TOKYO (Nikkei)--Economy, Trade and Industry Minister Yukio Edano has recently been showing off his diplomatic credentials, a curious contrast to his reputation as an expert on domestic affairs. This begs the questions: What has happened, and what is his goal of all this?
In the January edition of his quarterly parliamentary reports, Edano listed the countries he visited as METI minister. The headline stated he had traveled the world as minister to protect Japan's national interests as a major trading nation and secure energy resources.
Since assuming the office, Edano has visited North America, Europe, Asia and the Middle East. He was the only minister not at the first cabinet meeting after Prime Minister Yoshihiko Noda reshuffled it earlier this month, as Edano was in Myanmar. "I will be more actively involved this year," Edano said in the January report.
Cautious aggression
When the magnitude 9 earthquake hit Japan's northeast on March 11, Edano responded to the crisis as former Prime Minister Naoto Kan's chief cabinet secretary. He was always careful about what he said in the many news conferences he held as the tsunami and nuclear crisis unfolded, as he too did not know the exact details involving the accident at the Fukushima Daiichi nuclear power plant. Because of this, Edano developed a reputation as a cautious politician. But his career belies a much more aggressive nature. When Kan made a name for himself in 1996 by aggressively investigating an HIV-tainted blood scandal, which had caused up to two thousand hemophilia patients to contract HIV, Edano, who was a first-term lawmaker with New Party Sakigake, also grilled senior Health Ministry officials in the Diet about their responsibility, looking in every way like a gung-ho opposition lawmaker.
When the Democratic Party of Japan merged with the Liberal Party in 2003, Edano refused to the bitter end to accept Ichiro Ozawa as the new DPJ head. When he was given no key posts in the government under the leadership of then Prime Minister Yukio Hatoyama, Edano jokingly said that if he were offered a cabinet position, he would prefer it be that of foreign minister. Why would Edano, well known for his expertise in domestic affairs, want to become foreign minister? The post of foreign minister is seen as essential to hold for any aspiring politician, especially one like Edano who lacks significant diplomatic experience, before taking on another key post -- prime minister.
The prime minister can delegate domestic affairs to other ministers, but diplomatic affairs need more direct attention. In other words, Edano's behavior suggests he is gunning to become prime minister. Before Noda formed his government, Edano had said he would like to take a break, citing the heavy duties he took on as chief cabinet secretary under Kan. Although he was initially given no post in Noda's government, Edano was appointed METI's head after his predecessor, Yoshio Hachiro, was forced out after a series of gaffes. Now that he is METI minister, Edano apparently wants to use his new position to overhaul his image as a cautious politician.
Looking out for No.1
Earlier this month, Foreign Minister Koichiro Gemba visited Saudi Arabia, Turkey and the United Arab Emirates in quick succession amid rising tension over Iran's suspected nuclear weapons program.
METI Minister Edano met with pro-democracy activist Aung San Suu Kyi in Yangon, Myanmar, on Jan. 12. The foreign minister went to the Middle East to secure Japan's oil imports as the METI minister engaged in "human rights diplomacy" in Myanmar. A Japanese government official commented that this is a reversal of roles for the two ministers. Noda has staked his political career on successfully enacting Diet bills for consumption tax hikes, but he will face considerable opposition from within his own DPJ, not to mention the opposition Liberal Democratic Party and others. Basically, if Noda fails to pass the bills, he could see his administration quickly crumble, and Edano could emerge as one of the most likely contenders to succeed him.
(The Nikkei Jan. 27 online edition)
TOKYO (Dow Jones)--Japanese industrial production rose 4.0% in December from the previous month, the Ministry of Economy, Trade and Industry said Tuesday, as the impact of the flooding in Thailand on Japanese manufacturers began to ease.
The reading was significantly stronger than a 2.9% gain predicted in a median forecast of economists surveyed by Dow Jones Newswires.
A ministry official briefing reporters said the gains came from increases in output of cars, mobile phones and semiconductor manufacturing equipment.
