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.

General Edition Sunday, September 11, 2016, Issue No. 864

– What’s New — Moving Foreign Exchange Just Got Interesting
– News — Tokyo agrees to foreign housekeepers
– Upcoming Events
– Corrections/Feedback
– Travel Picks — Historic Onsen in Nagano, Oriental Garden in Ryogoku
– News Credits

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When was the last time you wanted to transfer or receive some money
internationally? Not a credit card transaction to pay for an
international Amazon order, but actual cash? Most likely it’s been a
while, and most likely that’s because moving cash is no cheaper than
credit card transactions and it’s a lot less convenient. Unfortunately
some things can’t be paid for by credit card, and for those times we are
quickly reminded just what a pain making international transfers can be.

To be sure we have PayPal, just so long as the other side has an
account. But even PayPal isn’t free of problems, especially if you
receive a payment of more than JPY100,000 and PayPal decides to lock
your money up for a week while deciding if it’s really yours. We’ve had
our accounts frozen in this way more times than we care to remember.
Triggers include large amounts, accessing your account while you’re
overseas, changing a source credit card, etc. To be fair, this is not
necessarily PayPal’s fault. Once they decided to comply with Japanese
government regulations in 2010, so they could source and service
Japanese customers, they were subject to a much more rigorous regime of
checks and oversights than they were in the USA. Indeed, PayPal couldn’t
accept cash transfers into accounts from Japan for over a year while
they were undergoing some kind of “cleansing” process.

But as of last week there is now another player in town, one which is
generating a similar level of excitement to PayPal when it announced its
Japan presence. This new player, UK-based Transferwise, solves a number
of problems with PayPal and could possibly become THE money transfer
solution for foreigners in Japan over the next couple of years. The
company first came to public attention here in Japan late last year,
when they started operations in the UK and announced they’d soon be in
the Far East. You could set up an account back then, but it’s only as of
Wednesday last week that you could actually put money in that account
and do something with it from Japan.

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According to Transferwise their main target in Japan is the 1.3m
Japanese expats living outside the country and the 2.2m foreigners
living and/or working in Japan itself. Other countries already able to
use the service are Brazil, Canada, China, and Singapore. New Zealand
and Hong Kong are next to be established. Although two of the biggest
foreign demographics (out of Japan at least) remitting money home,
Filipinos and Indians, do not have their countries on the list of
in-country operations, they are on the 50-country list that Transferwise
says you can send money to by sending through the company’s
correspondent banks there.

The main attraction of Transferwise is their unique business model and
therefore low-cost transfers. Basically the company keeps pools of funds
in a given country to service possible transfers from partner countries.
Then, when someone wants to send money home, instead of making an actual
transfer, they pay funds into the pool of the country they live in,
while a similar amount of money in the local currency is credited to
their account from the pool in the target country. This is really smart,
and relieves the company of having to deal with the incumbent bank
networks that currently control the world’s interbank money transfer

What are the fees? We have signed up for the service, but have not yet
had a counterparty in a country we needed to target, and so for
reference, we refer to Tokyo-based journalist Richard Solomon over at
about his experience. On August 28th he gave the community a heads up
that the company would start operations the following week and wrote
that he ran a test transfer with them that went without a hitch.
According to Richard the fees are 1% on conversion of yen to pounds
sterling, euro and US dollars, and 1.5% on conversion to other
currencies. On the website itself the company says 1% or a minimum fee
of JPY500.

This compares very favorably with PayPal, which is 3.6% for amounts
under JPY300,000. In fact, with PayPal, as with many other competing
money transfer services, the real cost is a hidden one, which is your
Foreign Exchange (FX) costs. PayPal will charge you about 3%-4% over the
interbank FX rate, meaning that if you were transferring the
hypothetical JPY300,000 you’d be wearing an 8% (base fees + FX rate) hit
on your cash. In comparison, Transferwise with its mid-market FX rate
charges nothing for its FX component. This is a huge plus over almost
any other money transfer method.

