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 AOYAMA VIEW

 Cruise missiles and cronyism, business boom, old people and sumo

Cruise missiles to Syria, trade war threats to China, boasts of "denuclearization" with Kim, Army mobilized on Mexican border, nasty attacks spread from media to other business, scandals with strippers, rumors of Russian prostitutes: the US president sure works tirelessly to keep his name in the global headlines. In Tokyo, too, Prime Minister remains in spotlight of increasing doubts of his integrity: more lost and doctored documents keep cropping up of Abe's cronyism, his credibility and popularity is tarnished and attacks are coming now even from inside his own party. Daily demonstrations outside Parliament House have got big and noisy. Mr. Trump and Mr. Abe have lots to talk with each other when they meet this week in Florida.

The two are so much same, still so different. Both born with silver spoon in mouth – one into national political dynasty, the other into New York real estate family. One bombastic big mouth always at front stage, the other a scheming party consensus builder in back rooms. Looking at Abe-san patiently replying to endless claims and questions from the opposition all day long in Parliament - denying time after time his personal involvement however clear it seemed - made me think how Trump would react in same position: probably he wouldn't last such heated grilling for 10 minutes without exploding!

Apart from exchanging stories of personal challenges, Abe will be asking Trump not to forget about Japan in his Korea talks and Trump will be pressuring Abe to somehow eliminate Japan-US trade gap. It seems Trump is changing his tune from insisting on bilateral deal to after all joining the TPP agreement that he cursed first off as president - "if the terms can be changed to better suit USA". Some badmouth said that looking at his other "great deals" it's enough to just change the meaning of "TPP" from Trans Pacific Partnership to Trump Pacific Partnership.

ABE OUT BY PARTY VOTE?
The grilling of key officials continues this week in the Diet but the spotlight is now off PM so he can travel to meet his golf buddy to supposedly raise his image again. However, it could well be that the LDP faction leaders have already decided to swap such unpopular leader for a fresh, clean face in the September party vote. Unless his popularity recovers miraculously, Abe might drag down LDP's own support that still remains unchanged and overwhelming from the voters. The supposed main challenger ex-FM Kishida, who leads his own faction with 46 MP's, has reportedly already persuaded party secretary Nikkai change his support to him from Abe. If he also gets votes from the 59 MP's commanded by Deputy Prime Minister Aso, the second biggest group, he could gain upper hand over Abe faction "nominally led by Hosoda", the biggest with 95 members. So far, Aso and Abe have been close allies, yet it might be tempting for old Aso, already 75, ex-PM and all, to become a king maker, who could then rule from behind Kishida. Also Finance Minister, Aso is a fiscal hawk in contrast to pro-growth Abe, this could make for a remarkable policy change in that respect.

So far, the financial impact from all the political commotion and leadership challenges has been surprisingly small in both Japan and USA. JPY value has stopped going up after the initial jump and seems pretty orderly now against USD. Equity markets took a bigger dip here as foreign investors withdrew parts of their big bets in Tokyo stocks, yet BOJ's active purchase policy has countered some of the impact. The re-appointment of governor Kuroda for another 5 year reign at the central bank certainly adds to the feeling of continued safety in Japan finance. In contrast to US Fed moves and EBC plans, BOJ says it will maintain its easing policy unchanged at least until end 2019 – possibly even beyond that if expected fading in the ongoing construction boom around that time will slow down the growth.

BUSINESS NEWS
Without corporate results from March 31 book closings and data on new base salaries and bonuses at big companies, both essential road signs for the new 2018 financial year, we focus on other business news here. One remarkable move is granting of business license and 5G bandwidth for Rakuten's new mobile phone operation, a fourth carrier to challenge the oligopoly of the 3 old ones - Docomo, AU and Softbank. With market saturated already long time with more phones than people and players satisfied with their market shares, there's been little interest for price competition. As result, Japanese consumers continue to pay highest prices in the world, probably more than 10 times (!) those in Finland. Visiting any three company's sservice office takes hours with lining up like in a government office. With no new demand in sight, Rakuten must gain its customers from the existing ones and this is likely to create welcome new price competition. Moreover, to build its new network with 5G straight off, Rakuten has budgeted JPY 616 billion (USD 6 billion), a big new business opportunity for Nokia Japan and other network builders.

