Interesting comments on JLH and its valuation from its analyst Hardman and Co.
http://hardmanandco.com/Research/JPLH_Dec2010.pdf
It is very interesting that Hardman believes that Japan Leisure Hotel's hotels should be valued in line with international hotel chain valuations; when it is common knowledge in Japan that Leisure Hotels or Love Hotels trade at much bigger caprates compared to their traditional hotel cousins in Japan
In the current market climate in Japan; combined with lack of financing, JLH's poor performance (most recently posting a loss in H1 2010) and also the upcoming regulatory change in the LH industry http://japanrealestatecommentary.blogspot.com/2010/05/japan-leisure-hotels-law-to-change.html
it is difficult to see any buyer emerging for the Bonita hotel chain
Tuesday, December 28, 2010
Japan Leisure Hotels - Board Statement
20 December 2010
Japan Leisure Hotels Limited
("JPLH" or the "Company")
Potential Offer for the Company
Funds managed by DKR Oasis Management Company, LP ("DKR Oasis") own approximately 87.6% of the Company's issued share capital. DKR Oasis recently informed the Board that it wanted to exit its investment in the Company and was taking active steps to achieve this end. There are a number of ways such an exit could be structured including an offer being made for its shares or a sale of the Company's assets.
The Takeover Panel has ruled that an offer for the Company will be subject to the City Code on Takeovers and Mergers (the "Code"). If an offer is made under the Code, DKR Oasis is in a position to deliver control of the Company by selling its shares (in which event the buyer will be required to make a cash offer on no less favourable terms to the remaining minority shareholders) or by providing an irrevocable undertaking to accept a takeover offer made for the Company's shares.
Under the AIM Rules, the Company cannot liquidate its assets without first obtaining the approval of shareholders in general meeting. At any such meeting, DKR Oasis would be in a position to vote through the required resolution. Although DKR Oasis does not currently control the Board, and so cannot force the Board to enter into contracts to liquidate its investments in the Bonita hotel portfolio, DKR Oasis can under Guernsey law gain control of the Board or requisition shareholder meetings to achieve its ends should it wish to do so.
The Board has recently been working with DKR Oasis to help maximise any sale proceeds for the benefit of all shareholders but it is not anticipated that the proceeds of any offer for the Company will deliver a premium to the current share price and it may even result in a discount.. Also, a sale of the assets to realise value in the short term is likely to be at a substantial discount to the previously announced net asset value per ordinary share which was based on the value of the assets on a going concern basis..
The Board believes that given additional time it might be possible to deliver greater value to shareholders than has been offered to date and is in discussions with DKR Oasis to explore whether it would be prepared to exit its investment in the Company over a longer timeframe.
The Board is willing to consider proposals from any new party interested in considering an offer for the Company or its assets. The asset manager New Perspective has indicated its willingness to continue as manager or alternatively to resign in order to facilitate any preferred exit structure
A further announcement updating shareholders will be made when appropriate. There can be no certainty that any offer will be made nor as to the terms on which any offer may be made.
In accordance with Rule 2.10 of the Code, the Company confirms that, as at 20 December 2010, it had 44,100,002 ordinary shares in issue. The International Securities Identification Number (ISIN) reference for these securities is GG00B28QMS50 and the SEDOL code is B28QMS5.
In accordance with Rule 19.11 of the Code, a copy of this announcement will be published on the Company's website: www.japanleisurehotels.com.
http://www.investegate.co.uk/article.aspx?id=201012201506323044Y
Japan Leisure Hotels Limited
("JPLH" or the "Company")
Potential Offer for the Company
Funds managed by DKR Oasis Management Company, LP ("DKR Oasis") own approximately 87.6% of the Company's issued share capital. DKR Oasis recently informed the Board that it wanted to exit its investment in the Company and was taking active steps to achieve this end. There are a number of ways such an exit could be structured including an offer being made for its shares or a sale of the Company's assets.
The Takeover Panel has ruled that an offer for the Company will be subject to the City Code on Takeovers and Mergers (the "Code"). If an offer is made under the Code, DKR Oasis is in a position to deliver control of the Company by selling its shares (in which event the buyer will be required to make a cash offer on no less favourable terms to the remaining minority shareholders) or by providing an irrevocable undertaking to accept a takeover offer made for the Company's shares.
Under the AIM Rules, the Company cannot liquidate its assets without first obtaining the approval of shareholders in general meeting. At any such meeting, DKR Oasis would be in a position to vote through the required resolution. Although DKR Oasis does not currently control the Board, and so cannot force the Board to enter into contracts to liquidate its investments in the Bonita hotel portfolio, DKR Oasis can under Guernsey law gain control of the Board or requisition shareholder meetings to achieve its ends should it wish to do so.
The Board has recently been working with DKR Oasis to help maximise any sale proceeds for the benefit of all shareholders but it is not anticipated that the proceeds of any offer for the Company will deliver a premium to the current share price and it may even result in a discount.. Also, a sale of the assets to realise value in the short term is likely to be at a substantial discount to the previously announced net asset value per ordinary share which was based on the value of the assets on a going concern basis..
The Board believes that given additional time it might be possible to deliver greater value to shareholders than has been offered to date and is in discussions with DKR Oasis to explore whether it would be prepared to exit its investment in the Company over a longer timeframe.
The Board is willing to consider proposals from any new party interested in considering an offer for the Company or its assets. The asset manager New Perspective has indicated its willingness to continue as manager or alternatively to resign in order to facilitate any preferred exit structure
A further announcement updating shareholders will be made when appropriate. There can be no certainty that any offer will be made nor as to the terms on which any offer may be made.
In accordance with Rule 2.10 of the Code, the Company confirms that, as at 20 December 2010, it had 44,100,002 ordinary shares in issue. The International Securities Identification Number (ISIN) reference for these securities is GG00B28QMS50 and the SEDOL code is B28QMS5.
In accordance with Rule 19.11 of the Code, a copy of this announcement will be published on the Company's website: www.japanleisurehotels.com.
http://www.investegate.co.uk/article.aspx?id=201012201506323044Y
Japan Leisure Hotels - Main Investor to Exit
Following the half year loss posted by Japan Leisure Hotels in H1 2010; it has been announced by the Board of JLH that its main investors, DKR Oasis, is looking to exit either by selling its shares in a TOB under the Takeovers Code or by Japan Leisure Hotels selling its hotels. According to the Financial Times, this could mean that Japan Leisure Hotels will be listed from AIM.
the FT says -
One of the more colourful companies on Aim looks set to join the hundreds that have left the junior market over the past two years.
Japan Leisure Hotels operates a portfolio of so-called love hotels, one of those Japanese idiosyncrasies that make sense to the country’s inhabitants.
They act as a refuge for married couples who live with family, philanderers and those – often backpacking foreigners – looking for a cheap room for the night.
Japan Leisure’s biggest shareholder is DKR Oasis Management, which has an 87.6 per cent stake. It has told the board it wants to realise its investment. Japan Leisure said it did not expect the proceeds of any offer to “deliver a premium to the current share price, and it may even result in a discount”.
In the short term, said the company, a sale was likely to be at a substantial discount to the previously announced net asset value per share of 77p, based on the value of the assets on a going concern basis.
Japan Leisure tried to raise £100m when it listed in 2007, convinced that it would be able to consolidate the fragmented Japanese industry. In the event it had to settle for £3m at 50p a share, leaving DKR Oasis with its large stake. Another attempt at a £50m fundraising in 2009 failed.
The shares fell 2½p to 23p on Tuesday, giving a market capitalisation of £10m.
The Takeover Panel has ruled that any offer will be subject to the City Code, so any buyer would have to offer similar terms to minority shareholders. The board is willing to consider proposals from any new party for either the company or its assets.
The board believes that given additional time it might be possible to deliver greater value to shareholders than has been offered to date, and it is talking to DKR Oasis to see if it “would be prepared to exit its investment over a longer time frame”.
So far this year 178 companies have delisted from Aim, against 293 departures in 2009. The total number of companies on the junior market fell below 1,200 at the end of November, the lowest level since 2004.
http://www.ft.com/cms/s/0/15a512b6-0d2e-11e0-82ff-00144feabdc0.html#axzz19RwfLEcf
the FT says -
One of the more colourful companies on Aim looks set to join the hundreds that have left the junior market over the past two years.
Japan Leisure Hotels operates a portfolio of so-called love hotels, one of those Japanese idiosyncrasies that make sense to the country’s inhabitants.
They act as a refuge for married couples who live with family, philanderers and those – often backpacking foreigners – looking for a cheap room for the night.
Japan Leisure’s biggest shareholder is DKR Oasis Management, which has an 87.6 per cent stake. It has told the board it wants to realise its investment. Japan Leisure said it did not expect the proceeds of any offer to “deliver a premium to the current share price, and it may even result in a discount”.
In the short term, said the company, a sale was likely to be at a substantial discount to the previously announced net asset value per share of 77p, based on the value of the assets on a going concern basis.
Japan Leisure tried to raise £100m when it listed in 2007, convinced that it would be able to consolidate the fragmented Japanese industry. In the event it had to settle for £3m at 50p a share, leaving DKR Oasis with its large stake. Another attempt at a £50m fundraising in 2009 failed.
The shares fell 2½p to 23p on Tuesday, giving a market capitalisation of £10m.
The Takeover Panel has ruled that any offer will be subject to the City Code, so any buyer would have to offer similar terms to minority shareholders. The board is willing to consider proposals from any new party for either the company or its assets.
The board believes that given additional time it might be possible to deliver greater value to shareholders than has been offered to date, and it is talking to DKR Oasis to see if it “would be prepared to exit its investment over a longer time frame”.
So far this year 178 companies have delisted from Aim, against 293 departures in 2009. The total number of companies on the junior market fell below 1,200 at the end of November, the lowest level since 2004.
http://www.ft.com/cms/s/0/15a512b6-0d2e-11e0-82ff-00144feabdc0.html#axzz19RwfLEcf
Sunday, November 28, 2010
October - Export Growth slows for 8th Straight Month
Japan's annual export growth slowed
for an eighth straight month in October due to a stronger yen,
and a central banker said downside risks to the Japanese economy
outweigh upside risks due to uncertainties abroad.
Slowing exports bode ill for an economy bracing for a
possible contraction in the final quarter of this year as a
temporary boost from stimulus-driven consumption tapers off.
Overseas demand for Japanese goods is likely to pick up again
next year and help Japan avoid recession, economists say, but
China's monetary policy tightening, European sovereign debt woes
and developments in the U.S. economy pose risks to the outlook.
Bank of Japan (BOJ) board member Seiji Nakamura said exports
could recover next year, but he warned of growing risks facing
the U.S. and European economies and said he remained on alert for
a possible spike in the yen stemming from problems in major
economies.
Nakamura sounded less upbeat than Governor Masaaki Shirakawa,
who has described risks to Japan's economy as evenly balanced,
suggesting Nakamura would not dissent if the BOJ were to boost
its 5 trillion yen ($59.87 billion) asset-buying scheme in
response to a worsening in the economy.
"Overall, downside risks (to the Japanese economy) seem
somewhat stronger than upside risks," Nakamura told a news
conference, citing strong uncertainties about the outlook for the
U.S. economy.
"There are worries ... sovereign debt problems in peripheral
Europe could affect the European economy by triggering spikes in
bond yields and worsening sentiment," he said in a speech.
"We tend to think that the economy could rebound as early as
January-March, because leading indicators for Japanese exports,
such as U.S. new orders, are stabilising," said Satoru Ogasawara,
an economist at Credit Suisse in Tokyo.
"If Nakamura sees further downside risks, it could mean he's
worried new orders overseas will start falling, and that would be
a risk to our economic forecasts."
One of the BOJ's two deputy governors, Hirohide Yamaguchi,
also said this month that the central bank needs to be mindful of
downside risks to Japan's economy.
Exports rose 7.8 percent in October from a year earlier, the
finance ministry said on Thursday, less than the median forecast
for a 10.7 percent rise. [JPEXPY=ECI]
Financial markets shrugged off the data. The Nikkei average
.N225 edged toward a five-month high on demand from overseas
investors.
Shipments to the United States in October rose 4.7 percent
from a year earlier, slower than the previous month's 10.4
percent, while exports to Europe fell an annual 1.9 percent, the
first decline in almost a year as worries about Ireland's debt
burden pushed bond yields higher. [ID:nLDE6AM25A]
In one positive sign, exports to China, the biggest
destination for Japanese goods, rose 17.5 percent from a year
earlier, faster than the 10.2 percent annual rise in September
due to higher shipments of metal-processing machines.
Data on jobless benefit claims and consumer spending suggests
the U.S. economic recovery is gaining strength, but a high
unemployment rate, weakness in the housing market and a reduction
in household debt cloud the outlook. [ID:nN24211131]
The BOJ eased monetary policy last month by pledging to keep
rates in a range from zero to 0.1 percent until the end of
deflation is in sight and announcing a plan to buy assets ranging
from government bonds to corporate debt.
The size of the 5 trillion yen asset buying pool now
effectively serves as a gauge of the BOJ's monetary easing.
Nakamura was cautious about setting the policy rate at zero,
saying it could reduce commercial banks' incentive to lend and
harm the money market.
Shirakawa has said topping up the asset buying plan is a
clear option if the looming economic slowdown proves worse than
expected. But the yen's retreat from 15-year highs scaled early
this month makes any radical near-term action unlikely.
[ID:nL3E6MI0E3]
Japan's economy grew a solid 0.9 percent in the third quarter
as expiring government incentives gave consumption a last-minute
boost before a long-anticipated slowdown.
http://www.reuters.com/article/idUSTOE6AN06020101125
for an eighth straight month in October due to a stronger yen,
and a central banker said downside risks to the Japanese economy
outweigh upside risks due to uncertainties abroad.
Slowing exports bode ill for an economy bracing for a
possible contraction in the final quarter of this year as a
temporary boost from stimulus-driven consumption tapers off.
Overseas demand for Japanese goods is likely to pick up again
next year and help Japan avoid recession, economists say, but
China's monetary policy tightening, European sovereign debt woes
and developments in the U.S. economy pose risks to the outlook.
Bank of Japan (BOJ) board member Seiji Nakamura said exports
could recover next year, but he warned of growing risks facing
the U.S. and European economies and said he remained on alert for
a possible spike in the yen stemming from problems in major
economies.
Nakamura sounded less upbeat than Governor Masaaki Shirakawa,
who has described risks to Japan's economy as evenly balanced,
suggesting Nakamura would not dissent if the BOJ were to boost
its 5 trillion yen ($59.87 billion) asset-buying scheme in
response to a worsening in the economy.
"Overall, downside risks (to the Japanese economy) seem
somewhat stronger than upside risks," Nakamura told a news
conference, citing strong uncertainties about the outlook for the
U.S. economy.
"There are worries ... sovereign debt problems in peripheral
Europe could affect the European economy by triggering spikes in
bond yields and worsening sentiment," he said in a speech.
"We tend to think that the economy could rebound as early as
January-March, because leading indicators for Japanese exports,
such as U.S. new orders, are stabilising," said Satoru Ogasawara,
an economist at Credit Suisse in Tokyo.
"If Nakamura sees further downside risks, it could mean he's
worried new orders overseas will start falling, and that would be
a risk to our economic forecasts."
One of the BOJ's two deputy governors, Hirohide Yamaguchi,
also said this month that the central bank needs to be mindful of
downside risks to Japan's economy.
Exports rose 7.8 percent in October from a year earlier, the
finance ministry said on Thursday, less than the median forecast
for a 10.7 percent rise. [JPEXPY=ECI]
Financial markets shrugged off the data. The Nikkei average
.N225 edged toward a five-month high on demand from overseas
investors.
Shipments to the United States in October rose 4.7 percent
from a year earlier, slower than the previous month's 10.4
percent, while exports to Europe fell an annual 1.9 percent, the
first decline in almost a year as worries about Ireland's debt
burden pushed bond yields higher. [ID:nLDE6AM25A]
In one positive sign, exports to China, the biggest
destination for Japanese goods, rose 17.5 percent from a year
earlier, faster than the 10.2 percent annual rise in September
due to higher shipments of metal-processing machines.
Data on jobless benefit claims and consumer spending suggests
the U.S. economic recovery is gaining strength, but a high
unemployment rate, weakness in the housing market and a reduction
in household debt cloud the outlook. [ID:nN24211131]
The BOJ eased monetary policy last month by pledging to keep
rates in a range from zero to 0.1 percent until the end of
deflation is in sight and announcing a plan to buy assets ranging
from government bonds to corporate debt.
The size of the 5 trillion yen asset buying pool now
effectively serves as a gauge of the BOJ's monetary easing.
Nakamura was cautious about setting the policy rate at zero,
saying it could reduce commercial banks' incentive to lend and
harm the money market.
Shirakawa has said topping up the asset buying plan is a
clear option if the looming economic slowdown proves worse than
expected. But the yen's retreat from 15-year highs scaled early
this month makes any radical near-term action unlikely.
[ID:nL3E6MI0E3]
Japan's economy grew a solid 0.9 percent in the third quarter
as expiring government incentives gave consumption a last-minute
boost before a long-anticipated slowdown.
http://www.reuters.com/article/idUSTOE6AN06020101125
Japanese men working shorter hours: survey
"Workaholic" may no longer be the most appropriate label for Japanese businessmen.
A survey has shown that Japanese men spend less time at work than they once did amid an economic slowdown and use their leisure time surfing the Internet at home rather than going out to drink, a news report said Saturday.
They now work eight hours and 39 minutes a day on average, around one hour less than they did in 2000, Jiji Press said, reporting the results of a survey covering 400 male corporate employees in their 20s to 50s.
In their private time, workers spent a record seven hours and 59 minutes a week on the Internet or catching up with email, the survey showed.
The previous survey in 2000 showed they spent seven hours and 52 minutes watching television -- then the top leisure-time activity.
Drinking at coffee shops or bars now took up just two hours and 25 minutes a week, down from a high of seven hours and 52 minutes in 1990, it said.
http://news.yahoo.com/s/afp/20101127/lf_afp/japanlifestylejobs_20101127121836
A survey has shown that Japanese men spend less time at work than they once did amid an economic slowdown and use their leisure time surfing the Internet at home rather than going out to drink, a news report said Saturday.
They now work eight hours and 39 minutes a day on average, around one hour less than they did in 2000, Jiji Press said, reporting the results of a survey covering 400 male corporate employees in their 20s to 50s.
In their private time, workers spent a record seven hours and 59 minutes a week on the Internet or catching up with email, the survey showed.
The previous survey in 2000 showed they spent seven hours and 52 minutes watching television -- then the top leisure-time activity.
