TT-754 -- Airbnb Legality in Japan, e-biz news from Japan

An Insider's comments on Japan's high tech business world
* * * * * * * * TERRIE'S TAKE - BY TERRIE LLOYD * * * * * *
A weekly roundup of news & information from Terrie Lloyd, a long-term
technology and media entrepreneur living in Japan.
(http://www.terrielloyd.com)

General Edition Sunday, Apr 27, 2014, Issue No. 754

+++ INDEX

- What's New -- Airbnb Legality in Japan
- News -- Consumer loans interest rates to be unleashed?
- Web Content/Tech Job Vacancies -- Video blogging/editing
- Upcoming Events
- Corrections/Feedback
- Travel Picks -- Edo Wonderland, Nikko; Books in Umeda
- News Credits

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+++ WHAT'S NEW

A very interesting battle is brewing in the USA between crowdsourced
accommodation provider Airbnb and the state of New York, which is
challenging Airbnb's very business model. The state Attorney General
alleges that the company has been breaking local state laws for
several years with its system that allows unlicenced individuals to
rent out their homes and apartments for periods shorter than 28 days.
The existing law's purpose, apparently, is to stop slum lords and
other opportunists from taking advantage of travelers and economically
challenged consumers. Probably the state of New York has a point,
because although Airbnb is talking confidently to the press, it's no
coincidence that the company has just eliminated over 2,000 listings
of properties in New York even as it heads to court.

The case is being watched by more than just Airbnb investors, because
what goes down in New York will have reverberations in crowdsourced
travel markets around the world. Basically it is the first full-on
confrontation between a crowdsourced travel website operator and
traditional business and legal interests. Of course this conflict is
not just happening in the travel industry, you only need to look at
Google and Amazon steam-rollering the publishing and retail industries
to see the overall trend of web vs. traditional business, at work.

But what is unique about the travel industry, and other sectors to
follow, is that it is fairly well regulated. And since regulations
usually arise from one of two sources: safety or self-interest, Airbnb
has its work cut out. Internet businesses are generally seen as
innovators that will improve the lot of consumers and exports in the
global knowledge economy, especially in/from tech-centric states such
as California. And so they are allowed to experiment on the edge of
regulation, invoking such arguments as:
1. We're just an open market for services, and the responsibility for
service quality and licencing falls on the users.
2. We're exercising freedom of speech and allowing buyers and sellers
to communicate with together, so we're protected by freedom of speech.
3. We don't charge the customer, we simply provide payment services
for one user to conveniently transact with another, so we're not the
seller.

[Continued below...]

-------- Japan Travel Paid Blogging -- in Japanese --------

www.japantravel.com has become the largest content creator for inbound
travel content in Japan, and this is now driving demand by local
operators for domestic content. We have a number of openings for
freelance bloggers to write stories and take photos at various
locations around Japan. These positions require native-level written
Japanese for the text projects, and advanced spoken Japanese for the
video and photographic projects. If you are a part-time photo blogger
or video journalist, then contact us for more information.

Go to: http://en.japantravel.com/contact and select the "I want to
write for you" option.
---------------------------------------------------------------

[...Article continues]

But while California incubates its innovators with a laissez-faire
attitude, we foresee a backlash elsewhere, starting with New York and
spreading abroad. Moderate governments will start asking themselves
why being online and providing the tools rather than the end services
excuses companies from not having to comply with local laws, or more
accurately, allowing their users to avoid complying with those laws.

Take Singapore for example. Currently there are two aspects of
crowdsourced travel that are illegal there -- temporary accommodation
and tour guiding -- both of which will create a flashpoint sooner
rather than later. Right now (as of today), there are 385 apartments
and houses for short-term rent on Airbnb in Singapore, and yet as
recently as September last year the Singapore Housing Board (HDB)
warned that providing paid accommodation of less than 6 months
duration without being a registered hotel is illegal and anyone caught
doing so would face heavy penalties. By "heavy", we're talking maximum
sentences of SG$200,000 and/or 12 months in jail.

