Terrie's Take 879 - Five Predictions for Japan for 2017, e-biz news from Japan

[Terrie's Take]

* * * * * * * * TERRIE'S TAKE - BY TERRIE LLOYD * * * * * *
A weekly roundup of news & information from Terrie Lloyd, a long-term 
technology and media entrepreneur living in Japan. 
(http://www.terrielloyd.com)

General Edition Sunday, January 15, 2017, Issue No. 879

- What's New -- Predictions for Japan for 2017
- News -- Asthma herbal medicine a hit in China
- Upcoming Events
- Corrections/Feedback
- Travel Picks -- Bizen pottery in Okayama, Daigo temple in Kyoto
- News Credits

SUBSCRIBE to, UNSUBSCRIBE from Terrie's Take at: 
http://mailman.japaninc.com/mailman/listinfo/terrie

BACK ISSUES
http://www.japaninc.com/terries_take, or, 
http://mailman.japaninc.com/pipermail/terrie/


+++ WHAT'S NEW

Five Predictions for Japan for 2017

Well, after a good break and a trip out of Japan, we're back with our 
predictions of 2017. Going overseas reminded us just how slowly Japan 
changes unless forced by circumstances to do so. It's a risk-averse and 
conservative society where generally the only domestic sources of change 
are scandals and deaths. Externally-induced changes are far more 
prevalent, especially when they involve the U.S. For example: think of 
the Plaza Accord in 1985 that stoked the yen to historic highs at the 
time, the 1990's dotcom bubble and resulting bust, 9/11 attack, "Open 
Skies" that ended JAL/ANA's local duopoly, and now of course the Trump 
Shock.

Why is Japan so conservative? Our take is that decades of mind control 
at school then through the media, coupled with 50 years of relative 
prosperity - at least offering an ability to live and eat decently - has 
taken the nation away from the mentality of a glass half full, to that 
of a glass half empty. Its rapidly aging society accentuates this 
aversion to risk and change, and this trend will only continue.

The result is that Japan is creating a society of young people who 
desire to work in safe jobs, lead safe but entertaining lives, and avoid 
the burden of families and risk of (entrepreneurial) failure. It's sad 
to see, but at the same time, this systemic atrophy of ambition and 
competitiveness does mean that predicting where changes will come from 
becomes easier - they'll either be in entertainment, longevity, food 
supply, or containment caused by external shocks (natural and political).

1. Year of Trump and Japanese Economy

...Donald Trump is just such a shock. Nicknamed the "Human Hand Grenade" 
by U.S. film maker Michael Moore, Trump's populist message and thought 
processes pretty much ensure that Japan will be lumped in with those 
other Asian countries that are flooding the U.S. with cheap products, 
apparently to the detriment of U.S. workers. He has already said that he 
wants to levy an import tax on Japan and China, and although we think 
that cooler heads will prevail and tell him to back off from that course 
of action, his bullying will nonetheless elicit a concerted reaction 
from both targeted countries.

Japan, ever the loyal puppy wagged by the U.S. defense/economic tail, 
will do its best to ingratiate itself with the Trump administration. 
This process has already started. In fact, the Japanese understand how 
to deal with bullying quite well, since it's embedded in the culture - 
starting with bullying in the schools. Kids are expected to internalize 
it, which is one reason they don't like risk and confrontation. And 
given that the bullied (and bullying) kids of the last 50 years are now 
the leaders of the country, they will placate the U.S. bully as best 
they can. They may actually be pretty good at it - as Masayoshi Son and 
Abe have both demonstrated so far.

Japan's economy in 2017 will follow the rest of the world. Trump is 
going to kick off a huge spending and tax-cutting splurge in the U.S., 
worrying about the side effects later. Thus the global mood is one of 
skittish expectation, but certainly a desire to believe in a global 
economic recovery. As a populist leader, Trump will do his best to 
encourage America's "animal spirits" and in our opinion he will 
initially be good for the U.S. and indeed the rest of the world. 
However, we don't think this euphoria will continue much past the 
beginning of 2018 (see more below).

