When we decided to write a series of essays on the state of Brand Japan, the LDP had just lost its majority with Prime Minister Ishida clinging on to power. As we prepare to publish our third, Ishida is gone, along with Komeito, the LDP’s junior coalition partner, and Sanae Takaichi is prime minister, after some fast-paced diplomacy saw a new partnership negotiated with Nippon Ishin no Kai – The Japan Innovation Party. 

So what of Takaichi, who becomes Japan’s first female leader? There have been comparisons to Margaret Thatcher (she’s a fan apparently), however there will likely be no ripping up of the rule book. Seen as the face of the LDP faction controlled by 85-year-old Taro Aso, the ex-prime minister, and needing to manage a new coalition partner, she is expected to tone down her conservative rhetoric. 

As she prepares to meet with Trump at the ASEAN Summit, she is talking about increasing defence spending to 2% of GDP as well as lifting restrictions on arms exports and a “proactive fiscal policy” to stimulate growth. 

The stock-market has responded positively with the Nikkei breaking through 50,000 for the first time. And while the yen is at its weakest levels since 1990, gold futures surged, providing a clear indication of near-term sentiment. 

Whilst Japanese politics is undergoing transformation, there has been a flurry of international M&A activity by Japanese companies. So where does this leave the country and what can we expect in terms of its relationship with the rest of the World and its prospects for the future? 

We’re not economists, we deal with brand and communication, but we, and the partners we work with, do this for companies that are directly impacted by the decisions made in Kasumigaseki. We pooled our thoughts and the following are some observations and trends we have been seeing: 

Japanese companies are expanding internationally, but many are now more B2B – providing precision components and technologies for AI, EV, robotics, networks and digital systems – our future global infrastructure.  

ESG and DEI teams are having to make big changes – after years of slowly developing coherent strategies, global Japanese companies are now scaling back (their communication, at least) to avoid falling foul of prevailing winds in the US. 

The population is declining, but Tokyo is still growing, drawing people in from the rest of the country. We’re going to see smaller towns and villages shut down as their elderly residents disappear. There is an opportunity here for the government to invest in the regions, in more efficient agricultural initiatives, for example, and strengthen food security – but is there enough political motivation to do so? 

From a consumer brand perspective, the return of inflation and the normalisation or rising prices will open up completely new ways of thinking about market competition. Rather than focus on cost control and price reduction like the last 30 years, price increases will become the norm. In turn, consumers will ask, “What do I get in return?” You can already see in the hospitality industry that they were one of the first to implement steep price increases, moving up the chain a lot, investing, upping their offers, and trying to outdo each other across every category. 

Tokyo property prices will continue to soar as there is not enough land available to meet demand and the construction industry is over stretched. A lot of this is being fuelled by overseas investment as real estate is seem as undervalued compared to Singapore and Hong Kong. It means that property purchasing is becoming more and more out of reach for young people. The average age for buying property has now move into the 30s and early 40s. 

Fathers are taking a greater role in child rearing. More men are taking paternity leave. This will increase and it means more balance in the home, workplace and society.