DUJAT News Coverage on Japan week 17 – 30 October 2016

Japan’s consumer prices fell again, for seven months in a row – and that’s a serious problem for the government that is looking desperately to “launch inflation”. Then: Carlos Ghosn proved to be – again – Japan’s automotive saviour when he took over control of Mitsubishi Motors. Whaling and Japan … it is a difficult combination. Here the news from and on Japan from October 17 – 30.

  • Politics:
    • Japan has seen a rapid succession of its Prime Ministers, from the start of Heisei (the reign of the current Emperor Akihito that started in 1989) to now there were no less than 17 PM’s in a period of 27 years = 1.5 year on average.PM Shinzo Abe will raise the average considerable, the more as his party LDP plans to revise party rules to allow its president three consecutive three-year terms, up from two now. Abe is currently in his second consecutive term, which will end in September 2018. At that time, he will have served a total of around seven years in the position and as prime minister, including an aborted first run from September 2006 to September 2007. The second Abe government has prevailed since December 2012 (Nikkei).
    • High time on the diplomatic front, writes the The Japan News / Yomiuri, as in the next two months, no less than ten Heads of State will visit Japan, incl. Russian President Putin (aim: to resolve he territorial disputes between Japan and Russia), President Razak of Malaysia (to sell patrol ships), and India’s PM Modi. From November 18 – 20 Mr. Abe is expected to meet with Chinese Premier Li Keqiang on the sidelines of a trilateral Japan- China-South Korea summit meeting that may take place in early December in Tokyo.President “Hurricane Duterte” of the Philippines just left Japan and repeated his thanks to Japan “for its role it has played in our country’s industrialisation.” Last week Tokyo pledged JPY 5 billion in yen loans for agricultural development in the southern Philippine island of Mindanao, where Duterte long served as mayor of the city of Davao. To strengthen its commitment to the maritime security of the region, Tokyo also pledged a loan of some ¥16.5 billion to build two vessels for the Filipino Coast Guard to bolster rescue missions and law enforcement.
    • For those among you who appreciate a long-read on Japan’s deeper politics, or better: on what some of the key decision makers in the current government really think, read this article from the Asia Pacific / Japan Focus magazine, about Nippon Kaigi. Nippon Kaigi (NK, the “Japan Conference”) is Japan’s largest and most powerful conservative right-wing organisation, whose members include current Prime Minister Abe and most of his Cabinet. This nationalist non-party political group with about 38,000 members, was relatively unknown until recently. “NK adherents profess to promote Japan’s prosperity and international prestige, to restore Japan’s national pride and unify the country. These goals seem honourable and appealing to many Japanese. Nonetheless, since NK supporters are uncritical in their affirmation of the imperial past and suppression of civil liberties, they may achieve the opposite results. Herein lies their contradictions and paradoxes.”

 

  • Economy:
    • Japan’s consumer prices fell for a seventh straight month and household spending slumped again in September, reports Bloomberg, underscoring the challenges Prime Minister Shinzo Abe and Bank of Japan Governor Haruhiko Kuroda face in trying to revive the world’s third-largest economy. “The downbeat inflation and spending data came despite an increasingly tight labor market. The unemployment rate slipped to 3 percent in September, equal to the lowest since 1995. The low jobless figure hasn’t yet resulted in significant wage gains, a key element of efforts to reflate Japan’s economy.”
    • In Japan’s greying society, there are more and more entrepreneurs over 60 years old, apr. one-third. But perhaps more worrying is the decreasing number of entrepreneurs: the total number of small and medium-sized enterprises and micro-businesses in Japan has fallen steadily in recent years, according to a government agency. Prime Minister Shinzo Abe took office vowing to transform the country into an “entrepreneurial powerhouse,” but people are growing more afraid of risk.Risk-averseness is something that you would expect from older people, but the opposite is true in Japan. It could be that Japanese employees get pensioned rather early (the Japanese government has decided to raise the official age of retirement to age 65 by 2025. This compares to 61 in April 2013 and 62 in 2016), so people are relatively young enough to start a second career, but with less  younger people looking to be entrepreneur, it will create a problem for the future. Japan ranked next to last among 70 countries in a global survey of “early-stage entrepreneurial activity,” according to 2014 data from the Global Entrepreneurship Monitor. Japanese demonstrated the second-highest level of fear of failure, the data showed (Bloomberg).
    • According to the latest survey by the Ministry of Health, Labor and Welfare, 910,000 foreigners work in Japan. While they account for only around 1% of the nation’s workforce, they are highly productive,writes te Nikkei. “The government maintains that foreign workers should be limited to engineers with advanced expertise while that of unskilled workers should be limited.” Nevertheless, foreigners have become indispensable workers in the Japanese economy. Where once they were employed to make up for labor shortages, foreign workers are now leading the nation’s economic growth.

 