So with a super cheap fee structure, can we trust Transferwise to stay
in business? This is a good question. It is true that they have raised
US$117m in funds so far and with unicorn status (valuation of more than
US$1bn) they can probably raise a lot more than that. However, a CEO of
a UK-based FX company VFX stated in January this year that
Transferwise’s business is all “smoke and mirrors”. By this he was
referring to whether or not Transferwise’s business model of maintaining
balanced pools of money in each transacting country really works. He
pointed out that most FX transfers tend to go one way, for example from
Japan to India, and there is not much demand going back the other way.
This being the case, it means that to keep their business going
Transferwise must be buying FX funds on the open market and at a loss,
to balance the currency accounts.

Yep, he could well be right, maybe Transferwise’s business model doesn’t
work as advertised, for now. But as with many unicorns it’s a classic
market-building challenge. You not only have to have a scalable
electronic marketplace, you also have to float your buyers and sellers
in equal proportions, or to finance either side until critical mass is
reached. This is no different to Airbnb and Uber, or even Skype for that
matter. The good news is that if enough people start using the service
then the sheer volumes will iron the model out via regional
recirculation (i.e., IT engineers in Tokyo sending savings back to
Mumbai, Calcutta importers buy wool from Yennora – Sydney, and Melbourne
used car dealers buy second-hand engines from Japan).

Will we be using Transferwise’s service? Yes, for small transfers to
start with, then after we gain confidence for our regular business.
Given that about 16% of Japan’s GDP is in exports, no doubt there will
be many others watching and trying their own test runs as well. If we
were PayPal, Western Union, or a number of other money transfer
services, we’d be looking over our collective shoulders right now.

…The information janitors/


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+++ NEWS

– Shareholders accept Softbanks ARM takeover offer
– JOC pronounces government innocent
– Japan and Russia to resolve the Kuril Islands problem?
– Tokyo agrees to foreign housekeepers
– Benesse appoints 4th CEO in 9 years

=> Shareholders accept Softbanks ARM takeover offer

Analysts are still debating the timing and wisdom of Softbank’s
Masayoshi Son taking over Britain’s largest tech firm, chip-maker ARM,
but at least for Son things are moving in the right direction.
Shareholders in ARM Holdings have agreed to accept Softbank’s £24bn
offer. To help the deal go through, Son has agreed to keep ARM’s
headquarters in Cambridge and to increase its UK workforce to about
3,000. ***Ed: One wonders if Son can continue piling on debt with these
humungous overseas acquisitions? It is true that ARM is a great company
and unlike the Sprint purchase in the USA it probably will pay for
itself in the long run. Still, does he really need control of the chips
themselves in his future businesses? Probably not. At the same time,
thanks to ARM’s deep IP licensing presence in mobile and IoT, he
probably won’t lose from this bet, either.** Source: TT commentary from, Aug 30, 2016)

=> JOC pronounces government innocent

In an amazing display of chutzpah, the Japan Olympic Committee (JOC) has
announced that its investigation into Japanese government Olympic
bid-related payments has found the government not guilty of paying
bribes. In May 2016, the Guardian newspaper revealed that the Olympic
Bid Committee had paid about US$1.3m to a company related to the son of
an influential member of the IOC, Lamine Diack. The French police are
still investigating the allegations and while the JOC is now trying to
whitewash the government’s involvement, so far there has been no word
on what the French police think. ***Ed: Corruption at worst, naivety at
best…** (Source: TT commentary from, Sep 1, 2016)

=> Japan and Russia to resolve the Kuril Islands problem?

Ever since losing the northern Kuril islands to Russia after World War
II, Japan has tried a number of times to get them back. But given that
they are a symbol of national pride for Russia it has failed each time.
It is interesting, then, to see that the two countries are now in “deep”
negotiations over the islands. Just what that means, no one knows,
because Russia has recently upgraded public infrastructure for local
inhabitants and so would seem to be thinking to stay in for the long
term. Still, the last year and a half of embargos on Russia by the USA
and Europe over Russia’s annexation of Crimea from the Ukraine, as well
as depressed oil prices internationally, has put the country under
significant economic pressure. ***Ed: We wonder what the Japanese would
be prepared to pay for Kunashiri, Etorofu, Shikotan and the Habomai
Islands? US$100bn? US$200bn? This would be a drop in the ocean when
compared to Bank of Japan spending (US$800bn approx. annually) on
devaluing the yen through own-government bond purchases.** (Source: TT
commentary from, Sep 02, 2016)

