TOKYO (Nikkei)--Japan needs a "public consensus" on joining the Trans-Pacific Partnership, the new minister for economy, trade and industry said Friday, giving no indication of when the government will decide whether to take part in negotiations on the trade pact.
Yoshio Hachiro
Yoshio Hachiro was not the only member of the new cabinet urging caution on rushing into the TPP, even as the U.S. and other current and prospective members aim to reach a broad agreement at the Asia-Pacific Economic Cooperation summit in November.
Many at the Ministry of Economy, Trade and Industry say Japan should use the forum to announce that it will join the negotiations.
Hachiro entered politics from a hotbed of opposition to the TPP -- JA, the politically powerful association of agricultural cooperatives. At his news conference, the minister stressed that he "must not champion any industry" in his new role.
But he minced words when it came to the TPP. Asked when the government would take a stance, he seemed to question the need to decide in November and cited the effects of the earthquake.
Other cabinet members sounded equally guarded. Pointing to the damage left by the disaster, Reconstruction Minister Tatsuo Hirano said now is not the time for debate over joining the TPP. He was echoed by Defense Minister Yasuo Ichikawa, who said it would be a good idea "to hold off on discussions for a while."
Prime Minister Yoshihiko Noda struck a different tone at his inaugural news conference, arguing for an active pursuit of "high-level economic partnerships." He will first need to figure out how to bring his own cabinet in line.
(The Nikkei Sept. 3 morning edition)
TOKYO (Nikkei)--Stock market watchers are wondering, with some concern, how shares in domestic-demand-driven companies will fare under Prime Minister Yoshihiko Noda.
As head of the government's Tax Commission during his time as finance minister, Noda oversaw work on a plan for tax reform. He maintained his support for higher taxes during last month's leadership contest in the Democratic Party of Japan, which he won.
Noda still needs to convince critics in his party and clear other hurdles. But the debate on raising taxes could very well move closer to a conclusion under his leadership.
Domestic-demand stocks would likely take a hit from a proposed step-by-step increase in the consumption tax to 10% by the middle of the decade. While the details remain sketchy, retailers and consumer goods makers alike are keeping an eye out for the government's next move.
In 1997, when the tax rate went from 3% to the current 5%, department store sales in Tokyo and Osaka dropped for the first time in two years. In 2004, when tax-inclusive pricing became mandatory, retailers pressed manufacturers harder for discounts. Unit prices plunged 5%, recalls Sadayoshi Fujishige, president of Lion Corp. (4912), whose products include toothpaste and laundry detergent.
But judging by how some domestic-demand companies fared, raising the consumption tax may not necessarily sink stocks. Unicharm Corp. (8113), for instance, enjoyed a brisk run-up in its share price from 1997 to 1999. True, the tax hike stunted its diaper sales in Japan for a while. But the company put down roots in Southeast Asia, making a clear shift into emerging economies. Its sales in Asia outside of Japan have topped 100 billion yen, up from a little over 10 billion yen back then.
"From a medium- to long-term perspective, domestic-demand companies that have ventured out to stake their claim in the global market have the underlying strength to brush aside tax increases and other domestic headwinds," says Katsuro Hirozumi, a senior analyst at Daiwa Securities Capital Markets Co.
Japan Tobacco Inc. (2914) is another "global domestic" firm, though without the kind of share price gains that Unicharm has seen. After an earnings downturn in fiscal 1997 following the consumption tax hike, the company transformed itself with two colossal acquisitions: RJR Nabisco Inc.'s overseas tobacco business in 1999 and Gallaher Group Plc in 2007. It now draws about half of its profits from its overseas tobacco business and is planning to further solidify this earnings base with the acquisition of a Sudanese cigarette company.
When it comes to another tax reform proposal -- lowering the corporate tax -- executives in domestic-demand-driven industries say it will help them measure up to foreign rivals. "Their high profit margins are partly the result of how low their tax rate is," says Unicharm President Takahisa Takahara, referring to Chinese diaper maker Hengan International Group Co.