But economists remain cautious about the outlook for Japan's industrial base. While the figure represents a recovery from the problems caused by the Thai flooding, other issues remain. "Since there will be differences in the pace of economic improvement in the April-June period, depending on whether areas are benefited by reconstruction demand, we probably should wait until the July-September quarter to see if the Japanese economy returns to a recovery path," said Mari Iwashita, chief market economist at SMBC Nikko Securities.
The strong yen continues to weigh on the country's exporters, with the dollar remaining near its post-war low of Y75.31 hit Oct. 31. The dollar took a tumble overnight due to expectations that the Fed will keep interest rates low until the end of 2014. At mid-morning the dollar was at Y76.28. Also weighing on sentiment is the European debt crisis, with unclear implications for consumer demand for goods over the longer term.
But manufacturers said they expect gains to continue. The data showed that companies expect output to rise 2.5% in January on month, and 1.2% in February. METI maintained its assessment of production in December, saying output as a whole was flat. For the October-December period, output fell 0.4% from the previous quarter. It rose 4.3% in the July-September period as the supply chains for parts for cars and electronics recovered after the March 11 earthquake and tsunami.
In separate figures released Tuesday, the government said the jobless rate rose slightly to 4.6% from 4.5% in November.
December household spending was better than expected, however, rising 0.5% from the same time last year, compared with an expected 0.2% fall. An official briefing reporters said the government was upgrading its assessment of household spending, which "more or less flattened out" from its previous decline.
Web site: http://www.meti.go.jp/english/statistics/index.html
(The Nikkei Jan 31 edition)
TOKYO (Dow Jones)--Japan posted a Y2.493 trillion trade deficit last year, its first annual shortfall since 1980, and economists expect more deficits ahead as the yen remains strong, global growth slows and Japanese demand for energy imports continues to surge.
A slew of unusual events, such as the March earthquake and nuclear accident and the European debt crisis, played a major role in pushing Japan into trade deficit. Another key factor was autumn flooding in Thailand, a key production center for many Japanese manufacturers. These factors helped to produce a shortfall of Y205.1 billion in December, worse than the Y150.5 billion shortfall forecast by analysts.
Many economists see no quick end to the trade shortfall, with Japan's export-driven economic model losing its luster as the strong yen continues to hollow out the domestic manufacturing base. The nation's shift away from nuclear power leaves it no choice but to import more energy. "The last year was an extraordinary year," said Hideki Matsumura, a senior economist at Japan Research Institute. "Still, the problem is that Japan may run a trade deficit again this year. There are signs that the trend is changing."
Japan's 2011 deficit in goods trade was the second-largest on record in the Finance Ministry's data, which go back to 1979, and compared with a Y6.635 trillion surplus in 2010, ministry data showed Wednesday. Japan last logged a record Y2.613 trillion trade deficit in 1980 in the wake of the second global oil crisis.
A diminished trade edge bodes ill for Japan's economy, which has long relied heavily on exports for growth amid persistent deflation and a shrinking population. "We believe there is a high possibility that weakening external demand will cause Japan's gross domestic product to contract in the October-December period" at an annual 1.5% rate after a 5.6% annualized expansion in the previous quarter, said Yoshiki Shinke, a senior economist at Dai-Ichi Life Research Institute.
The strength of the yen, which marked a record high when the dollar hit Y75.31 in October, and which has remained near that level since, has made Japanese exports less competitive abroad and fueled a shift of production overseas. A large increase in fossil fuel imports for electricity generation was a key driver of higher import costs. Such imports jumped 25.2% to Y21.783 trillion for the year, accounting for roughly a third of the total value of all imports. Output of electricity from nuclear power has been declining sharply since the March nuclear plant accident in northern Japan, stoking the need for more fossil fuel to generate power.
Overall, exports for the year fell 2.7% to Y65.555 trillion, while imports rose 12.0% to Y68.047 trillion, according to Finance Ministry figures. Based on estimates by Credit Suisse Chief Japan economist Hiromichi Shirakawa, Japan could continue to run monthly deficits of around Y300 billion to Y350 billion this year on growing energy imports, even if the global production cycle recovers. If the trade deficits continue, the broader current account could also swing into the red over time, complicating efforts to finance the country's massive public debt totaling around Y1,000 trillion, or more than 200% of GDP.