Drinking at coffee shops or bars now took up just two hours and 25 minutes a week, down from a high of seven hours and 52 minutes in 1990, it said.
http://news.yahoo.com/s/afp/20101127/lf_afp/japanlifestylejobs_20101127121836
Q3 - Land Values decline at fewer key sites
Land values declined at fewer prime sites for the fourth consecutive quarter as buyers returned to buy condominiums amid incentives including housing-related tax breaks, a quarterly government survey showed Friday.
Values fell at 87 of 150 prime locations nationwide, according to a survey by the Land, Infrastructure, Transport and Tourism Ministry. Values fell at 58 percent of monitored sites as of Oct. 1 from July 1, it said. That compares with 70 percent three months earlier, 82 percent in the quarter before that, and 96 percent in the prior quarter.
The declines in land values slowed as the drop in prices of condominiums attracted buyers and as those in the major commercial areas reversed their slide after rent adjustments, the report said. The survey consists of the 150 most expensive locations taken from the government's annual land survey, reflecting the latest movement in land value, according to the government.
"Prices in residential sites are starting to stabilize and some are signaling increases, while it may take a bit more time for the commercial sites to see a real recovery," said Yutaka Iwaki, a director of Land Price Research Division, said at a briefing in Tokyo.
Sites that saw prices that remain little changed increased by 20, while those where the values fell declined by 18, the report showed. Prices at 79 percent of residential sites surveyed rose or were unchanged, compared with 57 percent three months earlier, the survey said.
http://search.japantimes.co.jp/cgi-bin/nb20101127n3.html
Values fell at 87 of 150 prime locations nationwide, according to a survey by the Land, Infrastructure, Transport and Tourism Ministry. Values fell at 58 percent of monitored sites as of Oct. 1 from July 1, it said. That compares with 70 percent three months earlier, 82 percent in the quarter before that, and 96 percent in the prior quarter.
The declines in land values slowed as the drop in prices of condominiums attracted buyers and as those in the major commercial areas reversed their slide after rent adjustments, the report said. The survey consists of the 150 most expensive locations taken from the government's annual land survey, reflecting the latest movement in land value, according to the government.
"Prices in residential sites are starting to stabilize and some are signaling increases, while it may take a bit more time for the commercial sites to see a real recovery," said Yutaka Iwaki, a director of Land Price Research Division, said at a briefing in Tokyo.
Sites that saw prices that remain little changed increased by 20, while those where the values fell declined by 18, the report showed. Prices at 79 percent of residential sites surveyed rose or were unchanged, compared with 57 percent three months earlier, the survey said.
http://search.japantimes.co.jp/cgi-bin/nb20101127n3.html
October - Consumer Prices Slide for 20th Straight Month
Japan's consumer prices slid for the 20th straight month in October, data showed, underscoring fears of a delayed exit from crippling deflation as economic recovery loses steam.
While the pace of the year-on-year decline eased compared to previous months, analysts on Friday said this was due to one-off effects such as a hike in cigarette prices after a tax rise that month, with weak domestic demand still haunting the economy.
Japan's core consumer price index fell 0.6 percent in October year-on-year, compared to a 1.1 percent fall in September, as the deflation-mired economy laboured under a strong yen, which tends to harm its exporters.
Japan has been stuck in a deflationary spiral since its asset bubble burst in the early 1990s, and consumer spending has never fully recovered to become a major driver of growth.
A stronger yen exacerbates price declines as it makes imports cheaper.
"Even though the pace of the fall in prices slowed by 0.5 percentage points from the previous month, this was not due to an improved demand-supply balance", said Atsushi Matsumoto, economist at Mizuho Research Institute.
Data issued Thursday showed Japanese exports grew at their slowest pace of the year in October -- further evidence that the country's trade-reliant recovery is ebbing.
"Weak growth in exports could worsen corporate earnings, thus lowering household incomes to dampen consumer demand," said Matsumoto.
The latest price data "boils down to one-off effects" such as the tobacco price hike, he said. "Exit from deflation will be slower than previously thought."
Continued price falls undermine Prime Minister Naoto Kan's efforts to overcome deflation in the next fiscal year and work towards reining in the world's biggest public debt, which amounts to 200 percent of GDP, analysts said.
Deflation, a general fall in prices, has remained a challenge for Japan as it cuts into corporate profits and leads consumers to delay purchases while awaiting further price drops.
The Bank of Japan said last month that Japan's core consumer price index would turn to a positive figure during the fiscal year 2011, starting next April.
"We have to make efforts toward the government's goal of having a positive (CPI) figure in the next fiscal year," economy minister Banri Kaieda told a regular news conference Friday.
But analysts warn a return to inflation will take longer.
Matsumoto said he expects the positive figure to come only in fiscal 2012 due to weak consumer demand and a subdued appetite for corporate investment on the backdrop of slowing export growth.
The core consumer price index for Tokyo -- the leading indicator of nationwide prices -- in November fell 0.5 percent from a year earlier, the internal affairs ministry said.
Taro Saito, economist at NLI Research Institute, said "the overall picture is that falls in prices are improving but not worsening.... But the pressure from the government on the Bank of Japan to take further monetary easing measures will continue."
Parliament is likely to pass a supplementary budget later Friday to finance an economic stimulus plan worth 5.1 trillion yen (61 billion dollars) featuring job programmes, welfare spending and schemes for small businesses and infrastructure, local media reported.
Matsumoto of Mizuho said the extra budget "is surely a positive factor on the economy but not enough."
Japanese shares closed 0.40 percent lower on Friday. The benchmark Nikkei index has however stayed above the psychologically key 10,000 mark in recent sessions, buoyed by expectation-beating company earnings.
http://news.yahoo.com/s/afp/20101126/ts_afp/japaneconomy_20101126125159
While the pace of the year-on-year decline eased compared to previous months, analysts on Friday said this was due to one-off effects such as a hike in cigarette prices after a tax rise that month, with weak domestic demand still haunting the economy.
Japan's core consumer price index fell 0.6 percent in October year-on-year, compared to a 1.1 percent fall in September, as the deflation-mired economy laboured under a strong yen, which tends to harm its exporters.
Japan has been stuck in a deflationary spiral since its asset bubble burst in the early 1990s, and consumer spending has never fully recovered to become a major driver of growth.
A stronger yen exacerbates price declines as it makes imports cheaper.
"Even though the pace of the fall in prices slowed by 0.5 percentage points from the previous month, this was not due to an improved demand-supply balance", said Atsushi Matsumoto, economist at Mizuho Research Institute.
Data issued Thursday showed Japanese exports grew at their slowest pace of the year in October -- further evidence that the country's trade-reliant recovery is ebbing.
"Weak growth in exports could worsen corporate earnings, thus lowering household incomes to dampen consumer demand," said Matsumoto.
The latest price data "boils down to one-off effects" such as the tobacco price hike, he said. "Exit from deflation will be slower than previously thought."
Continued price falls undermine Prime Minister Naoto Kan's efforts to overcome deflation in the next fiscal year and work towards reining in the world's biggest public debt, which amounts to 200 percent of GDP, analysts said.
Deflation, a general fall in prices, has remained a challenge for Japan as it cuts into corporate profits and leads consumers to delay purchases while awaiting further price drops.
The Bank of Japan said last month that Japan's core consumer price index would turn to a positive figure during the fiscal year 2011, starting next April.
"We have to make efforts toward the government's goal of having a positive (CPI) figure in the next fiscal year," economy minister Banri Kaieda told a regular news conference Friday.
But analysts warn a return to inflation will take longer.
Matsumoto said he expects the positive figure to come only in fiscal 2012 due to weak consumer demand and a subdued appetite for corporate investment on the backdrop of slowing export growth.
The core consumer price index for Tokyo -- the leading indicator of nationwide prices -- in November fell 0.5 percent from a year earlier, the internal affairs ministry said.
Taro Saito, economist at NLI Research Institute, said "the overall picture is that falls in prices are improving but not worsening.... But the pressure from the government on the Bank of Japan to take further monetary easing measures will continue."
Parliament is likely to pass a supplementary budget later Friday to finance an economic stimulus plan worth 5.1 trillion yen (61 billion dollars) featuring job programmes, welfare spending and schemes for small businesses and infrastructure, local media reported.
Matsumoto of Mizuho said the extra budget "is surely a positive factor on the economy but not enough."
Japanese shares closed 0.40 percent lower on Friday. The benchmark Nikkei index has however stayed above the psychologically key 10,000 mark in recent sessions, buoyed by expectation-beating company earnings.
http://news.yahoo.com/s/afp/20101126/ts_afp/japaneconomy_20101126125159
Sunday, November 21, 2010
Economic Issues from Japan's Ageing Society
In 1979, Ezra Vogel, a Harvard academic, wrote a book entitled Japan as Number One: Lessons for America, in which he portrayed Japan, with its strong economy and cohesive society, as the world's most dynamic industrial nation.
Three decades later, Japan holds lessons of a less encouraging sort. Economists in the stricken West have been poring over data on the deflation that it has suffered since the bursting of the asset-price bubble in 1990. Yet deflation may be just one symptom of an even bigger problem that is squeezing the life out of the Japanese economy: aging. Unless Japan takes dramatic steps to re-energize its shrinking, greying workforce, its economy will suffer.
Other countries face this dismal prospect, too. Although Japanese society is growing older faster than anywhere else in the world, plenty of others are shuffling along behind it. Parts of Europe are aging fast, and are unwilling to adapt, as recent protests against rising retirement ages in France and Greece attest. Other Confucian countries such as South Korea, China and Taiwan, have enjoyed a "demographic dividend" -- a rapidly expanding workforce and falling birth rate -- similar to Japan's in the 1960s to 1980s. With fewer children and elderly to pay for, such countries could plow savings back into economic expansion. As in Japan, relatively few women work after becoming mothers and even fewer immigrants are let in. Such places will look to Japan for how to cope with the economic and social consequences when their manpower starts to dry up. So far, they will find, it is ducking the issue.
Many in Japan shrug off the problem of aging. That is partly because the elderly continue to live comfortably on their vast hoard of savings. Even though the number over 65 has doubled in 20 years, Japan's health-care system remains one of the cheapest and best in the rich world. And its economy, though it has now been overtaken in size by China's, remains home to a huge industrial apparatus with the innovative clout to make life easier for its elderly citizens. Anyway, what with entrenched deflation, high debt and disappointing economic growth, the Japanese have had other things to worry about in the past two decades.
Yet what Japan fails to appreciate is that, as the years pass, its economic ailments are being compounded by skewed demography. Unless the country acts to tackle this, its decline will become intractable -- for three reasons.
The crux is in the working-age population, age 15 to 64. From a peak of 87 million in 1995, it is expected to fall to about 52 million by 2050, leaving it close to its level at the end of the Second World War. Unless the output of those workers rises fast enough to offset the decline in their numbers, GDP will inevitably shrink; some predict Japan's output will be smaller than Indonesia's by the middle of this century. Declining GDP would not, in itself, be much of a worry, provided that output per person continued to rise. The trouble is that living standards are already dropping compared with other rich countries, so Japan feels poorer. And falling output may weaken Japan's sense of self-confidence and its standing in the world. What is more, Japan has the highest government debt relative to GDP in the rich world. If debt continues to grow as the economy contracts, it will become even harder to bear.
Secondly, a dwindling band of workers will have to support rising social-security payments, as the number of retired people grows. This will strain public finances. Ten years ago, each person in retirement was supported by four in work. In 10 years that burden will fall on only two workers. Already, the rising cost of caring for the elderly has pushed up the government deficit and the national debt. If Japan's workers cannot shoulder their burden, the country will find itself unable to honour fully its pension and health-care commitments. In effect, it will be forced to default on its obligations to society.
Thirdly, as the population ages and shrinks, demand will probably weaken. This would lower Japanese firms' appetite for risk and thus their willingness to invest. In growing markets, companies can afford to risk overinvesting, because excess capacity is eventually mopped up. But amid shrinking populations, that logic is turned upsidedown. Firms not only need to export more or build fewer factories; they may have to destroy idle ones. It is little wonder that Japanese companies hoard so much of their profit. The long-term outlook in their home market -- which still accounts for about two-thirds of output -- is uncertain. And yet the more they scrimp on investment, the more joblessness, especially among the young, will deepen Japan's sense of malaise.
There are ways to overcome these hurdles -- ways that would not only ensure living standards do not slip but also make for a more vibrant, inclusive economy. At present, for instance, 62 per cent of working women quit their jobs after having their first child; less discrimination against them in the workplace would encourage them to go on working. Retired people could be coaxed back to work, especially if they could claim their pensions while working. More immigration could help Japan maintain an innovative streak that it risks losing as its workers age. The hardest task will be to raise Japan's productivity to offset the looming manpower shortage. Deregulation would help, by making it easier to sell services (such as residential care) to the elderly, by freeing up finance to allow them to make better use of their savings, and by encouraging more competition in the domestic economy so that it can withstand the inevitable shocks to external trade.
All this means overcoming cultural taboos -- especially in Japan's hierarchical companies -- which for too long have been an excuse for inaction. It also demands strong political leadership, something that Naoto Kan has yet to supply, despite a clamour for fresh thinking when voters ended almost half a century of one-party rule last year. If Japan tackles its demographic problems swiftly, it has a chance of being a model of how to deal with aging, rather than a dreadful warning.
Read more: http://www.calgaryherald.com/life/greying+Japan/3861847/story.html#ixzz15yuQcPyO
http://www.calgaryherald.com/life/greying+Japan/3861847/story.html
Three decades later, Japan holds lessons of a less encouraging sort. Economists in the stricken West have been poring over data on the deflation that it has suffered since the bursting of the asset-price bubble in 1990. Yet deflation may be just one symptom of an even bigger problem that is squeezing the life out of the Japanese economy: aging. Unless Japan takes dramatic steps to re-energize its shrinking, greying workforce, its economy will suffer.
Other countries face this dismal prospect, too. Although Japanese society is growing older faster than anywhere else in the world, plenty of others are shuffling along behind it. Parts of Europe are aging fast, and are unwilling to adapt, as recent protests against rising retirement ages in France and Greece attest. Other Confucian countries such as South Korea, China and Taiwan, have enjoyed a "demographic dividend" -- a rapidly expanding workforce and falling birth rate -- similar to Japan's in the 1960s to 1980s. With fewer children and elderly to pay for, such countries could plow savings back into economic expansion. As in Japan, relatively few women work after becoming mothers and even fewer immigrants are let in. Such places will look to Japan for how to cope with the economic and social consequences when their manpower starts to dry up. So far, they will find, it is ducking the issue.
Many in Japan shrug off the problem of aging. That is partly because the elderly continue to live comfortably on their vast hoard of savings. Even though the number over 65 has doubled in 20 years, Japan's health-care system remains one of the cheapest and best in the rich world. And its economy, though it has now been overtaken in size by China's, remains home to a huge industrial apparatus with the innovative clout to make life easier for its elderly citizens. Anyway, what with entrenched deflation, high debt and disappointing economic growth, the Japanese have had other things to worry about in the past two decades.
Yet what Japan fails to appreciate is that, as the years pass, its economic ailments are being compounded by skewed demography. Unless the country acts to tackle this, its decline will become intractable -- for three reasons.
The crux is in the working-age population, age 15 to 64. From a peak of 87 million in 1995, it is expected to fall to about 52 million by 2050, leaving it close to its level at the end of the Second World War. Unless the output of those workers rises fast enough to offset the decline in their numbers, GDP will inevitably shrink; some predict Japan's output will be smaller than Indonesia's by the middle of this century. Declining GDP would not, in itself, be much of a worry, provided that output per person continued to rise. The trouble is that living standards are already dropping compared with other rich countries, so Japan feels poorer. And falling output may weaken Japan's sense of self-confidence and its standing in the world. What is more, Japan has the highest government debt relative to GDP in the rich world. If debt continues to grow as the economy contracts, it will become even harder to bear.
Secondly, a dwindling band of workers will have to support rising social-security payments, as the number of retired people grows. This will strain public finances. Ten years ago, each person in retirement was supported by four in work. In 10 years that burden will fall on only two workers. Already, the rising cost of caring for the elderly has pushed up the government deficit and the national debt. If Japan's workers cannot shoulder their burden, the country will find itself unable to honour fully its pension and health-care commitments. In effect, it will be forced to default on its obligations to society.
Thirdly, as the population ages and shrinks, demand will probably weaken. This would lower Japanese firms' appetite for risk and thus their willingness to invest. In growing markets, companies can afford to risk overinvesting, because excess capacity is eventually mopped up. But amid shrinking populations, that logic is turned upsidedown. Firms not only need to export more or build fewer factories; they may have to destroy idle ones. It is little wonder that Japanese companies hoard so much of their profit. The long-term outlook in their home market -- which still accounts for about two-thirds of output -- is uncertain. And yet the more they scrimp on investment, the more joblessness, especially among the young, will deepen Japan's sense of malaise.
There are ways to overcome these hurdles -- ways that would not only ensure living standards do not slip but also make for a more vibrant, inclusive economy. At present, for instance, 62 per cent of working women quit their jobs after having their first child; less discrimination against them in the workplace would encourage them to go on working. Retired people could be coaxed back to work, especially if they could claim their pensions while working. More immigration could help Japan maintain an innovative streak that it risks losing as its workers age. The hardest task will be to raise Japan's productivity to offset the looming manpower shortage. Deregulation would help, by making it easier to sell services (such as residential care) to the elderly, by freeing up finance to allow them to make better use of their savings, and by encouraging more competition in the domestic economy so that it can withstand the inevitable shocks to external trade.
All this means overcoming cultural taboos -- especially in Japan's hierarchical companies -- which for too long have been an excuse for inaction. It also demands strong political leadership, something that Naoto Kan has yet to supply, despite a clamour for fresh thinking when voters ended almost half a century of one-party rule last year. If Japan tackles its demographic problems swiftly, it has a chance of being a model of how to deal with aging, rather than a dreadful warning.
Read more: http://www.calgaryherald.com/life/greying+Japan/3861847/story.html#ixzz15yuQcPyO
http://www.calgaryherald.com/life/greying+Japan/3861847/story.html
Japan's Economic Performance over the last 2 decades
Simple analysis of the Japanese economy suggests simple causal relationships. Export success, excess domestic savings, low inflation and anemic growth are frequently linked in the media and commentary. But any review of Japan’s economic performance must be considered in three domestic contexts: the current recovery from its deepest postwar recession; the continuation since 1990 of subpar growth; and the 40 immediate postwar years of extraordinarily rapid, catch-up growth.
It is a mistake to refer to the recent period as the ‘two lost decades’. Despite subpar growth, major institutional, social, and political changes have taken place. Japan’s economic recovery from 2002 to the end of 2007 of about 2 per cent annual GDP growth was good but not great, and was incomplete. Even before the recession hit, a substantial output gap remained, full employment was not achieved, and deflation persisted.
