Week of February 8, 2016
- Just after Japan’s surrender in 1945, the Soviet Union took four islands north of Hokkaido. The minister in charge of pushing for the return from Russia of these islands forgot the name of one of them causing embarrassment, in particular now that the Japanese prime minister is to meet with president Putin to discuss this obstacle to peace between both nations. Just to refresh your memories, dear readers, the name is Habomai … again: Habomai!! (Japan Today).
- Too few babies in Japan is another headache of PM Abe. Many men leave the kids to the mother who often stops working. So parliamentarian Kensuke Miyazaki’s announcement to take a one-month paternity leave after the birth of his child was welcomed by many - and objected by a few others (“don’t you have more important things to do as a Diet member?”). Mr. Miyazaki told his audience that he would persist with his plan as he wanted "to promote women’s social advancement”. Various media however discovered that he had an affair with a model just days before his wife gave birth. His wife, a fellow parliamentarian requested he husband to “spit out everything” and take responsibility for his actions, even if that meant to “disgrace himself publicly.” Exit Mr. Miyazaki with a deep bow (Japan Today).
- Japan’s constitution, drafted by the Americans in 1946, has a famous article 9 that reads: “Land, sea, and air forces, as well as other war potential, will never be maintained.” PM Abe is looking to revise the constitution and this is causing deep rifts in the Japanese society. A group of organisations including the National Association of Shinto Shrines held an event in Tokyo last week bringing together some 1,200 people eager to promote the revision drive. In another part of Tokyo opponents to the revision held a rally of about 350 people, including history teachers. Shinzo Abe called last week for more public debate about amending the Constitution, which he has said will be one of the issues to be highlighted during campaigns for the upper house election. A debate, that's what he gets (Japan Today).
- A soaring yen, a Nikkei that lost its luster and hardly any, let alone a targeted 2% inflation: Abenomics is according to the Financial Times and the Guardian in poor health. "While, as some suggest, it is too early to read the last rites for Abenomics, few would disagree that its symptoms are in danger of becoming terminal”, says the Guardian. "In fairness, Abe is partly the victim of factors beyond his control, namely China’s slowdown, weak overseas demand and plunging oil prices. The problem for Abe and Kuroda is that they are quickly running out of options, even after last week’s surprise decision to adopt negative interest rates”. And Abe has barely started to address the structural reforms comprising the “third arrow” of Abenomics: a shrinking and ageing workforce and the urgent need to boost the role of women in the economy (The Guardian).
- So there were emergency meetings in Tokyo last week between PM Abe and his financial architects to discuss how to respond to the looming crisis (CNBC / Reuters).
- Koji Nagai, Nomura’s CEO, said Japanese shares had been targeted by Middle Eastern investors who have been under pressure from dropping oil prices. Brokers estimate the biggest petrodollar-funded SWF’s held a collective 6 per cent of the Japanese equity market. The Financial Times claimed that while some remain confident that the Bank of Japan's move to have negative interest rates could help Japanese authorities in their quest to encourage investors to switch from bank deposits into riskier assets, such as equities, Mr. Nagai said there was another possibility: “People may not adopt those behaviours and instead they will stock up on cash and Japan may fall back into deflation,” he said. “No one can tell what’s going to happen.” That is not an optimistic note …
- I told you three weeks ago that Asahi Breweries would acquire Grolsch and Peroni from SABMiller. Why? Japanese companies are no good in auction processes, so they rather come up with a knock-out bid. And that happened, for a price: apr. 15 times EBITA. “Like Nikkei’s recent USD 1.3 billion purchase of The Financial Times or Suntory Holdings’ USD 16 billion deal for Jim Beam, Asahi’s latest acquisition looks like an attempt to escape demographic destiny”, writes the New York Times. On the day the deal was made public I was in Grolsch-land, visiting another Dutch company, Selo, that has been acquired last year by Japanese packaging company Omori. Favourable reviews of these deals, "as long as we can continue to run the business by ourselves”.
- Condition to that will be: salary-levels of the company's top shots. The Nikkei reported on Japan’s outdated salary structure and compared salaries in Japan to those in various Asian countries. Simple conclusion: Japan must pay more or say goodbye. "Japanese companies have always underpaid chief executives,” says Atsushi Osanai, associate professor at Japan’s Waseda University. "In the past, what separated the strength of a company was its technology, not management. Therefore, there was never the need to reward the top executive”. With the global hunt for talent, Japanese top-executives might be lured by higher salaries elsewhere, but that requires at least a fair command of English.
- Japan’s answer to the Tesla is the Tommykaira ZZ by tiny automaker GLM. The company is expected to IPO later this year, the first Japanese automotive IPO in 30 years. But the IPO climate is not good: While 95 companies went public in Japan last year, not a single company filed an IPO in January and only five are expected to do so next month. For the right engine sound, GLM teamed up with Japanese synthesiser-maker Roland to allow drivers to switch between a selection of engine noises, from a throaty burp to a powerful purr that respond precisely to pressure on the accelerator (Financial Times).
- Child poverty in Japan: it exists, like anywhere, but it does not convene with Japan’s international reputation for economic fairness and equality. "It is an image the Japanese themselves cherished for many years. But we know now that it is a myth”, writes website Nippon.Com. The poverty rate for single-parent households (almost all of which are single-mother households) is more than 50%, despite the fact that 80% of single mothers are employed. Less than 20% of divorced mothers are receiving child-support payments from the father, largely because there is no system in place to enforce payment.
- Workplace harassment of women who take time off to give birth or take care of their babies is a big problem in Japan and must not be tolerated, Katsunobu Kato, Japan’s minister in charge of demographics and gender equality, told Bloomberg last week. He called for clearer rules for irregular workers to take childcare leave and said the government will introduce legal changes to encourage equal treatment of full and part-time workers if necessary.
- "Next Tokyo 2045”, incl. a mile-high skyscraper housing half a million people. The city would stretch across Tokyo bay in a series of hexagonal configurations in order to act as an ocean barrier and prevent the new city against typhoons, floods and earthquakes: it is a vision on a new Tokyo presented by Kohn Pederson Fox Associates. Drinking water obtained by harvesting moisture from the clouds and for transportation incorporating Elon Musk’s concept of the Hyperloop. Here some pictures in this article from the New Statesman / CityMetric. And have a look at the first six slides in this CNN link: http://edition.cnn.com/2016/02/10/architecture/tokyo-mile-high-skyscraper/ (1-6).