TT-693 -- Bonsoy Class Action in Australia, ebiz news in Japan

* * * * * * * * * T E R R I E 'S T A K E * * * * * * *
A weekly roundup of news & information from Terrie Lloyd.

General Edition Sunday, Jan 13, 2013, Issue No. 693


- What's New -- Bonsoy Class Action in Australia
- News -- High-end taxes going up
- Upcoming Events
- Corrections/Feedback
- News Credits

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Sometimes an event pops up which is a classic sign of our times. Such is a little publicized class action court case going on in the Supreme Court in Victoria, Australia, which may have long-term ramifications for smaller Japanese health food exporters. The case is being prosecuted on the behalf of over 600 claimants and revolves around a soy milk product called Bonsoy, which is produced for Australian company Spiral Foods by Marusan-ai of Aichi-ken.

The action comes from the fact that in 2003 Spiral Foods asked Marusan-ai to reformulate its exported soy milk to replace ordinary salt with Konbu as a salt alternative. No doubt Spiral Foods thought this would be healthier, but neither they nor Marusan-ai, nor their middleman trading company Muso Corp., bothered to check the safety of the formulation after making the switch. Then, in 2006 a test in Japan was done on Bonsoy, which found the product to have 30mg of iodine per liter, which is at least 100 times the U.S. recommended daily allowance for adults.

Around this time and over the next 3 years, Spiral Foods received a number of inquiries from concerned users, but only in 2009 did they finally pull the product and reformulate again, this time without the konbu. As a result, the law suit claims that Spiral foods, Marusan-ai, and Muso jointly neglected to act in a timely manner on information that their product had excessive levels of iodine, and thus caused many consumers to get sick with overactive thyroids.

[Continued below...]

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[...Article continues]

Before we move on to what the implications of this law suit will be, the question might be asked: is konbu and for that matter taking large doses of iodine safe or not? After all, after the Fukushima nuclear explosion, many people ordered in Potassium Iodide (KI) tablets as a precaution. They typically took 130mg per day for some weeks, so as to flood their systems with iodine and thereby prevent absorption of the radioactive kind being emitted from the power plant. Others, instead of taking KI tablets, chowed down on konbu, which in a large helping can deliver up to 10mg of iodine (although this is highly variable depending on how the Konbu is prepared).

Of course the Japanese have been eating konbu for generations, so they know a thing or two about it and iodine consumption. Up until two generations ago they were ingesting 6-8mg daily, almost as much as the Australian law suit is claiming (10-20mg) made people sick, so maybe it is this fact alone that made maker Marusan-ai complacent. Currently the average Japanese eats about 1mg-2mg of iodine daily, and even the Japanese Health Ministry sets the upper safe limit as 3mg a day, about 10 times more than the U.S. upper recommendation.

Perhaps a mitigating factor for the Japanese in terms of high iodine intake is that studies have also shown that high intakes of cruciferous vegetables inhibit the take-up of the mineral -- suggesting that so long as you are eating a whole-spectrum traditional Japanese diet (kaiwari, cabbage, various winter veges), that you can probably eat a lot more konbu/iodine than someone abroad who doesn't have the same diet.

Unfortunately for Spiral and Marusan-ai, those diet differences meant that Australian consumers taking 10mg-20mg of iodine via Bonsoy daily, as many were doing, caused hundreds of them to start getting sick, some seriously so, and being diagnosed overactive thyroids. Their symptoms ranged from hyperactivity, mood swings (such as anxiety, irritability and nervousness), insomnia, fatigue, and muscle weakness, through to diarrhoea, steatorrhoea, sensitivity to heat and excess sweating, unexplained or unexpected weight loss, infrequent or light periods, and infertility. In other words, it's a pretty long list and the effects can be debilitating.

The good news is that for most of those people affected, where the cause of these symptoms is ingestion of excess iodine alone, then stopping consumption alleviates the symptoms within 6-8 weeks. Maybe this is why Japanese doctors don't panic when they see these symptoms in a konbu-eating patient. Instead they just tell the person to cease and desist for a while.

In any case, the law firm conducting the class action, Maurice Blackburn, has a strong track record, and observers are predicting that Spiral Foods, Marusan-ai, and export firm Muso, may be in for a collective penalty of millions of dollars, plus of course very tarnished reputations. For Marusan-ai, which is a middle-size firm listed on the Nagoya stock exchange, the fines could put them out of business (although we wonder if a judgement in Australia will be enforceable in Japan?). We guess that all will be revealed mid-this year, when the Victorian Supreme Court is due to reach a decision and gives its verdict.

What this case means for Japanese food exporters, and particularly health food exporters, is that they need to remember that just because a product has been traditionally consumed in Japan without ill effects, traditions are not standards. Consumers abroad are eating these products out of context and often inappropriately, and so they need to be educated and listened to, making formula changes or issuing consumer warnings on the packaging as necessary.

Recently we heard of another (major) Japanese food products company that has had its formulated product brand on the store shelves for 60 years, without ever testing that product. They've never had a consumer complaint, and so as far as they are concerned their product is safe. But in this day and age, all food companies carrying formulated products owe it to themselves to check such formulations are safe.

