Terrie's Take 405 -- Business predictions for 2007, ebiz news from Japan

Mon Jan 22 22:28:29 JST 2007

* * * * * * * * * T E R R I E 'S  T A K E * * * * * * * *
A weekly roundup of news & information from Terrie Lloyd.
           (http://www.terrie.com)

General Edition Sunday, January 21, 2007 Issue No. 405

+++ INDEX

- What's new
- News
- Candidate roundup/Vacancies
- Upcoming events
- Corrections/Feedback
- News credits

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===========================================================

+++ WHAT'S NEW

Welcome to the first issue of Terrie's Take for 2007. Not 
a great way to start the year -- with a major meltdown of 
our Mailman system. Envisage if you will, engineers working 
feverishly around the clock to get a 5-year old open source
mailing manager reinstalled, only to find that just about 
all the support software and hardware needed upgrading as 
well! Then there was the database of over 100,000 
subscribers to be reloaded and re-tested. 

That's pretty much been the scene over here at Japan Inc. 
central for the last two weeks. Joyous chaos and teamwork. 
We're happy to say that the gremlins have been defeated, a 
new firewall and updated software and hardware are in 
place, so it's back to business as usual. Our personal 
thanks go to Jerome and Helmut for their attentions, 
patience, and inspired guesses on just what went wrong. 

As for the remainder of 2007, the signs are that the first 
half of the year at least is going to be a good one, 
certainly the mandarins at the Bank of Japan and our 
leaders in government and big business are saying so. With 
the amount of corporate investment cash sloshing around in 
the system, we're excited about the opportunities for 
foreign companies in Japan. In particular, the chance for 
new businesses to receive capital investment have never 
been better.

As we do every year with our first issue or so, we will
stick our necks out and make some predictions about what
might come to pass in the venture and high-tech worlds in
2007. Last year, we got 4 out of 10 predictions right --
proving that we're every bit as good as your average
monkey at throwing darts...!

1. The economy will do well for the first half of 2007,
with the Nikkei quickly hitting 19,000, mainly because
everyone said it would. Corporate confidence will be at an
all-time high and this will lead senior management to
gradually increase in wages and thus bring about an
improvement in consumer spending. In the first half, at
least, the Bank of Japan will increase interest rates, to
around double what they are now -- probably over a series
of minor increases.

2. But in the second half of this year, the laws of
economics will catch up with everyone's favorite consumer
nation, the US. Although the current outlook is for a "soft"
landing, once the financial system starts to feel the
impact of defaults in low quality loans and mortgages,
credit will tighten up considerably. The condition of the US
economy will start dominating press stories, competing
with the Iraq body count, and this will have an immediate
damping effect on the Japanese economy. Companies
here will turn conservative again, as will consumers, and
any further trending towards higher salaries and higher
consumer spending will cease.

3. M&A will pick up significantly in volume if not value
from last year, with less big deals and a lot more smaller
ones being consummated. As this action hits the headlines,
and the possibility of a stalled US economy starts to loom,
SME company owners will realize that this is the best
chance they've had in a decade to get out with a decent
price. And there will be a rush for the exit doors in the
second half.

At the same time, major companies with money to burn will
increase their recent foreign acquisition sprees. This will
exacerbate an existing shortage of bilingual business
people to run such ventures, and for adventurous CEOs will
create a lasting headache. Since a number of the expanding
firms are venture businesses with new money -- i.e., the
Rakutens of the world, there will be lots of opportunities
for foreigners with Japan experience to land jobs at an
early stage and grow with the business.

[Continued below...]

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===========================================================

[...Article continues]

4. Real estate prices will continue to rise, but more from
investment trusts than personal demand, as investors build
more luxury accomodation in the inner city. To overcome the
high prices, the developers will come up with creative
forms of leasing and renting. The Japanese have never really
liked renting property, but in their desire to live more
conveniently downtown, they will be willing to consider
ultra long-term leases or managed lifestyle properties
(which in Japan will mean a luxurious downtown apartment,
not a block of land out in the country) in a joint ownership
arrangement with others. Foreign firms will introduce some
interesting concepts to hasten things along.

5. Japan will finally ante up big time for the US effort in
Iraq, after a lot of prodding  by the US. This will be by
way of billions for reconstruction and other programs. The
country apparently already has the money earmarked, but has
been unable to find any particular application to use it on. The
US or someone in Iraq will create a channel for this cash.

Unfortunately, as a result of the decision to invest in
Iraq, Japan will increase the likelihood of extremists
wanting to lash out at it in return. Last year we predicted
a terrorist attack in Tokyo, but in retrospect, this would
be difficult to pull off due to the lack of zealot Muslims
in this country. However, an attack on overseas Japanese-
run assets is rather more possible.

