BANGKOK (Nikkei)--Thailand is a major food exporter, calling itself "the kitchen of the world." The country's canned tuna and pineapples account for 50% of total global exports of these foods, with high quality cans provided by Japanese makers supporting Thailand's dominant share. But newcomers from China and South Korea are rapidly catching up.
Thailand has ample capacity to produce its own tinplate for food cans, but foreign makers are increasing their market share.
Health-conscious people are turning to tuna as an alternative to meat, boosting global demand for the fish. Worldwide exports were estimated at 720,000 tons in 2000, with the volume rising to 1.1 million tons in 2009. Thailand's global market share rose from 37% to 50% in this period. Thailand imports a large proportion of the tuna used for canned products because of the limited size of the catch in waters near the country. Still, advanced port infrastructure and technology for frozen foods gives Thailand an edge over rivals. Thai Union Frozen Products Plc is the world's largest canned tuna maker, and other makers also have large global market shares. The main export destinations are rich markets such as Europe, the United States and Japan. Its rustproof cans are key to its high product quality.
Undercutting
Thai Tin Plate Manufacturing Co., an affiliate of JFE Steel Corp., and Siam Tinplate Co., in which Nippon Steel Corp. (5401) has a stake, dominate domestic production of tinplate for food cans. The two companies' combined annual output capacity is 700,000 tons, while the domestic market of tin sheets was 600,000 tons last year. These figures show that Thailand does not need to rely on imports. Yet imported tinplate accounts for one third of the market, an increase of almost 70% from 2009.
Chinese and South Korean makers once exported to Thailand when they had gluts, but they now have sales bases in Thailand. South Korea's Dongbu Steel Co. and China's Baoshan Iron & Steel Co. produce many of these imported plates.
The price competitiveness of foreign makers is the reason for their growing presence, with their products said to be about 20% cheaper than their Thai counterparts. Chinese and South Korean cans were once more likely to rust, but their quality has significantly improved.
Can of worms?
Both Nippon Steel and JFE Steel only have blast furnaces in Japan, meaning that their Thai affiliates have to import most of their materials from Japan. Japanese plates are of high quality but expensive, and the stronger yen is making them even more costly. Since raw materials account for 80 to 90% of can makers' production costs, they have no choice but to use cheaper alternatives.
Japanese steel makers are considering asking authorities to impose anti-dumping duties on Chinese and South Korean products. But canned food makers, who face fierce price competition, and manufacturers are moving away from just using products made in Thailand or Japan.
--Translated from an article by Nikkei staff writer Toru Takahashi
(The Nikkei Sep. 21 online edition)
TOKYO (Nikkei)--Nobutsugu Shimizu, chairman of the Japan Chain Stores Association and chairman of supermarket operator Life Corp. (8194)., is spearheading a plan to create a new organization that will bring together the entire retail and wholesale distribution industries.
The facilitators of the plan -- officials from retail and consumer groups, as well as executives from firms that produce consumer goods -- will meet on Sept. 30 to prepare for an inaugural meeting scheduled for Dec. 2.
Untapped power
"There a great number of organizations corresponding to the industrial and business sectors, in addition to the Japan Business Federation and the Japan Chamber of Commerce and Industry," the planned entity's prospectus reads. "But an organization has yet to (appear that could) protect the livelihoods and lives of 126 million Japanese."
It also states that the proposed entity "should unite firmly to secure enough power to have its views fully reflected in the government's (policies) and make sure that its proposals (are) carried out." Though businesses have generally managed to express their concerns in the political world, Shimizu believes it has been difficult for consumers to reach out to policymakers.
In fact, it is known throughout the distribution industry that organizations that represent the distribution business cannot fully utilize the collective power of consumers, even though consumer spending accounts for about 60% of the country's gross domestic product. The people behind the planned entity believe that its primary aim should be to convey consumer concerns gleaned from distributors to politicians.
