Japanese firms step up intelligence gathering as U.S.-China tensions escalate

A growing number of Japanese companies are ramping up intelligence gathering as Japan finds itself increasingly vulnerable to rising tensions between the United States and China.

On January 29, the Financial Times reported that Suntory, Hitachi and Mitsubishi Chemical, among others, from industries less vulnerable to geopolitical turmoil, have hired risk managers in recent months and set up new ones. positions and a dedicated team to catch up with more politically sensitive peers.

The move by Japanese companies to strengthen their risk management capabilities comes as investors call for greater disclosure of their responses and preparedness to emergencies, the conflict between Russia and Ukraine, supply chain disruptions caused by the epidemic, and China-U.S. disputes over Taiwan. tensions intensified.

Japanese companies often face the dilemma of how to comply with changing regulations in the world's two largest economies, said Kyohei Yabu, research manager at the Japan External Trade Organization.

“The risk of Japanese companies being caught in the middle is growing,” he said.

A September report by consultancy PwC Consulting found that nearly a third of listed Japanese companies with sales of more than 500 billion yen ($3.9 billion) mentioned "geopolitics" in their annual reports , compared with 11% a year ago.

"Compared with U.S. and European firms, Japanese firms are slower to respond to economic security and geopolitical risks," said Kazuhide Ueno of law firm TMI Associates.

In addition, Kazuhide Ueno also said: "For investors, corporate safety measures have become the standard for judging a company's value like ESG (environmental, social and governance)." According to his research, this fiscal year in the annual report The number of Japanese companies mentioning "economic security" more than doubled to 27 from 11 the previous year.