Thus far, Japan has successfully exported its way out of recession. Exports increased considerably more rapidly than anticipated, particularly to China and the other East Asian economies. Some 90 per cent of the increase in Japan’s aggregate demand over the past year has been from net exports. Domestic demand declined during 2009 until the last quarter, as business investment dropped sharply, consumption only increased slightly, and government spending slowed after the one-shot stimulus package. However growth has slowed significantly from the second quarter of 2010. Thus far, the recovery has only gone about half way to the previous GDP peak in 2007.
One of Japan’s most worrying macroeconomic problems is the return of mild but seemingly persistent deflation, interrupted temporarily in 2008 by the world commodity prices boom. Japan’s core CPI dropped by 1.6 per cent in fiscal 2009, and was a negative 1.1 per cent in July 2010. Even with its extraordinarily easy monetary policy, the Bank of Japan (BOJ) has not achieved price stability.
Persistent deflation has pernicious macroeconomic effects. It increases real interest rates, deters business investment and household consumption, reduces tax revenues, increases the fiscal deficit, renders traditional monetary policy ineffective, and generates adverse expectations about the future.
The most comprehensive measure of prices is the GDP deflator, which converts nominal GDP to real GDP. History suggests, as do current policy discussions in Japan, that the GDP deflator should be modestly positive. However, Japan’s GDP deflator has been negative since 1998, and indeed worsened to -2.3 per cent in the first half of 2010. If Japan’s GDP deflator had been slightly positive or even zero over the past decade, tax revenues would have been significantly higher and government debt smaller.
Japan’s financial system has weathered the recession well, largely because from the late 1990s it went through five years of its own crisis, reform, and consolidation. Corporate recovery has been internally financed, so bank loans have been decreasing. Banks continue to invest heavily in Japanese government bonds (JGBs) despite the very low yields. Japan remains over-banked; banks have huge deposits, market interest spreads are narrow, and profitability remains significantly below that of foreign counterparts.
While profits declined by a third and many companies recorded losses, the Japanese corporate sector held up quite well during the recession. Bankruptcies, in number and amount, did not increase significantly. Businesses reduced new fixed investment by 24 per cent from the peak first quarter of 2008 through the third quarter of 2009, before flattening out and beginning to pick up slightly in the first half of 2010. Profits have risen dramatically; profits of listed companies this fiscal year are projected to increase by 70 per cent. Companies have used cash flow not only to finance investment but to pay off debt. Almost half of listed companies are now essentially debt-free.
Forecasting growth for 2011 and following years is subject to significantly greater uncertainty than usual. The government and the BOJ are likely soon to reduce their optimistic estimates of a few months ago that the economy would grow at about 2 percent in fiscal 2011. Much will depend on the degree to which business investment picks up. Consumption is constrained by the slow growth of household income and the low share of wages in GDP.
The slowdown in export growth continuing into 2011 is mainly because the rapid-recovery phase of world growth is over. A further determinant of Japanese exports is the exchange rate, which averaged about 92 yen/dollar in 2009. Since May 2010 the yen has surged some 9 per cent relative to the dollar, a 15 year high. Not surprisingly, Japanese exporters and policymakers have voiced concerns, but it remains to be seen whether the government and BOJ policy steps in favour of a weakened yen will be effective. When adjusting for sustained difference in US and Japan inflation rates, the yen is not high, and the real effective exchange rate is at its long-run average.
Like the US and EU, Japan faces the conundrum of how to stimulate domestic demand and how to reduce the government budget deficit. This requires sensible policies of sequencing and timing. The big difference is that Japan is unique in having modest but persistent deflation. That must be overcome in order to implement successful growth and budget deficit strategies.
I am not optimistic about Japan’s near-to-medium term economic performance. Recovery will continue, but at a modest pace. Japan has a large overhang of labour even aside from recorded unemployment, notably those employed but underutilized and those who have withdrawn from the labour force. I am concerned whether Japan will overcome the persistent output gap and return to the full employment and stable growth path with price stability that for two decades it has not been able to accomplish. My sense is that it will take annual growth greater than 2 per cent for at least five years to achieve full employment.
Japan’s ‘two lost decades’ saw significant cultural, structural and technological development. With big short-term challenges remaining, particularly in terms of maintaining net-positive growth rates, forecasting future Japanese economic performance is not easy. With slow consumption growth, the focus of policy makers and analysts will sensibly be on the corporations and their competitiveness in international markets.
http://www.eastasiaforum.org/2010/11/20/the-japanese-economys-recovery/
It is a mistake to refer to the recent period as the ‘two lost decades’. Despite subpar growth, major institutional, social, and political changes have taken place. Japan’s economic recovery from 2002 to the end of 2007 of about 2 per cent annual GDP growth was good but not great, and was incomplete. Even before the recession hit, a substantial output gap remained, full employment was not achieved, and deflation persisted.
Thus far, Japan has successfully exported its way out of recession. Exports increased considerably more rapidly than anticipated, particularly to China and the other East Asian economies. Some 90 per cent of the increase in Japan’s aggregate demand over the past year has been from net exports. Domestic demand declined during 2009 until the last quarter, as business investment dropped sharply, consumption only increased slightly, and government spending slowed after the one-shot stimulus package. However growth has slowed significantly from the second quarter of 2010. Thus far, the recovery has only gone about half way to the previous GDP peak in 2007.
One of Japan’s most worrying macroeconomic problems is the return of mild but seemingly persistent deflation, interrupted temporarily in 2008 by the world commodity prices boom. Japan’s core CPI dropped by 1.6 per cent in fiscal 2009, and was a negative 1.1 per cent in July 2010. Even with its extraordinarily easy monetary policy, the Bank of Japan (BOJ) has not achieved price stability.
Persistent deflation has pernicious macroeconomic effects. It increases real interest rates, deters business investment and household consumption, reduces tax revenues, increases the fiscal deficit, renders traditional monetary policy ineffective, and generates adverse expectations about the future.
The most comprehensive measure of prices is the GDP deflator, which converts nominal GDP to real GDP. History suggests, as do current policy discussions in Japan, that the GDP deflator should be modestly positive. However, Japan’s GDP deflator has been negative since 1998, and indeed worsened to -2.3 per cent in the first half of 2010. If Japan’s GDP deflator had been slightly positive or even zero over the past decade, tax revenues would have been significantly higher and government debt smaller.
Japan’s financial system has weathered the recession well, largely because from the late 1990s it went through five years of its own crisis, reform, and consolidation. Corporate recovery has been internally financed, so bank loans have been decreasing. Banks continue to invest heavily in Japanese government bonds (JGBs) despite the very low yields. Japan remains over-banked; banks have huge deposits, market interest spreads are narrow, and profitability remains significantly below that of foreign counterparts.
While profits declined by a third and many companies recorded losses, the Japanese corporate sector held up quite well during the recession. Bankruptcies, in number and amount, did not increase significantly. Businesses reduced new fixed investment by 24 per cent from the peak first quarter of 2008 through the third quarter of 2009, before flattening out and beginning to pick up slightly in the first half of 2010. Profits have risen dramatically; profits of listed companies this fiscal year are projected to increase by 70 per cent. Companies have used cash flow not only to finance investment but to pay off debt. Almost half of listed companies are now essentially debt-free.
Forecasting growth for 2011 and following years is subject to significantly greater uncertainty than usual. The government and the BOJ are likely soon to reduce their optimistic estimates of a few months ago that the economy would grow at about 2 percent in fiscal 2011. Much will depend on the degree to which business investment picks up. Consumption is constrained by the slow growth of household income and the low share of wages in GDP.
The slowdown in export growth continuing into 2011 is mainly because the rapid-recovery phase of world growth is over. A further determinant of Japanese exports is the exchange rate, which averaged about 92 yen/dollar in 2009. Since May 2010 the yen has surged some 9 per cent relative to the dollar, a 15 year high. Not surprisingly, Japanese exporters and policymakers have voiced concerns, but it remains to be seen whether the government and BOJ policy steps in favour of a weakened yen will be effective. When adjusting for sustained difference in US and Japan inflation rates, the yen is not high, and the real effective exchange rate is at its long-run average.
Like the US and EU, Japan faces the conundrum of how to stimulate domestic demand and how to reduce the government budget deficit. This requires sensible policies of sequencing and timing. The big difference is that Japan is unique in having modest but persistent deflation. That must be overcome in order to implement successful growth and budget deficit strategies.
I am not optimistic about Japan’s near-to-medium term economic performance. Recovery will continue, but at a modest pace. Japan has a large overhang of labour even aside from recorded unemployment, notably those employed but underutilized and those who have withdrawn from the labour force. I am concerned whether Japan will overcome the persistent output gap and return to the full employment and stable growth path with price stability that for two decades it has not been able to accomplish. My sense is that it will take annual growth greater than 2 per cent for at least five years to achieve full employment.
Japan’s ‘two lost decades’ saw significant cultural, structural and technological development. With big short-term challenges remaining, particularly in terms of maintaining net-positive growth rates, forecasting future Japanese economic performance is not easy. With slow consumption growth, the focus of policy makers and analysts will sensibly be on the corporations and their competitiveness in international markets.
http://www.eastasiaforum.org/2010/11/20/the-japanese-economys-recovery/
The China Miracle?
Many Japanese corporations are pinning their hopes on what they see as the expanding "middle class" in China, which they think will offer a huge potential market for their products. In reality, that class is a mirage created politically by the Chinese Communist Party and is on the verge of disintegrating.
The middle class in China began to show its presence around 2005 and has consisted of those in managerial posts at state-owned enterprises, financial institutions and subsidiaries of foreign companies, as well as those who operate their own information technology venture businesses. They were known for spending their money on plush condominiums, expensive automobiles, traveling abroad and playing golf.
Since around 2008, real estate prices have shot up so high that the price of a condo in Beijing, Shanghai and Guangzhou now is 30 to 50 times the annual income of those in the middle class.
Further aggravating the situation has been a sudden drop in the stock market. The SSE Composite Index of the Shanghai Stock Exchange, for example, fell from a peak of more than 6,000 in autumn 2007 to around 3,000 at present.
What exactly is the size of the middle class in China? One answer to this question is given by the Chinese Academy of Social Sciences, a government-affiliated think tank. It says in its report that 23 percent of the total population belongs to this category. This means about 300 million out of the population of 1.3 billion, some 2.7 times the size of the middle class in Japan, estimated at 110 million.
Marketing experts point out, however, that there is a big mathematical trick in the statistics announced by the academy, which defines the middle class as those who earn more than 6,000 yuan (about ¥80,000) per month. With that monthly income, one can barely survive in big cities like Beijing or Shanghai, let alone enjoy life as a big spender.
There are two reasons why the Chinese government has artificially blown up the size of the middle class. One is to drive home to Chinese people that the government's economic policies have been highly successful. The other is to give foreign corporations high expectations about China's markets.
It is true that consumption in China has been on the rise, as evidenced by the 18.3 percent year-on-year increase in the first nine months of this year. This figure, however, was much lower than the 24.5 percent increase in investments by the government and state-owned corporations in fixed assets.
Another important factor that must not be overlooked is the fact that nearly half of retail sales in China is accounted for by the money spent on housing. The China Real Estate Research estimates that, in 2009, sales of new and used houses were valued at 5.7 trillion to 6 trillion yuan, which represented a substantial portion of the overall retail sales, which stood at 12 trillion yuan.
Given the steep rise in the prices of newly built condominiums, it would be a gross mistake to jump to the conclusion that the purchases of durable consumer goods are rising by double-digit percentages.
Although home electric appliances and automobiles are growing in sales, that has been due primarily to subsidies provided by the government to encourage purchase of eco-friendly cars and to boost sales of home electric appliances in farming regions.
Observers point out that during the past decade, the overall expansion of consumption in China has been brought about by wealthy people (numbering 70 million to 80 million) who have connections with the Chinese Communist Party. They have become even wealthier, while the so-called middle class has continued to struggle.
This observation is substantiated by the fact that the Gini coefficient in China has shot up to 0.5. This coefficient shows how equally or unequally income is distributed within the country, with the value of zero expressing total equality and a value of 1 maximal inequality. Had the middle class grown as claimed by Beijing, the Gini coefficient could not have gone as high as 0.5.
Another factor that has been working against the middle class is the sluggish performance of corporations in the private sector. Since the spring of this year, factory workers have held a series of strikes in many parts of the country to protest low wages. Management cannot afford to comply, however, because a majority of the privately owned enterprises in China are not at a technological level of high added value. So, they are forced to sell a large volume of merchandise at low-profit margins.
Many companies are making only 2 to 3 percent profit on sales and have been hit especially hard by wage hikes and the recent rise in the value of the renminbi currency.
The plight of the private sector is also reflected in the growing number of new college graduates who are unable to find jobs. Even though the overall economy is registering double-digit growth, only about 40 percent of those about to finish college are said to have found jobs. This is much worse than in Japan.
The Chinese Communist Party has long thought that an affluent middle class is indispensable for securing social stability. But the demographic composition of the population has made this target infeasible. Whereas in the industrialized nations, social stability was attained by building a middle class covering 70 percent of the population, China has had to look after 720 million farmers.
Since there are more farmers in China than farmlands can accommodate, many have had to seek jobs as migrant workers in urban areas. In the postwar Japan, the government adopted a fiscal policy designed to elevate farmers to the middle class. Farmers in China are so numerous that the government would find it impossible to do this.
Even if China succeeds in establishing a middle class, its members will account for only 20 percent to 30 percent of the population. Rather than becoming the dominant group in the country, the nascent middle class in China is struggling to survive. Japanese companies would be taking a big risk in betting that the Chinese middle class will continue to expand and prosper and thus create a substantial market for consumer goods.
http://search.japantimes.co.jp/cgi-bin/eo20101122a1.html
The middle class in China began to show its presence around 2005 and has consisted of those in managerial posts at state-owned enterprises, financial institutions and subsidiaries of foreign companies, as well as those who operate their own information technology venture businesses. They were known for spending their money on plush condominiums, expensive automobiles, traveling abroad and playing golf.
Since around 2008, real estate prices have shot up so high that the price of a condo in Beijing, Shanghai and Guangzhou now is 30 to 50 times the annual income of those in the middle class.
Further aggravating the situation has been a sudden drop in the stock market. The SSE Composite Index of the Shanghai Stock Exchange, for example, fell from a peak of more than 6,000 in autumn 2007 to around 3,000 at present.
What exactly is the size of the middle class in China? One answer to this question is given by the Chinese Academy of Social Sciences, a government-affiliated think tank. It says in its report that 23 percent of the total population belongs to this category. This means about 300 million out of the population of 1.3 billion, some 2.7 times the size of the middle class in Japan, estimated at 110 million.
Marketing experts point out, however, that there is a big mathematical trick in the statistics announced by the academy, which defines the middle class as those who earn more than 6,000 yuan (about ¥80,000) per month. With that monthly income, one can barely survive in big cities like Beijing or Shanghai, let alone enjoy life as a big spender.
There are two reasons why the Chinese government has artificially blown up the size of the middle class. One is to drive home to Chinese people that the government's economic policies have been highly successful. The other is to give foreign corporations high expectations about China's markets.
It is true that consumption in China has been on the rise, as evidenced by the 18.3 percent year-on-year increase in the first nine months of this year. This figure, however, was much lower than the 24.5 percent increase in investments by the government and state-owned corporations in fixed assets.
Another important factor that must not be overlooked is the fact that nearly half of retail sales in China is accounted for by the money spent on housing. The China Real Estate Research estimates that, in 2009, sales of new and used houses were valued at 5.7 trillion to 6 trillion yuan, which represented a substantial portion of the overall retail sales, which stood at 12 trillion yuan.
Given the steep rise in the prices of newly built condominiums, it would be a gross mistake to jump to the conclusion that the purchases of durable consumer goods are rising by double-digit percentages.
Although home electric appliances and automobiles are growing in sales, that has been due primarily to subsidies provided by the government to encourage purchase of eco-friendly cars and to boost sales of home electric appliances in farming regions.
Observers point out that during the past decade, the overall expansion of consumption in China has been brought about by wealthy people (numbering 70 million to 80 million) who have connections with the Chinese Communist Party. They have become even wealthier, while the so-called middle class has continued to struggle.
This observation is substantiated by the fact that the Gini coefficient in China has shot up to 0.5. This coefficient shows how equally or unequally income is distributed within the country, with the value of zero expressing total equality and a value of 1 maximal inequality. Had the middle class grown as claimed by Beijing, the Gini coefficient could not have gone as high as 0.5.
Another factor that has been working against the middle class is the sluggish performance of corporations in the private sector. Since the spring of this year, factory workers have held a series of strikes in many parts of the country to protest low wages. Management cannot afford to comply, however, because a majority of the privately owned enterprises in China are not at a technological level of high added value. So, they are forced to sell a large volume of merchandise at low-profit margins.
Many companies are making only 2 to 3 percent profit on sales and have been hit especially hard by wage hikes and the recent rise in the value of the renminbi currency.
The plight of the private sector is also reflected in the growing number of new college graduates who are unable to find jobs. Even though the overall economy is registering double-digit growth, only about 40 percent of those about to finish college are said to have found jobs. This is much worse than in Japan.
The Chinese Communist Party has long thought that an affluent middle class is indispensable for securing social stability. But the demographic composition of the population has made this target infeasible. Whereas in the industrialized nations, social stability was attained by building a middle class covering 70 percent of the population, China has had to look after 720 million farmers.
Since there are more farmers in China than farmlands can accommodate, many have had to seek jobs as migrant workers in urban areas. In the postwar Japan, the government adopted a fiscal policy designed to elevate farmers to the middle class. Farmers in China are so numerous that the government would find it impossible to do this.
Even if China succeeds in establishing a middle class, its members will account for only 20 percent to 30 percent of the population. Rather than becoming the dominant group in the country, the nascent middle class in China is struggling to survive. Japanese companies would be taking a big risk in betting that the Chinese middle class will continue to expand and prosper and thus create a substantial market for consumer goods.
http://search.japantimes.co.jp/cgi-bin/eo20101122a1.html
Friday, November 19, 2010
2010 - Japanese consumer trends
http://kotaku.com/5691952/in-2010-japan-went-mad-for-game-addiction-dog-politics-and-outer-space
Japanese and Americans Watch Most TV
Americans and Japanese watch more television than residents of any other country in the world, a new study from Motorola has found.
According to Motorola's Mobility's Global 2010 Media Engagement Barometer study, American and Japanese viewers spend 21 hours per week watching television and video content. South Koreans watch the least TV--just 13 hours a week. The average amount of time spent watching TV each week around the world is 17 hours. Motorola said most television viewers watch scheduled programming, but 34 percent watch scheduled content in addition to online video and on-demand shows.
The study, which looked at responses from 7,500 consumers in 13 international markets, also found that consumers prefer "subscription-only" TV services from providers, rather than free over-the-air content. However, subscription services are available to only 57 percent of worldwide television viewers, while 67 percent of people around the globe can access over-the-air content.
