An Insider's comments on Japan's high tech business world


* * * * * * * * TERRIE’S TAKE – BY TERRIE LLOYD * * * * * *
A weekly roundup of news & information from Terrie Lloyd, a long-term
technology and media entrepreneur living in Japan.
(http://www.terrielloyd.com)

General Edition Sunday, March 20, 2016, Issue No. 843

– What’s New — How the Failure of Abenomics Leads to the Record Sales
of Safes
– News — Can Sharp trust Honhai?
– Upcoming Events
– Corrections/Feedback — Marcus Yip Passes Away
– Travel Picks — Pancake Rocks in Wakayama, Railway Museum in Kyoto
– News Credits

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+++ WHAT’S NEW

After a strong start last year, the ruling LDP government seemed
genuinely perplexed when at the end of the year the nation’s annual Real
GDP was found to be just 0.5% and for the last quarter a problematic
-0.3%. The government’s leadership continue to have their collective heads
buried in the sand by blaming an unusually warm winter and other
external factors for the anemic performance. You kind of feel sorry for
them. After all, they have done everything by the textbook (well, the
Keynesian textbook, anyway), by expanding the nation’s money supply
aggressively, and by implementing various stimulus packages.

But unfortunately Mr. Abe’s crew seem to have forgotten one small thing,
they need the public to respond to their pump-priming (the whole point
of Keynesian policies), and this means being seen to be making real
regulatory reforms for the future, not just recirculating cash among
vested interests. Abe needs to make good on his promised third arrow –
slashing business regulations and encouraging innovation, liberalizing
the labor market, getting tough with the agricultural sector, cutting
corporate taxes, and increasing workforce diversity through immigration
and improved support of working mothers.

But instead the reverse is happening. For example, if you look at the
2015 statistics for Japan, the allocation of funds for
development/promotion of Small and Medium-sized Enterprises (SMEs), the
drivers of employment and economic growth in any country, fell from
JPY825bn in 2012 to just JPY186bn last year. At the same time, the
government spent JPY1.042trn (six times as much) on “stable food
supply”, a code for rice farmer subsidies. In other words, it’s business
for the vested interests as usual.

And now with the Bank of Japan moving to impose negative interest rates
on retail banks so as to force them to start investing their cash
instead of parking it, we can all see that the Bank of Japan’s policy
makers are running out of ammunition. This means that Abe’s politicians
either need to do their share of heavy lifting by implementing reforms
or the economy will be pretty much driven by external influences. Right
now, those influences are driving the yen back to 100 to the US dollar,
and will undo any of the benefits achieved over the last 3 years.

For the rest of us, this means that sectors that have been enjoying
increased business because of the cheap yen will see a reversal of
fortunes, including the exports, international recruiting, inbound
tourism, and banking/investment (i.e., a slow down in the repatriation
of overseas earnings by Japan-based parent companies). At least overseas
trips and food imports will get cheaper, though… ;-)

——– Business Start-up Seminar by Terrie Lloyd ——–

Have you ever thought about setting up your own company in Japan? Or,
are you already running one and wondering how to move up to the next level?

Local Australian/Kiwi entrepreneur Terrie Lloyd, is running a seminar
for people who want to form their own companies, on Saturday, April 2nd,
2016. Terrie has established 17 companies in Japan over the last 30
years, and has a lot of experience to share about how to structure and
run your business when first starting up, with particular reference to
his latest www.japantravel.com project.

Details: http://www.japaninc.com/entrepreneur_handbook_seminar
———————————————————–

[…Article continues]

The media is full of articles speculating as to why Abenomics is not
working, and certainly international pressures are one cause. But we
don’t think they are the root cause. For that, you need to look at WHY
the Japanese public and its corporations are so reluctant to take a risk
and spend some of their hoarded cash. Our take is that the malaise is
caused by one simple thing: a lack of trust in the government and its
policies.

Without trust that there will be no innovation and growth, the leadership
of big companies see their current record earnings as temporary and
don’t want to share them with employees. The employees themselves hold
off on spending, thus strangling the birthrate, car ownership, stock
market shares, travel, and advanced education. As an end-game the public
starts pulling cash out of the system and stashes it literally under the
mattress or in safes at home.

