TOKYO (Nikkei)--The nation's major manufacturers are accelerating their moves to shift production abroad, with Toyota Motor Corp. (7203) and Nissan Motor Co. (7201) expected to see their overseas output ratios reach record highs during the current year. Boosting foreign production strengthens the ability of these firms to withstand the strong yen. But it also raises concerns of Japanese industry hollowing out.
Toyota is expected to assemble 4.25 million vehicles abroad in 2010, up 19% on the year, with its overseas production ratio rising 1 point to 57%. The carmaker began making hybrids in Australia last December and the U.K. this June. Nissan will likely see emerging nations account for about 40% of its global production for the year ending March 2011, up from 30% in fiscal 2009. As a result, its non-Japanese output will likely exceed 70% of its groupwide production.
Honda Motor Co. (7267), too, will be making more than 70% of its new vehicles outside Japan. It is assuming exchange rates of 89 yen to the dollar and 114 yen to the euro for the April-September half. Compared with a year earlier, the Japanese currency is 6 yen and 19 yen stronger, respectively, against the dollar and the euro.
Other carmakers are similarly impacted by the stronger yen, with the seven largest automakers to see their combined profit eroded by about 300 billion yen. Having recently advanced to the 82 level versus the dollar, the yen has since weakened to the 84 level following Japan's yen-selling intervention. Still, manufacturers are finding that they have to expand overseas output because they need to make products closer to where they are bought.
Electronic parts makers that have largely limited output of high-value-added products to Japan are also feeling the heat from the yen's appreciation. Murata Mfg. Co. (6981) aims to double overseas output ratio to about 30% by fiscal 2012, while Fuji Electric Holdings Co. (6504) intends to lift its figure to about 40% in fiscal 2011 from 25% in fiscal 2009.
Acquiring foreign firms is another way to increase production abroad. Nidec Corp. (6594) will purchase the motor business of U.S. firm Emerson Electric Co. this month. "We will minimize the impact of foreign exchanges by balancing out our production bases worldwide," Nidec President Shigenobu Nagamori says.
Canon Inc. (7751), which bought Dutch printer company Oce NV this March, saw its overseas production ratio hit a record 48% in the January-June half. The overseas production ratio for manufacturers with any foreign presence came to 18% in fiscal 1994, according to the Ministry of Economy, Trade and Industry. But it started rising quickly in 1995, when the yen strengthened to the 79 level against the dollar. The ratio has hovered around 30% since hitting 29% in 2001.
With the strong yen offering Japanese companies openings to buy foreign firms, its recent appreciation may further speed the shift to more production abroad.
Source: The Nikkei Sept. 24
TOKYO (Nikkei)--Increasingly strained relationships with China and the U.S. are putting a damper on Japanese efforts to spearhead initiatives heading into this year's Asia-Pacific Economic Cooperation summit.
Japan will host the APEC summit in Yokohama this November, serving as the chair for the first time since 1995. The APEC events, which had been seen as a chance for the country to strut its leadership stuff in front of its Pacific Rim counterparts, may instead underline its declining presence in the region.
Since kicking off trade ministers' talks in June, APEC members have convened meetings of senior officials with a goal of hammering out a final agreement on a wide range of issues at the November summit. But diverging interests among members may prove difficult to reconcile.
One possible bone of contention is a future model for a regional economic integration centering on APEC. Japan is lobbying for an Asia-Pacific free trade agreement by around 2020. But the U.S. has actively promoted pacts with individual APEC countries, while China has placed more emphasis on a separate arrangement with members of the Association of Southeast Asian Nations.
At the same time, Japan wants APEC to flesh out this year a common growth strategy that would apply to all members. Japan is proposing detailed timetables for achieving growth, as well as numerical targets. But APEC members face varying economic conditions and are at different stages of growth. Such developed nations as the U.S. and Japan are pushing for specific targets for deregulation and enhanced protections for intellectual property as ways of encouraging corporate growth.
But China, an economic powerhouse, has focused on the plight of developing economies and balked at the setting strict targets. Instead, it is prioritizing financial assistance and other areas.
Just two months shy of the November summit, Sino-Japanese relations have worsened since a Chinese fishing boat collided with Japan Coast Guard vessels near the disputed Senkaku Islands. Chinese officials warned of a possible decline in tourism between the two countries in a news conference after a gathering of APEC tourism ministers Wednesday and Thursday.
Japan has also faced a cooler reception from the U.S. in the wake of the turmoil surrounding the relocation of a controversial American air base in Okinawa Prefecture. And with its own midterm elections coming up this fall, the U.S. appears more focused on domestic politics.
Such unique challenges are making it difficult for Japan to obtain Chinese and American cooperation to achieve its APEC goals. After launching his new cabinet Sept. 17, Prime Minister Naoto Kan urged Foreign Minister Seiji Maehara and Minister of Economy, Trade and Industry Akihiro Ohata to do their utmost to ensure the upcoming summit's success. But Japan's lofty goals for APEC might go unmet.
