The Office of Commercial Affairs,
Royal Thai Embassy in Tokyo, Japan
Japan Launches Panel To Promote 'Cool Japan' Cultural Industries
TOKYO (Kyodo)--The Japanese government is gearing up its efforts to export animation, fashion and other modern cultural industries as a way of boosting its economic growth, setting up a panel Friday that brings together officials from both public and private sectors.
The panel, led by Shiseido Co.'s Honorary Chairman Yoshiharu Fukuhara, plans to compile a proposal next spring on specific ways to make better strategic business out of ''Cool Japan'' industries, an official said.
The members shared the view that Japan has so far lacked an ''integrated strategy'' in promoting its cultural industries overseas, with one of them asserting the huge potential of Japan's ''soft power,'' the official said.
The Economy, Trade and Industry Ministry has stressed the need to diversify the country's sources of economic growth, which has largely been dependent on automobile and high-tech industries, and has set the ''culture'' industry as one of the areas the country should reinforce.
Economy, Trade and Industry Minister Akihiro Ohata, State Secretary for Foreign Affairs Takeaki Matsumoto and officials from other ministries also attended the panel meeting, along with such members as graphic designer Kenya Hara and photojournalist Everett Kennedy Brown.
Source: The Nikkei Nov 19
Yen's Punch Feared Knocking Out 'Made In Japan'
TOKYO (Nikkei)--The yen's persistent strength is adversely affecting a wide range of Japanese exporters, raising concerns that it could hollow out Japan's manufacturing sector if the trend continues unabated over the long term.
The yen's strength is hurting the profitability of many Japanese exporters, including Honda Motor Co. The yen traded at the mid-83 level to the dollar in Tokyo Monday, significantly stronger than the average of around 93 during the first half of fiscal 2009.
As a result, Yokohama Rubber Co. (5101) incurred more than one billion yen in foreign-exchange losses when its record sales in Russia for the April-September period were converted into yen.
Similarly, the value of orders Shibaura Mechatronics Corp. (6590) received during the fiscal first half was some 40% less than projected at the outset of the period because the won's cheapness relative to the yen bolstered the price competitiveness of the Japanese firm's South Korean rivals.
Given the circumstances, Japanese manufacturers are taking a variety of steps, such as relocating production overseas, using more foreign-made components and raising operating funds in currencies other than the yen.
Hitachi Construction Machinery Co. (6305), for example, has boosted output in Europe to increase the ratio of its overseas production. Kawasaki Kisen Kaisha Ltd. (9107) is leaning toward raising some of the funds it needs to purchase new ships in dollars.
NEC Corp. (6701) is further along the path to neutralizing the adverse effects of the yen's strength.
At the outset of this fiscal year, it separated its export-dependent chip business, negating the negative impact of the yen's strength relative to the dollar on its bottom line.
Toshiba Corp. (6502) has increased the ratio of flat-screen TV production consigned to overseas contractors, reworking its profit structure to the point where a stronger yen bolsters its profitability.
Exception not the rule
But these examples are still few and far between. Japan's top seven carmakers are expected to take a combined 816 billion yen hit to their operating profits this fiscal year if the dollar averages around 85 yen, a level in line with the projections made at the outset of this term.
In other words, a third of their combined profits is likely to be wiped out in fiscal 2010 even if the yen averages 85 to the dollar, a level still lower than where it is trading now.
Should the yen rise to 65 to the dollar, Japan's manufacturing sector as a whole will sustain an operating loss, according to Daiwa Institute of Research Ltd. But many Japanese firms are struggling even with the yen's current strength.
Shinko Electric Industries Co. (6967) forecasts it will barely break even during the fiscal second half if the dollar trades at an average of 80 yen. The firm specializes in manufacturing microprocessor packages, a high-value-added product category that requires a production process able to turn out many kinds of items in small lots.
This makes it difficult for the company to move production overseas. Shinko Electric President Mamoru Kuroiwa said he also wants to "protect the jobs of 4,000 workers at domestic factories."
