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 AOYAMA VIEW

UNINVITED GUEST CRASHES THE G20 PARTY
"Hey, you forgot to invite me again!" was Kim Jong Un's message to President Xi and G20 leaders conferencing in Hangzhou. What a spoiler for China's well-choreographed spectacle! Factories had been closed to make skies look blue, people were hassled off streets and the meeting agenda was secured not to include any mention of regional security problems, just focus on global economy. The world's biggest polluter seemed to have become the global leader in fighting against it with perfect timing of its Paris climate deal ratification. US president agreed to play along in this, then was snubbed at arriving airport for all China to see who is running the show. Then the poor neighbor, almost a family member, lobs three of its gift missiles to Japan waters just as it did one when the foreign ministers of China, (South) Korea and Japan were meeting in Tokyo two weeks ago. "Quelle sacrilege!" my French friends would say.

To make things worse, Xi had just told Korea's Park again that installing anti-missile defense against North was unnecessary and would "endanger good relations", i.e. lead to economic losses - because it could detect and defend also against China's missiles. Young Leader's new surprise obviously made mockery the Big Man's words and all meeting arrangements, a bad loss of face, worst you can do to a sponsor.

That the missiles landed again in Japan economic zone waters was naturally another shock here, yet its's been long known that all Japan is within North Korean missiles' range as much as within China's. North's real "enemy' is actually USA that it has targeted to reach all along and threatened turn the faraway Washington in "a ball of fire" as it has said it will do to close by Seoul. The continuous fiery talk has not caused much concern as continental US has been well beyond the reach of North's ballistic missiles, but its first successful missile launch from submarine last month broke that theory: now it's possible some North sub can sneak undetected close enough to launch an attack on, if not Washington, then at least Hawaii or California. Moreover, even after shooting the first strike, they can keep their missiles undetected under water beyond reach for US retaliation strike. Sub-launched missiles are also hard to intercept by current US anti-missile systems that Japan has and Korea is about to install.

The G-20 top leaders' meeting ended with a communique that all participants should do more for "sustainable, balanced and inclusive growth like China is demonstrating" and avoid risks from protectionism and highly leveraged financial markets - the last two were not references to China. "We should turn the G-20 group inti an action team instead of talk shop", said (meeting) Chairman Xi and agreed to solve the steel dumping crisis by establishing a new discussion forum for it among the G-20 members. The more, the merrier, I guess.

While China's maritime feuds were kept off the G-20 agenda and even Abe was made to promise that he will not use much time on the topic to be allowed to meet Xi 30 minutes face-to-face, it is likely to surface up in the ASEAN + 3 meeting starting today in Laos where the Asian G-20 participants rushed from Hangzhou. This is natural as several of the members are directly involved. Yet, even there, it is expected that no country is singled out for blame. China's power is strong and growing, yet think only diplomats and politicians can sit in a room with a big white elephant and pretend it is not there. One exception could be Philippines' new president, who seem to flunk all kind of rules and regulations even at home launching an unforeseen campaign to kill all suspected drug sellers instead of arresting and sentencing them in the courts as customary elsewhere.

He has a bone to pick, too. Encouraged by its unchallenged flaunt of island building around South China Sea, fresh photos show China is starting to build another base on Scarborough Shoal, a Philippines atoll it occupied some years ago. That would complete its control of the entire vast area and neutralize the renewal of US bases in Philippines, so the move was expected sooner or later, but to show its intention already during the G-20 meeting is highly brazen. Still last week, China's ambassador in Manilla was claiming there's no Chinese ships there, much like there never was Russian troops in Crimea or Ukraine. Another, more dangerous theory is that the earlier than expected move shows again that not all that happens in China is under central government's control.

When back from global spotlights, Abe-san must again face the usual political battles at home. The new Diet session that starts on September 26 has plenty to discuss and decide. New laws are needed for postponement of tax increase, for the new supplementary budget, for TPP ratification and for Emperor's abdication following his will. It is also people’s wish: more than 80% say he should be allowed to go if he so wishes. However, it is rumored that topping all this in urgency is how to somehow extend Abe's rule as party president and Prime Minister beyond 2018 when he is now set to give up the reins. According LDP rules, a leader can only serve two four year terms and hence it also applies to prime ministers. Now there's already a committee working for how to make an exception to this rule: will it be one more term or will it be an extension of the second term and if so, how long? While, Abe remains super popular with over 60% supporting rate from the voters, public support for extension of his rule is only 35%. Among the party, however, all elders are almost competing who can find a better way to extend the successful leader's rule; what I have read Koizumi Junior is the only one who has publicly questioned what's the rush today for something still two years away? Such sensible behavior shows he has confidence to become Prime Minister one day even if it is sure to keep him without minister seat as long as Abe remains in lead.