Secondly, Japanese SME exporters need to understand that dealing through a trading company doesn't protect them from legal and image liabilities abroad. If they made the product and come to learn that there are questions about it, then they need to pay attention and proactively remediate the problem. In this particular case, if Marusan-ai knew in 2006 that konbu content was an issue, because after all the iodine test results came from Japan, it should have warned Spiral Foods and thus reduced its culpability.

Further, they need PR control, something that isn't happening in Australia. Instead, Marusan-ai and its trader, Muso, look negligent through inaction and the local media having now taken up the case are swaying public opinion accordingly. As a result, even if both companies survive the court fines, their market in Australia and perhaps elsewhere will be ruined for a generation.

In short, Japanese SMEs have to realize that with new export earnings comes new responsibilities.

...The information janitors/


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+++ NEWS

- Softbank to jettison eAccess shares
- First LDP fiscal stimulus is large
- High-end taxes going up
- Spotify coming to Japan
- Taiwanese bank may buy Tokyo Star Bank

=> Softbank to jettison eAccess shares

It looks like the Communications Ministry has convinced Softbank to off-load at least 67% of the shares it owns in eAccess, so as to avoid administrative action over Softbank holding more than its fair share of mobile radio frequency spectrum. Softbank is apparently going to sell the shares to Samsung, Ericsson, Orix, and 8 other companies -- who will each receive a similarly sized share. Softbank will apparently make a handy profit over the divestment. ***Ed: We find it strange that the 11 new buyers would bother with the purchase, since none of the companies will have sufficient dominance in eAccess to influence the way the company is run and therefore will be leaving minority shareholder Softbank with continued control. Maybe Softbank has offered the new partners some future business in return? Oh, to be a fly on the wall of related Softbank board meetings...** (Source: TT commentary from, Jan 13, 2013)

=> First LDP fiscal stimulus is large

The new LDP cabinet has approved a new round of stimulus spending, totaling JPY20trn. Most of the money will go to construction work to beef up the country's infrastructure (whether such work is needed or not), and an extra JPY100bn for the military to spend patrolling and defending the Senkaku islands from China. This spending is just the start, apparently, and Abe has indicated that there will be a completely new budget for the fiscal year starting April. ***Ed: We expect a big blow-out budget by Abe and co., so as to help them win the Upper House election in summer. At the same time, we also expect the massive amounts being spent by the government to have little effect on the economy. Japan would need to see the yen go back to JPY120-JPY150 to the US dollar for a sustained period (several years) for the current monetary policy to really help -- hard to see the US allowing this to happen.** (Source: TT commentary from, Jan 10, 2013)

=> High-end taxes going up

Following a similar trend overseas (USA and France), the LDP is apparently considering raising taxes on people earning more than JPY18m a year. The current top tax rate is 40% and this will be increasing to 45% in 2015. The new tax level will apparently increase the government's tax take by about 200bn annually. ***Ed: We see this as yet another reason foreign executives will avoid Japan and domicile in either Singapore or Hong Kong. The reality is that the government is doing this as a populist move to partially distract the public from the oncoming sales tax rise next year.** (Source: TT commentary from, Jan 11, 2013)

=> Spotify coming to Japan

According to music industry website,, both Spotify and Rdio, two major international online radio subscription services, will be launching in Japan in the next few months, although they haven't said when officially. Apparently Spotify is discussing with Japanese record labels about terms and conditions for streaming their music, which after Sony would make it only the second company to offer online music on a subscription basis (versus buying the songs on iTunes or a similar service). ***Ed: This has to be bad news for radio stations, since one of Spotify's main points of focus will be reaching users who are currently downloading music with more conventional online services. Apparently mobile downloads accounted for 67.6% of Japan's total digital music sales.** (Source: TT commentary from, Jan 11, 2013)

=> Taiwanese bank may buy Tokyo Star Bank

Ever since Tokyo-based fund Advantage Partners ran out of cash in 2011 to pay interest on loans used to buy Tokyo Star Bank, the lenders have been looking for a buyer for the mid-sized bank, but without much luck. Finally, it looks like they may have a buyer in the form of Taiwanese Chinatrust Commercial Bank. According to the Nikkei, the Taiwanese proposal is for a purchase of Tokyo Star Bank's shares for around JPY50bn. ***Ed: Interesting to see the shareholders taking such a big haircut. The Financial Times said in 2011 that the shareholders were owed about JPY170bn in debt, so they appear to be getting just 30% back in this deal. Not surprising, since running a small bank profitably in Japan these days is hard work.** (Source: TT commentary from, Jan 10, 2013)

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.


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" traditions are not standards" Brilliant. Keep em coming Terrie, you make all of us smarter.

Not sure why this this is a sign of the times. Company sells dangerous product (which is heavily promoted as being healthy) and people get really ill (some people have had their lives ruined). People sue for recompense. Seems fair to me.

Drawing parallels between a normal Japanese diet, let alone taking iodine tablets to guard against nuclear radiation sickness, is just being silly.

Here's a product that had questions over it for quite a few years, was tested several times after consumer concerns and which was materially unsafe.

It was only pulled after a cluster of illnesses occurred.

You might want to read to get a better grip on the actual implications.

The whole straw man argument that Australian/western diets are iodine deficient utterly irrelevant, too.