Terrie's Take 427 -- Lanabake, ebiz news from Japan
terrie at mailman.japaninc.com
terrie at mailman.japaninc.com
Mon Jul 2 08:04:13 JST 2007
* * * * * * * * * T E R R I E 'S T A K E * * * * * * *
A weekly roundup of news & information from Terrie Lloyd.
General Edition Sunday, July 01, 2007 Issue No. 427
- What's new
- Candidate roundup/Vacancies
- Upcoming events
- News credits
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+++ WHAT'S NEW
Did you know that the humble incandescent lamp (aka the
"light bulb") lasts about 1 year and while it costs just
JPY200 to buy, running one 6 hours a night for a year will
set you back JPY3,500 (approx.) in electricity bills? The
average 2DK apartment has 15 or more lamps and around 20%
of your annual electricity bill is used running them. The
reason why these lamps are so expensive to run is that they
are highly inefficient, with only 5% of the electricity
flowing in being used to create visible light, and the
other 95% being wasted as heat and infrared light.
While the Japanese government in its search for better
national energy management hasn't nailed the incandescent
lamp as an energy waster, some foreign governments are
indeed moving to ban them. Australia, for example, plans to
ban the bulb by 2010, while Canada is planning to ban their
sale by 2012.
One efficient technology to replace incandescent lamps is
that of fluorescent lamps, such as consumer-oriented
Compact Fluorescent lamps (CFLs). These devices come in the
same package as an incandescent lamp, but produce about 5
times more luminosity for a given wattage, and thus are far
more power efficient.
Another technology that has even more promise is that of
high-intensity white LEDs, which are now becoming available
in commercial-grade brightness and durability packages. A
new Toshiba product costs 3 times more than the
incandescent but only consumes 14% of the power. A new
Nichia breakthrough will bring the power consumption down
to a mere 5%. In Tokyo this would mean savings of JPY40,000
to JPY60,000 annually for the average household - and of
course even more dramatic savings at the government and
utility infrastructure level. This level of savings is of
course why Tokyo has converted almost all of its traffic
signals in the last 5 years to LEDs.
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But while advances are being made in reducing the costs of
the devices themselves and electricity they consume, one
thing remains the same: the cost of the manpower to
maintain them. Most consumers other than the aged still do
their own maintenance, but for operators of commercial
office buildings and retail stores, safety and costs
dictate the need to have qualified people come in and do
the work. In Japan the traditional providers of this
service are the major power companies and their services
affiliates. Needless to say, such vendors are expensive and
have had a virtual monopoly in the lighting maintenance
But that is all starting to change, and recently a number
of independent maintenance companies have risen to
challenge the status quo.
The summer edition of Japan Inc. magazine covers just such
a company, the Nagano-based Lanabake Ltd. Established in
1999, although Lanabake is in the rather "boring" business
of lighting and electrical maintenance, its financial
results are anything but boring. The company is rapidly
becoming one of the nation's leading independent servicers
of lighting and electrical systems and sales have soared
from JPY630m in FY2005 to JPY1.4bn in FY2006. They are
further expected to hit JPY2.5bn in FY2007.
Clearly there's money in simple repetitive tasks such as
changing lamps -- especially when your competition is
from entrenched public companies.
The engine behind Lanabake's spectacular growth is its
unassuming but risk-taking 41-year old CEO, Ken Nagahama.
He has been able to turn the light bulb changing business
into a high-profit industry thanks to a number of simple
but increasingly important insights. Firstly, he decided
early on to focus in on major retail chains, the rationale
being that even though each piece of work is minor and low
profit, the combined effects of mass-procurement and
cumulative store-clerk man-hour savings means that his
team can have a real and noticeable impact on the P&L of a
500-branch chain store operator.
