TT-440 -- JMEC, ebiz news from Japan

* * * * * * * * * T E R R I E 'S T A K E * * * * * * *
A weekly roundup of news & information from Terrie Lloyd.
(http://www.terrie.com)

General Edition Sunday, October 07, 2007 Issue No. 440

+++ INDEX

- What's new
- News
- Candidate roundup/Vacancies
- Upcoming events
- Corrections/Feedback
- News credits

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+++ WHAT'S NEW

While Japan is in the middle of an economic boom, it may
surprise you to learn that the number of new companies
being established in the last 3 years has been
plummeting -- due both to the aging population and also a
distinct lack of risk-taking by the nation's youth.
According to METI, about 290,000 companies shut down
annually between 2001 and 2004, while only 168,000 started
up. This is a worrying trend and over a period of 10 years
will represent a reduction of a full 20% of the nation's
4,338,000 (2004) registerd companies.

Granted, many of these companies were small- or
Medium-sized enterprises (SMEs), and in fact, METI reckons
that about 99% of Japanese firms are SMEs. METI also says
that almost 70% of these firms are sole proprietorships,
and that over half of them do not employ regular workers,
preferring instead subcontractors and part-timers. This
means that as the CEO retires there is no one left to run
the company.

Although we could expect that most of the closures are due
to the founders retiring at the age of 60 or more, you may
also be surprised to learn that a large percentage of
Japan's NEW entrepreneurs are also aged. According to the
National Life Finance Corporation (NLFC), the number of
companies started by someone aged 45-59 is 33.9% (2003).
This is a stark contrast to other nations, where
entrepreneurs tend to be younger and have nothing to lose
by starting up a company.

METI reckons the reasons that oldies start more companies
here are: the ability to start with their own saved capital
(in lieu of the availability of risk capital in Japan), age
discrimination driving older workers out of their salaryman
roles, and personal networks yielding business
opportunities that are too good to pass up. METI says that
younger entrepreneurs are in short supply, and due to the
lack of cash and experience they tend to create
skill-specific "boutique" businesses. The oldies on the
other hand create man-power driven businesses to take
advantage of relationships.

So is Japan doing anything to re-establish the role of
younger risk-taking entrepreneurs?

[Continued below...]

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[...Article continues]

As many readers will be aware, in April of last year, new
legislation took effect that has made it much easier for
people to establish a company. The so-called "One Yen"
company laws have substantially lowered the cost hurdle to
that of the establishment paperwork and hiring a judicial
scrivener, revenue stamps -- plus one yen. Effectively it
now costs about JPY350,000-JPY400,000 to set up a company
(if you're a native Japanese speaker and don't have to
translate reams of materials for some overseas parent
company). This cost level compares very favorably to the
JPY3m or JPY10m capital requirements of previous years.

Although the numbers are not out yet, from what we've heard
there has been an uptick in the basic number of companies
formed since the law changes. To spur things along even
more, METI is also making available loans for SMEs to buy
each other out. Apparently companies can now borrow without
collateral (other than that of the target firm) up to
JPY720m (US$6.26m) to buy out a firm whose CEO is retiring.

Japanese universities are also pushing entrepreneurship and
in recent years, entrepreneur classes have become more
popular. Keio started a class last year for undergrads,
called "Entrepreneur 101" at its renowned Fujisawa
high-technology campus, and it currently has an attendance
of about 130 students. Likewise, Todai has a 270-student
course called "Entrepreneur Dojo", and Waseda has its
"Basics for Becoming a Venture Entrepreneur" with about 80
students.

The classes typically culminate in business plan
competitions, which are designed to stimulate both business
sense and also the logical analysis of business
opportunities. While these student numbers are just a drop
in the bucket compared to the 120,00-company deficit Japan
is experiencing every year, it is a start. METI says that
in FY2005, more than 1,500 new start-ups sprang up from
universities.

Another possible source of entrepreneurs is non-Japanese.
Most readers will be familiar with the statistics on
successful high-tech entrepreneurs in Silicon Valley.
Research has found that 52.4% of high-tech companies in
that area are headed by people not born in the USA. The
theory goes that foreigners and immigrants have nothing to
lose by risking everything, and accordingly, some of them
make it.

While it is hard to imagine Japan being as encouraging of
foreign entrepreneurs, the fact is that there are no
regulations beyond those of immigration, which prevent
foreign entrepreneurs doing the same things that Japanese
can. You can borrow, you can employ, you can buy-out
competitors, etc.

There is still a small number of foreigners running their
own businesses in Japan, we would estimate less than 1,000
-- but thanks to a growing entrepreneurship education
program, the number promises to grow. Specifically, we are
referring to the Japan Market Expansion Competition (JMEC),
a business plan education and competition program
supported by many of the foreign chambers of commerce
active in Japan, and which in terms of numbers graduates as
many aspiring entrepreneurs as does a 46,000-student
university such as Waseda.

