Terrie's Take 598 -- Why You Will Retire at 70, e-biz news from Japan
terrie at mailman.japaninc.com
Mon Jan 24 09:22:47 JST 2011
* * * * * * * * * T E R R I E 'S T A K E * * * * * * *
A weekly roundup of news & information from Terrie Lloyd.
General Edition Sunday, January 23, 2011, Issue No. 598
- What's New
- Short Takes
- Candidate Roundup/Vacancies
- Upcoming Events
- News Credits
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+++ WHAT'S NEW
One of the predictions we made at the start of this year
was that Prime Minister Naoto Kan would survive his year-end
popularity slump and emerge with a much stronger agenda for
dealing with Japan's many economic and social ills.
Certainly the Trans Pacific Partnership (TPP) trade
agreement appears to be one of the tools he plans to use to
forge a reputation for himself and his government as
forward thinkers and a party of action.
TPP is a bold gamble, but after a long period of DPJ
inaction and consequent disappointment by the electorate,
it's a bet worth making. If he is successful in quelling
the protests from the agricultural sector and farming
prefectural governments, and gets the TPP signed, then he
may just be able to capture the public's imagination about
how change is once again on its way -- helping the DPJ
carry the day at the next general elections. Don't
underestimate Mr Kan, is what we think.
Another area the PM is drawing a bead on is that of
consumption tax and pensions. His cabinet are doing their
best to float trial balloons one after the other, to get
the media and consequently the public discussing what
appears to be an inevitable occurrence -- the raising of
the Consumption Tax and other painful measures to bring
Japan's fiscal house into order.
The way Kan is going about this is an indication that he
and his government have learned a big lesson from their
thrashing in last year's elections. There is a lot more
grassroots discussion about the alternatives and consensus
is being built up upon a base of recommendations and
published supportive statements from a diverse range of
business and financial organizations rather than just from
the DPJ itself.
----------- LINC Media Group companies move ---------------
Readers may recall that in TT581 we wrote about now being
a good time to move. We wound up taking our own advice and
saving a whopping 50% in rent costs in the process. As a
result, the following LINC Media related companies will be
located at this address from Monday, January 24th, 2011.
Please note also the changed general phone number.
Roppongi OG Building, 1-3-4 Nishi-Azabu, Minato-ku, Tokyo
TEL: 03-4588-2245 (General)
- LINC Media Inc.
- BiOS Inc.
- Metropolis KK
- Japan Inc. Holdings KK
- Japan Inc. Communications (ACCJ Journal publisher)
- MetroWorks Inc.
- Champion Visions Japan
- Ohio Department of Development Japan Office
- MyHR Inc.
One of the big questions being asked in the media is
whether the nation should raise premiums on a decreasing
working population to pay for pensions or should it
continue the current practice of subsidizing the
ever-increasing payments from the public purse? If public
funding option is desired, then more money has to come from
somewhere, and since the foreign credit markets are too
expensive and local government bond sales are being
forecast to start drying up, consumption tax is one of the
few reliable sources of additional income.
Thus consumption tax MUST go up. Our guess is that it will
ihappen shortly after the next general elections, which we
think will be held either later this year or ideally next year.
One way the PM is pushing his program to get the public to
accept the inevitable is to appoint others who are better
at handling the media and capturing the public's attention
than perhaps Kan can do. Just this year he appointed a
fiscal hawk, Economic and fiscal policy minister Kaoru
Yosano to tackle the subject, which Yosano has lost no time
We're not sure why having Yosano start the tough discussion
on taxes to come is better than Kan doing it -- maybe a
cabinet minister sounds more credible? Whatever the
reason, the media and public seem to be coming around to
the idea that consumption taxes will increase. A recent
Kyodo news poll found that 54.3% of people agree with the
necessity of a consumption tax increase. It helps that
various prominent foreign financial analysts at Goldman
Sachs and more recently at Citibank are saying that in the
mid-term, the chance of Japan having a credit default
similar to those in Greece and Portugal is increasingly
So will the pensions system be maintained by funneling cash
from increased consumption tax? Hearing the media tell the
story, a 15% consumption tax rate will be a panacea that
will fix the pension system for some time to come. But in
fact, Yosano and others in the DPJ prefer NOT to use
consumption tax. Instead, he wants to put up the retirement
age and focus on premiums (i.e., user pays), or at least a
combination of that and money from the public purse.
Yesterday, Saturday, the Nikkei reported Yosano openly
speculating that Japan's retirement age needed to rise from
the current 65 years old to something higher. Of course,
like any good politician, he denied later that there was any
actual plan by the government to increase the retirement
age. But the suggestion has been tabled, and like a good
trial balloon should, it got attention AND it didn't get
So why does Yosano not want to use the consumption tax
increase to fund the pensions? Probably because the money
is already ear-marked for a more important reason: to cover
the government's huge short-falls between tax income and
outgoings. Apparently interest payments and pension and
other entitlement spending costs will balloon out over the
next 10 years to the extent where, according to Nomura
Securities' chief public finance analyst, the consumption
tax will have to go up to 20% or more to achieve primary
balance. In other words the consumption tax cookie jar
isn't going to be big enough to cover both existing social
programs and an expanded population of retirees.
