* * * * * * * * * T E R R I E 'S T A K E * * * * * * *<br>A weekly roundup of news & information from Terrie Lloyd.<br>(<a href="http://www.terrie.com">http://www.terrie.com</a>)<br><br>General Edition Sunday, September 12, 2010, Issue No. 581<br>
<br>+++ INDEX<br><br>- What's New<br>- News<br>- Candidate Roundup/Vacancies<br>- Upcoming Events<br>- Corrections/Feedback<br>- News Credits<br><br>SUBSCRIBE to, UNSUBSCRIBE from Terrie's Take at:<br><a href="http://mailman.japaninc.com/mailman/listinfo/terrie">http://mailman.japaninc.com/mailman/listinfo/terrie</a><br>
<br>BACK ISSUES<br><a href="http://www.japaninc.com/terries_take">http://www.japaninc.com/terries_take</a>, or,<br><a href="http://mailman.japaninc.com/pipermail/terrie/">http://mailman.japaninc.com/pipermail/terrie/</a><br>
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<br><br>+++ WHAT'S NEW<br><br>Walk along the streets of almost any inner city business or<br>shopping area of Tokyo, and you will quickly notice all the<br>"To Let" signs posted in windows and alongside doors. Some <br>
areas are noticeably worse than others, but basically all <br>commercial real estate appears to be under pressure.<br><br>A Miki Shoji report confirms this. They say that in <br>August, office vacancies in central Tokyo rose 0.07% to <br>
9.17% overall, and as a result, the average rent for the <br>innermost 5 wards (Chiyoda-ku, Chuo-ku, Minato-ku, <br>Shinjuku-ku, and Shibuya-ku) fell to JPY17,832 per tsubo <br>(3.3 sq. m.) -- 10.24% down on August of last year. Miki <br>
reckons the reason for the current office glut is caution <br>by Japanese firms about the global economy, coupled <br>with an oversupply of new buildings coming on to the <br>market.<br><br>Our take is that the current situation is caused by the <br>
fact that although 30% of Japanese companies are making <br>lots of money, mainly those who are exporting consumer goods, <br>components, and technology, the other more domestic 70% are<br>still suffering and are likely to continue doing so. Thus, <br>
companies are going to keep cutting back on people and office <br>space requirements. Then, as the rents fall they are taking <br>advantage of price deflation by moving further out of town <br>and moving into buildings that are not so upmarket. The <br>
deflationary spiral has seized other segments of Japan's <br>commercial world, and there is no reason we can see to not<br>expect it to spread to real estate -- particularly office and <br>retail property.<br><br>Here at LINC Media and Japan Inc., we have been in the <br>
same Minami Aoyama building since 1998. For ten years we <br>had a low but fair rent, thanks to the fact that we are quite<br>some distance from the station and are in an older building.<br>Unfortunately, the hapless Japanese conglomerate that<br>
owned the building knew more about running trains than <br>renting buildings and five years ago had to sell their real <br>estate holdings to a certain major American bank. It <br>didn't take long for that bank to realize they could squeeze <br>
us for more rent -- especially since in 2006/2007 it seemed<br>like there was a recovery going on.<br><br>[Continued below...]<br><br>----------- Making Web Sites More Affordable --------------<br><br>LINC Media's Electronic Commerce team is proud to announce<br>
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<br>And squeeze they did. First with someone who would have <br>done the yakuza proud, demanding an immediate 50% increase <br>in rent, then later and after some complaints by us, with <br>a smoother character who eventually got us to sign a 3-year<br>
fixed term contract just before the Lehman Shock. Now, <br>almost 3 years later, it is time for us to re-sign the <br>lease agreement, and while we'd like to stay, we've been out <br>looking at the office rental market and have been surprised to <br>
find that we're now paying at minimum 25% over market price, <br>if not more.<br><br>Probably we're not unusual in this respect. Many companies,<br>after committing to a location, are reluctant to move, and <br>would rather focus on the daily business of making profits <br>
and growing the company. Since we don't want to move, we <br>approached the U.S. bank with a proposal for them to cut <br>our rent by 25%, based on what we found out in the market. <br>However, as a REIT, they say they are tied to financial <br>
results in their business plans and can't cut us any slack.<br>As a result, we will probably move, and they can figure out<br>for themselves what happens when you lose a tenant in an <br>overpriced C-grade building in today's market.<br>
