DUJAT News Coverage on Japan week 26 September – 2 October 2016

It is difficult to make economic policy when there is no agreement on economic data between the government and the Bank of Japan. How much did Japan’s economy actually grow in 2014? A big difference in answers. Then Brexit: Nissan delays its investments in Sunderland as long as it isn’t clear why Brexit will look. And: the Financial Times reported a worrying gap in defense spending between Japan and China.
Here the News from and on Japan in the week of September 26, 2016.

  • Politics:
    • The Diplomat, an on-line Tokyo based magazine, published last week an interesting article: “Japan and China have more in common than they realize – including their particular strain of nationalism.” It describes the underlying ideologies in Japan and China, the Nippon Kaigi and the CPC or Communist Party of China. But, as The Diplomat states, “denial of fact, creation and nurturing of fictions, asserting exceptionalism – there’s plenty of that going around in this part of the world”, and that is worrying. The CPC and Nippon Kaigi ate “Not So Strange Bedfellows”, says the magazine. “The forebears of the CPC and Nippon Kaigi were arch enemies – the rulers of Imperial Japan claimed to detest communism, while the CPC stakes its claim to legitimacy in part by asserting (mostly falsely) that they, not the Kuomintang of Chiang Kai-Shek, dedicated themselves to expelling the Japanese invaders from 1931-1945.”
      I added an article in the Huffington Post by Yuriko Koike, Tokyo’s Governor, in which she praises Tokyo: “Tokyo is Japan’s city of romance and youthful ambition, and the home to both our imperial past and our J-pop present. It is our Silicon Valley, our Wall Street and our Washington, D.C. It is an ancient city that reinvents itself constantly and in surprising ways.”
    • Last Monday PM Shinzo Abe gave a policy speech before plenary sessions of the House of Representatives and the House of Councillors to mark the convocation of the extraordinary 66-day Diet session that will run through Nov. 30. The Chicago Tribune reported what PM Abe indicated as the most important economic and diplomatic issues: the change in the Constitution, in both Diet chambers, the possible abdication of the Emperor, reform to working styles, including realisation of “equal pay for equal work” (so: employees and temp workers should have equal pay), the discussions with Russia to resolve northern territories issue and conclude a peace treaty after 71 years, and the danger of North Korea’s nuclear advancement.
    • Defense spendings in Japan and China: the Financial Times reported that “whereas in 2000, Japan’s defence spending was double that of China, China’s is now more than five times that of Japan, according to estimates by the Stockholm International Peace Research Institute quoted in the CSIS report.” The article includes a number of graphs that would look to me, more an advocate of Japan than that of China, rather worrying. The report’s findings come as China warned Japan this week that it is “playing with fire” by planning joint training patrols with the US in the contested South China Sea. China claims virtually the entire South China Sea and repeatedly denounces what it sees as interference there by the US, Japan and other countries. “We must solemnly tell Japan this is a miscalculation. If Japan wants to have joint patrols or drills in waters under Chinese jurisdiction, this really is playing with fire,” Yang Yujun, China’s defence ministry spokesman, told a news briefing. “China’s military will not sit idly by,” he added, without elaborating. Earlier this month, Japanese Defense Minister Tomomi Inada outlined Japan’s upcoming plans in the South China Sea, which included “Maritime Self Defense Force joint training cruises with the U.S. Navy, bilateral and multilateral exercises with regional navies, as well as providing capacity building assistance to coastal nations.”
    • Economy:
      • There is already for a long time a discrepancy between Japan’s economic data sa provided by the government and those by the Bank of Japan. Example: according to government data Japan’s economy shrunk with 0.9% in 2014, whereas the BoJ reported an increase of 2.4%. The official figures, reports the Financial Times, suggest Japan’s economy was hit hard by rise in consumption tax that year to 8 per cent, prompting a drop into recession which helped to damp both wage demands and corporate investment plans for the following year. But the alternative numbers suggest that recession never happened. That makes economic policy quite complicated, so there is a review of the research methods.
      • Japan’s consumer prices have been falling for a fifth consecutive month and price momentum has been slowing further in August. Headline consumer prices were down 0.5 per cent on a year earlier, in line with analyst expectations, reflecting the impact of weak oil prices and a strong yen. But more alarming for the Bank of Japan was the weakening of a crucial measure of inflation that strips out volatile food and energy prices to an annual rise of just 0.2 per cent, wrote the Financial Times. But other data showed that the domestic economy continues to tick over even if there is not enough momentum to drive prices higher. Industrial production rose 1.5 per cent compared with the previous month while the ratio of job openings to applicants remained at its highest level for decades.
      • But according to Bloomberg Bank of Japan’s Governor Kuroda may succeed where Greenspan and Bernanke failed: yield forecasts among dealers surveyed by Bloomberg have risen in line with the goals revealed by the Bank of Japan governor on Sept. 21 to pin 10-year sovereign bond yields near zero and steepen the curve. The median estimates among the 13 respondents are for benchmark yields to rise to minus 0.05 percent at year-end, while those on 20-year debt climb to 0.3 percent. In a poll three weeks ago, they projected minus 0.15 percent and 0.23 percent respectively.
      • Corporate:
