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, January 29, 2017, Issue No. 881

– What’s New — How Japan Needs to Appease Trump
– News — Rental housing building boom
– Upcoming Events
– Corrections/Feedback
– Travel Picks — Tranquility in Karuizawa, Best Tsukemen in Tokyo
– News Credits

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With the global media so focused on the policy “hand grenades” that the
Trump administration is tossing out day after day, we thought it would
be interesting to try to predict what effect the new administration’s
tactics of bullying will have on Japan. We also go into a little of the
psychology of bullies, since President Trump clearly plans to run things
his way, and therefore for the time being at least the man will be the
nation’s primary source of policy.

We’ll say up front that we don’t like bullies, having had to deal with
far too many of them both at school and later in business. But given
that Donald Trump has on numerous occasions as a businessman used
bullying as an effective tactic to get what he wants, it’s unlikely that
he will change his methodology now that he is president. To the
contrary, he was voted in precisely because he’s used to getting his own
way and therefore voters would have been betting that he’d become a
quick and effective (destructive) agent of change in Washington. In his
first ten days, he’s certainly fulfilling that hope.

Psychologists generally agree that bullies are driven by envy,
resentment, and a need to build up self esteem by demeaning others.
Bullies are easily offended by criticism and lack of deference by other
people, reacting with verbal or even physical violence and insults.
Worryingly, successful bullies tend to surround themselves with others
swayed/influenced by his/her toxic behavior and who wind up replicating
such behavior. Taken the extreme, the abusive behavior becomes the new
normal in the bully’s sphere of influence (such as government
institutions) and susceptible individuals ratchet up the bullying
behavior to ingratiate themselves with the leader. Throw in Trump’s
narcissism and you have a veritable cocktail for abusive behavior
towards others.

On the other side of the equation, there are the victims.

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Research shows that, perhaps surprisingly, adult bullies usually pick on
competent but non-mainstream individuals as targets. They rely on their
ability to sway the opinions of others in the workplace to ostracize
that target and thus establish dominance. Frequently scapegoating is
used to speed up the process of isolation and indeed, we are seeing
scapegoating of a global nature that hasn’t been seen in the West for 15
years — picking on Muslims and “unfair” Asians in particular.

Generally, there are three ways to deal with a bully: 1) Run, 2) Fight,
3) Suffer and appease. In our 2017 predictions post several weeks ago,
we said that the Chinese will fight back, while the Japanese, having a
bullying culture already, will go for appeasement. As of this weekend,
it looks like the UK’s PM, Ms. Theresa May, will opt for the first option.

And so it is that we are seeing PM Abe head to the USA for a second time
in a couple of months, to meet with President Trump. Abe’s mission will
be to try to convince Trump that Japan is one of the good guys, and that
Trump, if he has to kick a neighborhood dog, should pick on the Chinese
instead. This is actually a great strategy if Abe’s team can get it
right. However, we think they don’t yet realize the psychology involved
– particularly that they need to feed Trump’s ego publicly. Our advice
is that they’d better do a quick study on how to appease bullies.

Appeasement is an interesting concept. There are some very good
scientific papers on the subject of appeasement and embarrassment (such
as caused by watching someone engage in appeasement) by Dacher Keltner,
a Professor at UC Berkley, and his various collaborators. (Keltner’s Wikipedia bio)

In one such paper, specifically written about appeasement and related
human emotion and social practice, Keltner reminds us that many human
behaviors can be traced back to our animal ancestors, including emotions
such as shame and embarrassment. He identifies two general classes of
human appeasement: 1) reactive, where a person provides appropriate
responses specifically AFTER incidents where they transgressed morals or
conventions. According to Keltner, in normal individuals these responses
are usually public displays of embarrassment and shame. And, 2)
anticipatory appeasement, where a person engages in certain strategies
BEFORE, or to PREVENT, aggression by a bully. Just like our animal
ancestors, these responses involve distributing to the bully resources
such as food, physical space, or social attention. Polite modesty and
shyness are also considered anticipatory appeasement. (Keltner’s appeasement paper)