This is no joke and the situation is prompting all kinds of abnormal
(but perfectly logical) behavior by the public. For example, there has
been a surge in cash hoardings, with an extra 6.2% ten thousand yen
bills going into circulation last year, the highest jump in demand since
2002. This means that there is now totally about JPY100trn (US$890bn) of
cash in circulation, around 20% of the total economy. And to hold all
that cash, there has also been a run on home safes, with sales soaring
60% to 70% above last year.

It’s ironic that even as consumers distrust the government, they still
trust it to honor the bills it issues.

Well, not everyone trusts the government to honor its paper and as the
Japanese are generally well educated there is a growing segment of the
community that is starting to buy gold. The price of gold bars has risen
to JPY5,027/gram and demand in 2015 was up a whopping 70%, from 17.9
metric tons in 2014 to 32.8 tons in 2015. This makes Japan the seventh
largest consumer of gold in Asia, even though as a nation they don’t
really have a recent gold culture like the Chinese and Indians do. At
this rate, Japanese consumers will spend about JPY300bn in 2016 just on
gold.

So what is the government to do with this seemingly intractable
situation? There are really only two ways forward for Abe’s government:
either confront their personal demons and attack and reform vested
interests while funding SMEs who are the real growth engines for the
country, OR, devalue all that cash hidden under mattresses through more
inflationary policies and distract the public’s attention with a little
military adventure.

And what better than a little military adventure against the Chinese
bogeyman through a SE Asian proxy such as the Philippines?

…The information janitors/

***————————****————————-***

—————– Soy Sauce Recipe Contest —————-

Your original dish could win you a cash prize! Send in your own recipe
for either a Japanese dish or one from your own country, that uses soy
sauce as an ingredient, for a chance to win ¥100,000! Deadline for
applications is May 31, 2016.

Prizes:
Grand prize – 100,000 yen x 1 person
Silver prize – 50,000yen x 2 persons
Bronze prize – 30,000 yen x 7 persons.

https://www.soysauce.or.jp/en/recipe/contest/
———————————————————–

***********************************************************

+++ NEWS

– Casinos bill isn’t going to happen
– Anonymous targets local government over zoos
– Passage of TPP bill a done deal?
– Can Sharp trust Honhai?
– Yahoo Japan girding up for inbound travel sales

=> Casinos bill isn’t going to happen

It’s been a long fight by LDP politicians and supporters to get a bill
permitting casinos into consideration by the Diet, particularly as the
LDP’s junior coalition partner, the Buddhist Komeito, are against it.
But with other priorities stemming from international events, the casino
bill has missed this session of the Diet. As a result, it looks like
casinos may be put back on the back burner for an indeterminate amount
of time — certainly too late to allow any facilities to be built before
the Olympics. ***Ed: Why was the casino bill derailed? Basically casinos
are viewed as a source of corruption by Buddhist parties, and are a
political hot potato. With Abe reportedly considering a snap election
next year, casinos are definitely too hot to risk losing an election
over.** (Source: TT commentary from forbes.com, Feb 26, 2016)

http://onforb.es/1ZglYMw

=> Anonymous targets local government over zoos

A sub-group of Anonymous hackers has decided to go after Japanese public
and private organizations that are considered to support animal cruelty.
A group calling itself Karmasec, hacked the Yamaguchi Prefecture
Tourism Division website (www.visit-jy.com) in protest for alleged
mistreatment of animals at the Akiyoshidai Safari Land, which is located
in the prefecture. Karmasec issued a notice saying that they would
continue their attacks unless the animals at the facility were released.
***Ed: To where, we wonder? It is true that Japan is creating a serious
international reputational liability through its inhuman treatment of
animals, not just in zoos but also its infamous dolphin and whale hunts.
The Karmasec attack could mark an “open season” on Japanese websites,
something that Chinese hackers would be rather gleeful about. We note
that the Yamaguchi web site is back up and running now.** (Source: TT
commentary from hackread.com, Mar 19, 2016)

http://bit.ly/1puQwxu

=> Passage of TPP bill a done deal?

