Japan's Overseas Resource Strategy Analysis Of The International Political Economy

Upon the beginning of the new century, China is facing increasingly tight supplyof mineral resources. Although the scale of indigenous mineral resources in China ishuge, and some categories see China ranking among the top in the world, but thepossession amount per capita is very low, and the indigenous mineral resources are farfrom sufficient to satisfy the induced demands from the growing economy of China.Consequently and naturally, China is looking outward for substitute supply sources,but the achievements shall not be declared as successes. As for the reasons for theunsatisfactory situation, there has not been any convincing argument so far. Thepopular arguments, such as increasingly tight global supply of mineral resources,hostile and preemptive actions by western developed countries and enterprises, overlyquick increase of China demand, Chinese enterprises’ lack of experience ininternational trade and foreign investment, insufficient support from Chinagovernment to Chinese enterprises, have offered little enlightening and constructiveopinions and insights.On the contrary, Japan has a much worse luck than China in terms of fortune ofmineral resources, however, that bad luck didn’t stop Japan from becoming one of thestrongest economies second only to U.S. very quickly after the end of World War II,and Japan remains one of the biggest economies in the world today. During thecourse of Japan’s economic recovery and miracle, its demands on mineral resourceswere consistently well met, and Japanese enterprises even enjoyed significantly loweracquisition cost of mineral resources comparing with European and Americancounterparts. One shall not ignore the facts that for a quite long time after the end ofWorld War II, Japan had not been deemed as “insider” of the global political andeconomic game lead and dominated by U.S. and Europe, and therefore theinternational political environment for Japan was not very pleasant, that Japan’sdemand on mineral resources once also surged so violently that the balance of globalmineral market was shaken, and that Japanese enterprises had all the difficulties likeChinese enterprises have today when they entered the arena of international mineraltrading and investment. Therefore, Japan can well serve as a good reference and model for China in the course of procuring mineral resources from abroad.As illustrated clearly by the metaphor that oil is the blood for industrialization,mineral recourses are the basic elements for the maintenance and growth of anyeconomy, and resources security is not only an economic issue, but also a politicalissue related to people’s livelihood, economic growth and social stability, and shall beamong the top economic and political agenda deserving the attentions and endeavorsof all members of those countries which are in shortage of mineral resources. In thetrend of globalization and in the unchangeable situation of extremely unbalancedglobal distribution of mineral resources, the efforts for resources security by a largeeconomy will inevitably have an impact on the global interest structure of mineralresources, and because of the importance and sensitivity of mineral resources, willthen inevitably have an impact on the global economic and political structures, whichwill then turn the topic to an international one with economic and politicalsignificance.The main contribution of this article is to apply the research achievements ofinternational political economics, particularly the opinions from its realistic school, inthe analysis of Japan’s practice and results of procuring mineral resources fromabroad, reaching the conclusion that the practice of procuring mineral resources fromabroad by Japan government and Japanese enterprises has demonstrated and verifiedvery well one of the opinions of realistic school of international political economics,namely, that the competition among multinational corporations is essentiallycompetition among their mother countries, and competition among countries will becarried out in the form of competition among their multinational corporations inpeacetime. The belief of Japan government and Japanese enterprises in competitionguides them in the course of international trade and foreign investment of mineralresources to work hand-in-hand, each to perform its own duties, each to display itsown capabilities, and to preserve in the course, to optimize its tactics continuously,which is the root cause that Japan has occupied an important and advantaged positionin the global interest structure of mineral resources.Another contribution of this article is to define enhancing bargaining power as thekey perspective to understand various measures and tactics applied by Japangovernment and Japanese enterprises for resources security, and to conclude that anyeffective effort to make one’s own market position closer to that of monopolist, andany effective effort to make counterpart’s market position closer to as in a perfect competitive market, would be favorable to enhance one’s own bargaining power, andtherefore would help one to obtain more benefits from a market where both demandside and supply side are originally in monopolistic competition or oligopoly, and,however, one shall fully utilize its bargaining power in trade negotiations in order toturn advantaged market position to real benefits.The first chapter of this article summarizes, categorizes and synthesizes theexisting researches on Japan’s strategy and practice of procuring mineral resourcesfrom abroad, and finds that the achievements by existing researches lie mainly indocumenting certain facts about the said strategy and practice and demonstrating theireffectiveness, with little help for us to understand them from theoretical perspectiveand with the defect of missing comprehensive and historical description of the saidstrategy and practice. This article then seeks theoretical nutrients from internationalpolitical economics and determines the realistic school as the theoretical basis foranalysis of the said strategy and practice. This article also briefly reviews severalexisting economic theories related to bargaining power and proposes its ownframework about how to enhance bargaining power.The second chapter is used to review briefly the history and features of Japan’spolitical system, economic system and large conglomerates, and analyzes the impactof large conglomerates on Japan’s politics, in order to establish a macroscopicbackground about Japan’s domestic political and economic environments for thefollowing analysis.The third chapter reviews the history of Japan’s procurement of key mineralresources since its start of industrialization, including petroleum, coal, iron ore andcopper, and reviews briefly the history of Japan plundering mineral resources fromChina during the first half of20thcentury, in order to establish a historical backgroundfor the following analysis.The forth chapter is used to analyze thoroughly the three key aspects of the saidstrategy and practice, namely enhancing internal collaboration, provoking supplycompetition and dominating trade negotiation, in order to depict a full view of the saidstrategy and practice.The fifth chapter uses coal and iron ore as examples to illustrate the said strategyand practice and their effectiveness, and concludes that the said strategy and practiceare very successful in terms of stable and large-scale supply and considerably loweracquisition costs, such that the input cost disadvantage of Japanese steel industry comparing with their U.S. counterparts was reversed, which was of crucial importanceto Japanese steel industry and even Japan economy.In the sixth chapter, several enlightenments are derived from the previousanalysis, including that China government and Chinese enterprises shall establish andstrengthen the sense of competition in the course of procuring mineral resources fromabroad, that the incentives and motivations of all relevant parties in the said courseshall be harmonized, that China needs to design and establish a comprehensivemechanism supporting the said course which fits China’s situation, and that Chinashall put more efforts in legislation in the said area for better implementation of itsown strategy. In addition, China shall keep pace with the times to adjustcontinuously its strategy and tactics, shall well utilize and manage its indigenousmineral resources in order to strengthen its position in the global mineral resourcesmarket, shall participate more proactively and smartly in the course of economicdevelopment of resources-rich but less developed countries in order for a better tradeand investment environments for Chinese enterprises and also new opportunities togrow in those countries, and shall continue and strengthen the research and attentionon Japan’s relevant strategy and practice in order to learn from its strengthes and todevelop countermeasures to compete with Japanese enterprises.This article is substantially limited due to insufficient coverage on researches inJapanese language, such that the incubation of the said Japan’s strategy and practice,the differences among the opinions of Japan government, Japanese enterprises andJapanese scholars, and the latest thoughts of various Japanese practitioners are notshown and analyzed. Also, this article has not analyzed the global interest structureof mineral resources and its evolvement, which limits the completeness of this articlefrom the spatial dimension. All the limits guarantee the necessity of further research.