[Editorial] Japan's policy of steering corporate profits toward future investment deserves attention

The Japanese government has issued guidelines aimed at encouraging companies to use profits for growth investment rather than shareholder returns. According to local media, the new growth investment guidelines recently prepared by METI call on companies to make strategic investments in advanced future industries. In particular, the warning that a heavy focus on share buybacks could undermine corporate value over the medium to long term stands out. Japan, after its lost three decades, is now examining the spending competitiveness of its companies.
The Takaichi administration launched itself under the banner of a "strong economy." It made clear its strategy of channeling corporate profits into growth investment rather than short-term payouts in order to expand the economy. Through investment in advanced industries, it aims to create a virtuous cycle in which corporate profits, wages, consumption, and tax revenue all rise together. In the past, the Abe administration pushed Japanese companies to improve shareholder returns and capital efficiency through higher dividends and share buybacks. The Takaichi administration is now shifting that direction toward growth investment. The new growth investment guidelines were issued in that context.
For a country like ours, where companies are rushing to divide up semiconductor-driven profits through "take it now" distribution, Japan's policy carries important lessons. As semiconductor labor unions push for performance bonuses tied to N% of profits, the entire society is being drawn into a scramble for gains. Strong unions in the auto and shipbuilding industries are already demanding bonus payments equal to 30% of a company's net profit or operating profit. Kakao's labor union is demanding 13% to 15% of operating profit and says it will go ahead with a June strike if talks break down. If this continues, N% performance bonuses could become the new normal and turn into an industry standard.
To make matters worse, the government has also joined the pressure for profit sharing. Kim Young-hoon, Minister of Employment and Labor, said on the 27th that "an emergency forum will be held to find ways to socially redistribute excess profits from large companies." Earlier, the Chief Presidential Secretary for Policy had also said that part of the windfall from the AI boom should be returned to the public. Cheong Wa Dae later explained that this referred to a distribution of excess tax revenue, but Kim's remarks suggest that the government's real intent is profit redistribution.
The global industrial order is now in a period of major transition. Future industries such as AI, autonomous driving, advanced semiconductors, and biotech all require massive upfront investment. Rival countries are engaged in an investment war to gain the upper hand. Jensen Huang, the Taiwanese American founder of NVIDIA, said at a groundbreaking ceremony for the company's local headquarters in Taipei on the 27th that he would invest $150 billion annually in Taiwan. He declared that chips, packaging, and AI supercomputers would be built there, and that Taiwan would be developed into the heart of the AI revolution. His plan is to firmly build an AI ecosystem with TSMC, the world's largest semiconductor foundry, as well as Foxconn and Wistron, among other AI server makers. These are key competitors to Korea's semiconductor industry.
If we miss the investment window by getting trapped in a distribution trap, no one can say what will happen to our future. Falling behind in technological competition could leave us behind in an instant. This is why Japan is once again emphasizing the importance of investment. We should not make the mistake of getting caught up in excess profit distribution and failing to look ahead. It is even more troubling when the government takes the lead, as that comes across as populist. The government's role is to ensure that profits are used for growth investment. It should act as a cool-headed mediator in the face of excessive union demands. Corporate profits must become investment capital that strengthens industrial competitiveness.