Yu Ping (second left), vice chairman of CCPIT, Ji Keliang (second right), chairman of Moutai Group, and two Chinese entrepreneurs pose at the "China's night" banquet in Tokyo during the Japan APEC CEO Summit. [Photo / China Daily]

YOKOHAMA, Japan- While territorial disputes have muddied the waters of Sino-Japanese relations in recent months, Chinese business leaders were able to skirt this issue in talks with their Japanese counterparts, while state leaders of 21 Pacific Rim countries gathered here for the annual APEC meeting earlier this month.

On the sidelines of the APEC CEO Summit, heads of China's State-owned enterprises (SOE) like Wang Jianzhong, chairman of China Mobile Communication Corp, and Ji Keliang, chairman of the Moutai Group, and other Chinese entrepreneurs were looking for business opportunities in the neighboring country.

In one event of the summit, on Nov 12, the "China Night" banquet, more than 200 Chinese and Japanese business executives met to exchange ideas on business opportunities and market potential in two of the world's major economies. The absence of these two delegations from the main conference venue left the auditorium almost half empty, or even a little cheerless.

The event, hosted by Nippon Keidanren (the Japan Business Federation) and the China Council for the Promotion of International Trade (CCPIT), featured Japanese sushi and Chinese folk dancing under the dazzling lights of the ballroom.

A group of Chinese college students who served as "APEC voices of the future", performed onstage at the banquet in a show of Chinese culture.

Hiromasa Yonekura, chairman of Nippon Keidanren, said that as much as 80 percent of Japanese companies' revenues are generated in the APEC region.

"We believe it's essential to expand the free-trade agreement networks as basic institutional infrastructure," Yonekura said, adding that Japan should conclude bilateral and regional FTAs "as soon as possible".

Asia-Pacific leaders have committed themselves to a Pacific-wide free trade zone, but Japan may prove to be a key test case on how realistic that vision is.

Wider markets

Some Japanese business representatives advocate that Japan needs to open up its markets and embrace free trade, or risk getting left behind regional rivals.

"Japan is determined to reopen itself, " said Prime Minister Naoto Kan, pointing to the historic role that Yokohama, host of the summit, played more than 150 years ago as one of the first ports to open to the West.

Japan's target in further opening up, now, however, might not just be the West, but the emerging dynamic market like China.

"I believe that if Japan further opens its economy, there is huge investment potential for Chinese businessmen in trade and real estate investments," said Huang Xianzhong, president of the Wenzhou Renrui Investment and Guaranty Co Ltd.

Wenzhou, in Zhejiang province, is famous for its manufacturing and exports and being on the frontline of China's reforms and opening-up.

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China Mobile's Wang said that Japan has the technologies that China needs to learn from and that he hopes the two can increase cooperation in the telecommunications sector.

Moutai's Ji said it is a perfect situation if China and Japan strengthen bilateral trade ties and that Maotai will be interested in partnerships with Japanese alcoholic drinks producers.

"China is already our largest manufacturing base," commented Takashi Matano, executive director of YKK AP Inc, a Japanese leading construction equipment producer.

Matano said his company plans to expand its production capabilities in China in the next few years.

By slashing tariffs and other import and investment barriers, the Asia-Pacific Free Trade Area in the future could cover half the world's commerce, said Osamu Hosokubo, of Japan Asia Investment China Co Ltd.

China's transformation into the world's second-largest economy - overtaking Japan this year - and the dynamism that has helped it lead the global recovery, was made possible by opening to foreign trade and investment, said Erh-fei Liu, chief executive with Merrill Lynch China.

Big Japanese corporations are urging Japan's prime minister to join FTA or it could put Japan at a disadvantage. But Naoto Kan is already facing an intense fight from farmers who worry that a flood of cheaper agricultural products will ruin them.

Just before China's President Hu Jintao met with the Japanese Prime Minister Naoto Kan at the APEC Summit, thousands of flag-waving Japanese, angry over the offshore island dispute, held a protest march.