Week of March 28, 2016
- Tensions between China and Japan were up again this week, after the Japanese government announced that it had switched on a radar station in the East China Sea, giving it a permanent intelligence-gathering post close to Taiwan and the disputed Senkaku islands. China is now accusing Japan’s “warlord” prime minister, Shinzo Abe, of threatening peace in the region, following the enactment on Tuesday of controversial laws allowing Japanese troops to fight on foreign soil for the first time since the end of the second world war (The Guardian).
- North Korea launched recently missiles including its Nodong missile, a rocket that is supposed to be able to carry a nuclear warhead. It takes 8 minutes for the rocket to reach Japan, so the time window to detect and intercept is is very short. When a missile tipped with a warhead, or re-entry vehicle, is launched and leaves the Earth's atmosphere, it must then re-enter the stratosphere. When it does, air that contacts the tip of the projectile is compressed and can reach temperatures in excess of 10,000 C. Question is if the Pyongyang has the "Atmospheric re-entry technology”: applying heat-shielding components that can withstand these temperatures. The Nikkei advocates that Japan should be prepared for a missile strike by North Korea.
- This week Japan’s parliament passed a record USD 853 billion spending plan for the 2016 fiscal year, including a USD 44 bln defense budget, the highest ever (USA Today).
- The Japanese Yen is becoming stronger and as a result Japanese exporting companies are less competitive - and so the Bank of Japan’s quarterly Tankan index (a sounding-out among Japanese companies) was disappointing: It came in at a reading of +6 in March, down from +12 in December and below analyst expectations of +8. The reading, published on Friday, was the worst since June 2013 when Abenomics started. So the question is: has the negative interest rate as applied by the Bank of Japan been effective? Probably not. What was better than expected was Japan’s corporate mood in the service sector (primarily domestic, incl. the construction sector, Financial Times).
- The stock market in Japan had its worst start of the new fiscal year in 7 years and-foreign investors were net-sellers of Japanese stocks for a 12th straight week in the period ended March 25, according to data released Thursday by Japan Exchange Group Inc. (Bloomberg).
- By April 1, 2016 the electricity market in Japan is more liberalised, with Europe as an example. By liberalising its low-voltage electricity market, Japan is allowing roughly 85 million households and small businesses - representing about 38 percent of the market - to choose electricity providers for the first time. The nation last decade reformed retail competition for high-voltage customers, which account for roughly 62 percent. There are also plans to break-up Japan’s vertically integrated utilities. The companies will be required to separate transmission, distribution and retail businesses by 2020 (Bloomberg).
- Taiwanese company Foxconn and Sharp finally agreed on the terms of the take-over of 66% of Sharp’s shares. Foxconn’s Chairman Terry Gou has been a successful negotiator, as the price he has to pay for this 66% stake in Sharp is JPY 100 bln less than earlier agreed. Interesting remark in this Nikkei article on Japan’s transfer of display technology to South Korea and China by Weng-ju Tai, Foxconn’s Japan. On whether Foxconn will keep Sharp's core technology within Japan, Foxconn’s Japan boss said that Japan had only itself to blame for losing panel technology in the past. "Japan has bestowed South Korea with advanced panel technology and equipment, and Japanese talents have been staying in South Korea to teach Samsung and LG Display," Tai said, adding that Sharp itself has transferred advanced indium gallium zinc oxide (IGZO) display technology to a facility in Nanjing, China.
- The new head of the Japanese Bankers’ Association, Takeshi Kunibe, predicts a spike in overseas acquisitions as Japanese companies are prodded into an “aggressive mindset” by the country’s negative interest rate policy (Nirp). Should be good news for Dutch targets … (Financial Times)
- To my big surprise the cracking by the FBI of the IPhone owned by one of the killed terrorists in the USA was done by an Israeli company, Cellebrite that is owned by … relatively unknown Japanese company Sun Corporation (www.sun-denshi.co.jp). Sun Corp. started manufacturing pachinko (pinball) machines, branched out in computer and IT systems and bought Cellebrite in 2007. Now apr. 50% of its sales is in mobile phone technology. Sun’s shares were 40% up since Cellebrite hacked upon request of the FBI the above mentioned IPhone. Interesting to see that Cellebrite is managed by Israeli management, no Japanese names on Cellebrite’s board. (Bloomberg).
- Let’s look to the relations between Japan and its infamous neighbour North Korea. In the ’70’s of the last century, a number of Japanese people started disappearing, in particular from the North West Part of Japan. No traces of violence, no dead bodies, people simply disappeared. There were rumours of extraterrestrial invasions with aliens abducting these people to far away planets. Nothing of that kind. A number of people were abducted by North Korean agents, who took the Japanese from beaches and transported them in submarines and rubber boats to the Hermit Kingdom. For what purpose? To teach Japanese to spies and / or to take their identities. This week The Guardian had a review of the book by Robert Boynton “The invitation-only zone”. The New Yorker had a long-read about North Korea’s abduction project last December that I include, see both attachments. With a dictator in a neighbouring country willing to send rockets over your territory and kidnap your citizens, I would be quite worried.
- Somewhat lighter stuff. PM Abe announced this week that he wants to have 40 mln foreign visitors in Japan by 2020 and 60 mln by 2030. In 2015, tourists spent JPY 3.5 trillion (EUR 30 billion) in Japan, and Prime Minister Abe wants to more than double that amount to 8 trillion yen by 2020 by relaxing visa requirements further and improving flight access (Japan Today).
- Some more remote area’s in Japan are looking how to lure foreign tourists, and the BBC visited Mie-prefecture, where they will revive the art of diving and ninja-fights. See http://www.bbc.com/news/business-35917827
- a Bloomberg video on the recent Tankan report: Corporate Gloom Remains in Japan
- a Bloomberg report on the impact of the sale of Sharp to Foxconn: What Foxconn-Sharp Deal Means for Corporate Japan
- a Nikkei video on Japanese geek-girls, promoting “Otaku”, let’s call it a Japanese sub-culture, often found in manga and anime: 'Geek girl' forges unique, global style - Select - Video Player