News from and on Japan, November 19 – December 2, 2017

The Emperor’s abdication is set for April 30, 2018, Japan’s most popular word in 2017, Tesla vs Toyota, Yes: Bitcoins are big coins in Japan and Japan’s lonely elderly

Bitcoin is the buzzword all over the world, also in Japan as the yen <> bitcoin trade is huge – and read below how big cryptocurrencies are in Japan. But there was more to report over the last two week, incl. the position of Narita Airport as a hub for transit passengers, the record profits of corporate Japan and the challenges Japan faces towards the care for its elderly inhabitants.
  • Politics:
    • Japan’s cabinet has agreed that the date of Emperor Akihito’s planned abdication will be in April 30, 2019, reports Deutsch Welle. “According to legend, the Chrysanthemum Throne is the oldest continuing monarchy in the world, founded in 660 BC by Emperor Jimmu. Emperor Akihito, who has reigned since 1989, is the 125th direct descendant of Jimmu.” 
      With the Emperor’s granddaughter Mako’s marriage to a commoner next November (implying that she will no longer be member of the imperial family), the imperial family will only count 18 members – 13 of whom are women – and only four heirs to the throne: Crown Prince Naruhito, his younger brother Prince Akishino and Akishino’s son, 11-year-old Prince Hisahito, and the emperor’s 82-year-old brother, Prince Masahito.
    • Long read in The Diplomat, a Toko-based online magazine on developments in Asia, on “Japan’s Increasingly Tough Defense Choices”. North-Korea is an obvious threat, China’s assertiveness in the region and the rapid modernization of the People’s Liberation Army Navy (PLAN) and the Chinese Coast Guard are another point of great concern, but also Russia’s frequent intrusions in Japan’s airspace. 
      And then there is Mr. Trump’s over-confidence, provided that Japan’s buys enough American equipment. At a Nov. 6 press conference with US President Donald Trump, Japanese PM Abe was asked if Japan would respond to North Korean missile launches by shooting them down. “I could just take a piece of the Prime Minister’s answer,” Trump interjected, “He will shoot them out of the sky when he completes the purchase of lots of additional military equipment from the United States. He will easily shoot them out of the sky, just like we shot something out of the sky the other day in Saudi Arabia.” But Trump was wrong, writes Quartz: “the US can’t easily shoot down missiles like the one North Korea tested yesterday, which are designed to launch nuclear weapons. The Saudi military did intercept a missile using a US-made Patriot missile defense system, but it was a medium-range missile moving at far slower speeds than a nuclear warhead launched by an inter-continental ballistic missile.” (See also: https://qz.com/1141900/north-korea-missile-the-us-cant-count-on-shooting-down-north-korean-nuclear-missiles)
    • Japan may have one of the world’s most powerful armies, with the eighth-largest budget (JPY 5.2 tln = EUR 40 bln), a larger navy than France and Britain combined, over 1,600 aircraft and four flat-top carriers. Its 300,000 troops are superbly equipped. But, reports Economist, the army’s biggest challenge is demographic. “Japan’s population of 18-year-olds has shrunk by more than half a million over the past two decades, and military recruitment has long been a problem. That could worsen as the prospect of real combat increases. After seven decades living in peace, Japan has yet to mentally recalibrate for the prospect – however remote – of war.”

  • Economy:
    • It doesn’t look like a very important fact – but the implications could be big: Narita, Japan’s major airport, is seeing increasing numbers of passengers – mainly toursits into Japan – but it is loosing ground to Beijing and Seoul for transit passengers. In particular US airlines are replacing their Narita and Haneda bound flights for Beijing and Seoul.Both cities are expanding their airport facilities rapidly and Beijing Airport will be able to handle 70 mln, Seoul’s Incheon 72 mln. Both are increasingly preferred for transit. Narita handled 39 mln passengers in 2016. Big question obviously is: will the Tokyo 2020 Olympics create a lasting tourist boom to Japan?
    • Let’s talk Bitcoin, dubbed by Japan Today as an “Uber Currency”. Whoever the founder of Bitcoin might be, he is known by a very Japanese name, Satoshi Nakamoto and Japan accounts with South Korea for approximately 74 percent of global bitcoin trades. According to several cryptocurrency market data providers including CryptoCompare, the Japanese bitcoin exchange market alone accounts for 64 percent of global bitcoin trades, nearly twice as large as the US, with premium rates. “While the premium rate in Japan is not as high as South Korea, it still significantly higher than that of other major regions such as the US. At the time of reporting, bitcoin is being traded at over USD 11,500 in Japan, approximately USD 1,000 higher than that of the global bitcoin average price.” (Cryptocoin News).
    • Japan’s Cabinet last year approved amendments to the law making bitcoin an officially recognized currency. The new law places virtual currency exchanges under the control of the Japanese Financial Services Agency. The exchanges must be registered and must verify the identity of customers opening accounts. But like anywhere, also in Japan Bitcoin is used for whitewashing and fraud: according to Cryptocoin News, Japan’s Cryptocurrency Exchanges reported 170 money-laundering cases from April – October 2017, involving organized crime (“yakuza”) and white washing. 

