* * * * * * * * * T E R R I E 'S T A K E * * * * * * *
A weekly roundup of news & information from Terrie Lloyd.
General Edition Sunday, November 8, 2009 Issue No. 541
- What's new
- Candidate roundup/Vacancies
- Upcoming events
- News credits
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+++ WHAT'S NEW
This last week, the Bank of Japan's Deputy Governor,
Hirohide Yamaguchi, told the press that Japan is unlikely
to sink back into a double-dip recession, and that while
deflation is with us, it is less likely to be a problem
moving forward. It appeared that his comments were intended
to offer some positive spin after the previous week's BOJ
report showing that Japan's Consumer Price Index (CPI) was
still negative this last half, and is likely to stay
negative for the next two fiscal years.
Reinforcing Yamaguchi's view that the economy has turned
the corner is financial news from the very strategic U.S.
market, where the U.S. Commerce Department announced a
strong July-September quarter of growth, annualized at 3.5 percent
-- indicating that Obama's stimulus policies are working
and the economy is recovering. Of course, this was an
annualized figure, and some would say, including us, that
the way the U.S. figures its GDP numbers conveniently
forgets to include the cost of borrowing the money the
government is busy pumping into the economy (unlike private
consumption figures, where the cost of the goods are
subtracted from the value of them).
The OECD is also saying that the indicator of economic
activity in its 30-member organization shows that things
are recovering. The OECD numbers carry some credibility
because of their detailed inputs and previous track record
in presaging actual improvements and declines. According to
the OECD, the leading indicator for the U.S. in September
was 99.2, up from 97.8 in August; for Europe as a whole,
102.7 versus 101.3; and for Japan 98.8 versus 97.5.
Then of course there was the surprise news that
unemployment in Japan fell to 5.3 percent from 5.5 percent in August.
Most analysts expected the unemployment rate to stay the
same or even rise.
So, are things really getting better? Should we be making
plans for business and personal consumption expansion in
-------------- Start a Company in Japan -------------------
Entrepreneur's Handbook Seminar 14th of Nov, 2009
We had such a great response to our October seminar, we
decided to run a second one in November. So, if you have
been considering setting up your own company, let us give
you some tips on what it takes to make it successful.
Terrie Lloyd, founder of over 17 start-up companies in
Japan, will be giving an English-language seminar and Q&A
on starting, operating and selling a company in Japan.
This is an ideal opportunity to find out what is involved,
and to ask specific questions that are not normally
answered in business books. All materials are in English
and are Japan-focused. Seminar price includes lunch.
For more details:
We'll say up front that we're bears on the economy and
believe that this current reprieve is temporary. We're not
economists, so our reasoning is necessarily simple minded
-- but hard to ignore. Unemployment and underemployment are
running at very high levels in all developed economies, and
when you have lots of people out of work you get falls in
taxes and consumer spending, and increases in mortgage and
lending defaults. In the current environment, you're also
getting huge issuances of government debt to make up for the
lack of private economic activity. All of these trends are
very concerning, and lead us to a negative view even as the
stock market soars.
1. Unemployment and underemployment
As mentioned, Japan's unemployment rate has fallen from a
high of 5.7 percent in July to 5.3 percent in September. The Bureau of
Statistics says that the all-important indicator, the
job-to-applicant ratio, rose from a record low of 0.42 (42
jobs for every 100 job seekers) in August to 0.43 in
September, indicating that firms are employing people
again. As a result, household spending also rose in
September to 1 percent more than the same period last year.
Now, an unemployment rate of 5.3 percent sounds almost positive to
anyone in the U.S. or Germany, where the unemployment rate
is now 10.2 percent and 7.6 percent respectively. However, as a Nikkei
editorial recently pointed out, because of Japan's more
stringent lay-off rules, companies rather than cutting
necks are instead slashing salaries (overtime and bonuses
in particular) -- meaning that people stay in work, but the
economy as a whole is stressed just as much as if
unemployment was higher.
The Nikkei says that average pay per worker dropped 1.6 percent
year-on-year in September, the 16th straight month of
decline. June marked the peak of salary contraction, when
average pay for that month dropped a huge 7 percent against the
same period a year before. In contrast, salaries in the
U.S. have actually gone up, by up to 4.3 percent, since October
of 2008. They have also risen by 1.3 percent in the U.K., and by
0.8 percent in Germany. So this is a clear indication that
instead of lay-offs, the pain being spread around in
Further, at least some of the drop in this month's
unemployment number is probably because of the government
stimulus subsidies for companies who don't do lay-offs.
Apparently about 2m employees are now having their salaries
subsidized -- which is a lot, and points to the fact that
under employment in Japan is probably very high. Providing
the global economy really does mend itself in the next 12
months, then maybe this policy of subsidizing under
employment will be a bet well made. But, if there is a
second decline, it will be difficult for the government to
not extend the subsidies to even more firms, which could
lead to a massive increase in such payments.
