TT-614 -- Rebuilding Foreigner Population in 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, May 22, 2011, Issue No. 614


- What's New -- Rebuilding the Foreigner Population in Japan
- News -- Horie to do jail time
- Candidate Roundup/Vacancies
- Upcoming Events -- ICA meeting
- Corrections/Feedback
- News Credits

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For us, one of the most memorable scenes post-earthquake
was the long lines of foreigners waiting at Narita airport
for the first plane out to "anywhere but here". The near
panic created by various embassies, aftershocks, and the
worsening reports from the Fukushima nuclear power plant,
created a lasting negative impression of conditions in
Tokyo for TV viewers around the world. Indeed, after seeing
images of the crowds at the airport, calls from friends and
family noticeably increased for us personally.

As we have reported in earlier Terrie's Takes, the barrage
of negative reporting certainly took its toll on the
"gaijin" (foreigner) population in Japan, and according to
the Justice Ministry overall more than 470,000 foreigners
left the country at least temporarily between March 12th
and April 1st. The main demographic groups to be noticed as
leaving by the Japanese press were foreign expats,
students, Chinese workers, and of course tourists.

Now here we are two months later and Tokyo is almost back
to normal -- there are people back in cafes, shops, and on
urban transport, and stores are fully stocked with food and
goods that temporarily disappeared in March/April. Up in
Fukushima TEPCO workers have entered a number of reactor
buildings to start the long, slow process of shutting down
the plant and removing the nuclear threat to Tokyo.

And yet, apart from the return of the more committed
(typically longer-term) foreign residents, there is still a
noticeable shortage of foreigners on the streets of Tokyo.
As a result, the media is full of dire reports about what
this is doing to the inbound tourism industry and farming
and factory sectors. Ask any upmarket foreign hotel chain
or clothing factory owner employing Chinese laborers (uh,
sorry, "trainees") and while they may put on a brave face,
things are really, really difficult.

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So how to get more foreign travelers, students, and foreign
labor to come back to Japan?

Obviously the biggest hurdle to recovery of inbound
foreigners is to fix the Fukushima power plant situation.
Unfortunately, the time frame for that to happen ranges from
between the "year-end" for cooling systems to be fully
reinstated, and 30 years hence, once the reactors are fully
decommissioned and entombed in concrete. So we don't think
there will be any major tourism recovery at least for
another six months.

However, things can be helped along by ensuring that as the
plant does become safer again, that the world is told about
it. A marketing campaign on plant safety is not going to
work, because it puts focus back on the risks and would
lack credibility. But if the government took a chance on
having independent foreign nuclear experts prognosticate on
safety levels, and accepted whatever criticisms that might
come forth and make good on fixing the problems, then this
would provide highly believable information for overseas
audiences. It might be ego-deflating for local scientists
and the technocratic establishment, but it would have the
desired effect.

Another approach as nuclear fears recede is to use
foreigners who are still in Japan, and therefore who are
obviously committed to the place, to tell the message that
things are getting back to normal. The government is
already doing this, engaging in a program with JTB to
recruit more than 1,000 international students to
disseminate Twitter, Facebook, and other social media
postings about the fact that Japan is safe (see the news
item in NEWS below on this).

The problem, though, is that there are billions of
messages posted on social media every day, and the output
of 1,100 people is not going to go far, nor will it be
cohesive. Instead, these postings need to be aggregated
into a credible third party site (which isn't viewed as
government propaganda) with proper search, booking links,
and other functionality. In other words, there should be
an effort to produce a full-on kuchi-komi site
interconnected into the major travel search engines.

Another point is to get past the obsession Japan has with
Chinese tourists and start working on the many other Asian
(and European) populations who might want to come to Japan
for its service, food, sightseeing, snow, and other unique
experiences. The cash that Chinese tourists are spending
has of course been addictive, and so far has been easy to
come by, but the fact is that even before the earthquake
the wealth levels of Chinese tourists were starting to
fall, and tourism authorities have had to dig deeper to
keep the numbers going up. Now that Chinese tourists are
so averse to the Fukushima situation, this should be a
signal to the government that diversity is the key to

Next, foreign students. In the last ten years, an
overwhelming percentage of foreign students have also come
from China. According to the Immigration Bureau, of the
nation's approximately 140,000 foreign students, 86,000 of
them are from China and since many of them are
only-children, a product of the One Child policy, the
pressure on them by their parents to stay out of Japan has
been great. As a result, out of the 70,000 students left
after the earthquake 22,000 have not returned. This is
causing significant concern among Japanese universities who
have no other real source of students as the country ages.

The key here, too, is diversity. If the government wants
foreign students, which we agree creates a tremendous
amount of future goodwill as well as future foreign
residents/workers, then it needs to expand its assistance
to universities recruiting elsewhere in Asia. Economic
circumstances will ensure a strong flow from most
countries, but there needs to be a cohesive and deliberate
policy to turn the taps on. As yet, while small steps are
being taken, we don't see that happening.