Much of that viewing has been or will soon be done on HDTVs, Motorola also found. Some 75 percent of people around the globe either own an HDTV or plan to buy one "in the next 18 months." The company said 25 percent of global television viewers plan to get their hands on a 3D TV at some point in the next year and a half.
Although global viewers prefer paid services on their televisions, more than 66 percent of respondents said that it's "quite or very important" to have free access to content on devices other than the television. Just 39 percent of folks said that they would want to pay for access to video content available on products other than a TV.
One more interesting tidbit from Motorola's study: 20 percent of respondents said they would like to see a recommendation engine made available on their televisions that "tracked viewing habits and suggested content based on viewer preference."
Read more: http://news.cnet.com/8301-13506_3-20023091-17.html#ixzz15nqiAT8e
http://news.cnet.com/8301-13506_3-20023091-17.html?part=rss&subj=news&tag=2547-1_3-0-20
According to Motorola's Mobility's Global 2010 Media Engagement Barometer study, American and Japanese viewers spend 21 hours per week watching television and video content. South Koreans watch the least TV--just 13 hours a week. The average amount of time spent watching TV each week around the world is 17 hours. Motorola said most television viewers watch scheduled programming, but 34 percent watch scheduled content in addition to online video and on-demand shows.
The study, which looked at responses from 7,500 consumers in 13 international markets, also found that consumers prefer "subscription-only" TV services from providers, rather than free over-the-air content. However, subscription services are available to only 57 percent of worldwide television viewers, while 67 percent of people around the globe can access over-the-air content.
Much of that viewing has been or will soon be done on HDTVs, Motorola also found. Some 75 percent of people around the globe either own an HDTV or plan to buy one "in the next 18 months." The company said 25 percent of global television viewers plan to get their hands on a 3D TV at some point in the next year and a half.
Although global viewers prefer paid services on their televisions, more than 66 percent of respondents said that it's "quite or very important" to have free access to content on devices other than the television. Just 39 percent of folks said that they would want to pay for access to video content available on products other than a TV.
One more interesting tidbit from Motorola's study: 20 percent of respondents said they would like to see a recommendation engine made available on their televisions that "tracked viewing habits and suggested content based on viewer preference."
Read more: http://news.cnet.com/8301-13506_3-20023091-17.html#ixzz15nqiAT8e
http://news.cnet.com/8301-13506_3-20023091-17.html?part=rss&subj=news&tag=2547-1_3-0-20
November - Beaujolais Price Fight
Major supermarkets and other retailers are gearing up for intensified price competition for this year's Beaujolais Nouveau French wine ahead of its release at midnight on Nov. 17.
While Beaujolais Nouveau that comes in less costly PET bottles became prevalent last year, this year will see ever more heated price competition due in large part to the yen's appreciation. Despite the popularity of Beaujolais wines with a price tag of less than 1,000 yen, some are concerned that plastic bottles could only undermine its brand image and quality.
Major retailer Seiyu GK announced on Nov. 16 that it will retail PET bottles of Beaujolais Nouveau for 690 yen each, 59 yen cheaper than last year. The company had initially declared it would sell the wine for 890 yen last year, but lowered the price to 780 yen after major discount chain Don Quijote announced a plan to sell the wine for 880 yen. Seiyu further cut its price to 749 yen on the release day.
To avoid having its prices undercut before the release date again this year, Don Quijote will not unveil its pricing until shortly before midnight on Nov. 17.
Retail competitor Aeon has set the price of its Beaujolais Nouveau at 980 yen, the same as last year, while also launching a half-sized PET bottle version for 500 yen -- even cheaper than the 750-yen limited edition bottles the company released last year.
While glass bottles of Beaujolais Nouveau will generally be priced around 2,000 yen this year, with Suntory offering the wine at 2,300 yen and Mercian at 1,980 yen, PET bottles of Beaujolais come cheaper because of their light-weight -- about 30 percent lighter than glass -- resulting in lower transport costs, according to an Aeon official.
The spread of budget Beaujolais Nouveau has also contributed to reviving the wine's consumption. Suntory is importing 550,000 cases of Beaujolais Nouveau (each containing a dozen 750-milliliter bottles) this year, up 10 percent in volume from 2009 -- the first year-on-year increase in six years.
However, French producers are apparently frowning upon the heated price competition between distributors of their wines in Japan. Agroalimentaire Francais au Japon is concerned that the price-cutting could overshadow the principal aim of celebrating the year's first produce.
Last year, Inter Beaujolais, a producers' group in France, declared that PET bottles should be banned as containers for Beaujolais Nouveau, citing damage to the quality of the wine and its brand image. The group is intensifying its lobbying of the French government seeking a legislated ban on Beaujolais in PET bottles.
Japanese retailers are divided over their response. Mercian, which introduced PET bottle Beaujolais Nouveau last year, maintains that it has conducted sufficient tests to insure the PET bottled version is delivered to consumers at the same quality as the glass bottled edition, while a Don Quijote official says they have no choice but to observe the course of developments next year and beyond.
http://mdn.mainichi.jp/mdnnews/news/20101117p2a00m0na019000c.html
While Beaujolais Nouveau that comes in less costly PET bottles became prevalent last year, this year will see ever more heated price competition due in large part to the yen's appreciation. Despite the popularity of Beaujolais wines with a price tag of less than 1,000 yen, some are concerned that plastic bottles could only undermine its brand image and quality.
Major retailer Seiyu GK announced on Nov. 16 that it will retail PET bottles of Beaujolais Nouveau for 690 yen each, 59 yen cheaper than last year. The company had initially declared it would sell the wine for 890 yen last year, but lowered the price to 780 yen after major discount chain Don Quijote announced a plan to sell the wine for 880 yen. Seiyu further cut its price to 749 yen on the release day.
To avoid having its prices undercut before the release date again this year, Don Quijote will not unveil its pricing until shortly before midnight on Nov. 17.
Retail competitor Aeon has set the price of its Beaujolais Nouveau at 980 yen, the same as last year, while also launching a half-sized PET bottle version for 500 yen -- even cheaper than the 750-yen limited edition bottles the company released last year.
While glass bottles of Beaujolais Nouveau will generally be priced around 2,000 yen this year, with Suntory offering the wine at 2,300 yen and Mercian at 1,980 yen, PET bottles of Beaujolais come cheaper because of their light-weight -- about 30 percent lighter than glass -- resulting in lower transport costs, according to an Aeon official.
The spread of budget Beaujolais Nouveau has also contributed to reviving the wine's consumption. Suntory is importing 550,000 cases of Beaujolais Nouveau (each containing a dozen 750-milliliter bottles) this year, up 10 percent in volume from 2009 -- the first year-on-year increase in six years.
However, French producers are apparently frowning upon the heated price competition between distributors of their wines in Japan. Agroalimentaire Francais au Japon is concerned that the price-cutting could overshadow the principal aim of celebrating the year's first produce.
Last year, Inter Beaujolais, a producers' group in France, declared that PET bottles should be banned as containers for Beaujolais Nouveau, citing damage to the quality of the wine and its brand image. The group is intensifying its lobbying of the French government seeking a legislated ban on Beaujolais in PET bottles.
Japanese retailers are divided over their response. Mercian, which introduced PET bottle Beaujolais Nouveau last year, maintains that it has conducted sufficient tests to insure the PET bottled version is delivered to consumers at the same quality as the glass bottled edition, while a Don Quijote official says they have no choice but to observe the course of developments next year and beyond.
http://mdn.mainichi.jp/mdnnews/news/20101117p2a00m0na019000c.html
November - JAL to terminate employment contracts
Japan Airlines Corp. said Monday it will terminate the contracts of up to 250 pilots and cabin attendants after its voluntary retirement programs failed to achieve the company's job reduction goal.
The decision by JAL and its bankruptcy administrator, the state-backed Enterprise Turnaround Initiative Corp. of Japan, was made at a time when the struggling airline is trying to obtain court approval for its restructuring plans by the end of this month.
JAL had been trying to get around 270 people — 130 pilots and 140 cabin attendants — to voluntarily retire from Oct. 26 to Nov. 9, but only managed to get 20 pilots and 50 cabin attendants to apply, the airline said.
In addition to the 250 contract terminations, the airline also plans to dismiss about 50 pilots and cabin attendants who are currently on leave, it said.
"We are in a very difficult situation with regard to carrying out further steps to implement our restructuring plan," JAL said in a statement. "We have reached the decision that we have no choice but to dismiss personnel to achieve an appropriate size of workforce."
The airline said it has informed its labor unions of the plan and will continue to accept voluntary retirement applications before the pilots and cabin attendants targeted for forcible dismissal leave in and after December.
http://search.japantimes.co.jp/cgi-bin/nb20101116a8.html
The decision by JAL and its bankruptcy administrator, the state-backed Enterprise Turnaround Initiative Corp. of Japan, was made at a time when the struggling airline is trying to obtain court approval for its restructuring plans by the end of this month.
JAL had been trying to get around 270 people — 130 pilots and 140 cabin attendants — to voluntarily retire from Oct. 26 to Nov. 9, but only managed to get 20 pilots and 50 cabin attendants to apply, the airline said.
In addition to the 250 contract terminations, the airline also plans to dismiss about 50 pilots and cabin attendants who are currently on leave, it said.
"We are in a very difficult situation with regard to carrying out further steps to implement our restructuring plan," JAL said in a statement. "We have reached the decision that we have no choice but to dismiss personnel to achieve an appropriate size of workforce."
The airline said it has informed its labor unions of the plan and will continue to accept voluntary retirement applications before the pilots and cabin attendants targeted for forcible dismissal leave in and after December.
http://search.japantimes.co.jp/cgi-bin/nb20101116a8.html
Hotel Turnarounds - Targetting new markets
One autumn afternoon in Kobuchizawa, Yamanashi Prefecture, a group of children and their parents were driving to a field to pick fresh vegetables for pizzas they planned to make there.
nside the van, the driver asked them, "Do you know how soil is made?" A 6-year-old girl confidently said, "I know. It's a worm's poo-poo!" The group burst into laughter.
The group was taking part in a family program organized by Resonare Kobuchizawa, a resort hotel run by Hoshino Resort Co. The hotel offers various outdoor activities to its guest families and children, which has helped it turn the corner after tipping into bankruptcy.
Families with small children often tend to stay at home because many places, not only hotels but restaurants and other businesses, are not set up to accommodate children. But some hotel operators are beginning to wake up to the opportunities that catering to families can provide.
Yoshie Komuro, the mother of a 4-year-old boy and president of Tokyo-based Work Life Balance Co., which offers seminars and consulting services on work-life balance, recalls a bad experience with a family-unfriendly hotel.
"Soon after my son was born, I wanted to have a relaxing time at my favorite hotel, which we used to go to before I got pregnant. So I called the hotel to make a reservation. But they rejected us, saying they don't accept babies because they make a big mess," she said. "My son couldn't even roll over at that time. It was the moment that my favorite hotel became the hotel that I disliked the most."
But when Komuro visited Resonare, their child care services, children's programs and quiet cafe stocked with many picture books made her family's stay a comfortable one, she said. That experience led her to organize a tour for children and parents in concert with Resonare Kobuchizawa.
he tour included a grape-picking expedition at a nearby farm and a lecture by Komuro on work-life balance. While parents listened to her lecture, children explored the outdoors around Kobuchizawa with Resonare staff. At night, costumed children went Halloween trick-or-treating along the shopping street in the hotel compound. The trip to the vegetable patch was also included in the tour.
Resonare opened in 1992, initially starting out as a resort hotel targeting couples.
The inn filed for bankruptcy protection in 2001. It was then that Hoshino Resort took over the hotel's operations.
Takeshi Koyama, Resonare's sales manager, said the company studied the market carefully to resuscitate the hotel.
One disadvantage was its lack of a hot spring — a must in Japan for attracting guests. But when the company did further research, it found that people with children under 12 usually plan trips with the idea of creating good family memories.
"So we decided to target families with children under age 12, especially with those younger than elementary school kids because such families don't have to worry about their children missing school and can come even on weekdays, as long as the fathers can manage to get time off work," said Koyama.
The strategy succeeded in attracting families, and the hotel, which posted a pretax loss of ¥410 million in the 2002 business year, turned a profit only three years after Hoshino Resort took over in 2001. In the business year that ended in November 2009, it posted a pretax profit of ¥180 million, according to Hoshino Resort.
Another inn to make a comeback after teetering on the brink of bankruptcy in 2009 is Kagaya Hoshotei, a traditional "ryokan" founded in 1912 in the Yamashiro Hot Spring area in Ishikawa Prefecture.
In April 2009, Hosenkaku, a Japanese-style hotel in the same prefecture, took over the hotel, which was running in the red, and instead of depending solely on travel agencies, it began direct marketing, providing various baby-friendly and other unique services to customers.
"Guests who stayed at our hotel through travel agencies rarely come back because where they stay is just one element in a package tour. They don't have a strong feeling of attachment to us," said Takashi Boshiyama, managing director at Kagaya Hoshotei. "So we decided to focus advertising on services that appeal to guests, especially targeting specific segments of the market."
The hotel came up with a baby-friendly package for young parents. Mothers with newborns are usually reluctant to travel as they are worried about babies crying loudly in public or getting sick during the trip. They also have to bring large bags stuffed with baby things, such as diapers, clothes and toys, Boshiyama said.
Boshiyama's wife, a mother of three, including a 2-month-old, came up with the idea of a baby-friendly package that provides diapers, milk and homemade baby food for free.
Thanks to other unique plans, such as offering groups of female guests collagen drinks and sweets, its occupancy rate jumped to 81.3 percent in November 2009 from 36.5 percent the year before, with the number of guests more than doubling to 2,439 from 1,096.
"In recent years, the need for such baby-friendly hotels has been increasing," said Tomoko Minoura of Mikihouse Child & Family Research and Marketing Institute Inc. Based on a checklist of more than 100 items, it gives a "Welcome Baby Accommodations" certificate to hotels that are baby-friendly. The institute has so far awarded the certificate to 16 hotels in Japan, Minoura said.
"There are many mothers who want to travel with their small children, while hotels want to attract guests amid the economic slowdown," said Minoura. "Hotels that received our certificate have reported good results. One hotel even said the number of guests tripled from the previous year."
Work Life Balance's Komuro, who is also a member of various government panels on work-life balance and gender equality, says hotels have started to notice the benefits of targeting families, especially those with working parents who have spending power.
In addition to the need to increase the occupancy rate on weekdays, Komuro pointed to changes in the demographics of both service providers and customers as a factor prompting hotels to provide child-friendly services.
She said people in their 30s and 40s, who used to be single or DINKS (double income no kids) and spent money at high-end hotels even after the bubble years, began to have children.
"Hotels are beginning to realize that such people who used to go to hotels may be less inclined to do so once they have children," she said.
She added that until recently hotels, because of night shifts, often lost female employees when they had children.
"But with improvements in the working environment, many mothers are now staying in the workforce. Consequently, there are many working at the hotels now who understand the needs of families with small children," she said.
http://search.japantimes.co.jp/cgi-bin/nn20101110f1.html
nside the van, the driver asked them, "Do you know how soil is made?" A 6-year-old girl confidently said, "I know. It's a worm's poo-poo!" The group burst into laughter.
The group was taking part in a family program organized by Resonare Kobuchizawa, a resort hotel run by Hoshino Resort Co. The hotel offers various outdoor activities to its guest families and children, which has helped it turn the corner after tipping into bankruptcy.
Families with small children often tend to stay at home because many places, not only hotels but restaurants and other businesses, are not set up to accommodate children. But some hotel operators are beginning to wake up to the opportunities that catering to families can provide.
Yoshie Komuro, the mother of a 4-year-old boy and president of Tokyo-based Work Life Balance Co., which offers seminars and consulting services on work-life balance, recalls a bad experience with a family-unfriendly hotel.
"Soon after my son was born, I wanted to have a relaxing time at my favorite hotel, which we used to go to before I got pregnant. So I called the hotel to make a reservation. But they rejected us, saying they don't accept babies because they make a big mess," she said. "My son couldn't even roll over at that time. It was the moment that my favorite hotel became the hotel that I disliked the most."
But when Komuro visited Resonare, their child care services, children's programs and quiet cafe stocked with many picture books made her family's stay a comfortable one, she said. That experience led her to organize a tour for children and parents in concert with Resonare Kobuchizawa.
he tour included a grape-picking expedition at a nearby farm and a lecture by Komuro on work-life balance. While parents listened to her lecture, children explored the outdoors around Kobuchizawa with Resonare staff. At night, costumed children went Halloween trick-or-treating along the shopping street in the hotel compound. The trip to the vegetable patch was also included in the tour.
Resonare opened in 1992, initially starting out as a resort hotel targeting couples.
The inn filed for bankruptcy protection in 2001. It was then that Hoshino Resort took over the hotel's operations.
Takeshi Koyama, Resonare's sales manager, said the company studied the market carefully to resuscitate the hotel.
One disadvantage was its lack of a hot spring — a must in Japan for attracting guests. But when the company did further research, it found that people with children under 12 usually plan trips with the idea of creating good family memories.
"So we decided to target families with children under age 12, especially with those younger than elementary school kids because such families don't have to worry about their children missing school and can come even on weekdays, as long as the fathers can manage to get time off work," said Koyama.
The strategy succeeded in attracting families, and the hotel, which posted a pretax loss of ¥410 million in the 2002 business year, turned a profit only three years after Hoshino Resort took over in 2001. In the business year that ended in November 2009, it posted a pretax profit of ¥180 million, according to Hoshino Resort.
Another inn to make a comeback after teetering on the brink of bankruptcy in 2009 is Kagaya Hoshotei, a traditional "ryokan" founded in 1912 in the Yamashiro Hot Spring area in Ishikawa Prefecture.
In April 2009, Hosenkaku, a Japanese-style hotel in the same prefecture, took over the hotel, which was running in the red, and instead of depending solely on travel agencies, it began direct marketing, providing various baby-friendly and other unique services to customers.
"Guests who stayed at our hotel through travel agencies rarely come back because where they stay is just one element in a package tour. They don't have a strong feeling of attachment to us," said Takashi Boshiyama, managing director at Kagaya Hoshotei. "So we decided to focus advertising on services that appeal to guests, especially targeting specific segments of the market."
The hotel came up with a baby-friendly package for young parents. Mothers with newborns are usually reluctant to travel as they are worried about babies crying loudly in public or getting sick during the trip. They also have to bring large bags stuffed with baby things, such as diapers, clothes and toys, Boshiyama said.
Boshiyama's wife, a mother of three, including a 2-month-old, came up with the idea of a baby-friendly package that provides diapers, milk and homemade baby food for free.
