News from and on Japan, February 25 – March 10, 2018

Women’s Day in Japan, Japan’s commercial aircraft difficulties, Japan reinventing scissors, PM Abe grilled again and who holds the key to higher wages in Japan? 

March 8 was International Women’s Day, celebrated since 1909, and also in Japan there has been ample attention to this particular day. Let’s take this occasion to see what the position of women is in Japan.

On a different ticket there was the announcement on March 9 that Messrs. Trump and Kim Jong Un will meet. Let’s also try to find out what the reactions are in Japan to this unexpected summit.
  • Politics:
    • Speaking after a telephone conversation with Trump on March 9, PM Shinzo Abe hailed the “change” in North Korea’s stance as it has offered to “begin dialogue on the basis that it will denuclearize. I agreed with President Trump that (this development) is the result of Japan, the United States and South Korea, together with the international community, having continued to put a high level of pressure on North Korea,” Abe said. 
      There are mixed voices in Japan about this summit-to-be. Takahashi Kawakami, a professor at Tokyo’s Takushoku University, told Reuters that three possible scenarios lay ahead: that Pyongyang agrees to denuclearize, that it agrees on a nuclear freeze, or that it goes back to missile launches. “Of those I see the second as the most likely, with Japan’s calls for continued pressure sidelined,” Kawakami said. And: “a freeze would worry Japan as it would “lock in North Korea’s limited nuclear capacity and its existing capacity to hit Japan and South Korean targets while the U.S. is out of range,” said Brad Glosserman, a visiting professor at Tama University. “It would legitimize Kim Jong Un in ways that Japan doesn’t want to see.” That would put Japan in an awkward position as it will have to reinforce its defence capacity and as it would have to accept another nuclear-armed neighbour at its doorstep. Then there is the issue of Japanese abductees in North-Korea, believed to be somewhere between 17 and a couple of hundred people who have been snatched away by North-Korean agents from Japanese beaches between 1977 – 1983. 
    • TPP or the Trans-Pacific Partnership agreement, is a free-trade zone that was TPP-12 with the USA in and since Trump TP-11, with the USA out. If the USA had stayed in, it would represent 38.2% of the world GDP; ex USA it is – still – 13.5%. “How Asia took the lead in free trade”, headed the Nikkei. In dollars: TPP-11 is USD 12.4 trillion, the #3 free trade zone in the world after NAFTA with USD 20 trillion and the EU with USD 18 trillion. The Nikkei depicts how this TPP was founded, from 4 members in 2006 until now.
    • Meanwhile, PM Shinzo Abe, an ardent proponent of free trade, is being grilled over a long-running scandal, the story of the Moritomo Gakuen elementary school, that received a huge discount (apr. 85%) on the acquisition of government owned land in Osaka. The school operator runs a nationalist curriculum at the school which included daily recitations of the Imperial Rescript on Education, a practice employed at schools in the Empire of Japan from 1890 to 1945. Akie Abe, the PM’s wife, had endorsed the school but had to cut ties after a scandal broke loose when it became clear that the land in Osaka was provided with such an enormous discount. Now the Asahi Shimbun reported, with other newspapers, that some of the documents of the transaction are missing or falsified; a local government official committed suicide and the nation’s tax chief resigned amid questions over his involvement in the deal. This year old scandal also complicates the outlook for Abe’s bid to win a third term as leader of the ruling Liberal Democratic Party this autumn. 