Secondly, Lanabake's basic services are so modestly priced
that they get the sales-engineer team through the doors of
most prospective new customers. Once in, these company
representatives are well trained on how to convince a
conservative procurement manager that they should stay with
Lanabake long term. The company values of responsiveness,
trouble-free service, low price, qualified electrical
workers, and a smile are of course all part of the package
and are drummed into company employees just as thoroughly
as any McDonalds store manager. And by virtue of these
values, the classic on-sell opportunities soon appear:
"Thanks for changing my lights. By-the-way, can you take a
look at our kitchen water heater as well?"
It's a formula that has worked really well for Nagahama's
team, and Lanabake's client list is starting to look like a
who's who of retailing. The first big-name customer was
Kojima Denki, a deal that went through in 2000 after
Nagahama received some venture funding from the government.
Since then the firm has since gone on to become the major
vendor for the Shimamura Group, a Saitama-based JPY328bn
(US$2.78bn) apparel retailer with more than 1,150 stores
throughout Japan, HMV Japan, Yodobashi Camera, and many
Lanabake is featured in Japan Inc. magazine not just
because it's one of the fastest growing private firms in
the building maintenance market, but also because with the
HMV account, CEO Nagahama has become aware of the
advantages of dealing with foreign firms. In his own words,
he says he was "shocked" at how quickly and decisively
foreign firms can move. As a result, he now wants to work
more intensively with foreign property owners looking to
cut costs on their lighting and electrical infrastructure.
Lanabake should be a good company to watch for the next 3
years. Despite its "gritty" business sector, the company
has plans to become the Askul [Ed: a major office supplies
company] in the Data and Energy segment of the building
maintenance industry. Nagahama plans to build to an IPO in
2009. We'll keep readers up to date on the progress of the
firm, and if you want to find out more about the company
and its CEO, pick up a copy of the latest magazine.
*** Today's feedback. A reader points out that on the
whaling issue we should follow the money trail.
...The information janitors/
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- Record number of M&As
- Paxil users more likely to suicide
- Billy's Boot Camp big in Japan
- ATM card thefts up 8.6%
- Japan property still pulling punters
-> Record number of M&As
In keeping with predictions, M&As involving listed
companies jumped 20% to 338 deals in the first 6 months of
this year, a record high. Most of the deals were between
Japanese companies, but among those involving a foreign
firm the most notable were Citigroup's JPY920bn
acquisition of Nikko Cordial, GE's buy-out of Sanyo
Electric Credit, and AB Volvo's purchase of Nissan Diesel
Motor. The pace continues unabated, with another 50 offers
currently in progress or failed, in all a 60% increase over
the same period last year. (Source: TT commentary from
nikkei.co.jp, Jun 29, 2007)
-> Paxil users more likely to suicide
GlaxoSmithKline, the maker of antidepressant blockbuster
drug Paxil, must be feeling in need for its own product
after the Japanese Ministry of Health issued a warning that
it reckons at least 15 people killed themselves after
taking the drug, while another 24 were confirmed to have
planned suicides. In 2005, there were 920,000 people in
Japan receiving treatment for depression, and Paxil sales
to this audience totalled JPY56bn (US$455m), about 1/3 of
Paxil's global sales. ***Ed: The problem here, as with
Tamiflu, is that the Japanese have gone out on a limb with
mass prescriptions of just 1 or 2 "standard" drugs. This
one-size-fits-all is lazy medicine and needs review.**
(Source: TT commentary from bloomberg.com, Jun 28, 2007)
-> Billy's Boot Camp big in Japan
You may have not heard of it, but tens of thousands of
Japanese women think fitness coach Billy Blanks is the
answer to their search for fitness and a more attractive
body (especially the waist and abdomen). Blanks was in
Japan on a 10-day tour recently, promoting his DVD called
Billy's Boot Camp. Rumors are that he has sold 500,000
copies of the DVD so far. The inventor of a grueling
workout routine called Tae Bo held an exercise workshop at
Tokyo Dome's Prism Hall, and attracted more than 400 fans.