<br>Going out to the market, we found that there are dozens of <br>buildings around desirable parts of Tokyo which have been <br>empty for months and in some cases several years. We found <br>perfectly good 20-year old or younger buildings offering <br>
rents of just JPY14,000/tsubo within 10 minutes walk of <br>major stations. Our current place is 35 years old, and is <br>at least 15 minutes walk from the station. In Japan, <br>buildings older than 1985 generally are considered <br>
structurally inferior and therefore rent at 20%-30% lower <br>prices than newer ones with the same facilities. And in <br>Tokyo, office locations more than 10 minutes from the <br>station see a 10%-20% decrease in rent as well.<br>
<br>The real kicker for us is the fact that because there are <br>so many lower-grade but perfectly serviceable buildings <br>available inside the Yamanote line, landlords are <br>offering significant incentives, such as 6 to 9 months free<br>
rent, and a reduction in deposits to 6 months, instead of <br>the usual 10-12 months. Of course the fit out and move also <br>cost money, so these reduced outlays really only go to <br>offset the cost of moving, but they are a powerful <br>
incentive if you're spending some millions of yen a month <br>on rent and can suddenly chop 25%-30% off that amount and <br>not be out of pocket for doing so.<br><br>How long will this situation persist?<br><br>We believe that the current market is only temporary. <br>
Essentially, we're seeing the overhang of the Lehman <br>Shock and its 2009 aftermath, and so companies are still <br>running their operations on a very tight leash. Those who <br>are exporting are expecting a double dip recession in the <br>
USA, and it this happens the thinking is that there will be <br>a corresponding impact on China and thus Japan. These <br>companies are therefore mostly deciding not to expand<br>their white collar workforces in Tokyo, and are instead <br>
socking away the cash to see them through the <br>downturn. Where they have surplus cash, it's going into M&A<br>of cash-flow positive investments abroad, and not into <br>fancy company headquarters buildings.<br>
<br>Thus, we expect fiscal conservatism on the real estate side<br>of things to continue at least until this time next year.<br><br>Our own decision to do an office search is probably being <br>reflected in the CEO's offices of lots of smaller companies in <br>
Tokyo, and thus is the part of the iceberg you never really <br>see -- at least until realtor Miki Shoji comes out with its<br>monthly statistics.<br><br>Still, while the low end of the market is probably in bad<br>shape, there are some signs of let-up, particularly in the <br>
more visible upmarket buildings and residential sector.<br>As far as we can see, there are two positive domestic real <br>estate trends in play:<br>1. Wealthier Japanese folks and even normal income families<br>are taking advantage of the record low long-term (35 years) <br>
interest rates available for residential property purchases.<br>2.06% is the magic number for September, and is the lowest <br>mortgage rate offered by the government for more than 5 <br>years. This is having a decidedly beneficial effect on the <br>
sale of condos inside or convenient to downtown urban <br>areas, and indeed, in Tokyo condo sales have increased <br>27.1% over last year, hitting 24,299 units in the period <br>January through July.<br><br>2. Foreign investment funds, especially Asian ones, are <br>
making increasing purchases of property here as part of a <br>more strategic play of catering to foreign tourists and foreign<br>condo buyers into Japan. By virtue of their focus, access <br>to funds, and willingness to buy outside the CBD, they are <br>
pushing up prices in certain sectors. This appears to be <br>having a palliative effect on Japanese REITs, which are <br>also seeing the value of their holdings start to improve. <br>But as to how many foreigners will really want to buy <br>
condos in Tokyo or Niseko, only time and the continuing <br>boom in China will tell.<br><br>So if you're looking to move office, there probably isn't <br>a better time to do so than now. And if you're looking to <br>
buy a condo, we recommend holding off until the U.S. <br>economy decides what it is going to do, but certainly <br>before the interest rates start to rise again.<br><br>*************<br><br>In the next couple of weeks, the Metropolis Members Club <br>