Hengan had a net profit margin of about 18% in fiscal 2010 -- nearly double Unicharm's. The difference can be seen as a matter of taxation. Mainland China taxes companies at 25%, while Hong Kong has a tax rate of 16.5%. Both are far less than Japan's effective corporate tax rate of 40.7%. Unicharm's expansion into low-tax emerging markets has effectively cut its tax burden by about 10 percentage points. But the high corporate tax rate in its home country remains a bottleneck.
With a lighter tax burden, Japanese firms would see gains in return on equity and other measures of value and maybe appear in a new light to foreign investors. A challenge for Noda's government in pursuing tax reform is to go beyond the country's fiscal problems and find ways to help domestic-demand firms become more competitive internationally.
--Translated from an article by Nikkei staff writer Takehiko Hama
(The Nikkei Veritas Sept. 5 online edition)
TOKYO (Nikkei)--Food producers are strengthening R&D efforts as they hope to develop unique, value-added offerings to draw in consumers, especially as competition from store-brand products intensifies.
Kewpie Corp. (2809) plans to invest 6 billion yen to set up in summer 2013 a research facility at a site in Chofu, Tokyo, that once housed one of its former plants. By moving such functions to larger digs, the company known for its mayonnaise products and other condiments hopes to accelerate development of new products and menus.
R&D at Nippon Suisan.
In addition to coming up with seasonings that help household cooks whip up dishes in a short amount of time, Kewpie will work on creating new egg products for commercial use as well as dishes that can be served in nursing homes and other settings. The company will also work on developing new products featuring hyaluronic acid, which is said to be good for the skin.
It will increase R&D spending by nearly 10% on the year for the full term ending Nov. 30.
Nippon Suisan Kaisha Ltd. (1332) spent around 5 billion yen in April to build a new R&D base in the city of Hachioji that consolidates research and product development operations previously scattered throughout Tokyo. By strengthening cooperation among these divisions, the seafood company hopes to accelerate the development and launch of new products that contain eicosapentaenoic acid, which is extracted from sardines and is said to offer health benefits.
Having integrated group members candy maker Meiji Seika Kaisha Ltd. and Meiji Dairies Corp. in April, Meiji Holdings Co. (2269) has reorganized their R&D structures. Divisions at Meiji Seika and Meiji Dairies that had each handled development of sweets and ice creams, as well as nutritional foods, have been consolidated. Meiji Holdings will focus on creating new products by combining their know-how in such areas as chocolate, dairy products, lactic acid-based goods and nutritional supplements.
(The Nikkei Sept. 2 morning edition)
Forty-six percent of major manufacturers would relocate their plants and research and development facilities overseas if the yen remained at the level of 76 yen to the dollar for six months or longer, according to a survey conducted by the Economy, Trade and Industry Ministry.
Thirty-two percent of major manufacturers said their operating profit would drop more than 20 percent if the yen stayed at that level for six months or longer.
The survey shows the hollowing out of the nation's industry may be accelerated if the yen stays strong.
The survey announced by the ministry Thursday covered 154 companies--61 major manufacturers and 93 small and midsize companies--and was conducted Aug. 22 to 26 after the yen surged to a postwar record high of 75.95 yen against the dollar in New York on Aug. 19.
About 80 percent of the companies said their profit would drop if the yen remained at the 76 yen level for six months or longer.
More than 50 percent of major manufacturers said they would procure more materials and parts from overseas to cope with the superstrong yen. This likely would deal a blow to domestic small and midsize manufacturers who have business relationships with them.
Twelve percent of major manufacturers said their profit would increase because the yen's appreciation would push down procurement costs of raw materials.
Meanwhile, 18 percent of major manufacturers said China, South Korea and other countries had approached them to lure them to their countries. Those countries are believed to have presented favorable conditions, such as tax breaks, subsidies and exemption from electricity charges.