Thanks to other unique plans, such as offering groups of female guests collagen drinks and sweets, its occupancy rate jumped to 81.3 percent in November 2009 from 36.5 percent the year before, with the number of guests more than doubling to 2,439 from 1,096.
"In recent years, the need for such baby-friendly hotels has been increasing," said Tomoko Minoura of Mikihouse Child & Family Research and Marketing Institute Inc. Based on a checklist of more than 100 items, it gives a "Welcome Baby Accommodations" certificate to hotels that are baby-friendly. The institute has so far awarded the certificate to 16 hotels in Japan, Minoura said.
"There are many mothers who want to travel with their small children, while hotels want to attract guests amid the economic slowdown," said Minoura. "Hotels that received our certificate have reported good results. One hotel even said the number of guests tripled from the previous year."
Work Life Balance's Komuro, who is also a member of various government panels on work-life balance and gender equality, says hotels have started to notice the benefits of targeting families, especially those with working parents who have spending power.
In addition to the need to increase the occupancy rate on weekdays, Komuro pointed to changes in the demographics of both service providers and customers as a factor prompting hotels to provide child-friendly services.
She said people in their 30s and 40s, who used to be single or DINKS (double income no kids) and spent money at high-end hotels even after the bubble years, began to have children.
"Hotels are beginning to realize that such people who used to go to hotels may be less inclined to do so once they have children," she said.
She added that until recently hotels, because of night shifts, often lost female employees when they had children.
"But with improvements in the working environment, many mothers are now staying in the workforce. Consequently, there are many working at the hotels now who understand the needs of families with small children," she said.
http://search.japantimes.co.jp/cgi-bin/nn20101110f1.html
Demographics
IN 1979 Ezra Vogel, a Harvard academic, wrote a book entitled “Japan as Number One: Lessons for America” in which he portrayed Japan, with its strong economy and cohesive society, as the world’s most dynamic industrial nation. Three decades later, Japan holds lessons of a less encouraging sort. Economists in the stricken West have been poring over the data on the deflation that it has suffered since the bursting of the asset-price bubble in 1990. Yet deflation may be just one symptom of an even bigger problem that, as our special report this week argues, is squeezing the life out of the Japanese economy: ageing. Unless Japan takes dramatic steps to re-energise its shrinking, greying workforce, its economy will suffer.
Other countries face this dismal prospect too. Although Japanese society is growing older faster than anywhere else in the world, plenty of others are shuffling along behind it. Parts of Europe are ageing fast, and are unwilling to adapt, as recent protests against rising retirement ages in France and Greece attest. Other Confucian countries such as South Korea, China and Taiwan, have enjoyed a “demographic dividend”—a rapidly expanding workforce and falling birth rate—similar to Japan’s in the 1960s to 1980s. With fewer children and elderly to pay for, such countries could plough savings back into economic expansion. As in Japan, relatively few women work after becoming mothers and even fewer immigrants are let in. Such places will look to Japan for how to cope with the economic and social consequences when their manpower starts to dry up. So far, they will find, it is ducking the issue.
Young at heart
Many in Japan shrug off the problem of ageing. That is partly because the elderly continue to live comfortably on their vast hoard of savings. Even though the number over 65 has doubled in 20 years, Japan’s health-care system remains one of the cheapest and best in the rich world. And its economy, though it has now been overtaken in size by China’s, remains home to a huge industrial apparatus with the innovative clout to make life easier for its elderly citizens. Anyway, what with entrenched deflation, high debt and disappointing economic growth, the Japanese have had other things to worry about in the past two decades.
Yet what Japan fails to appreciate is that, as the years pass, its economic ailments are being compounded by skewed demography. Unless the country acts to tackle this, its decline will become intractable—for three reasons.
The crux is in the working-age population, aged 15-64. From a peak of 87m in 1995, it is expected to fall to about 52m by 2050, leaving it close to its level at the end of the second world war. Unless the output of those workers rises fast enough to offset the decline in their numbers, GDP will inevitably shrink; some predict Japan’s output will be smaller than Indonesia’s by the middle of this century. Declining GDP would not, in itself, be much of a worry, provided that output per person continued to rise. The trouble is that living standards are already dropping compared with other rich countries, so Japan feels poorer. And falling output may weaken Japan’s sense of self-confidence and its standing in the world. What is more, Japan has the highest government debt relative to GDP in the rich world. If debt continues to grow as the economy contracts, it will become even harder to bear.
Secondly, a dwindling band of workers will have to support rising social-security payments, as the number of retired people grows. This will strain public finances. Ten years ago each person in retirement was supported by four in work. In ten years that burden will fall on only two workers. Already, the rising cost of caring for the elderly has pushed up the government deficit and the national debt. If Japan’s workers cannot shoulder their burden, the country will find itself unable to honour fully its pension and health-care commitments. In effect, it will be forced to default on its obligations to society.
Thirdly, as the population ages and shrinks, demand will probably weaken. This would lower Japanese firms’ appetite for risk and thus their willingness to invest. In growing markets, companies can afford to risk over-investing, because excess capacity is eventually mopped up. But amid shrinking populations, that logic is turned upside-down. Firms not only need to export more or build fewer factories; they may have to destroy idle ones. It is little wonder that Japanese companies hoard so much of their profit. The long-term outlook in their home market—which still accounts for about two-thirds of output—is uncertain. And yet the more they scrimp on investment, the more joblessness, especially among the young, will deepen Japan’s sense of malaise.
There are ways to overcome these hurdles—ways that would not only ensure living standards do not slip but also make for a more vibrant, inclusive economy. At present, for instance, 62% of working women quit their jobs after having their first child; less discrimination against them in the workplace would encourage them to go on working. Retired people could be coaxed back to work, especially if they could claim their pensions while working. More immigration could help Japan maintain an innovative streak that it risks losing as its workers age. The hardest task will be to raise Japan’s productivity to offset the looming manpower shortage. Deregulation would help, by making it easier to sell services (such as residential care) to the elderly, by freeing up finance to allow them to make better use of their savings, and by encouraging more competition in the domestic economy so that it can withstand the inevitable shocks to external trade.
Get up and go
All this means overcoming cultural taboos—especially in Japan’s hierarchical companies—which for too long have been an excuse for inaction. It also demands strong political leadership, something that Naoto Kan has yet to supply, despite a clamour for fresh thinking when voters ended almost half a century of one-party rule last year. If Japan tackles its demographic problems swiftly, it has a chance of being a model of how to deal with ageing, rather than a dreadful warning.
http://www.economist.com/node/17522568?story_id=17522568&fsrc=rss
Other countries face this dismal prospect too. Although Japanese society is growing older faster than anywhere else in the world, plenty of others are shuffling along behind it. Parts of Europe are ageing fast, and are unwilling to adapt, as recent protests against rising retirement ages in France and Greece attest. Other Confucian countries such as South Korea, China and Taiwan, have enjoyed a “demographic dividend”—a rapidly expanding workforce and falling birth rate—similar to Japan’s in the 1960s to 1980s. With fewer children and elderly to pay for, such countries could plough savings back into economic expansion. As in Japan, relatively few women work after becoming mothers and even fewer immigrants are let in. Such places will look to Japan for how to cope with the economic and social consequences when their manpower starts to dry up. So far, they will find, it is ducking the issue.
Young at heart
Many in Japan shrug off the problem of ageing. That is partly because the elderly continue to live comfortably on their vast hoard of savings. Even though the number over 65 has doubled in 20 years, Japan’s health-care system remains one of the cheapest and best in the rich world. And its economy, though it has now been overtaken in size by China’s, remains home to a huge industrial apparatus with the innovative clout to make life easier for its elderly citizens. Anyway, what with entrenched deflation, high debt and disappointing economic growth, the Japanese have had other things to worry about in the past two decades.
Yet what Japan fails to appreciate is that, as the years pass, its economic ailments are being compounded by skewed demography. Unless the country acts to tackle this, its decline will become intractable—for three reasons.
The crux is in the working-age population, aged 15-64. From a peak of 87m in 1995, it is expected to fall to about 52m by 2050, leaving it close to its level at the end of the second world war. Unless the output of those workers rises fast enough to offset the decline in their numbers, GDP will inevitably shrink; some predict Japan’s output will be smaller than Indonesia’s by the middle of this century. Declining GDP would not, in itself, be much of a worry, provided that output per person continued to rise. The trouble is that living standards are already dropping compared with other rich countries, so Japan feels poorer. And falling output may weaken Japan’s sense of self-confidence and its standing in the world. What is more, Japan has the highest government debt relative to GDP in the rich world. If debt continues to grow as the economy contracts, it will become even harder to bear.
Secondly, a dwindling band of workers will have to support rising social-security payments, as the number of retired people grows. This will strain public finances. Ten years ago each person in retirement was supported by four in work. In ten years that burden will fall on only two workers. Already, the rising cost of caring for the elderly has pushed up the government deficit and the national debt. If Japan’s workers cannot shoulder their burden, the country will find itself unable to honour fully its pension and health-care commitments. In effect, it will be forced to default on its obligations to society.
Thirdly, as the population ages and shrinks, demand will probably weaken. This would lower Japanese firms’ appetite for risk and thus their willingness to invest. In growing markets, companies can afford to risk over-investing, because excess capacity is eventually mopped up. But amid shrinking populations, that logic is turned upside-down. Firms not only need to export more or build fewer factories; they may have to destroy idle ones. It is little wonder that Japanese companies hoard so much of their profit. The long-term outlook in their home market—which still accounts for about two-thirds of output—is uncertain. And yet the more they scrimp on investment, the more joblessness, especially among the young, will deepen Japan’s sense of malaise.
There are ways to overcome these hurdles—ways that would not only ensure living standards do not slip but also make for a more vibrant, inclusive economy. At present, for instance, 62% of working women quit their jobs after having their first child; less discrimination against them in the workplace would encourage them to go on working. Retired people could be coaxed back to work, especially if they could claim their pensions while working. More immigration could help Japan maintain an innovative streak that it risks losing as its workers age. The hardest task will be to raise Japan’s productivity to offset the looming manpower shortage. Deregulation would help, by making it easier to sell services (such as residential care) to the elderly, by freeing up finance to allow them to make better use of their savings, and by encouraging more competition in the domestic economy so that it can withstand the inevitable shocks to external trade.
Get up and go
All this means overcoming cultural taboos—especially in Japan’s hierarchical companies—which for too long have been an excuse for inaction. It also demands strong political leadership, something that Naoto Kan has yet to supply, despite a clamour for fresh thinking when voters ended almost half a century of one-party rule last year. If Japan tackles its demographic problems swiftly, it has a chance of being a model of how to deal with ageing, rather than a dreadful warning.
http://www.economist.com/node/17522568?story_id=17522568&fsrc=rss
Changes in Japan
In Japan, anxiety over a lost decade has given way to fear that economic growth is never coming back. Japanese pundits warn that the country has “lost its animal spirits.”
A business leader I spoke with during a recent visit talked of relocating his company’s operations to Singapore. Another asked if I thought Japan “would still be around” in 20 years. I’m not sure what he meant, but I know it isn’t good.
Two decades ago, Japan’s gross government debt stood at 63 percent of the country’s G.D.P. Today, it’s at nearly 200 percent. Consumer prices have fallen in 9 of the past 20 years, depressing production. A third of Japanese between the ages of 20 and 30 don’t have jobs. Falling birthrates suggest there may soon be just two workers to support each retiree, yet there is little prospect of immigration reform to give the work force new dynamism.
Add projections for several more years of flat growth, frustration with the country’s deeply dysfunctional political system, and worries that Japan has no place in the emerging world order and you begin to see the depth of the country’s malaise. Japan’s alliance with the United States has been stuck in the mud for some time, and the country is ever more reliant for growth on an increasingly unfriendly China.
Japan’s business community seems the most disillusioned segment of society. Senior executives I spoke with acknowledge that Prime Minister Naoto Kan is more competent than his hopeless predecessor, Yukio Hatoyama, but they have little else positive to say about his government. In part, that’s because the Democratic Party of Japan arrived in power just 15 months ago after a half century of nearly uninterrupted Liberal Democratic Party rule. Only since August 2009 have the DPJ and the country’s business community begun to build working relationships.
But there is also a philosophical divide between the two sides. The DPJ’s traditional ties with trade unions, and the anti-corporate rhetoric of many of its leaders, make mutual suspicion difficult to overcome. Recent party efforts to build bridges with the Keidanren, Japan’s lead industrial organization, have produced little. In addition, many of Japan’s business leaders have been in place for a long time, and some are resistant to change.
Yet, there are three reasons to believe that all this pessimism is overdone.
First, the DPJ and the business elite now appear to see that they are stuck with one another. The DPJ will remain in power for awhile, and the industrial elite knows it can’t simply wait for the moribund LDP to stage a comeback.
In fact, finance and economic officials say work is moving forward on a proposal for a substantial reduction in the corporate tax rate, one they said enjoyed support at the highest levels of government. It’s a modest accomplishment, and the devil may yet be in the details, but it’s clearly a positive signal that Japan’s political and business elites can work together more effectively.
In addition, Japan was a one-party system for several decades, and there was little incentive for the bureaucracy to share vital information on the operation of government with leaders of the seemingly eternal opposition. Yet, DPJ officials and the army of bureaucrats tasked with day-to-day operation of government finally appear to be communicating with one another more effectively.
Second, anxiety over China’s recently more aggressive foreign policy has helped put troubled U.S.-Japanese relations back on track. Much work remains to be done to restore damaged trust. These days, U.S. and Chinese officials negotiate questions of trade, currency policy and security while American and Japanese officials bicker over the length of runways at U.S. military bases.
But real progress has been made on an extraordinarily important project: The Trans-Pacific Partnership, a multilateral free trade pact that might one day integrate the Pacific Rim’s largest economies. Singapore, Chile, New Zealand and Brunei are already members. The United States, Australia, Malaysia, Vietnam and Peru are negotiating to join. Tokyo has finally begun to show interest.
Under the LDP, Japan would not consider membership, since the country’s farmers, a key segment of the LDP’s base, stand to lose the protections of tariffs on imported staples. Prime Minister Kan has expressed interest in joining the pact, and his support will come at a much lower political cost. That’s good news for those in Washington and Tokyo who see advantage in hedging their bets on China via closer ties with one another.
The third reason for a more optimistic view of Japan’s future is that the country’s elected leaders do not face the outraged opposition of citizens and interest groups eager to make trouble in the streets. Following two decades of economic stagnation, there are no Tea Partiers, fuming French transport workers or rock-throwing South Korean students.
In China, despite three decades of go-go growth, officials warn that continued growth of 7 to 8 percent is necessary to create enough new jobs to safeguard “social stability.” Japan, by contrast, will continue to enjoy relative domestic tranquility despite yet another year of growth at less than 2 percent.
In that sense, at least, Japan’s leaders are the envy of the world.
http://www.nytimes.com/2010/11/17/opinion/17iht-edbremmer.html?_r=1
A business leader I spoke with during a recent visit talked of relocating his company’s operations to Singapore. Another asked if I thought Japan “would still be around” in 20 years. I’m not sure what he meant, but I know it isn’t good.
Two decades ago, Japan’s gross government debt stood at 63 percent of the country’s G.D.P. Today, it’s at nearly 200 percent. Consumer prices have fallen in 9 of the past 20 years, depressing production. A third of Japanese between the ages of 20 and 30 don’t have jobs. Falling birthrates suggest there may soon be just two workers to support each retiree, yet there is little prospect of immigration reform to give the work force new dynamism.
Add projections for several more years of flat growth, frustration with the country’s deeply dysfunctional political system, and worries that Japan has no place in the emerging world order and you begin to see the depth of the country’s malaise. Japan’s alliance with the United States has been stuck in the mud for some time, and the country is ever more reliant for growth on an increasingly unfriendly China.
Japan’s business community seems the most disillusioned segment of society. Senior executives I spoke with acknowledge that Prime Minister Naoto Kan is more competent than his hopeless predecessor, Yukio Hatoyama, but they have little else positive to say about his government. In part, that’s because the Democratic Party of Japan arrived in power just 15 months ago after a half century of nearly uninterrupted Liberal Democratic Party rule. Only since August 2009 have the DPJ and the country’s business community begun to build working relationships.
But there is also a philosophical divide between the two sides. The DPJ’s traditional ties with trade unions, and the anti-corporate rhetoric of many of its leaders, make mutual suspicion difficult to overcome. Recent party efforts to build bridges with the Keidanren, Japan’s lead industrial organization, have produced little. In addition, many of Japan’s business leaders have been in place for a long time, and some are resistant to change.
Yet, there are three reasons to believe that all this pessimism is overdone.
First, the DPJ and the business elite now appear to see that they are stuck with one another. The DPJ will remain in power for awhile, and the industrial elite knows it can’t simply wait for the moribund LDP to stage a comeback.
In fact, finance and economic officials say work is moving forward on a proposal for a substantial reduction in the corporate tax rate, one they said enjoyed support at the highest levels of government. It’s a modest accomplishment, and the devil may yet be in the details, but it’s clearly a positive signal that Japan’s political and business elites can work together more effectively.
In addition, Japan was a one-party system for several decades, and there was little incentive for the bureaucracy to share vital information on the operation of government with leaders of the seemingly eternal opposition. Yet, DPJ officials and the army of bureaucrats tasked with day-to-day operation of government finally appear to be communicating with one another more effectively.
Second, anxiety over China’s recently more aggressive foreign policy has helped put troubled U.S.-Japanese relations back on track. Much work remains to be done to restore damaged trust. These days, U.S. and Chinese officials negotiate questions of trade, currency policy and security while American and Japanese officials bicker over the length of runways at U.S. military bases.
But real progress has been made on an extraordinarily important project: The Trans-Pacific Partnership, a multilateral free trade pact that might one day integrate the Pacific Rim’s largest economies. Singapore, Chile, New Zealand and Brunei are already members. The United States, Australia, Malaysia, Vietnam and Peru are negotiating to join. Tokyo has finally begun to show interest.
Under the LDP, Japan would not consider membership, since the country’s farmers, a key segment of the LDP’s base, stand to lose the protections of tariffs on imported staples. Prime Minister Kan has expressed interest in joining the pact, and his support will come at a much lower political cost. That’s good news for those in Washington and Tokyo who see advantage in hedging their bets on China via closer ties with one another.
The third reason for a more optimistic view of Japan’s future is that the country’s elected leaders do not face the outraged opposition of citizens and interest groups eager to make trouble in the streets. Following two decades of economic stagnation, there are no Tea Partiers, fuming French transport workers or rock-throwing South Korean students.
In China, despite three decades of go-go growth, officials warn that continued growth of 7 to 8 percent is necessary to create enough new jobs to safeguard “social stability.” Japan, by contrast, will continue to enjoy relative domestic tranquility despite yet another year of growth at less than 2 percent.
