TT-691 -- 7 Events that Changed Japan in 2012, ebiz 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, Dec 16, 2012, Issue No. 691


- What's New -- 7 Events that Changed Japan in 2012
- News -- Advantage Partners to buy Sanyo "digi-came" ops?
- Upcoming Events
- Corrections/Feedback -- Cybercrime in the USA
- Travel Picks -- Ikebukuro's charcoal icecream...!
- News Credits

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Today we take a look back at some of the key events that
shaped 2012, including those relevant to non-Japanese
living here. Though not listed in any particular order,
the success of the right-wing LDP party in today's national
lower house elections ratchets up the threat of a war with
China yet another notch, and makes our first choice all the
more pertinent.

1. Senkaku Islands

Five islands and 3 rocks located just 140 kilometers from
Taiwan (and 170km from Ishigakijima), called the Senkaku
islands (Diaoyu in Chinese), look set to disrupt Asian
trade for some years and possibly start an arms race
between Japan, China, and Taiwan. The dispute over who owns
the islands has been simmering for decades, especially
since it was discovered that there are significant oil
resources in the area. The dispute boiled over with the
change in China's Communist Party leadership earlier this
year because they provide a handy distraction for patriots
who might otherwise look harder at their own government. As
a result, it has become dangerous to drive a Japanese car
in China and certainly free-spending Chinese tourists have
stopped coming here.

The LDP's Abe and far-right wingers like ex-Tokyo governor
Shintaro Ishihara are making hay out of the situation,
causing speculation on Japanese web-based bulletin boards
that the nation will reintroduce the draft and
remilitarize. We think that given the state of the nation's
finances and politicians' historical predilection for
distracting their citizens' attention with a small war or
two, armed conflict is highly likely in the future. Think
about it: one little air-based dog fight between Chinese
aircraft and SDF jets scrambled to intercept them would
touch off a dangerous escalation that would surely be
marked with the Chinese invading the Senkakus before Japan
is able to react.

[Continued below...]

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2. Weakening yen

Although we don't see a permanent weakening of the yen, a
combination of political change and the Bank of Japan
embarking on another major bond-buying exercise (quantitative
easing by any other name) have brought down the currency by
5% in the last few months and analysts are predicting it
could fall to 90 yen to the dollar, a 15% movement, over
the next few months. The initial move in the most recent
yen weakening round was by the BOJ, which in April
announced it will buy another JPY10trn (US$124bn) of bonds,
bringing its total purchases to JPY80trn. However, while
this had some small effect on the markets, investors were
still really nervous about the Eurozone and within days
the yen was back to its previous strength.

So what was really needed was for market sentiment to be
driven by emotion, and this was provided in spades in early
November by Shintaro Abe, the leader of the LDP, who will
probably be the nation's next Prime Minister. Abe called
for the BOJ to be made to follow government objectives,
which would mean massive new quantitative easing programs.
Yup, that certainly did the trick and the yen dived to 83
to the dollar a few days later. But the fact remains that the
Japanese yen is still a safe haven currency, so if the Eurozone
comes apart next year, which we think is a possibility,
then the yen weakness will quickly disappear again.

3. Govinda Mainali exoneration

Convicted people in Japan don't often get exonerated,
especially when they've been found guilty of murdering
someone. But this is what happened after 15 long years in
jail for Govinda Mainali of Nepal. Mainali was in Japan as
an undocumented worker and had the bad luck of getting to
know a prostitute named Yasuko Watanabe, who was brutally
murdered. Mainali's sperm was found in a condom at the
crime scene and for some strange reason the investigators
didn't bother to confirm whether it was also inside her.
Not until a number of escalating court challenges later
were the prosecution forced to test swabs taken from her
body and they found that another unknown person was the
last to have had sex with her. This new evidence threw
into doubt whether Mainali was in fact even at the scene
when the murder happened. It then emerged that the
prostitute had a double life and was by day a mild-
mannered administrative worker at Tokyo Electric Power
Company (TEPCO) while at night she sold her body. What's
more, she was sexually involved with some very senior
business figures at TEPCO and rumors were rampant that
someone decided she was too risky alive and had her
killed by the Yakuza, with evidence planted to implicate