will be offering another pair of tickets courtesy of United <br>Airlines to anywhere in their direct network. Surely this is<br>sufficient reason to sign up for the MMC newsletter today. <br>It couldn't be easier.<br>
<br><a href="http://blogs.metropolis.co.jp/club/">http://blogs.metropolis.co.jp/club/</a><br><br><br><br>...The information janitors/<br><br>***------------------------****-------------------------***<br><br>--------- BIOS - Bilingual IT Systems and Support ---------<br>
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<br>This innovative service is available for companies needing<br>to hire staff for Japanese customers, but who are unable<br>to commit to the expense and infrastructure of maintaining<br>an office in Japan. We take care of all aspects of the<br>
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Web: <a href="http://www.biosjp.com">www.biosjp.com</a><br>-----------------------------------------------------------<br><br><br>+++ NEWS<br><br>- 234,000 oldsters may already have died<br>- Tabelog moves to subscriber service<br>
- Japan's current account surplus up in July<br>- Heat drives Japan Aug power output to near record<br>- Rice glut is back<br><br><br><br>-> 234,000 oldsters may already have died<br><br>The lack of connected citizen registration systems between <br>
central and local governments appears to be the main source<br>of blame for the revelation by the Justice Ministry that up <br>to 234,354 people registered as being older than 100 may in<br>fact have already died. The Ministry has just conducted a <br>
survey and has found 77,118 cases of people who would be <br>over 120 years old, and even 884 people who would be at <br>least 150 years old...! ***Ed: This all goes to show that <br>for all the control Japan's various government bodies want <br>
to have over their citizens' whereabouts, none of it counts<br>for much if errors of this magnitude can happen. We'll be <br>interested to see the world rankings for Japan as home of <br>the longest lived people after this is all sorted out.** <br>
(Source: TT commentary from <a href="http://Japantimes.co.jp">Japantimes.co.jp</a>, Sep 11, <br>2010)<br><br><a href="http://search.japantimes.co.jp/mail/nn20100911a1.html">http://search.japantimes.co.jp/mail/nn20100911a1.html</a><br>
<br>-> Tabelog moves to subscriber service<br><br>After having built the eating out recommendation engine <br>site into a monster traffic magnet, operator Kakaku.com is <br>now planning to start charging users JPY315/month to use <br>
the service, which will be upgraded to work on the iPhone. <br>Until now, the free audience-ranked restaurant site has <br>been attracting tens of thousands of visitors a week to see<br>the best places to eat out. Currently Tabelog has mainly <br>
advertising income, amounting to JPY285m for the 3 months <br>through to June. ***Ed: It will be interesting to see if <br>users will continue to come to Tabelog if they have to pay,<br>or whether a free-to-view competitor will pop up to take <br>
its place.** (Source: TT commentary from <a href="http://nikkei.com">nikkei.com</a>, Sep <br>10, 2010)<br><br><a href="http://e.nikkei.com/e/ac/tnks/Nni20100910D10SS939.htm">http://e.nikkei.com/e/ac/tnks/Nni20100910D10SS939.htm</a><br>
<br>-> Japan's current account surplus up in July<br><br>Although Japan is in a terminal state of decline and the <br>yen is at a record high, exporters appear to have enough <br>momentum and know-how to continue earning substantial <br>
export earnings. The Current Account for Japan rose by an <br>impressive 26.1% in July compared with a year earlier. The <br>surplus amounted to JPY1.676trn (US$20bn). This result was <br>largely due to an increase of 24.7% in exports and a 15.7% <br>
decrease in imports. ***Ed: With the high yen, imports will<br>start to gain in volume, pulling the numbers back down <br>again over time.** (Source: TT commentary from <br><a href="http://channelnewsasia.com">channelnewsasia.com</a>, Sep 8, 2010)<br>
<br><a href="http://tinyurl.com/33pozw5">http://tinyurl.com/33pozw5</a><br><br>-> Heat drives Japan Aug power output to near record<br><br>Hot weather drives up the use of air conditioners and <br>therefore electricity. The nation's power companies cranked<br>
up their coal, LNG, and oil fired power stations by 13.2% <br>to a near-record 96.17bn kw/hrs to meet the extra demand. <br>Most of the extra power came from the burning of 830 <br>kiloliters of oil, up 74% over last year. ***Ed: <br>
