Week of September 5, 2016

​​Politics:
  • PM Shinzo Abe’s Abenomics may be doubted, but that is different for another programme coined with a similar name: Womenomics. At least in Japanese politics women are on the  rise, with the newly elected Governor of Tokyo Yuriko Koike and the newly appointed Minister of Defense  Tonomi Inada as examples. Mr Abe’s aim is to redress the country’s longstanding problem of gender inequality, writes the Financial Times. One aim is to raise the female employment rate from 68 per cent to 73 per cent by 2020, obliging large companies to publish targets for ratios of female managers. Ms Inada is also seen as a strong candidate to become Japan’s first female PM (and so is Ms Koike, who also served for a short time as a Minister of Defense.) Ms Inada is known for her very conservative views on Japan’s history and has also said Japan should consider arming itself with nuclear weapons (Financial Times).
  • One of Japan’s neighbours, North Korea, carried out its largest-ever nuclear test this Friday. Combined with the recent launches of its missiles, including from submarines, this is a real threat for Japan. And the country is not well prepared yet for a nuclear attack by Kim Jong-un’s regime. The Japanese Self-Defense Forces are taking steps to better guard against missile attacks. A system capable of intercepting projectiles more than 1,000km high will be deployed on missile defense ships as early as fiscal 2019. Upgraded ground-to-air interceptors covering twice the area of current models are planned as well - but not yet operational. The chart in The Japan News / Yomiuri shows well that Japan’s territory is in North Korea’s missile launching range.
  • In a different part of the world Japan is making efforts to woe various African countries with a lot of money. PM Abe promised USD 30 bln in financing aid for the next 3 years. Like anywhere, Japan is competing against China, that offers also substantial money, and that is somehow better marketing its development aid. Japan should do a better job, writes Bloomberg. "Quietly, over decades, Japan has become the leading financier of growth-supporting infrastructure across large swathes of the developing world. Perhaps too quietly. In fact, few people outside the country appreciate the scope of Japan’s overseas development assistance (ODA).” "After all, it’s easy to differentiate Japanese investment from China’s. In Africa, for example, the Japanese have admitted that they can’t win by competing with China on the amount of assistance alone. That's why they've emphasised “quality” and the lower life-cycle costs of the infrastructure they help create.” Where is Japan’s PR engine?

Economy:
  • The Japanese economy grew at a 0.7 percent annualised rate over April-June, an upward revision of the preliminary reading of 0.2 percent growth, so a little better than previously estimated. Nevertheless, the Bank of Japan has signalled it will consider changing its methods for achieving 2% inflation at a policy board meeting later this month, writes the Nikkei. In the meantime, markets are struggling to divine what that might entail, presenting a challenge for BoJ’s Governor Haruhiko Kuroda's new communication strategy. "More than three years have passed since Kuroda presided over the April 2013 introduction of a vastly expanded form of monetary easing that was supposed to achieve 2% consumer price growth in two years. That failed to happen. Now, as the BOJ's options for further easing dwindle, the strain caused by the bank's outsize influence on financial markets is growing ever more apparent.” 
    And: I read in the Wall Street Journal that Japan’s central bank is facing a new problem: It could be running out of government bonds to buy. The Bank of Japan is snapping up the equivalent of more than USD 750 billion worth of government debt a year in an effort to spur inflation and growth. At that rate, analysts say, banks could run out of government debt to sell within the next 18 months ...
  • The Financial Times puts it even more bluntly. "Bank of Japan stars in its own disaster movie. Gloomsters fear Haruhiko Kuroda will decide QE has not been working.” On September 21 the Bank of Japan makes public its “comprehensive assessment” of the effectiveness of its negative interest rate policy, which it has been working on since the end of July. "The fear in the market is that Haruhiko Kuroda, the central bank governor, and his colleagues will decide quantitative easing has not been working. Then, the gloomsters say, the BoJ will slow down its purchases of Japan government bonds, exchange traded funds, and other securities.” 
  • Japanese companies meanwhile are poised to issue a record amount of debt this quarter to fund activities such as acquisitions, a sign that rock-bottom interest rates have begun prodding firms to ramp up investment. In this quarter a record amount of JPY 4.5 tln or EUR 39 bln in bonds is to be floated (Nikkei).

Corporate:
  • Japanese companies are stepping up their investments in Europe, see trading house Mitsui that announced Thursday that it will acquire a roughly 12.5% stake in Spanish car parts maker Gestamp Automocion for 416 million euros. So far Mitsui has been cooperating with Gestamp since 2013 by investing apr. JPY 33 bln in Gestamp operations in four countries, including the U.S. and Brazil. By investing directly in the parent, the Japanese company will step up its involvement by dispatching executives and expand autoparts operations to more regions (Nikkei.)
  • Denso, with its European HQ in Weesp, just bought a Japanese company Fuji Ten that produces vehicle radar technology that senses the immediate environment and engine control units. It is strong in the car audio systems that Denso hopes to put in the cockpits of its self-driving vehicles to create synergies. Denso is focusing on development of artificial intelligence technology for cars and will launch its new advanced driving assistance systems division in January to accelerate such efforts. Denso, previously reliant largely on in-house innovation, is now actively collaborating with companies outside its group via such means as forming domestic and international joint ventures (Nikkei.) 
  • The shake-out in retail that we see in The Netherlands (V&D, Dixon's etc.) is also apparent in Japan with a prestigious brand as Mitsukoshi Department Stores closing several of its shops. Foreign tourism brings in less sales than expected, the yen is higher than anticipated, the population is shrinking and concentrating in the big cities (Nikkei.)

Society:
  • Another phenomenon in Japanese retail is doing quite well actually: convenience stores or in Japan-speak: convinie. Financial Times journalist Sarah Laitner is fascinated by these 24/7 shops that you can find at virtually every corner. Most famous name is 7-Eleven, a company that started mid-20’s of the last century in California and that was bought by Japanese retailer Ito-Yokado. Now you have various chains like FamilyMart, AM-PM, Lawson. Tremendous successful companies and Sarah Laitner knows why: "Most of all, these shops highlighted a reassuring culture in Japan that anticipates people’s needs and does its best to address them before they arise.”
  • Another Japanese export article or rather: concept is the “Art of Growing Old”. Japan has stared decline in the face, writes Leo Lewis, the Financial Times Japan correspondent, so “it  decided to perfect it as an art form. Youth, the saying goes, is wasted on the young. Japan, in glorious seniority, feels wasted on the old. It is a developed economy slipping, with what is often surprising grace, into collective old age. The big forces at work - low birth rate, social stability, deflation, a cautious post-bubble mindset, low wage growth, groupthink and so on - have been endlessly parsed under decades of scrutiny." Great read as it describes how to cope with something inevitable as a shrinking population (and let’s face it: Japan is only ahead of us.
  • But OK, there are still plenty of young Japanese and let’s balance the story of “growing old” by looking who won this year’s Miss Japan title. Actually, it is a half Indian, half Japanese lady and a licensed elephant trainer: Priyanka Yoshikawa, reports Japan Today. Ms. Yoshikawa is the lucky one, after Ariana Miyamoto won the title of Miss Universe Japan in 2015, child of an Afro-American father and a Japanese mother. There are protests by people that think Miss Japan should be entirely Japanese, but we see that with two beauty queens with mixed blood show also that the art of admiring the young is changing Japan.

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