Lastly, foreign workers. Um, need we say it again? The
country needs diversity. For some reason recruiters are
heavily focused on China, but the fact is that wages there
are rising rapidly and in 20-30 years time they will also
have a worse aging problem than Japan does. Until now,
China has provided a cheap source of labor through the
intern/trainee program. The Japan Textile Federation says
that there are roughly 40,000 foreign trainees in Japan and
99% are from China.

Since the earthquake there are plenty of stories in the
local press about factory owners complaining how their
Chinese workers fled the country and have not come back.
Usually the story ends with the owner saying that they will
hire local Japanese from now on. Hmmm, good luck to them in
finding a skilled machinist for JPY120,000/month. A jobless
person in Sendai would make more on the dole.

If factories have to continue running in Japan, then
recruiters need to head for more promising sources of
people. Bangladesh, Indonesia, and possibly Vietnam or Laos
come to mind. It will be hard work to source workers to
begin with, because the road between Japan and China is so
well traveled, but staying ahead of the curve requires
continuing innovation and risk taking. This is an ideal
time to start forging new relationships and balancing out
the nation's foreign population.

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+++ NEWS

- Students to help produce tourist content
- Horie to do jail time
- New family law legislation floated
- Takeda to buy Nycomed
- New M&A legislation passes

-> Students to help produce tourist content

Although it's a good idea, we wonder whether the execution
will be sufficient. The Tourism Agency is working with JTB
Corporation to send up to 1,100 students to various tourist
sites around Japan, and as payment for receiving the trip
have to write up their experiences on various international
social media. The government is going to target Tohoku,
Hakone, and Kyoto. ***Ed: The problem here is in imagining
that students can write materials in a way that will
attract new tourists and furthermore that the information
will actually be found and read. Someone should point out
to the Tourism Agency that there are billions of postings
on the Internet every day, and 1,100 reports is not going
to make much difference unless they are located in an
easy-to-find website and are ordered in a way to be useful
during a prospective tourist's research. (Source: TT
commentary from, May 20, 2011)

-> Horie to do jail time

We suppose that with all the nose thumbing that Horie did
with the institution, that it was only a matter of time
before the institution bit back. That happened with a
vengeance this week when the Supreme Court handed down a
sentence of 30 months for Horie's window dressing scandal
in 2004. ***Ed: Now, as we have said in the past, there
was another more damaging shareholder scandal that took
place at roughly the same time, involving one of the
Seibu-related Tsutsumi brothers (Yoshiaki), and he only
got a suspended sentence. But then he took his lumps at
the time and certainly didn't run around making adult
movies and making public statements that would incense
the judiciary.** (Source: TT commentary from,
May 21, 2011)

-> New family law legislation floated

The Japanese government is taking another step closer to
signing the Hague Convention and therefore imposing
international child custody laws by announcing Friday
that the country's family law system would be changed.
Still just a plan that needs to be voted into law, the
changes call for the Foreign Ministry to get involved in
international child custody disputes. The Foreign Ministry
would have the power to find abducted children, action
child abuse situations, and advising parents on voluntary
return of kids to another country. ***Ed: This is the very
first step on a long and tortuous path, where we worry that
the temptation will be to patch rather than overhaul the
family law system and cause more problems than it will
fix.**(Source: TT commentary from, May 20, 2011)

-> Takeda to buy Nycomed

As an acknowledgment by Japan's best and brightest that
the domestic economy is headed nowhere but down,
pharmaceutical giant Takeda is reportedly shelling out
US$9.1bn for Europe-based Nycomed so as to buy new revenue
and profits. The purchase price comprises the largest M&A
for a Japanese pharma company ever. Takeda is paying about
3.4 times Nycomed's annual sales, less than other
comparable M&As of billion-dollar-plus takeovers, but still
a rich price, and is counting on the 80m person "smoker's
cough" market to build the revenues further. (Source: TT
commentary from, May 19, 2011)

-> New M&A legislation passes

M&As just got easier to do in Japan, with the passage of a
new revitalization law that allows amongst other things:
1) for acquiring firms to have their screenings by the
various government authorities (such as the Fair Trade
Commission) to be sped up; 2) for acquisitions to be done
in stock rather than just cash; and 3) a new "super
majority" level of 90% so that the final 10% can be brought
up without having to call a General Shareholders Meeting.
(Source: TT commentary from, May 19, 2011)

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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------------------ ICA Event - May 26 ---------------------

Speaker: Mark Beresford, Program Director - Globalinx
Title: 'Kanban' for IT Project Management

Details: Complete event details at
(RSVP Required)

Date: Thursday, May 26, 2011

Time: 6:30 Doors open, Buffet Dinner included and cash bar
Cost: 4,000 yen (members), 6,000 yen (non-members) Open to
all. Venue is The Foreign Correspondents' Club of Japan.



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