The economic impact – and opportunity – of disaster

From a Tokyo perspective, Hori says that while concerns remain over the Fukushima Daiichi nuclear power plants, these are not that acute. And as far as power supplies to Greater Tokyo are concerned, while there has undeniably been a sharp impact on businesses and households alike, conditions are already noticeably returning to normal.

This is also what he sees from GLOBIS' portfolio companies. Hori says that right after the earthquake the revenues of four of their companies dropped anywhere from 30%. "At the same time, however, I have to say that since about the end of March, this situation has rebounded to about 90% of what it was before."

Nevertheless, the shock prompted GLOBIS to spend time trying to get to grips with the business concerns of these four companies, with the result that they isolated two or three new trends. One is that internet and mobile businesses will emerge stronger; plus the trend toward social media has now proven itself effective in a global scale disaster. Therefore its business prospects also look brighter.

As for ‘real economy' businesses, he believes the impact and effects will eventually be ‘processed' as well, albeit more slowly.

"From an investors' perspective, in terms of IPOs and the stock market, the latter slipped by perhaps 10% in the wake of the crisis. But according to Nomura and other securities companies' projections, the expectation is that the aggregate number of IPOs for the year will be almost the same as prior to the disaster. And those companies whose listings were derailed right on the heels of it are already seeing them start up again," Hori told AVCJ.

Long journey ahead

However, while the landscape for business is improving, there remain obvious hurdles to contend with. For example, the rolling blackouts have had a serious effect on the Japanese economy, as has the halt in the supply of components due to the collateral damage to factories. Since many of these companies maintain assembly plants worldwide, the impact will certainly be global. Using auto giant Toyota as an example, shutdowns of its global plant network could cause it to slip from world number one to number three, producing more bankruptcies and unemployment.

What is known now is that industrial output dropped by a record 15.3% in March, considerably more than the initially forecast 11%. So even with a spirited recovery over the next few months, this short sharp plunge will act as a serious limiter of any sustained recovery's positive effect.

"Additionally, massive amounts of compensation will be required, mostly because of the excessive evacuation criteria and shipment suspension measures. From the taxpayers' standpoint, the will lead to heavier tax burdens and increased risk of fiscal meltdown," Hori explains.

Yet, the rebuilding process may make way for positive change. Hori expects to see the emergence of a new wave of entrepreneurs which had, on a much more modest scale, occurred after the Kobe earthquake in 1995. High Richter Scale tremblors seem to shake up more than the landscape; they shake off outmoded mindsets as well. "The people will be more committed," Hori predicts. "And so there will be more energy coming out of Japan. But to see what will change, we will have to wait and see."

Venture capital lends a hand

In the days following the March 11 quake, Hori and a group of business leaders devised a plan to lend their skills to the areas that needed them most, and thus Project KIBOW was born.

KIBOW's agenda is simple but innovative. Leveraging their collective global experience, they aimed to approach prominent business people and leaders, Japanese and foreign. After perceiving mass media reporting gaps and errors, they further decided to set up an information hub as a vital tool for collaboration among different organizations, as well as providing on-the-spot information on what is really going on at ground zero, and at the same time sending messages of hope to the people via social media such as Twitter, Facebook et al. The plan also includes KIBOW Music as a particular help to those traumatized and exhausted by the recent events.

A third KIBOW aim put forward was to seek and coordinate the use of donations from within Japan and around the world in collaboration with the graduate school of management,GLOBIS University. The system will support PayPal and accepts transfers in foreign currencies.

According to GLOBIS' webpage, the group plans to allocation 25% of its garnered donations to non-profit organizations; 25% to support local teams who are leading the recovery; 25% for education use; and the last 25% to the Civic Force.

"Our country has never been in the world spotlight as it is now; likewise the need to disseminate information globally has never been greater," Hori says. "We, the people, not the government or the mass media, seek to convey our strong will to make Japan better and our desire to gain the cooperation of the world in Japan's reconstruction."

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• Topics
• North Asia
• Globis Capital Partners
• Yoshito Hori