Blanks is a 7-time world karate champion, as well as
holding black belts in 6 other martial arts. (Source: TT
commentary from asahi.com, Jun 30, 2007)
-> ATM card thefts up 8.6%
ATM card thefts and online banking fraud is on the rise in
Japan. The FSA has announced that there was a total of
6,603 cash withdrawals made using stolen ATM cards in 2006,
up 8.6% from 2005. At the same time there were 98 cases of
online banking fraud, double the year before. The average
loss from the ATM thefts was JPY450,000, a decrease, thanks
to an increasing awareness by consumers and bank vigilence.
The FSA also said that the incidence of credit card
counterfeiting had dropped dramatically, thanks to the
adoption of cards with embedded smart chips -- which are
hard to copy. (Source: TT commentary from nikkei.com, Jun
-> Japan property still pulling punters
A Reuters article says that real estate punters expect
Tokyo office rents to rise another 60%, peaking in 2010,
due to the current tight vacancy rate of 2.7%. Foreign
trusts, private equity funds, and institutional investors
are being drawn to Japan as a result and apparently 55%
of the US$94bn of real estate transactions done in all of
Asia last year were done in Japan. Although normal returns
on commercial property are around 5%, by using Japan-based
borrowing and currency hedging, foreign funds (such as the
4 major funds from Australia) can offer investors back home
an investment yield of around 7.7%. The Japanese government
is concerned about the possibility of another property
bubble and has said it will start monitoring private
investment funds from September. (Source: TT commentary
from reuters.com, Jun 26, 2007)
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.
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+++ CANDIDATE ROUND UP/VACANCIES
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Interested Japanese or foreign candidates may e-mail
resumes to: terrie at lincjapan.net
+++ UPCOMING EVENTS/ANNOUNCEMENTS
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Date/Time: Tuesday, July 3rd 7:00 pm
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Topic: The Best of Both Worlds: A Practically Secure Network
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Date: Thursday, July 19, 2007
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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.
-> Correction in TT 425. We incorrectly identified the
hotel at the top of midtown as the Mandarin. As a reader
pointed out, it is in fact the Ritz-Carlton. We apologize
to both parties and can only conclude that we need to stop
frequenting ramen shops and eat at fancier places more...
TT423 -- Whaling. The last reader comment on whaling.
*** Our reader states: Personally, I have always had two
hypotheses on this subject.
1. The first is related to your nationalism idea. I think
that at some level, the Japanese government and to some
extent the public just don't like other countries telling
Japan what to do. I think this kind of sentiment is
responsible for the strong reaction defending Japan that
often surfaces when this topic is brought up to ordinary
Japanese. I have seen otherwise mild-mannered Japanese who
have few political opinions get very worked up on the topic
of whaling. It's a kind of defensiveness in the face of
criticism of Japan, and in a sense perhaps whaling has
become a symbol for other deeper issues. It also seems very
similar to me to the strong feelings that many Japanese
have on the subject of the school textbook issue with China
and Korea -- just the fact of another country telling the
Japanese what they should or should not write in their
textbooks is viewed as improper interference with Japan's
sovereignty and really gets people's hackles up.
2. My second hypothesis, one which I have not yet
researched, but on things like this I think it always comes
down to money. Someone must be making money, and good
money, off the harvesting of whales. And whoever is making
that money must be making donations to politicians and
taking bureaucrats out to fancy meals, etc.
I very much agree with you that the negative publicity to
Japan is significant, and in light of this Japan's policy
seems quite reckless. And as you point out, expensive. So
thus, the whole issue is quite puzzling.
*** We respond: Based on the "slippery slope" theory of a
reader several weeks ago, the money in whaling is tied to
the overall fishing industry. First they lose whaling, then
the taking of tuna and other species. Seafood is indeed a
major industry in Japan. In 2001, the value of the nation's
overall catch was around US$10bn. Interestingly US$2.5bn
was paid out in subsidies... As our reader says, follow the
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+++ ABOUT US
Written by: Terrie Lloyd (terrie.lloyd at japaninc.com)
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