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 AOYAMA VIEW

Heisei 30 looks good: share prices soar, PM rides high

"Boom boom Tokyo Girl, let's be going Boy Kawaii!"

This deep message from song group Perfume set the tune on New Year Eve for Heisei 30, last full year of the ruling Emperor, and Year of Dog according to the Chinese calendar. Long holidays at parental homes and leisure travel is over and normal work routines have resumed. Some New Year traditions were still evident this week: salarymen in dark suits lining up in shrines and rushing for their first customer greetings, restaurants filling up with raucous Shinnenkai parties in the evening. Adding color, we had Becoming Adult Day with pretty 20-year olds in bright kimonos parading in streets and cafes. Some things never change here.

Some do. Like New Year as solemn family affair. Instead of countdown parties sitting at home and watching NHK's annual song program until midnight when, instead of fireworks, temple bells toll to call for prayers at local shrine. Now the countdown party at Shibuya Crossing looked like New York's Times Square with 60,000 people, many of them foreigners. There was even fireworks in amusement parks! Days later in Oji, Kita-ku – not a well-known place even on local maps – the "Fox Festival" at local shrine was attended by 5000 "gaijin" tourists. Completing the changing world picture, the Shibuya event was sponsored by Coca Cola, while in New York, the many years of Japanese corporate sponsors on the big screen were substituted by China government PR videos.

The first economic news of the year are all good. Nikkei index shot up over 700 points on its first day following Dow's earlier strong start. The positive outlook for global growth and expectations for continued good corporate earning reports end this month should maintain the momentum, analysts say. Big companies' winter bonuses averaged JPY 880,000 pushing consumer spending back up again in November – the booming construction industry paid even JPY 1.2 million to its workers. The jobless rate fell to its lowest since 1993 and the jobs-to-applicants took another step up to 1.56, the best level since 1974. Consumer price index continued to rise for the 11th straight month to 0.9%, yet "real wages" that took that in account improved a bit more with overtime pay 2,6% and basic wages 0.4% up for full-time workers while the proportion of low-paid part-time workers declined to 30.7%.

The trillion yen question is how the big companies' wage talks turn out in March. Prime Minister was again pushing his "minimum 3% up" at Keidanren "shinnenkai" party with seemingly full backing from chairman Sakakibara but not all top bosses at member companies seemed to buy that. If we are to believe a recent report, the cash pile they are sitting on has grown already to USD 10 trillion, yet the old line from the old men remains same "better be careful about the future and not increase costs". In many ways, Keidanren embodies the Old Japan, always careful and avoiding to take any risk, if possible. No better symbol of that than the coming chairman change: the 74 year old Sakakibara, ex-chairman of Toray, is said to be replaced by 71 year old ex-Hitachi chairman Nakanishi when FY2018 starts April 1.

Like other gaijin commentators here, I would like to see Abe-san listening more to Masayoshi Son, the flamboyant Softbank leader whose fresh business ideas and bold investments have taken him to the top of the venture capital world. His last month's move to force USD 9 billion stake in Uber at 30% below market price was another brilliant step in his long rise. Son plans to make something totally new out of the troubled taxi ride company by connecting it to his AI world. Making it happen will take time, but some expect it could turn out another Ali Baba, where Son's USD 20 million early investment is now worth USD 130 billion. Find that hard to believe but agree that Son would be better adviser to Abe than Keidanren's old industries for preparing Japan for the future and pushing through domestic reforms necessary for that.

Unfortunately, Abe-san seem to focus this year on his pet project to change the Constitution instead of economy - that's doing reasonably well for now. Undertandably, that would be his lasting legacy ("the PM who changed it") while the economy always can go down the drain soon after him. Yet, even his Constitution change is not purely for long lasting principle, but comes with an expedient political aspect involved: if Abe fails to pull it through now, other LDP leaders now resigned to hide in wings until his obligatory retimement in 2021, might brave to raise their hand to challenge him for the party leadership in coming September vote.

LDP and its allies supporting change maintained their 2/3 super majority in last October's election, but the situation remains complicated by party's own disability to agree on a unified proposal what to change. Furthemore, the strong back up expected from the new Kibo Party failed to materialize as it fell behind Edano-san's hastily assembled new Constitutional Democrats, who are against any change as their very name implies. No wonder, Prime Minister has selected to go for the smallest little change: just mention that there is a Self Defence Force fully legally in this country. For us foreigners it seems incredible that anybody in any country would oppose that, but probably that's exactly why we are not allowed to vote here even in local community matters. Who knows what mayhem that could lead to?

With no disturbing deregulation to risk the Big Target, JPY 3 trillion supplementary budget kicking in for Jan-March and the full budget for FY2018 already agreed between the government parties and assured to go through Parliament with their overwhelming majority, Prime Minister can travel out to shine in international diplomatics. First off it's East Europe: Abe had to cancel visiting Estonia from Finland last summer and, once there, why not go through other Baltics and top it off with Romania, Bulgaria and Serbia? It's an important task to get them show support for Japan against North Korea's threat, I guess. For that worthy cause, some financial support, building a few train lines, power plants and bridges could be promised. Getting close to these countries is also important to counter inroads made in East Europe by China. It looks like Mr. Xi plans to make the area European terminal for his Silk Road landbridge just as he bought out Greece for his maritime terminal. It's also about political influence: with EU decision making based on unified vote, every country counts also in shaping EU policies. For instance the EU plan to condemn China for occupying and militarizing the entire South China Sea was stopped by "No" vote from Greece.

