News from and on Japan, September 4 – 17, 2017

Japan’s #1 Instagram influencer walks on 4 legs; news on Japan’s export of nuclear plants … and Fukushima; Brexit is hurting really and of course: Kim Jong Un’s threats.

Over the last months I started this bi-weekly News from and on Japan – alas – with reports on North Korea’s actions. This time no difference. Obviously the Japanese government is considering how to respond – see below. However, keep reading because you will also learn how many centenarians Japan counts and who is Japan’s most influential Instagram personality.
  • Politics:
    • The more North Korean rockets, the higher PM Abe’s approval. Mid July approval rates were at a 20% low, but in a Yomiuri Shimbun poll one week ago, 50% of respondents thought highly of him, against a disapproval rate of 39%. “When respondents were asked about the reason for supporting Abe, many cited Abe’s proactive approach to North Korea’s nuclear test, including phone calls and consultations with U.S. President Donald Trump and South Korean President Moon Jae-in”, reports UPI. Similar figures on how to respond to North Korea: about 51% of respondents to the Yomiuri poll said they support adding further pressure on Pyongyang, but 38% said priority should be placed on dialogue.
    • Two days after this poll, Kim Jong Un fired another rockets and made his boldest statement to “destroy Japan with nuclear weapons” and “reduce the US mainland to ashes and darkness” in response to the countries’ effort to ramp up sanctions on the isolated east Asian nation. “The four islands of the [Japanese] archipelago should be sunken into the sea by the nuclear bomb of Juche,” the country’s Asia-Pacific Peace Committee said in a statement carried by state news agency KCNA. “Japan is no longer needed to exist near us.” Juche, or “self-reliance”, is the official ideology of North Korea, originally crafted in the 1950s by founding father Kim Il Sung – grandfather of the current supreme leader, Kim Jong Un.
    • And the debate in the Japanese government about adapting the Constitution continues to focus on its famous Article 9. This reads: “(1) Aspiring sincerely to an international peace based on justice and order, the Japanese people forever renounce war as a sovereign right of the nation and the threat or use of force as means of settling international disputes. (2) In order to accomplish the aim of the preceding paragraph, land, sea, and air forces, as well as other war potential, will never be maintained. The right of belligerency of the state will not be recognized.” 
      It seems all a matter of definition. Prime Minister Shinzo Abe wants simply to add a reference to Japan’s Self- Defense Forces to Article 9 and leave the article’s existing language as is, reports the Nikkei. “Others in the party argue that Abe’s proposal would directly contradict the existing clause that stipulates Japan shall not maintain “land, sea, and air forces, as well as other war potential.” In a 2012 proposal for a revised constitution, the LDP had suggested replacing the clause in question with a new section regarding Japan’s defensive forces. Former LDP Secretary-General Shigeru Ishiba noted during last week’s meeting that the party lacked a standard definition for the “right of belligerency,” which Article 9 also bans. “Without removing or revising [the clause against maintaining armed forces], the LDP’s conservative supporters will not give us their support,” Seishiro Eto, former vice speaker of the Diet’s lower house, said as well. Mr. Eto was DUJAT’s guest 2.5 years ago in Amsterdam. 

  • Economy:
    • Japan logged a record-high JPY 2.32 tln (EUR 17 bln) current account surplus in July, wrote the Nikkei. “The surplus in the primary income account, which reflects how much Japan earns from foreign investments, expanded 26.8 percent from a year ago to 2.15 trillion yen, the Finance Ministry said in a preliminary report.” The expansion is mainly thanks to an increase of dividends from overseas subsidiaries and the depreciation of the Japanese Yen against the US dollar and the EURO helped. Imports surged 17.7 percent from a year ago to JPY 5.83 tln while exports rose 15.2 percent to JPY 6.40 tln.
    • Let’s look to a chart with Japan’s export portfolio (2014 figures, two sources: Harvard’s Atlas of Economic Complexity and Cleveredge Trading, small changes in aggregated figures): cars take a big part and all transport combined adds up to apr. 22%. Machines and equipment incl. electronic parts count for apr. 37%. 
    • What is lagging behind in these export figures are agricultural products: Japan’s agri-export is very low, but ambitions are high. In 2016, Japan’s rice exports totaled 10,000 tons for the staple food alone and 24,000 tons including processed items. On September 8 Japan’s Ministry of Agriculture, Forestry and Fisheries set an ambitious goal of increasing annual rice exports to 100,000 tons by 2019. That is a tall order … (Japan Agri News).
    • … also given the reluctance with some trading partner such as EU to import certain Japanese agri-products such as products from the Fukushima area: the EU parliament opposed this week the bid to reduce testing of Fukushima food products (Japan Today). 