Although only about 15% of Japan's economy is export related, record 
profits by those exporters will mean recovering tax revenue, more 
government spending, and thus a general easing of conditions here. 
Simultaneously, the BOJ's re-inflationary efforts will gain traction 
later in 2017, and so interest rates are likely to move up. If you have 
a variable home mortgage, now would be a good time to ask the bank about 
changing over to fixed rates.

2. Number of inbound tourists drops

Trump's attacks on China, conversely, are likely to worsen the 
relationship between the U.S. and China, and we foresee a series of 
tit-for-tat trade disputes that could escalate quickly. This has as much 
to do with Trump's bullying personality and quick temper as it does for 
his need as a populist politician to have a convenient scapegoat. And 
while the Japanese learn at school to accept bullying and repress their 
feelings, the Chinese education system is much less evenly applied, so a 
culture of fighting back is alive and well. Not to mention that half the 
population still has to struggle to survive. As a result, China's 
reaction to bullying will be to hit back, both at the U.S., and because 
the Chinese government is smart enough to steer public outrage, to hit 
their favorite whipping boy - the Japanese.

So Trump causes direct financial hardship in China, and the authorities 
there create a territorial incident with the Japanese to divert the 
attention of their citizens. If this process is allowed to escalate too 
much, regardless of whether there will be any border clashes, the 
Chinese economy will come under pressure and this may cause another run 
on the shadow banking system. This would of course have a huge dampening 
effect on Japan inbound tourism, not to mention the global economy at large.

Whether it's territorial or financial, we don't expect this period to 
last beyond 2019, for the reason that if Trump does destabilize major 
U.S. political relationships in 2017, the Republican party itself may 
take action sooner or later. There is an interesting piece in the 
Independent this week about the probability of Trump being impeached 
within his first term.

http://ind.pn/2jx7F81.

--------- Micro Loans Program in South Pacific ------------

SPBD and MicroDreams seek to combat poverty in the South Pacific by 
enabling women to become entrepreneurs. These women apply for small 
loans, as low as US$120, to launch, grow, and maintain small businesses. 
Previously, many of our clients did not have a stable source of income 
to support their families. We work alongside these hardworking women, 
teaching them essential business and financial skills to expand their 
businesses and generate steady income and improve their quality of life. 
With our program, these women turn dreams into reality as they reap the 
rewards of their efforts.

Read about our remarkable clients
http://www.microdreams.org/success-stories. You can also donate to the
program at: http://www.microdreams.org/donate-today.
-----------------------------------------------------------

[...Article continues]

3. Immigration increases, along with racist incidents

So long as aged voters are more important to politicians than families 
with non-voting kids, the graying of Japan will continue apace and those 
legions of elderly will need more home and hospice care. Although there 
probably are enough nurses in Japan to support the nation's elderly for 
some years to come, the jobs offered are so poorly paid and the 
conditions so trying, that nurses in their 30's and older are willingly 
leaving the profession as they have families and are not returning 
later. Like so many sectors in Japan, health sector employers have 
little sympathy or financing to improve conditions - and so the system 
declines and if nothing is done it will collapse.

We will also say at this point that employers who have the cash (many) 
but who won't pay employees more are likely doing so because they fear 
the future. In a way, they are engaging in the same bullying behavior 
they learned at school sports teams - that of pushing your charges 
(employees, team members) to the limit. It's hard to break the habit and 
the government hasn't yet gotten to the stage where it will force wage 
increases through law. But we do think that this stage will come in the 
next 5-10 years if things get desperate enough. The problem at the 
moment is that things are NOT desperate, just difficult. And the 
Japanese are good at "gaman" (stoic acceptance).

