Japan's government recently released its 2026 white paper on manufacturing industries. The headline finding: 60% of Japanese firms are now working on economic security measures, up from 40% the year before.

That sounds like progress.

It isn't.

Read the fine print. A large share of that 60% were merely collecting information on international affairs. In other words, they are reading the news and calling it strategy.

This is not a small distinction. It is the difference between a company that will survive the next supply chain shock and one that will not.

The shock is not coming. It is already here.

China has effectively halted exports of several critical heavy rare earth minerals and gallium to Japan for months. We are talking about dysprosium, terbium, yttrium oxide, and gallium — materials essential for semiconductors, electric vehicles, aerospace, and high-performance magnets. Japanese electronics manufacturers responded by building up six months of forward inventory.

That is a defensive scramble, not a strategy.

The white paper cited this directly, along with the risks of Middle East oil dependency made vivid by a de facto blockade of the Strait of Hormuz. These are not hypothetical scenarios that warrant monitoring. They are live disruptions demanding decisions.

And yet most Japanese firms are reading the news.

This is not a new lesson.

In 2010, China imposed a rare earth export embargo on Japan during a diplomatic dispute. At that point, Japan depended on China for 90% of its rare earth elements. The shock was brutal and immediate. In response, Japanese manufacturers, policymakers, and government agencies launched a serious, sustained de-risking effort. Japan partnered with Australia's Lynas Rare Earths. It developed processing capacity in Vietnam and Malaysia. Toyota and Hitachi Metals established supply chain partnerships across the region.

By 2025, Japan had reduced its rare earth dependence on China from 90% to around 60%.

Fifteen years of sustained effort to move the needle by 30 percentage points. And it still was not enough when China tightened controls again in January 2026.

The lesson from 2010 was clear. The response took fifteen years and remains incomplete. What exactly are the firms in the 60% cohort waiting for?

Toyota understood something the others didn't.

Toyota's new manufacturing plant in Toyota City — the first new assembly plant in Japan since 2012 — is not an act of nostalgia. It is a deliberate hedge. Toyota has shifted production of specific models to the United States to avoid tariffs. It is investing 730 billion yen in battery production at its Himeji Plant and another 2.5 billion dollars in a North Carolina battery facility. It has a Business Continuity Plan that treats localised production as a strategic asset, not a cost burden.

This is the same instinct Elon Musk showed when he built Tesla's supply chain around in-house control of critical chips and software. He was mocked for it in 2018. When the pandemic hit and every other automaker's supply chains buckled, Tesla fared well. The contrarian approach looked like genius because it was — not genius in the sense of impossible insight, but genius in the sense of doing what is obviously right before the crisis forces your hand. Musk has made numerous questionable business decisions since, in addition to a proclivity for far right politics and pursuit of power and influence, but he got the decision about semiconductor supply right.

Toyota is doing the same thing. The others are reading the news.

The real problem is not information. It is decision-making.

Strategy failures are rarely the result of insufficient data. Every company in Japan knows about the rare earth restrictions. Every CEO has read about the Strait of Hormuz. The information is available to everyone. That is precisely why acting on it is a leadership decision, not an analytical one.

A robust strategy is explicit about the assumptions on which it depends — and it has contingent responses ready for when those assumptions fail. A company that depends on Chinese rare earths for its production is making an assumption: that supply will remain available at acceptable cost and lead time. The question is not whether that assumption exists. It does, for every manufacturer in this situation. The question is whether it is named, monitored, and matched with a contingent response.

Most Japanese firms have not named their assumptions. They have not prepared contingent responses. They have collected information on international affairs and checked the economic security box.

That is not a strategy. That is current affairs knowledge disguised as strategy.

The white paper says companies need to make decisions without being deterred by short-term costs. I agree. But I would go further. Companies need to make decisions without being deterred by the absence of a government mandate.

The Economic Security Promotion Act targets critical infrastructure sectors. If you are not in one of those sectors, you are under no legal obligation to map your supply chain vulnerabilities. Many CEOs interpret this as permission to defer. It is not. It is simply the government deciding where to start. The absence of a mandate for your sector does not mean the risk does not exist. It means the government has not gotten to you yet.

The firms that will emerge from the next disruption in a stronger competitive position are not waiting. They are asking the questions that the white paper says most firms are avoiding: Where exactly am I exposed? What does that exposure mean for my ability to serve customers and compete? What would I do if the supply disappeared tomorrow? And — critically — what am I doing today to reduce that dependency before I have no choice?

A final word on urgency.

The white paper called for government leadership in fostering a sense of urgency. I understand the impulse, but I reject the premise. The sense of urgency should not come from government. It should come from the CEO.

A CEO who needs the government to tell them that China's rare earth restrictions and a blockaded strait represent strategic risks to their business is not operating with the level of strategic awareness their role demands. The information has been public for months. The risks have been named in every major business publication. The companies that are acting on it are not doing so because they received a government directive. They are doing so because their leaders decided that waiting is more dangerous than moving.

That is strategy on your own terms. Not strategy on the government's terms. Not strategy at the pace of regulation. Strategy built on a clear-eyed assessment of what must be true for your business to succeed — and what happens when it isn't.

The 40% of Japanese firms that are not even collecting information are in serious trouble. The 60% that are collecting information but not acting are in a different kind of trouble — the kind that is harder to see because it looks like diligence.

Reading the news is not a strategy. Deciding what to do about it is.