Terrie's Take 693 -- Bonsoy Class Action in Australia, ebiz news in Japan

Terrie's Take terrie at mailman.japaninc.com
Mon Jan 14 10:22:09 JST 2013

* * * * * * * * * T E R R I E 'S T A K E * * * * * * *
A weekly roundup of news & information from Terrie Lloyd.

General Edition Sunday, Jan 13, 2013, Issue No. 693


- What's New -- Bonsoy Class Action in Australia
- News -- High-end taxes going up
- Upcoming Events
- Corrections/Feedback
- News Credits

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Sometimes an event pops up which is a classic sign of our times. Such is a
little publicized class action court case going on in the Supreme Court in
Victoria, Australia, which may have long-term ramifications for smaller
Japanese health food exporters. The case is being prosecuted on the behalf
of over 600 claimants and revolves around a soy milk product called Bonsoy,
which is produced for Australian company Spiral Foods by Marusan-ai of

The action comes from the fact that in 2003 Spiral Foods asked Marusan-ai
to reformulate its exported soy milk to replace ordinary salt with Konbu as
a salt alternative. No doubt Spiral Foods thought this would be healthier,
but neither they nor Marusan-ai, nor their middleman trading company Muso
Corp., bothered to check the safety of the formulation after making the
switch. Then, in 2006 a test in Japan was done on Bonsoy, which found the
product to have 30mg of iodine per liter, which is at least 100 times the
U.S. recommended daily allowance for adults.

Around this time and over the next 3 years, Spiral Foods received a number
of inquiries from concerned users, but only in 2009 did they finally pull
the product and reformulate again, this time without the konbu. As a
result, the law suit claims that Spiral foods, Marusan-ai, and Muso jointly
neglected to act in a timely manner on information that their product had
excessive levels of iodine, and thus caused many consumers to get sick with
overactive thyroids.

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[...Article continues]

Before we move on to what the implications of this law suit will be, the
question might be asked: is konbu and for that matter taking large doses of
iodine safe or not? After all, after the Fukushima nuclear explosion, many
people ordered in Potassium Iodide (KI) tablets as a precaution. They
typically took 130mg per day for some weeks, so as to flood their systems
with iodine and thereby prevent absorption of the radioactive kind being
emitted from the power plant. Others, instead of taking KI tablets, chowed
down on konbu, which in a large helping can deliver up to 10mg of iodine
(although this is highly variable depending on how the Konbu is prepared).

Of course the Japanese have been eating konbu for generations, so they know
a thing or two about it and iodine consumption. Up until two generations
ago they were ingesting 6-8mg daily, almost as much as the Australian law
suit is claiming (10-20mg) made people sick, so maybe it is this fact alone
that made maker Marusan-ai complacent. Currently the average Japanese eats
about 1mg-2mg of iodine daily, and even the Japanese Health Ministry sets
the upper safe limit as 3mg a day, about 10 times more than the U.S. upper

Perhaps a mitigating factor for the Japanese in terms of high iodine intake
is that studies have also shown that high intakes of cruciferous vegetables
inhibit the take-up of the mineral -- suggesting that so long as you are
eating a whole-spectrum traditional Japanese diet (kaiwari, cabbage,
various winter veges), that you can probably eat a lot more konbu/iodine
than someone abroad who doesn't have the same diet.

Unfortunately for Spiral and Marusan-ai, those diet differences meant that
Australian consumers taking 10mg-20mg of iodine via Bonsoy daily, as many
were doing, caused hundreds of them to start getting sick, some seriously
so, and being diagnosed overactive thyroids. Their symptoms ranged from
hyperactivity, mood swings (such as anxiety, irritability and nervousness),
insomnia, fatigue, and muscle weakness, through to diarrhoea, steatorrhoea,
sensitivity to heat and excess sweating, unexplained or unexpected weight
loss, infrequent or light periods, and infertility. In other words, it's a
pretty long list and the effects can be debilitating.

The good news is that for most of those people affected, where the cause of
these symptoms is ingestion of excess iodine alone, then stopping
consumption alleviates the symptoms within 6-8 weeks. Maybe this is why
Japanese doctors don't panic when they see these symptoms in a konbu-eating
patient. Instead they just tell the person to cease and desist for a while.