6. The number of foreign workers in Japan will continue to
increase, and gain higher visibility in the Japanese press.
More special visa categories will be created, which allow
people to alleviate the manpower shortages at SMEs but
which keep salaries low and force the workers to return
home again. A system like this, the "Trainee Visa" system
already exists, but we predict a more specific program will
be introduced. To keep application volumes under control,
the program(s) will be allowed only for specific countries
that Japan doesn't consider a threat, such as the
Philippines and India. Quite apart from the official
programs, however, the number of Chinese coming to Japan as
students then finding work will continue to creep back up.
This will increase the pressure on Immigration authorities
to properly regulate and monitor newcomers and will
generally make things a bit more difficult for the rest of
us.

7.Livedoor's Horie will be hit with a minor sentence, due
to the lack of credibility of testimony by Ryoji Miyauchi,
Horie's former CFO, and also due to the fact that others
are still being caught in the act of window dressing at far
higher amounts of money and yet are escaping with light
punishment (e.g., Nikko Securities). The fall out from this
will be that the FSA and the government will crack down
even harder on the practice of window dressing, and that
some other major firms will either be embarrassed or their
executives charged for fudged figures going back 3-5 years.
Internal whistle blowers will have a part to play in this.

8. Some amazing inventions that have been brewing under
the radar for the last 3-5 years will start to come to the
attention of the global market. These will involve a wide
range of ingenious materials and chemical discoveries. All
will offer the same promise: a dramatic cut in energy and
production costs and will be warmly received elsewhere in
Asia. In this way, Japan will continue to cut its reliance
on oil.

9. Broadband will continue to sweep all before it and
Culture Convenience Club's (CCC, aka Tsutaya) experiment
with Video-on-Demand (VOD) will result in a proper service
being introduced by the end of the year. This will be so
popular that CCC will have a hit equal to Apple's iTunes on
its hands. We would not be surprised to see the two
companies even tie up over this.

10. With all the broadband capability, Japanese
garage-based music, manga, and theater producers will start
to produce content for micro markets -- a sort of advanced
form of uTube. An enterprising portal provider will
spearhead this, supporting groups until they are able to
produce to minimum commercial requirements. The output from
this effort will create some immediate hits, and some of
these groups will move to an international audience. In
addition, there will be a renaissance in home-brew
equipment and instruments, as young people everywhere join
up with their mates to try and make the big time.

...The information janitors/

***------------------------****-------------------------***

========== Logistics: The So-Fast Corporation =============

Why Choose the So-Fast Corporation?

Failed logistics is a frequent reason why foreign import
and retail companies in Japan eventually pull out. In the
start-up phase, management is focused on just getting the
business up and running, and so it is tempting to abdicate
the logistics to a large trading or transportation firm.
But the reality is that the convenience is soon replaced by
frustration -- as any change request, any problem
resolution takes forever and becomes "muzukashii desu ne".

Now, So-Fast Corporation offers its "Start Logistics
Package" which includes:
1. A reasonable and set price,
2. Simple distribution, and
3. Quick, customer-oriented service to satisfy end-users

Email: info at so-fast.co.jp
http://www.so-fast.co.jp/en/index.html 
===========================================================

+++ NEWS

- JPY500m fine for Nikko
- Stock exchanges could merge by 2009
- NTT DoCoMo buys into Nippon TV
- Hundreds of millions more earmarked for missiles
- Consensus is mild turnaround in consumer spending

-> JPY500m fine for Nikko

Nikko Cordial has been fined a record JPY500m by the
Financial Services Agency (FSA) for cooking its books to
show higher profits on a deal involving the purchase of
Bellsystems24 shares by subsidiary Nikko Principal
Investments. This is the biggest penalty ever levied by the
Agency. ***Ed: It also shows that Japan has two levels of
punishment for window dressers -- the Nikko fudging
totalled about JPY18bn of misstated revenues, while the
Livedoor version of essentially the same practice was
around JPY4.7bn. One wonders why one party gets off with
a fine and slap on the wrist, while the other faces 4 years
in jail?**  (Source: TT commentary from japantimes.co.jp,
Jan 6, 2007)

http://search.japantimes.co.jp/cgi-bin/nb20070106a2.html

-> Stock exchanges could merge by 2009

In what could be a major shakeup of the way we buy and sell
shares in Japan, the Yomiuri Shimbun has said that it has
learned that the Tokyo Stock Exchange and and five other
stock exchanges around Japan, including the Osaka
Securities Exchange, are considering merging and
reorganizing into a holding company controlling four new
exchanges. The new bourses will each focus on a different
segment of the markets: one for commodities, one for futures,
one for venture companies, and one for established
companies. Apparently the exchanges plan to move quickly
and complete the merger by 2009. (Source: TT commentary
from yomiuri.co.jp, Jan 5, 2007)

http://www.yomiuri.co.jp/dy/business/20070105TDY01005.htm

-> NTT DoCoMo buys into Nippon TV

If you needed proof as to which direction NTT DoCoMo is
headed -- mobile video -- then look no further than the
latest TV broadcaster tie-up by the company. DoCoMo has
just bought 760,500 NTV shares for JPY13.6bn (US$114m),
representing 3% of the TV broadcaster. DoCoMo and NTV have
been working for almost a year to create applications that
put broadcasts on DoCoMo's mobile network. In January 2006,
DoCoMo also invested in Fuji TV, buying 2.6% of that
company's stock. (Source: abu.org.my, Jan 5, 2007)