So if pension support can't come from a consumption tax
increase then the only serious alternative is to put off
the start of pensions for retirees as Yosano suggests.
Instead of 65, we can easily see the government raising the
age to 70. The fact is that people are a lot more healthy
and active at 70 these days than they were some decades
ago, and working until then is not inconceivable --
although laws will need to be introduced to make firms keep
their aging staff. Actually, it is interesting to note that
Germany has already decided to raise its retirement age
from 65 to 67, and the UK plans to raise its retirement age
to 68 as well. In this respect Japan is not an isolated
case. Just it needs to push forward with the tough medicine
and get it out of the way.
So if you're nearing retirement age, don't hold your
breath. Instead you'd better start focusing on your health
and achieving some longevity, because you'll be going to
the office for a few more years yet... :-)
Lastly, we have some highly interesting reader feedback
in the Corrections/Feedback section below, on Facebook's
activities here in Japan. One of the great things about
writing Terrie's Take is that we get real insider
feedback that helps us navigate the tricky waters of
speculation and joining the dots for Japanese commerce
Then there's our Start Your Own Business seminar, on Feb
19th. More details in the Upcoming Events section below.
...The information janitors/
+++ SHORT TAKES
Some readers have asked why we are running these health
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- Son proposes web access on subways
- TPP's upside: food exports
- Rakuten still growing strongly
- NEC to cede PC business to Lenovo J/V?
- Japan is consumer electronics net importer
-> Son proposes web access on subways
Softbank's Masayoshi Son is nothing if not an ideas man. He
has proposed to the Tokyo Metropolitan Government, which
directly and indirectly owns a good chunk of the subways
flowing below it, to provide a devices network that allows
commuters to access their email and the web while between
stations underground. According to Son, worker productivity
may be boosted significantly if company employees could do
email while on the train. Apparently Tokyo-to is viewing
the proposal with interest. ***Ed: Of course this ignores
the fact that email access can be had at every station and
for about 100m leaving the station, so interruptions while
annoying are limited to less than a minute between
stations. Further, if we were Tokyo-to, we'd open the idea
up for bid. Whomever got the contract could potentially
enjoy the business of more than 20m commuters daily. No
wonder Mr. Son is interested.** (Source: TT commentary from
japantimes.co.jp, Jan 21, 2011)
-> TPP's upside: food exports
The Ministry of Agriculture may be fighting a rearguard
action against the TPP trade agreement, but at the same
time is moving forward with an export strategy for the
nation's food producers that should see them improve their
situation. The Ministry will be publishing in March a
long-term growth strategy for food exports. Japan currently
exports JPY1.2trn of food products to Asia's approx. 1bn
middle class and wealthy consumers in 2008. Given that the
number of middle class and wealthy consumers is expected to
swell to around 1.9bn people by 2020, the expectation is
that Japanese high-grade food exports will be in big demand
and will rise to at least JPY2trn by the same date. ***Ed:
If one follows what is happening with the sake industry,
where struggling producers are finding better markets for
their brands overseas than in Japan, and take into account
that for food producers the number of actual domestic
customers started shrinking from 3 years ago, it is not
hard to see that export is really the only hope for Japan's
farming sector. TPP will accelerate this process.**
(Source: TT commentary from e.nikkei.com, Jan 23, 2011)
-> Rakuten still growing strongly
Market saturation will happen at some point, but just when
doesn't seem to be an issue for Rakuten and its famous
online shopping mall just yet. The company is expected to
report another year of record profits in April, thanks to a
very strong third quarter last year. The company is likely
to see sales increase by 17% to JPY350bn, and profits up by
15% to JPY65bn. The marketplace place business had more
than 35,000 merchants at the end of 2010, also up 15% on
the year. (Source: TT commentary from e.nikkei.com, Jan 22,
-> NEC to cede PC business to Lenovo J/V?
