By Greg Lane

Predicting the future is not really about looking forward. Without a crystal ball, the best we can do is study what has passed and use that knowledge and experience to anticipate what might happen in the future. While a neatly linear chart of sales can be estimated with the use of a ruler and a dotted line, predicting future events and trends is akin to attempting to predict the final destination of a speeding car by staring intently out the rear window. Adding to the difficulty of making any predictions about the year ahead is the truly unpredictable—the threat of earthquake, tsunami, volcanic eruption and typhoons to which Japan is eternally prone. Then there are the ‘unknown unknowns’ as former US Secretary of Defense Donald Rumsfeld so eloquently termed them— the death of a prominent politician, the next big business scandal or an unexpected plane flying into a building.

With this heavy disclaimer nailed firmly in place, we venture five predictions for Japan in 2008.

Legal: The year Japan learned to litigate

2007 saw a rush of international law firms into Japan: Norton Rose, Ropes & Gray and Quinn Emanuel to name a few. Much of the focus of these companies is not on legal matters in Japan. Rather, it will be on exploiting Japan’s massive stock of unenforced patents overseas. Expect to see some big Japanese corporations begin to aggressively protect their patents on the world stage and a marked rise in overall litigation as enterprising foreign law firms encourage Japanese patent holders to enforce their intellectual property rights, taking a commission on successful cases.

Finance: More Japanese banking consolidation

With the stampede of bank mergers six or seven years ago, some observers were predicting this activity to culminate in one or two mighty mega-banks. This pressure subsided with the subsequent revival of the Japanese economy, which meant that the toshi ginko (city banks) were able to dispose of their bad loans much more smoothly and quickly than initially anticipated. In 2008, the pressure to cosy-up will be back on. The ongoing fallout from the US sub-prime mortgage collapse, the fact that Japanese banks’ capital adequacy ratios still don’t stack up, and the recent granting of banking licenses to global giants such as Citibank and ING, could see a real rush of merger activity.

Politics: Business as usual

Insiders are predicting that the incumbent LDP will call a general election in the spring. However, in the hope of keeping the opposition DPJ on their toes (or perhaps just to annoy them) the last thing the LDP wants to be is predictable. While Yasuo Fukuda has turned out to be considerably more adept at avoiding scandals than his hapless predecessor Abe, with the electoral appeal of a damp oshibori (towel), the LDP Lower House majority will take a major hit. The result will be close but if the earnest Mr Fukuda manages to ride out his honeymoon with the minimum of negative publicity, he will likely scrape to a narrow victory over the ever uninspiring DPJ. A major effect of this will be to put the issue of raising the consumption tax from the current 5% firmly on the back burner. Any attempts to push it through will be met with rebellion from the back benches or be blocked by the DPJ in the Upper House.

G8 Summit: Toyako, Hokkaido

You might not have heard of Toyako— the venue for the 34th G8 summit in July—but that’s the whole point. As has become the pattern, Japan has chosen a remote location with lots of wholesome scenery and very few of those pesky people—not that there will be any protests worthy of the name. Expect blanket media coverage and if the last time Japan hosted a G8 summit is anything to go by, a catchy theme song that will be hammered everywhere for about a month. As it has been attempting to do recently, (Southern Ocean whale hunts aside) Japan will be trying to enhance its environmental leadership credentials. Expect Japan to take credit for a (carefully pre-arranged and non-binding) joint statement on further pursuing alternative fuels and reducing CO emissions.

Olympics: Overshadowed

Don’t expect a wave of ‘Cool China’ in the same way that the ‘02 Football World Cup triggered a wave of interest in all things South Korean. China will however loom ever larger in the Japanese consciousness as the world’s media turns its glare on the slick, shiny showcase taking place in Beijing throughout August. Despite the Games happening in Japan’s backyard and large numbers of enthusiastic supporters making the short trip over, don’t expect too much of the Japanese Olympians. Dismal results in recent athletics and judo world championships as well as fired-up Chinese athletes mean that Japan could take home its lowest medal haul since the paltry three golds won at the Atlanta Olympics in 1996. JI