JMEC's program is open to 50 people a year wanting to learn
about entrepreneurship and how to plan a business in Japan.
Typically it consists of both foreigners and Japanese of
all ages whose common thread is that they want to open new
opportunities, don't mind giving up a lot of free time, and
want to push themselves intellectually and emotionally.
Supporting these participants are sponsors looking for
innovation and ideas that they can't get from more
conventional management consultants, and at a fraction of
the price.

The program works as follows. In November each year, the
new-signed up JMEC participants get together and take part
in a series of lectures focused doing business in Japan.
They listen to experienced business people cover the basics
of business as well as issues unique to Japan. Then in
January they are divided up into teams of 5-6 and assigned
to a project client, or company, who is in need of a
business plan. For the next four months, the teams focus
only on their client's needs. They meet with the
management, learn from sales representatives about the
product or service, and thereafter undertake a variety of
market research, financial analysis, operational studies,
and other activities required by the client.

Judging of the business plans is done in May, and involves
both a written plan as well as an oral presentation.
Winners are chosen on a variety of factors, including
feasibility, financial soundness, quality of the written
plan, and quality of the oral presentation. After the
winners are chosen and awards made, the question has to be
asked, "Do the plans get used?"

In fact they do, either in part or whole. JMEC testimonials
include Gordon Thom, President of Dyson KK, saying, "I was
enormously impressed by the commitment and enthusiasm of
the JMEC team; but most of all by the quality of their
market entry plan," and Jon Doherty, Vice President/Japan
Country Manager of Chubb Group of Insurance Companies,
Federal Insurance Company Japan, saying, "The JMEC report
was prepared in a very professional manner. The data and
findings were an important catalyst for our own thinking
on how best to approach a new market opportunity."

JMEC is now in its 14th year and has contributed almost 350
aspiring entrepreneurs to the foreign business community.
While not everyone goes off to actually form a company,
some do, and we all benefit as a result. To find out how to
become a sponsor or a participant in JMEC this year, visit
www.jmec.gr.jp, or send an email to Beckie Cassidy at
info@jmec.gr.jp.

*********

Lastly, if you're a foreign resident here in Japan, and
like the way you can use the Japanese line at immigration,
you're in for a big shock come November. Read our news
item below about how you'll be forced to join the long
lines at the visitor lines

...The information janitors/

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-----------------------------------------------------------

+++ NEWS

- 60-year old single mom-to-be
- New plating material boosts fisheries survival rates
- Ginren cards let Chinese tourists spend more
- Goldman to buy Simplex for US$1.1bn
- Permanent resident or not, you'll be lining up

-> 60-year old single mom-to-be

If you thought giving birth in your 40's was risky, the
envelope has been well and truly pushed out by the news
that a 60-year old woman living in Suwa, Nagano, has
successfully undergone in-vitro fertilization in the USA.
The woman is 15 weeks into her pregnancy and is apparently
doing well. If she does give birth, she will become the
world's oldest single new mom. Elsewhere in the world, a
66-year old married Romanian woman gave birth in 2005, and
in the UK in 2006 a 63-year old married woman did so.
***Ed: One can only wonder what is to become of the child
itself... We sincerely hope the woman has other younger
family members to help out with rearing.** (Source: TT
commentary from ap.google.com, Oct 4, 2007)

http://ap.google.com/article/ALeqM5jN6g1M5fdQuiCb58O5tTUjm8zDiwD8S2KPT80

-> New plating material boosts fisheries survival rates

A major problem for fish farms is the mortality rate of
fresh eggs, caused by parasitic water mold. Although a
chemical called malachite green is effective in keeping the
mold at bay, it is a suspected carcinogen and was banned in
Japan in 2005. Now, however, Kobe Steel has come up with a
nickel-alloy plating material called Kenifine, which can be
applied to the wire mesh trays used to hold the eggs, and
which reduces the incidence of water mold so significantly
that the yields in fish fingerlings spawned over the
material effectively doubles. Unlike titanium dioxide
coatings, Kenifine does not need light to work, and is much
cheaper to manufacture. The product is being licenced out
to Japanese manufacturers. ***Ed: Kobe Steel is also
apparently thinking of expanding the application of
Kenifine to food factories trying to reduce the incidence
of bacteria in their processing lines.** (Source: TT
commentary from nikkei.co.jp, Sep 21, 2007)

http://www.nni.nikkei.co.jp/AC/TNKS/Nni20070921D20HH614.htm

-> Ginren cards let Chinese tourists spend more

The Chinese bank network debit card system, Ginren, is now
being offered here in Japan, and according to a Nikkei
report, the number of Japanese merchants catering to
Chinese tourists and accepting Ginren account settlement
services is around 7,800 establishments, up 40% over a
year ago. Apparently Chinese tourists are spending about 3
times more per head at mensware, electronics, and other
retail stores than do their Japanese counterparts. (Source:
TT commentary from nikkei.co.jp, Oct 7, 2007)