In that sense, at least, Japan’s leaders are the envy of the world.
http://www.nytimes.com/2010/11/17/opinion/17iht-edbremmer.html?_r=1
Q3 - GDP results paint deceptively rosy picture
The nation's gross domestic product saw higher-than-expected growth of 0.9 percent in July-September, but that sunny figure does not reflect the rather more gloomy reality of the current economic situation.
The growth was primarily due to temporary factors, such as a last-minute rise in demand for cars before the end of government subsidies for eco-friendly models and the unusually hot summer, which drove up consumption of durable goods such as air conditioners.
The prevailing view is that the GDP will post negative growth in October-December, with private consumption falling and exports struggling due to the yen's appreciation against the dollar.
The seasonally adjusted real GDP's 0.9 percent rise in the latest quarter--or an annualized 3.9 percent--marked the fourth consecutive quarterly increase.
Nominal GDP, which reflects price fluctuations and is more in line with consumer sentiment, also rose in the last quarter, up by 0.7 percent, or an annualized 2.9 percent, for the first increase since the January-March quarter.
The consumption of durable goods rose 11.1 percent from the previous quarter, equaling the rate posted in 1989 amid the bubble economy and pushing up overall GDP by 0.6 percentage point.
Yet private consumption has been declining markedly in recent weeks. Domestic new car sales in October were up to 26.7 percent less than a year earlier.
"Our customer numbers have halved," a Tokyo auto dealership employee said.
Cigarette sales also nosedived in October, plunging by about 70 percent from a year earlier, a result attributable to bulk-buying that took place before the cigarette tax rose.
Exports, a driving force for this nation's economy, are quickly losing momentum. In July-September they rose 2.4 percent from the previous quarter, marking the sixth consecutive quarter of growth. That result is well short of the 5.6 percent growth posted in the preceding quarter, however.
While private consumption continues to struggle to sustain its own path to recovery, future prospects for exports are murkier than ever.
Many observers believe the GDP will shrink during the current quarter.
According to the average of predictions by 42 private-sector economists and organizations surveyed by the Economic Planning Association--an auxiliary organization to the Cabinet Office--this nation's GDP will contract by an annualized 0.88 percent in October-December.
http://www.yomiuri.co.jp/dy/business/T101116005392.htm
The growth was primarily due to temporary factors, such as a last-minute rise in demand for cars before the end of government subsidies for eco-friendly models and the unusually hot summer, which drove up consumption of durable goods such as air conditioners.
The prevailing view is that the GDP will post negative growth in October-December, with private consumption falling and exports struggling due to the yen's appreciation against the dollar.
The seasonally adjusted real GDP's 0.9 percent rise in the latest quarter--or an annualized 3.9 percent--marked the fourth consecutive quarterly increase.
Nominal GDP, which reflects price fluctuations and is more in line with consumer sentiment, also rose in the last quarter, up by 0.7 percent, or an annualized 2.9 percent, for the first increase since the January-March quarter.
The consumption of durable goods rose 11.1 percent from the previous quarter, equaling the rate posted in 1989 amid the bubble economy and pushing up overall GDP by 0.6 percentage point.
Yet private consumption has been declining markedly in recent weeks. Domestic new car sales in October were up to 26.7 percent less than a year earlier.
"Our customer numbers have halved," a Tokyo auto dealership employee said.
Cigarette sales also nosedived in October, plunging by about 70 percent from a year earlier, a result attributable to bulk-buying that took place before the cigarette tax rose.
Exports, a driving force for this nation's economy, are quickly losing momentum. In July-September they rose 2.4 percent from the previous quarter, marking the sixth consecutive quarter of growth. That result is well short of the 5.6 percent growth posted in the preceding quarter, however.
While private consumption continues to struggle to sustain its own path to recovery, future prospects for exports are murkier than ever.
Many observers believe the GDP will shrink during the current quarter.
According to the average of predictions by 42 private-sector economists and organizations surveyed by the Economic Planning Association--an auxiliary organization to the Cabinet Office--this nation's GDP will contract by an annualized 0.88 percent in October-December.
http://www.yomiuri.co.jp/dy/business/T101116005392.htm
Q3 - Economy expands, but risks ahead
Japan's economy expanded in the third quarter as car buyers rushed to make the most of expiring subsidies and smokers stocked up ahead of a tax hike, data showed Monday, but analysts warned of risks ahead.
The hottest summer on record also drove sales of items such as air conditioners during the period, helping to drive growth.
But there were warnings of a looming payback in the fourth quarter in the absence of such one-off factors, amid growing fears Japan could face a slide back towards recession and doubt over the impact of planned stimulus measures.
The economy grew at an annualised pace of 3.9 percent in the July-September period, compared with the previous quarter's revised 1.8 percent growth. Monday's data beat market expectations of 2.5 percent.
On a quarterly basis the economy grew 0.9 percent, compared to 0.4 percent.
Japan's fourth straight quarter of expansion was driven by a consumer rush to make the most of government subsidies for car buyers before they expired in September and a surge in cigarette sales before a new tobacco tax was levied.
Private consumer spending, which accounts for nearly two-thirds of Japan's gross domestic product, was up 1.1 percent on-quarter in the period compared to a revised 0.1 percent in the previous quarter.
"The positive reading is purely thanks to a big growth in consumption in the private sector," said Taro Saito, a senior economist at NLI Research Institute.
"An end to the government's subsidies programme for environmentally friendly cars as well as a tax hike on cigarettes encouraged last-minute shopping, raising individual consumption."
Without the boost in the next quarter, consumption is likely to be much lower, analysts say. The third quarter data was "good due to stimulus steroids: Q4 will stink without them," said Nicholas Smith of MF Global FXA Securities.
Japan's export-led recovery has continued to lose steam recently, with industrial production falling for the fourth month running in September and export growth slowing.
"We continue to expect the economy to contract again in the fourth quarter as consumer spending drops back, exports struggle, and the recovery in investment remains sluggish," said consultancy Capital Economics.
Consumer prices continue to slide with Japan mired in crippling deflation.
The yen has been trading at 15-year highs against the dollar, hammering the competitiveness of the crucial export sector despite Tokyo's first intervention for six years in September.
A strong yen not only makes Japan's growth-driving exports more expensive but erodes companies' overseas profits when repatriated, with many firms considering sending more production overseas as a result.
It also makes imports cheaper, prolonging a demand-sapping cycle of deflation. Japanese consumers have been holding off on purchases in the hope of further price drops, clouding future corporate investment.
Monday's data showed growth in business spending fell to 0.8 percent from 1.8 percent on-quarter, its slowest this year.
The Bank of Japan has adopted a near zero rate policy and has announced an asset purchase scheme in an effort to lower borrowing costs and tackle deflation, but there is little optimism the measures will be enough.
Japan's cabinet last month approved an extra budget to cover a new stimulus package worth about 5.1 trillion yen (62 billion dollars) to avert what the government called the threat of a "double-dip recession".
But its fate depends on whether Prime Minister Naoto Kan's ruling party can pass it in parliament where it lacks a clear majority.
Kan came to power promising to slash spending and work towards cutting the world's biggest industrialised debt, at 200 percent of gross domestic product, and has vowed not to issue new debt to pay for the new stimulus measures.
But Japan's malaise has complicated Kan's ambitions. In October the government downgraded its view of the economy for the first time since February 2009.
http://news.yahoo.com/s/afp/20101115/bs_afp/japaneconomy_20101115073805
The hottest summer on record also drove sales of items such as air conditioners during the period, helping to drive growth.
But there were warnings of a looming payback in the fourth quarter in the absence of such one-off factors, amid growing fears Japan could face a slide back towards recession and doubt over the impact of planned stimulus measures.
The economy grew at an annualised pace of 3.9 percent in the July-September period, compared with the previous quarter's revised 1.8 percent growth. Monday's data beat market expectations of 2.5 percent.
On a quarterly basis the economy grew 0.9 percent, compared to 0.4 percent.
Japan's fourth straight quarter of expansion was driven by a consumer rush to make the most of government subsidies for car buyers before they expired in September and a surge in cigarette sales before a new tobacco tax was levied.
Private consumer spending, which accounts for nearly two-thirds of Japan's gross domestic product, was up 1.1 percent on-quarter in the period compared to a revised 0.1 percent in the previous quarter.
"The positive reading is purely thanks to a big growth in consumption in the private sector," said Taro Saito, a senior economist at NLI Research Institute.
"An end to the government's subsidies programme for environmentally friendly cars as well as a tax hike on cigarettes encouraged last-minute shopping, raising individual consumption."
Without the boost in the next quarter, consumption is likely to be much lower, analysts say. The third quarter data was "good due to stimulus steroids: Q4 will stink without them," said Nicholas Smith of MF Global FXA Securities.
Japan's export-led recovery has continued to lose steam recently, with industrial production falling for the fourth month running in September and export growth slowing.
"We continue to expect the economy to contract again in the fourth quarter as consumer spending drops back, exports struggle, and the recovery in investment remains sluggish," said consultancy Capital Economics.
Consumer prices continue to slide with Japan mired in crippling deflation.
The yen has been trading at 15-year highs against the dollar, hammering the competitiveness of the crucial export sector despite Tokyo's first intervention for six years in September.
A strong yen not only makes Japan's growth-driving exports more expensive but erodes companies' overseas profits when repatriated, with many firms considering sending more production overseas as a result.
It also makes imports cheaper, prolonging a demand-sapping cycle of deflation. Japanese consumers have been holding off on purchases in the hope of further price drops, clouding future corporate investment.
Monday's data showed growth in business spending fell to 0.8 percent from 1.8 percent on-quarter, its slowest this year.
The Bank of Japan has adopted a near zero rate policy and has announced an asset purchase scheme in an effort to lower borrowing costs and tackle deflation, but there is little optimism the measures will be enough.
Japan's cabinet last month approved an extra budget to cover a new stimulus package worth about 5.1 trillion yen (62 billion dollars) to avert what the government called the threat of a "double-dip recession".
But its fate depends on whether Prime Minister Naoto Kan's ruling party can pass it in parliament where it lacks a clear majority.
Kan came to power promising to slash spending and work towards cutting the world's biggest industrialised debt, at 200 percent of gross domestic product, and has vowed not to issue new debt to pay for the new stimulus measures.
But Japan's malaise has complicated Kan's ambitions. In October the government downgraded its view of the economy for the first time since February 2009.
http://news.yahoo.com/s/afp/20101115/bs_afp/japaneconomy_20101115073805
October - corporate bankruptcies decline for 15th straight month
The number of corporate bankruptcies in Japan declined for the 15th successive month on year in October, aided by government credit guarantees for small and medium-sized firms and improved exports, Tokyo Shoko Research said in a report on Tuesday.
According to the research firm, the number of corporate failures declined 9.91 percent from a year earlier to 1,136 registered cases, however liabilities rose for the second time in nine months on year.
The debt involved surged 79.11 percent in the recording period to 520.05 billion yen (6.41 billion U.S. dollars), the firm said, as three major bankruptcies involved debt of more than 50 billion yen (618 million U.S. dollars).
Tokyo Shoko Research reported that out of the 10 industries surveyed in their monthly report, seven sectors saw corporate failures decrease, however the transportation service and real estate industries logged more bankruptcies than a year earlier.
As for agricultural, forestry, fisheries and mining industries, the figures in October remained unchanged.
The research firm cited the yen's persistent strength against the U.S. dollar as a major cause of firms' failures, particularly those reliant on earnings made abroad and stated that between January and October the number of business failures due to the yen 's strength had tripled from 19 a year earlier to 58.
Compared with the previous month, the number of bankruptcies was up 3.08 percent in October, with the liabilities dropping 63.3 percent.
http://news.xinhuanet.com/english2010/business/2010-11/09/c_13598188.htm
According to the research firm, the number of corporate failures declined 9.91 percent from a year earlier to 1,136 registered cases, however liabilities rose for the second time in nine months on year.
The debt involved surged 79.11 percent in the recording period to 520.05 billion yen (6.41 billion U.S. dollars), the firm said, as three major bankruptcies involved debt of more than 50 billion yen (618 million U.S. dollars).
Tokyo Shoko Research reported that out of the 10 industries surveyed in their monthly report, seven sectors saw corporate failures decrease, however the transportation service and real estate industries logged more bankruptcies than a year earlier.
As for agricultural, forestry, fisheries and mining industries, the figures in October remained unchanged.
The research firm cited the yen's persistent strength against the U.S. dollar as a major cause of firms' failures, particularly those reliant on earnings made abroad and stated that between January and October the number of business failures due to the yen 's strength had tripled from 19 a year earlier to 58.
Compared with the previous month, the number of bankruptcies was up 3.08 percent in October, with the liabilities dropping 63.3 percent.
http://news.xinhuanet.com/english2010/business/2010-11/09/c_13598188.htm
October - bank lending falls 1.9%
Outstanding loans by Japanese banks dropped 1.9 percent from a year earlier in October, the Bank of Japan (BOJ) said in report on Tuesday.
According to the BOJ data, outstanding loans held by Japan's four main categories of banks, including 'shinkin' or credit unions, stood at a lesser 456.98 trillion yen (5.6 trillion U.S. dollars) in the recording period, in a sign the central bank's highly accommodating monetary policy is not encouraging corporations and consumers to spend and borrow.
Although concerns over a strong yen, which hit 15-year highs against the U.S. dollar recently, are beginning to wane, major economies' moves towards quantitative easing has unsettled some markets, although economists are yet to describe the situation as a 'currency war.'
Such currency issues continue to weigh on businesses and their economic outlook and hence demand for bank loans continues to slump.
"I think the figures will continue to fall slightly as the domestic economy seems to have peaked," said Seiji Shiraishi, an analyst from HSBC Securities Japan.
"After the financial crisis, bank lending and money supply rose for a while, but this was not real demand for funds. Big companies were borrowing large sums of money to ensure liquidity in a time of unease. There is no change in the weakness of actual demand for funds."
"The Bank of Japan can only provide funds to the banks. Whether the banks can actually lend that money depends on demand. There are really no effective measures left for the BOJ. But they can not accept deflation, so while deflation continues they must continue to act in coordination with the government. I think that action will basically consist of buying one-to two-year JGBs," Shiraishi said.
Excluding factors such as loan write-offs, the loan balance fell 1.7 percent from the same month a year earlier.
http://news.xinhuanet.com/english2010/business/2010-11/09/c_13597803.htm
According to the BOJ data, outstanding loans held by Japan's four main categories of banks, including 'shinkin' or credit unions, stood at a lesser 456.98 trillion yen (5.6 trillion U.S. dollars) in the recording period, in a sign the central bank's highly accommodating monetary policy is not encouraging corporations and consumers to spend and borrow.
Although concerns over a strong yen, which hit 15-year highs against the U.S. dollar recently, are beginning to wane, major economies' moves towards quantitative easing has unsettled some markets, although economists are yet to describe the situation as a 'currency war.'
Such currency issues continue to weigh on businesses and their economic outlook and hence demand for bank loans continues to slump.
"I think the figures will continue to fall slightly as the domestic economy seems to have peaked," said Seiji Shiraishi, an analyst from HSBC Securities Japan.
"After the financial crisis, bank lending and money supply rose for a while, but this was not real demand for funds. Big companies were borrowing large sums of money to ensure liquidity in a time of unease. There is no change in the weakness of actual demand for funds."
"The Bank of Japan can only provide funds to the banks. Whether the banks can actually lend that money depends on demand. There are really no effective measures left for the BOJ. But they can not accept deflation, so while deflation continues they must continue to act in coordination with the government. I think that action will basically consist of buying one-to two-year JGBs," Shiraishi said.
Excluding factors such as loan write-offs, the loan balance fell 1.7 percent from the same month a year earlier.
http://news.xinhuanet.com/english2010/business/2010-11/09/c_13597803.htm
October - service sector sentiment falls for 3rd straight month
Sentiment in Japan's service sector fell for the third consecutive month in October as government subsidies put in place to stimulate business confidence expired the previous month, a Cabinet Office survey showed Tuesday.
The monthly Economy Watchers survey, in which a score of over 50 means people view economic conditions in a positive light, retreated from a previous reading of 41.2 in September to 40.2 in the recording period and marked the lowest reading since 38.8 marked in January this year.
According to the Cabinet Office, the end of the governments subsidy program for the purchase of eco-friendly cars and products in September, coupled with slump in demand following the tax hike on cigarettes, collectively, had a negative effect on household spending, business activity and employment conditions.
The government maintained its basic assessment of the economy from last month, stating that,"has been moderately picking up, but weak movements have been seen these days."
The government's assessment in August maintained that "while the economic climate remains tough, movements for picking up are slowing."
The overall forward-looking index, which gauges business conditions two to three months ahead, retreated to 41.1 in October from 41.4 in September, marking the first drop in two months, as the yen's persistent strength versus the U.S. dollar continues to dampen overall business sentiment and growth in the employment sector, the survey revealed.
Notably, the forward-looking index stayed below the key 50 level for the 41st straight month in October.
The Economy Watchers Survey asks business-cycle sensitive workers their thoughts on existing and future economic conditions, to provide the government with a detailed picture of economic trends in Japan.
Segments of the economy surveyed include sectors such as retail, restaurant service, and taxi driving and the monthly report serves as both a consumer confidence indicator and a leading indicator for the rest of the economy.
The headline index stood below the key 50 level -- the dividing line between net positive and net negative responses to the survey -- for the 43rd straight month in October.
http://news.xinhuanet.com/english2010/business/2010-11/09/c_13598405.htm
The monthly Economy Watchers survey, in which a score of over 50 means people view economic conditions in a positive light, retreated from a previous reading of 41.2 in September to 40.2 in the recording period and marked the lowest reading since 38.8 marked in January this year.
According to the Cabinet Office, the end of the governments subsidy program for the purchase of eco-friendly cars and products in September, coupled with slump in demand following the tax hike on cigarettes, collectively, had a negative effect on household spending, business activity and employment conditions.
The government maintained its basic assessment of the economy from last month, stating that,"has been moderately picking up, but weak movements have been seen these days."
The government's assessment in August maintained that "while the economic climate remains tough, movements for picking up are slowing."
The overall forward-looking index, which gauges business conditions two to three months ahead, retreated to 41.1 in October from 41.4 in September, marking the first drop in two months, as the yen's persistent strength versus the U.S. dollar continues to dampen overall business sentiment and growth in the employment sector, the survey revealed.
Notably, the forward-looking index stayed below the key 50 level for the 41st straight month in October.
The Economy Watchers Survey asks business-cycle sensitive workers their thoughts on existing and future economic conditions, to provide the government with a detailed picture of economic trends in Japan.
Segments of the economy surveyed include sectors such as retail, restaurant service, and taxi driving and the monthly report serves as both a consumer confidence indicator and a leading indicator for the rest of the economy.