  • Economy:
    • There is a lot of talk about a US initiated trade war but also be aware of a looming currency war, according to Bloomberg. Only since January 1, 2018 the Japanese yen has soared 6.6 percent against the dollar – and that is a problem for Japanese companies and so: the Japanese economy. “BOJ Governor Haruhiko Kuroda can deny it, but the central bank has every interest in seeking a weak yen. Japanese corporate earnings are highly cyclical: on a market-weighted basis, companies on the Nikkei Topix index derive more than 37 percent of their revenue from abroad, data compiled by Gadfly show. A strengthening yen can cause stocks to plunge, depressing consumption and tipping the economy back into deflation”, and the policy of the BOJ is to create inflation. “The central bank can keep the yen weak by buying US government bonds as a means for delivering proper monetary policy for Japan,” Koichi Hamada, an economic adviser to Prime Minister Shinzo Abe, told Reuters. As a side-note: we all know that the Japanese and Chinese are the biggest buyers of US T-bills.
    • Japanese households increased spending but real wages continued to fall in January, government data showed Friday, painting a mixed picture of the economy. Spending by households with two or more people gained a real 1.9 percent from a year ago in January to 289,703 yen (USD 2,720), according to the Ministry of Internal Affairs and Communications. The ministry changed how it compiles spending figures starting January. Japan’s real, or inflation-adjusted average wages, fell 0.9 percent in January from a year earlier for the second consecutive month of decline, as a rise in prices outpaced a nominal wage increase, according to the Ministry of Health, Labor and Welfare.
    • But who holds the key to a real wage increase? PM Abe may have urged companies for a 3% pay-rise, but to not much avail. So, who is able to break this dead-lock? “It’s Mighty Toyota,” said Hiromu Kogure, general secretary of UA Zensen, a union representing 1.7 million workers in sectors covering services, textiles, chemicals and food. “They do everything in a theatrical style. That helps many business owners.” Kogure said his union, which is a key representative of women and part-timers, has tried and failed in the past to get businesses to agree to wages before Toyota announces its pay deal. “Unlike in global peers like Germany, where unions push hard for higher wages, in Japan the two sides are much less confrontational. While the big umbrella unions hold rallies each spring to show support for wage increases, it’s the company unions that actually negotiate the pay.” (Bloomberg.) 

  • Corporate:
    • Somehow Japan INC. has not been able to develop, build and sell its own commercial aircraft – and this is also true for MRJ or Mitsubishi Regional Jet by Mitsubishi Heavy Industries. The first aircraft is now expected to be delivered in 2020, 7 years behind schedule. US airline Eastern Air Lines has cancelled an order of 40 planes in January and the future for this division of MHI looks grim. The company has received firm orders for 223 aircraft and 184 optional orders. Due to these delays, MHI’s competitors, incl. Embraer are flying a more profitable route (Nikkei.)
    • To be or not to be, that is a question for many small and midsize companies that have no successor to take over the business. “The country has 2.45 million small and midsize businesses run by those at or over the average retirement age of 70, roughly half of which are without successors”, reports Nikkei. “An even larger number are run by those aged 65 to 69. Around 28,000 businesses closed their doors in 2017, according to Tokyo Shoko Research – a 30% increase in 10 years. So the (local) government steps in to try to save jobs and economic activity. … If these closings go unchecked, Japan could lose around 6.5 million jobs and around 22 trillion yen (USD 205 billion) in gross domestic product by 2025, estimates the Ministry of Economy, Trade and Industry. Roughly half of businesses that shut down do so while still in the black. Often, owners themselves do not wish to see their companies vanish for good but cannot find anyone to keep them open. Perhaps of interest to Dutch buyers?
    • In 2016 DUJAT organized a “DUJAT Japan Update” on “Health in the Workplace”. There is a distinctive difference between the way Dutch and Japanese companies look after their employees’ health. To cut a long story short: Dutch companies are looking more to cure, where as Japanese companies look more for prevention. Enough sleep is an essential part of keeping the workforce in good shape, and with long working hours at Japanese companies, Japan’s has a “sleep debt”, a much talked about phenomenon. A number of Japanese companies companies developed devices and programs to help their workers, incl. Teijin that is set to launch a service that lets companies monitor their employees’ sleep via a wearable sensor. The device, which is worn around the stomach for eight weeks while sleeping, monitors the rate and depth of breathing, after which it assesses sleep quality. Hitachi is preparing to introduce a health improvement service in April that uses an activity tracker fitted with a precision accelerometer to analyze body movement. According to marketing consultant Seed Planning, Japan’s health management market is expected to reach about 1.67 trillion yen (USD 15.73 billion) in 2020, up from 1.36 trillion yen in 2016, on growing corporate demand for sleep examinations. The company says sleep counseling services will likely become as common as stress measurement and voluntary health checkups, with entrants to the market expected to grow.