2. Mortgage and other loan defaults
Unemployment and underemployment of course lead to less
consumers being able to pay their bills, let alone engage
in discretionary spending. We hear a lot about the climbing
mortgage default rate in the U.S., and how if weren't for
government subsidies to support that market, we'd be
having a "son-of-derivatives-shock" of fairly massive
proportions right now. Well apparently, the same thing on a
less exaggerated level is going on here in Japan as well.
Japanese banks hold around one quarter of their 445 trillion yen
loan balances as home mortgages. The national Consumer
Affairs Center of Japan says that in the last six months it
has had 1,625 mortgagees approach it since April, after
losing their jobs, up about 50 percent over the same period last
year. This of course is a much smaller rate than troubled
mortgages than in the U.S., but since Japanese are not
normally complainers, it is highly likely that these 1,600
people are just the tip of a much bigger iceberg. Indeed,
this is suggested by the fact that Bank of Tokyo-Mitsubishi
is getting about 500 consultations per month at present, up
about 200 percent over the first half of this year, and the other
major banks are experiencing similar surges.
There are other indications that things are serious in the
private mortgage market -- and remember we're not talking
subprime debt, but regular salary men (typically men) with
regular jobs, going underwater. We were told recently by
the leading player in vacant home management that there are
about 4.5m vacant properties in Japan -- about quarter of
the much publicized 20m vacant homes in the USA. We also
heard that court confiscation of properties with unpaid
taxes is soaring. Certainly the increasing volume of
tax-seized properties being sold for cents in the dollar
(sen in the yen?) online seems to provide evidence of this.
3. Government spending bubble
Then don't get us started on the DPJ's plans to increase
Japan's public lending balance from 218 percent of GDP this year
to 246 percent by 2014. Coupled with a 20 percent reduction in tax
revenues this year and debt servicing costs amounting to a
full 20 percent of the national tax take (the government now pays
26 billion yen a day on bond interest payments), things are
looking really serious for the nation's public finances.
One wonders if the government can really keep up all the
subsidies and stimulus programs that were promised prior to
the election, and just where they think the money will come
from? Massive additional Quantitative Easing (QE) through bond
issuance is going to get harder to do as buyers get more
nervous and realize there is no real plan to reduce the
debt. Indeed, a meltdown is just a market panic (like the
one of last year) away.
An excellent review of the risks of current government
policies is covered here:
So to sum up, the stock markets may be up, and after a
year's time-out, consumers globally are having to replace
some of their fixed asset base with new cars,
refrigerators, and other China-made, Japanese-branded
goodies -- leading to a temporary improvement in the
nation's trade surplus and employment figures. However, our
take is that we are living on borrowed time, and as the
government starts to run up its public debt to such a point
that buyers of government bonds (JGBs) baulk at their
creditworthiness, there is a odds-on chance that we will
see a repeat of last year's meltdown sometime in the next
Thus, our advice, and certainly we're taking this
ourselves, is to repair your balance sheet as quickly as
possible, and get ready for another round of financial
OK, a little plug here... It could also be a good time to
start your own company, because scared managers of
potential customers tend to look for innovation and
cost-savings to fix their problems, and they are more ready
to dump cozy established relationships... So, if you
want to take advantage of this market psychology, join our
Entrepreneur's Handbook seminar, the last one until next
February, this Saturday November 14th, in Tokyo.
If you were arrested or had a serious accident in Japan,
who would be there to help you? The short answer is, unless
you're living with a spouse or partner, probably no one.
That's why The Japan Helpline, run by Ken Joseph, is so
We are renewing our appeal to readers to join us in being
one of JHELP's "One Hundred Club" members. If just 100
people sign up to give 3,000 yen per month to Ken's team,
they will be able to cover their costs so that they can
continue to help those of us in need.
Your support keeps The Japan Helpline going.
...The information janitors/
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- Bain Capital to buy Bellsystems24
- Takeda sues Teva
- Chinese grab stake in Biomaster
- Foreigner local voting rights happening or not?
- Foreign law firms bulking up
-> Bain Capital to buy Bellsystems24
It looks like Bain Capital will be the buyer of Citibank's
telemarketing portfolio company, Bellsystem24, a company
that originally belonged to CSK. Bain is reportedly
offering around JPY100bn. Bain has until November 11th to
close the deal, having beaten out Permira Advisors and CVC
Capital working with Blackstone Group. Citi will be happy
to be getting the cash, although it is apparently less than
the 151 billion yen ($1.66 billion dollars) Bellsystem24 was originally valued
at when they bought up the rest of the company's shares
along with their Nikko acquisition. (Source: TT commentary
from americanbankingnews.com, Nov 4, 2009)
-> Takeda sues Teva
Per our news item below about foreign law firms bulking up
to help Japanese companies protect their IP, Takeda
Pharmaceutical has just announced that it is suing Israeli
generic drugs maker Teva Pharmaceutical, for infringement
of a U.S. patent on Takeda's Rozerem sleeping tablets.
