Sayonara decline! Japan is globetrotting again Michael Woodford of Olympus. Sir Howard Stringer of Sony. Craig Naylor of Nippon Sheet Glass. The cavalcade of foreign executives to leave the helm of Japanese companies in recent months is long. Shorter is the list of those who remain. Easily the most famous of whom is Carlos Ghosn, the Brazilian-born French businessman who still heads Nissan after coming to Japan a decade ago. No wonder people have started calling him Ghosn Alone. The parade of departures - Mr Woodford's after helpfully exposing a $1bn fraud - has given the impression that corporate Japan is retreating from the world. A word one hears a lot in Tokyo these days is uchi-muki (inward-looking) to describe the phenomenon of a country drawing in on itself. David Pilling But look at corporate Japan and this impression has one slight flaw: it is the exact reversal of the truth. Foreign executives may be leaving Japan but Japanese ones are flocking abroad. They may not be making the splashy deals that grab headlines. Yet Japanese companies are second only to those of the US in making foreign acquisitions. In the first five months of 2012 alone, according to Dealogic, Japanese companies spent $35.4bn on foreign targets. That puts them on track to equal last year's record of $83.7bn. This year, Japanese companies have accounted for 11 per cent of all cross-border deals by value, against 9 per cent for 2011 and just 2-3 per cent for most years in the past decade. Japanese companies, in other words, are substantially ramping up their international push. Last year they spent $25bn more than Chinese companies. True, no one really noticed. That is because Japanese purchases, shocking in the late 1980s, have become routine. Who could forget, for instance, this year's $1bn grab by Glory, Japan's top cash-handling machine manufacturer, for Talaris Topco, its UK rival? If truth be told, the deal never made the pages of the Financial Times. Or Asahi Kasei's bold $2.2bn acquisition of Zoll Medical? Even deals that did make ripples, such as Marubeni's $5.6bn bid for Gavilon, a US grain trader, have hardly set the world alight. Yet these are precisely the deals Japanese companies should be making. Of course, the merits of these particular acquisitions have yet to be tested. Glory was punished by the markets for what some considered a risky foray. But these are far from the vanity acquisitions of the Rockefeller Centre or Pebble Beach for which Japanese companies were once famous. It is not just acquisitions. Japanese companies, spurred on to look overseas by a flat domestic market and fears of energy shortages, are quietly shifting production abroad. By 2014, according to Jesper Koll, director of equity research at JPMorgan, more than three-quarters of Japanese cars will be produced overseas. In 2005, it was just half. It is hardly surprising that Japanese companies should be looking abroad. Emerging markets, in particular, offer faster growth while the strong yen, now at roughly Y79 to the dollar, makes acquisitions seem cheap. In January, Yukio Edano, trade and industry minister, told the FT that Japanese businesses "should use the strong yen assertively to invest and buy things." They have taken him at his word. Mr Edano also pointed out that Japan, with its nuclear plants closing one by one, was short on resources. So we need to use this opportunity to firmly secure rights to energy and commodities. Again, Japanese companies are responding. Four of the top 10 deals made this year have been in oil and gas, with purchases in Australia, Canada, the US and UK. Foreign acquisitions are a logical step for Japanese companies. Still, they should be careful. They have a tendency to overpay. Since 2000, they have forked out an average premium of 28 per cent above the previous day's closing price, 5 percentage points above the global norm. They are also a little too honourable. Daiichi Sankyo stuck to its offer for Ranbaxy even when the Indian drugmaker's share price wilted. Daiichi ended up taking a Y360bn hit when it was found that Ranbaxy had serious regulatory problems in the US. Nor have Japanese companies always been good at integrating their foreign acquisitions or at extracting synergies. They have at times lacked the nous to do well in emerging markets, producing goods that are too pricey for poorer consumers. Still, one should not exaggerate the pitfalls nor worry excessively about what is sometimes called "hollowing out." As Japan ages and its economy matures, it is right and proper that its companies look abroad for growth. Some will doubtless fail. But the fact they are venturing forth in increasing numbers is a sign of continued vigour in corporate Japan - not, as some would have it, of interminable decline.