  • Corporate:
    • Nuclear energy plants are also (still) part of Japan’s export portfolio. The Japanese government announced some days ago that it wants to export a new generation of safer atomic power plants, so called High Temperature Gas Reactors, or HTGR’s. First target country is Poland that plans to buy / build apr. 20 reactors with a value of JPY 1 tln or EUR 7.5 bln. Competition is tough and is – as always – with Chinese companies as challengers (Nikkei).
    • Consolidation in auto-land: the development of electric, driverless, connected and shared cars force companies to combine forces and the alliance Renault, Nissan, Mitsubishi is following this road. The combination is the largest car manufacturing conglomerate and it manufactured more than 5 mln cars in the first 6 months of 2017 (Financial Times). My guess is that there will be two major Japanese groups, Toyota / Mazda / Subaru / Suzuki / Daihatsu / Yamaha Motor and the Renault / Nissan / Mitsubishi combi, with Honda as a “go by itself” manufacturer. 
      Note: I had the pleasure to meet last week with one of Japan’s largest investment funds that is considering investing in European “flying car” companies. Idea behind this: cities are designed for cars and trains, but personal mobility incl. flying cars will be the future.
    • Interesting read in Deutsche Welle about the envisioned exodus of Japanese companies in Great Britain. Even Toyota is reconsidering its strong UK presence after Brexit. “Britain leaving the European single market is becoming a clear disadvantage for Japanese companies with operations across the continent there, although there is still an expectation among most that the UK will remain at least closely connected to the European market,” Martin Schulz, a senior economist with the Fujitsu Research Institute, told DW. In the article also the announcement that Mitsubishi UFJ Securities Holdings has decided to apply for a license to establish a new subsidiary in Amsterdam and it will be transferring its European securities operations out of London.

  • Society:
    • Japan has spent some JPY 34.5 billion yen (EUR 226 million) in taxpayer funds on an underground “ice wall” around the crippled Fukushima Daiichi nuclear power plant, intended to reduce groundwater contamination. All in all there will be a 1.5km barrier of frozen earth around the crippled plant’s reactor buildings. “It is unclear precisely when the wall will be complete. The plan is to freeze soil 30 meters deep over the course of two or three months, completing the barrier as soon as this fall. But as the gap in the wall narrows, water flows through it more quickly, making soil there more difficult to freeze. It now appears that a dramatic improvement is not likely, though the wall will still require more than 1 billion yen per year (EUR 7.5 mln) in upkeep. The frozen-earth barrier is a temporary measure, “Some other type of wall should be considered as well.” (Nikkei). 
      See also this staggering video, first part released by NHK, the other part from various sources with some scientific facts on the effects of the contaminated water flushing into the ocean on food: https://www.youtube.com/watch?v=SHPMtXKf1sI
    • Japan has a record number of centenarians, reported Japan Today. No less that 67,824 people in Japan are older than 100 years, that is apr. 0.05% of Japan’s population of apr. 126 mln. Tokyo alone has nearly 6,000 inhabitants that are 100+. In the past centenarians were presented a cup of pure silver by the prime minister, but to cut costs this has been replaced by a silver-plated cup. Nevertheless, I would go for such a decoration.
    • Japan’s top 10 Instagram influencers: I wouldn’t have the faintest idea who that could be. Now I know: the # 1 is … a dog! Marutaro-chan has more than 2.6 million followers and will earn without any doubt handsome money for his boss. See also @marutaro. Most of Japan’s Instagram users are women between the ages of 20 and 34, a demographic called “F1” in marketing jargon, writes the Nikkei. These women are very responsive to information, and word spreads quickly among them. Unlike other social media platforms, Instagram is particularly effective at communicating with images.
Have a great and fruitful (working) week.
Radboud Molijn