So Keltner is saying that to deal with a bully before the fact, you need
to appease them with gifts of value AND to be seen to be doing so very
publicly, so that the bully has an aggrandizement “high”. This means
that the ministry of transport’s declaration on Friday that they are
already giving U.S. automobile makers preferred access to the Japanese
market is the wrong strategy for Trump. He is not interested in being
told that the Japanese market is open and U.S. auto makers are unable to
make the needed small, economical, attractive, and value-for-money
products desired by picky Japanese consumers. Instead, if Abe wants to
curry Trump’s favor, he needs to give Trump a big public win, something
that Trump can hold up and say, “See, I did that – I pressured those
sneaky Japanese into playing our game.”

An appropriate gift to Trump would be a LARGE order of autos by the
Japanese government, to show that if the government uses these vehicles,
then the public will surely see how great they are and be motivated to
buy them as well. Although ordinary U.S. vehicles are unpopular in
Japan, there are some niche products that would do very nicely and which
could support a big injection (say, 10,000 units) of U.S. vehicles. Such
niches would include small trucks, military trucks, delivery vans, and
for those of us in the tourism industry, camper vans.

Actually, U.S. camper vans are highly sought after in Japan, and with so
many tourists coming, the strategy of moving those tourists into the
countryside and giving them an alternative to the accommodation shortage
in the major cities — means that camper vans distributed through the
top four rental companies around the country would surely be a hit.
Making this idea even more relevant is the fact that the biggest
complaining U.S. auto maker, Ford, recently invested in a camper van
company called “Livin Lite” and they make some very decent compact campers.

But back to bullying. What we see happening in the next four years is
the Japanese leading a long procession of global leaders traveling to
Rome (uh, sorry, Washington) to meet the new leader. They will bring
gifts to entertain his ego, and they may even buy into “build in
America” more than they do already, but in reality, this type of
imperial rule will cause all kinds of distortions and illicit behavior
by these same companies, the bureaucrats involved in policing border
taxes and penalties, and even the people working at manufacturing
companies lucky enough to receive Trump’s largesse.

For example, there was a recent study of bureaucratic bullying of
entrepreneurs in Russia. The outcome was an increase in bribes to the
officials gating each business registration/license process, rampant
mislabeling of resources, bankrupting of companies that had been
targeted and starting new ones to avoid taxes, replacing expensive human
labor with off-shoring (Detroit auto line workers are 400% more
expensive than Mexico), and generally cutting corners to support the
increased costs of doing business. Of course, the U.S., unlike Russia
also has a very active legal system, so in addition we will see a lot
more litigation and thus demand for legal services.

Then, with the clamp down on immigration, Trump is scapegoating the
entire immigrant population by saying they are taking U.S. jobs (even as
U.S. unemployment levels are at a 9-year low – but hey, who cares about
facts, it’s the narrative that matters). This means that U.S. technology
companies, instead of increasing U.S. business with the Trump moves, are
more likely to speed up their diversification to sites elsewhere in the
world. This represents an exciting opportunity for Japan, since it,
unlike most other countries in the world, is making it even easier for
technology professionals to move here. While Japanese speakers in a
foreign operation in Japan are a must today, we foresee in the near
future that there could be entire corporate campuses springing up in
Japan where the primary language is English. This has already happened
at Niseko as a holiday destination, so there is no reason why it won’t
happen with tech firms looking for a stable environment to put their
non-US employees. Okinawa or Fukushima maybe?

The Japanese are paranoid about the defense relationship with the USA,
and will do whatever it takes to keep the goodwill flowing. But even as
this effort is going on, Trump has now given Abe a mandate to build up
Japan’s military might so that it can look after itself. This process
will take at least a decade, but at least the political environment now
makes the effort possible. Also, it’s not hard to imagine that if Trump
does decide to isolate the Chinese militarily over the Spratleys, as
Bullies are wont to do he will probably make Japan play along in a kind
of initiation rite to join the Trump “in” club, such as forcing them to
participate in whatever military adventure he has in mind.