Anyway back to immigration. We can already see a strong under-the-table 
pro-immigration policy by the Abe government. For now they just want 
cheap bodies to man dilapidated factories and under-utilized farms. This 
means that although the official stance is on of attracting 
well-educated, high-value engineers and professionals, in fact the need 
currently is for the desperately poor (and usually under-educated) 
people from developing countries. This will inevitably lead to abuse, 
anger, disillusion, and desperation by some, and crime. We've already 
seen foreign workers beat and kill local Japanese. Our prediction this 
year is that there will be one or more similar incidents, and this will 
incite more anti-foreigner hate speech.

4. New foods

One of our favorite activities in 2016 was going to the supermarket to 
see what new foods are appearing on the shelves. While the beverage 
industry has always been competitive and innovative, regular food 
products have been more about price - with the exception of the gradual 
introduction of more western delicacies (cheeses, olives, crackers, 
candies, cookies, etc.). But recently there has been a marked change in 
Japanese staples. We noticed the trend start back in 2014 when the media 
started commenting that in order to psychologically deal with tighter 
personal budgets (as wages and the yen's buying power continued to fall) 
people were splurging on "small luxuries". This was especially so with 
western food items. Then in 2015 and 2016 we started seeing Japanese 
makers following suit, making more luxurious versions of staple foods 
that previously they'd been under pressure to keep at the same cost for 
20 years.

A good example of this is tofu, probably one of the cheapest and safest 
sources of protein around. Until recently, no one ever paid more than 
JPY100 for a block, and if you wanted to spice it up, you could top it 
some kind of flavored miso or an exotic fish sauce from some remote part 
of Japan. But last year, specialty versions of tofu appeared and they 
have been a huge hit. Nowadays you can buy tofu that mimics mozzarella 
cheese ("Burrata" tofu), and various other textures and flavors (but 
uniquely tofu flavored variants). The Burrata is delicious! We have no 
doubt that as inflation starts to gain traction this year, a sure thing 
as the USA re-prices bank interest rates, Japanese food makers will 
accelerate their food offerings.

We are particularly expecting the appearance of functional foods that 
are cheap and healthy, and which people on student-like budgets can live 
on and thrive. JPY38 packs of vegetable sprouts have been a good example 
in the past. So maybe we can expect small packs of pre-mixed vegetable 
powders and nutritive gels that can be added as ramen toppings - thus 
making a ramen meal not only cheap and fast, but healthy as well. Then 
of course there are product improvements on supplement bars such as 
Soyjoy. Really hoping to see some Japan-made "raw" bars that are so 
common recently in the U.S., but without the sugar load.

5. Toyota electric cars to compete with Tesla?

Finally, it's not every day that a manufacturing behemoth like Toyota 
puts its president, grandson of the firm's founder, in charge of a new 
division. But that's what happened on November 30th last year. It looks 
like the company is finally going to get serious about electric cars, 
and particularly battery plug-ins (BEVs). The firm has mostly been 
announcing products relating to its fuel cell technology, which it 
believes provides yet another bridge between pumped fuels and electric. 
But now that Tesla is building a huge battery factory with Matsushita 
and has its low-cost Model 3 due out late this year, and even other U.S. 
and German car makers are introducing full-range electrics, obviously 
Toyota has decided it had better get moving with its own vehicles.

Tesla has done a great job of defining the future for electric vehicles 
- integrating them into homes and domestic power ecosystems. 
Unfortunately for them, oil fracking and the increased output of 
low-cost oil put off the precipitating factors to move the general 
population into electrics by at least 5-10 years, and so they have been 
ahead of their time. But with their focus on high-end vehicles, that 
hasn't been too much of a hurdle until now.

So our prediction is that this year Toyota will announce specifics about 
a hot new BEV. Not only that, but maybe they will get back into bed with 
Tesla and put out a vehicle with a Tesla power plant.