Ill-equipped
Toyota Motor Corp. (7203) calculates that a total 120,000 workers would lose their jobs at the company and its suppliers if it began overseas production of 1 million of the 3 million or so vehicles now being made in Japan. The projected job losses would affect some 70% more people than the total workforce of Toyota alone.
"The Japanese economy is ill-equipped to cope with the yen's current strength, or at least, Toyota is not competitive enough to handle it," Toyota Executive Vice President Satoshi Ozawa said during an earnings briefing Nov. 5.
Tokyo Electron Ltd. (8035), a chipmaking equipment manufacturer, has avoided taking production overseas due to risks of technology leaks. But it decided last month to build a factory to produce LCD-panel-making equipment in China's Jiangsu Province to trim its production costs and more fully tap growing Chinese demand.
The rest of Asia has emerged as both a major production base and a rapidly growing consumer market. The investment environment is also improving in the region, making it increasingly easy for Japanese firms to move production to these countries.
In fact, both the percentage of assets Japanese firms held at home and the ratio of profits they earned at home have been declining over the long term.
Overseas assets account for more than one third of the total assets held by 660 Japanese firms recently surveyed. In another survey of 420 domestic firms, less than 60% of their combined profits are earned in Japan, down sharply from 80% a decade ago.
"Exchange rates will heavily influence our decision on whether to make investments in Japan or abroad going forward," said Fuji Heavy Industries Ltd. (7270) Corporate Executive Vice President Mitsuru Takahashi, who is also chief financial officer.
If the top executives of many Japanese firms conclude that the yen will continue to rise over the long term, they will not hesitate to move production overseas, hollowing out Japan's manufacturing base.
Source: The Nikkei Nov. 22 morning edition
Watami's Services For Elderly Seen Becoming Top Profit Earner
TOKYO (Nikkei)--Watami Co.'s (7522) services geared to senior citizens are expected to generate more profit than its main business of running izakaya Japanese-style pubs this fiscal year for the first time since the company's establishment in 1986.
The firm's izakaya business is seen logging an operating profit of 3.7 billion yen in the current year through March 31, down 3% from the previous year. This segment has continued to suffer from stiff competition and consumers' preference for lower prices. At the beginning of the fiscal year, the firm had projected a 10% increase to 4.2 billion yen.
Meanwhile, the company's business of running nursing homes is expected to post a 26% jump in operating profit to 3.4 billion yen. Its nursing homes have a high occupancy rate of 94%, and nine buildings are slated to be built in the fiscal second half.
The firm is also adding sales locations for meal deliveries to the elderly. It plans to boost daily sales from about 60,000 meals last fiscal year to about 130,000 meals this fiscal year. The segment's operating profit is seen surging 66% to 1.3 billion yen.
Source: The Nikkei Nov. 19 morning edition
Department stores dropped the apparel sales and Takashimaya lunches the reform
TOKYO (Nikkei)--Department store operator Takashimaya Co. will begin designing, producing and selling its own clothing, following the system adopted by Specialty Store Retailer of Private Label Apparel(SPA), such as Uniqulo, H&M and so on, in a bid to bring down prices to meet the demands of quality-conscious, penny-pinching consumers.
For starters, it will offer women's 100% cashmere sweaters and cardigans for 7,000 yen to 8,000 yen.
The company purchased cashmere wool in Mongolia and outsourced production to a plant in China. It will sell a total of 10,000 units, with sales to begin gradually at 11 domestic locations from Wednesday. Similar products purchased from apparel makers would sell for around 30,000 yen, says Takashimaya.
Boosted by the strong yen, the department store operator will develop summer sweaters, scarves and other items from silk and other materials procured abroad. It will also branch into men's apparel. In areas like Hokkaido and Kyushu where it has no presence, Takashimaya intends to sell its wares wholesale to regional department store operators. The business is targeted to ring up 1 billion yen in annual sales.