4. Advent of LCCs

When JAL fell into a deep slump (the stock fell by 81% in
just one day) back in 2010, the news that American Airlines
would come to the rescue with a JPY1.4bn investment,
coupled with an even larger investment by the government's
Enterprise Turnaround Initiative Corporation of Japan,
proved to be a turning point for the airline. It also proved to be
a turning point for the nation's air travel industry in
general. This is because with American's involvement the
Japanese government was required to accept a U.S. demand
for Open Skies, an international free market commitment by
participating governments. As a result, once the skies were
declared open, not only did American and other U.S.
airlines benefit, but a new breed of foreign operators,
Low-cost Carriers (LCCs) were allowed in as well -- in the
form of Jetstar, Peach Airlines, and AirAsia. We believe
that these airlines will completely change the face of
travel in Japan in the next five years.

Interestingly, even as the LCCs started their push, JAL
recovered spectacularly under the leadership of Kyocera
founder and Buddhist priest, Kazuo Inamori, and enjoyed one
of the largest IPOs of 2012, in September. But we don't
think JAL shareholders should be celebrating just yet,
because we believe that the LCCs will do to air travel what
Uniqlo has done to the apparel business -- ripping the guts
out of the incumbents -- unless of course the Japanese
government figures out a way to shut the door on Open Skies

5. Major changes in Foreigner residence permits

While Japanese liberals are fighting a (losing) rearguard
action against centralized data and ID numbers for
citizens, the same level of concern doesn't appear for
foreigners, who now have 3 years (from July) to switch
their registrations over to the new Residents ID cards. The
new cards are fully chipped, and are electronically
connected across all aspects of living in Japan (taxes,
visas, etc.). This means that there is far less likelihood
of overstayers escaping notice, and their ability to seek
health and other services from local government agencies
anonymously will be eliminated. Fair enough, we suppose,
you need to play by the rules. But even though there are a
few sops thrown in for foreigners to go with the new
system, we can't help feeling we're even more controlled
and discriminated against than before. If the whole nation
is forced to join a similar electronic system, Jukinet, then
at least it would be fairer.

6. Dentsu takeover of Aegis

The twin pressure points of stagnant-to-declining growth at
home and the high yen are spurring Japanese firms to join
herd-like in executing high-priced, high-return foreign
M&As to boost their bottom lines. It's great business for
the larger international law firms having Tokyo offices.
According to Recof, Japanese firms have bought 489 foreign
companies as of calendar mid-December 2012. The deals total
JPY6.9trn, about 8% up on last year, and are the third
highest number ever recorded. The second largest deal was
advertising company Dentsu's takeover of London-based Aegis
for JPY400bn, a premium of 48% over the last closing price
for Aegis stock prior to the announcement.

The Dentsu-Aegis deal is both massive and complex,
involving as it does business units all over the world.
Indeed, this complexity is challenging the deal itself, as
Chinese authorities seem to be delighting in holding
everything up in their country until at least February next

The question is whether Dentsu can manage such a large and
diverse group of non-Japanese, and whether it is prepared
as a company to submit to global best practices and give
up the back office dealings system that it likes so much in
Japan. For now, they are leaving the international
operations in the hands of a capable and trusted foreign
executive named Tim Andree. We hope that they leave him to
get on with the job, and to resist the temptation to start
micro-controlling things from Tokyo.

7. Softbank buys Sprint

In contrast to the Dentsu-Aegis deal, which is an obvious
fit for both companies, the Softbank takeover of Sprint has
everyone, including us, scratching their heads as to why
Mr. Son wants Sprint. Sure, it's a good company and it is
America's third largest carrier. But with the iPhone
strangling Sprint's profits, according to some analysts
until 2015, it's hard to understand what Sprint has that is
so attractive. Is there any synergy to be had in the deal's
two very disparate and disconnected players and their
respective markets? We don't think so. Given that Sprint
has an unlimited data access plan for iPhone users, maybe
Son feels he can turn Sprint around by using methods and
systems developed by Softbank in Japan for the iPhone. If
so, it's a secret recipe that has cost Mr. Son US$20.1bn
to try out so far. You really have to respect a guy who has
the guts to bet the farm to prove a point.

