TT-533 -- Konkatsu kraze settles in for the long run, ebiz from Japan

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

General Edition Sunday, September 13, 2009 Issue No. 533


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

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What ever you may have thought about outgoing Prime
Minister Aso Taro, what were called gaffes were most often
his simple-minded verbalization of what a lot of Japanese
still think. Typical of this was an address he made shortly
before the recent national election to a group of
university students.

He was asked by one student if financial fears weren't a
major reason for people to get married later and thereby
contributing to the falling birthrate. Aso in his usual
forthright style said that he reckoned young people without
money should indeed wait to get married, because it would
be difficult for their partners to respect them

Forget about love and all that soppy stuff! Alas poor Taro,
he was seldom politically correct...

But financial fears about the future do indeed appear to be
one of the major reasons why people are taking longer to
get married. If you track the birth rate and the financial
condition of Japan over the last 10 years, the correlation
is very close. Fundamentally the bottoming out and slight
recovery of the fertility rate over the last three years
to 1.37 kids per couple appears to be due to the
improvement in the economy during the period 2005 through
2007 -- allowing some lag for people to gain confidence
about their futures and dream of having a happy family.

Granted, there may be other reasons for the lower birth
rate, but they don't track so closely as does the economy.

However, after three relatively strong years, the Lehman
Shock of last year caused reality to bite hard again, and
now many young people not only face the depressing prospect
of low salaries (according to NHK, more than 80 percent of those
under 35 years old now make LESS than JPY2MM a year!) but
also fear even keeping the unfulfilling jobs they already have.
As their lives are impacted, we're pretty sure that the
birth rate will take another dive again from next year.

[Continued below...]

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[...Article continues]

These financial fears are well founded. In fact, it costs
about JPY30MM to raise and send a child to school (until
they graduate from university) these days, which is about
as much disposable income as many families can expect to
earn in their life times if the mother is a full-time
housewife. You want two kids? Well forget about it -- you
need to either be rich or living out on a farm under the
same roof as your parents and your foreign wife
(statistically an Asian wife, if you're a farmer boy).

But not having the confidence in one's financial future
doesn't stop you from being lonely, and this seems to be
the case with many young and middle aged people in Japan.
As a result, the dating business is booming.

But these days it's dating with a purpose -- to get
married, not the old-fashioned idea of joining with friends
to have fun and see where it goes (that activity is called
a "gokon").

The new performance dating is called "Konkatsu" or "Kekkon
Katsudo," meaning "marriage activities" and comes from a
term coined from a 2008 book by sociologist Masahiro
Yamada, the same guy who came up with the cute term
"parasite single." With konkatsu, he was referring to a
growing number of singles who are not making enough money
to provide a decent future for their mate, and thus those
wanting to get married are having to focus on financial
and emotional preparation.

Sounds desperate doesn't it? And to a certain extent it is
-- but the connotations of inadequacy don't seem to impact
the ongoing popularity of konkatsu parties. Indeed, as
some commentators have remarked, since the term konkatsu
derives from the term job hunting ("Shushoku Katsudo"), it
seems to connote the same resignation of getting results
that one might normally reserve for job hunting.

So as a result it's somehow become trendy to be slightly
desperate and determined. Although as one matchmaking owner
says, it appears that the most enthusiastic marriage
seekers still tend to be women in their late 30's who are
sensitive to their biological clocks ticking away.

We thought the konkatsu trend would quickly hit its peak
at the end of last year, when several TV dramas on Fuji
and NHK showed the situation of aging singles (typically
cast as women in their late 30's and men in their early
40's) becoming more obsessed with getting married so as to
not grow old alone, or to miss the chance to have kids
before it is too late. But in fact, rather than dying off
as so many other fads in Japan do, this one appears to be
gaining pace.

According to a Nikkei report, a 2007-2008 survey by Tokyo
University's Institute of Social Science reckons that older
singles rely less on friends and networking to find a mate
and turn more to professional matchmaking services such as
konkatsu party organizers. The 2005 census statistics have
47 percent of men aged 30-34 still being unmarried and 32
percent of women. You can be sure that the 2008 number is
at least as high.

Konkatsu is a growing business. After the popularity of the
konkatsu TV dramas, leading matchmaking company Zwei
said it had a 20 percent jump in inquiries and its membership
has now risen to around 40,000. Zwei had sales of
JPY4.4bn in FY2008, and a net profit of JPY321m, up 9 percent
over last year. This may not sound like a lot, but Zwei is
spending large sums on advertising and clearly is on a roll
recently. Their share price has surged 40 percent in the
last 6 months. We saw them advertising on a rail-side hording
today, alongside parent company Aeon.