Shimizu, 85, has experience in lobbying the government. In the mid-1980s, when a plan surfaced to introduce a sales tax under the cabinet of then-Prime Minister Yasuhiro Nakasone, he spearheaded a campaign to oppose the idea. The move sparked a nationwide debate, which led the government to drop the tax plan.
Now, Shimizu appears to be driven by a desire to put the country back on the right path again. Common sense
The ideals set out in the prospectus make sense, but the new organization will likely face a number of problems that could slow its efforts. For one thing, the groupings behind the plan differ hugely in size and nature. Some of them are major entities, such as the Japan Chain Stores Association and the Japan Department Stores Association, but some of the others are organizational groupings of smaller supermarket companies, as well as groups representing small retailers that are based on shopping streets.
These differences mean that each group is pursuing a different set of interests. As one source familiar with the plan sees it, "it will be extremely difficult to form a consensus among members about how deregulation should be implemented -- there is also a difference in the reaction to the possible consumption tax hike, for instance."
For the moment, the new entity will likely struggle to place any strong demands on the government. This is why the new organization should focus on providing consumers with relevant information, rather than presenting proposals to government policymakers.
The organization could become an information provider similar to Consumer Reports in the U.S., which objectively assesses the credibility and safety of products and services in the interest of consumers.
The planned entity should strive to become an organization that is recognized by Japanese consumers, who tend to be highly aware of the safety of products and services. It must provide vital information to consumers to help them trigger change in the government.
--Translated from an article by senior Nikkei staff writer Yo Tanaka
(The Nikkei Marketing Journal Sept. 26 edition)
WASHINGTON (Dow Jones)--Japan's finance minister and central bank governor Thursday emphasized the negative impact of the yen's rise on the domestic economy at a Group of 20 meeting, underscoring Japan's concerns over a stubborn uptrend in its currency.
"I told the meeting I'm concerned that the yen's appreciation, especially since August, has thrown cold water on Japan's economic recovery," Finance Minister Jun Azumi said at a press conference with BOJ Gov. Masaaki Shirakawa, after a meeting of G-20 finance ministers and central bank governors.
Azumi said he believes the G-20 nations share a general view on currencies. The G-20 earlier concluded in an emergency statement that "excess volatility and disorderly movements in exchange rates have adverse implications for economic and financial stability."
The reference to exchange rates in the statement reflects the opinion of not just Japan, but also emerging countries whose foreign-exchange markets have also been volatile, according to a finance ministry official.
The Japanese currency--regarded as a safehaven--has been under constant upward pressure in the face of increasing global uncertainties, trading near a record-high of Y75.94 against the dollar marked in August. At 0547 GMT, the dollar was around Y76.30.
Azumi and Shirakawa also stressed the importance of fiscal reconstruction amid growing fears of a euro-zone sovereign debt contagion.
While Azumi said countries with fiscal discipline can achieve growth with "a sense of security and stability," Shirakawa said markets need to watch for negative feedback between fiscal conditions, financial systems and real economies.
Azumi also reiterated that Tokyo is willing to provide financial support to Europe to help ease concerns about the continent's debt crisis, such as through purchases of bonds issued by a European bailout fund, but European countries should show a concrete plan to resolve the problem first.
Japan has already bought about EUR2.7 billion--or about 20%--of debt issued by the European Financial Stability Facility since January to help Ireland and Portugal. The Asian nation has $1.2 trillion in foreign reserves.
In an interview with Dow Jones Newswires and The Wall Street Journal earlier in the day, Azumi said Japan stands ready to lend to the International Monetary Fund, like it did during the Lehman crisis, to help the region. (Nikkei September 23 edition)
TOKYO (Dow Jones)--The Japanese government said Tuesday it will start implementing measures to support domestic firms coping with the strong yen as recent moves in financial markets are elevating downside risks to the economy.
But analysts don't believe the steps will have a big or direct impact on the currency market--at least in the short run--as the measures are targeted at providing funds to small firms.