Most analysts don't expect any such major shift in the short term. The world's biggest creditor nation, Japan still earns huge sums from overseas investments, with net income of Y13.33 trillion on such investments for the first 11 months of the year.
But Kyohei Morita, chief Japan economist of Barclays Capital, warned "we still believe the current account could show a deficit as early as 2018 when considering Japan's aging population, which reduces household savings, and the hollowing-out of industry, which results in an outflow of corporate savings."
Not everyone is pessimistic. Bank of Japan Gov. Masaaki Shirakawa played down the recent deficits, saying he doesn't expect it to become a longer-term trend. And in a note to clients Wednesday, Goldman Sachs said it expects Japan to return to trade surplus in the six months from October on the back of a global economic pickup.
(The Nikkei Jan.25 edition)
TOKYO (NQN)--Domestic shipments of consumer appliances fell for the first time in a decade in 2011, sliding 27.8% on the year to 2.81 trillion yen, the Japan Electronics and Information Technology Industries Association reported Tuesday.
The contraction came in reaction to strong sales of flat-panel TVs in 2010, when government incentives boosted sales of energy-efficient home appliances.
Shipments TV and other visual equipment slid 31.4% to 2.08 trillion yen, marking the first drop in 12 years.
Shipments of flat-panel TVs slid 21.3% to 19.82 million units, down for the first time since comparable data was first compiled in 2001. However, shipments were the second-largest ever after the record figure for 2010.
(The Nikkei Jan. 24 edition)
TOKYO (Nikkei)--The nation's 10 electric power utilities on Tuesday announced their fiscal 2012 surcharges to pass along purchasing costs for surplus power from home solar power generation systems, with the figures going up across the board.
The amount to be added to monthly power bills ranges from 7 yen for Hokkaido Electric Power Co. (9509) to 45 yen for Kyushu Electric Power Co. (9508). These are up from 2-21 yen in fiscal 2011. Thanks to lower prices and competition among manufacturers, more homes in Japan have installed solar panels. As a result, costs incurred by each utility to purchase surplus solar power as required by law grew about 40-60% on the year in 2011. Utilities' total spending surged 53% to 95.9 billion yen, with the power they bought increasing 54% to about 2.1 billion kilowatt-hours.
Starting this July, utilities will also have to buy electricity from other renewable energy sources, such as wind and geothermal, as well as solar power from commercial generation businesses. Such details as the price and duration for purchases from each source are to be debated by an expert panel before they are announced by the Ministry of Economy, Trade and Industry.
(The Nikkei Jan. 25 morning edition)
TOKYO (Nikkei)--The occupancy rate for major Tokyo hotels edged higher in December, the first year-on-year increase since the March earthquake and tsunami. The average rate gained 0.4 percentage point to 79.1% for 19 hotels surveyed by Nikkei Inc. In addition to a pickup in leisure demand, foreign guests are returning. Hotel Nikko Tokyo and others have had success by cutting room rates. The occupancy rate had not risen on the year since February.
Prince Hotels Inc. is stepping up restructuring. Imperial Hotel Tokyo and Hotel New Otani Tokyo are among the hotels whose occupancy rates climbed for the first time since the disaster, to 77.6% and 54.3%, respectively. Last month, 11 hotels saw occupancy rates improve on the year.
Hotel Nikko Tokyo's rate surged 10 points to 86.8%, but its average room price dropped about 12%. Royal Park Hotel saw its occupancy rate jump 9 points. Its room rate fell about 7%.
Overall, the recovery in occupancy is still tepid, with January rates for major hotels remaining largely flat on the year.
Hotels are rushing to improve earnings through cost cuts. Imperial Hotel Ltd. (9708) closed overseas sales offices in Los Angeles and London last summer. Next month, Prince Hotels Inc. will offer workers early retirement, targeting 500 full-time employees, or 7.7% of the total. In addition, the company will sell two hotels in March, including the Gamagori Prince Hotel in Aichi Prefecture. Before the Great East Japan Earthquake, major hotels in central Tokyo were enjoying occupancy rates in the 70-80% range. But the average rate plunged to 40.5% in April. For the whole of 2011, the rate was 69.4%, down 9.6 points from 2010.
