【official】AppleTown | Monthly magazine

Reshoring will lead to an economic upswing

　On April 25, 2025, an article was posted on The Sankei Shimbun website, titled, “California’s 2024 GDP Outstrips Japan: Number Four in World After United States, China, and Germany.” It read:

“The State of California (U.S.) announced on the 23rd that its economy was larger than Japan’s when measured in dollars for 2024. Compared to other countries, its gross domestic product (GDP) was number four in the world. Bloomberg News, an American company, reported that Japan was once again higher than California due to the recent appreciation of the yen against the American dollar. Based on data from the International Monetary Fund (IMF) and U.S. Department of Commerce, California said its 2024 nominal gross product was 4.1 trillion dollars (approximately 585 trillion yen), compared to Japan’s at 4.02 trillion dollars. California’s growth rate was 6%. The U.S. has the top nominal GPD in the ranking of nations, followed by China and Germany.”

　Japan used to be the world’s number-two economic power, but our GDP fell below China in 2010, and we were number four under Germany last year. Now, Japan is ranked below an American state.
　The Japanese economy has stagnated since the economic bubble burst in the 1980s, leading to the Lost Decade, which stretched into two and three decades. The advent of Abenomics in December 2012 put the economy on a positive track, even more so than the Izanagi Boom. Although this was the second-longest period of prosperity since World War II, I think its effects were rather difficult to experience outside of the stock market and some industries. More recently, global inflation began right after the end of the COVID-19 pandemic due to impacts from monetary easing policy and the war in Ukraine. Because Japan was finally able to break free from its long-term deflationary spiral, the Bank of Japan (BOJ) ended its negative interest rates in March 2024. The BOJ raised its policy interest rate to 0.25% that July, then hiked it to 0.5% in January 2025. Many citizens have not been able to experience the effects of this economic prosperity since the cost of living has risen along with interest rates. More people are calling on the government to cut taxes, perhaps because they are struggling to support themselves while feeling anxiety about the future.
　Many experts have analyzed the reasons for Japan’s long-lasting economic slump. Looking back at the past from a birds-eye perspective, I think this sluggishness was mostly caused by three overlapping factors: economic globalization following the end of the Cold War, yen appreciation after the Plaza Accord, and the burst of the Japanese economic bubble. In addition, we must not forget that the U.S. shifted its post-Cold War target from the Soviet Union, a military superpower, to Japan, an economic superpower. Progressing globalization brought low-priced foreign imports, and quality improved along with economic growth in China and Southeast Asia. Moreover, Japanese manufacturers set up overseas production bases due to negative impacts of the strong yen. The domestic economy flourished when it was focused on exports. Companies had increasingly positive results as export volumes grew, then invested more money in plants and equipment. Today, only some results are returned to the domestic economy; most funds are used for overseas investment and investor dividends.
　Some time ago, The Sankei Shimbun website posted an article on May 25, 2024, titled, “Major Restaurant Companies Turn Troubles to Their Advantage by Expanding Overseas During Historically Weak Yen, Manufacturing Industry Returns to Domestic Production.”

“Manufacturing companies with overseas operations are impacted by the weak yen. IRIS OHYAMA produced consumer electronics and commodities for the Japanese market at its Chinese factories. It has started making some of these goods in Japan due to rising raw material costs and shipping prices for importing products from China, and IRIS OHYAMA is working to cut costs through reshoring. Audio equipment manufacturer JVCKENWOOD used to make commercial wireless products in the U.S., but it has moved these to its Yamagata factory (Tsuruoka City, Yamagata Prefecture), switching to a method of producing items that are exported to the U.S. JVCKENWOOD says it has been able to cut manufacturing costs by 30% through automation with robots at the Yamagata factory. The manufacturing industry is also facing increasingly serious geopolitical risks, including Sino-American conflict, and more companies are implementing reshoring to strengthen supply chains. Ishii Yanisa, head researcher in TEIKOKU DATABANK’s Information Management Division, said, ‘More companies are returning to domestic production because of China’s economic slowdown. This is further exacerbated by the historically weak yen.’”

　Although yen depreciation is certainly a major reason for reshoring, it is not the only factor. In the post-COVID world, supply chain strength is a serious issue for manufacturing companies – which can no longer simply choose the cheapest locations – and factory automation has also mitigated the impacts of disparities between personnel expenses. This is why I believe this trend will not be a temporary one. While the shortage of workers is an issue, reshoring may boost productivity and stabilize supply chains, which would be a positive thing for the Japanese economy.

