TT-595 -- Events in 2010 That Will Change Japan, e-biz news 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, December 19, 2010, Issue No. 595


- What's New
- Short Takes
- News
- Candidate Roundup/Vacancies
- Upcoming Events
- Corrections/Feedback
- News Credits

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It's been a tough year. One of recovery for some, but for
most Japanese domestic firms it has been an increasingly
negative story and a wake-up call that they are going to
have to change how they do things. In particular, the 70%
of companies who are not international are suddenly
starting to realize that they are going to need overseas
income or they'll go belly up. This opens up all kinds of
opportunities for those of us servicing that market.

Here are our top 10 news items for the year, accompanied by
a short analysis of why we think they are important and
will affect us in the coming year. We invite your comments
and feedback. Did we miss a key event that you think has
profound ramifications for business and the economy in the
future? Please let us know.

** January -- Toyota Recall

We start the year with the tribulations of Japan's largest
and most profitable corporation (profit in absolute terms,
not by ratio to costs) -- Toyota Motor Corporation. As you
may remember, Toyota announced in January that it was going
to do a massive recall of 2.3m cars having problems with a
sticky gas pedal and then the brakes. The company's stock
price plummeted 16.7% in the week after the announcement,
and for a while it looked like Toyota might come undone.
About 7m vehicles and 10 months later, however, the firm has
got on top of its problems and is once again making lots of
money. The Japanese Tax Office must be sighing a breath of
relief. By our reckoning, Toyota pays about 2% of Japan's
corporate taxes.

** February -- Whaling arrest

While the high seas arrest of Green Peace activist Peter
Bethune hardly counts as major news, and in any case he was
released to detention back in New Zealand after a short
stay in a Japanese jail, the case nonetheless highlights
Japan's uphill battle to keep on fishing the high seas as
it likes. Whales are an emotional issue and one which is
earning Japan some very negative publicity abroad, but the
banning of the hunting of them is the start of a slippery
slope for fishing of other species -- at least this is how
we think the Japanese Fisheries Ministry sees it.

After whales there is the potential banning of tuna,
narrowly avoided several months ago at the CITES
conference, then the banning of fishing of other species.
For a fish-eating nation like Japan, this is a real threat
and so it's not surprising they're fighting for their
traditional rights whenever they can. The issue is whether
these fights are appropriate. We think not, and sooner or
later, just like the TPP (Trans-Pacific Partnership) threat
to farmers, concessions will have to be made in the fishing
sector as well... And the price of food will go up.

[Continued below...]

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[...Article continues]

** April -- Debut of mass market EVs

Although the oil crisis caused by the Iraq war is no longer
with us, peak oil is, and it will only be a matter of time
(and possibly an air raid by Israel on Iran's reactors)
before oil prices once again soar out of control. Both
Mitsubishi and Nissan are counting on this, and have
committed huge amounts of capital to ensure that they are
in the forefront of the Electric Vehicle (EV) revolution.
What surprises us is that there hasn't been more
collaboration around the world on battery technology,
because clearly Tesla and some foreign battery makers have
sorted part of that problem out. Both Nissan and Mitsubishi
need to get to about 300km on a charge before they will be
really viable in the markets.

** May -- Launch of Apple iPad

As with many other places in the world, the Apple iPad
created a huge level of excitement by fans and the media,
and there were lines outside Apple stores for several days
prior to the launch date. In retrospect, it's hard to say
whether the iPad is that great, but it has certainly
legitimized a form factor that other companies had tried
and failed at. Here in Japan iPad sales are reportedly
slow, but in the medical and financial sectors, sales
people are embracing the machine as an ideal way to do
demonstrations for customers. Some pharmaceutical companies
are buying thousands of iPads this year and next, to
"enable" their Medical Representatives to reach doctors
more effectively. Softbank must be happy and HP, Dell, and
others will be taking notes. We're expecting some really
excellent iPad competition to come out -- on the Android
platform mostly. So if you don't have an iPad yet, it
might be worth holding on.