Among measures to deal with the surging yen, 87 percent of major manufacturers said they want the government to lower the effective corporate tax rate, which is higher than those of other countries. Sixty-three percent want the government to continually intervene in foreign exchange markets, while 58 percent want it to promote economic partnerships, such as the Trans-Pacific Partnership (TPP) free trade agreement.
(The Yomiuri Shimbun Sep. 3, 2011)
TOKYO (Dow Jones)--Japan's new finance minister said Monday he will try to forge a consensus among the Group of Seven leading industrialized countries that "excessive yen rises" won't benefit the world economy when finance officials meet in France later this week.
The yen's recent strength isn't economically justified and makes life for Japanese exporters very difficult, Finance Minister Jun Azumi said. The dollar fell to a post-war low of Y75.94 Aug. 19 and has been only slightly above that level since.
"I am hoping to see us develop a common view that excessive yen rises, as shown by facts and processes in the past, do not necessarily have a positive impact on the global economy," Azumi told reporters, referring to Friday's planned meeting of G-7 finance ministers and central bank chiefs in Marseille, France.
The gathering will be Azumi's first opportunity to ask U.S. and European officials face-to-face to support such measures as currency-market intervention. Dealing with the strong yen is a major task for Azumi, a lawmaker with little background in economic policy-making but years of experience in political negotiations.
The gathering could be the first major test for Azumi, now just four days into his new post. Successfully making his case to his G-7 counterparts could help tame the yen's rise by dispelling speculation that Tokyo has been dissuaded from intervening in the market by U.S. and European opposition. But failure could embolden such yen-strengthening speculation.
Signaling he would keep the possibility of solo intervention on the table--just as his predecessor, now Prime Minister Yoshihiko Noda, did--Azumi said: "I am watching the market carefully, and in particular, I will deal with speculative movement with great interest."
Azumi added that steps being drafted by the government to cushion the impact of yen rises would include financial support for small firms and tax changes to encourage manufacturers to build and keep factories at home instead of shifting production overseas.
"At this exchange rate, it is becoming impossible for crucial parts of Japan's export industry to make profits," he said.
Azumi said he wants to hear "specifically how the U.S. and European nations are planning to rebuild their finances" during the G-7 events. He said he will explain Japan's plans to improve its own finances and rebuild areas devastated by the March 11 earthquake.
Azumi, meanwhile, praised the Bank of Japan for doing "a good job." But he said he wants the central bank to "act appropriately with appropriate timing."
(The Nikkei September 5, 2011 edition)
TOKYO (Nikkei)--Futures contracts on Koshihikari-brand rice grown in the Kanto region are trading close to spot price levels on the Tokyo Grain Exchange.
The most heavily traded February contract closed at 15,430 yen per 60kg Thursday.
Rice futures fetched an initial price of 17,280 yen per 60kg on Aug. 9 after trading started the previous day.
The market had been swamped with buy orders on speculation of dwindling supplies if radiation was detected in new rice crops.
But futures slumped to the 14,500 yen level on Aug. 23 after fears of rice shortages were wiped away by reports that radiation was not above legal limits in early crops. Since then futures have been trending upward again because it seems prices have sunk too far, and are now in the vicinity of spot prices.
Rice futures are "gradually reflecting real demand," said an official at a rice wholesaler.
(The Nikkei Sept. 2 morning edition)
BEIJING (Nikkei)--A delegation of Japanese executives seeking closer economic ties with China on Monday called for a free trade agreement between the two sides and South Korea to be signed soon. In response, the Chinese side said it aims to kick off official talks after joint research by industry, government and academia is completed this year.
The comments came in talks here between the Japan-China Economic Association -- headed by Toyota Motor Corp. (7203) Chairman Fujio Cho -- and the Chinese Ministry of Commerce on such matters as trade, investing and industrial promotion.