And that would certainly make things very difficult for the Japanese.

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+++ NEWS

– Japan having an immigration boom
– Embarrassing diplomatic theft case
– U.S. auto companies already have favorable import rules
– Casino operators wooing JP authorities
– Rental housing building boom

=> Japan having an immigration boom

The Abe government is showing us how to have an immigration boom without
drawing attention to the fact. The labor ministry has published data
that up until October 2016, Japan’s population of foreign workers passed
1m people for the first time. The number of foreign workers rose 20%
over the same period a year earlier, and many were in the skilled and
semi-skilled labor categories. For example, there were 29,000 foreign
workers in construction in 2015, and this number jumped to 41,000 in
2016. ***Ed: Many of the workers are being brought in surreptitiously as
“trainees,” with the number of people in this category increasing to 20%
of the 1m-person total in 2016.** (Source: TT commentary from,

=> Embarrassing diplomatic theft case

Japan and Thailand, normally the best of friends at a diplomatic level,
had an embarrassing moment two weeks ago when a Thai Intellectual
Property Department senior official was arrested in Japan on suspicion
of stealing three paintings from a Japanese hotel. The Thai official was
detained for ten days and finally released after the Royal Thai
Consulate in Osaka intervened and negotiated for him to compensate the
hotel for the theft. The paintings in question were worth JPY15,000.
[Ed: Yes, that is not a typo…!] Source: TT commentary from review

=> U.S. auto companies already have favorable import rules

In an appeal to reason, the government is saying to U.S. trade
authorities that U.S. auto imports to Japan already have favorable
terms, including pre-acceptance of U.S. safety checks and of course no
tariffs. The Japanese side started these import speed-up concessions in
preparation for adoption of the Trans-Pacific Partnership (TPP), which
has now been scrapped by the new Trump administration. ***Ed: The
problem the Japanese are dealing with, and they should get a clue as
quickly as possible, Trump is a populist and not interested in cold
details, only bold ones. If the Japanese want to get his attention, they
have to grab the headlines with a bold move doing something that makes
Trump look good.** (Source: TT commentary from, Jan
28, 2017)

=> Casino operators wooing JP authorities

Now that casinos are legalized in Japan, the race is on by casino
operators to be one of the first to gain a license once the new
regulations are finalized in December. In the race are familiar faces
including MGM Resorts, Hard Rock Cafe International, Las Vegas Sands,
Genting Singapore, and Boyd Gaming. Sources say that there will be 2-3
casinos approved initially, and that these will approved in 2019 and
ready for operation by 2023. Investment bank CLSA reckons that Japan
will be a rich market, and that just two casinos would earn about
JPY120bn in annual revenue between them. Other analysts are saying the
revenues could be up to four times that amount. ***Ed: Perhaps more
important will be WHERE these casinos will be built. While we’ve heard a
number of locations, the initial consensus is that Tokyo will not be in
the first wave, since the city will have its hands full with Olympics
preparations.** (Source: TT commentary from, Jan 27, 2017)

=> Rental housing building boom

Data from the land ministry (MLIT) shows that the number of new rental
housing apartment buildings being constructed in Tokyo has risen
significantly, even as consumer demand for new housing is tailing off
due to the greying of society. Apparently the number of new rental
building starts jumped by 10% to 420,000 dwellings, comprising about 40%
of the overall total of new dwellings built (i.e., including owner-built
residences). The reason for the surge is that the taxable assessable
value of land is lower for rental buildings, thus causing people
concerned about inheritance tax to put up rental apartments rather than
leave the land vacant or owner-occupied. Needless to say, this
phenomenon is distorting the market, causing vacancy rates for rental
units to jump to 35% in Tokyo, Kanagawa, and Chiba. ***Ed: When you have
nowhere else to put your money productively, you look for any gap
available. This is another story of unintended consequences caused by
legislative tinkering that had no real substance.** (Source: TT
commentary from, Jan 28, 2017)

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.