Fast Retailing Co. subsidiary Uniqlo Co. and Sweden's H & M Hennes & Mauritz AB are the masters of guiding a product all the way from design through to marketing. Because of affordable and fashionable clothing designs, they have been able to boost their market positions even in a down market.
By contrast, department store operators have mostly relied on manufacturers for mainstay apparel. With this business model, there is little inventory risk but profit margins are low and product lineups cannot be changed easily even when expensive items are repelling customers.
Department store operators are undergoing a protracted slump, and weak demand for clothing is a main reason why. Takashimaya's apparel sales plunged 14.6% on the year in FY 2009.
Thakashimaya Co. adopts the SPA system and sets up the framework to accommodate consumers demand promptly. Other department stores, facing the chronic sales drop in apparel, might follow the Takashimaya’s challenge.
Isetan Co. and Daimaru Co. dropped the apparel sales of FY 2009 dropped by 12.1% and 8.7% respectively. According to the Japan Department Stores Association, the apparel sales of FY 2009 was dropped by 13.2% of that of FY 2008. By this September, it has been falling below the sales in FY 2008 for 39 month in a row.
For department stores, the apparel is major items; the sales is about 35% of the total sales(2009). The apparel lucrative items and is the main profit pillar. However the future Japanese apparel market is expected to be shrinking and department stores call for a urgent overhaul of apparel. Department stores, narrowing down the products categories by the cut down of sales space of electric appliance, focused the apparel as the largest glowing item. However on the contrary to the expectation, the apparel sales has been registering year-on-year losses since 1997.
Then in this few years, SPA companies such as Uniqulo, Forever 21(U.S.) emerge and grows the market rapidly. Then fashion online shopping sites such as ZOZOTOWN gains popularity. That results in that department stores lose the profit in the both market casual and cutting-edge fashion.
This current situation accelerates the realignment of apparel makers who supply products to department stores. In this July a veteran maker, RENOWN INCORPORATED was affiliated with Chinese leading fiber maker,. In this October, SANEI INTERNATIONAL and TOKYO STYLE announced to be merged.
Source:The Nikkei Nov. 16, 2010
Battle for skin centers on price
Major cosmetics firms roll out 1,000 yen-or-less skin-care products A price war over skin-care products is heating up, with big guns like Shiseido Co. serving up products priced at 1,000 yen or less ($12.30).
Shiseido's Senka Skin Lotion Made from Moisturizing Cream comes in four types. Low-cost skin-care products used to be the domain of newer or midtier cosmetics companies - such as Rohto Pharmaceutical Co., with its Hada Labo brand. But the entry of leading firms highlights the ever shrinking high-end market, while the cheaper segment expands in small but noticeable increments. The market for 1,000 yen-or-less products grew by slightly more than 3% from fiscal 2006 to 2009.
Fusako Znaiden, who manages Shiseido's mass and masstige brand marketing unit, said low-cost products are drawing a wide spectrum of customers beyond the company's core clientele of women in their 20s and 30s. It has been about two months since the brand debuted at some 21,000 drugstores, convenience stores and other outlets around the country.
Getting connected
A total of 1 million samples have been distributed at large commercial facilities or attached to magazines. And rather than going with a full-scale TV ad blitz, Shiseido has searched for new ways to connect with customers while boosting recognition of the Senka brand. The Senka line has its own Web site to encourage users to provide their opinions and observations. Shiseido plans to begin developing products based on that feedback next year.
Kanebo Cosmetics Inc., meanwhile, has also entered the low-cost market with an extensive economy version of its Freshel line. Regular Freshel products, which are geared toward women in their 30s and 40s, are in the 1,000 yen to 2,000 yen price range. At the forefront is the hit BB Cream, which goes for around 1,600 yen.
The Freshel line covers a range of functions - beauty serum, lotions, sunscreen and light makeup. More than 2.5 million units have been sold since last fall. The suggested retail prices for the newly added Freshel The Basic line - which includes six products - run from 1,050 yen to 1,260 yen, but they are being sold at stores for less than 1,000 yen.