China also revealed plans to invite new Economy, Trade and Industry Minister Yoshio Hachiro as well as the governors of quake-devastated Iwate, Miyagi and Fukushima prefectures to the country's biggest trade show, slated for next month in Guangzhou. China says it wants to help with reconstruction by increasing imports from the area.
(The Nikkei Sept. 6 morning edition)
TOKYO (Nikkei)--Japanese shipbuilders and plant-engineering companies are racing to win infrastructure projects in emerging markets.
As the yen's rise hurts their competitiveness with South Korean rivals in conventional petrochemical plants, these Japanese firms seek to diversify their sources of income.
JGC operates this desalination plant in China. Mitsui Engineering & Shipbuilding Co. (7003) plans to increase output capacity for bridge construction materials by 50% to 9,000
tons at a Vietnamese joint venture. Spending 300-500 million yen, the company will expand the facilities by the end of fiscal 2012.
A project is under way to replace aging bridges on the Hanoi-Ho Chi Minh City train line, which stretches 1,600km. In addition to supplying construction materials for its own portion of the bridge project, Mitsui Engineering will also sell them to other companies. The Japanese firm expects to win a series of orders in Vietnam over the next 10 years.
JGC Corp. (1963) has set up a representative office in the Indian city of Delhi and begun a feasibility study on managing facilities for water treatment and power generation. The firm generally focuses on design, procurement and construction for liquefied natural gas and petrochemical plants. But in India, it seeks to branch out into managing facilities. Such participation will enable JGC to secure income over the long term.
Chiyoda Corp. (6366) is considering managing industrial wastewater treatment facilities in Saudi Arabia. It has won a contract to conduct a feasibility study on facilities to recycle wastewater in Jubail and Yanbu industrial parks from a local utility. If Chiyoda wins a deal to build these facilities as well, it plans to invest in this firm.
(The Nikkei Sept. 6 morning edition)
An association of 18 small and midsize mold manufacturers in Toyama Prefecture will build manufacturing facilities in Indonesia to sell products to local automobile and electrical appliance parts makers, it has been learned.
The sharp rise in the yen's value, combined with flagging domestic demand, is encouraging an increasing number of domestic manufacturers to relocate overseas. The association's move is considered a new survival strategy by small companies that find it difficult to relocate independently. Many of the association's mold makers are companies with 20 employees or less, and specialize in manufacturing molds for car interior parts.
Combined sales fell by about 40 percent from 10 years ago to slightly less than 500 million yen in the period ended in March 2010, due largely to a drop in orders after the collapse of Lehman Brothers in 2008 and the yen's appreciation. Two of the association's members went bankrupt earlier this year.
According to sources, the association plans to build a plant in the suburbs of Jakarta in November at the earliest and will hire Indonesians. The estimated cost of the project is about 150 million yen. The 18 mold makers will continue domestic production, the sources said.
(The Yomiuri Shimbun Sep. 5, 2011 edition)
Japan's rice farmers have struggled for years to get people to eat more of the country's staple food. Now the industry has latched onto a new idea: rice-based frozen desserts.
Rice malt maker Houraiyahonten Co. in June launched Healthy Rice Ice, a frozen dessert made solely from rice malt and rice. "We don't use milk or sugar, so children with allergies can enjoy it as well," said Masahito Yaginuma, president of the Fukushima Prefecture-based company, which is better known as a maker of miso soybean paste and amazake sweet sake.
Fermentation
The product gets its sweetness from malt rather than sugar. And because it contains no dairy products, it can be stored at room temperature. That lowers transportation and storage costs. Unlike regular ice cream, Rice Ice can be refrozen after thawing. The product takes about eight hours to freeze.
Healthy Rice Ice has a sherbetlike texture with a creamy finish. It retails for 210 yen per 65-gram dish and is available at some supermarkets and co-op food shops in Fukushima Prefecture.
It was fermentation specialist Shima Microbio Laboratory Co. that developed the original rice cream. It is mostly made from a puree of fermented steamed rice. The Tokyo-based company substitutes soy milk for the regular kind and uses kelp extract as a thickener. The low-calorie treat is aimed primarily at health-conscious women.