Source: The Nikkei Sept. 24
TOKYO (NQN)--Domestic personal computer shipments increased for the 12th straight month in August, up 27.6% on the year to 793,000 units, the Japan Electronics and Information Technology Industries Association said Friday.
Shipments to companies were strong on a recovery in corporate investment in information technology. Shipments to individual users--especially those of large-size products--also expanded.
Shipments of desktop computers, which were popular among corporate customers, grew 28.7% to 263,000 units, while those of laptops rose 27.1% to 531,000 units. Shipments of PCs loaded with terrestrial digital tuners jumped 88.1% ahead of July's termination of analog broadcasting.
Source: The Nikkei, Sept 27, 2010
TOKYO (Nikkei)--Japan's major chemical manufacturers, some of which are upbeat about the April-September period, appear well-positioned to upgrade their earnings estimates for all of fiscal 2010 as well.
Of the five major chemical makers that close their books in March, Mitsubishi Chemical Holdings Corp. (4188), Asahi Kasei Corp. (3407) and Sumitomo Chemical Co. (4005) have raised their forecasts for the six months through Sept. 30, following stronger-than-expected growth in demand for materials used in liquid crystal displays and automobiles.
Still, those three firms take conservative views for the next half year. Kunio Nozaki, managing executive officer at Sumitomo Chemical, said that business will likely slow in the second half, compared with the first.
There are two sources of worry for chemical makers' October-March earnings: a possible glut due to increased supplies from the Middle East, and a possible decline in demand for LCDs and semiconductors.
In the Middle East, a number of plants that make ethylene from natural gas have recently opened. Their production costs are estimated to be around 90% less than Japanese plants, which use naphtha to make ethylene.
Middle Eastern producers use ethylene to make commodity resins such as high-density polyethylene, which is used, for example, in plastic shopping bags.
Demand for commodity resins is strong in emerging economies at the moment, but could slacken if the global economy slows.
It is thus important for Japanese chemical firms to make petrochemical products that do not directly compete with low-cost producers in the Middle East.
Mitsui Chemicals Inc. (4183), for one, is strengthening its phenols business; phenolic resins are used to turn out polycarbonate resins, which are used in car lights and office equipment. Sumitomo Chemical is strong in caprolactam, which is used to produce nylon resins.
Prices of phenol and caprolactam have been rising steadily due to tight supplies. Because there are no major plans to open or expand plants, which would put downward pressure on prices, these higher added-value products will likely continue to generate healthy profits for them.
Demand for flat-panel TVs will also factor into chemical makers' profits for October-March. They are major suppliers of lucrative LCD materials, for example.
Still, Nobuhito Owaki, an analyst at JPMorgan Securities Japan Co., said there is less uncertainty about chemical makers' October-March earnings than in late July; the three firms made upward revisions when they released their April-June results.
For October-March, the five chemical companies, including Tosoh Corp. (4042), expect total sales of 4.65 trillion yen, up 16% year on year, but their net profits are forecast at 61.5 billion yen, down 8%.
Given that only Sumitomo Chemical has raised its full-year forecast, others may follow suit as concerns fade over the outlook for the second half.
Mitsui Chemicals, for example, earned 80% of its estimated fiscal 2010 profit in the April-June alone. The company may upgrade its full-year forecast when it releases its April-September results.
Mitsubishi Chemical Holdings and Asahi Kasei, which revised their April-September estimates upward but left their full-year figures unchanged, may also reveal brighter outlooks for the year through March.
Source: The Nikkei Sept. 23
TOKYO (Dow Jones)--Japanese export growth slowed in August due to the strong yen and slack buying overseas, stoking concerns that the country's export-driven economy may lose more steam ahead.
While still solid demand for Japanese steel and other products in Asia pushed overall exports up 15.8% on year to Y5.224 trillion, that was down from the 23.5% rise in July, the Ministry of Finance said Monday. The result also fell short of the median forecast for a 17.9% rise in a poll of economists by Dow Jones Newswires.
"Yen strength was certainly a factor in the slower export growth in August," a MOF official said. The average dollar-yen exchange rate in August was Y86.37, down 9.1% from Y94.97 in the same month last year, according to ministry data.
Seasonally-adjusted real exports fell 2.3% on month, for the fourth straight month of falls. The slowing exports may intensify pressure on the government of Prime Minister Naoto Kan to do more to support an economic recovery that looks increasingly vulnerable to further slowdown. Citing the strong yen as a downside risk, Economy Minister Banri Kaieda said Friday he thinks the economy is entering a lull.