An article in the latest issue of The Diplomat website says that passage
of the TPP bill within Japan is a done deal, despite tough talk from the
Norin-zoku block within the LDP. The writer says that the bill will be
subject to some stormy debate in the Diet, but that most of verbiage is
posturing for home-prefecture voters. Why is it a done deal? Firstly
because the bill has already been passed by the LDP’s party machinery to
get this far already. Secondly because of the large compensatory
payments that will flow to the affected farming communities. ***Ed: And
if there’s one thing we know – the friends of farmers love the tinkle of
a cash waterfall.** (Source: TT commentary from thediplomat.com, Mar 19,
2016)

http://bit.ly/21BKmYG

=> Can Sharp trust Honhai?

Or for that matter, can Honhai trust Sharp? Seems like the pending
JPY489bn share purchase of 70% of Sharp by the Taiwanese company may be
in jeopardy. Honhai has apparently pulled back from an initial plan to
buy the shares, over concern that potential liabilities at Sharp are
much higher than the company is saying. Apparently Honhai is looking to
reduce its purchase offer. ***Ed: Terry Gou of Honhai is a shrewd
businessman and pulled the same stunt last time with Sharp, basically
switching-and-baiting his offer with a lower one, in order to see how
desperate Sharp was. He lost the game of chicken last time, and he may
again this time. If this continues, we think the INC-J will come back
with the support of one of the other Japanese government financial
entities to make a renewed and more favorable offer for the shares.**
(Source: TT commentary from reuters.com, Mar 19, 2016)

http://reut.rs/1UtMti4

=> Yahoo Japan girding up for inbound travel sales

According to the Nikkei, recent moves by Yahoo Japan indicate that the
company is getting ready to start inbound travel sales to foreign
customers. The company has taken on PayPal as a payment option, and
apparently it will help market Japan and Yahoo Japan’s travel portal
(actually, Ikyu Travel, which Yahoo has just bought) as a destination to
buy tickets. Apparently the PayPal relationship will also be enhanced by
Yahoo’s ownership of the Dynatech hotel booking network, a company that
Yahoo Japan also bought last year. ***Ed: Problem is, no one reads
PayPal’s commercial announcements, they’re just annoying, and most
customers divert them in the junk mail folder. Further, Ikyu has
virtually nothing other than 500 or so ryokan to offer inbound
foreigners. The Nikkei is so full of bull recently…** (Source: TT
commentary from asia.nikkei.com, Mar 17, 2016)

http://s.nikkei.com/1XEGrcx

NOTE: Broken links
Some online news sources remove their articles after just a few days of
posting them, thus breaking our links — we apologize for the inconvenience.

***————————****————————-***

+++ UPCOMING EVENTS/ANNOUNCEMENTS

——— [NEW!] Wildcard Incubator Program —————

KOEI COMPANY Inc. Presents its latest “Up Close” Tokyo Session 2016 seminar

KOEI COMPANY is a San Francisco based consulting/M&A practice, and the
co-founder of the Wildcard Incubation Program. We will be hosting our
latest seminar session in Tokyo for startups, entrepreneurs, and other
internationally-minded business people, focusing on the Inbound business
in Japan and how to launch a new businesses.

Main Speaker: Terrie Lloyd, Serial Entrepreneur, Founder/CEO Japan
Travel K.K.
Moderator: Nobu Kumagai, Founder, KOEI COMPANY, Inc.
Title: “The Real Deal of Running an Inbound Business in Japan”

Details: Complete event details at http://upclose201604.peatix.com
Date/Time: April 12, 7-9pm, 6:30pm doors open
Venue: Connecting the Dots co-working space, Shibuya, Tokyo
Cost: 2,000 yen, please purchase tickets via Peatix Event Page:
http://upclose201604.peatix.com
More information: nobu.kumagai@koei-company.com
———————————————————–

+++ CORRECTIONS/FEEDBACK — Marcus Yip Passes Away

=> With great sadness we inform you that Marcus passed away peacefully
on Monday morning, March 14th. He died of a brain tumor. His funeral was
yesterday in Koto-ku. Marcus will be remembered, in the words of his
friend Skip, for “…being an excellent and generous host whether it be
organizing and adding his personal touch to an event with 500+ people or
simply sitting down with you to have a chat and perhaps share a glass of
75-year old port to make a meal a little more special.”

