TT-467 -- Taking it slow during Golden Week, 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, April 27, 2008 Issue No. 467

+++ INDEX

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

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+++ WHAT'S NEW

Here we are at the start of what normally for many is one
of their longest holiday breaks -- Golden Week ("Renkyu").
But not this year -- as neither of the two weeks that the
holidays occur in provides workers more than 2 days off.
Normally, the 4 days: Showa Day, Constitution Day, Greenery
Day, and Children's Day would generate a string of holidays
up to 7 or 8 days long, but because this year two of the
days fall on the weekend, we only get a single compensation
day on Tuesday, May 6th. Next year is better, we get 5
consecutive days.

This hasn't deterred a number of traditional companies from
going ahead and giving their employees some extra time off
-- so next week it will be hard to order anything from
factories or service companies. We know because we just
tried to get a new TV installed. No way Jose, we'll have to
wait until at least May 7th or 8th -- ten days from now.

But while some lucky workers are getting a couple of bonus
days off, most are not. This is apparently the main reason
why the number of tourists expected to travel overseas
this Golden Week is likely to fall almost 15% from last
year, to 458,000 people. This is the biggest drop since
2003, when SARs scared everyone into staying home. SARs of
course is just a faded memory (other than the government
which has a stock pile of 35m doses of Tamiflu), and this
year, 269,000 people will still make the pilgramage to Hong
Kong, South Korea, and/or China.

But it seems that there are other factors besides the
scattered nature of the holidays which are keeping the
Japanese at home during Golden Week, 2008.

[Continued below...]

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[...Article continues]

As far as Asia is concerned, the Japanese are a relatively
peripatetic nation, with around 17m people making overseas
trips and 22m taking domestic holidays in 2007. This is
equivalent to 32% of all its citizens taking a holiday away
from home at least once a year. Golden Week is a
particularly important travel period economically.
Destinations like Hawaii receive about 458,000 Japanese
tourists a year, and about 1/3 of them travel during Golden
Week, spending an average US$269 a day, almost double the
US$169 Americans from the mainland spend.

Those who don't go overseas instead journey to Tokyo and
other major centers to shop. Last year 1.5m people visited
the then-new Mitsui Midtown shopping/office complex in
Roppongi. Department stores such as Daimaru saw shopper
numbers rise by around 12%. Taxi company Nihon Kotsu had
its fare earnings increase by JPY1,300 per cab, due to
customers making round trips to Haneda airport and the
city. In Osaka, sales at the Namba Parks entertainment
complex soared 170%.

Some of the reasons that JTB, Japan's largest travel
agency, is giving for the international tourist drop-off
this year include the higher fuel surcharges, adding up to
10% to ticket prices; the Chinese gyoza food scare; and
just the simple lack of holiday budget by families and
younger people who have historically flocked to Hawaii and
other international destinations.

This last point is in our minds probably the biggest factor
affecting travel statistics in general -- not just
international travel. Although one would think that the 13%
revaluation of the yen versus the dollar would make Hawaii
and similar dollar-tied destinations a lot more attractive,
it seems that the cloud of pessimism which has been hanging
over the Japanese economy since the subprime news started
breaking last summer, is still very much affecting the
moods of both employers and workers alike.

As polls are showing, the average Japanese appears to be
very concerned about their overall future -- the Cabinet
Office's March consumer confidence poll showed that just
36.5% of households in the period January-March were
confident about the future, the lowest level of confidence
since June 2003, when it was 36.1%. A reading of less than
50% indicates a general mood of pessimism in the nation. So,
perhaps it is natural that people are less likely than ever
to want to lay out thousands of dollars on a trip when
doing so might create a shortfall in their budget if the
prices continue to rise.

And this is not a new trend. Overseas travel has dropped
each year over the last two years, and has only just barely
retraced the levels of pre-SARs 2002. However, whereas in
previous years falling international travel was offset by
local visits to onsen and tourist spots around the country,
this year JTB is also forecasting a slight drop in domestic
tourists, to 21.44m people. Gunma reckons its visitor
numbers to onsen this year will be down around 5%.

The feeling of pessimism (or realism?) is nowhere more
pronounced than amongst young adults in their 20's. While
in 1996, around 4.63m people in this age group traveled
overseas, in 2006, only 2.98m did -- a fall of 35.7%. This
huge drop can be explained by simple economics. Although
the job market is tight, companies are not opening their
purse strings to employees -- they're scared too, and thus
real income for workers in their 20's has dropped almost
yearly since 2001. Recent inflation is speeding up this
deficit. JTB says the average Japanese tourist spends about
JPY214,000 on an overseas trip, and that is several
thousand dollars more than a worried single is prepared to
pay. Indeed, the Statistics Bureau gives the average
2006 disposable income of under-34's, who have their own
apartment as being just barely more than JPY20,000
(US$200) per month -- hardly enough to do any travel on.

As a result, not just travel, but other forms of youth
spending such as autos and alcohol have also dropped.
According to a recent Nikkei article, the Japan Automobile
Manufacturers Association says that the ratio of cars owned
by young men in their 20s dropped from 81% in 1995 to 74%
in 2005. Another survey found that single males 34 years or
younger were last year spending 26% less on alcohol then
they did in 2002.

So is there a silver lining to a slow golden holiday
period? It seems there is. In 2002, the number of people
killed in Golden Week accidents was 224, while last year,
just five years later, 119 died this way. More notable was
the fact that only 12 people died through drunk-driving
accidents versus 29 in 2007.

Japan's youth appear to becoming a generation of worried,
sober bicycle and train riders, who stay at home
or meet friends during Golden Week...

************

Next week there will be no Terrie's Take, as this is one of
the 4 weeks a year we take a break. We'll be back on May
11th.