  • Corporate:
    • “Corporate Japan still looking for US-like profitability, ranking shows”, headed Nikkei last week – and it compared the profitability of Japanese companies vs. US companies. Toyota, Japan’s #1, reported “a net profit of JPY 458.2 bln  (USD 4.08 bln) in the July-September period, up 16% from a year earlier, thanks to the yen’s depreciation. But Apple, the No. 1 profit generator in the U.S., registered a net profit of $10.7 billion, 2.6 times more than Toyota’s.” On a peer-to-peer basis most US companies score better, save the automobile companies. 
      Japan’s corporate profits rose to record highs over the period July – September 2017, see https://www3.nhk.or.jp/nhkworld/en/news/20171201_31/, also thanks to the relatively cheap yen.
    • Last week it was 20 years ago that Yamaichi Securities collapsed. We all remember its president, Shohei Nozawa, who burst into tears at a press-conference in which he declared the securities company bankrupt. With a lot of government pressure, the banking sector was drastically reformed, with three megabanks as a result. Not enough reform, states Nikkei. “It’s time for Japan to reboot its financial reforms”. Follows an analysis of what is to be done. “Around the time of the Yamaichi crisis, the government of then-Prime Minister Ryutaro Hashimoto stepped up the Japanese version of Big Bang financial deregulation. The move was aimed at allowing market mechanisms to play a role in financial intermediation to facilitate the flow of risk money and thereby help revitalize economic activity. Unfortunately, as things stand now, large amounts of funds are simply stagnating. Though personal financial assets in Japan have increased from JPY 1,200 tln (USD 10.7 tln) to JPY 1,800 tln over the past two decades, roughly half of that amount is sitting in bank accounts. Meanwhile the tendency among companies to keep surplus funds on hand in case of emergencies has only grown stronger. The sluggish movement of personal and corporate money leaves startups and other businesses short of funds for growth, a factor behind Japan’s slow industrial metabolism.”
    • Tesla or Toyota? Both companies recently showed their pilot trucks, Tesla’s truck is battery powered, Toyota’s truck hydrogen powered. Toyota is clearly looking to further develop simultaneously its electric and fuel cell technology and is also installing hydrogen filling stations. Apart from the car industry, another big prize seems to be the aviation industry, that is not keen on heavy electric batteries (Nikkei).

  • Society:
    • Two sad stories about “kodokushi” or “dying alone” in Japan. Japan Today writes that kodokushi is a growing problem in Japan, where 27.7% of the population is aged over 65 and many people are giving up trying to find partners in middle age, opting instead for a solitary existence. “Experts say a combination of uniquely Japanese cultural, social and demographic factors have compounded the problem. There are no official figures for the number of people dying alone who stay unnoticed for days and weeks but most experts estimate it at 30,000 per year. Yoshinori Ishimi, who runs the Anshin Net service that cleans up afterwards, believes the true figure is ‘twice or three times that.’ Modern Japan has experienced sweeping cultural and economic changes in recent decades but demographers say the country’s social safety net has failed to keep pace – with the burden still on the family to look after the elderly. ‘In Japan, family has long served as the strong foundation of social support of all kinds,’ said Katsuhiko Fujimori, a well-known expert on welfare issues. ‘But now things are changing with the rise of single people and the size of the family becoming smaller,’ added Fujimori, chief research associate at Mizuho Information and Research Institute. In the past three decades, Japan has seen the share of single-occupant households more than double to 14.5 percent of the total population, the rise driven mainly by men in their 50s and women in their 80s and older. Marriage rates are also dropping, with experts saying many men fear their job is too precarious to settle down and start a family and more women entering the workforce and no longer needing a husband to provide for them. One in four 50-year-old Japanese men has never been married. By 2030, the figure is estimated to rise to one in three.The problem is exacerbated by a deep-rooted Japanese cultural tendency to turn to family rather than neighbours in times of trouble. … Some 15 percent of elderly Japanese people living alone, report having only one conversation a week, compared to five percent of their peers in Sweden, six percent in the US and eight percent in Germany, according to a Japanese government study.” 
      The New York Times’ journalist Norimitsu Onishi wrote a long article; I herewith attach the text, but here is the link to this article (perhaps paywall), where the persons mentioned have face. https://www.nytimes.com/2017/11/30/world/asia/japan-lonely-deaths-the-end.html?_r=0
    • What was the most popular word in Japan in 2017? In Japan, like in the Netherlands, this word reflects often a serious political or societal issue. Van Dale, a Dutch dictionary, has ranked up apr. 30 words and we can vote until December 17. Contenders are very different words, incl. (translated into English) “crypto-fever”, “app-accident”, “pity-sex” and “brexit-booty”. The most popular word for 2017 in Japan has been selected by publisher Jiyukokuminsha and a panel and the winner is: “sontaku”, 忖度, meaning “to infer what the other person is thinking when the person does not express anything explicitly.” The word refers to PM Shinzo Abe’s political troubles earlier this year in the Moritomo Gakuen scandal. Among the contenders in Japan was also one German word: “Aufheben”, a word used by Yuriko Koike, Tokyo’s Governor (Quartz).
    • Let’s finish with some festive pictures: the best city places to see the festive winter illumination. 14 spots in Tokyo have been selected by Savvy Tokyo. For all of you who know Tokyo well, it is great to see how the colored lights can change a spot. For those among you that haven’t been in Tokyo (yet): equally interesting to see how this great metropole can dress itself up. 
Have a great week!
Radboud Molijn
Global Bridges BV / グローバル・ブリッジズ B.V. for DUJAT / Dutch & Japanese Trade Federation