In 2012, the HDB investigated 1,800 cases of unauthorized short-term
rentals, and in 2013 the number is apparently up by 100%. The
Singapore rules specify two criteria for allowable short-term stays
that are not hotels: i) The person staying should not be paying cash
to the owner, and ii) their stay should not disturb others. As a
result, we believe that if the Airbnb case doesn't go well in New
York, the Singaporean authorities could well act against the company
as well. That will also include its competitors, Roomorama, Travelmob,
and Wimdu.

We believe the Japanese are probably looking closely at the same case,
although, interestingly, so far this country doesn't seem to have a
comprehensive set of minimum requirements for hotels. The regulations
we can find all seem to be either voluntary or more related to issues
such as fire and earthquake proofing -- probably because of the
industry's bed-and-breakfast ("Minshuku") origins. At the same time,
though, there seems to be new legislation coming down the pipe which
will hobble the Airbnb business model.

Perhaps one reason the authorities haven't moved faster to regulate is
simply that Japanese are not used to renting out their places for
transient occupancy -- it's just a very big departure from the
cultural norm, where people seldom move more than once every couple of
years and where private individuals don't have enough spare space to
entertain unknown guests. This means that Airbnb is not a big enough
threat just yet. If you look at the listings for the site for Tokyo
"Entire Place" (versus single rooms), while the number has doubled
each year from 2012 to 2014, even now, we're only talking about 688
listings.

Perhaps another slice of the tourism market which is more clearly
restricted and policed in Japan, and which we think will guide the
thinking of the authorities when it comes to regulating the likes of
Airbnb, is the tour guiding business. In Japan, if you are
accompanying tourists and interpreting for them for money, you need to
have a licence. There are heavy penalties for not only unregistered
tour guides, but also the companies that might be tempted to use them.
So this pretty much prevents the likes of Vayable and other
"Experience Tourism" matching sites from setting up in Japan.

That said, there have been some early adopters who understand the
legal issues, and these sites, such as Anyroad.com and
triplelights.com, require that all guides signing up with them be
properly licenced. But because of the shortage of such professionals,
this defeats the purpose of crowdsourcing and they don't seem to be
gaining much traction here.

Thus there is an opportunity for a creative individual or company to
come up with a legal solution -- one that is sufficiently appealing to
travelers, and yet does not over-stimulate the authorities. Our guess
is that a combination of having the server outside the country (to
obfuscate the jurisdiction issue) and using technology to change the
guide-customer relationship, could be a winning combination. As an
example, if the person (the "non-guide") accompanying the tourists was
to speak to them in Japanese, which was then interpreted by a third
person at a phone-based service, then probably that would not be
breaking Japanese law...

With the Olympics coming every closer, it will be interesting to see
how this all plays out.

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

Lastly, we're off next weekend, to enjoy Golden Week. We will be back
on board on May 11th.

...The information janitors/

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

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

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

+++ NEWS

- Billions being pumped into shipbuilding
- Consumer loans interest rates to be unleashed?
- Major insurance player gives up on JGBs
- Oji Holdings to buy NZ co.
- Peach Airlines to cut 2k flights in next 6 months

=> Billions being pumped into shipbuilding

An indication of just how far the Abe government will go to re-float
the economy can be found in the industries and companies that are now
receiving hundreds of millions and sometimes billions of dollars of
cheap loans or "government investments" -- even though those
industries were previously in a death spiral due to competition from
low-cost centers abroad. One such industry is shipbuilding, which had
been pretty much written off other than for defense contracts and
specialized craft. Now the Japan Bank for International Cooperation
(JBIC) is providing low-interest loans to anyone who will buy
Japanese-built ships. This is particularly popular with European
shipowners, who are struggling to get funding back home. JBIC has so
far handed out JPY30bn in customer loans in 2013 and is likely to
provide even more this year. ***Ed: This is of course on top of the
7-year low yen rates, which allow shipowners wanting big,
fuel-efficient craft to consider the more expensive Japanese product
balanced against to the lower financing and operating costs.**
(Source: TT commentary from bloomberg.com, Apr 23, 2014)

http://bloom.bg/1pDypUu

=> Consumer loans interest rates to be unleashed?