Although both parties appear to be denying any actual
discussions at present, the media is busy reporting that
NEC will move its PC business into a joint venture with
Lenovo. The nature of the deal is unknown at this stage,
but media speculation is that the deal will not be a
straight sell-out of the PC business to Lenovo as was
the case with IBM in 2004. Rather, the new j/v would be
responsible for R&D, production, support, etc., while the
products continue to carry the NEC name. NEC has done
several similar deals to slim down its overall operations
in recent years (Renesas, also a j/v with Casio and Hitachi
for cell phones). (Source: TT commentary from
online.wsj.com, Jan 21, 2011)
-> Japan is consumer electronics net importer
In a sign of the times, the Japan Electronics and
Information Technology Industries Association (JEITA) has
released data showing that Japan became a net importer of
consumer electronics goods in 2010. The country exported
JPY762bn of consumer electronics and imported JPY769bn, a
net deficit of JPY7bn. On the positive side, industry
experts note that many of the imports were Japanese brand
products manufactured in low-cost locations abroad. ***Ed:
This point about globalized companies no longer being
counted as exporters from Japan is of course a very
interesting one. There should be a study on the net trade
value and income (not just Japan-reported income) for
all Japanese company activity overseas. Such a report would
give pause to the doomsayers about Japan.** (Source: TT
commentary from ft.com, Jan 21, 2011)
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
=> BiOS, a Division of the LINC Media group, is actively
marketing the following positions for customers setting up
or expanding in Japan, as well as other employers of
** HIGHLIGHTED POSITION
BiOS is currently looking for an experienced helpdesk
engineer to join an international medical equipment company
located in Bunkyo-Ku, Tokyo. A successful candidate will be
responsible for supporting end users, predominantly
Japanese language environment, with not only limited to 2nd
level support, but also support including;
Laptop/SmartPhone setup, network/server administration, etc.
At least 2 years of helpdesk/desktop experience, with wide
knowledge of system administration experience is required.
The qualified candidate would also have business level
English and native level Japanese.
Salary: JPY4m – JPY5m per year, based on your experience.
** POSITIONS VACANT
- Snr Infra Engineer, BiOS, JPY5m – JPY7.5m
- Network Engineer, global IT co, JPY7m – JPY10m
- Staffing Consultant, BiOS, JPY2.5m – JPY3m + comm.
- Sales Team Account Manager, BiOS, JPY3.5m – 4.5m + comm.
- Media Management Mgr (DC), iBank, JPY 4m – JPY5m
Interested individuals may e-mail resumes to:
kenji.sakota at biosjp.com
** BiOS Job Mail
Every 2 weeks BiOS sends out a regular communication to its
job seeking candidates, called BiOS Job Mail. Every edition
carries a list of BiOS's current and most up-to-date
vacancies, with each entry featuring a short job
description and a direct link to the main entry on the BiOS
home page. Regardless of whether you are unemployed and
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better, the BiOS Job Mail newsletter is an easy and
convenient way for you to stay informed. If you would like
to register for the BiOS Job Mail, or to find out more,
please email stuart.gibson at biosjp.com.
Interested individuals may e-mail resumes to:
stuart.gibson at biosjp.com
+++ UPCOMING EVENTS/ANNOUNCEMENTS
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--------------- Start a Company in Japan ------------------
Entrepreneur's Handbook Seminar 19th of February, 2011
If you have been considering setting up your own company,
find out what it takes to make it successful.
Terrie Lloyd, founder of over 13 start-up companies in Japan,
will be giving an English-language seminar and Q and A on
starting up a company in Japan.
This is an ideal opportunity to find out what is involved,
and to ask specific questions that are not normally answered
in business books.
All materials are in English and are Japan-focused.
For more details:
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.
*** Greenpeace, not Peter Bethune
In TT595 and TT583 we incorrectly identified whale activist
Peter Bethune as a member of Greenpeace. While he once was,
he has long since split from that organization and founded
the Sea Shepherd organization. We regret the error and
appreciate Greenpeace pointing it out.
*** TT597 Facebook Japan comments
Reader: Thanks for another great edition of Terries Take. I
deeply appreciate each and every one. Just wanted to offer
a few corrections and comments on the Facebook article.
First, the Facebook Japan office was set up in about March
2010. It remained undercover for a while before the country
growth manager and his colleague began leaving the office
to develop relationships with bigger brands like Recruit.
They also have three software engineers from Palo Alto
here in Tokyo, who helped sharpen the mobile platform and
develop the Connection Search functionality.
Regarding the Mixi partnership, which you mentioned
scratching your head over: this is not actually a
partnership like one would imagine. It was Facebook
integrating an already available Mixi API that other
services had also been using. The Nikkei story was later
proven to be misleading in that sense - to my knowledge
there was actually no direct conversation between Mixi and
Facebook on this feature.
As far as a Facebook buyout of Mixi - I think it would be
incredibly unlikely. Mixi users not only tend to use
pseudonyms but have photo albums without photos of
themselves, and friend networks that consist not of offline
friends but ones made online. While similarities exist
between the services I think some of the nuances in terms
of use and organization of user information makes the two
services pretty incompatible.
Facebook in Japan is really on what I can only describe as
a "noble mission". They're fighting to break into the
Japanese SNS space on their terms and their terms alone.
Zuck wont budge on things like people registering with
real names and using real profile photos - Japan will not
get an exception from that underlying culture. I can't say
if this is smart or stupid.
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+++ ABOUT US
Written by: Terrie Lloyd (terrie.lloyd at japaninc.com)
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