- 160 years since Japan concluded the Treaty of Amity and Commerce with Prussia in 1861.
- Japanese-German relations have grown exceptionally close across a wide range of fields, including politics, economics, science, academia, culture and the arts.
- Germany is the largest location in Europe for Japanese companies. The number of Japanese companies in Germany has increased by about 30% over the past decade to about 1,900 companies.
- Japanese investment has been increasing in the eastern part of Germany, particularly in Saxony, Berlin and Thuringia.
- Japan and Germany are partners with shared values such as democracy, rule of law and multilateralism.
Bridges: Japan and Germany recently celebrated their 160th Anniversary of relations. Where does the relationship stand today?
Ambassador Hidenao Yanagi: In the 160 years since Japan concluded the Treaty of Amity and Commerce with Prussia in 1861, Japanese-German relations have grown exceptionally close across a wide range of fields, including politics, economics, science, academia, culture and the arts.
The two countries are now partners who share the fundamental values of freedom, democracy, and the rule of law. On this basis, we would like to enhance our relationship further more. As part of this effort, we would like to strengthen Japan-Germany cooperation in the area of security. Japan is promoting the realization of a “Free and Open Indo-Pacific” with like-minded countries like Germany, which announced its “Indo-Pacific Guidelines” in September 2020.
In this regard, the dispatch of the German frigate “Bayern” to the Indo-Pacific and a joint training with the Japan Maritime Self-Defense Force (JMSDF) is a good example of bilateral cooperation. Since many cultural events were canceled unfortunately due to the Covid-19 pandemic, the Bayern’s port visit to Japan in November marked a highlight of the 160th anniversary of Japan-Germany relations.
Diplomatic and security cooperation has made significant progress, by signing of the ‘Agreement on the Security of Information’ in March 2021 and the holding of the first ministerial-level 2+2 meeting in April (online).
On the economic front, Germany is the largest location in Europe for Japanese companies. The number of Japanese companies in Germany has increased by about 30% over the past decade to about 1,900 companies. The industrial structure of Japan and Germany is similar in that both countries have strong manufacturing industries, making it easy for Japanese companies to promote cooperation.
In addition, there is a large number of small and medium-sized companies known as “hidden champions” that have a competitive edge in the global business to business (B2B) market; and it is easy access for Japanese companies to the prestigious universities and research institutes since it’s located nationwide.
Japan and Germany are partners with shared values and are expected to deepen their economic relationship in the future. In particular, the Japan-EU Economic Partnership Agreement (EPA), which went into effective in February 2019, will contribute to strengthening economic relations between the two countries, although it has not fully effective due to the global pandemic that began one year after the agreement to be effective.
While Japan-Germany economic activities have been centered around Dusseldorf, Frankfurt, and southern part of Germany, however, since the beginning of this century, Japanese investment has been increasing in the eastern part of Germany, particularly in Saxony. (and I believe this is the area where Japanese companies are interested in).
Bridges: What are the advantages of Berlin-Brandenburg and the State of Saxony as destinations for Japanese companies?
Yanagi: The former East German states have an advantage over the former West German states in various aspects such as the availability of land when it comes to setting up factories.
According to the Saxony Economic Development Corporation, more than 40 Japanese companies have established operations in Saxony, employing more than 5,700 people. There are clusters of industries such as automobiles and semiconductors in the state of Saxony, and it is easy to find cooperative companies in these fields. Especially in the field of semiconductors, Saxony is the most important region for microelectronics in Europe and the fifth largest in the world. Japanese companies such as DENSO (automotive) and Tokyo Electron Limited (semiconductors) have already established operations in Saxony and are actively engaged in the region.
In addition, Japanese companies such as Takeda Pharmaceutical Company Limited (pharmaceuticals) and Olympus (medical equipment) have established operations in Brandenburg.
Furthermore, according to a survey by Ernst & Young, Berlin is one of the leading start-up centers in Europe after London and Paris. Cooperation with these start-ups is expected to strengthen the competitiveness of Japanese companies through innovation.
The Berlin-Brandenburg International Airport opened in November last year, and if the situation surrounding the Covid-19 pandemic settles down, Japanese investment in the states of Berlin and Brandenburg is expected to increase. The investment environment in the region is also improving, as seen in Tesla’s investment in electric vehicles and fuel cells in Brandenburg.
In addition to the expansion of Japanese companies in Brandenburg and Saxony, there are other areas where Japanese companies are expanding, such as in Thuringia, where Nidec Corporation acquired a German company in 2014, planning to strengthen its research and development activities in the future. The state also has good access to Volkswagen’s Wolfsburg, BMW’s Munich, and Opel’s Frankfurt.
In addition, the automotive sector is shifting to electric vehicles, which emit less CO2, and investment in the automotive sector is expected. For example, Thuringia has a thriving automobile industry with BMW’s manufacturing base in Eisenach and Mercedes/Daimler’s manufacturing bases in Kölleda and Arnstadt, and I hope that Japanese companies will enter the region.
Bridges: What ambitions have you set for the Embassy?
Yanagi: Japan and Germany have shared common experiences such as postwar reconstruction. Whereas traditional pro-German sentiment still remains high in Japan, however, in Germany, not so many people seem to preserve the shared experience, especially after the reunification.
Today, we expect to strengthen and deepen Japan-German relations based on shared values such as democracy and the rule of law. In addition, I welcome the positive mention to Japan in the coalition agreement of the three German ruling parties.
In German society, Japanese culture has earned public acceptance; not only Japanese music, flower arrangement, and tea ceremony but also, more recently, Japanese cuisine, manga and anime among the young people; there is also an increasing number of Japanese talents in the field of sports like Mr. HASEBE Makoto (football player) in Eintracht Frankfurt. We would like to further strengthen our cultural and sporting exchanges.
To sum up, I would like to further deepen the relationship between the two countries, especially the people-to-people exchanges, and not only in the fields of economy, culture, politics, security, and defense as like-minded countries.
Bridges: What message do you have for the Japanese, German and international business communities?
Yanagi: The strength of Germany’s investment environment is that research institutes such as the Fraunhofer-Gesellschaft and the Max Planck Society, as well as technical universities, are active in commissioned research by companies. There are also advantages in terms of R&D.
Germany is a large market located in the heart of Europe. Because of its nature of good business conditions and regional hub for trade fair, Germany is a significant place for market research and following up the world’s most advanced products in various field.
In the fields of hydrogen, AI, and digitalization, there is much room for cooperation between Japan and Germany. In addition, there are issues common to both countries, such as the declining birthrate and aging population of society, and both countries can tackle them in cooperation by sharing their experiences.
Japan and Germany believe in multilateralism, and we would like to strengthen cooperation with many countries in the economic and trade fields, including the WTO, but also utilizing the Japan-EU EPA.
In the field of diplomacy and security, we would like to enhance cooperation between Japan and Germany in multilateral forums such as the United Nations and the G7, as well as in areas such as disarmament and non-proliferation.