"It's no big deal," said Masanobu Ishikawa, a senior dealer at Tokyo Forex and Ueda Harlow. The measures, which include extending grants to support employment and for other pressing short-term needs, are a part of a package the government has been compiling alongside the third-extra budget over the past few weeks. Thus, they came as no surprise to markets.
It will take more time for the government to finalize the package, and for the parliament to pass the budget to fund the overall deal. But the Cabinet decided to roll out some measures that don't require fresh spending because the rising yen, falling share prices and slowing overseas economies are piling up the pressure on the quake-hit economy.
"It's important we take steps that can be carried out immediately, and we'll keep checking if there are more measures that we can do right away," said Economy Minister Motohisa Furukawa at a regular press conference.
The government will also start providing funds to firms to buy overseas resources and companies via lending though the Japan Bank for International Cooperation. (Tuesday, September 27, 2011)
TOKYO (Nikkei)--Major pharmaceutical firms are bolstering cooperation with colleges, start-ups and others to share expertise and cost burdens for drug development.
Some estimates show that just one in 20,000 new compounds stand a chance of becoming a commercial drug. Because governments continue to raise the bar for drug safety and effectiveness, the odds of successful commercialization are expected to decline even further.
Takeda Pharmaceutical plans to open up R&D facilities to outside researchers.
Against this backdrop, Takeda Pharmaceutical Co. (4502) will open up to outside researchers some R&D facilities at its Shonan laboratory in Kanagawa Prefecture, which is slated to begin full-scale operation in November.
Researchers at universities and start-ups are sometimes unable to synthesize compounds they have formulated due to a lack of adequate facilities. Takeda will share some of its R&D facilities with such researchers in exchange for benefits, such as first crack at conducting clinical trials, if promising compounds are developed.
Takeda is already in talks with multiple Japanese and foreign researchers and start-ups, with some agreements expected shortly.
Astellas Pharma Inc. (4503) has launched a program under which external researchers are asked to explore potential applications for its compounds. For starters, three types of compounds have been provided to participants.
Eisai Co. (4523), meanwhile, has decided to solicits investments from third parties to fund the development of compounds in the latter stages of clinical trials. By tapping outside funds, it hopes to develop new drugs more efficiently. The investors may not recoup their funds if the clinical trials are unsuccessful, but they could be rewarded handsomely if the drugs are commercialized.
Eisai has already signed a contract with a U.S. drugmaker to fund development of a treatment for thyroid cancer.
(The Nikkei Sept. 26 morning edition)
TOKYO (Nikkei)--Major advertising agencies Dentsu Inc. (4324) and Hakuhodo Inc. are turning to social networking sites to help corporate clients identify consumer tastes and monitor market trends. Dentsu will team up with Internet research firm Macromill Inc. from October to conduct consumer polls on Facebook, where users who click on an ad will be directed to a survey page. The results will be analyzed through users' data registered on Facebook, such as occupation and age.
Macromill will design the surveys, with Dentsu expecting roughly 10 orders a year from manufacturers of household goods and home appliances.
Meanwhile, Hakuhodo has recruited consumers willing to discuss products with manufacturers on Facebook and other social networking sites. They are grouped by product genre, such as cosmetics, with each consisting of dozens to several hundred consumers. Manufacturers seeking input for product development will conduct discussions with those volunteers.
Advertising specialists at Hakuhodo will lead discussions to encourage debate. The cost for using the service for a year is estimated at roughly 10 million yen.
The ad agencies believe the vast quantities of information shared by users on social networking sites represent a treasure trove for analyzing consumer needs.
(The Nikkei Sept. 26 morning edition)
TOKYO (Nikkei)--Southeast Asia, where Japanese food companies are trying to establish a bigger presence, is a market hard to penetrate because of its diverse food culture and myriad ethnic groups. Only a few Japanese companies, including Ajinomoto Co. (2802), have been successful in this increasingly attractive consumer market.
Ajinomoto, which derives nearly 80% of its overseas sales from Southeast Asia, runs thoroughly localized operations in the region. For instance, its namesake seasoning is modified for local tastes and sold in an amount and price range suitable for consumers there. Locally hired sales people not only deliver products directly to retail stores but also collect payments promptly.