In retail, Uniqlo raised again its full year profit forecast with sales continuing to grow in China and South East Asia as well as last quarter at home thanks to cold winter. Further boost comes from online sales that grew over 30% and make almost 10% of the total now, something company plans to double in next 5 years. This contrast to competitor H&M, who struggles to adapt to new online shopping patterns. In USA, big apparel shop chains have gone under after failing to adapt an online service. Uniqlo is highly popular in Asia - something well evidenced with hordes of tourists shopping at Uniqlo even here - and growing consumer demand there can further help Uniqlo realize its target to catch up in size with the Swedish giant. Taking fight into its home, Uniqlo plans to open its first store in Sweden this year. Maybe Finland could follow next.

Tokyo Disneyland is celebrating its 35th anniversary and since its 2001 expansion remains the No.2 amusement park in the world in terms of visitors behind Disneyworld in Orlando, Florida. It is also the first Disneyland outside USA and the only one that is not owned by Disney organization. The owner and operator is Oriental Land Corporation, set up by Keisei Railway company, who only pays royalties to Disney. Wised up, Disney people have made sure they hold the majority ownership firmly in their hands in new Disneylands they have set up in Europe and Asia. Having visited in Urayasu long ago when my kids were young, I have no need anymore luckily: reports say the waiting lines for each attraction can run over an hour and has only got worse now with so many foreign tourists. Good education for kids in patience, no just fun! Once tired, you can withdraw to the Disney Hotel or another one near-by. Not bad business plan!

HOTELS AND TRAVEL BIZ
Thanks to the tourist wave, hotel business has boomed now for several years with high occupancy rates and unrebated prices. Well known international brands and less known domestic ones keep opening new properties here and there, Airbnb Japan is now a fully established market player and even total outsiders are joining into the prospective business. Among new hotel keepers you can find train operators, travel agencies, online sellers, information providers, car rentals, retailers, even a wedding service provider. It is no wonder newcomers want to have share of the cake: Japan had last year 29 million foreign visitors, up from just 8 million in 2010, in addition to traditionally strong domestic travel and these foreigners spent record JPY 4.4 trillion (USD 42 billion) whereof JPY 1.25 trillion (USD 12 billion or 28%) went to hotels. Only shopping got more with 37 pct while 20 pct went to eating and drinking. The latter percentage translates to USD 8 billion – just wonder how many beers that would buy?

The government target of 40 million inbound tourists during Olympics year 2020 looks reachable, but it must be spread from the "golden triangle" of Tokyo-Kyoto-Osaka to all over the country to to find enough hotel rooms. That would also help against declining livelihood in countryside. Good progress has already been made: Hokkaido and Okinawa, the two poorest prefectures traditionally, are buzzing today with impact of tourists. Those in know say my memories of incredible seafood breakfast at very reasonable price in Hakodate morning market are bygone: the prices have doubled or tripled today and lobsters to feed the tourist masses come increasingly from Russia. Last time in Naha at the other end of the country, there was a long line to get into hotel breakfast room. And that was off season!

Another wider spread is needed for where the foreign tourists come from: China, Korea and Taiwan make today the overwhelming majority and while South East Asian travelers are rapidly increasing, only 3 million came last year from Europe, America and Australia. Increasing that number is important but difficult, travel experts say, as many Westerners think Japan is just seeing Tokyo, Mt.Fuji, sakura and a few old temples – plus finding the closest McDonalds! Think what such people are missing.

AGING POPULATION AND BUSINESS DECLINE FOR YAKUZA
Boosting the countryside economies is essential to stop the population decline and aging there. According to fresh account, Japan's total population fell last year again by 227,000 for seventh consecutive year to 126.7 million and people over 65 make now 28% of the total. According WHO vocabulary, that makes us "super-aged" society - to be "aged society" it's enough to have just 14% over 65. Japan has now more than that over 75 year olds - in fact, they're more than below 15 year old's! – and the old people increasingly populate the country side as young people move to cities in search for better paying work. Population in Tokyo and other big cities keeps still increasing – probably even getting younger.