The headline index stood below the key 50 level -- the dividing line between net positive and net negative responses to the survey -- for the 43rd straight month in October.
http://news.xinhuanet.com/english2010/business/2010-11/09/c_13598405.htm
EXporters continue to shift production offshore due to strong Yen
Surging quarterly profits for Japan's top companies belie the threat posed by a strong yen, as the unit's rise prompts firms to shift production out of the country to stay competitive, say analysts.
With the currency closing in on its post-World-War-II high of 79.75 against the dollar, Japan's biggest companies are preparing to adapt to life with a currency that has defied Tokyo's efforts to weaken it.
For many firms, the yen's 14 percent rise against the dollar and near 16 percent rise versus the euro this year has mitigated a post-crisis demand revival and undermined the benefits of earlier cost cuts and restructuring.
With more companies considering moving production overseas to stay competitive against rivals benefiting from weaker currencies in their home countries, Japan's fragile recovery could be further tested, analysts say.
"Japanese companies are losing their edge. They are aware that they need to take the next step," said Hideyuki Araki, economist at Resona Research Institute.
"This will mean shifting production overseas or a switch to imports of foreign-made parts from domestically produced ones," he said.
Such a scenario would mean more jobs being taken out of Japan, threatening an already weak economy dependent on exports that account for two-thirds of its growth, as government efforts to generate domestic demand falter.
An August government survey suggested that at least 40 percent of companies in Japan were considering moving production overseas if the yen stayed high.
Despite last month intervening in the foreign exchange market for the first time in six years to sell the yen and adopting near zero interest rates, Tokyo has been unable halt the Japanese currency's climb.
The yen's ascent threatens Japan's export-led growth by making companies' goods more expensive and eroding their earnings when repatriated.
While many firms are coping better than expected, recent earnings point to darkened horizons.
Top exporters Sony and Panasonic both reported surging profits in the second quarter, with Sony raising its full year profit forecast.
But the maker of PlayStation consoles and Bravia television sets cut its full year sales forecast to 7.4 trillion yen (92 billion dollars) from 7.6 trillion yen and warned of "a difficult business environment for the remainder of the fiscal year."
Carmakers Honda and Mazda also reported strong profits in the second quarter but the strong yen has forced them to re-set their dollar rates at more unfavorable levels. Honda downgraded its sales expectations for the year.
"Let me repeat this. The strong yen is painful," Takashi Yamanouchi, Mazda chief executive, said at a press conference this week.
For every one-yen rise in the currency's value against the dollar, Japan's exporters can lose tens of billions of yen earned overseas when repatriated.
Toyota will start producing its Prius hybrid model in Thailand from next month, in its latest move to expand production overseas as the strong yen continues to bite into profits.
Rival Nissan this week spoke of "a sense of crisis" in the industry as it looks to reduce exports from Japan while increasing imports as a short-term measure to cope with the yen, aiming to shift more production abroad.
"Companies are trying to raise their target yen-dollar exchange rates for the second half," said Mitsushige Akino, analyst at Ichiyoshi Investment Management Co. Ltd.
"But the present yen rate is already much higher (against the dollar) than their forecasts."
Japanese entertainment giant Nintendo saw a net loss of 25 million dollars for the six months to September due to the strong yen, with the "Super Mario Bros" makers' sales outside Japan comprising nearly 90 percent of its total.
Sharp meanwhile slashed its full-year profit forecast by 40 percent.
With Tokyo hamstrung by global tensions over currencies, particularly with the G20's recent warning against "competitive devaluation" possibly deterring the government from fresh yen selling, companies must now adapt to survive.
And while companies complain about a yen at 15-year highs on nominal terms, analysts say it is still below its 1995 peak when adjusted for price changes and compared to a basket of currencies used by Japan's top trade partners.
One company setting the pace is technology group Toshiba, which last week said that planning for a rate of 70 yen to the dollar had led it to alter production and procurement policies.
"We will stop money-losing operations and expand profitable ones," President Norio Sasaki told the Nikkei business daily. "Changing the business structure is of primary importance."
http://www.channelnewsasia.com/stories/afp_asiapacific_business/view/1090486/1/.html
With the currency closing in on its post-World-War-II high of 79.75 against the dollar, Japan's biggest companies are preparing to adapt to life with a currency that has defied Tokyo's efforts to weaken it.
For many firms, the yen's 14 percent rise against the dollar and near 16 percent rise versus the euro this year has mitigated a post-crisis demand revival and undermined the benefits of earlier cost cuts and restructuring.
With more companies considering moving production overseas to stay competitive against rivals benefiting from weaker currencies in their home countries, Japan's fragile recovery could be further tested, analysts say.
"Japanese companies are losing their edge. They are aware that they need to take the next step," said Hideyuki Araki, economist at Resona Research Institute.
"This will mean shifting production overseas or a switch to imports of foreign-made parts from domestically produced ones," he said.
Such a scenario would mean more jobs being taken out of Japan, threatening an already weak economy dependent on exports that account for two-thirds of its growth, as government efforts to generate domestic demand falter.
An August government survey suggested that at least 40 percent of companies in Japan were considering moving production overseas if the yen stayed high.
Despite last month intervening in the foreign exchange market for the first time in six years to sell the yen and adopting near zero interest rates, Tokyo has been unable halt the Japanese currency's climb.
The yen's ascent threatens Japan's export-led growth by making companies' goods more expensive and eroding their earnings when repatriated.
While many firms are coping better than expected, recent earnings point to darkened horizons.
Top exporters Sony and Panasonic both reported surging profits in the second quarter, with Sony raising its full year profit forecast.
But the maker of PlayStation consoles and Bravia television sets cut its full year sales forecast to 7.4 trillion yen (92 billion dollars) from 7.6 trillion yen and warned of "a difficult business environment for the remainder of the fiscal year."
Carmakers Honda and Mazda also reported strong profits in the second quarter but the strong yen has forced them to re-set their dollar rates at more unfavorable levels. Honda downgraded its sales expectations for the year.
"Let me repeat this. The strong yen is painful," Takashi Yamanouchi, Mazda chief executive, said at a press conference this week.
For every one-yen rise in the currency's value against the dollar, Japan's exporters can lose tens of billions of yen earned overseas when repatriated.
Toyota will start producing its Prius hybrid model in Thailand from next month, in its latest move to expand production overseas as the strong yen continues to bite into profits.
Rival Nissan this week spoke of "a sense of crisis" in the industry as it looks to reduce exports from Japan while increasing imports as a short-term measure to cope with the yen, aiming to shift more production abroad.
"Companies are trying to raise their target yen-dollar exchange rates for the second half," said Mitsushige Akino, analyst at Ichiyoshi Investment Management Co. Ltd.
"But the present yen rate is already much higher (against the dollar) than their forecasts."
Japanese entertainment giant Nintendo saw a net loss of 25 million dollars for the six months to September due to the strong yen, with the "Super Mario Bros" makers' sales outside Japan comprising nearly 90 percent of its total.
Sharp meanwhile slashed its full-year profit forecast by 40 percent.
With Tokyo hamstrung by global tensions over currencies, particularly with the G20's recent warning against "competitive devaluation" possibly deterring the government from fresh yen selling, companies must now adapt to survive.
And while companies complain about a yen at 15-year highs on nominal terms, analysts say it is still below its 1995 peak when adjusted for price changes and compared to a basket of currencies used by Japan's top trade partners.
One company setting the pace is technology group Toshiba, which last week said that planning for a rate of 70 yen to the dollar had led it to alter production and procurement policies.
"We will stop money-losing operations and expand profitable ones," President Norio Sasaki told the Nikkei business daily. "Changing the business structure is of primary importance."
http://www.channelnewsasia.com/stories/afp_asiapacific_business/view/1090486/1/.html
September - Output down, deflation to continue to 2011
TOKYO (AFP) – Japan's export-led recovery showed further signs of losing steam Friday, with industrial production falling for the fourth month running in September as consumer prices slid anew.
Output from Japanese factories is feeling the effects from slowing export growth, as the effects of stimulus measures wane and nations embrace tighter fiscal policies.
Industrial production slid 1.9 percent in September from the previous month, data showed Friday, in the fourth consecutive monthly fall and missing expectations of a 0.6 percent drop.
Production of automobiles, electronics and other manufacturing were hardest hit, the Trade Ministry said, giving a bleak forecast for a 3.6 percent fall in October. "A slump in the auto industry is the outstanding factor for the decline in production, said Hideki Matsumura, senior economist at the Japan Research Institute. The ministry forecast production to return to growth in November with a 1.7 percent rise. However, many analysts argue that such a scenario is overly optimistic.
"The (industrial output) recovery is now heavily relying on foreign demand, but that is also slowing down," said Matsumura, adding that he did not see a recovery emerging until the second half of next year.
The data underlined concerns for Japan after the government last week downgraded its view of the economy for the first time since February 2009.
The Japanese currency has been trading at 15-year highs against the dollar, hammering the competitiveness of the crucial export sector, despite a yen-selling intervention by authorities last month.
A strong yen not only makes Japan's growth-driving exports more expensive but also erodes companies' overseas profits when repatriated.
It also makes imports cheaper, prolonging a demand-sapping cycle of deflation. Japanese consumers have been holding off on purchases in the hope of further price drops, thereby clouding future corporate investment.
Separate data Friday illustrated Japan's entrenched deflation, showing that consumer prices fell 1.1 percent in September from a year earlier, marking the 19th straight month of decline.
The fall was slightly greater than market expectations of a 1.0 percent decline, according to a joint Dow Jones Newswires and Nikkei poll of economists.
In its semi-annual economic report Thursday, the Bank of Japan said consumer prices would continue falling until fiscal 2011 and pledged to hold its key rate between zero and 0.1 percent until deflation was beaten.
The bank's decision to hold rates followed its surprise move this month to adopt a near zero-rate policy and announce a five trillion yen (61 billion dollar) asset purchase scheme to lower borrowing costs and tackle deflation.
It also lowered its forecast for the nation's growth and warned that a strong yen was slowing the fragile recovery from recession.
Japan's gross domestic product grew by an annualised 1.5 percent in the April-June quarter, well off the previous quarter's growth of 5.0 percent.
In other data Friday, Japan's unemployment rate fell 0.1 percentage points from August to 5.0 percent in September.
http://news.yahoo.com/s/afp/20101029/bs_afp/japaneconomy_20101029034602
Output from Japanese factories is feeling the effects from slowing export growth, as the effects of stimulus measures wane and nations embrace tighter fiscal policies.
Industrial production slid 1.9 percent in September from the previous month, data showed Friday, in the fourth consecutive monthly fall and missing expectations of a 0.6 percent drop.
Production of automobiles, electronics and other manufacturing were hardest hit, the Trade Ministry said, giving a bleak forecast for a 3.6 percent fall in October. "A slump in the auto industry is the outstanding factor for the decline in production, said Hideki Matsumura, senior economist at the Japan Research Institute. The ministry forecast production to return to growth in November with a 1.7 percent rise. However, many analysts argue that such a scenario is overly optimistic.
"The (industrial output) recovery is now heavily relying on foreign demand, but that is also slowing down," said Matsumura, adding that he did not see a recovery emerging until the second half of next year.
The data underlined concerns for Japan after the government last week downgraded its view of the economy for the first time since February 2009.
The Japanese currency has been trading at 15-year highs against the dollar, hammering the competitiveness of the crucial export sector, despite a yen-selling intervention by authorities last month.
A strong yen not only makes Japan's growth-driving exports more expensive but also erodes companies' overseas profits when repatriated.
It also makes imports cheaper, prolonging a demand-sapping cycle of deflation. Japanese consumers have been holding off on purchases in the hope of further price drops, thereby clouding future corporate investment.
Separate data Friday illustrated Japan's entrenched deflation, showing that consumer prices fell 1.1 percent in September from a year earlier, marking the 19th straight month of decline.
The fall was slightly greater than market expectations of a 1.0 percent decline, according to a joint Dow Jones Newswires and Nikkei poll of economists.
In its semi-annual economic report Thursday, the Bank of Japan said consumer prices would continue falling until fiscal 2011 and pledged to hold its key rate between zero and 0.1 percent until deflation was beaten.
The bank's decision to hold rates followed its surprise move this month to adopt a near zero-rate policy and announce a five trillion yen (61 billion dollar) asset purchase scheme to lower borrowing costs and tackle deflation.
It also lowered its forecast for the nation's growth and warned that a strong yen was slowing the fragile recovery from recession.
Japan's gross domestic product grew by an annualised 1.5 percent in the April-June quarter, well off the previous quarter's growth of 5.0 percent.
In other data Friday, Japan's unemployment rate fell 0.1 percentage points from August to 5.0 percent in September.
http://news.yahoo.com/s/afp/20101029/bs_afp/japaneconomy_20101029034602
September - industrial output down 1.9%
Japan's industrial production in September dropped a seasonally adjusted 1.9 percent from the previous month for the fourth straight month of decline, the government said Friday.
The headline reading compared with an average market forecast of a 0.6 percent fall in a Kyodo News survey.
The index of output at factories and mines stood at 92.5 against the base of 100 for 2005, the Ministry of Economy Trade and Industry said in a preliminary report.
The index of industrial shipments fell 0.7 percent to 95.0 and that of industrial inventories was up 0.2 percent to 97.7.
http://www.breitbart.com/article.php?id=D9J50R6O1&show_article=1
The headline reading compared with an average market forecast of a 0.6 percent fall in a Kyodo News survey.
The index of output at factories and mines stood at 92.5 against the base of 100 for 2005, the Ministry of Economy Trade and Industry said in a preliminary report.
The index of industrial shipments fell 0.7 percent to 95.0 and that of industrial inventories was up 0.2 percent to 97.7.
http://www.breitbart.com/article.php?id=D9J50R6O1&show_article=1
2010/2011 GDP Growth Rates Downgraded by BOJ
The Bank of Japan on Thursday downgraded its forecasts of the country's economic growth to 2.1 percent for fiscal 2010 and 1.8 percent for fiscal 2011.
In July, the central bank predicted year-on-year real gross domestic product growth at 2.6 percent and 1.9 percent, respectively. In its biannual report released Thursday, the BOJ made a new projection of 2.1 percent real GDP expansion for fiscal 2012.
The economy is "still showing signs of a moderate recovery, but the pace has slowed due to recent deceleration in the growth of exports and production," the report said. The pace of recovery "is likely to slow due to factors such as the slowdown in overseas economies and the ending of the boost from policy measures...as well as the recent appreciation of the yen."
On prices, the central bank said the nation's core consumer price index, which excludes fresh food prices, could fall 0.4 percent in fiscal 2010 and rise 0.1 percent the following year, unchanged from earlier forecasts.
http://www.breitbart.com/article.php?id=D9J4HHRG0&show_article=1
In July, the central bank predicted year-on-year real gross domestic product growth at 2.6 percent and 1.9 percent, respectively. In its biannual report released Thursday, the BOJ made a new projection of 2.1 percent real GDP expansion for fiscal 2012.
The economy is "still showing signs of a moderate recovery, but the pace has slowed due to recent deceleration in the growth of exports and production," the report said. The pace of recovery "is likely to slow due to factors such as the slowdown in overseas economies and the ending of the boost from policy measures...as well as the recent appreciation of the yen."
On prices, the central bank said the nation's core consumer price index, which excludes fresh food prices, could fall 0.4 percent in fiscal 2010 and rise 0.1 percent the following year, unchanged from earlier forecasts.
http://www.breitbart.com/article.php?id=D9J4HHRG0&show_article=1
Death of Anti-Yakuza Crusader
HAT is it that draws some people towards their own destruction, like moths to a flame? Sometimes it is the most dedicated and generous people who end this way: foreign-aid workers, social activists. Even journalists, sometimes. And once in a while it is a lawyer, who chose a less-travelled path.
One such attorney met a sad end this year. Toshiro Igari, a former prosecutor who worked on cases against the yakuza, Japan's mafia, was found dead in August. His death was ruled a suicide. But Jake Adelstein, an American journalist who specialises on yakuza activities, suspects murder.
In a moving tribute that he recently published, Mr Adelstein describes the respect that Mr Igari earned in his crusade, and the anger it provoked among crime bosses. "In life, we encounter only the injustices we were meant to correct," Mr Igari had said. He was both a lawyer and a mentor to Mr Adelstein, who himself has been threatened by the yakuza for his work.
As in few other countries, the business of Japan's criminal gangs is woven densely into the life of the country, its economy, government and society. Some elements within the yakuza operate openly, lending the police an illusion of control. But there is a deeper and uglier dimension lying beneath the surface, profiting by human-trafficking, extortion and the trade in hard drugs. It can be exceedingly violent.
n a moving tribute that he recently published, Mr Adelstein describes the respect that Mr Igari earned in his crusade, and the anger it provoked among crime bosses. "In life, we encounter only the injustices we were meant to correct," Mr Igari had said. He was both a lawyer and a mentor to Mr Adelstein, who himself has been threatened by the yakuza for his work.
As in few other countries, the business of Japan's criminal gangs is woven densely into the life of the country, its economy, government and society. Some elements within the yakuza operate openly, lending the police an illusion of control. But there is a deeper and uglier dimension lying beneath the surface, profiting by human-trafficking, extortion and the trade in hard drugs. It can be exceedingly violent.
"Sometimes, the only way to honour the dead is to fight for what they died for. It’s the only way I know how to mourn," writes Mr Adelstein. We hope that this journalist, whom Mr Igari once called "trustworthy, crazy, and courageous", works carefully in the dark, and avoids the flame.
http://www.economist.com/blogs/asiaview/2010/11/japans_yakuza
Extract from Igari's final book -
http://www.scribd.com/doc/46533478/Miro-Mijatovic-v-Pride-FC-Nobuyuki-Sakakibara-Yamaguchi-Gumi
One such attorney met a sad end this year. Toshiro Igari, a former prosecutor who worked on cases against the yakuza, Japan's mafia, was found dead in August. His death was ruled a suicide. But Jake Adelstein, an American journalist who specialises on yakuza activities, suspects murder.
In a moving tribute that he recently published, Mr Adelstein describes the respect that Mr Igari earned in his crusade, and the anger it provoked among crime bosses. "In life, we encounter only the injustices we were meant to correct," Mr Igari had said. He was both a lawyer and a mentor to Mr Adelstein, who himself has been threatened by the yakuza for his work.
As in few other countries, the business of Japan's criminal gangs is woven densely into the life of the country, its economy, government and society. Some elements within the yakuza operate openly, lending the police an illusion of control. But there is a deeper and uglier dimension lying beneath the surface, profiting by human-trafficking, extortion and the trade in hard drugs. It can be exceedingly violent.
n a moving tribute that he recently published, Mr Adelstein describes the respect that Mr Igari earned in his crusade, and the anger it provoked among crime bosses. "In life, we encounter only the injustices we were meant to correct," Mr Igari had said. He was both a lawyer and a mentor to Mr Adelstein, who himself has been threatened by the yakuza for his work.
