A growing number of Japanese businesses are strengthening their intelligence gathering as the country finds itself increasingly exposed to the mounting tensions between the US and China.
Companies in sectors that have historically been less exposed to geopolitical disruptions — including Suntory and Mitsubishi Chemical — have hired risk executives and created new job roles and dedicated teams in recent months, as they catch up with their counterparts in more politically sensitive sectors.
The move to bolster their risk management capacity comes as investors call on Japanese companies to strengthen their disclosures on their response and readiness for contingencies such as the war in Ukraine, supply chain disruptions caused by the pandemic and increased tensions between the US and China over Taiwan.
Kyohei Yabu, research manager at the Japan External Trade Organization, said Japanese companies often face the dilemma of how they can comply with changing regulations in the world’s two largest economies.
“The risk of Japanese companies being caught between the two sides is increasing,” he said.
A report by consulting firm PwC Advisory published in September found that almost a third of Japanese-listed companies with sales of more than ¥500bn ($3.9bn) cited “geopolitics” in their annual reports, compared to 11 per cent a year earlier.
“Japanese companies have been slower to respond to economic security and geopolitical risks compared to US and European companies,” said Kazuhide Ueno, a lawyer at the legal firm TMI Associates.
“For investors, corporate security initiatives have become a criteria like ESG [environmental, social and governance] for judging a company’s value,” Ueno said. According to his research, the number of Japanese companies mentioning “economic security” in their annual reports has more than doubled to 27 this fiscal year, from the previous year’s 11.
Last month Suntory poached Go Eguchi, a US-based executive at trading