(The Nikkei Jan. 31 morning edition)
TOKYO (Nikkei)--Makers of "kampo" (Chinese herbal medicine) are diversifying their sources of raw materials as prices for ingredients from China have spiked, The Nikkei learned on Monday. At the moment the firms rely heavily on basic materials from China. By diversifying their sources of supply, they hope to cut costs and ensure access to raw materials.
According to the Japan Kampo Medicines Manufacturers Association, prices for basic drugs made in China surged 64% between 2006 and 2010, due largely to increased demand in China. Tsumura & Co. (4540), which holds more than 80% of the domestic market for prescription kampo drugs, will by 2013 expand by slightly more than sixfold the cultivation area in Laos for ingredients such as cassia bark. A Tsumura unit set up in Laos last spring grows raw materials for medicines on 156 hectares. It will expand the cultivation area to 1,000 hectares in 2013.
Cokey Co., a Tokyo-based maker of raw materials for medical products, established a joint venture in Tajikistan recently to process licorice, which is used in basic drugs.
Kracie Holdings Ltd., Japan's largest maker of nonprescription kampo drugs, also plans to boost its trial cultivation of basic drugs in East and Southeast Asia.
According to the Health Ministry, Japan's kampo production rose 17% to 136.6 billion yen from 2006 to 2010.
(The Nikkei Jan. 30 evening edition)
TOKYO (Nikkei)--With the domestic market expected to keep shrinking as the population ages and the birth rate declines, many consumer-focused companies in Japan are trying to make inroads with the rapidly growing middle class in the rest of Asia.
Consumer markets in Asia have drawn the attention of companies around the world, thanks to the region's steady growth, amid uncertainty over the global economy stemming from the European financial crisis.
In a report released last year, the Asian Development Bank predicted an "Asian century," with the region accounting for more than half the world's gross domestic product by 2050. Already Asia has emerged as a new mega-market, with a rapidly growing middle class. Your Asian future
As of 2010, there were roughly 320 million middle-class households -- defined as those with annual disposal incomes of between $5,000 and $35,000 -- in China, India and Indonesia, according to UK-based research firm Euromonitor International Ltd. That number is forecast to grow by slightly more than 30% to about 430 million in 2015.
In stark contrast, the number of middle-class households in Japan, the United States and the European Union combined is projected to remain almost unchanged during the same period, at about 120 million.
To cash in on the Asian mega-market, many Japanese consumer-focused firms that have traditionally relied on domestic demand for growth, are rushing to expand operations elsewhere in the region. One up-and-coming Japanese fashion brand went so far as to relocate its headquarters to Singapore last October. "We moved our base from Japan to fan out across Asia," said Satisfaction Guaranteed Pte Ltd. CEO Shunsuke Sato.
The 33-year-old Sato is busy with preparations for a fashion show in February on Orchard Road, one of the busiest shopping areas in the city-state. Satisfaction Guaranteed has 980,000 fans on Facebook, the world's largest social networking site. That makes it the second most popular Japanese company on Facebook. Of those fans, 97% live in Asia outside Japan. India and Indonesia have the world's second- and third-largest group of Facebook users, respectively, with more than 40 million each. That is about six times as many as Japan.
Satisfaction Guaranteed posts potential new products online in English and has people vote on what pieces should be brought to market. The firm sees huge growth potential in Asia's large youth population.
Japanese retailers and food service companies are also expanding operations on the continent amid declining domestic sales.
Hearts and minds
Yoshinoya Holdings Co. (9861), a major "gyudon" (beef bowl) restaurant chain, plans to open just over 1,000 new restaurants in Asia outside Japan by fiscal 2015, 200 more than the planned total in Japan.
Four major Japanese convenience store chains forecast combined growth in Asia outside Japan of about 1,900 stores on a net basis by the end of the fiscal year ending in March, 20% higher than in Japan.
But many European and U.S. companies are edging out their Japanese rivals in Asia. Big fashion brands, including U.S.-based Coach, Inc. and Italy's Prada SpA, have listed on the Hong Kong Stock Exchange or are preparing to do so as part of their Asian push.