We suppose that there is some logic in the idea that if the government
is going to start licencing casinos in Japan, then society in general
is going to have to learn to look after itself with regards to the
moral hazards of personal finances. Accordingly, it shouldn't come as
a surprise that the government is considering removing the upper
interest limits on consumer loans as well. The LDP is apparently
considering allowing consumer finance companies to return their rates
to a high of 29.2% per annum. ***Ed: There are going to be some very
unhappy foreign finance companies who lost a ton of money after the
consumer finance industry interest rate cap of 20% was introduced as a
result of judicial fiat back in 2006. One could almost be forgiven for
thinking that there was a master plan at work to flush out the low-end
players and foreigners from the industry...** (Source: TT commentary
from japantimes.co.jp, Apr 27, 2014)

http://bit.ly/1lVHTVl

=> Major insurance player gives up on JGBs

It's a major event when one of Japan's largest life insurance
companies, Dai-ichi Life, announces that it has given up buying
Japanese Government Bonds (JGBs), at least temporarily. Dai-ichi says
that the JGB yields are too low, and that instead of essentially just
parking cash with the government, it has decided to chase higher
yields through overseas bonds as well as Japanese stocks. Dai-ichi has
about JPY35trn of assets under management. (Source: TT commentary from
reuters.com, Apr 25, 2014)

http://www.reuters.com/article/2014/04/25/japan-insurers-daiichi-life-id...

=> Oji Holdings to buy NZ co.

Major Japanese paper company, Oji Holdings, has announced that it will
buy out New Zealand's Carter Holt Harvey Pulp and Paper for around
JPY90bn. [Ed: The Nikkei says the price is JPY31bn, which seems to be
wrong.] The seller is the Rank Group, which belongs to NZ's richest
man, Graeme Hart. Oji says that they are buying the NZ forestry
company due to its concentration in conifer forests, which apparently
are in short supply globally. ***Ed: The really interesting part of
this story is the fact that Oji made the purchase with the
government's INCJ fund. Both organizations have co-invested before,
but you have to wonder why Oji with all its existing overseas
experience, needs government help to make this purchase? We can only
assume that it's a classic case of Abe's grand "Japan Inc."
renaissance plan, which seeks to use public money with favored private
firms, to secure future global revenue to offset the shrinking markets
in Japan.** (Source: TT commentary from asia.nikkei.com, Apr 26, 2014)

http://s.nikkei.com/1fhaTsi

=> Peach Airlines to cut 2k flights in next 6 months

One wonders what is really going on over at ANA-owned budget carrier
Peach Airlines. The company says it will cut up to 2,088 flights
during the peak travel months of May through October this year,
ostensibly because it says it can't find enough pilots. The company
says that while the cuts will virtually eliminate the upside on
previously announced expansion plans, it is trying to be "careful in
how we plan our business." ***Ed: While this may be true, it is common
knowledge that there are plenty of pilot outsourcing companies around,
some of which are already servicing other Japanese airlines here. Our
guess is that the company has other problems -- stay tuned.** (Source:
TT commentary from asia.nikkei.com, Apr 25, 2014)

http://s.nikkei.com/1iq3fGh

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.

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

+++ WEB CONTENT/TECH VACANCIES

=> Are you in web content, sales, or engineering? If so, this section
is for you.

** HIGHLIGHTED POSITION

- Part-time video editors and bloggers

We are inviting applications from amateur video editors and video
bloggers who own their own equipment, to provide stories for our
travel website business clients. You must have strong experience with
either Final Cut Pro or Adobe Premiere, and be able to show work
samples that have been commercially published or which have garnered a
high number of views on public video sites. The positions require
strong communication skills, availability at least several times a
month to do shooting during business hours, and strong Japanese. You
should be located close to one of the following cities: Naha, Fukuoka,
Osaka, Nagoya, Tokyo, Sendai, or Sapporo. Payment rates vary according
to client, but are NOT at full commercial level, meaning that these
positions are best suited to talented non-professionals. Please send
your resume to info@japaninc.com.