Continually strong tourism performance will be a driving force in the economy

　Although the Japanese GDP ranks fourth in the world, our cutting-edge scientific and medical technologies still have sufficient competitive power on the global stage. Compared to other nations, we also have excellent tourist attractions. Traveling to 82 different countries showed me that Japan is the best country in the world, and I was convinced that it would one day become a major tourist destination. Japan is truly unique, with a long history and culture, natural wonders, and beautiful scenery in all four seasons. Japan is safe and clean. Our public transportation runs on time, and most people are extremely kind. Visitors can enjoy many different types of food without having to worry about sanitation. My beliefs have been proven true. APA Group began opening many hotels according to our Summit strategy launched in 2010, with a focus on central Tokyo. A total of 8.61 million foreign tourists came to Japan that year. They numbered 6.22 million in 2011, then rose to more than 30 million in 2018. This trend fell temporarily during the pandemic, then a new record was set in 2024 at roughly 37 million foreign tourists. These numbers are causing the tourism industry to thrive, which is centered on hotels, an industry showing overall good performance. And thanks to these overseas travelers, APA Hotel set sales and profit records in the past fiscal year.
　The real estate industry used to be focused on development and investment for condominiums and offices. However, I feel like its interests are rapidly shifting to hotels during the past few years. The hotel business is booming, and some data indicates that hotels are better investments than either condos or offices. Major developers are attracting foreign luxury hotel brands to the top floors of large-scale buildings, leading to a rapid increase in the number of luxury hotels. Foreign brands are also opening low-priced hotels, and Japanese companies in other industries are entering the hotel market. In these and other ways, the hotel industry is heating up.
　Although APA Hotel rooms are compact, we are dedicated to making them functional, convenient, and environmentally friendly. Our hotels are located near major train stations so they are not limited to specific applications, but can be used as multipurpose facilities. APA Hotels above a certain size have communal baths. Our large-scale hotels are like “urban resorts” where guests can enjoy swimming pools and relaxing experiences in the city. These are all factors behind APA Hotel’s excellent performance. At the same time, other companies are taking creative measures to attract foreign guests. There is an increasingly wide range of options including hotels with large rooms for several guests to share, and rooms with kitchens and other facilities for long-term stays. More players in this market will likely lead to fiercer competition. I believe that the entire industry will be improved through friendly competition that leads to economic growth. In my opinion, the hotel industry will remain extremely active for quite some time.

Popularity is based on continually good performance

　Labor shortages are becoming increasingly serious issues in all industries while the economy rebounds after the pandemic. I have seen news reports saying that many major corporations are drastically raising wages for new graduates this year to attract skilled human resources of young ages. Takeuchi Masaya of Mizuho Research & Technologies published a paper on April 3, 2025, titled, “Who Benefits From Higher Starting Salaries?” He wrote as follows under the heading, “Outbreak of competition to raise starting salaries.”

“Increased starting salaries – if they are not accompanied by higher base salaries – can be regarded as one facet of the breakdown of Japan’s unique employment structure. In general, the characteristics of this structure include long-term employment, deferred wage payments, and company unions. Considering entry-level salary raises, many companies use a system in which students are hired and paid low wages because they lack sufficient abilities. New employees receive in-house training. After achieving growth through long employment, they receive high wages. Companies have worked to keep employees by training them in skills that the company needs, and salaries continue rising over time. If companies hike entry-level wages without sufficiently revising pay scales for existing employees, their employees will receive fewer raises in the future, flattening out the wage curve. The premise has been that employees are paid little when they are first hired, then are paid more after working at a company for many years. We can say this premise is crumbling.”

　Some companies raise base salaries along with entry-level wages, and some do not. Takeuchi points out that the latter case may lead to worsened efficiency in personnel expense distribution and lowered motivation for existing employees.
　Before changing entry-level wages, APA Group has continually raised base salaries every year since 2013 for a cumulative total of 81,000 yen, including this year’s raise (excluding 2020 and 2021 during the pandemic). This is possible only because the company earns so much revenue. APA Group has never recorded a deficit during its 54-year history, and we have continually fulfilled our obligation to pay large amounts of taxes, which is a way that we contribute to society. I am confident that this is all founded on my ability to predict what will happen in the future. APA Hotel has a high level of ordinary profit at 35% because of our new hotel business model: we are in charge of all aspects, including ownership, operation, and branding. In this way, we have obtained capital that we return to our employees today.
　Companies no longer select their employees – in this era of labor shortages, employees are the ones who make choices about where to work. Going forward, corporations will not be chosen unless they fulfill their social responsibility and provide satisfying working environments for employees. APA Group has hired approximately 600 new graduates annually over the past few years. Today, APA Hotel is ranked number 41 in the Humanities category of the Mynavi Nikkei 2026 New Graduate Popular Place of Employment Ranking, up from number 53 in the previous fiscal year. We are also number four in the Hotel/Ryokan Company ranking. This shows that students have a favorable impression of APA Group, and we must work to further increase this popularity.
　Things are looking up in the Japanese economy, including reshoring inspired by the depreciating yen and Donald Trump’s tariffs, as well as the tourism boom led by foreign travelers. There are not enough workers today, but APA Group is facing this era head-on according to our unique hotel business model. We will work to maintain our great performance and ensure customer satisfaction through our services, which make use of our past experience and digital transformation. In addition, we will pay taxes and offer fulfilling working environments to our employees, including wage structures. I believe that we could enhance Japan’s national power if many companies of this type engaged in friendly competition.

May 21 (Wednesday), 5:00 p.m.