  • Society:
    • Women’s Day in Japan on March 8 – so let’s look to the position of women in the work place. Let’s start with female lawmakers. In 2012 PM Shinzo Abe declared to make Japan a place where “all women can shine” – but that is not yet realised in Japan’s parliament. “Japan ranks lowest for women in parliament”, headed Asahi Shimbun. The Inter-Parliamentary Union / IPU surveyed the number of women in parliament in 193 countries as of January 1st this year. Japan ranks 158th with female lawmakers only accounting for 10.1 percent of Lower House seats. Curious detail: since 1945 about 21,000 women have been elected to local assemblies, but only 120 have given birth, reports Asahi Shimbun. At the same time, In Japan more than 75% of working-age women are in the working, and that is a higher percentage than in the USA.
      When it comes to women in the boardrooms, “Asia trails Global Peers in Boardroom Gender Parity”, states Bloomberg, with Japan at the very low end: with less than 1.5% of its directors women. But good news for Japan’s Maritime Self Defense Forces: 44 year old Ryoko Azuma has become the first female squadron commander in the Japanese Maritime Self-Defense Force, that includes also the command of the Izumo, the helicopter carrier that is to be transformed into an aircraft carrier. The navy might look like a man-dominated bulwark, that is also true for the construction industry. Despite the labor shortage, construction workers earn on average 25 percent less than their peers in other industries. And women in construction earned 30 percent less on average than their male counterparts, according to a 2016 government report (New York Times.)
    • In the Japan Times I read a curious article about the way Japan is looked at by … white supremacists. Jared Taylor, Richard Spencer, William Daniel Johnson (some of them are fluent in Japanese due to religious upbringing) and even ousted Trump advisor Steve Bannon, they are all big fans of Japan. “Supremacists see Japan as a viable national alternative, not only because Japan can get away with policies that embed racism and keep immigrants out, but also, more importantly, because Japan gets the acceptance and respect of other rich countries regardless.” (Japan Times.)
    • Well, let’s finish with a more upbeat subject: scissors! Japan is a paradise for lovers of stationary, thin writing pens, beautiful washi (handmade paper) and, as the Nikkei reports, “in the early 2000s, Japanese companies started to produce scissors with distinct features, like compactness. Because of their uneven shape, scissors tend to be bulky. Unlike pencils, they do not easily fit into cases, and their presence on desks can be awkward. If this is a design problem, it cannot be solved by making smaller scissors; this would merely compromise the tool’s utilitarian nature.” Follows a description of how Japanese companies are developing the perfect scissor for each purpose. As I stated in this news clipping, Japan is the country where material science, combined with design ingenuity, results in remarkable products. Next time you visit Japan, present yourself a cutting-edge pair of scissors.
  • Recommended exhibitions
    • Last week we were visited by a Japanese investment fund that is interested in investing in the Netherlands, also as there is much “Japan in the Netherlands”. We guided the CEO and one of the managers of this fund to a number of Dutch art collections with a high-Japan content. Volkenkunde in Leiden has an impressive Japan-collection, the Sieboldhuis has a beautiful exhibition of Japanese armor now on display, Nihon no Hanga is one of Amsterdam’s best kept secrets, in two weeks time “Van Gogh and Japan” will open in the Van Gogh Museum and we met with Matthi Forrer, former curator at Volkenkunde in Leiden and now in charge of a successful exhibition in Cologne with Japanese woodblock prints. See (in German) the review in the Frankfurter Allgemeine. Recommended!
Have a great week!
Radboud Molijn, Global Bridges BV for DUJAT / Dutch & Japanese Trade Federation


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