Shiseido and Kanebo have taken different approaches to branding their low-cost cosmetics. While Shiseido does not print its name on the Senka bottles or mention it in the advertisements, Kanebo puts its stamp on its 1,000 yen-or-less items.
"We want our customers to feel safe in knowing that they are buying from a leading manufacturer," a manager of Kanebo's marketing department said. This fiscal year, the company is aiming to drive up Freshel sales by 20% on the year.
Another player is Kose Corp., which introduced skin-care products in August priced around 1,000 yen. Kose's new offerings are geared toward people in their 40s and 50s. All of this suggests that the pricing battle will intensify in the low-cost cosmetics segment.
Source:The Nikkei Nov.15,2010
Trading Houses Flock To SE Asia Food Biz
HANOI (Nikkei)--Japanese trading companies have long used Southeast Asia as a base for shipping shrimp, bananas and other foods to Japan, but they have begun boosting their investment in food businesses in the region to cater to growing local demand.
Marubeni Corp. (8002) in October signed a contract with Cambodia's largest rice wholesaler, Angkor Kasekam Roonroeung Co. (AKR), to jointly grow and process rice for domestic consumption as well as for export to other Southeast Asian nations and China. The Japanese company will provide AKR The figure is total sales of the following 16 Japanese leading companies based on the report of marketable securities of each companies.(Shiseido Co.,Ltd., Kao Co.,Ltd., KOSE, NOEVIR Co.Ltd.,mandom corp.,FANCL,CORPORATION, AVON PRODUCTS,Naris Cosmetics Co.,Ltd.,Dr.Ci:Labo,Milbon Co.,Ltd., HOUSE OF ROSE CO.,LTD., HABA Laboratories Inc., Nippon Shikizai,Inc. ivy cosmetics, COTA Co.,Ltd., FAVORINA CO.,LTD.) with fertilizers, farming machines and know-how on milling.
Mitsubishi Corp. (8058) will tie up with Kewpie Corp. (2809) to set up a food business in Vietnam in November. The partners plan to build a factory to produce mayonnaise and other condiments and begin local sales by 2012. Itochu Corp. (8001) will partner with Fuji Oil Co. (2607) to build a cooking oil plant in Thailand in 2011.
Sojitz Corp. (2768) has acquired a roughly 20% stake in Interflour Vietnam Co. It is also participating in a Vietnamese project to improve port facilities so the flour-milling firm can handle a large volume of flour imports. The revamped facilities will come online by the end of this year.
Source: The Nikkei 16, 2010
3 Highway Entities To Pursue Projects In India, Vietnam
TOKYO (Nikkei)--Three highway firms plan to set up a company next year for handling road construction and management projects in Vietnam, India and other emerging markets.
East Nippon Expressway Co., Central Nippon Expressway Co. and West Nippon Expressway Co. -- spun off from the Japan Highway Public Corp. in October 2005 -- will pool their expertise and business resources to win orders.
They will consider tapping government-affiliated lenders such as Japan International Cooperation Agency and Japan Bank for International Cooperation to pay for construction, which will be carried out by Japanese or local general contractors.
Vietnam plans to build a 5,873km network of highways connecting such cities as Hanoi and Ho Chi Minh City, with about half to be treated as a priority project slated for completion by 2020. Central Nippon Expressway has snagged a project to supply consulting services in Vietnam for the design and management of a large bridge. The firms will now try to win highway projects there through the planned company.
East Nippon Expressway opened an office in India this past May and has already been tapped to study highway construction plans in the city of Mumbai. It is also scheduled to provide support for the rollout of such initiatives as electronic toll collection systems for other roads in India.
The government has been pushing to export infrastructure technology as a package deal that offers both construction and management. With domestic demand for road construction slowing, Japan hopes to cash in on the increasing needs in emerging countries.
The three highway entities expect to face heavy competition from South Korea and others hoping to provide their infrastructure technologies to Asian markets. To fend off these challenges, they will concentrate resources to hold down costs while offering high-quality services.
Source:The Nikkei Nov. 18, 2010
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