Expectations are that once the weather cools down next week<br>and the week after, demand for power will fall <br>significantly, since industry is not consuming at the rate <br>it did before the Lehman Shock.** (Source: TT commentary <br>
from <a href="http://reuters.com">reuters.com</a>, Sep 10, 2010)<br><br><a href="http://af.reuters.com/article/energyOilNews/idAFTOE68901F20100910?sp=true">http://af.reuters.com/article/energyOilNews/idAFTOE68901F20100910?sp=true</a><br>
<br>-> Rice glut is back<br><br>After the price rises in global wheat supplies last year, <br>and in advance of any possible shortage in the same crop <br>this year, it appears that Japan is headed for another <br>surplus in rice. Prices for early harvested Koshihikari <br>
stocks has fallen by 8% below last year's prices, to JPY14,400<br>per 60kg on the wholesale market. Surprisingly, the <br>glut is occurring even as the government runs a new program <br>to reduce the amount of rice being planted by paying out <br>
subsidies of around JPY15,000 per 1,000 sq. m. of rice <br>paddies left uncultivated this year. ***Ed: We find it <br>strange that speculators are not taking advantage of what <br>may be a global wheat shortage this year, due to the crop <br>
failures in Russia.** (Source: TT commentary from <br><a href="http://nikkei.com">nikkei.com</a>, Aug 30, 2010)<br><br><a href="http://e.nikkei.com/e/ac/20100830/TNW/Nni20100830PR4RICEP.htm">http://e.nikkei.com/e/ac/20100830/TNW/Nni20100830PR4RICEP.htm</a><br>
<br><br><br>NOTE: Broken links<br>Many online news sources remove their articles after just a<br>few days of posting them, thus breaking our links -- we<br>apologize for the inconvenience.<br><br>***------------------------****-------------------------***<br>
<br>+++ CANDIDATE ROUND UP/VACANCIES<br><br>=> BiOS, a Division of the LINC Media group, is actively <br>marketing the following positions for customers setting up <br>or expanding in Japan, as well as other employers of <br>
bilinguals.<br><br>** HIGHLIGHTED POSITION(S)<br><br>BiOS is now looking for experienced HR director candidates <br>for a new APAC wide role with a client in service sales. <br>Acting as a core business partner to the APAC Director of <br>
operations, you will provide both hands on and strategic <br>support in the areas of employee relations, recruitment, <br>coaching/development, organizational development and <br>workforce planning. Note that this role requires relocation<br>
to Singapore. <br><br>The successful candidate in this role will have more than <br>10 years HR experience in a high-growth, fast-paced, and <br>changing environment, and in particular a deep <br>understanding of Japanese labor law and HR principles and <br>
practices are essential for this position, to support the <br>expansion plans in this territory, as well as the wider HR <br>issues in the overall APAC zone. In addition to this you <br>will demonstrate leadership in key HR issues with <br>
versatility and enthusiasm, and be able to use all of this <br>to influence key decision makers.<br><br>Remuneration is up to JPY20m depending on your experience <br>and level.<br><br>** POSITIONS VACANT<br><br>- Data Center Engineer, JPY3.0m – JPY5m<br>
- User and Network Support Engineer, JPY4.5m – JPY5.0m<br>- SAP Helpdesk, central Tokyo JPY3.5m – JPY6m<br>- Security Sales, Global Vendor, JPY8m – JPY10.5m<br>- Android/iPhone Developer, Metroworks, JPY3m – JPY4m<br><br>
Interested individuals may e-mail resumes to:<br><a href="mailto:stuart.gibson@biosjp.com">stuart.gibson@biosjp.com</a><br><br>** BiOS Job Mail<br><br>Every 2 weeks BiOS sends out a regular communication to its<br>job seeking candidates, called BiOS Job Mail. Every edition<br>
carries a list of BiOS's current and most up-to-date<br>vacancies, with each entry featuring a short job<br>description and a direct link to the main entry on the BiOS<br>home page. Regardless of whether you are unemployed and<br>
searching, thinking about a career change, or just curious<br>to know if there is something out there that might suit you<br>better, the BiOS Job Mail newsletter is an easy and<br>convenient way for you to stay informed. If you would like<br>
to register for the BiOS Job Mail, or to find out more,<br>please email <a href="mailto:stuart.gibson@biosjp.com">stuart.gibson@biosjp.com</a>.<br><br>Interested individuals may e-mail resumes to:<br><a href="mailto:stuart.gibson@biosjp.com">stuart.gibson@biosjp.com</a><br>
<br>-----------------------------------------------------------<br><br>***------------------------****-------------------------***<br><br><br>+++ UPCOMING EVENTS/ANNOUNCEMENTS<br><br>------------ Entrepreneur Seminar is Back! ----------------<br>