It's not yet clear what will be next on Abe's travel plans. My bet is he will skip this year Davos as his friend Donald suddenly decided to go there to preach the benefits of "America First" to the annual meeting of globalists and multinationalists – you can't argue against The Boss on such important mission. It looks unlikely either that Abe will follow Korea's invitation to join in Olympic opening ceremonies after Moon government's demarche on the 2015 agreement to bury the "comfort women" issue forever – as useless as that move was. Hey, you might even end up sitting next to a North general and television audience at home expect you to take up the missiles and the abductees! Difficult to do while watching North and South teams march in front of you hand in hand. Instead, better focus on plans to see the friendly Putin-san again, even if it will be only next year. Talking about those little islands next to Hokkaido is always good for ratings even if no result is ever achieved.

Instead of watching Abe-san sitting uncomfortably in VIP box we can focus on sports from Pyeongchang. It's only 28 days to go and expectations in Japan are pretty high. They focus on ski jumpers, both women and men, skaters, both speed and figure, as well as freestyle ski and snowboard. Women's ice hockey team has also improved to World Top 5. The big question mark for Japanese sport fans is whether their biggest idol Yuzuru Hanyu, who has ruled men's figure skating past few years, has fully recovered from his recent injury, both physically and mentally.

Japan's all-time best medal score from Winter Olympics was in Nagano 1998 with 5 golds and same number of silver and bronze. Since then it's been only one gold each year. How many this time?

Timo Varhama  
Tokyo, January 12, 2018  


Previous Columns

20 December 2017
"Look back at 2017: commotion around Japan, but steady and safe here"

11 December 2017
"Missiles, footballers and fishermen from North - Big spending on child care to get more mothers working"

28 November 2017
"Foolish things sell in retail, but sports are to be serious"

20 November 2017
"Making China Great - with Gaffes, Platitudes and Bullying"

10 November 2017
"Good news week: Finland business grows, EU trade deal gets cleared, Nikkei hits new heights and Trump visit goes smoothly"

20 November 2017
"Making China Great - with Gaffes, Platitudes and Bullying"

1 November 2017
"Japan: Endless Discovery"

21 October 2017
"Power play in Japan and elsewhere - some potentially serious, some not"

10 October 2017
"Abe's useless snap election sparks big changes he did not count on"

26 September 2017
"North Korea boost Abe popularity - opportunity to extend his rule"

7 September 2017
"Kims'allah, Japan is OK and doing well"

28 August 2017
"From North Korea's missiles to Turku Terror and US Navy Mishaps"

17 August 2017
"Raining cats and dogs, missiles and threats, but strong sunshine in economy"

27 July 2017
"Forests, floods, fish and consumer prices - stories too good and data too bad to be true"

21 July 2017
"From Cool Finland to Hot Tokyo: A Round-Up of Recent Happenings"

26 June 2017
"Anniversaries and Memories: Finland, Japan, USA."

19 June 2017
"Rainy Season in Japan, Political Storms in Europe"

8 June 2017
"Trump impact spreads - Japan struggles with workforce issues"

30 May 2017
"Taormina to Tokyo: Heavyweights and fashionable ladies"

"New Missiles, Diet Debates, Yet Big Business in Big Profits - Down on Ground Challenges Remain Basic and Simple"

9 May 2017
"Golden Week, Special Trains, Luxury Spending, Even North Worries Makes for Good Business"

20 April 2017
"North Korea, USA both worry Japan - Koike worry Abe and LDP even more"

5 April 2017
"Spring, Sakura and New Year Start in Japan - Commotion, Tensions Rise Around the World"

27 March 2017
"Questions Unanswered, Unasked – Lifestyle and Surveys Bring Light"

21 March 2017
"Finland in Focus: Friendship, Dictionary, Music, Food - Even Elevators?"

13 March 2017
"Uncertainty Increases Around Japan - At Home Rebuilding Uncompleted in 6 Years - Abe Popularity Takes a Hit."

3 March 2017
"Book Readers, Police Jokes, Nerdy Napoleon and Poison Scare"

24 February 2017
"Populism, Ignorance and Isolationism Leads to Mayhem and Mess"

16 February 2017
"Golf Diplomacy, Chocolate Festa and Hokkaido Deams-Come-True"

9 February 2017
"Tokyo overcoming winter, business changes, political battle and Trump threats "

2 February 2017
"Warm Feelings in Japan, Wild Winds from USA"

20 January 2017
"Ready for Rooster? It will be a wild ride!"



About the Columnist

The columnist is a Japan veteran among Finnish business, our Chamber ex-president and today Member of the Board of Trustees.
After running a major Finnish industry company's Japan business for over 20 years, he is now Senior Associate in a strategic consulting company.

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