Quietly and slowly, Japan is seeing the disintegration of the 'tacit contract' between bureaucracy and industry. Ongoing socio-economic changes, primarily driven by the globalisation of business and the political drive towards deregulation, have gradually made it clear that the bureaucracy cannot afford to maintain such traditional systems and 'protect' industries any longer.
In Japan, the creation of industry associations dates back before World War II, when bureaucrats attempted to strengthen their control over industrial production under the wartime economy. The current Japanese economic system is a wartime legacy. Since then, there has been a tacit contract where, in return for compliance with regulatory orders or guidance, industry associations and their member companies were protected by the bureaucracy.
This unwritten understanding is changing. Take, for example, an 'industry association' Fleishman-Hillard currently counsels. Prior to our involvement, this group was under severe scrutiny and attack by environmentalists.
Chemicals manufactured by its member companies were suspected of having toxic and hazardous effects on the ecosystem. In tandem with these attacks, the association suffered from regulatory action that could possibly lead to significant restriction or prohibition of chemical use in industrial and consumer applications. Even more troubling, the views held by both ends of this political pincer were not well-grounded in scientifically sound research.
Ultimately, it was the negative regulatory action that drove the association to retain the services of public affairs professionals. Considering the traditional relationship between bureaucracy and industry in Japan, it is safe to say such action by the association was an extraordinary move towards the acceptance of public affairs counsel.
The experience of the industry association mirrors the fundamental change in the traditional relationship between bureaucracy and industry and the gradual dissolution of the tacit contract.
As a natural reaction to the changing modus operandi, industry has clearly demonstrated its own mutability by taking public affairs action. If its actions truly reflect the larger sentiment of Japanese business, industry will continue to rely less on bureaucracy and, instead, bolster outside initiatives to influence public policy and opinion.
This trend is propelling growth in the country's public affairs sector.
Although public affairs consulting is still in its infancy in Japan, the enormous potential presented by this paradigm shift will certainly add to an already exciting field.