<br>Start a Company in Japan<br><br>Entrepreneur's Handbook Seminar, October 2nd, 2010<br><br>If you have been considering setting up your own company,<br>find out what it takes to make it successful. Terrie <br>Lloyd, founder of over 13 start-up companies in Japan,<br>
will be giving an English-language seminar and Q and A on<br>starting up a company in Japan.<br><br>This is an ideal opportunity to find out what is involved,<br>and to ask specific questions that are not normally <br>answered in business books. All materials are in English <br>
and are Japan-focused.<br><br>For more details:<br><a href="http://www.japaninc.com/entrepreneur_handbook_seminar">http://www.japaninc.com/entrepreneur_handbook_seminar</a><br><br>-----------------------------------------------------------<br>
<br>---------------- ICA Event - September 16 -----------------<br><br>Speaker: Naveen Ravindran, CEO-Endeavor Japan<br>Title: 'ERP: Hard to Implement? Effective?'<br><br>Details: Complete event details at <a href="http://www.icajapan.jp/">http://www.icajapan.jp/</a><br>
(RSVP Required)<br><br>Date: Thursday, September 16, 2010<br>Time: 6:30 Doors open, Buffet Dinner included and cash bar<br>Cost: 4,000 yen (members), 6,000 yen (non-members)<br>Open to all - Venue is The Foreign Correspondents' Club of <br>
Japan<br><br><a href="http://www.fccj.or.jp/aboutus/map">http://www.fccj.or.jp/aboutus/map</a><br>-----------------------------------------------------------<br><br>-------------------- CCH Tax Seminar ----------------------<br>
<br>Important Changes in Japanese Transfer Pricing<br>and Corporate Tax in 2010<br><br>Transfer Pricing<br>- NTA clarifies expectations around documentation - the <br>role of documentation and supporting materials in managing <br>
TP risk.<br>- Advance Pricing Arrangements: a great value for some<br>taxpayers, what do they accomplish, and what is involved?<br>- Transfer pricing audits: surviving the ordeal.<br><br>Corporate Tax and Supply Chain<br>
- Corporate Tax Update<br>- Supply Chain Restructurings<br><br>Indirect Tax<br><br>Date: Thursday, 28th September 1:30pm-5:00pm<br>Venue: Arcadia Ichigaya: 5F Daisetsu East<br>Speaker: Professionals from Ernst & Young <br>
Number of Seats: 50 seats<br>Language: English<br>Fees: 20,000JPY+Tax<br>Register: <a href="https://www.cch-japan.jp/contents/register/form">https://www.cch-japan.jp/contents/register/form</a><br><br>For more details, Please Contact us at: <a href="mailto:support@cch.co.jp">support@cch.co.jp</a>,<br>
or 03-3265-1161, <a href="http://www.cch-japan.jp">www.cch-japan.jp</a>.<br>-----------------------------------------------------------<br><br><br>***------------------------****-------------------------***<br><br>+++ CORRECTIONS/FEEDBACK<br>
<br>In this section we run comments and corrections submitted<br>by readers. We encourage you to spot our mistakes and<br>amplify our points, by email, to <a href="mailto:editors@terrie.com">editors@terrie.com</a>.<br><br>
*** No feedback this week.<br> <br>***********************************************************<br>END<br><br>SUBSCRIBERS: 8,950 members as of September 12, 2010<br>(We purge our list regularly.)<br><br>+++ ABOUT US<br><br>
STAFF<br>Written by: Terrie Lloyd (<a href="mailto:terrie.lloyd@japaninc.com">terrie.lloyd@japaninc.com</a>)<br><br>HELP: E-mail <a href="mailto:Terrie-request@mailman.japaninc.com">Terrie-request@mailman.japaninc.com</a><br>
with the word 'help' in the subject or body (don't include<br>the quotes), and you will get back a message with<br>instructions.<br><br>FEEDBACK<br>Send letters (Feedback, Inquiries & Information) to the<br>
editor to <a href="mailto:terrie.lloyd@japaninc.com">terrie.lloyd@japaninc.com</a>.<br><br>ADVERTISING INFORMATION<br>For more information on advertising in this newsletter,<br>Contact <a href="mailto:ads@japaninc.com">ads@japaninc.com</a>.<br>
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or, <a href="http://mailman.japaninc.com/pipermail/terrie/">http://mailman.japaninc.com/pipermail/terrie/</a><br><br>Copyright 2010 Japan Inc. Communications Inc.<br><br>----------------- Japan Inc opens up Japan ----------------<br>
<br>J@pan Inc is Japan's only independently published English-<br>language business website. Authoritatively chronicling <br>online the business trends in Japan, each posting brings <br>you in-depth analysis of business, people and technology in<br>
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