Why wouldn't Toyota do it on their own? Probably because with the 
remarkably lower complexity of connecting parts (although the parts 
themselves may be technically complex), Toyota is probably worried that 
there won't be enough differentiation for them to keep a healthy 
business and so doesn't want to speed up the natural evolution of 
automobiles. But, yep... that's exactly what Sony thought back when 
Apple introduced the smartphone. We think cars are next on the list and 
in ten years time customers will be buying autos for the software not 
the base hardware. So instead, Toyota will take a short-cut to keep a 
presence, and get the parts from someone else - as they did in 2012. For 
clues, watch for new investment in Tesla. Heck, with a cash pile of more 
than US$47bn and Tesla's market cap of US$38bn, maybe they can buy Tesla 
out...?


...The information janitors/

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

--- Japan Travel Inbound Travel Professional Services -----

Japan Travel's inbound company travel professional services team now 
serves incentive and group training logistics and support. We assist 
your headquarters HR teams in hosting your foreign employee groups in a 
successful program in Japan. Our services include: hotels, 
transportation, meals (including special diets), entertainment, 
activities, help desk support, telecommunications, guest speakers, and 
of course the core training (delivered by our professional training 
services partners). We work on a menu-basis, providing as much or as 
little as your management team needs to get the project done.

If you have a group needing assistance, we invite them to contact us at: 
tours at japantravel.com.

Or visit our pages at:http://bit.ly/29c2eG5
-----------------------------------------------------------

***********************************************************

+++ NEWS

- The real JP contribution to US economy
- Asthma herbal medicine a hit in China
- Emperor to get his wish to abdicate
- Uniqlo on a roller coaster ride
- Dolphins-1, Taiji-0


=> The real JP contribution to US economy

The Japanese government has quickly realized that they need to 
differentiate themselves from the Chinese, or risk being lumped into 
trade tariffs or worse, as U.S. President-elect Trump's new government 
starts to deliver on election promises. As a result, they have put out a 
statement that gives some facts about the real value of Japan to the 
U.S. economy - which Reuters has reported as being:
- 47,000 people are directly employed by Japanese companies in the U.S.
- More importantly, those companies have created more than 839,000 
downstream jobs for Americans. Japan reckons this is about 30x more than 
Chinese firms.
- Cumulative investment into USA of US$411bn, about 30x that of China also.
- Japan trade surplus with the U.S. has shrunk substantially in the last 
few years - to about 9% - while China's surplus gap yawns wider.
- Toyota, the main target of Trump's vitriol so far, says it will invest 
US$10 billion in the U.S. through 2022. (Source: TT commentary from 
reuters.com, Jan 12, 2017)

http://www.reuters.com/article/us-usa-trump-japan-trade-idUSKBN14W0UL

=> Asthma herbal medicine a hit in China

Kobayashi Pharmaceutical's Dusmock product, a herbal remedy for 
alleviating chest infections, has become a hit in China. The product has 
gained a large following on the internet by users there after concern 
peaked about PM2.5 particulates in smog. It supposedly increases 
bronchial secretion and moves foreign particles out as phlegm (coughed 
back out). Chinese tourists visiting Japan are snapping up the product 
and Kobayashi says it will increase production by 30% to meet demand. 
***Ed: Pollution medicine? For sure Kobayashi's competitors will be 
watching this with interest.** (Source: TT commentary from nikkei.com, 
Jan 12, 2017)

http://asia.nikkei.com/Markets/Tokyo-Market/Japan-s-Kobayashi-plays-to-its-Chinese-fans