The key to success in the region is to establish a local-centric decision-making system when it comes to product development and sales strategy.
In April, Kirin Holdings Co. (2503) moved its Southeast Asian strategic planning team from its Japanese headquarters to a Singaporean subsidiary. The Singaporean unit now has product development staff.
Partnering with local firms with strong business networks is another way to crack the market. Meiji Co. has teamed up with Thai conglomerate Charoen Pokphand Group Co. in the beverage business. "We rely largely on the partner's sales channels and marketing prowess," a Meiji executive says.
(The Nikkei Sept. 22 morning edition)
TOKYO (Dow Jones)--Japan's exports rose for the first time since the March 11 earthquake and tsunami in August, but the much smaller-than-expected gain helped to push the country's trade balance into a record deficit for the month.
The weak data raise fresh concerns about the outlook for the export-dependent Japanese economy, which is being buffeted by slowing global growth and a strong yen that is once again approaching record highs against the dollar.
Exports climbed 2.8% from a year earlier in August, Finance Ministry data showed Wednesday, marking the first rise in six months but much lower than the 8.2% gain expected by economists polled by Dow Jones Newswires.
The modest rise in exports, together with a surge in energy imports due to many of the country's nuclear plants remaining offline, caused Japan's trade balance to swing to a Y775.3 billion deficit--more than triple economists' expectations--after two months in surplus.
"We had been expecting a further slowdown in exports in the October-December period based on worsening sentiment among global manufacturers, but (Japanese) data over the past two months could mean that has already begun," said Hiromichi Shirakawa, chief economist at Credit Suisse Securities.
The strong yen, which makes Japanese products less competitive globally, is also weighing on the country's exports.
The currency rose to Y76.11 against the dollar Wednesday, near its record high of Y75.94. That prompted government officials to repeat their warning that they would take "decisive action" in the foreign exchange markets if necessary, suggesting they may intervene to weaken the yen.
"As we have been saying, we are closely watching speculative movements...and we will take decisive steps when it is necessary," Finance Minister Jun Azumi told reporters.
Although the nation's economy has continued to recover from the March 11 earthquake and tsunami, the outlook is growing murkier because of a global slowdown on the back of Europe's debt crisis and a weakening U.S. economy. The same factors are also driving the yen higher.
The International Monetary Fund recently cut its forecast for this year's global growth by 0.3 of a percentage point to 4%.
"It is now unclear whether Japan's trade balance will return to a steady surplus in September or even October," as many had previously expected, said Toshihiro Nagahama, chief economist at Dai-ichi Life Research Institute.
Also fueling pessimism over Japan's trade outlook is the nation's need to buy more foreign oil and gas for power generation due to the quake-induced nuclear crisis. Imports jumped 19.2% in August, the biggest rise in 14 months, reflecting the purchase of record amounts of liquid natural gas, the ministry said.
But Yoshimasa Maruyama, a senior economist at Itochu Corp., said a global slowdown is still moderate and that more data are needed to see if the weak trade figures in August are the start of a trend.
(Nikkei September 21 edition)
TOKYO (Nikkei)--The industrial production index likely rose 1.5% in August from July, according to the median estimate from 30 private-sector research institutes surveyed by QUICK Corp., a Nikkei Inc. group firm.
The forecasts ranged from a 0.5% rise to a 2.3% increase. A positive figure would mark a fifth consecutive month of month-on-month expansion.
The growth expectations stem from higher auto production after carmakers bolstered exports to raise inventory levels in overseas markets. But with the global economy slowing down and the yen still strong, their estimates remained modest.
"The rebound phase (from the steep production fall caused by disaster-induced supply chain disruptions) is coming to an end," Yoshiki Shinke, senior economist at the Dai-ichi Life Research Institute, says.
The Ministry of Economy, Trade and Industry will release the results on Friday.