Coach Chairman and CEO Lew Frankfort said he is sure China will top Japan within several years in terms of the company's sales. Prada raised about 174 billion yen in funds through its Hong Kong listing and plans to open new 20-25 new outlets a year in the region.
Companies from around the world have set their sights on the Asian mega-market to boost their growth. Surviving the increasingly fierce fight for a piece of Asia's wallets will not be an easy task for Japanese companies.
(The Nikkei Jan. 29 morning edition)
TOKYO (Nikkei)--Japanese restaurant operators seeking to become global powerhouses are rushing to the booming Asian market, but they are finding the road to success is dotted with such obstacles as different religious practices, tastes and business customs.
An Ootoya restaurant in Jakarta. Ootoya Holdings Co. (2705), which runs a chain of set-meal restaurants, broke into Indonesia in 2008 and is about to open its third store there. Many of its customers are businesspeople in their late 20s as well as 30- and 40-somethings with families. With meals selling for 750-800 yen, prices are similar to those in Japan.
But since some 90% of Indonesia's population is Muslim, Ootoya does not serve items using pork and offers a menu focused on cooked fish. However, it struggles to secure ingredients. One-third of its ingredients, primarily fish, are imported from Japan and elsewhere, but customs clearance is slow, and in some cases food is detained at ports, according to the company.
Watami Co. (7522) President Yutaka Kuwabara's energies of late have been devoted to the firm's new Kitchen J restaurant, which debuted in Hong Kong on Jan. 19. With its menu angled toward Japanese-style Western dishes, Kitchen J is targeted mainly at female diners. To ensure it got off to a blazing start, the company was still experimenting with dishes right up to the opening.
These efforts appear to be paying off, with a dozen or so customers waiting to be seated in the packed restaurant on the evening of Jan. 25, the final day of Chinese New Year celebrations. Kitchen J's Hamburg steak has a flavor akin to that served in Japanese family restaurants, but the servings are slightly larger. At around 1,080 yen, including service charges, it seems slightly rich fare for lunch. But the restaurant tries to make parents feel confident about eating there with small children.
Hong Kong diners have a fairly sophisticated palate and are unforgiving if flavor disappoints. And with a wealth of available cuisines, including a sushi restaurant right next door, competition is extremely tough.
Meanwhile, Italian restaurant chain Saizeriya Co. (7581) had lively discussions about the menu for its Chinese locations.
In Italy -- the home of pasta -- pasta is cooked to be firm. But in China, firm pasta is greeted by complaints from diners. And flavor preferences also vary throughout the nation. In Beijing, pasta served in soups is the order of the day, but Hong Kong diners have a penchant for squid ink pasta. "All we can do is learn from trial and error," says Saizeriya Director Nobuyuki Masuoka.
Ingenuity is also required on the price side. Saizeriya's menu items sell in the lower-700 yen range at home. In China, prices are kept to the lower-300 yen level out of consideration for prevailing local wages.
But it is not simply a case of offering affordable prices, as Ootoya found out. When the firm first entered Indonesia, it set prices lower than in Japan, but profits soured as it was unable to find a balance with ingredient quality.
Profits improved after lifting prices, but the move limited its customer base to high-income earners. Companies have also been hampered when adding stores. Most lease agreements for commercial real estate are for 10 years and renewals are common in Japan. But in Asia, the norm is five years and renewing leases is difficult.
The only way to solve this problem is by racking up a track record. Lessors will come on board if restaurants have established a reputation for tasty food and affordable prices. In fact, Saizeriya has received six- to eight-year extensions for some of its Chinese locations.
(The Nikkei Veritas Jan. 29 edition)
TOKYO (Nikkei)--A growing number of Japanese company employees are switching from commuting via jam-packed trains in favor of going to work by bicycle. Cycling is great exercise, of course, but it's also cheaper and more environmentally friendly than other forms of transport. This is why this trend will likely continue to grow, creating new business opportunities for a wide range of companies.