Takeda says that it is protected by a patent until 2017,
but Teva reckons that the Takeda patent is invalid because
the invention is obvious. ***Ed: The market also seems to
think that Teva will prevail in this one, with its stock
rising after the law suit was announced.** (Source: TT
commentary from bloomberg.net, Nov 6, 2009)
-> Chinese grab stake in Biomaster
A leading biotech company providing adipose-based stem cell
therapies, Biomaster, has sold a big stake in itself to
Shenzhen-based Beike Biotechnology, China's leading stem
cell research firm. Beike seems to have made a very canny
investment, picking up the China and global partnering
rights for Biomaster's cosmetic surgery applications.
Biomaster is the only company licensed by the Health
Ministry to offer stem-cell based therapies to the public
in Japan. Its main commercialization has been a
proprietary technique called Cell-Assisted Lipotransfer
(CAL), which allows for the extraction of fat from the
legs or belly of a patient, mixes the fat with a stem cell
treatment, then injects the mix into other parts of the
body where a cosmetic or reconstructive effect is desired
-- such as breast reconstruction, breast augmentation,
facial treatments, and buttocks lift. Apparently
Biomaster's success rate is much higher than for
conventional lipotransfer methods. ***Ed: If Chinese
nouveau riche women worry about body augmentation as much
as Japanese women do, then Biomaster should do very well
in China.** (Source: TT commentary from reuters.com, Nov 5,
-> Foreigner local voting rights happening or not?
While the DPJ's list of policy proposals prior to being
elected included granting local authority voting rights for
permanent resident foreigners, PM Yukio Hatoyama is now
backtracking by saying that effecting such legislation
would be "difficult" -- presumably because of political
back lash feared from Japan's right. ***Ed: Hmmm, this is
the same DPJ that repeatedly submitted bills to give
foreign residents the vote. Surely Japan could take a leaf
from the notebooks of other countries that allow foreign
residents to vote, even though they are not citizens. Our
view is that if it's good enough to tax foreigners, they
should have the right to choose who gets to legislate that
tax.** (Source: TT commentary from japantimes.co.jp, Nov
-> Foreign law firms bulking up
According to the Nikkei, 3 of Tokyo's major foreign law
firms are bulking up on staff, on the back of increased
international patent, M&A, and contractual actions being
encountered by Japanese firms. The three are Baker &
McKenzie, which now has 122 staff, up 7 from last year;
Morrison Foerster (MOFO), which has 70 lawyers; and White
& Case, which also has about 70 lawyers. MOFO is quoted as
saying that it has been handling an increasing number of
patent infringement cases, such as its recent
representation of Pioneer and Funai Electric as they filed
claims in the USA. (Source: TT commentary from
nikkei.co.jp, Nov 5, 2009)
NOTE: Broken links
Many 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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Formed in 1998, BiOS is a full-service IT solutions
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* IT Infrastructure Projects, Office Setups/Relocations
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* IT Personnel Outsourcing and Recruiting
* BiOS NetCare: Bilingual IT Service Desk and Support
* BiOS Advanceserve: Secure Online Data Backup (free trial)
BiOS is committed to providing quality services at
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+++ CANDIDATE ROUND UP/VACANCIES
=> BiOS, a Division of the LINC Media group, is actively
marketing the following positions for customers setting up
or expanding in Japan, as well as other employers of
** HIGHLIGHTED POSITION(S)
BiOS is recruiting a senior IT tech support manager for an
expanding telecoms services and equipment provider to lead
the global services delivery organization in Japan, and
to take responsibility for customer satisfaction through
warranty support, delivery of core maintenance and the
effective use of other tools and services that the customer
provides. In addition to this you will be regularly
coordinating with decision makers in HQ to provide services
on all products, as well as taking the lead in technical
training and the introduction of new products. This is an
exciting role for an experienced technical engagement
manager to bring their experience to bear in a dynamic and
rapidly growing business.
First and foremost, the successful applicant will have
exceptional communications skills, combined with a high
level of fluency in both English and Japanese, with one of
those ideally at native level. As well as this and your 8
– 10 years experience, including management, in high tech
or teleconferencing businesses, you will have a strong,
assertive personality and will be able to negotiate
effectively with both end users and internal decision
makers to further enhance the position of your unit within
the entire department, and motivate those around you to
deliver that little bit extra required to succeed.