Coming from a country that in its own history once extended a popular president's long time rule with special law made up by all parties together when the old man said he did not want to bother himself with re-election campaign, I am in no position to criticize what LDP and Japan is doing. Instead follow with interest whether the main opposition party DPJ will elect a woman and half-foreigner as its next leader to follow the boring Mr. Okada. Renho, who uses only one name like some artists and sport stars - Ichiro and Kazu come to mind - is a stylish, hard talking lady, who knows her way in spotlights, like Yuriko Koike, the new Tokyo governor. With a Taiwanese father she had to apply to become Japanese, then made her rising career in television, finally starring in the infamous live-grilling of bureaucrats for "wasteful spending" during the first DPJ government in 2009. In my opinion, she would be the kind of colorful leader that could raise the miserably dormant support of the once powerful party and, from her own part, project a new, more colorful Japan to the world. His opposite numbers include Maehara-san, who was the defense minister and architect for government's purchase of Senkaku islands in 2012 to prevent old man Ishihara-led rightwing causing trouble to China relations. Instead, that move became the cause – or excuse - for China's wrath that we suffer of still today.

Talking about powerful women, Koike-san exercised strong leadership in freezing the scheduled move of the big Tsukiji fish market to new ready built premises in Toyosu Island after finding that environmental studies there were not completed and fishermen claiming the new design was not good for their work. Tsukiji is not your usual fish market – located in its central positions just steps away from flashy Ginza since 1935 it has a turnover of JPY 150 million per day - and neither is the new complex that will substitute it: a 400,000 sqm monolith that cost JPY 200 billion (USD 2 billion) to build. Removing the heavy ground pollution from the old gas plant that was there cost JPY 50 billion alone, so no wonder environmental concerns runs high and cannot be treated lightly like the City building bureaucrats tried. Same time, the old location is needed to be cleared up for the Olympic plans: a new highway to Olympic Village is supposed to run through the place while the rest is supposed to become a riverside park. So Koike-san had to face down the Olympic bureaucrats and politicians headed by ex-PM Mori, who were concerned the delay will impact their schedules. For us Tokyo residents, it is clear that Olympics cannot come over concerns for food health for millions, yet Koike-san assured both will be realized timely and properly. The JPY 7 million cost per day for possible delay is small potatoes in comparison.

In business, probably the biggest news last week was Family Mart's takeover of Uny Group's Circle K and Sunkus "combini" chains. Once re-branded Family Mart, the No.3 chain today, partly owned by Itochu, will pass Mitsubishi Corporation's Lawson chain as No.2 in the country with almost as many shops as 19,000 of the market leader Seven-Eleven. For us living here, ubiqitious convenience stores open 24 hours have become an irreplaceable part of our daily lives and it is difficult to understand how other countries can do without them. They have now eroded their business model business model to China and other Asian countries, yet in Europe many countries are still bound by strict laws when shops can be open and what they can sell.

On education front, a new ranking of Asian universities based on innovation saw the venerable University of Tokyo first time not ranked No.1 but No.2 as the top spot goes to Korea - Korea Advanced Institute of Science and Technology. We have seen "Todai" slowly going down in global overall rankings from Top 10 to 28th today, yet never expected the "Old Lady" with wide curriculums would rank so high in "innovation". As interestingly, 17 out of Top 20 were either Japanese or Korean with old "national" universities like Kyoto and Kyushu filling most of the Japanese placings and many highly rated private business universities falling off the list.

Then again I remembered that Taizo Son, a Todai graduate and the founder of Gung Ho game company, who bought Finland's Supercell, said a few years ago there were young 120 start-up companies at his old university's campus. In more recent news, he said he had given up games and re-directed his career as investor and incubator for start-ups. He has now invested JPY 10 billion (USD 100 million) his own money in more than 30 companies including one whose drones deliver blood and medicines in Ruanda, one that makes satellite maps for self-drive cars and one that makes toilets that analyze your health condition from what your bodily fluids. In total, Japanese start-ups collected USD 900 million financing last year, so combined with innovative education they should stand a chance in global competitions if only the people themselves are brave enough.