http://www.nni.nikkei.co.jp/AC/TNKS/Nni20071007D07JF666.htm

-> Goldman to buy Simplex for US$1.1bn

Goldman Sachs has said that it will jointly with New
York-based Aetos Capital buy around 80% of the Simplex
Investment Advisors REIT for JPY124.7bn (US$1.1bn) this
month. Simplex owns 179 properties in Japan, and the total
value of its assets was around JPY622.2bn (US$5.41bn ) as
of March 31st this year. Real estate broker CBRE says that
the vacancy rate is now less than 0.3% in downtown Tokyo,
and 1.4% citywide. The nation's most expensive land is in
central Ginza, and costs JPY25.3m sq. m. (US$2,365 sq.
ft.), only 30% off the peak of the property bubble in 1991.
(Source: TT commentary from bloomberg.com, Oct 5, 2007)

http://www.bloomberg.com/apps/news?pid=20601101&sid=awyDQzOmDXYY&refer=j...

-> Permanent resident or not, you'll be lining up

Although Japan did away with fingerprinting of foreign
long-term and permanent residents some years ago, the
practice is about to make an intrusive reappearance as of
November 23, 2007. A 2006 Immigration law will come into
effect that will require EVERYONE other than "special
long-term residents" (meaning 2nd and 3rd generation
Koreans) to join the tourist line at immigration and
undergo fingerprinting and retinal scanning. While such
procedures are used elsewhere for tourists, in Japan, even
people who have been resident for decades, will, as
foreigners have to stop using the Japanese entry lines at
immigration and switch to the visitor ones. Those with
Japanese families will not be exempted. Nor, apparently,
will aircrew. ***Ed: We're sure that as this comes into
effect, there will be a big stink among the senior
businesspeople in the foreign community and from the
various Chambers of Commerce. We hope the foreign press
will also carry news of Japan's retrograde treatment of
its foreign residents, because this procedure offers no
differentiation between a tourist just in for a week of fun
and a foreign Mom or Dad who has a Japanese national spouse
and kids, and who owns land and pays taxes here.** (Source:
TT commentary from immi-moj.go.jp, Sep 25, 2007)

http://www.immi-moj.go.jp/english/keiziban/happyou/Outline_070925.pdf

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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+++ CANDIDATE ROUND UP/VACANCIES

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entry customers setting up in Japan, as well as other
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+++ UPCOMING EVENTS/ANNOUNCEMENTS

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Topic: Using 'Stories' to Create Winning Presentations

Details: Complete event details at http://www.icajapan.jp/
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IT events announcements are priced at JPY50,000 per week.
For more information, contact sales at japaninc.com

***------------------------****-------------------------***

+++ CORRECTIONS/FEEDBACK

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 editors@terrie.com.

-> In TT439, we carried a news item about Toyota's new
high-efficiency fuel cell, mounted in one of their
production SUVs.

* Our reader says: I have been paying attention to all
things electric motor. The experimental technologies in
this area, particularly in automobile applications, are
quite fascinating. I noticed your story on the Toyota fuel
cell car and wanted to confirm something written there.
Is it true that the Toyota fuel cell car runs on Ethanol?
I thought it was hydrogen...

* We respond: Yes, you are quite correct. The Toyota fuel
cell runs off hydrogen, not ethanol. Thanks for pointing
this out.

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

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+++ ABOUT US

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Newsletter:

Comments

If what you write is true about the requirement to line up and be fingerprinted, then I am totally furious!

I am furious enough that I would consider selling my business, firing all my employees, and certainly stop paying the taxes that help fund this kind of discriminatory ********.

Sometimes they make it really easy to hate this country.

[This comment has been edited for use of inappropriate langauge]

Temper, temper! Its not as if Western civilization doesn't do the same thing to its foreigners. If you are going to the US you will be subjected to a huge number of humiliating experiences. Whats good for the gander is good for the goose. I would get off your high horse and look at what is also happening back in your not so "free world"

This is exactly the argument the Japanese government is using. The US is in fact in the minority when it comes to this kind of treatment of foreign visitors and it has suffered from a big downturn in the number of foreign visitors as a result. I know reasonable people who live in Japan who refuse to travel to the US on principle.

Also, unless you've been living in a cave near Kandahar (or should that be even if you've been living in a cave near Kandahar), you'll know that the US is increasingly a pariah when it comes to setting any kind of international standard.

This new law shows enormous disrespect to the foreign resident population of Japan and is a purely token measure. If you disagree, take a count of how much unattended luggage you see the next time you visit Haneda airport. I sometimes think when I see the 'special anti-terrorist alert in operation' signs that the only action taken to increase security was to put up the damn signs!

What does US policy have to do with this?

I'm not American. I almost never go there and I would certainly not live there.

Are you saying that because the US does this, Japan should not only do the same thing, but take it even further by subjecting tax-payers like myself who contribute to helping the economy of this country to the same treatment as tourists here for a week? Wow, thanks. Obviously you and your government don't want us, though you're happy to take our money.

Hey, there's an idea. Give me a 50% discount on my taxes and I'll line up with the tourists.

Otherwise, please explain why I should pay the same rates as you, but get treated differently when I come "home" to Japan (though obviously you don't want me to make this my home).

business