TT-508 -- China's Next Food Scandal? Ebiz news from Japan

* * * * * * * * * T E R R I E 'S T A K E * * * * * * *
A weekly roundup of news & information from Terrie Lloyd.
(http://www.terrie.com)

General Edition Sunday, Mar 8, 2009 Issue No. 508

+++ INDEX

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

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+++ WHAT'S NEW

If you like honey, you may be interested to know that an
article in the Mainichi newspaper this week highlighted the
fact that like the USA and Europe, Japan is facing a bee
crisis of sorts. The problem here is similar to that in the
U.S., of Colony Collapse Disorder (CCD), which has
decimated that country's bee population by up to 30%.

However, while Japanese bee numbers are down by as much as
50%, the reason is less to do with CCD alone (one survey
says CCD accounts for 9% of the overall reduction), and
more to local factors such as the aging of the nation's
apiarists and the disappearance of pollen-bearing wild
flowers in Western Japan. The areas affected by CCD appear
to be thus far limited to Hokkaido and Iwate Prefectures.

Whatever the cause, the developing bee shortage is of major
concern to Japanese agriculture, since bees are the main
source of pollination of the country's substantial and
valuable fruit and vegetable growing industries. For
example, bee hives are rented and widely used in the
production of strawberries, watermelons, musk melons,
nashi, cherries, nasu (aubergine), etc.

So if apiarists can't improve their production of bee
numbers this year, there will likely be reduced production
of fruit in particular, as growers have to resort to hand
pollination. The problem with hand pollination is that it
is demonstrably less effective in producing good crop
volumes, and of course is just plain tedious, hard work.

What about our supply of Umeshu, Castella cakes, and other
honey-based Japanese food products? According to the
2,500-member Japan Beekeeping Association (JBA), Japan only
produces about 6% of its own honey and therefore the honey
supply will not change appreciably from where it is now.
Unless of course you look at the CCD, drought, flood, fire,
and other problems being experienced worldwide by
beekeepers at the moment...

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[...Article continues]

So where does the other 94% of Japan's honey supply come
from? Well, about 85% comes from China and the rest from
another 20+ countries around the world. The volumes and
average price per kilo of honey of the top 7 honey suppliers
to Japan are as follows:

Information from the Honey Beekeepers Association of Japan
website, (www.bee.lin.go.jp), 2007 shipments.

China, 34,000 tonnes @ JPY233/kg
Argentina, 1,600 tonnes @ JPY285/kg
Myanmar, 422 tonnes @ JPY134/kg
Canada 367 tonnes @ JPY366/kg
Vietnam 363 tonnes @ JPY194/kg
New Zealand 237 tonnes @ JPY2,094/kg
Hungary 233 tonnes @ JPY698/kg

Interestingly, the selling price for honey from New Zealand
is significantly higher per kilo than any of the other 6
top suppliers and yet even at that price it is still the
6th largest supplier by volume. We put this down to the
high success the Kiwis have had in identifying active
Manuka honey as highly desirable for its antimicrobial,
antibacterial, antioxidant medicinal properties. An aging
population is definitely going to respond to an anti-aging
health food...!

The fact that so much honey comes from China has become a
major worry for the Japanese authorities recently, as they
have no doubt been closely watching revelations in the USA
that significant amounts of Chinese honey is contaminated
with the powerful antibiotic Chloramphenicol, and there are
calls in the U.S. to ban honey imports from China all
together. Chloramphenicol is used for prescriptive
treatment of eye and brain infections in humans but is
considered a zero-tolerance additive to food sources as it
has been linked to a fatal blood disorder known as aplastic
anemia.

Apparently Chinese apiarists started using the now-banned
(i.e., banned from honey bee production) substance in 1997
when they had a bacterial epidemic that infected the bee
larvae in a large number of hives around the country.
Rather than destroy the hives, they sought to treat the
problem with Chloramphenicol -- and now it's a habit that
they're finding hard to break, perhaps like Melamine in
milk was. The problem of course is that much of the
imported stuff has been going into widely consumed
Japanese staples such as Umeshu liquor, and therefore a
large portion of the adult Japanese population has likely
now been dosed with it.

The authorities quietly put in extra testing procedures
last November and now it is a lot harder to import honey
(and in particular honey from China) than it once was.
Given the overreaction by the public to the tainted gyoza
scare last year, it is no wonder that this potential honey
scandal is being kept low key. Aplastic anemia is a scarey
disease which requires risky and painful bone marrow
transplants to remedy. It has been directly linked to the
overuse of some agricultural chemicals, as well as
Chloramphenicol. While in Europe and the USA the rate of
disease occurrence is 2 cases per million population, and in
Thailand it is around 6 cases per million, in Japan it is
as high as 14 cases per million!