=> Emperor to get his wish to abdicate

Finally an elderly couple will be allowed to retire in peace. The 
Emperor and Empress will shortly receive a one-off permission to retire, 
thanks to special legislation to be passed mid-this year by the 
government. The new legislation comes after a favorable finding by a 
select council to permit a change in rules. As a result, the Emperor 
will retire on December 31, 2018 - just after he turns 85. The new 
Emperor will be Crown Prince Naruhito, who will assume the throne on 
January 1st, 2019, a date chosen to allow the traditional Japanese 
calendar coincide with the Gregorian calendar used by most of the rest 
of the world. ***Ed: Nice piece of dramatic pantomime by the government 
and media after the Emperor expressed his wish to retire last year. 
Although it was a genuinely gutsy move, in the process he also earned 
the Imperial family sympathy and admiration from the people - surely Mr. 
Abe and other traditionalists must be happy.** (Source: TT commentary 
from asahi.com, Jan 11, 2017)

http://www.asahi.com/ajw/articles/AJ201701110051.html

=> Uniqlo on a roller coaster ride

Investors in Uniqlo are nervous as the company's fiscal results gyrate 
quarter to quarter. Even as the firm announced that Q1 net profit was up 
by 45% over the same period last year, the stock fell 6.7% on January 
9th (Yanai's personal fortune fell by JPY160bn that day), before 
rebounding on buybacks later in the week - because of poor December 
sales. Behind the turmoil is Fast Retailing's struggle to recover from a 
disastrous 2015 (profits halved), due to a renewed surge in the US 
dollar coupled with an admission that a price increase introduced at the 
same time was ill-timed. Nonetheless, the company is still saying that 
the fiscal year prediction of JPY1.85trn in sales and JPY100bn in net 
profit is on track. ***Ed: Our take is that Uniqlo needs to rein in CEO 
Yanai's gigantic ego and force him to "listen" more proactively to the 
market, rather than chasing hell-for-leather an unrealistic goal of 
JPY5trn in sales by 2020. On the other hand, he could achieve that 
number if he buys out a major competitor or two...** (Source: TT 
commentary from japantimes.co.jp, Jan 12, 2017)

http://www.japantimes.co.jp/news/2017/01/12/business/corporate-business/uniqlo-quarterly-profit-45-percent-refocus/#.WHhrG30b8S8

=> Dolphins-1, Taiji-0

Someone or something apparently cut nets holding dolphins in an open 
water pen in Taiji harbor, allowing the dolphins to escape. Although the 
Telegraph article reporting the incident doesn't say whether it was the 
work of activists or not, given that the police are investigating, we 
can assume it was. A "classic" comment by the Taiji facility owner, that 
appeared in a blog post, read "We are enraged by the heinous act which 
can easily lead to the dolphins dying. They [ed: the activists] think 
that once out of their pen, dolphins will swim far away, but that is not 
true. Dolphins will not stray far and they will not leave their group." 
Taiji is of course the site of the annual and well-documented dolphin 
slaughter every year. Whether or not the escaped animals were born in 
captivity is unknown, but again, given the fact that only 3 animals 
returned after the unplanned release suggests they were wild-born and 
the facility owner is an ass. ***Ed: Ugly practice, ugly all round. 
Given that the government can subsidize rice farmers, why not pay the 
Taiji fishermen to do something else each year? More dolphin experiences 
for tourists perhaps?** (Source: TT commentary from telegraph.co.uk, Jan 
05, 2017)

http://www.telegraph.co.uk/news/2017/01/05/dolphins-held-captivity-escape-japanese-tourist-attraction/


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.

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

+++ UPCOMING EVENTS

---------------- BIG DATA ANALYTIC TOKYO -----------------

AI, machine learning, and data science are redefining competition and 
disrupting markets, corporate cultures, and industries. Gain early mover 
advantage by connecting to the most promising innovations from overseas.

This conference brings together 30+ experts and entrepreneurs from the 
U.S. and Japan tech hubs. Hear 20+ talks, panel discussions, business 
pitch sessions, and lightning talks. (Talks are bilingual with 
simultaneous interpretation.) How are these technologies solving complex 
problems and changing "business-as-usual"? Whether you are a business 
leader, data scientist or investor, join us to find out.

Where: February 7-8
Where: Roppongi Academyhills
Website: http://www.bigdatacon.jp/
-----------------------------------------------------------

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

+++ CORRECTIONS/FEEDBACK

=> No feedback this week.