        • A first result of the Brexit outcome is a delay in investments in Nissan’s plant in Sunderland (where a majority of voters were in favour of Brexit…). Carlos Ghosn, Nissan’s and Renault’s enigmatic CEO said last week that “the only way a decision could be made to invest in the UK before certainty over tariffs was reached would be if the British government could provide ‘commitments for compensation’ if carmakers eventually faced trade barriers”. The plant in Sunderland employs 7,000 people and another 20,000 people are indirectly involved (Financial Times).
        • “AB InBev-SABMiller deal leaves Japanese rivals flat”, writes the Nikkei. While AB InBev has been expanding its global footprint over the past two decades, Japanese brewers have focused on their battle for the domestic market, particularly in the low-malt happoshu and no-malt “third-category beer” segments. These “non-beer” drinks are cheaper due to a loophole in Japan’s liquor tax. “Now they face a Goliath in the form of AB InBev-SABMiller. Combined, Japan’s two largest beer makers, Asahi Group Holdings and Kirin Holdings, are dwarfed by AB InBev alone. The Belgian brewer’s operating profit is more than five times larger; its market capitalisation is six times larger. The megadeal will widen the gap further.”
        • Innovation in Japan, in particular at small companies, might be the domain of non-Japanese entrepreneurs. “The number of foreign entrepreneurs and CEOs in Japan is growing,” reports the Nikkei, “which may signal a change in the country’s notoriously insular, close-knit society. In 2015, a total of 1,352 foreigners acquired residence status in the ‘Business Manager’ category, according to the Ministry of Justice. After declining for several years, the number jumped to surpass 1,000 last year.” However, these foreign innovators inevitably face a series of obstacles when trying to get started and grow. “Japanese companies generally have no time for businesses without solid track records,”, an American entrepreneur in Japan says. “Companies can be cripplingly slow in evaluating innovative technologies or radically new products. The process from beginning talks to winning orders is a long and tedious one. This could be a big disadvantage for Japanese companies. Innovation, by nature, is something new without track records”.
        • Society:
          • How energy-efficient is Japan? Have a look at this world map of the American Council for Energy Efficient Economy / ACEEE. Japan ranks #2, behind Germany, The Netherlands #11 … Thirty-five different energy efficiency indicators have been analysed for each economy ranked in the report. The rankings are determined by scoring out of 100 possible points. Points can be earned in four different categories, including buildings, industry, transportation, and national effort, which measures overall or cross-cutting indicators of energy use at the national level. Industry, national energy saving and transportation scored well in Japan, the Japanese building sector is subject to improvement.
          • So you would like to work in Japan, you have some farming experience and you have some basic knowledge on the Japanese language? “Japan desperate for foreign farmers,” reports the Nikkei. “Japan’s farm population is collapsing. As of February, it stood at 3.17 million, 2 million fewer than a decade earlier.” Mark my words, in 5 years we have a program: Boer zoekt Vrouw in Japan (Dutch farmer looks for wife in Japan, a popular TV program in the Netherlands that might be adapted to Japan.
          • I couldn’t believe my eyes when I read: “Ancient Roman coins have been found in the ruins of a castle in Okinawa, Japan, that dates to the 12th and 15th centuries. The copper coins were found in 2013; X-ray analysis shows that they bear an image of Constantine the Great.” Apparently the coins ended up by long-distance trade.
          • Dutch photographer Charlotte Dumas will have an exhibition in Tokyo and in Amsterdam with photographs of Japanese horses. Truly great pictures in this article.
          • Recommended video’s:
            • Bloomberg video on the amount of cash held by Japanese companies and the lack of wage increase: the labour unions are becoming less relevant due to more hiring of temp and contract workers. “Japan has to reform” is IMF’s message. IMF Warns Japan on Wages, Cash Hoard
            • Woman turns into eel… I haven’t seen often such a strange commercial: http://foreignpolicy.com/2016/09/26/this-japanese-commercial-for-eel-is-being-compared-to-a-sexist-horror-movie/
            • How to become aware as a male of the impact of pregnancy on women? The three current governors of the Saga Prefecture, Miyazaki Prefecture, and Yamaguchi Prefecture put on jackets weighing 7.3 kg that replicate the additional weight a woman would be carrying around the 7th month of pregnancy and wore them as they went about their normal daily lives – working, shopping, doing laundry, washing dishes, you name it: http://qz.com/797903/japanese-politicians-are-experiencing-pregnancy-to-urge-dads-to-help-out-at-home/
            • A major earthquake could strike any moment and how to deal with a major catastrophe? Here a Quake simulation prepares Japan’s residents

I started this News from and on Japan about 2 years ago as there is virtually no reporting on Japan by Dutch media. My idea was – and is – to show the news from and on Japan with all pro’s and con’s, from different angles and on different aspects of Japan.
With a big party I finished last Thursday my assignment as Managing Director of DUJAT after 13 years and that also has implications for this weekly news reporting on Japan. From now you will receive this on a bi-weekly basis.

My contact details are:
Global Bridges BV
Prinsengracht 754, 1017 LD Amsterdam, The Netherlands.

Global Bridges Japan Rep. office
Akasaka Chuo Bldg. 7F Akasaka 3-2-6, Minato-ku. Tokyo,
107-0052 Japan

Tel.: +3120.6730301 / +31.6.54318333.

Enjoy the Sunday and have a great week!

Best regards,


DUJAT | Dutch & Japanese Trade Federation
Radboud Molijn

T: +31203050930
M: +31654318333
Over 30 years boosting the Dutch & Japanese economic relations