Remuneration is 11.0 million yen – 16.0 million yen depending on your
** POSITIONS VACANT
- Level 1/2 Helpdesk/Desktop support engrs, 3 million yen – 5 million yen
- Technical Support engr, Miyazaki, Kyushu, 3 million yen– 4 million yen
- IT Support Analyst, Tokyo Law Firm, 3.5 million yen – 5 million yen
- FileNet Architect, European Insurance co., 6 million yen – 7.5 million yen
- AS400 Engr, European Insurance provider, 3 million yen – 3.5 million yen
Interested individuals may e-mail resumes to:
** BiOS Job Mail
Every 2 weeks BiOS sends out a regular communication to its
job seeking candidates, called BiOS Job Mail. Every edition
carries a list of BiOS's current and most up-to-date
vacancies, with each entry featuring a short job
description and a direct link to the main entry on the BiOS
home page. Regardless of whether you are unemployed and
searching, thinking about a career change, or just curious
to know if there is something out there that might suit you
better, the BiOS Job Mail newsletter is an easy and
convenient way for you to stay informed. If you would like
to register for the BiOS Job Mail, or to find out more,
please email firstname.lastname@example.org.
Interested individuals may e-mail resumes to:
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+++ UPCOMING EVENTS/ANNOUNCEMENTS
----------- Entrepreneur Association of Tokyo -------------
Seminar:Tuesday, November 17th
Speaker: Takashi Sakamoto, Founder, former CEO of BOOKOFF
Corporation and President of New Value Corporation
In 1991, Sakamoto-san left his career selling used pianos
to establish BOOKOFF Corporation Limited., which has grown
into Japan's largest used bookstore with over 1000
locations. Like most great business ideas, Sakamoto-san's
idea for BOOKOFF was extremely simple; sell used books in
a clean, organized, well-lit environment with well-trained
and friendly employees.
Seating is limited to 300 so please sign up early.
Date/Time: Tuesday, November 17th
- Doors open at 6:15, Seminar starts at 7:00
Location: GRIPS (National Graduate Institute for Policy
Language: Japanese (Simultaneous J->E interpretation)
--------------- CCH Labor Law Seminar ---------------------
Labor and Employment Law Update seminar.
1.Review of provisions of the current statute
- Basic regulations on working hours and holidays
- Overtime work and overtime work allowances
- Annual paid leave
- Increase ratio of overtime work allowances
- Unit of the annual paid leave
- Substitute holidays
- Child care and Family care leave
Date: Thursday, November 19, 2009 1:30PM-5:00PM
Venue: Happo-en (5F, Linden) (1-1-1 Shirokanedai Minato-ku)
Fee: 20,000yen +Tax
Please register from following URL:
Number of seats: 50 seats
Speaker: Hideki Kano (Anderson, Mori & Tomotsune LLP)
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------------- iWine Tasting Gala in November --------------
en.iwine.jp presents its Winter Wine Gala
- Come try 100 wines for only 3,980 yen on Nov 25!
Want to find a favorite wine?
Why not do it the way the pros do: by tasting lots of wines
at once! en.iwine.jp is proud to present a large-format
wine tasting event, featuring over 100 wines from all
around the world. Take your time and taste a variety of
flavors from the varietals and styles you enjoy most... or
branch off on a new journey of exploration. Lots of new
wines will be on offer and some fantastic deals and
discounts on pre-orders will be available on the night,
just in time for Christmas!
Other beverages and food available as desired, order and
pay at the bar.
Wednesday Nov 25, 2009, 7:30-10:30pm (cash bar after 10:30)
Venue : 57 Fifty Seven
Tickets limited to only 250 and only sold online.
Click here: http://en.iwine.jp/wintertasting
to find out more information and purchase tickets!
------------------- ICA Event - Nov 19 --------------------
Speaker: David Sweet, Ph.D., Senior Manager
- Specialized Group K.K.
Topic: Secrets of Headhunters: Best Practices in
Recruitment for Finding a Job in a Tough Market
Details: Complete event details at http://www.icajapan.jp/
Date: Thursday, November 19, 2009
Time: 6:30pm doors open, buffet dinner included, cash bar
Cost: 4,000 yen (members), 6,000 yen (non-members)
Open to all-venue is Foreign Correspondents' Club of Japan
In this section we run comments and corrections submitted
by readers. We encourage you to spot our mistakes and
amplify our points, by email, to email@example.com.
*** No feedback this week.
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+++ ABOUT US
Written by: Terrie Lloyd (email@example.com)
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------------ Japan Inc is worth every penny! --------------
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trends in Japan, each beautifully designed full-color issue
brings you in-depth analysis of business, people and
technology in the world's second largest economy.
Visit www.japaninc.com for more information
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