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

+++ TRAVEL DESTINATIONS PICKS

=> Bizen Pottery in Okayama Prefecture
Traditional Japanese pottery in small-town Japan

On a cool Monday in early December, I made my way to Imbe in Okayama 
Prefecture. The small town, a 35-minute ride from Okayama Station, is 
home to Bizen-yaki (Bizen pottery), one of the six traditional kilns of 
Japan. My first stop was the Bizen Pottery School, a 20-minute walk from 
the station, where I got my first lesson in Bizen-yaki. Bizen is one of 
a number of types of traditional Japanese pottery. It developed and 
flourished in Imbe and traces its roots back about 800 years to the 
Hei-an period.

Thick, pliable clay is dug up and through a process of drying the clay, 
removing debris and adding water, the final clay used to make the 
pottery is created. There are two types of kilns used to fire the 
pottery: Noborigama ("climbing kiln") built on an incline with various 
chambers, and Anagama, a single, long chamber.

The friendly teacher at the center invited me to make something of my 
own. A word to the wise: keep your nails as short as possible! She 
explained that the center accepts students for one-month and six-month 
courses. Foreign students stay for the one-month course and they even 
have affordable housing for students in a traditional ryokan (a Japanese 
inn).

http://en.japantravel.com/okayama/bizen-pottery-in-okayama-prefecture/34020

=> Daigo-ji Temple in Kyoto
An exquisitely beautiful temple, garden and museum

About twenty minutes east of central Kyoto on the subway, Daigo-ji 
doesn't get as many visitors as the more storied sights in the center, 
but for my money, it's as interesting and beautiful as anywhere else in 
the city. It's worth dedicating half a day to a visit here, more if 
Kami-Daigo is open, to fully appreciate every part of the complex.

In 874, a Buddhist monk named Shobo Rigen Daishi climbed sacred Mount 
Daigo, and met an old man with white hair. This old man was actually the 
mountain god Yokoo Myojin, who gave the mountain to Shobo, along with a 
richly flowing fountain. Shobo then carved two Kannon statues and 
dedicated them on top of the mountain; following that, subsequent 
emperors built and expanded the many halls of the temple.

Open only in spring and autumn, the Reihokan is where you can see 
exhibitions of the temple's treasures. These include documents, craft 
works and carved statues, but only a fraction can be exhibited at any 
time: I saw a selection of splendid large Buddhist statues, carved in 
meticulous detail, some of them fierce, some dynamic, some serene.

http://en.japantravel.com/kyoto/garden-temple-daigo-ji/34687

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

***********************************************************
END

SUBSCRIBERS: 6,604 members as of January 15, 2017 (We purge our list 
regularly.)

+++ ABOUT US

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

HELP: E-mail Terrie-request at mailman.japaninc.com with the word 'help' in 
the subject or body (don't include the quotes), and you will get back a
message with instructions.

FEEDBACK
Send letters (Feedback, Inquiries & Information) to the editor to 
terrie.lloyd at japaninc.com.

ADVERTISING INFORMATION
For more information on advertising in this newsletter, contact 
ads at japaninc.com.

SUBSCRIBE
Get Terrie's Take by giving your name and email address at 
http://www.japaninc.com/newsletters/free_sign_up, or go straight to 
Mailman at:
http://mailman.japaninc.com/mailman/listinfo/terrie

BACK ISSUES
http://www.japaninc.com/terries_take or, 
http://mailman.japaninc.com/pipermail/terrie/

Copyright 2017 Japan Inc. Communications Inc.

----------------- Japan Inc opens up Japan ----------------

J at pan Inc authoritatively chronicles business trends in Japan. Each 
posting brings you in-depth analysis of business, people and technology
in the world's third largest economy.

Visit www.japaninc.com for the best business insight on Japan available.
-----------------------------------------------------------