In any case, the law firm conducting the class action, Maurice Blackburn,
has a strong track record, and observers are predicting that Spiral Foods,
Marusan-ai, and export firm Muso, may be in for a collective penalty of
millions of dollars, plus of course very tarnished reputations. For
Marusan-ai, which is a middle-size firm listed on the Nagoya stock
exchange, the fines could put them out of business (although we wonder if a
judgement in Australia will be enforceable in Japan?). We guess that all
will be revealed mid-this year, when the Victorian Supreme Court is due to
reach a decision and gives its verdict.

What this case means for Japanese food exporters, and particularly health
food exporters, is that they need to remember that just because a product
has been traditionally consumed in Japan without ill effects, traditions
are not standards. Consumers abroad are eating these products out of
context and often inappropriately, and so they need to be educated and
listened to, making formula changes or issuing consumer warnings on the
packaging as  necessary.

Recently we heard of another (major) Japanese food products company that
has had its formulated product brand on the store shelves for 60 years,
without ever testing that product. They've never had a consumer complaint,
and so as far as they are concerned their product is safe. But in this day
and age, all food companies carrying formulated products owe it to
themselves to check such formulations are safe.

Secondly, Japanese SME exporters need to understand that dealing through a
trading company doesn't protect them from legal and image liabilities
abroad. If they made the product and come to learn that there are questions
about it, then they need to pay attention and proactively remediate the
problem. In this particular case, if Marusan-ai knew in 2006 that konbu
content was an issue, because after all the iodine test results came from
Japan, it should have warned Spiral Foods and thus reduced its culpability.

Further, they need PR control, something that isn't happening in Australia.
Instead, Marusan-ai and its trader, Muso, look negligent through inaction
and the local media having now taken up the case are swaying public opinion
accordingly. As a result, even if both companies survive the court fines,
their market in Australia and perhaps elsewhere will be ruined for a

In short, Japanese SMEs have to realize that with new export earnings comes
new responsibilities.

...The information janitors/


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+++ NEWS

- Softbank to jettison eAccess shares
- First LDP fiscal stimulus is large
- High-end taxes going up
- Spotify coming to Japan
- Taiwanese bank may buy Tokyo Star Bank

=> Softbank to jettison eAccess shares

It looks like the Communications Ministry has convinced Softbank to
off-load at least 67% of the shares it owns in eAccess, so as to avoid
administrative action over Softbank holding more than its fair share of
mobile radio frequency spectrum. Softbank is apparently going to sell the
shares to Samsung, Ericsson, Orix, and 8 other companies -- who will each
receive a similarly sized share. Softbank will apparently make a handy
profit over the divestment. ***Ed: We find it strange that the 11 new
buyers would bother with the purchase, since none of the companies will
have sufficient dominance in eAccess to influence the way the company is
run and therefore will be leaving minority shareholder Softbank with
continued control. Maybe Softbank has offered the new partners some future
business in return? Oh, to be a fly on the wall of related Softbank board
meetings...** (Source: TT commentary from japantimes.co.jp, Jan 13, 2013)


=> First LDP fiscal stimulus is large

The new LDP cabinet has approved a new round of stimulus spending, totaling
JPY20trn. Most of the money will go to construction work to beef up the
country's infrastructure (whether such work is needed or not), and an extra
JPY100bn for the military to spend patrolling and defending the Senkaku
islands from China. This spending is just the start, apparently, and Abe
has indicated that there will be a completely new budget for the fiscal
year starting April. ***Ed: We expect a big blow-out budget by Abe and co.,
so as to help them win the Upper House election in summer. At the same
time, we also expect the massive amounts being spent by the government to
have little effect on the economy. Japan would need to see the yen go back
to JPY120-JPY150 to the US dollar for a sustained period (several years)
for the current monetary policy to really help -- hard to see the US
allowing this to happen.** (Source: TT commentary from cbsnews.com, Jan 10,