There were plenty of other interesting developments this
year, including Sharp almost going bankrupt, the
acceleration of accelerators for venture firms, and the
wavering of Japan's energy sector between dumping or
keeping nuclear, and the introduction of feed-in tariffs for
home-generated electricity. The pace of change is
speeding up because of the fact that the country is being
forced to internationalize commercially. In this respect,
2013 should be a very interesting year and one where anyone
servicing the international market should see an
improvement in their fortunes. Why? Because every time a
huge Japan-connected deal hits the headlines, the CEOs of
a hundred smaller firms are encouraged to start broadening
their horizons as well.

Next, our travel section below covers two
very different museums, one with a very complete historical
archive of Japan and how the nation developed culturally
and in art, while the other museum, which is in Ikebukuro,
features snake and charcoal icecream (really!).

Then, as a little Christmas present, be sure to read the
announcements section below for the Kyoto Convention
Bureau. They are recruiting corporate types (especially
meeting planners) to come down and sample the delights of
Kyoto as a monitor. We did this trip earlier this year as a
media representative/monitor and it was both eye-opening
and deliciously enjoyable. As a monitor, the Bureau covers
most of your costs and you get to go places normally
closed to ordinary tourists. We got some great photos and
video footage from our trip.

Lastly, we will be taking off our usual two weeks over the
year-end/New Year period, and the next issue of Terrie's
Take will be out on January 6th. We wish all of our readers
a very Merry Christmas and a Happy New Year.

...The information janitors/


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wishes for 2013!

+++ NEWS

- Advantage Partners to buy Sanyo digital camera ops?
- Kamei moratorium for SMEs to discontinue?
- Sharp gives early retirement to 3,000
- Kanematsu buys Honda's soybeans export business
- Lead in cosmetics increased samurai family mortality

=> Advantage Partners to buy Sanyo digital camera ops?

Market rumor has it that Panasonic plans to sell its Sanyo
digital camera operations to fund Advantage Partners, as
part of a rationalization of its overall operations. Given
that Panasonic already has an in-house "digi-came"
business, the divestiture is not unsurprising. What is
surprising, though, is that Advantage Partners thinks it
can turn the business around, given that Panasonic had
shopped the operation around to a bunch of other makers
unsuccessfully. Reuters says that the sale will be for
several hundred million yen -- a bargain, so long as AP is
able to fire a bunch of surplus workers and keep the ones
that really matter. (Source: TT commentary from, Dec 12, 2012)

=> Kamei moratorium for SMEs to discontinue?

Data we have long speculated over -- just how many
companies took advantage of the bank loan repayments
moratorium introduced by then financial services
minister Shizuka Kamei in 2009 -- has been partly
answered with data released by the FSA recently.
Apparently, 3.4m company and individual (mainly real
estate) loans were rescheduled between December 2009 and
September 2012. The total amount is estimated by the FSA
to be around JPY230bn. ***Ed: This is not a small amount of
money, and given the nature of the reschedulings, generally
because of repayment difficulties, one wonders just how
much of these loans will actually be recovered should the
program close next year. Further, it isn't just the
rescheduled loans that are the problem, but also the
losses caused by the bankruptcies precipitated by
the loss of this financing lifeline. Our guess is that you
can take the FSA number and multiply it by 10-20x to
estimate the overall losses that will be incurred. And that
doesn't include tens of thousands who will have to draw
unemployment benefits. Perhaps, now that the LDP is likely
to return to power and SMEs are one of their traditional
power bases, the government will continue the Small and
Medium-sized Enterprise Financing Facilitation Law
indefinitely.** (Source: TT commentary from, Dec 13, 2012)

=> Sharp gives early retirement to 3,000

Layoffs are increasing in the ailing electronics sector,
and Sharp is giving 2,960 employees early retirement
packages this week. This is the first tranche of a global
downsizing program of around 10,000 people for the company.
A Nikkei article covering the event noted that many of the
Sharp engineers leaving are being eagerly sought after by
other not-so-damaged firms who want to access their
expertise. There is also speculation that many of the
departing engineers will wind up working elsewhere in Asia
and thus accelerate the hollowing out of the electronics
industry in Japan. (Source: TT commentary from, Dec 15, 2012)