Even organized crime is facing problems in declining numbers. According to latest police data, there's only 34,500 registered yakuza left after 13 years of consecutive decline. Moreover, in line with "normal" companies, only half of the staff are better-paid regulars even at formerly powerful big gangs like Kobe's Yamaguchi-gumi and Roppongi's Sumiyoshi-kai. Their life seem to be more peaceful, too, at least on surface: only 1 in 2 was arrested or suspected for a crime last year. Drug dealing was the main reason, two times more than violence and bodily harm. The violent inter-gang fights, the classical element of yakuza movies, were reduced to just 8 incidents down from 42 clashes in 2016 when Yamaguchi-gumi broke in two and the business boundaries between the factions were sorted out. Takakura Ken, Sugawara Bunta and Beat Takeshi always had much more action than that.

SUMO SEX DISCRIMINATION
Another traditional element of old Japan, sumo keeps facing problems, too. Having just sorted out the fight between top wrestlers in a country town night club with sacking a popular Grand Champion and demotion of a well-known stable master, news from another country tour went wild across the nation and around the world when a town mayor fell down on "dohyo" with a stroke in middle of his "aisatsu" speech and local nurses in audience rushing to help him were admonished by local announcer to get out of the "holy" ring.

"Is this the world top in sexism?" asked a Finnish sports daily. In my mind, it's nothing in comparison to US president's escapades, but afraid it added to overseas view of women's position in Japan. Here, of course, everybody understand that old-fashioned sumo world reflects prevailing views of today's society about as much as some far-flung religious sect the views in Finland. Even if Sumo Association immediately apologized and said the announcement was a wrong call in a life threatening emergengy, it surely cost thousands of angry female fans dropping their support. Old and ancient or whatever, no sport can live profitably if the audiences are reduced to just bunch of old men.

Unfortunately, the incident didn't stop the association from further mistakes. The female mayor in the next town on the tour schedule was requested to make her speech from outside the dohyo - she sure didn't mince her words doing that! - and fumbling continued with demand to stop girls' participation in regional school tournaments, an established and popular phenomena already for years. The given excuse was risk for injuries, but I doubt it was because today's sturdy girls are too strong for same aged boys. Even in "normal" wrestling Japanese women do these days better in Olympics and World Championships than men!

Adding insult to injury, it was found out that earlier this year the Association had allowed to set even cars (!) on the holiest of holiest dohyo - in Ryogoku Kokugikan national stadium – for a Ferrari promotion event. Obviously, for Sumo Association, even cars are bette than women and big money washes away any "impurity" in their mechanics!

BASEBALL PHENOMENA
The No.1 local sport news last week was the multitalented young baseball player Shohei Otani's start in US Major League. There hasn't been so much buzz for any Japanese player debut in MLB since Hideo Nomo in 1995 and Ichiro Suzuki in 2001. That's because Otani is a rare talent: powerful both as pitcher and slugger. Such "nitoryu" or samurais with two swords are a rare phenomena even in USA: commentators there talked about "new Babe Ruth" in reference to the Yankees legend, who ruled the game in the 20's and 30's.

With high expectations proving true in Otani's first series of games, Japanese media and audience have "gone gaga" to quote the local English daily headline. Otani's games are televised live in the morning and daytime programs spend hours analyzing and discussing his every pitch and hit. Little mention is given to the fact that his team Los Angeles Angels is not one of the Big Ones nor was the opponent in the first 3 matches. Naturally hope that young Otani will continue to do well, but would save the superior acccolades to later once we have seen more.

As it happens, Finland seem to have similar media bubble of two young rookies doing well in USA, one in ice hockey, one in basket ball. Every time I check my Finnish sport news, they're full of high praise for what great performance Patrik Laine and Lauri Markkanen put in the night before in USA. Yet, when I check my New York Times, I cannot find any mention of either name. Guess, we all love our sports men and women in our own way. As much as we don't always like our political leaders.

Timo Varhama  
Tokyo, April 17, 2018  


Previous Columns

6 April 2018
"Mystery train and other unpredictable moves in geopolitics around Japan"

26 March 2018
"Trump Unchained and Abelympics – Can PM Make the Party?"

16 March 2018
"Anniversaries, updates, fallacies and deception"

5 March 2018
"WHILE WE WERE WATCHING OLYMPICS..."

26 February 2018
"Korean Olympics: sports shine, politics stink"

14 February 2018
"Korea: Murky Politics and Big Business Behind the Sport Spectacle"

4 February 2018
"It's "smile time" in politics, Olympics, economics and business"

23 January 2018
"Moomin crisis, panda frenzy and Olympics turned into political farce"

12 January 2018
"Heisei 30 looks good: share prices soar, PM rides high "

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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