=> High-end taxes going up

Following a similar trend overseas (USA and France), the LDP is apparently
considering raising taxes on people earning more than JPY18m a year. The
current top tax rate is 40% and this will be increasing to 45% in 2015. The
new tax level will apparently increase the government's tax take by about
200bn annually. ***Ed: We see this as yet another reason foreign executives
will avoid Japan and domicile in either Singapore or Hong Kong. The reality
is that the government is doing this as a populist move to partially
distract the public from the oncoming sales tax rise next year.** (Source:
TT commentary from wsj.com, Jan 11, 2013)


=> Spotify coming to Japan

According to music industry website, mccluremusic.com, both Spotify and
Rdio, two major international online radio subscription services,  will be
launching in Japan in the next few months, although they haven't said when
officially. Apparently Spotify is discussing with Japanese record labels
about terms and conditions for streaming their music, which after Sony
would make it only the second company to offer online music on a
subscription basis (versus buying the songs on iTunes or a similar
service). ***Ed: This has to be bad news for radio stations, since one of
Spotify's main points of focus will be reaching users who are currently
downloading music with more conventional online services. Apparently mobile
downloads accounted for 67.6% of Japan's total digital music sales.**
(Source: TT commentary from billboard.biz, Jan 11, 2013)


=> Taiwanese bank may buy Tokyo Star Bank

Ever since Tokyo-based fund Advantage Partners ran out of cash in 2011 to
pay interest on loans used to buy Tokyo Star Bank, the lenders have been
looking for a buyer for the mid-sized bank, but without much luck. Finally,
it looks like they may have a buyer in the form of Taiwanese Chinatrust
Commercial Bank. According to the Nikkei, the Taiwanese proposal is for a
purchase of Tokyo Star Bank's shares for around JPY50bn. ***Ed: Interesting
to see the shareholders taking such a big haircut. The Financial Times said
in 2011 that the shareholders were owed about JPY170bn in debt, so they
appear to be getting just 30% back in this deal. Not surprising, since
running a small bank profitably in Japan these days is hard work.**
(Source: TT commentary from e.nikkei.com, Jan 10, 2013)


NOTE: Broken links
Some 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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at the temple lodgings in Toge Village, which lies at the foot of Mount
Haguro, one of the other three sacred mountains of Dewa (Dewa Sanzan).

Now, Dewa Sanzan's “yamabushi” (mountain priests) have decided to travel
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Remuneration is negotiable depending on your experience and skill level.


- Server Engineer, major Japanese online company, negotiable
- Software Asset Management Officer, global bank, negotiable
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- Service Delivery Manager (Data Center), large data center services
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- Staffing Consultant, IT services provider, negotiable

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Venue is The Foreign Correspondents' Club of Japan

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The Japan - U.S. Innovation Award Program <http:/www.usjinnovate.org>,
which is produced by the Japan Society of Northern California in
cooperation with Stanford's US-Asia Technology Management Center, is
opening up a new award category this year: the "Untold Story in Innovation"

This will go to the author of a previously unpublished story of
intrapreneurial innovation inside a company (probably a large company) that
has relevance to Japan - U.S. business. This award is aimed at professional
or part-time journalists and other researchers/writers.

The award is for an English language piece of journalism. There will be one
winning author, who will receive a $3,000 cash prize. We will also
recognize two Award Alternates, who will each receive a $1,000 cash prize.
Although the cash prizes will only go to the winning
authors, the innovators and companies featured in their stories will also
be named as recipients of the honor.

The first step is to send in a "pitch" proposal to the Subcommittee for
this Untold Story award, namely:

Richard Dasher <rdasher at stanford.edu>
Dana Lewis <danalewis at mac.com>
Andrew Neuman <aneuman at usajapan.org>
with cc to John Thomas <JOHNRTHOMAS at me.com>

Deadline for the pitch is January 31, 2013. PLEASE REFER TO the attached
document for details on what to include in the pitch, etc. If you have
further questions, please contact Prof. Richard Dasher <rdasher at stanford.edu>
or Ms. Dana Lewis <danalewis at me.com>.

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Available for short and long-term tenants. Just JPY50,000/month. Includes
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Only 20 minutes by train from Shibuya/Ikebukuro.

Contact the owner at hatanokawakatsu at yahoo.com



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.

=> No corrections or comments this week.



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Written by: Terrie Lloyd (terrie.lloyd at japaninc.com)

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