By coincidence, just as we were considering writing about
Chinese honey this week, what should show up in our post
box but a flyer from a Shibuya-based company called Venture
Bank, selling beekeeping as a hobby. For just JPY55,000 you
can buy a beekeeper kit and install it on your roof or in
your garden. This might sound a bit crazy in Tokyo, but in
fact there is a solid and increasing number of older men
(generally) producing their own honeys in town. Typically
these people live within a kilometer or so of a major park
(in Tokyo, places like Yoyogi, Shinjuku, and Inokashira),
where of course there are lots of flowers. Indeed a business
acquaintance recently revealed his passion for honey bee
breeding in his apartment, and we were given samples of
his downtown produce. They weren't half bad -- no hint of
diesel at all...

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

Our Entrepreneur Handbook Seminar is obviously filling a
need in the community right now, as many people look at
their employers and see the writing on the wall. We had a
sell-out audience of 35, and still more people wanting to
attend. So, we have decided to re-run the seminar next
month for those people unable to make it this month. The
new date will be Saturday March 21. Details can be found
at:
http://www.japaninc.com/entrepreneur_handbook_seminar

Lastly, Terrie's Take is proud to be a supporter of The
Japan Helpline. To get help 24 hours assistance with any
problem, whether personal, legal, or financial, any time,
go to www.jhelp.com and click `help`.

To donate:
https://www.lincmedia.co.jp/jhelp/index.html?lang=en
Your support keeps The Japan Helpline going.

...The information janitors/

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

+++ NEWS

- Centenarian silver cups get smaller
- Big real estate investment into South Korea
- Welfare applications soar 162% in Nagoya
- Hikari Tsushin to book a big loss
- Almost no economic benefit from stimulus

-> Centenarian silver cups get smaller

We had never heard of this tradition before reading this
BBC article, but apparently the Ministry of Health, Labor,
and Welfare has since 1963 given a silver sake cup to
citizens turning 100 years old. In 1963 just 153 cups were
given out but this year more than 20,000 cups are expected
to be awarded. Clearly this is a big increase, and the
Ministry has decided they can't afford the cost of the
silver, so they will be making the cups smaller from this
year on. Currently they measure 10.5cm in diameter and will
shrink to 9cm. There are expected to be around 1m people
aged 100 or more in Japan by 2050. (Source: TT commentary
from bbc.co.uk, Mar 4, 2009)

http://news.bbc.co.uk/2/hi/asia-pacific/7922761.stm

-> Big real estate investment into South Korea

A Japanese private equity firm called Vana World has
announced that it will invest JPY190bn (US$2bn) into an
international business center in a South Korean free trade
zone called New Songdo City, near Incheon. The investment
will include the construction of a complex of office
buildings, schools, hospitals and other public and private
facilities. The will be the single biggest Japanese
real estate investment in Korea but will still only comprise
1/20th of the overall project cost of US$40bn. ***Ed: We were
unable to find out much about the Vana World fund. This
seems such a contrarian investment given the current
economic climate, in spite of the huge devaluation of the
Korean Won vis-a-vis the Yen, that we can only imagine that
the fund has political ties. If any of our readers know of a
website for Vana, we would love to know what it is.** (Source:
privateequityrealestate.net, Mar 4, 2009)

http://tinyurl.com/bq3hct

-> Welfare applications soar 162% in Nagoya

A Yomiuri newspaper survey has found that applications from
people seeking government welfare assistance jumped by 62%
in January compared with a year earlier. According to the
survey, about 11,555 people applied in January, as auto
maker lay-offs started gathering pace. Applications in
Nagoya, a heavy auto manufacturing region, soared by 162%.
(Source: TT commentary from bloomberg.com, Mar 3, 2009)

http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aASwmrATWTBE

-> Hikari Tsushin to book a big loss

We don't hear much of Hikari Tsushin, a big venture capital
investor back in the 1990s, these days, as even though
they are still listed they like to keep a low profile. The
company has been very profitable over the last few years
and has regrown tremendously since its near collapse in
2001. The firm has announced that it will experience an
extraordinary loss for the fiscal year ending March 31st
on the basis of share losses from its holdings in consumer
finance company SFCG, which went bankrupt last month.
***Ed: Hikari could have done worse: they sold more than
1.6m SFCG shares since last October, when they were the
second largest shareholder of SFCG. This rather "prescient"
sale of shares points once again to the need for foreign
shareholders to carefully watch what the larger Japanese
stakeholders are doing with their holdings. Someone bought
the SFCG shares when they should have been selling!**
(Source: TT commentary from nikkei.co.jp, Mar 5, 2009)

http://www.nni.nikkei.co.jp/AC/TNKS/Nni20090305D04JFA19.htm

-> Almost no economic benefit from stimulus

A Daiwa Institute of Research economist reckons that the
government's upcoming JPY2trn cash hand-out stimulus to the
public will have almost no effect on the nation's GDP,
increasing it possibly by just 0.15% so long as 40% of the
cash is actually spent and not saved. Unfortunately, the
economist reckons that the problem is that the public reads
the press and they are worried about their future, thus the
spending of the stimulus may amount to just 20% of the
actual cash handed out, reducing the GDP effect to 0.075%
or less. (Source: TT commentary from nikkei.co.jp, Mar 5,
2009)

http://www.nni.nikkei.co.jp/AC/TNKS/Nni20090304D04JFA07.htm

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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+++ CANDIDATE ROUND UP/VACANCIES