Japan's football team lost its World Cup qualification match at home last week against UAE on a penalty kick and free kick one and same player gave away plus referee disallowing a goal that was clearly over the line. It has a chance to put things back on track away against Thailand tonight. For one, I will be holding my thumbs up, yet worry how come the perennial World Cup participant cannot put away such low ranking teams. Like many other things here, guess it’s a question of confidence more than skills.

Timo Varhama  
Tokyo, 6 September, 2016   


Previous Columns

31 August 2016
"It's not Super Mario, It's Super Abe! -- And Super Japan! "

8 August 2016
"Summer holidays, heat, rush and relax, while the world keeps turning"

12 July 2016
"Fog of uncertainties ahead: Japan, Britain, China and USA, each in their own way"

24 June 2016
"UK Splits, shakes EU, even Japan"

13 June 2016
"Rainy season: it's pouring on Prime Minister "

30 May 2016
"Obama is a Class Act, G7 Meeting Was for Japanese Audience "

8 May 2016
"With More Headaches at Home, Abe Takes Golden Week Europe Tour "

23 April 2016
"Dramatic Giant Quake, Business Slowdown, Election Mode in Politics"

7 April 2016
"Tokyo Great City, Japan hmmm...Colorful People "

22 March 2016
"Spring energy, child care and train travel "

11 March 2016
"Five Years from Japan "3-11" - Making Best Out of Gigantic Recovery Task "

28 February 2016
"A Dig Deeper into Politics: Ignorance, Camouflage, Chicanery "

15 February 2016
"Markets in turmoil, economy in decline, challenges grow for Abe"

5 February 2016
"Minister scandal distract, economy slow down, Kuroda rides for rescue "

28 January 2016
ABE: THE REALITY BEHIND ALL THAT TALK "

20 January 2016
"Bear Outlook for Monkey Year Grows, Taiwan Votes to Keep Distance from China, but Pop Group is More Important for Many "

12 January 2016
"NEW YEAR VIEWS - AND A LOOK BACK AT 2015"

17 December 2015
"Global Environment, Food Tax, National Stadium: Historical Decisions or Political Parading? "

8 December 2015
"Challenges in Paris Conference, Challenges Back Home in Japan "

27 November 2015
"Refugees, bombs, business and global warming - can we control them all? "

3 November 2015
"Japan, USA, UK or Germany - China Impacts Us All Today "

22 October 2015
"New Ministers, New Trade Deals, All Political Play"

7 October 2015
"Power games, ball games, trade deals and refugee misery"

25 September 2015
"Big Problems, Big Talk and Big Figures - Each in Their Own Way".

9 September 2015
"Challenges in Japan, Tougher in USA and Europe ".

1 September 2015
"Looking at Neighbors, Japan Seems Stable and Safe ".

19 August 2015
"End Summer, Ceremonies and Holidays Over, Back to Work for All".

6 August 2015
"Hot Weather, Hot Air in Politics - From War Anniversary to Whisky in Space".

23 July 2015
Greece, China, EU, Japan: looking for the lost reality

23 June 2015
World No.1 City? The Difficulty of Passing New Laws, the Easiness of Spending a Lot

16 June 2015
"Only in Japan?" - Somethings, Yes, But Others Are Same All Over

4 June 2015
Security and Finances: Pensions, Companies, Banks, Olympics, FIFA

21 May 2015
Economy Back on Track, Record Profits at Big Companies

11 May 2015
Spring Events: Odaiba Rock, Shibuya Sex, Capitol Hill, White Hall and Red Square

22 April 2015
Elections, Elections - Finland, Japan, Around the World

30 March 2015
Sakura: beautiful, but just for a short, fleeting moment

16 March 2015
Better late than never - Japan moves slowly

2 March 2015
Three struck out, three more in doubt - Abe's ministers under attack again

19 February 2015
Spring, Sibelius, Chocolate, Budget and Big, Bad Putin

5 February 2015
Reform Work Starts - Energy, Farming and Food on Wish List

26 January 2015
Terror strikes, plenty work, sad memories wait

15 January 2015
Watching AKB, Eating Mochi, Spending JPY 96 Trillion - Japan Off to Better 2015 After So-So 2014



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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