(The Nikkei Sept. 27 morning edition)
The Yomiuri Shimbun
A new global standard for digital books, to be released as early as October, will be able to handle vertical Japanese text, a move expected to promote the standardization of e-book devices and digital books in the country.
In the current domestic e-book market, different formats are used among reading devices and content distributors, hindering the popularity of electronic books.
Major digital book distributors, including Sony Corp. and Rakuten, Inc., plan to adopt the new standard. If the e-book standard of domestic distributors is brought in line with the global standard, it is expected to significantly boost convenience for users.
The standard to be adopted by Sony and Rakuten is a content publication standard called EPUB3, which the International Digital Publishing Forum, a U.S. trade and standards organization for the digital publishing industry, plans to introduce in mid-October.
Content under the format is expected to hit the market by year-end or later. EPUB, used by Apple Inc.'s e-book service, has become the standard in Europe and the United States. The new version of the format will support Japanese vertical text layouts and furigana placed next to kanji to aid pronunciation.
Japan currently has two main standards--XMDF, an e-book format created by Sharp Corp. in 2001 for its handheld terminal Zaurus, and .book, a format developed by U.S. Voyager Co. However, the formats are not compatible with each other.
As a result, e-books in one format cannot be read on the other's devices. Apple and other foreign firms offering e-book services have also been required to convert their products to the Japanese formats if they wish to sell them here. This has greatly hindered the flow of digital books from foreign distributors.
Sony plans to make its future e-book devices EPUB-friendly. A Sony senior official said, "If EPUB becomes the standard in Japan, e-book content for users will certainly increase."
A Sharp official, however, stressed the superiority of the company's XMDF format, saying, "[By using XMDF] users will be able to read past content in the future. XMDF is more suitable for reading comics."
(The Daily Yomiuri Sep. 26, 2011)
Hotels and traditional inns in Fukushima Prefecture are expected to see their income drop by about 50 percent in the year following the March 11 disaster from the corresponding period in the previous year, according to a survey by an industry association.
Following the outbreak of the crisis at the Fukushima No. 1 nuclear power plant, the Fukushima Prefecture Ryokan Hotel Association sent questionnaires in May to its member hotels and inns about the resulting damage to their business.
The association has 614 members, or about 25 percent of all the accommodation facilities in the prefecture. Of these, 299, or 49 percent, responded to the survey.
Based on the results, association Chairman Yutaka Sugano plans to ask plant operator Tokyo Electric Power Co. to review its criteria for calculating compensation for the tourism industry, on the grounds that members in Fukushima Prefecture have been hit particularly hard by the crisis.
According to the survey, the 299 responding facilities had a combined income of about 69.5 billion yen during the one-year period through the end of February this year.
However, their projected revenues for the one year from March through the end of February next year--calculated based on income and cancelations since March this year--stood at about 34.8 billion yen, or about 50 percent below the previous year.
Hotels and inns in the coastal Hamadori district, where the Fukushima No. 1 plant is, are projected to suffer the most serious damage. Their income was expected to be 10.1 billion yen, or 45 percent of the previous year. They were followed by the Aizu district, which has many sightseeing areas, with about 10.7 billion yen, or 49 percent of the previous year; and the Nakadori district, which includes Fukushima city, with about 14 billion yen, or 56 percent of the previous year.
TEPCO announced Wednesday it would reduce compensation for losses caused by radiation fears in the tourism industry in Fukushima, Ibaraki, Tochigi and Gunma prefectures. Compensation was to be cut 20 percent from a certain base amount of remuneration, on the premise that the March 11 quake and tsunami would have meant lower income for the tourism industry even if the nuclear crisis had not occurred.
(The Yomiuri Shimbun Sep. 27, 2011)
Yoichiro Kagawa and Shoichi Shirahaze / Yomiuri Shimbun Staff Writers
Many major manufacturers are procuring fewer parts domestically and buying more components overseas to lessen the impact of the super-strong yen, a trend that is hurting small and midsize firms and could weaken the nation's industrial base.