** May-July -- Strikes at Japanese plants in China

China has played a crucial part of Japanese manufacturing
for more than ten years now, and the largest companies are
addicted to cheap labor there. Having invested so much into
China, they also believed that they have a strong
understanding with the party bosses to keep a good thing
going. It must have come as some shock then, when workers
were allowed to go on strike at a number of major Japanese
companies, in search of better pay and conditions. Strikes
of this magnitude only happen if they are allowed to
happen, so perhaps this is the Chinese government's way of
saying that the good times are coming to an end. Honda was
the first major company hit, followed by other auto and
electronics firms. After the strikes there would have been
a number of urgent board meetings to look at relocating to
Vietnam, India, or elsewhere.

** August -- Groupon buyout of

Japanese high-tech start-ups have frequently been buoyed by
foreign money and technology. After all, none of the major
IT companies want them around and getting a meaningful
amount of private equity in Japan is extremely difficult.
That's why, when a quick, mostly-cash deal for big numbers
gets done, it's not just a success for the business owners
but is a shot in the arm for everyone in the sector. Such
was the case of Groupon buying out local crowd sourcer (OK,
group buying website), Qpon. Interesting thing is that Qpon
had only been up and running online for 3 months before
this US$10m deal got done. Its investors must have had a
smile on their faces. At the same time, Groupon promises to
try to turn Japan's restaurant industry's typically
churlish attitude to discounting on its head. It will be
interesting to see if they are successful. We suspect
they'll have their work cut out for them.

** August -- Buy-out of Wall Street Associates

Although it didn't even make the Nikkei newspaper, a deal
that was carefully noted by many of us in the foreign
community was the buy out of recruiting firm Wall Street
Associates by En-Japan, one of Japan's largest online
recruiting players. The apparent strategy of En-Japan is
to supply bilingual workers to Japanese companies expanding
abroad, as well as to set up their own offices overseas as
well. Wall Street Associates will be the platform to do
that. This means that the smart money is identifying
international recruiting as a major trend and is something
that other recruiters will be wanting a piece of. The owner
of Wall Street Associates got a very decent price for the
firm, with a sale price of JPY1.77bn (US$22m) for a firm
founded in 2000. Not bad going...

** September -- Bankruptcy of Takefuji

There was a time when Takefuji and the other "sarakin"
(loan sharks) operated with impunity. They were covering
the ugly underbelly of Japan's financial sector and were
left alone so long as they didn't get out of hand. But with
a wiretapping scandal and various suicides by desperate
borrowers, the government and courts decided to take action.
The government opened up the sector to foreign firms, which
introduced accountability and above-board competition, then
in 2006, the courts passed a law allowing borrowers to seek
refunds for excess interest charged to them from 2003, the
so-called gray-zone rates. As a result, Takefuji and the
other 3 top companies have been paying out JPY300bn a year
in refunds, ruining those companies. On September 28th the
management of Takefuji couldn't take it any more and filed
for bankruptcy, ending a less-than-proud era for Japan.

** October -- Softbank Mobile record profits

Softbank's Masayoshi Son is an upstart as far as DoCoMo and
AU are concerned, and they must have been pretty sure four
years ago that he'd bitten off more than he could chew when
he raised US$17bn in debt to buy Vodafone Japan. Whether by
luck or genius, Son's huge bet has paid off, and with the
help of Apple's iPhone, Softbank Mobile is making tons of
money. In October they announced the group Q2 profit had
surged by 30% to JPY57.4bn. At this rate, Son will have
paid off his Vodafone purchase in ten years or less. Not
bad for such a huge bet. We believe that Son will continue
to challenge his competitors, forcing them to provide
better services at lower costs and keeping Japan a
telecoms and mobile internet haven -- which is just what
we need to push innovation in the technology sector ahead.