** OTHER MEDIA POSITIONS VACANT

- Bilingual account manager for major tourism portal
(www.japantourist.jp), JPY3M - JPY5M
- Bilingual sales trainee for web media properties, JPY2.5M-JPY3M +
10% commission

Interested individuals may e-mail resumes to: jobs@metroworks.co.jp.

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

+++ UPCOMING EVENTS/ANNOUNCEMENTS

------------------ ICA Event - May 15th--------------------

Speaker: Robert E. Peterson ("Bob-san") - President, Wickaboag
Consulting Group, Inc. Marketing & Communications Problem Solver
Title: "Japanese Companies Do Not Understand Marketing! Why and
Implications for Japan Inc"

Details: Complete event details at http://www.icajapan.jp/

Date: Thursday, May 15th, 2014
Time: 6:30 Doors open, Buffet Dinner included and cash bar
Cost: 4,000 yen (members), 6,000 yen (non-members) Open to all. No
sign ups at the door!!!!!!!
RSVP: By 4pm on Friday 9th May 2014, venue is The Foreign
Correspondents' Club of Japan

http://www.fccj.or.jp/about/access.html
-----------------------------------------------------------
-----------------------------------------------------------

-------- Business Start-up Seminar by Terrie Lloyd --------

Have you ever thought about setting up your own company in Japan? Or,
are you already running one and wondering how to move up to the next
level?

Local Australian/Kiwi entrepreneur Terrie Lloyd, is running a seminar
for people who want to form their own companies, on May 10th, 2014.
Terrie has established 17 companies in Japan over the last 30 years,
and has a lot of experience to share about how to structure and run
your business when first starting up.

Details: http://www.japaninc.com/entrepreneur_handbook_seminar
-----------------------------------------------------------

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

+++ CORRECTIONS/FEEDBACK

=> No comments this week.

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

+++ TRAVEL DESTINATIONS PICKS

=> Edo Wonderland: Wonders from Nikko, Tochigi
Travel back to Edo Period in this beautiful theme park

Surely coming to Japan and not visiting Tokyo is like going to Rome
and not seeing the Pope, but there are also beautiful secret places
outside the big city.

Nikko is located in the mountains of Tochigi Prefecture, approximately
140km north of Tokyo, and is a very popular destination for both
Japanese and foreign travelers. Its attractions include the mausoleum
of the famous Shogun Tokugawa Ieyasu (Toshogu), the Futarasan Shrine
(dating from 767), and you can also enjoy a lot of hot springs, as
elevations range from 200 to 2,000m.

But what we are focusing today is yet another attraction, Edo
Wonderland. This cultural theme park takes you 400 years back in time
to the Edo period, back when the present Tokyo had that name. The
concept of Edo Wonderland is to make you the visitor feel like you are
an Edo citizen, and you can start by renting a traditional costume,
like a kimono! That said, it is very common to see visitors wearing
Samurai, Oiran, or Ninja clothes!

http://bit.ly/1h3j9He

=> Cafe & Books Bibliotheque Umeda, Osaka
Stunning food and culture space close to Osaka Station

Umeda is the northern gateway to the Osaka Central Business District,
with several iconic buildings including the Floating Garden
Observatory (Osaka Sky Building), Grand Front Osaka, and Osaka Forum
No 1 to No 4. (Dai 1 to Dai 4). It is a precinct pulsing with energy
day and night, but also a maze of shops, cultural and entertainment
spaces.

Cafe & Books Bibliotheque is a great addition to the Osaka
Station/Umeda Dining scene, and a wonderful place to relax after
shopping at the E-ma shopping center or while waiting for or coming
off your train or overnight inter-city bus, as there are several late
dining as well as brunch options, with food service available from 11
am to 10:30 pm. This cafe also has an art and craft focused bookstore
next door.

Depending on the time of year, they have workshops for parents and
their children to enjoy making handicrafts together, such as Christmas
tree workshops in December, or candle, soap and even hanna decoration
classes during the year.

http://bit.ly/1mPpayG

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

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+++ ABOUT US

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Written by: Terrie Lloyd (terrie.lloyd@japaninc.com)

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