At a press conference Wednesday, Mitsubishi Motors Corp. President Osamu Masuko said the recent yen-dollar exchange rate, which has been hovering in the 76 yen range against the dollar, was affecting his company's bottom line.
"It's a tough level for companies that are highly dependent on exports," Masuko said.
MCC plans to raise the percentage of parts it buys overseas from the current 18 percent to 25 percent in 2013 to cut costs.
Nissan Motor Co. President Carlos Ghosn also said Tuesday his company would review the balance of domestic and overseas parts procurement for its plant in Kandamachi, Fukuoka Prefecture.
Although the Kyushu plant is Nissan's stronghold for domestic production, the automaker plans in principle to stop buying parts other than engines and other key components from manufacturers in the Kanto and Chubu regions.
Ghosn said Nissan plans to raise the percentage of parts bought from South Korea and China, as well as Kyushu--from where parts can be shipped relatively cheaply--from about 70 percent now to between 80 percent and 90 percent.
Daihatsu Motor Co. recently imported for the first time parts for its fuel-efficient new model, Mira e:s. The company aims to take advantage of the strong yen by importing parts to keep the vehicle's lowest price at 795,000 yen.
Electronics makers also are reexamining their procurement plans.
Panasonic Corp. plans to reduce its number of suppliers from about 18,000 now to about 10,000 to cut about 60 billion yen in annual costs. With Singapore as its base for overseas parts procurement, Panasonic plans to raise the portion of parts to be procured overseas from 43 percent in fiscal 2009 to 60 percent in fiscal 2012.
Sony Corp. had halved its number of parts suppliers by spring this year.
The rapid growth of parts manufacturers in other parts of Asia and parts standardization through globalized production also are accelerating Japanese manufacturers' moves to increase procurement from abroad.
Currently, major manufacturers are intensifying efforts to cope with the strong yen by buying more parts overseas, while maintaining domestic development and production as much as possible to keep technology levels high.
However, this will result in fewer contracts for small and midsize parts makers, and could force them to relocate their operations overseas.
With domestic production and exports facing tough times in recent months, Ghosn said Japanese manufacturers are having to make a tough choice--either increase parts procurement from other nations or become unable to continue production in Japan.
(The Daily Yomiuri Sep. 23, 2011)
TOKYO (Nikkei)--Higher residency taxes to pay for post-disaster reconstruction would last five years from June 2013, according to a proposal put forward Monday by leaders of the ruling Democratic Party of Japan's tax committee.
A stepped-up income tax would remain in place for 10 years from January 2013, while a corporate surtax would start in April 2012 and last three years. Committee leaders also endorsed a higher tax on cigarettes but took an inheritance tax hike off the table.
At the insistence of the DPJ, the government and the ruling coalition are discussing enlarging a proposed third supplementary budget to around 12 trillion yen, up from about 11 trillion yen. Besides the reconstruction, the budget will include measures to bolster the economy against the strong yen. "The reconstruction is an urgent challenge," said committee Chairman Hirohisa Fujii, calling the task of deciding the party line on the tax hikes "a great responsibility."
Fujii had wanted to wrap up the debate Monday, but was met with a barrage of opposition to the very idea of raising taxes, which some committee members derided as being spearheaded by bureaucrats advancing their own agenda. He will try again for a consensus on Tuesday.
Under the committee leaders' plan, the effective corporate tax rate would be cut 5 percentage points, then bumped up with a somewhat smaller three-year surtax.
The tobacco tax hike would take effect in October 2012 and last 10 years at the national level and five years at the local level. But leaders also showed a willingness to make allowances for tobacco growers and retailers, both of which would take a hit from the tax increase.
In ruling out a proposed inheritance tax hike, the leaders responded to criticism that it would be unfair to take a bigger cut of the estates of those who had the misfortune of dying while the higher tax was in force.
(The Nikkei Sept. 27 morning edition)
The Office of Commercial Affairs, Royal Thai Embassy in Tokyo, Japan
Source : http://www.depthai.go.th