As in few other countries, the business of Japan's criminal gangs is woven densely into the life of the country, its economy, government and society. Some elements within the yakuza operate openly, lending the police an illusion of control. But there is a deeper and uglier dimension lying beneath the surface, profiting by human-trafficking, extortion and the trade in hard drugs. It can be exceedingly violent.
"Sometimes, the only way to honour the dead is to fight for what they died for. It’s the only way I know how to mourn," writes Mr Adelstein. We hope that this journalist, whom Mr Igari once called "trustworthy, crazy, and courageous", works carefully in the dark, and avoids the flame.
http://www.economist.com/blogs/asiaview/2010/11/japans_yakuza
Extract from Igari's final book -
http://www.scribd.com/doc/46533478/Miro-Mijatovic-v-Pride-FC-Nobuyuki-Sakakibara-Yamaguchi-Gumi
Source of the Anti-Yakuza Clause
Igari Toshiro, was my lawyer, my mentor, and my friend. In the sixteen years I’ve been covering organized crime in Japan, I’ve never met anyone more courageous or inspiring–or anyone who actually looked as much like a pit-bull in human form. Igari-san was a legend in the law enforcement world, the author of several books on dealing with organized crime and preventing their incursion into the business world. He was the father of the “organized crime exclusion clause”, a simple but brilliant idea that is now embedded into most contracts in Japan and requires the signer to pledge that he is not a member of an organized crime group. It’s already been used to arrest one high-ranking yakuza boss, and is the basis for the legislation being adapted prefecture-by-prefecture that will make it a crime to pay off gangs or provide them with capital. He was rather disliked in the underworld.
The last time I spoke face-to-face with Igari was on August 8 this year. It was a Sunday; he had come back from Brazil and went directly from Narita Airport to his office to meet me. I asked him if he would cooperate in a documentary I am working on as consultant and a reporter for National Geographic Television on the yakuza.
I also had a problem.
It’s rather simple: In 2008, I angered an yakuza boss named Goto Tadamasa, who was head of a 1,000-member strong faction of the country’s largest gang, the Yamaguchi-gumi. In an article published in the Washington Post, I wrote how he had sold out his own group to the FBI in order to get a visa for the United States so he could receive a liver transplant at UCLA. The article along with a subsequent book I helped write for Takarajima Publishing resulted in him being kicked out of the Yamaguchi-gumi on October 14, 2008. Takarijma, without bothering to warn me, published his biography this May. It’s a great book–except for a bit of subtle language that amounts to a yakuza-style fatwa on my life.
I asked Igari to help me deal with the fallout from the book. After much discussion, he and his two colleagues came up with a plan. His parting words were: “It’ll be a long battle. It’ll take money and courage, and you’ll have to come up with those on your own. But we’ll fight.”
On August 28th, his body was found in his vacation home in Manila, wrists slashed. Time of death unknown. It’s been ruled a suicide. Personally, I believe he was killed. I probably will never be able to prove it.
Igari had been working on his final book, Gekitotsu (Collision). It’s an amazing work that pulls no punches, using the real names of the yakuza and the politicians and individuals connected to them. He wrote, “Wherever it was possible, I made it a point to use the real names here. I’m aware that poses a huge risk for myself. I took that risk because I wanted to honestly write about my battles with the injustices hidden in our society and the results of those struggles. It’s proper to write the name of those you’ve fought.”
See extract from the book at - http://www.scribd.com/doc/46533478/Miro-Mijatovic-v-Pride-FC-Nobuyuki-Sakakibara-Yamaguchi-Gumi
Igari has been probably more influential than any individual in the anti-organized crime movement in Japan. As discussed above, he was the lawyer who first came up with the idea of the “organized crime member exclusionary clause” (暴力団排除条項). It was inspired by problems the Westin Hotel had when Goto-gumi and his posse stayed there and refused to leave, pointing out, “there’s nothing that says yakuza can’t stay at a hotel.” Igari realized that legally that could be accomplished since the Japanese government does designate organized crime groups and members officially. All it would take was adding a clause to any contract in which the individual signing has to clarify whether or not they are a yakuza, and if they are, the establishment reserves the right to unilaterally nullify the contract. It’s now part of almost any standard contract in Japan, even Sports Clubs. It has been used effectively by the police. A yakuza boss opening a bank account this year was later arrested for fraud because he lied about his yakuza affiliation on the contractual agreement with the bank. The organized crime exclusionary ordinances （暴力団排除条例）which are sweeping the country, prefecture by prefecture, were also his brain child. This year I met up with a high-ranking member of the National Police Agency, who had a copy of Igari’s book on his desk, and said, “In the war on organized crime, Igari-sensei was the equivalent of a five star general. He will be sorely missed.” The current head of the National Centre For The Elimination of Boryokudan was also very vocally supportive of Igari, adding, “the organized crime exclusionary ordinances would have never made into legislation if it hadn’t been for the man.” (There are now more than ten local governments in Japan with these ordinances on the book, which differ from prefecture to prefecture, but generally ban pay-offs to the yakuza or providing them with capital. Violators can be fined or jailed. Corporations that do business with yakuza will be publicly named. The ordinances have the potential of being a huge body blow to all organized crime groups, depriving them of protection money and capital. By punishing the individual or firm that capitulates to organized crime, it may have the same efficacy the change in the Commerce Laws had in eliminating racketeers-総会屋.)
Before leaving for Manila on vacation, he told his editor, “I’m nosing around in dangerous places. I don’t know what’s going to happen to me. Let me sign the publishing contract now.”
In September, my best source in the Yamaguchi-gumi told me point blank: “Igari-san was murdered by the yakuza. It wasn’t Goto’s direct order. He was exposing yakuza ties to Sumo and professional baseball. It angered people. You should be careful too. The yakuza don’t warn people anymore, they just act.”
It’s a dangerous thing to expose the worst of the yakuza for what they are. Itami Juzo, directed the first realistic film about the yakuza, Minbo, in 1992. Goto-gumi members attacked him for doing it, slashing his face open. He would later tell the New York Times in an interview, “They cut very slowly, they took their time. They could have killed me if they wanted to.” Eventually they did. On December 20, 1997, after a weekly magazine wrote about his extra-marital affair, he allegedly killed himself. A former member of the Goto-gumi told me in 2008, “We set it up to stage his murder as a suicide. We dragged him up to the rooftop and put a gun in his face. We gave him a choice: jump and you might live or stay and we’ll blow your face off. He jumped. He didn’t live.”
In 2005, yakuza fan magazine writer Suzuki T wrote an article that poked fun at a yakuza group. They broke into his office and beat him to a pulp. In 2006, Yamaguchi-gumi thugs stabbed the son of non-fiction writer Mizoguchi Atsushi, because their boss was unhappy with one of his articles. Two members were arrested. Their boss was not. On April 17, 2007, the mayor of Nagasaki was gunned down after refusing local yakuza involvement in public works projects.
I try to be very careful when writing about the yakuza, and mindful of my sources, some of whom are members. I hate to admit it, but there are still those in the organizations that do follow a code of honor.
I understand the unwritten rules in Japan. Yakuza fan magazines are sold here in the open: three weeklies, three monthlies. They do interviews with current yakuza bosses, but the questions are limited and there is an implicit understanding that even after the interview is done, the boss reserves the right to edit or scrap it. As one veteran detective explained to me, “if you violate that rule, there will be harassment and often retaliation.”
I probably didn’t communicate that fact well enough to the National Geographic production crew that came to Japan. Through the sources I introduced they interviewed three current yakuza members, but didn’t alert me that they ran into trouble. The best I could do was warn the local National Geographic offices about it and talk to the head office in Washington DC. They were very responsive and hopefully nothing will come of it. But if it does, it will be my sources and the local Japanese staff who take the hit. I’m not an easy target because I’m under police protection. The staff are not.
The yakuza don’t have much pull in the US. They harass whoever will give them leverage. It’s why I don’t move my family back to Japan and why leaving Japan is not an option for me. I have to take care of my sources. It’s my responsibility.
I went to Igari’s offices in September to pay my respects; there was no funeral. There was a little shrine for him in his office, but everything was pretty much as he’d left it. On his desk, was an article about the Sumo Association and match rigging, heavily noted. His secretary told me, “Igari-san was really happy to take your case. He laughingly bragged to everyone, ‘I’m representing a reporter for National Geographic–that makes me an international lawyer!’ ” I could visualize him saying that with his deep, rolling laugh.
Grief is a funny thing. Seeing his empty desk, for the first time I got a little misty-eyed. Not too much, because there were people around, you know. It wasn’t very manly, but I didn’t cry.
You may wonder why I keep doing a job that is increasingly dangerous. I wonder myself. Partly, it’s because Japan is my home. I’ve lived here for more than twenty years. I’d like it to be a better place. In the old days, we’d call that civic duty.
I once asked Igari-san over wine, “Have you ever been threatened? Do you ever fear for your life?” He didn’t answer my question directly.
“I became a prosecutor because I wanted to see justice done in this world. When I quit and became a lawyer, I didn’t go to work for the yakuza like many ex-prosecutors do. I continued to fight them. Not all yakuza are bad guys, but 95 percent of them are leeches on society: they exploit the weak, they prey on the innocent, they cause great suffering. If you capitulate, if you run away, you’ll be chased for the rest of your life. And if you’re being chased, eventually what is chasing you will catch up. Step back and you’re dead already. You can only stand your ground and pursue. Because that’s not only the right thing to do, that’s the only thing to do.”
And so I stay. Igari-san wasn’t an investigative journalist and he wasn’t a saint. But he fought for justice and for truth, and as an investigative journalist, I’ve always believed that’s what our job entailed. Forgive me if that sounds naive. I believe that, if no one stands up to the anti-social forces in the world, then we all lose.
When I called Igari’s editor, he knew who I was. He told me, “Igari said you’re the most trustworthy, crazy, and courageous journalist he knew.” It’s the first time I’ve ever been praised by the dead, and more than I deserve. But it made me feel an obligation to live up to those words. Sometimes, the only way to honor the dead is to fight for what they died for. It’s the only way I know how to mourn.
http://www.japansubculture.com/2010/11/the-high-price-of-writing-about-the-yakuza-and-those-who-pay/
The last time I spoke face-to-face with Igari was on August 8 this year. It was a Sunday; he had come back from Brazil and went directly from Narita Airport to his office to meet me. I asked him if he would cooperate in a documentary I am working on as consultant and a reporter for National Geographic Television on the yakuza.
I also had a problem.
It’s rather simple: In 2008, I angered an yakuza boss named Goto Tadamasa, who was head of a 1,000-member strong faction of the country’s largest gang, the Yamaguchi-gumi. In an article published in the Washington Post, I wrote how he had sold out his own group to the FBI in order to get a visa for the United States so he could receive a liver transplant at UCLA. The article along with a subsequent book I helped write for Takarajima Publishing resulted in him being kicked out of the Yamaguchi-gumi on October 14, 2008. Takarijma, without bothering to warn me, published his biography this May. It’s a great book–except for a bit of subtle language that amounts to a yakuza-style fatwa on my life.
I asked Igari to help me deal with the fallout from the book. After much discussion, he and his two colleagues came up with a plan. His parting words were: “It’ll be a long battle. It’ll take money and courage, and you’ll have to come up with those on your own. But we’ll fight.”
On August 28th, his body was found in his vacation home in Manila, wrists slashed. Time of death unknown. It’s been ruled a suicide. Personally, I believe he was killed. I probably will never be able to prove it.
Igari had been working on his final book, Gekitotsu (Collision). It’s an amazing work that pulls no punches, using the real names of the yakuza and the politicians and individuals connected to them. He wrote, “Wherever it was possible, I made it a point to use the real names here. I’m aware that poses a huge risk for myself. I took that risk because I wanted to honestly write about my battles with the injustices hidden in our society and the results of those struggles. It’s proper to write the name of those you’ve fought.”
See extract from the book at - http://www.scribd.com/doc/46533478/Miro-Mijatovic-v-Pride-FC-Nobuyuki-Sakakibara-Yamaguchi-Gumi
Igari has been probably more influential than any individual in the anti-organized crime movement in Japan. As discussed above, he was the lawyer who first came up with the idea of the “organized crime member exclusionary clause” (暴力団排除条項). It was inspired by problems the Westin Hotel had when Goto-gumi and his posse stayed there and refused to leave, pointing out, “there’s nothing that says yakuza can’t stay at a hotel.” Igari realized that legally that could be accomplished since the Japanese government does designate organized crime groups and members officially. All it would take was adding a clause to any contract in which the individual signing has to clarify whether or not they are a yakuza, and if they are, the establishment reserves the right to unilaterally nullify the contract. It’s now part of almost any standard contract in Japan, even Sports Clubs. It has been used effectively by the police. A yakuza boss opening a bank account this year was later arrested for fraud because he lied about his yakuza affiliation on the contractual agreement with the bank. The organized crime exclusionary ordinances （暴力団排除条例）which are sweeping the country, prefecture by prefecture, were also his brain child. This year I met up with a high-ranking member of the National Police Agency, who had a copy of Igari’s book on his desk, and said, “In the war on organized crime, Igari-sensei was the equivalent of a five star general. He will be sorely missed.” The current head of the National Centre For The Elimination of Boryokudan was also very vocally supportive of Igari, adding, “the organized crime exclusionary ordinances would have never made into legislation if it hadn’t been for the man.” (There are now more than ten local governments in Japan with these ordinances on the book, which differ from prefecture to prefecture, but generally ban pay-offs to the yakuza or providing them with capital. Violators can be fined or jailed. Corporations that do business with yakuza will be publicly named. The ordinances have the potential of being a huge body blow to all organized crime groups, depriving them of protection money and capital. By punishing the individual or firm that capitulates to organized crime, it may have the same efficacy the change in the Commerce Laws had in eliminating racketeers-総会屋.)
Before leaving for Manila on vacation, he told his editor, “I’m nosing around in dangerous places. I don’t know what’s going to happen to me. Let me sign the publishing contract now.”
In September, my best source in the Yamaguchi-gumi told me point blank: “Igari-san was murdered by the yakuza. It wasn’t Goto’s direct order. He was exposing yakuza ties to Sumo and professional baseball. It angered people. You should be careful too. The yakuza don’t warn people anymore, they just act.”
It’s a dangerous thing to expose the worst of the yakuza for what they are. Itami Juzo, directed the first realistic film about the yakuza, Minbo, in 1992. Goto-gumi members attacked him for doing it, slashing his face open. He would later tell the New York Times in an interview, “They cut very slowly, they took their time. They could have killed me if they wanted to.” Eventually they did. On December 20, 1997, after a weekly magazine wrote about his extra-marital affair, he allegedly killed himself. A former member of the Goto-gumi told me in 2008, “We set it up to stage his murder as a suicide. We dragged him up to the rooftop and put a gun in his face. We gave him a choice: jump and you might live or stay and we’ll blow your face off. He jumped. He didn’t live.”
In 2005, yakuza fan magazine writer Suzuki T wrote an article that poked fun at a yakuza group. They broke into his office and beat him to a pulp. In 2006, Yamaguchi-gumi thugs stabbed the son of non-fiction writer Mizoguchi Atsushi, because their boss was unhappy with one of his articles. Two members were arrested. Their boss was not. On April 17, 2007, the mayor of Nagasaki was gunned down after refusing local yakuza involvement in public works projects.
I try to be very careful when writing about the yakuza, and mindful of my sources, some of whom are members. I hate to admit it, but there are still those in the organizations that do follow a code of honor.
I understand the unwritten rules in Japan. Yakuza fan magazines are sold here in the open: three weeklies, three monthlies. They do interviews with current yakuza bosses, but the questions are limited and there is an implicit understanding that even after the interview is done, the boss reserves the right to edit or scrap it. As one veteran detective explained to me, “if you violate that rule, there will be harassment and often retaliation.”
I probably didn’t communicate that fact well enough to the National Geographic production crew that came to Japan. Through the sources I introduced they interviewed three current yakuza members, but didn’t alert me that they ran into trouble. The best I could do was warn the local National Geographic offices about it and talk to the head office in Washington DC. They were very responsive and hopefully nothing will come of it. But if it does, it will be my sources and the local Japanese staff who take the hit. I’m not an easy target because I’m under police protection. The staff are not.
The yakuza don’t have much pull in the US. They harass whoever will give them leverage. It’s why I don’t move my family back to Japan and why leaving Japan is not an option for me. I have to take care of my sources. It’s my responsibility.
I went to Igari’s offices in September to pay my respects; there was no funeral. There was a little shrine for him in his office, but everything was pretty much as he’d left it. On his desk, was an article about the Sumo Association and match rigging, heavily noted. His secretary told me, “Igari-san was really happy to take your case. He laughingly bragged to everyone, ‘I’m representing a reporter for National Geographic–that makes me an international lawyer!’ ” I could visualize him saying that with his deep, rolling laugh.
Grief is a funny thing. Seeing his empty desk, for the first time I got a little misty-eyed. Not too much, because there were people around, you know. It wasn’t very manly, but I didn’t cry.
You may wonder why I keep doing a job that is increasingly dangerous. I wonder myself. Partly, it’s because Japan is my home. I’ve lived here for more than twenty years. I’d like it to be a better place. In the old days, we’d call that civic duty.
I once asked Igari-san over wine, “Have you ever been threatened? Do you ever fear for your life?” He didn’t answer my question directly.
“I became a prosecutor because I wanted to see justice done in this world. When I quit and became a lawyer, I didn’t go to work for the yakuza like many ex-prosecutors do. I continued to fight them. Not all yakuza are bad guys, but 95 percent of them are leeches on society: they exploit the weak, they prey on the innocent, they cause great suffering. If you capitulate, if you run away, you’ll be chased for the rest of your life. And if you’re being chased, eventually what is chasing you will catch up. Step back and you’re dead already. You can only stand your ground and pursue. Because that’s not only the right thing to do, that’s the only thing to do.”
And so I stay. Igari-san wasn’t an investigative journalist and he wasn’t a saint. But he fought for justice and for truth, and as an investigative journalist, I’ve always believed that’s what our job entailed. Forgive me if that sounds naive. I believe that, if no one stands up to the anti-social forces in the world, then we all lose.
When I called Igari’s editor, he knew who I was. He told me, “Igari said you’re the most trustworthy, crazy, and courageous journalist he knew.” It’s the first time I’ve ever been praised by the dead, and more than I deserve. But it made me feel an obligation to live up to those words. Sometimes, the only way to honor the dead is to fight for what they died for. It’s the only way I know how to mourn.
http://www.japansubculture.com/2010/11/the-high-price-of-writing-about-the-yakuza-and-those-who-pay/
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