There are literally thousands of companies getting in on
the konkatsu act. One company that we spoke to in Shinjuku
in relation to our sister company Metropolis and their
monthly Global parties, told us that they have 20,000
members, about 1/3 of whom show up to parties every month.
Indeed, they have members who have subscribed for 5 years
or more and who still regularly attend parties but who
remain unmarried. We felt like asking them "What's the
point?" but that wouldn't have been polite. :-)

Anyway, the average fee per party is JPY5,000 for men and
JPY3,500 for women, and since this company like many others
uses regularly booked venues multiple times a week, a
well-rehearsed master of ceremonies, and modest drinks and
finger food, its costs are low and profits high. They seem
to be doing well -- although they were complaining about
increasing competition.

So is konkatsu working? Well, there were 726,000 marriages
in 2008, up about 6,000 over the year before. However,
given that 2008 was a leap year, in fact this represents
just two day's worth of extra marriages -- not a
statistically meaningful amount. Our guess is that the
dating bit will continue, but the reality of peoples'
financial situations means that marriage rates and
eventually fertility rates won't improve until the economy

Lastly, excellent FEEDBACK section this week, at the
bottom of this newsletter...


For over 20 years we have watched the good works of The
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day, 365 days a year, they have been helping the
International Community with emergency assistance and day
to day advice the whole time.

Ken regularly copies us on the many appeals he gets from
foreigners all over the country -- people having personal crises
and begging for help. Ken selflessly responds to each person
and works through their problems -- seeing the police,
talking to immigration, landlords, and embassies, arranging
repatriation of coffins and belongings, and much more

It's a thankless task, and recently with the financial
crisis the donations to The Japan Helpline have fallen
dramatically. In times like these when things are tough, we
need The Japan Helpline even more. But they rely 100% on
private donations to keep going.

So we appeal to our readers to join us in being one of
their "One Hundred Club" members. If just 100 people sign
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+++ NEWS

- Delta and JAL to tie up?
- Sourcenext gets help from Rakuten
- DoCoMo to bid for Net Mobile AG
- Top entertainment agency does LBO
- Nomura hit with recruiting company lawsuit

-> Delta and JAL to tie up?

The hot news over the last 2 days has been speculation that
the world's biggest airline, Delta Air, is reportedly
negotiating with Japan Airlines (JAL) to buy a stake in
that company. Delta is apparently offering JAL a
combination of cash, know-how to reduce operating costs,
and a global network. ***Ed: Nikkei editorial comments
indicate that while JAL senior management are not
particularly excited by a tie-up prospect, the new
government loves the idea. As they should, given that they
have sunk some billions into JAL over the last 12 months,
with little to show for it.** (Source: TT commentary from, Sep 11, 2009)

-> Sourcenext gets help from Rakuten

A company that you don't hear much about, although it's the
largest software reseller in Japan, is TSE-listed
Sourcenext Corporation. They have hit the news this week,
however, by agreeing to sell 14.9% of the company to a
Rakuten group investment firm, for JPY600MM. Apparently
Sourcenext is saying they are going to use the money to
finance some new software titles, but a look at the
financials shows that something rather more serious is
going on... ***Ed: We wrote about Sourcenext in TT402, and
at that time the company was on an upwards trajectory --
until the FY2008 results came in around May this year. In
the last 12 months they have suddenly and very seriously
tanked. Indeed, the company lost JPY2.8bn in FY2008 ending
March 31st 2009.** (Source: TT commentary from, Sep 12, 2009)

-> DoCoMo to bid for Net Mobile AG

In one of the clearest indications so far that NTT DoCoMo
plans to push the mobile SaaS business aggressively came
to light with their bid for 75% or more of a German
middleware company called Net Mobile AG. DoCoMo is offering
a 54% premium for Net Mobile, a company that provides a
software distribution platform for mobile content and
applications. ***Ed: Net Mobile had sales of Eu59.4m and
operating profit of Eu4.6m. Thus the offer of Eu36.7m will
take DoCoMo 8 years to amortize -- showing they must REALLY
want Net Mobile's software.** (Source: TT commentary from, Sep 11, 2009)