=> Tokyo agrees to foreign housekeepers

New Tokyo governor, Yuriko Koike, has given her support to allowing
foreign housekeepers to live and work in Japanese homes. Koike agreed
that helping mothers return to work was a good enough reason to have
Tokyo join the list of cities who will allow the initiative, the other
two being Osaka and Kanagawa. ***Ed: While this may sound like the start
of opening the immigration floodgates, reporters in the Philippines, the
main source of such domestic workers, say that migrant numbers will be
extremely limited and that only housekeepers dispatched by a licensed
company will be allowed. So far, only Duskin is permitted to handle such
work.** (Source: TT commentary from, Sep 2, 2016)

=> Benesse appoints 4th CEO in 9 years

Troubled Benesse Holdings has just appointed its fourth CEO in nine
years to try to fix the struggling conglomerate. The latest CEO is
Tamotsu Adachi, currently Chairman of the Carlyle Group. He succeeds
hapless Kenichi Fukuhara who had to step in after ex-McDonalds Japan CEO
Eikoh Harada resigned unexpectedly. ***Ed: Benesse has deep problems,
not least of which is the decreasing number of school-age children and
parents unable to pay the home study fees that used to be standard for
families wanting good careers for their offspring. Another big issue is
the fact that the company has a large and ossified middle management who
are timid and slow to take action.** (Source: TT commentary from, Sep 10, 2016)

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.


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No events to announce this week.



=> Biwa no Yu, Asama Hot Springs, Nagano
A beautiful, relaxing spa that won’t break the bank

Before coming to Japan, there were a few things I was hoping to
experience. One of those items on my wish list was to visit a
traditional hot spring. Today I ticked that dream off in the greatest
way possible at Biwa no Yu in Asama Onsen.

Tucked away in a leafy corner of the little hillside village of Asama
Onsen, this spa is as pretty as it is relaxing. Quiet woods surround the
beautifully preserved, four hundred year old building, so that whilst
you are there you truly feel as if you are fully immersed in nature and
disconnected from all external stresses. What’s more, the first lord of
Matsumoto Castle, Ishikawa, established this spa and used to bathe here
himself! For many years it was kept as a private facility for the
palace, and is still today maintained by one of Lord Ishikawa’s

Even if it were not such an incredible experience, the spa would be
worth a visit for its historical interest alone!

Biwa no Yu is easily accessible from Matsumoto City by bus or bicycle,
and is a brilliant way to while away a lazy afternoon. For a very
reasonable price you can make use of both their two indoor and outdoor
bathhouse facilities. Beautiful maple trees surround the outdoor
bathhouse, whilst the indoor facilities are spacious, clean and very
relaxing. Soap and shampoo are provided, and items such as hairdryers
are available free of use for after your spa session.

=> Kyu-Yasuda Teien Gardens, Sumida
A welcome oasis in busy Tokyo

Tokyo is a space of fantastic contradictions. Ultra-modern skyscrapers
crowd out ancient temples below. Young girls with pink hair and knee
high boots sit on the metro side-by-side with wizened old men in smart
shirts and fedoras. McDonalds sell Egg McMuffins on the same menu as
teriyaki chicken burgers. The range and density of contradictions make
this city a delight to get lost in – you just never know what modern or
ancient wonder you will have the pleasure of stumbling upon.

It was quite by chance, thus, that I had the pleasure of finding the
Kyu-Yasuda Teien Gardens in Ryogoku. The unassuming exterior and lack of
fanfare betray nothing of the gorgeous green haven hidden within. But
how glad I was to find it amidst the modern shops and busy streets! With
its hushed paths, still pond and lush greenery, it is the stuff of one’s
Oriental dreams.

Its existence dates back to 1691 when it belonged to a samurai resident
of the area. In 1891, it became the property of Yasuda Zenjiro who
granted it to the public in 1922. The great earthquake of 1923, however,
destroyed the gardens and it was only in 1927 that the beautiful plot
was finally restored. With all this history, Kyu-Yasuda is worth a
visit. It helps even more that it is so beautiful.



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