=> BiOS, a Division of the LINC Media group, is actively
marketing the following positions for customers setting up
or expanding in Japan, as well as other employers of
bilinguals.

** HIGHLIGHTED POSITION(S)

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** POSITIONS VACANT

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

+++ UPCOMING EVENTS/ANNOUNCEMENTS

------------- Entrepreneur Handbook Seminar ---------------

Our Entrepreneur Handbook Seminar is obviously filling a
need in the community right now, as many people look at
their employers and see the writing on the wall. We had a
sell-out audience of 35 and February, and still have more
people wanting to attend.
So, we have decided to re-run the seminar next
month for those people unable to make it this month.
The new date will be Saturday March 21.

Details will be posted on the website shortly, at:
http://www.japaninc.com/entrepreneur_handbook_seminar
-----------------------------------------------------------

------------------- Smartphone Showdown -------------------

Time: Thurs. March 12, 2009 from 7pm to 10pm
Location: The Pink Cow (www.thepinkcow.com)
Organizers: Mobile in Japan, Tokyo PC Users Group, Digital
Eve
Cost: 1,000 yen, (incl. snacks, TPC member rates apply)

Event Description:
Join the Tokyo PC Users Group, Digital Eve Japan and the
Mobile in Japan Community for an evening of debate on the
merits and demerits of the increasing array of smartphones.

Learn about the benefits of a smartphone over a regular
Japanese keitai, features of various brands (iPhone,
Windows Mobile, Nokia, Blackberry, Palm and Android), and
developments we can expect to see.

Please RSVP at: event-reg@mobileinjapan.com
http://www.mobileinjapan.com/events/smartphone-showdown
-----------------------------------------------------------

--------------- Silent Art Auction - Mar 30 ---------------

Event: Sale and Silent Auction of Contemporary American
and Asian Art, in support of Second Harvest Japan

Details: Complete event details at
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(RSVP by 22 Mar, 03-6418-0077)

Date: Monday, Mar 30, 2009
Time: 18:00 to 21:00
Cost: 6,000 yen, includes dinner, free drinks and silent
auction participation
Venue: Beacon Urban Chop House (1-2-5 Shibuya,
Ph. 03-6418-0077)
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-----------------------------------------------------------

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+++ CORRECTIONS/FEEDBACK

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 editors@terrie.com.

*** In Terrie's Take 506, we spoke about a Nikkei article
stating that Japanese companies are not using IFRS
standards and therefore are exposing themselves to future
shortfalls when accounting for the liability represented by
outstanding customer loyalty points.

Reader: Just a quick note on the loyalty program issue; I
don't think the Nikkei has it quite right. We are audited
in both Japanese GAAP and IFRS and have a loyalty program,
so we have looked at the treatment from both respects. It
is true that there are no clear principles in Japanese
GAAP, but there are some widely recognized practices that
in most cases I expect would result in exactly the same net
impact as the IFSR methodology. The key difference is that
in Japanese GAAP the movement in the provision is shown as
a separate P&L item, where as in IFRS that amount affects
sales directly. Although the IFRS uses quite different
language and talks about a deferral of sales, the impact
on the balance sheet is exactly the same, but there is a
difference in presentation (admittedly, a significant one
since it impacts the number shown as sales so therefore
could have a knock-on effect on performance measurements).

The Nikkei article is misleading in suggesting that IFRS
recognizes the "entire value" of the points where as
Japanese GAAP recognizes only that portion that is expected
to be used. IFRS also applies a "redemption rate" to the
value of the points granted. Although there is lots of
discussion about how that applies in the IFRS standard,
there is virtually no guidance in either the standard or
the commentary I have read on how to calculate that
redemption rate, so with "reasonableness" as the only
explicit standard I have found under either set of
principles, it is very likely that the rate applied for
Japanese GAAP would be acceptable for IFRS purposes.

So the impact of implementation of IFRS in this area would
be to force all companies that have a loyalty program to
recognize the expected cost of usage of those points - many
are already doing so, but I don't have any feel for how
many more are not doing it - and to move the impact from an
expense item to a direct impact on sales.

***********************************************************
END

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+++ ABOUT US

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