Late in 2006, Matthews Asia was wrapping up a special report titled “Japan Reawakens.” The timing of that AsiaNow publication, just ahead of the Global Financial Crisis, was unfortunate to say the least. With the ensuing economic turmoil, Japan fell asleep again, sliding off the radar screens of many investors. But as interest in Japan has more recently re-emerged, I thought it would be important for us to take a look back and consider what we previously published. Has Japan evolved the way we had envisioned? What’s changed and what hasn’t?

Are collaborative robotsindustrial robots made to better work alongside humanslikely to be well-received in the market? How feasible is a car made from a 3D printer? This week Portfolio Manager Kenichi Amaki discusses his findings from the International Manufacturing Technology Show in Chicago.

The reversal of Japan's equity markets so far this year, have led investors to wonder, "Is Abenomics working?" There are hundreds of components that comprise this economic plan, and among the recent successes has been job creation. However, macroeconomic statistics point to some emerging near-term challenges, including still-muted wage growth. This month Kenichi Amaki takes a look at both current pressures and progress in Japan.

Many in Tokyo erupted with delight and excitement following the recent news of the citys selection as host to the 2020 Summer Olympic Games. Following a failed bid in 2016, Tokyo edged out rivals Istanbul and Madrid on its way to becoming the first Asian city to host the Games for a second time.

Matthews Asias investment team members regularly travel across Asia to conduct research. Between meeting with management teams, touring factories and catching flights from one destination to the next, we do, on occasion, need to eat. Sometimes its room service at midnight while typing up meeting notes, other times we may try some local food. For me, as a ramen lover, the growing number of ramen restaurants across Asia has been a real treat. Apparently, Im not alone in that thought.

Japans stock market continues to rise while its currency heads in the other direction. Its new leaders, now enjoying high approval ratings, are battling deflation and trying to jump-start its economy with a new determination. This month Kenichi Amaki takes a look at what, if anything, is different this time.

Japan's politics have entered 2013 with a mixed freshness. Former Prime Minister Shinzo Abe has clinched a rare second shot at the prime minister's post. His first term, which began in late 2006, lasted only about a year and ended with his sudden resignation. But following its landslide victory last month, his Liberal Democratic Party (LDP) has secured a two-thirds majority in the 480-seat Lower House, giving it the constitutional power to override Upper House opposition, where no single party holds a majority, on almost all issues.

I just returned from a two-week trip to Asia, meeting with companies in Japan, Indonesia and Singapore. One notable change I observed in Tokyo - and confirmed in Jakarta - was the emergence of Indonesia as an investment destination for Japanese companies. All of the auto-related companies I met with in Japan were either building or had plans to build new capacity in Indonesia.

In mid-February, the Bank of Japan surprised markets with an expansion of its Asset Purchase Program, Japans version of quantitative easing. At the same time, the BOJ reworded its stance regarding inflation, revising its quantitative easing understanding to a goal and formally adopting an inflation target of 1%. Equity markets reacted positively, prompting foreign investors to pour more than US$5 billion into Japanese stocks and futures over just a 2-week period. The yen weakened to levels not seen since May 2011, and the currency seems to have broken from its 5-year appreciation trend.

Conservation measures helped lower peak electricity consumption by 18% compared to last year. The measures, along with a faster-than-expected upturn in thermal electricity generation capacity, helped Japan avoid any rolling blackouts this summer.And in early September, government restrictions on electricity usage were lifted. Given the public disapproval of Japanese power companies following the nuclear incidents this year, the time seems ripe for discourse over fullscale industry liberalization. Whether the equally unpopular Democratic Party of Japan can achieve that goal remains to be seen.

I recently spent two weeks meeting with management teams from various firms across Japan during my first trip back since the March earthquake. My overall impression was that the environment there post-disaster is still quite mixed.

On Friday March 11, 2011, the largest earthquake on record in Japanese history struck northeastern Japan. A devastating tsunami followed with 30 foot waves swallowing entire cities across the Pacific coastline. The full scope of the damage is still unknown, though the confirmed death toll has already exceeded 1,600, and is expected to rise significantly. Several cities and villages remain completely isolated, accessible only by helicopter. I was on a flight over the Pacific heading into Tokyo when all of this was happening. Passengers were informed of the tragedy an hour before landing.

The stereotype held by many overseas investors is that Japanese companies have slow growth, low margins, low capital efficiency and lots of cash but nothing to use it on. Investors must not forget, however, that Japan is still the third-largest economy in the world. With a gross domestic product of more than $5 trillion U.S., there is more than enough room for small entrepreneurial companies with innovative ideas to achieve growth, even in Japan's domestic market. Although these companies are still the exception, they are growing in numbers, representing the emergence of a new Japan.

After experiencing swift growth in 2009, China has become the world's largest auto market in terms of unit sales. With approximately 80 manufacturers now competing for a share of this immense market, China's car industry is also quickly becoming the world's most competitive. The argument for investing in this market is compelling. Not only is penetration so far still low, and thus full of potential, the industry is growing faster than China?s overall GDP. This is not to say, however, that the growth will be in a straight line

While most Japanese companies are still cautious over the medium term, the tone is certainly becoming upbeat. Management teams are gaining confidence as the economy recovers, which bodes well for the outlook on capital expenditure and consumption. With their high operating leverage, profits at Japanese manufacturers tend to rebound quickly when sales start to grow. Japan has been the best performer among major global equity markets so far this year, and we hope to see further improvements soon.