Since overseeing the government's first currency market intervention in more than six years earlier this month, Finance Minister Yoshihiko Noda has said the government will continue to take decisive steps to deal with the strong yen, which makes Japanese products less competitive overseas and diminishes revenue sent back to Japan.
"Due to the slowdown in the global recovery and the heightened appreciation of the yen, the head-winds to Japan's economy are definitely strengthening," said Masamichi Adachi, economist at J.P.Morgan Securities Japan. Other economists echoed that view. "The idea of a V-shaped recovery based solely on the export sector is no longer a credible scenario," said Japan Research Institute chief economist Hidehiko Fujii.
Japan's trade surplus fell 37.5% on year to Y103.2 billion, the first fall in 15 months. The result fell short of expectations for a Y200.0 billion surplus in a poll of economists by Nikkei and Dow Jones Newswires. The lower surplus came as imports rose 17.9% on-year to Y5.121 trillion, due to increases in liquefied natural gas and iron ore.
The slowdown in overseas shipments came as exports to the United States rose only 8.8% on-year in August to Y776.1 billion, slowing from the 25.9% rise in July to Y972.5 billion. Shipments of autos to the U.S. fell 8.3%, for the first on-year fall since October 2009, the Finance Ministry official said. The volume of auto exports was up only 0.6%.
The overall slowdown in exports would have been worse if not for continued strength in shipments to China and other high-growth Asian economies. Exports to China, Japan's largest trading partner, rose 18.5% to Y1.048 trillion, while exports to Asia as a whole were up 18.6% at Y3.053 trillion. Leading the gains were shipments of steel, metal processing equipment, electronic devices and autos, the ministry data showed.
But despite the relative strength of demand for Japanese goods in China, exports to the Asian neighbor also grew more slowly in August, down from the 22.7% rise in July to Y1.157 trillion. Any more slowdown, as the effects of Chinese government purchase incentives wear off, would further complicate the outlook for the Japanese economy, analysts said.
Another potential risk is that a diplomatic row over a territorial issue with China could escalate, spilling over into the economic realm, economists said. Economy Minister Kaieda cited the conflict Friday as another potential threat to the Japanese economy.
The dispute has "definitely been negative news for the trade activities of China and Japan," said J.P.Morgan's Adachi. But as any prolonged trade friction could also harm China, "I don't think from China's perspective it makes sense" to escalate the conflict further, Adachi said.
Japan last week released a Chinese fishing trawler captain it had detained after a collision with the Japanese coast guard in disputed waters, but China has continued to demand an apology and compensation for the incident. Source: The Nikkei Sept 27, 2010
TOKYO (Nikkei)--The growing market for anti-aging cosmetics products has given companies from other sectors, such as Fujifilm Holdings Corp. (4901), reason to plot aggressive strategies for making deeper inroads into the field.
While the overall market for cosmetics shrinks, the over-40 segment is growing.
Fujifilm released an anti-aging beauty liquid this month. Astalift Jelly Aquarysta uses collagen, familiar to the company from its years of handling photographic film, as well as technology originally developed to keep color photos from fading.
The product is sold online in a 40-gram container for 9,450 yen. Fujifilm has also prepared a smaller, 15-gram container priced at 3,990 yen for sale in drugstores and sundry goods stores.
Fujifilm entered the cosmetics market in 2006. Over the past two years, it has more than doubled the number of retail stores carrying its products to 5,000. With a focus on retail stores going forward, the company will dispatch more salespeople to promote its cosmetics.
Suntory Holdings Ltd. entered the market for anti-aging cosmetics this past spring with the F.A.G.E. series of skin care products, which are based on its technologies making use of yeast for beer and whiskey. The cleanser, beauty lotion and other F.A.G.E. products are marketed to people in their 50s and 60s.
Suntory has been selling the F.A.G.E. products via its own Web site but will soon also make them available on television shopping channels. By doing so, it hopes to boost sales from the 500 million yen expected this year to 2 billion yen after three years.
Asahi Breweries Ltd. (2502) has also leveraged its technologies using yeast. Its Aquareina series, introduced by a subsidiary last year and sold mainly in drugstores, is doing well, with television commercials now planned. Through such promotions, the firm expects to grow sales by more than 10-fold to some 1 billion yen in the year ending December.
Government statistics show that the domestic cosmetics market as a whole shrank a second straight year in 2009, contracting 8% to 1.39 trillion yen. But within that market, anti-aging cosmetics saw their sales grow 3% to 222.9 billion yen, according to a separate survey by Total Planning Center Osaka Corp.Working women and middle-aged women with discretionary income make up the market for anti-aging cosmetics, underpinning the steady growth in sales.
Major cosmetics companies are also expanding their own ranges of anti-aging products, setting the stage for the segment to turn into a battlefield for market share.
Source:The Nikkei Sept. 25
The Office of Commercial Affairs, Royal Thai Embassy in Tokyo, Japan
Source : http://www.depthai.go.th