News from and on Japan, February 5-18, 2017

Japan’s economy up, sex in marriage down, salaries of Japan’s top board members is below that in competing countries and are Japanese soldiers up to a fight?

The previous weekend we saw president Trump and PM Abe at a press conference, we saw Trump shaking hands with Shinzo Abe for 19 seconds, we could see them playing golf  in Florida, dining  – and reacting to a North-Korean rocket that fell only 250 km from Japan’s shores (see last attachment).

Herewith the news from and on Japan where the economy is doing better according to some – and is still stagnant according to others, where Japan’s car related trade surplus with the US is rising, Japanese companies made record profits and where there is hope for free trade agreement with Europe.
  • Politics:
    • Last year August Emperor Akihito made a rare televised speech, where he told the Japanese public that he could no longer fulfill his official duties to his satisfaction. Beyond pleading his case of advancing age and fragile health, he indicated that it was time for Japan to reconsider the future of imperial succession. In plain words: the Emperor wanted to have the option to abdicate, something that Japan’s constitution does not provide for. A committee was formed and indeed, a one-time only solution seems to be at hand making it possible for the 83-year old monarch to step down. But this is, according to Eri Hotta (whose book “Japan 1941” is a must-read) not what he is looking for. The emperor referred in his speech to the historical precedents of abdications in “our country’s long history of imperial rulers,” hoping that Japanese emperors could retire with dignity, just as the Dutch queen, the Belgian king, or even the Pope have done in the recent past. His unmistakable message was that emperors, too, are first and foremost individuals, with human limitations, who age like everyone else.” New for me was to learn that the Emperor when he was young had an American Quaker tutor Elizabeth Vining. She taught him the valuable lesson, in the words of his confidante Akashi: “Man must act on his own will.”
    • Crystal clear analysis of the first Trump & Abe summit by Michael Auslin, a veteran Japan / Asia specialist. “Whether out of instinct or a careful reading of Trump’s personality, Abe concluded that politics with Trump will be personal. Thus, he offered with alacrity to meet Trump just days after his election, flying to New York in a bid to get Trump to look him in the eye and size him up. Given the lukewarm reception that Trump received from other heads of government, Abe’s outreach was all the more welcome.” “As first meetings go, the Trump-Abe summit was a near flawless exercise. Turmoil within the Trump administration and crises in other parts of the globe should not be allowed to overshadow what might turn out to be one of the handful of most important global relationships over the next decade.” (Foreign Affairs)
    • Japan’s Self Defense Force / SDF is, albeit not very big in number of soldiers, considered the #4 in the world as it is well equipped, with a budget of USD 41.6 billion, 247,173active frontline personnel, 678 tanks, 1,613 total aircraft and 16 submarines as well as four aircraft carriers, although these vessels are equipped only with helicopter fleets (information from Business Insider). However, question is if its soldiers are up to a real fight, according to an article in Economist. “Young people in the SDF joined to help the victims of earthquakes and tsunamis, says Norikazu Doro, a former service member. “They had no idea they were joining an army that could one day go to war.”

  • Economy:
    • Japan’s nominal GDP is rising faster than its debt, reports Bloomberg. “Hidden beneath the headlines about Japan’s continual failure to reach its inflation target is a quiet reflation of its economy. It took almost two decades, but Japan finally notched a record for the size of its economy in 2016, one of the most significant signs yet that Prime Minister Shinzo Abe’s reflation policies have had an impact on underlying fundamentals. Despite population declines on the order of more than a quarter million people a year, and in face of muted productivity gains, Japan’s nominal gross domestic product totaled 537 trillion yen (USD 6.1 trillion) last year, government data showed Monday. Last year was the first time that nominal GDP, which is unadjusted for price changes, hit a record since 1997. See also Japan’s GDP Grew Four Quarters in a Row – Bloomberg
    • Trump’s focus when it comes to ending trade deficits, often boils down to cars. Here some figures: the US imported 1.6 million cars from Japan in 2015, according to data from the Japan Automobile Manufacturers Association, “yet three-quarters of the Japanese-branded cars sold in the US were made in North American factories, Bloomberg recently reported. For example, 56% of the vehicles sold at Toyota dealerships in the US last year were made inside the country. In contrast, of the apr. 5 mln cars sold in Japan last year, only 15,000 cars came from American brands, and that is less than what a single Japanese dealership in California sold last year, Longo Toyota in LA, sold”, Quartz reported. “As they navigate crowded cities, Japanese consumers there favor small vehicles, not monstrously sized US-made vehicles. More than a third of auto sales in Japan are of tiny vehicles called kei cars, which cost under USD 10,000, according to Reuters.”
    • TPP may be dead, the Free Trade Agreement between Japan and the EU is well alive and kicking. “Japan, EU aim to clinch free trade deal soon”, wrote Japan Today. There are still hurdles though: “EU negotiators have requested market access for the bloc’s dairy products, meat, timber and wine at levels higher than Japan agreed to in the Trans­Pacific Partnership multilateral trade deal. Japan, meanwhile, is asking for the European Union to remove its tariffs on Japanese vehicles and electronic devices, which are 10 percent and up to 14 percent, respectively.” However, what is uncertain is the outcome of elections in various EU members and so the ratifications of this trade agreement.