  • Corporate:
    • “Le Cost Killer” was Carlos Ghosn’s nickname when he turned around Renault, and later Nissan and now with Mitsubishi Motors. I would call him the King of Cars as he is now heading three major car manufacturers. Nissan Motor has completed a JPY 237 billion or EUR 2.2 bln acquisition of a 34% stake in Mitsubishi Motors and it is now Mitsubishi Motors’ largest shareholder. He will keep Osama Masuko as Mitsubishi Motors’ President, and Masuko’s staying “was a very important condition for us, “ claimed Ghosn in the Nikkei. “We are sending a clear message that we believe in the underlying strength of Japanese car-making,” he said. Somehow it is, let’s call it peculiar, that this drive for efficiency had to come from a foreigner. “It’s easier for Ghosn to do things he did at Nissan, such as combining production platforms, cutting costs and even closing plants,” SBI Securities analyst Koji Endo told the AFP news agency as reported by Deutsche Welle. “In order to implement such massive restructuring, you need someone as powerful as Ghosn to get things going.”
    • In another automotive segment, the EUR 43 bln acquisition of Dutch company NXP by American company Qualcomm causes headache in Japan. NXP has been acquired by Qualcomm as it has a leading 13.8% share of the market for automotive chips – a sector destined for explosive growth as self-driving cars come into their own. Japanese company Renesas (formerly NEC, Hitachi and Mitsubishi Electric semiconductors) focuses on automotive chips with a 9.3% market share, and it has been engrossed in an intense competition with NXP for devices like engine controllers. Toshiba is battling in the market for chips that assess a car’s surroundings based on camera feeds. But neither Japanese company compares to NXP in terms of the scale of their business in this sector, claim the Nikkei. “If NXP spends extravagantly on R&D once it comes under the wing of Qualcomm, Japanese chipmakers risk falling behind on cutting-edge technologies.”Chinese investors bought already two divisions of NXP, its standard chips division in June this year and last year NXP’s performance amplifier division.
    • Japan’s export engine built around cars and electronics mate have stalled, but the future could be using the country’s gourmet culture to cast itself as a purveyor of high-quality food, reports Reuters. In 2015, Japan’s food and marine products exports were worth JPY 745.1 billion yen (EUR 7 billion) according to the Agriculture Ministry, which is only 1 percent of total exports of JPY 75.6 trillion. To compare: auto exports were JPY 10.4 trillion or almost 14 percent of total shipments, while semiconductor and electronic parts brought in JPY 3.9 trillion, about 5 percent of total exports. PM Abe’s ambition is to raise Japan’ agriculture export to JPY 1 trillion. “Italy uses its food culture to drive food exports, and France is doing the same thing with wine,” said Katsunori Nakazawa, head of the export promotion division at the Agriculture Ministry. “I want this for Japanese food as well.If our farmers don’t sell abroad, our agricultural industry won’t grow.” The recipe seems pretty simple: better logistics, an advertising blitz and a splash of social media buzz with the tag #japanese food – and some lobbying of foreign governments. Hong Kong is now Japan’s main destination for its food products, the USA is Japan’s second, followed by Taiwan, mainland China and South Korea, the agriculture ministry said. Together, the top five destinations accounted for about 70 percent of food exports last year. To Europe the sales of rice wine and green tea are booming.

 

  • Society:
    • The World Economic Forum in Davos downgraded Japan to 111th in the world ranking of gender equality, citing big gaps between men and women in politics and economics, reports NHK News.Japan’s downgrade from 101st last year was attributable to poor records in political empowerment and economic opportunity. The country received relatively high marks in educational attainment and health and survival. This year, Japan was listed as the least gender-equal country among the Group of 7 industrialised countries. Germany ranked 13th, France 17th, the United Kingdom 20th, the United States 45th and China 99th. For comparison, also the Netherlands is disappointing: 16th after Rwanda (5), Philippines (7) and Nicaragua (10).
    • Controversial news from the IWC, the International Whaling Commission, that passed last week by simple majority, a resolution to more stringently review permits for Japan’s “scientific” whale-hunting program, according to Deutsche Welle. Japan is accused of abusing an exemption to a 30-year moratorium on commercial hunting of whales, by continuing to hunt whales for “scientific research.” Japan kills about 330 whales each year for “research.” However, meat from the whales ends up in supermarkets and restaurants, and only very few peer-reviewed papers have emerged from the hunt. Under the new rules, Japan must now seek approval from the IWC to hunt whales for so-called scientific research. At the same time, the IWC decided to set up a fund to help cash-strapped developing nations and make a Japanese official, Joji Morishita  the next chairman. The new fund, proposed by Japan and other countries as the IWC wrapped up its general meeting in Slovenia on Friday, is aimed at providing financial assistance to countries unable to send delegates to its meetings. This year’s meeting was attended by about 65 of 88 members.
    • And now for something completely different: as you might know, in Japan gambling is illegal in except for kōei kyōgi, some selected public sports where people in Japan can gamble on legally. There are four different types of kōei kyōgi: horse racing, bicycle racing (keirin), powerboat racing, and asphalt speedway motorcycle racing. These four are allowed by special laws and are regulated by local governments or governmental corporations. But now a bill proposed by the ruling LDP to introduce integrated resorts (IRs), with hotels, casinos, malls and other entertainment facilities, stands a chance of being debated in parliament before year-end. As a result Japan may overtake Singapore as Asia’s gaming hub.The Abe government is planning to have this legislation approved and the potential economic advantages could be massive. IRs could inject EUR 36 billion a year into the economy. And not only would the economy form a new source of job creation and tax revenue, but legalised casinos would help Japan reach its goal of attracting 20 million visitors a year by 2020. 
      My favourite way of gambling in Japan is Jan-Ken-Pon or Rock-Paper-Scissors. Why don’t you practise this game with two of your friends / relatives? See https://en.wikipedia.org/wiki/Rock–paper–scissors#/media/File:Rock-paper-scissors.svg and click to the next pictures. There are in Japan (illegal) sites where Japanese gamblers can play rock-paper-scissors and win cash prizes. The punters were offered to purchase betting tickets for JPY 315. They could get JPY 1,000 if they won no less than 3 times in a row. JPY 10,000 was the prize for those who won 5 times in a row. Researchers at the University of Tokyo have created a robot hand that has a 100% winning rate playing rock–paper–scissors. Using a high-speed camera, the robot recognises within one millisecond which shape the human hand is making, then produces the corresponding winning shape. So I’m sure that within the foreseeable future, trained people will be able to mimic this robot – and win. Shall we bet on this?

 

 

Have a great Monday!

 

Radboud Molijn