=> Kanematsu buys Honda's soybeans export business

Non-GMO soy beans are a strategic import for the Japanese,
and a large percentage comes from the mid-western USA.
Kanematsu is spending more than JPY1bn to buy out the soy
beans buying, preparation, and export business of Honda
Trading. The purchase will increase Kanematsu's non-GMO
export business from the USA by 50%, giving it 15% of the
market overall. Non-GMO farmers are declining in number,
as mainstream producers move to GMO crops for better
drought and insect resistance. Japanese consumers are
averse to eating GMO products. ***Ed: Eventually Kanematsu
will either have to invest in actual farms so as to keep
GMO supplies going, form a dividends-oriented cooperative
similar to New Zealand's Fonterra for milk products, or look
to another country (like Brazil) to produce what it
wants.** (Source: TT commentary from, Dec 14,

=> Lead in cosmetics increased samurai family mortality

Interesting little tidbit from the Press Trust of India.
Apparently researchers at the University of Occupational
and Environmental Health in Kitakyushu have found from bone
samples that some children of high-born samurai families
suffered from severe lead poisoning. In some of the bone
samples the lead concentrations were so high that the
scientists reckon the kids would have had IQ problems.
Speculation is that the mothers were using lead-based
facial cosmetics after copying the fashion in the 1600's
from Geisha. Then, as babies would suckle at the breast
of a mother wearing such makeup, they would ingest large
amounts of lead, with devastating results later in life.
(Source: TT commentary from, Dec 14,

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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Entrepreneur's Handbook Seminar 9th of February, 2013

If you have been considering setting up your own company,
find out what it takes to make it successful.
Terrie Lloyd, founder of over 17 start-up companies in Japan,
will be giving an English-language seminar and Q and A on
starting up a company in Japan.

This is an ideal opportunity to find out what is involved,
and to ask specific questions that are not normally answered
in business books.
All materials are in English and are Japan-focused.

For more details:

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Come and join the Australia Society Tokyo at our annual
Australia Day Ball on Saturday 26th January, 2013 at the
centrally-located ANA Intercontinental Hotel ballroom.

Bookings for tables of ten guests can be arranged at
members' rates and individuals are of course welcome, too.
Enjoy fantastic food, specially selected wines, three
different live music performances, and chat with a wide
variety of people. There are prizes to win, auctions to
raise funds for worthy causes, and a few surprises as

This event, being the highlight of our social calendar,
attracts many so register quickly as seats sell out fast.

Treat yourself once a year - you won't be disappointed!

Visit to register.

------------------ Kyoto Convention Bureau ------------------

Invitation to Kyoto for Corporate Meeting Planners, 5th &
6th March 2013

Are you considering Kyoto for business events? The Kyoto
Convention Bureau invites you to join fellow decision-
makers for a two-day learning-focused workshop in Kyoto
about using this city to add value to your corporate
meetings, incentive travel and events.

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Password: 2013

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There are gaijin share houses, and those that you share
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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 TT690, we covered stats on cybercrime in Japan and
ways in which online scams are being perpetrated. Our
reader provides us with a good reference on how cybercrime
is evolving in the USA -- the 'ground-zero" for
international online deviants.

*** Reader: Relating to your article, here is an important
article regarding online safety.



=> Tokyo National Museum
From Ainu to Zen, there's something for everyone

If you’re looking for a historical treasure-trove of
Japanese arts that will give you an overview of some of the
most important and influential techniques, products and
traditions to come out of Japan, Tokyo National Museum is
the place for you.

The permanent collection, located in the Honkan (Japanese
Gallery) is brought together under the title, Highlights
of Japanese Art. The information tells visitors they are
about to embark on a “cultural journey through time” and
the gallery lives up to this claim. The earliest items in
the collection are clay pots and jars from the Jomon
Period (10,000-500 BC). From there you are taken on a
whistlestop tour that ends up in the current Heisei Era,
having touched on everything in between. There is plenty
of English around on the labels in the galleries, as well
as guides and maps in English, French, German, Spanish,
Chinese and Korean so it’s easily navigable by foreign

=> Strange Flavors at Cup Ice Museum, Tokyo
Some of the most bizarre ice cream around

To start with an ice cream confession: I'm a vanilla man,
myself. The Cup Ice Museum in Ikebukuro has that. It also
has some other flavors that you'd expect, like chocolate
and strawberry. BUT, then it takes another step with some
flavors that don't sound like ice cream at all: tulip,
salt, and crab fall into this category. Luckily, the Cup
Ice Museum doesn't stop there, oh no. They won't be happy
until they've made you question just how far you're willing
to go. Ever tried Viper ice cream? No? How about



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