-> Top entertainment agency does LBO

When you're a TV broadcaster and ad revenues are dropping
precipitously, what do you do? Why, you invest along with a
bunch of buddies in just one lucky content production
company and send all the hundreds of others into a panic.
This is what happened this week when entertainment agency
Yoshimoto Kogyo announced that it would was doing an LBO,
going private through a US$554m buyout that is led by five TV
broadcasters. ***Ed: The investors are saying that their
rationale is to produce shows at low cost, however, it is
hard to imagine that Yoshimoto can actually make programs
cheaper than the little guys do. Maybe there is something
else going on here...?** (Source: TT commentary from, Sep 11, 2009)

-> Nomura hit with recruiting company lawsuit

When the pressure is on to do a quick deal, many details
get swept under the carpet, only to reappear later as
fully-fledged rug monsters. Thus is the case with a law
suit filed in London by Hogarth Davies, a recruiter,
against Nomura Holdings. Nomura retained Hogarth to ensure
Lehman Brothers bankers went to it, and not some
competitor. It appears that Hogarth wants to charge Nomura
their standard fee of 25% of EACH of hundreds of hirees'
first year's salaries. Assuming that the average Lehman
banker was on a base of JPY50m to JPY100m, this is a LOT
of money (possibly JPY2.5bn or more). ***Ed: While one
imagines that Hogarth has decided to go for broke on the
basis of a very lax contract and a big pot of gold at the
end of the case, nonetheless, Nomura does seem to have
a point that the amount is excessive. It will be interesting to
see what the London High Court says.** (Source: TT
commentary from, Sep 11, 2009)

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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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

=> In TT531 we covered the coming fundamental changes in
the Internal Combustion Engine (ICE) Industry and how major
players don't seem to be aware of the fact that they may
become dinosaurs if they don't quickly adjust and start
innovating OUT of ICE.

*** Reader: Your surprise about Tsubakimoto echos that of a
certain major foreign business news service when I
described the 'real' state of the auto industry some time
ago. They said, "We really have no connections to industry
insiders... we're basically guessing what is happening in
Japan". [sic]

Much of my time in the executive suite of a major Japanese
auto firm was spent drawing up scenarios of the industry's
future. I came up with my own 'mad-doctor' innovations that
a progressive organization might look to as strategies for
survival when business changed suddenly and drastically.

And boy does it ever change...

Remember the lovable carburettor? It left the hood quicker
than anyone could imagine - though everybody wanted it
gone. Its demise hit some Japanese makers extremely hard
since the Japanese practice of giving suppliers a single
part to manufacture meant the carburettor guys saw their
livelihoods evaporate.

My experience has been that the supplier simply listens to
the client immediately above them in their food chain. The
information coming down from the top is strictly limited to
engineering needs. Industry facts are simply never
discussed from the top down. The result is that whenever a
new industry-changing gizmo appears in the morning paper,
it comes as news not only to the readers at home but to
industry insiders as well.

Most observers will not believe this, but the big ideas
which are revolutionizing the automobile are coming from
individuals or small organizations that are generally
classified as crack-pot inventors. In fact they are
literally barred from industry social events, until of
course the savvy Toyota quietly gives them an audience.

You mentioned METI in your article. Believe me, they have
and are still bending over backwards for the suppliers. The
problem is that most of the suppliers listen with
half-closed ears. In fact, they even question the motive
for METI asking them to explore alternative technology,
ventures etc.

As I have told you before, a few years ago I went to Hirobo
(the Hiroshima based remote controlled helicopter maker) to
persuade the company owner about the need for him to
explore alternative business. At the suggestion of my
employer, which bought certain parts from Hirobo, I
proposed venturing into industrial application drones
particularly for the national anti-pollution effort and
infrastructure inspection. I suggested things such as smoke
stack emissions measuring choppers, post-tremor high
voltage power lines and railway tunnel inspection remote
controlled machines, etc.

The result was seen within eight months: state funding came
in the form of millions of dollars, as well as tie-ups with
major players in other industries (rail, steelworks etc.),
which brought in additional funds and prestige -- plus the
debt collectors were sent scurrying away.

Hirobo were open to my suggestions because the proverbial
writing had come in the form of bank foreclosure notices.
150 workers were facing the chop and the company was facing
the unsavory choice of handing its business to a handpicked
rival - the industry's worst scenario. The notion of
restructuring is unfortunately limited to headcount
reduction and streamlining. Japan still shuns innovation as a
subject. To most industry experts, innovation is a talent
one is born with.

Unfortunately, as we are witnessing, those with sufficient
talent to compete are becoming scarcer by the day.

I enjoyed your article. It brought back memories. Thank you

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