Message from the Publisher

Terrie LloydTerrie Lloyd
2007 - A Tale of Two Halves

Last year was a year to remember. It was punctuated by two strong cross-currents: frantic activity and optimism in the first half of the year, then a loss of confidence, caution and a lot more frantic activity of the negative sort in the second half.

Japan began 2007 in buoyant mood, as companies holding on to their cash in case of a predicted downturn, found that they could expect even more growth carrying on from 2006. The stock market looked good, land prices were moving up, and so on. On the ground, we noticed a large upturn in general business inquiries, an increased number of creative deals and proposals, a few more smiles, and commentators noting that they haven’t seen such a sharp rise in business confidence for at least 15 years. Things were running hot for Japan’s economy.

However, those growing smiles were stopped in their tracks in the second half of the year, due to the US subprime credit implosion. The Nikkei dove back down from the 18,000s into the 14,000s, recovering slightly by the end of the year, but in general the current economic recovery has been seesawing on the back of news and events in the US. Those who predicted that Japan was decoupling from its dependence on the US markets, forgot about a little thing called consumer confidence. The US has been big brother for so long that people just naturally expect the worst when things get difficult there.

Until the full extent of the fall-out, predicted by some to exceed one trillion dollars, is known, the first quarter of 2008 should be one of caution and slowing pace. In particular, we’re seeing the effects of tightened credit on M&A, corporate lending, and speculative investment. Having said that, if the US is able to avoid or quickly re-emerge from recession, then the Japanese economy may well come back strong. The fundamentals still look good, it’s the consumer and industry confidence factor that is critical. In particular, we’re expecting more M&A, more technology-cash tie-ups, and more foreign investment in 2008.

The boom in M&A experienced in 2006 continued into the first half of 2007 as well. Even the government got in on the act, loosening regulations on triangular mergers, effectively making it easier for foreign companies to acquire their Japanese counterparts. However they then negated any gains through the Supreme Court’s ruling in favor of Bull-Dog Sauce adopting a poison pill protection against an attempted takeover by foreign fund Steel Partners. This was a short, sharp reminder that Japan does not always follow the Western rules of the market, and that we shouldn’t get too carried away with any of our fancy foreign ideas.

That said, here at J@pan Inc, we were able to contribute to the M&A frenzy by acquiring and bringing Metropolis magazine into the J@pan Inc Holdings group. We are delighted to now be publishing both Japan’s largest independent English business and lifestyle magazines.

This is the 75th issue of the J@pan Inc magazine, and it has come a long way since its humble beginnings in 1994 in its previous incarnation as Computing Japan. Readers may recall that we not only tried to make a go out of niche publishing in English, we targeted computer users—ensuring 100% audience penetration of a market segment that was all of 5,000 readers. These days we print 25,000 copies of J@pan Inc and we’re no longer quite so niche. Actually, as an aside, I was emailed a few weeks ago by a dedicated reader who told me that he had kept every issue of Computing Japan, despite his wife trying to throw out ‘those moth-eaten rags’ several times, because “they might be valuable one day.” That’s the kind of people we need as readers!

In 2007, we saw the implosion of the mighty Nova Eikaiwa school group, the beating that ex-PM Abe suffered in the Upper House elections, the privatization of Japan Post, and the introduction of the new foreign fingerprinting law. What chance is there that 2008 could be even more exciting?

Terrie Lloyd

Terry Lloyd's Signature

Publisher, J@pan Inc Magazine
Writer of Terrie’s Take
terrie@japaninc.com

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business