  • Corporate:
    • Thanks largely to the sharp weakening of the yen since the fall and recovery in resource prices, the net profit of major Japanese listed companies rose 25% on the year in the October-December quarter. The Nikkei compiled results announced by companies that close their books in March. The data includes Toshiba’s estimate released Tuesday and excludes financial institutions. With 64% of companies covered reporting net profit growth, the aggregate profit increased for the first time in six quarters. Non-manufacturers’ profit shot up 44%, with trading houses posting a 140% jump and accounting for more than 40% of profit growth in the sector (Nikkei).
    • But rising profits or not, Japanese board room salaries are well below what is paid in China, HK and Singapore  The Nikkei published a survey by Hays and found out that 53% of Japanese employees are dissatisfied with their salaries. Furthermore, the ratio of Japanese respondents who said salary or benefits would motivate them to move to a new job jumped to 49% in 2017 from 37% in last year’s survey. It is a different way to perceive what you pay to your top shots: “it is important for companies to view salaries of highly skilled employees as an investment and not a cost,” said Marc Burrage, managing director for Hays Japan. Hays predicts that Japanese companies will be competing with global rivals in the race for top talent, especially in the fields of autonomous driving, artificial intelligence, data science and the internet of things. “In this race, there are no prizes for second place,” Burrage said. “Competitors are aiming for the same talent, and Japan is in danger of being left behind.” Interesting conclusion by Atsushi Osanai, professor at Waseda Business School: “for years, Japan has given up on the cheap mass production of goods and tried to compete with expensive, high-end products,” he said. “Maybe it is time for Japan to move back into cheap goods due to its low-cost environment.
    • Someone who knows the price of his company’s key people is Masayoshi Son, founder & CEO of Softbank. Son surprised markets years ago when he bought US telecom company Sprint (still ailing), UK semiconductor designing company ARM Holding for USD 32 bln and some days ago he acquired Fortress Alternative Investments for USD 3.3 bln. “Mr Son’s empire will add not only its USD 70 bln in assets under management, but 1,100 employees that will strengthen a SoftBank investment team built up by Nikesh Arora” (Nikkei). By the way, Nikesh Arora, Son’s heir to be, was paid USD 73 mln in 2015 by Mr. Son, who himself received a salary of USD 1.2 mln).

  • Society:
    • Wow, look at this figure: a five-nation study by RAND Europe, a subsidiary of the research group RAND Corp. shows that when Japanese employees would sleep enough up to USD 138 billion a year could be added to Japan’s economy, or about 2.9 percent of gross domestic product. Simply increasing nightly sleep from under six hours to between six and seven hours could add USD 75.7 billion to the Japanese economy, the report said. Interesting graph with the economic cost of sleep deprivation. My conclusion: best country to work is … Canada. (Bloomberg).
    • Sex in a Japanese marriage is getting scarce: a survey conducted by the Japan Family Planning Association found that over 47% of married men and women had not had sex for a month or more. That was a 2.6-percentage-point increase from the last survey in 2014, and much higher than the 31.9% recorded in the first such poll in 2004. “The biggest passion-killer was work. Over 35% of men who responded said work left them “too tired” to have sex, up from just over 20% two years earlier. For women, the biggest reason to avoid lovemaking was that it was seen as a hassle – more than a fifth said it was too much like hard work. The highest rate of “sexless” marriages, as those in drought periods of over a month were called, were among people in their mid to late 40s.
    • So, why not have a lover outside your marriage, and when you want to play it safe, then have a virtual one. An on-line app Ikeman (“handsome man”) is quite popular – and more and more among women. Romance games are one of the culprits behind a trend that has seen some young Japanese lose interest in finding a real partner, according to a study last year by the Meiji Yasuda Life Foundation of Health and Welfare. The relationship that does not happen in real life happens perfectly in the game – that can lead some people to give up looking for love, at least for a time,” said marriage specialist Aizawa. (website Phys.org).

  • Fukushima:
Have  great Sunday and working week!
Radboud