Interest in bicycle commuting surged after the March 11, 2011 earthquake, which forced railway companies in the Tokyo metropolitan area to halt services. As a result, hundreds of thousands of train commuters had no choice but to walk back home. This prompted many businesspeople who work in the capital to start cycling to their offices. Bike boom
Bicycles manufactured across Japan from January-November 2011 were valued at approximately 39.2 billion yen, versus a total value of 37 billion yen for all of 2010, according to data from the Japan Bicycle Promotion Institute. Asahi Co. (3333), a major bicycle retailer, expects a 45% jump on the year in its after-tax profit for the fiscal year through February, up to about 3 billion yen.
There are 13.7 million cyclists in Japan, or about half of the 25.8 million runners and joggers throughout the country. But cyclists spend 13,300 yen per year, or nearly twice the average 7,300 yen that joggers spend, according to the Japan Productivity Center.
In particular, sales of hybrid bicycles -- models that combine key features of both road and mountain bikes -- are growing, as are sales of electric bicycles, according to sportwear producer Goldwin Inc. (8111).
The growing popularity of bicycle commuting is prompting companies from a range of sectors to enter the market for cycling-related products. Pioneer Corp. (6773), for example, is launching a bicycle navigation system in February that will offer global positioning and communication capabilities. The devices will also give users route information and tips on restaurants, shops and events, in addition to providing weather forecasts. Pioneer hopes to eventually increase its annual sales of bike navigation systems to 10 billion yen.
Apparel manufacturers are also starting to sell business suits that are more suitable for bicycle commuters. Aoyama Trading Co. (8219), which runs a nationwide chain of suit shops, has expanded its lineup of stretchable suits. Approximately 420,000 of the 550,000 suits for young people that the company put on its shelves during the fall/winter season were stretchable. Aoyama plans to increase the number of stretchable suits it sells by 30% for the spring/summer 2012 season. Space issues
Tokyo's shortage of parking spaces for bicycles, however, is a major headache for many urban bike commuters, but a potential source of profits for companies such as Nippon Parking Development Co. (2353). In April 2011, the company opened a parking lot for bicycles in the first basement level of the Shin-Marunouchi Building in Tokyo's central business district. Monthly fees for the facility, which includes showers, start at 15,750 yen. Despite the expense, 66 of the 71 spaces have already been taken.
Property developer Mitsui Fudosan Co. (8801) is also expanding its bike-parking business through one of its subsidiaries. In December, it opened the first hourly-rate bicycle parking lot in the Kansai region in front of JR Kyoto Station. The company now runs 118 bike parking lots, mainly throughout the Tokyo metropolitan area, with more than 20,000 spaces for cyclists. The company plans to increase this number, primarily in areas around train stations, where illegally parked bicycles cause serious problems.
One downside to the bike commuting boom is the recent increase in traffic accidents involving cyclists. The number of people injured in cycling accidents in 2010 accounted for about 17% of all road-related injuries, according to the National Police Agency. And accidents involving bicycles accounted for about 21% of all traffic accidents.
Importance of insurance
As a result, Goldwin now requires all of its employees who bike to work to buy bicycle insurance. Insurance firms now offer low-cost policies for cyclists. For example, Au Insurance Co., a joint venture between mobile operator KDDI Corp. (9433) and Aioi Nissay Dowa Insurance Co., sells cycle insurance policies online. Cyclists can also buy such policies through their mobile phones, with cheap monthly fees starting from 100 yen. In November, Seven-Eleven Japan Co., the convenience store subsidiary of Seven & i Holdings Co. (3382), started selling bicycle insurance policies on behalf of Mitsui Sumitomo Insurance Co. at Seven-Eleven stores throughout Japan.
Bike accidents involving pedestrians are increasing, so the National Police Agency has decided to more strictly enforce traffic rules, by requiring cyclists to use the roads, rather than sidewalks. This could trigger fresh public works spending to build cycling infrastructure, which would offer business opportunities for road construction firms such as Maeda Road Construction Co. (1883) and Nippon Road Co. (1884).
--Translated from an article by Nikkei staff writer Koji Okuda
(The Nikkei Veritas Jan. 29 edition)
The Office of Commercial Affairs, Royal Thai Embassy in Tokyo, Japan
Source : http://www.depthai.go.th