Strengthening Post-Corona Resilience — Germany and Japan’s Efforts to Prepare for a New Global Crisis

German Research Institute Proposes a Quantitative Framework to Assess and Analyse Resilience
In the context of a prolonged pandemic and concerns over its impact on the economy, discussions are being held among academic, business and government circles in Germany and Japan on how resilience should be strengthened in the event of future pandemics and other global-scale crises.
Alexander Stolz, head of department at the Fraunhofer Institute for High-Speed Dynamics (Ernst-Mach-Institut, EMI), has spent the past decade investigating the resilience of societies to cope with all kinds of adversity or risk. In 2020, Stolz carried out a project on turning the experiences from the corona crisis into new chances and opportunities. In this project he proposed preparing for large-scale emergency situations such as the current pandemic by preparing the following five-step countermeasure plan in advance: discuss necessary preparations (Prepare), take precautionary measures (Prevent), shield and shelter (Protect), mitigate severe consequences and maintain critical supplies (Respond), and get everything up and running again (Recover). Stolz also points out that it is necessary to quantify the resilience of companies and of the economy based on resilience engineering. Specifically, EMI advocates the analysis of different scenarios to determine the extent to which the performance of companies would be affected as a result of a crisis, and to use the results to design countermeasures.

Supply Chains Need to Be Overhauled
EMI also recommends that business owners ask themselves the following questions as part of the ‘Prepare’ step: To what extent should the core business of the company be maintained in the event of a crisis? What initiatives should be taken and how much would they cost? The first wave of the COVID-19 pandemic in the spring of 2020 closed international borders and harmed German companies by cutting off supply chains. Against this backdrop, EMI encourages companies to systematically examine such topics as: Which component suppliers are essential to us? Can we get supplies from other companies if we are cut off from our existing suppliers? Therefore, Stolz recommends that companies make detailed predictions in advance regarding crisis scenarios and the impacts of these scenarios.
EMI’s research indicates that 27% of electrical components and products imported into Germany in 2019 originated in China, and that the majority of raw materials for antibiotics produced in Germany were manufactured in China. The temporary disruption of supply chains due to the COVID-19 pandemic highlights the risks of relying on certain countries for the supply of components or semi-finished products to reduce costs. Based on this perspective, Stolz argues that enterprise executives should take advantage of the lessons learned from the pandemic to systematically assess their dependence on other companies and countries, and to start working to reduce their reliance in preparation for the next emergency. In conjunction with this, according to a series of interviews conducted by EMI in 2017 with approximately 200 German enterprises, 57% of the respondents reported that they had already experienced temporary disruptions in their supply chains that could have affected their survival.

METI of Japan Focuses on Reinforcing the System through Innovation
Some Japanese economic research institutes have also stressed in their reports the need to scrutinise supply chains for vulnerabilities in the wake of the COVID-19 pandemic. In June 2020, a notable report was released by the Industrial Science and Technology Policy and Environment Bureau of the Ministry of Economy, Trade and Industry (METI) regarding Japan’s future innovation policy in light of the coronavirus crisis. In this report, METI pointed out that initiatives should be taken based on the outlook that the pandemic may continue unabated for at least two more years until 60 to 70% of the population will become infected. METI also warns that factors such as the expansion of human societies into the realm of nature, coupled with closer proximity of human habitation to wildlife habitats, globalisation, climatic fluctuations and other changes, will continue to further exacerbate the risk of recurrence of infections worldwide and in localised areas.
METI then advocates that artificial intelligence (AI) should be utilised to strengthen the fight against infectious diseases, while digitalisation, online systematisation, and automation should also be accelerated to reduce social contacts. The ministry predicts that, as with other countries, Japan will be faced with fundamental changes such as an increase in the number of people wanting to move from metropolitan areas to rural areas, the spread of remote working, the globalisation of the labour market, digitalisation, and an overhaul of globalisation initiatives.
These research results released by METI are one of the reasons behind why the Japanese government is making a strong call for digital transformation (DX) since the outbreak of the COVID-19 crisis. Indeed, in the above report, METI quotes Klaus Schwab, founder and executive chairman of the World Economic Forum, as saying that now is the time for a ‘Great Reset’ of capitalist society to harness the innovations of the Fourth Industrial Revolution to support the public good, especially by addressing health and social challenges.

Industry 4.0 Gains Momentum in the Wake of the Pandemic
Since the announcement of the Industry 4.0 initiative in 2011, the German government and academia have taken a pioneering role in the digitalisation of manufacturing. The pandemic that started in the spring of 2020 has fuelled the added urgency of the digitalisation of the economy, particularly in terms of the practical application of remote manufacturing technologies to enable continuous production even in the event of widespread infection. In its vision of the Smart Factory, Industry 4.0 has from the outset envisaged technologies that would enable factory operations to be controlled remotely, for example, from home. These technologies can be utilised to enhance operational resilience when people become unable to work in factories due to the spread of a new virus, for instance.
Germany and Japan are trading nations with manufacturing industries as their mainstays, and thus both need strategies to maintain their performance even in future emergency situations. In this regard, collaborations and concerted research efforts between the two will certainly continue to take on greater importance in the fields of digitalisation and improving the resilience of society and economy as a whole.

About Toru Kumagai

Born in Tokyo in 1959, Kumagai graduated from the Department of Political Science and Economics at Waseda University in 1982 and joined Japan Broadcasting Corporation (NHK), where he gained a wealth of experience in domestic reporting and overseas assignments. After NHK, he has lived and worked as a journalist in Munich, Germany, since 1990. He has published more than 20 books on Germany and Germany-Japan relations, as well as been to numerous media outlets to report on the situation in Germany.