http://tinyurl.com/tpt6r

-> Hundreds of millions more earmarked for missiles

A Lockheed Martin senior executive has let the cat out of
the bag by stating that Japan will spend "hundreds of
millions of dollars more" on additional missile
installations to plug gaps in the country's defense shield.
Lockheed Martin is the Pentagon's largest supplier of
missiles and is one of two US-led teams building a
battle-management system for the region. The money is in
addition to the JPY120bn (US$1bn) already budgeted for
Patriot PAC-3 and Aegis system upgrades in 2007. (Source:
TT commentary from cnn.com, Jan 3, 2007)

http://tinyurl.com/yyn67e

-> Consensus is mild turnaround in consumer spending

The consensus by senior business leaders at the first
meeting of the Nippon Keidanren (Japan Business Federation)
last week was that consumer spending will stage a mild
turnaround in 2007 and be stronger than last year --
inspite of the scrapping of income tax cuts, increased
medical fees, and increased energy and mortgage costs. The
businessmen based their call on the fact that most major
firms have been doing well financially and plan to
gradually increase wages in line with their improved
results. Most CEOs agreed that the growth rate for 2007
would be somewhere around 2%.  (Source: TT commentary from
nikkei.co.jp, Jan 6, 2007)

http://www.nni.nikkei.co.jp/AC/TNKS/Nni20070106D05JFA12.htm

NOTE: Broken links
Many online news sources remove their articles after just a
few days of posting them, thus breaking our links -- we
apologize for the inconvenience.

***------------------------****-------------------------***

================= You're Vending What? ====================

Japan is home to the highest density of vending machines in
the world, with about 5.6m machines, or one for every 23
people. You can buy almost anything, and the Japanese do,
with about JPY6.67trn (US$56bn) being spent every year.

Yet, apart from the obvious players such as major soft
drinks companies, there have been no foreign owners of this
massive direct sales medium - until now.

Market Pioneer Japan is proud to announce that as of
October, 2006, it has built a network of 1,000 vending
machines placed nationwide, selling stickers and print
logos. We invite owners of licenceable characters to
contact us with a view to distributing your IP assets into
the Japanese market.

Web: www.japaninc.com/mpj, email: mpj at japaninc.com.

===========================================================

+++ CANDIDATE ROUND UP/VACANCIES

=> The following position is for LINC Media's BiOS Division.
Interested parties should contact: jobs at biosjp.com

-> Desk-side engineers
Large multinational bank looking for Desk-side support
engineers to work in their Tokyo office. Must have
experience in Desk-side support, be flexible, and have
strong work ethic. All candidates must have strong command
of written Japanese. Successful applicants will enjoy very
competitive salary and benefits.

Responsibilities will include:
- Level One Support - Troubleshooting PC-desktop problems
- Problem management
- Escalation POC for the Help Desk.
- Installation, troubleshooting, configuring, support of
Win2000/XP desktops
- Testing and evaluation of automated desktop builds
- Software deployments, upgrades, etc.

Required Skills/Experience:
- English/Japanese language ability (Fluent: candidate MUST
have superior written Japanese ability)
- 1+ Years working experience in NT/XP/Windows 2000
- Knowledge of the Microsoft Office product range
- MCSE (Microsoft Certified Systems Engineer) Preferred
- Good communication and organizational skills
- Ability to work well under pressure in large foreign firm

For more information or to submit your resume, please email
jobs at biosjp.com
--------------------------------------------------------

+++ UPCOMING EVENTS/ANNOUNCEMENTS

Event announcements from next week.

______________________________________________________
IT events announcements are priced at JPY50,000 per week.
For more information, contact sales at japaninc.com

***------------------------****-------------------------***

+++ CORRECTIONS/FEEDBACK

In this section we run comments and corrections submitted
by readers. We encourage you to spot our mistakes and
amplify our points, by email, to editors at terrie.com.

-> TT 404 -- 2006 wrap-up. We ran a set of events that
highlighted the market last year, mainly featuring
technology and venture-related business developments.

*** Reader Jack Plimpton of Japan Entry fame responded:
Terrie, you forgot one achievement in October last year.
Japan Entry reached a record 23 distribution/JV deals and
17 Country/Sales Managers hired.

*** Our response: Congratulations, Jack and Ken (Sumitani).
Since 1989, Japan Entry has introduced more than 100
foreign firms to Japanese partners or investors, and now 23
in one year alone. This is an outstanding result and we
guess that it proves out the fact that with capable
assistance, foreign firms can make it in Japan.

You can find Jack and Ken at: www.japanentry.com .

...The information janitors/

***********************************************************
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+++ ABOUT US

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Written by: Terrie Lloyd (terrie at lincmedia.co.jp)

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