Marcus is survived by his wife Takae and two young children Kylie and
Hannah. A fund established some weeks ago to help Marcus and his family
is still going, and currently is at US$50,871. Our understanding is that
Marcus’ ordeal has left the family with very little in assets, and any
help that readers can provide would be gratefully received. See more at
the URL below.

http://bit.ly/1K6zcZf

***————————****————————-***

+++ TRAVEL DESTINATIONS PICKS

=> Senjojiki – A Thousand Tatami Mats, Wakayama
Explore the hidden plateau of multi-tiered rocks

Nanki, a generic name for the southwestern part of Wakayama, has an
array of various amusement parks, zoos, beaches and places where you can
enjoy water sports. Approximately two and a half hours away from Osaka
by limited express train, Shirahama is a great place for a weekend trip
not to be missed. It is known as one of Japan’s biggest onsen (hot
spring) resorts and lives up to its name for its beautiful white sand
beaches. A popular spot in summer, the resorts are usually booked months
in advance. An annual event in the last week of May, modeled after the
Snow Festival in Hokkaido, the Suna (sand) Festival features a
competition of spectacular three-dimensional artworks made from just
sand and seawater. 40 to 60 pieces of sculptures are usually displayed
on the beach. It is always a spectacle to behold and participate in.

But away from the crowded main streets, located in southwestern
Shirahama, Senjojiki is an interesting tiered formation of huge
horizontal rocks created by the constant erosion of the powerful waves
of the Pacific Ocean over the years. The waves are extremely strong, and
they continue to reshape the rocks year after year. It remains a natural
marvel left untouched by human development.

http://bit.ly/1UIawIL

=> Fukuchiyama Railway Museum, Kyoto
Fun for adults and children at Poppoland

Ask someone these days about the role of trains in rural Japan, and
chances are they will tell you about Kami-Shirataki, Kyu-Shirataki and
Shimo-Shirataki stations. Located one of the remotest parts of the north
island Hokkaido, they were destined for imminent closure until they
realized there was a schoolgirl who journeyed from the station to go to
school during term. Followers of that story would know how much the
railway is a lifeline to remote communities. Whether in the snow of
Hokkaido or the mountains behind Fukuchiyama, the trains connect remote
villages hidden in the mountains, often hamlets that would be closed to
the rest of the world if it was not for the train.

Long before the advent of the first Tokaido Shinkansen bullet train
service in 1964, steam locomotives such as the C58 series ferried
passengers and freight across Japan. It was a big trip for someone to
visit Kyoto from Hiroshima or Tokyo in the 1950’s. With more than 400 of
these 2-4-2 configured locomotives built between 1938 and 1947, they
were the backbone of train travel until the 1960s. Today, you can get a
feel of how magnificent these 100 tonne plus locomotives are, at the
Fukuchiyama Railway Museum Annex (Poppo land No 2). Her sister train,
the C58-1, can be found at the Kyoto Railway Museum from May 2016.

http://bit.ly/1LyPDhP

***————————****————————-***

—————- Ota City Photo Contest ——————-

With beaches, rivers, and parks that allow enjoyment of the outdoors,
Ota has been described as a microcosm of Tokyo. Off the usual beaten
track, Ota is famous not only for its traditional culture, masterful
craftsmen, and bustling shopping streets, but also recently it became
the first Tokyo city to allow Minpaku (Airbnb) style accommodation.

Ota-ku is now running a photo contest to help it highlight this unique
part of Tokyo. Send in your favorite photo(s) taken from anywhere within
Ota City or Haneda airport for a chance to win an Amazon JPY5,000
voucher. Submit photo(s) via email to ota@japantravel.com by March 31st.
Winning photos may be featured on the city’s web site.

Details:
http://en.japantravel.com/news/destination-ota-city-photo-contest/26722
———————————————————-

***********************************************************
END

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+++ ABOUT US

STAFF
Written by: Terrie Lloyd (terrie.lloyd@japaninc.com)

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