No events to announce this week.



=> Last week we discussed how to control the perils of backcountry
skiing while still allowing people to continue doing it. One reader
living in Niseko put the solution rather succinctly:

*** Reader Comment:
In Niseko we have local rules and manage the risk. Look for Niseko local
backcountry rules ( and you will see we manage it
here. That’s part of the reason why Niseko is so popular. [Ed: We note
that visitors breaking the Niseko backcountry skiing area rules WILL in
fact be charged for Search & Rescue.]

=> In TT-799 we relayed a news item about someone freeing dolphins
penned up at the infamous Taiji Cove (at a stock holding area, not for
butchering). A reader in Hawaii relates how the whole aquarium
experience there is being questioned.

*** Reader Comment:

Just a comment on the dolphin item. A new resort being developed in Ko
Olina on Oahu, Hawaii, has cancelled plans to include captive dolphins
as a source of entertainment. There are also debates about outlawing
“dolphin swims” off Oahu because the particular dolphin species is
nocturnal and trying to rest when the tourists come to play.

The Honolulu Zoo has also had management trouble in recent years and
many voices have called for just shutting it down.

I live within a seal’s shouting distance of Sea Life Park where they
have dolphin shows (along with the barking seals) and occasionally visit
the Japanese-owned Kahala Hotel where captive dolphins do tricks and
give rides to part well-heeled guests from their money.

I sense that in Hawaii, at least, there is a gradual shift against
captive animal entertainment, whereas in Japan captive animal
entertainment may actually help prevent captive animal consumption.
Personally, I think zoos, aquariums and dolphin shows do much to protect
wild animals by fostering familiarity and concern among us primates.



=> Kumobaike Pond in Karuizawa, Nagano
A peaceful stroll in nature

The small but long pond of Kumobaike is sometimes called a “swan lake”.
We didn’t notice any swans, only ducks, and the Japanese maples had
already dropped their leaves. The autumn foliage can be seen from
mid-October to early November. Nevertheless, the serene nature in
December was wonderful. We could relax while strolling along the pond
and breathing in the crisp but-not-too-cold winter air. The blue sky
with white clouds provided a wonderful chance for a good photo session.
The pond is located not far from a luxurious neighborhood in Karuizawa,
about 1.2 km northwest of Karuizawa Station. I recommend going by car or
by bicycle. For drivers, there is a parking lot not far away.

=> Tsujita, Iidabashi
The best tsukemen in town

I used to teach English at a language school in Iidabashi. I would pass
this noodle shop that almost always had a long line outside it around
lunch or dinner time. It was a nondescript place from the outside. I
would see men with towels tied around their heads preparing bowls of
noodles amid steam rising from what I assume are vats of boiling water
or stock. The customers sat on stools around the counter. One day, I
finished my class at four in the afternoon and when I went passed the
noodle shop, there were a lot of empty seats and no line outside so I
decided to find out what the fuss is all about.

This noodle shop’s bestseller is tsukemen (“dipping noodles”), which I
had never had before. It took about ten, maybe fifteen, minutes before
they served me with a big bowl of dry noodles topped with a sheet of
nori (seaweed) and a half slice of lime on top. Then they served a
smaller bowl of thick soup with slices of meat and menma (bamboo shoots)
and cautioned me that the bowl was hot. I tried the noodles first. They
were satisfyingly thick, thicker than regular ramen, and gratifyingly
chewy or as with pasta, al dente. Then I tried the soup. The dense
flavor was an amazing combination of pork and dried fish. I took a
chopsticks’ worth of noodles and dipped them in the soup. From that very
moment, I was converted.



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