** November -- Bombardment of Yeonpyeong island

The bombardment of Yeonpyeong island in South Korea by the
North has had two important and far-reaching effects for
Japan. Firstly, it has reminded the nation that it has
dangerous neighbors and has firmed government resolve to
increase defense spending. Chief amongst the shopping items
is a speeded up implementation of the PAC-3 missile defense
system being supplied by Raytheon of the USA. Secondly, the
bombing has reminded Japan just how much it still needs the
friendship of the USA. We expect all kinds of evidence in
2011 in the financial and trade markets based on this
realization. The TPP trade talks which include the USA
would be a good start and Kan seems intent in "ramming" a
trade agreement of some kind through.


To all our readers, a Merry Christmas and Happy New Year!
This is our last Take for 2010. It's been a tough year but
an interesting one. We take 4 weeks off a year, including
2 weeks over the Christmas New Year's break, so our next
newsletter will be in your mail box on January 9th 2011.
Don't let that stop you sending us tips and comments,

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+++ NEWS

- Tourist numbers sag...
- ...But overall traveler trend looks positive
- Next year's car sales expected to be worst in 34 years
- Tea drinking suppresses weight gain
- Medical tourism takes another step forward

-> Tourist numbers sag...

Although the final industry numbers are not in yet, it
appears that the number of Chinese tourists coming to Japan
has dropped significantly in the last two months. Hotels
such as the Shinjuku Washington Hotel and the Osaka
Imperial have seen Chinese tourist bookings plunge 50% and
60% respectively for December and January. Overall the
October numbers were down just 1.8%, so it seems that the
latest plunge can be directly connected to the September
Senkaku islands dispute between Japan and China, which will
likely show up in November travel numbers. The Japan
Tourism Agency (JTA) reckons that Chinese tourists spend an
average JPY95,000 on shopping in Japan versus JPY47,000 for
people from the USA. (Source: TT commentary from, Dec 18, 2010)

-> ...But overall travel trend looks positive

According to Japan's leading tourist agency, JTB, the
expected number of Japanese traveling in 2011 and
foreigners visiting Japan is set to increase modestly. JTB
says that Japanese will make 302m domestic trips and 17.3m
foreign trips next year, up 1.3% and 3.7% respectively. The
increase is attributed to lower highway tolls and the
opening of the Haneda airport to more Asian flights. At the
same time, the number of foreign tourists coming to Japan
is expected to rise around 5.7% to 9.2m people. (Source: TT
commentary from, Dec 17, 2010)

-> Next year's car sales expected to be worst in 34 years

Japan's car makers are doing well abroad, but are having
and will continue to have a terrible time in the local
market. The Japan Automobile Manufacturers Association
reckons that sales will fall by at least 10% to just 4.4m
units next year, the lowest sales level since 1977.
Although there was a brief pick up in numbers this year,
leading to probably around 4.9m units being sold, this was
largely due to the government subsidies on green vehicles
and this ended recently. (Source: TT commentary from, Dec 17, 2010)

-> Tea drinking suppresses weight gain

Kobe University researchers have found that both green and
black tea fed to lab mice over a 14-week period suppressed
weight gain when the mice were put on a high-fat diet.
Black tea ingested regularly in particular suppressed blood
effects of a high-fat diet, such as aiding lower
cholestrol, lower blood glucose, and lower insulin
resistance. (Source: TT commentary from, Dec
18, 2010)

-> Medical tourism takes another step forward

The Justice Ministry has announced that it will start
issuing 6-month medical visas for patients looking for
medical treatment in Japan. Prior to the new visa, patients
had to leave after 90 days, which isn't long enough for
recovery from major medical procedures. In addition to the
patients, the visas will be offered to those coming to care
for the patient, such as relatives and specialized medical
staff. ***Ed: It will be interesting to see if the Ministry
restricts which hospitals patients can use, or whether they
will be allowed to pick any treatment provider.** (Source:
TT commentary from, Dec 18, 2010)

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
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amplify our points, by email, to

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