...The information janitors/

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

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+++ NEWS

- Rice flour instead of wheat?
- Fujifilm profit bounds 80%
- New support for Internet homeless
- Bosch makes share buy-out offer on Japan unit
- India's Lupin sub gets approval for 10 generic drugs

-> Rice flour instead of wheat?

Due to the surge in wheat prices recently, 90% of which is
imported, the government has started laying plans to
substitute wheat flour with rice flour -- with legislation
due as early as next year. Currently the production of
flour from rice is limited and accounts for just 2% of the
overall amount of flour consumed in Japan. ***Ed: Over the
last 12 months, the price of wheat has doubled and although
rice flour still costs twice that of wheat, the plan is to
free up some of the surplus grain still being held from
previous years, and to subsidize its conversion into flour.
Of course, if the government simply let foreign rice in
without the huge tariffs, then rice flour would actually be
twice as cheap as wheat flour... But then that wouldn't
conveniently soak up the surplus, would it?** (Source: TT
commentary from nikkei.co.jp, Apr 27, 2008)

http://www.nni.nikkei.co.jp/AC/TNKS/Nni20080426D26JFF03.htm

-> Fujifilm profit bounds 80%

Talk about great timing. Barely 4 weeks after our last
coverage (TT462) of Fujifilm and how we thought the company
was doing good, its management have announced that
the group operating profit for FY2007, ending March 31st
2008, will leap 80% to an all-time high of JPY210bn. The
spectacular result is thanks to continued strong demand for
its products across-the-board, and particularly for medical
diagnostic imaging systems, high-value-added LCD materials,
printing materials, and cell phone camera lenses. ***Ed:
We expect to see functional foods and pharma products to
feature strongly next year and the year after.** (Source:
TT commentary from nikkei.co.jp, Apr 27, 2008)

http://www.nni.nikkei.co.jp/AC/TNKS/Nni20080425D25JFA07.htm

-> New support for Internet homeless

After months of media coverage about penniless young people
in Tokyo being forced to live in Internet cafes, the Labor
Ministry in cooperation with the Tokyo Government has
opened a Shinjuku support center for the youngsters, as
well as allocating budget to action the programs that the
center now offers. The Ministry reckons that there are
around 5,400 Internet cafe refugees, and hopes that they
will contact the Tokyo Challenge Net center to receive
counseling, medical advice, basic job seeking training,
and loans of up to JPY200,000 yen (US$2,000) for living
expenses and JPY400,000 (US$4,000) for rent payments. Osaka
and Nagoya plan similar support centers. (Source: TT
commentary from afp.google.com, Apr 25, 2008)

http://afp.google.com/article/ALeqM5jgdxDtDrNZp4ScrkV2i24p-XE9cQ

-> Bosch makes share buy-out offer on Japan unit

After 34 years of its stock barely moving, suddenly the
share price of Bosch Corp., have jumped 34% on the news
that the parent company, Robert Bosch, wants to buy the
40% of shares that it doesn't already own. Privately held
Robert Bosch offered a 35% premium over the
pre-announcement TSE stock price. Bosch reckons it will
spend about Eu612m (JPY96bn) on the acquisition. ***Ed: The
high Euro rate makes this a very smart move -- we're
surprised that more European companies haven't tried to do
the same.** (Source: TT commentary from bloomberg.com, Apr
25, 2008)

http://tinyurl.com/48rhwo

-> India's Lupin sub gets approval for 10 generic drugs

In a "text book" execution, India's Lupin, a major generic
drugs maker, is making great use of its 2007 Japan
acquisition, Kyowa Pharmaceutical. Lupin has just received
Health Ministry approval to roll out 10 generic drugs here,
through Kyowa. The new products will start becoming
available from July, 2008. The Japanese government has
already embraced the use of cheap generic drugs in public
health, and Lupin has exhibited superb timing both with its
M&A and also with their product pipeline. According to
IMS2007, the Japanese market for generics is around
US$2.65bn and is expected to grow. (Source: TT commentary
from sify.com, Apr 25, 2008)

http://sify.com/finance/fullstory.php?id=14656079

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

+++ UPCOMING EVENTS/ANNOUNCEMENTS

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

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

______________________________________________________
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.

-> Subject: In our review on the Japanese web business, in
Terrie's Take No. 464, we discussed what makes a web page
commercially viable to a large operator like CyberAgent.

Reader: Regarding this paragraph from your newsletter,
TT464: "Maintaining a new website is not cheap, and a major
discussion internally is on how to commercialize the site.
CyberAgent's shacho reckons that you need around 3bn PVs a
month to make a site commercially viable. If you're front
loading a business with PR expenses, this is probably true,
however, in our experience, a site with more than 3m PVs
(just 10% of what CyberAgent reckons) and around 20,000
users is enough to start drawing advertisers -- so long as
you have a well defined audience that advertisers
can't easily or accurately reach through other means."

Unless I'm misreading, you seem to be saying 3,000,000
is 10% of 3,000,000,000... I'm concerned about how to
commercialize my own site after it is redesigned this year,
so these numbers are important. Could you clarify this? I
suspect the 3 billion is wrong.

Our response: In actual fact, the number is correct. Ref:
http://www.nni.nikkei.co.jp/AC/TNKS/Search/Nni20080124D23JFA05.htm
The incorrect number was our saying that the smaller sites
at 3m PVs comprised 10%. Of course the ratio should be 0.1%.

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

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+++ ABOUT US

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Newsletter:

Comments

Of course, if the government simply let foreign rice in
without the huge tariffs, then rice flour would actually be
twice as cheap as wheat flour... But then that wouldn't
conveniently soak up the surplus, would it

The "strategic rice reserve" has to be good for something!

business