JA Ibaraki Mizuho, a branch of the Central Union of Agricultural Co-operatives, located in Hitachiota, Ibaraki Prefecture, markets a frozen dessert using Shima Microbio Laboratory's recipe and locally grown Koshihikari rice. The JA branch markets the product as a local delicacy and sells it for 200 yen per 82ml cup at a local farmers market.
(The Nikkei August 29 edition)
TOKYO (Nikkei)--The video game industry is hopeful that the 2012 release of a major new "Dragon Quest" title, this one with online play, will energize a domestic market that has slumped as smartphones and social networking sites come into their own as gaming platforms.
Nintendo President Satoru Iwata, right, at a news conference Monday. Square Enix Holdings Co. (9684) said Monday that "Dragon Quest X" will go on sale for Nintendo Co.'s (7974) Wii next year and that it is also developing a version with improved graphics for the console's planned successor, the Wii U.
The series of role-playing games has proved tremendously popular over the years, with cumulative shipments surpassing 58 million units since its 1986 debut.
"Video games continue to change rapidly," Nintendo President Satoru Iwata told a news conference here Monday, adding that the new "Dragon Quest" title could redefine the online RPG.
In "Dragon Quest X," players can form parties with their friends online. As games played on social networking sites like those of Gree Inc. (3632) and DeNA Co. (2432) draw users, Square Enix hopes to make its hit series more attractive by offering interactions between players over the Net.
The domestic home video game market shrank for three years straight through 2010, according to game magazine publisher Enterbrain Inc. But while hopes are high for "Dragon Quest X," the product will not come out in time for the 2011 year-end shopping season. Nintendo, having posted a 37.7 billion yen operating loss for the April-June quarter, intends to focus for now on boosting sales of the Nintendo 3DS, its 3-D handheld game system released this spring.
(The Nikkei Sept. 6 morning edition)
A railroad hit hard by the March 11 disaster is cashing in on rice crackers that have become so popular, sales are nearly 70 times their level before the calamity.
Sanriku Railway Co., which operates train services along the coast of Iwate Prefecture, has named its product "Kitto me ga deru senbei," which literally means "rice crackers that will surely sprout." "Me ga deru" also has the meaning that success or luck is around the corner.
After the disaster, the senbei became popular among volunteers visiting the disaster-hit area. Orders then began increasing online and from major department stores.
The railway introduced the senbei jointly with a confectionery firm in Nishi-Wagamachi in the prefecture in February last year in an effort to help reduce its deficit. Locally harvested ingredients--germinated brown rice from Kamaishi and wakame seaweed from Miyako--are used in the product.
Prior to the disaster, sales of the rice crackers brought in about 100,000 yen a month. The disaster forced the company to halt sales as its station buildings were damaged.
When Sanriku Railway resumed selling its senbei in June it added new flavors--shrimp, brown sugar and grilled rice ball--to its original three flavors of spicy, extra spicy and hot.
Boxes containing rice crackers with the six flavors have proved extremely popular among the volunteers.
According to the company, it now receives about 20 orders online every week, and Hanshin department store in Kita Ward, Osaka, placed an order for 120 boxes for an event featuring specialties from six Tohoku prefectures, which began Wednesday.
Average monthly sales of the product have jumped to about 6.7 million yen.
Only one-third of the company's train operations have been restored. In the April-July period, the firm earned about 30 million yen from passenger services, a sharp decline from about 130 million yen a year earlier. Full restoration of operations is expected to cost about 110 million yen, of which the semipublic company may have to foot half the bill. Therefore, Sanriku Railway is aiming to expand the sales network for its rice crackers to help sustain its core business.
(The Yomiuri Shimbun Sep. 5 edition )
The Office of Commercial Affairs, Royal Thai Embassy in Tokyo, Japan
Source : http://www.depthai.go.th