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 AOYAMA VIEW

Look back at 2017: commotion around Japan, but steady and safe here
It's only a few days to Christmas and after that Japan closes for traditional long New Year holidays. They should be peaceful even this year: the rumors say US attack on North Korea won't happpen until February! In China, they are already building camps for Korean refugees, but Japan Prime Minister counts on the given date so much that he plans to leave country in January for a trip through East Europe. Winter Tokyo is at its cold, sunny beautiful best and spectacular Christmas lights twinkle in evenings. It's time to take a look back at Heisei 29 what kind of year it was.

For us Finns the Finland100 celebrations were certainly the high point and for many European business people here it might have been the finalisation of the long drawn talks of EU-Japan Economic Parthership agreement, but overall this year was plagued by all sorts of commotion. The usual typhoons, landslides and quakes were augmented by North Korean missiles buzzing over now and then or falling short in Japan Sea narrowly missing airliners and fishing boats out there. Hundreds of the latter were North's own desperate fishermen who had ventured far out to Japan waters in fierce conditions on their flimsy wooden boats after Young Leader rented out the local waters to Chinese fishermen to counter the UN ban to sell his seafood to them. At least that's how another rumor explains the exodus that ended fatally for many of the armada: the number of shipwrecks and dead bodies drifting ashore in Akita, Yamagata and Niigata every winter has never been this high.

It was pretty stormy in politics around the world as well. Especially, USA seemed to sail from turmoil to another with its new president settling in the White House while the rest of the world including Japan tried to steer over the high waves rolling from Washington. China and Russia, the usual culprits for unruliness - beside North Korea, that is – were surprisingly steady and predictable in comparison. China managed even to present itself as the new global leader for international rules and free trade, yet continued its fortification of the vast South China Sea, while Russia spread its influence on internet and completed its Syrian regime reinstallation mission, all with little objection from the new White House. Of old US friends, Japan Prime Minister turned out the first and most skillful leader in getting close to Trump's ear. He sure tried hard to please him, never blinking an eye even for most glaring "gomasuri" after finding early out that the more exaggarated the praise was, the more narcistic Trump loved it.

At home, Abe stumbled in summer with two favoritism scandals related to public support for new schools, yet rapidly regained strength from North Korean security threat and gained a spectacular win in extra parliament election he organised for himself. This will pave road for Abe-san to rule until 2021 and become the longest serving PM in Japan history. In fact, the longest serving democratically re-elected leader in the world beating out Margaret Thatcher. (President/Prime Minister Putin does not count in my calculation.)

Such political stability has provided firm foundation for the steady economic growth that has continued ever since 2012 when Abe led LDP back to power - the longest continuous period of growth in Japan post-war history. Yet, the school scandals and North Korean missiles also showed the inbuilt weakness of Japan's political system based on personal popularity and little difference in actual policies for voters to choose from. While Abe's popularity collapsed from high 70's to low 40's, then rose back again in a few months, his No.1 challenger Koike-san ruined her carefully built image in just two weeks before the election with one uncareful statement. As result, her Hope Party ended up with less than 1/3 of seats it was predicted just days before and Koike-san instantly gave up her pretensions for national politics to focus back on her Tokyo Governor job. Instead, the new Constitutional Democrats, hurriedly scrambled together within same short time by the loser Edano-san, gained votes intended for Hope to become No.1 opposition party. CD's 55 seats against LDP's 284 have hardly any meaning though; it's clear that Abe rules and that's good for economy.

As readers have noticed, I'm not a true believer in Abenomics as its main elements are just cheap money, low yen and public spending and it has missed out on major reforms it promised, yet, as said, Abe's steady rule is something to build on in these stormy times and we can always keep hoping more radical reforms will come. After all, Abe is now only half-way through his rule to 2021 in all likelihood. Emeritus professor Heizo Takenaka, who almost single-handedly forced banks to clean up bubble-time bad loans as ex-economy minister under Koizumi 15 years ago, wrote in his "Midterm Review" last week that Abenomics has significantly improved the economy – stock market has climbed up from 8000 to 23,000, job offers for each job seeker have risen from 0.9 to 1.55, inbound tourists increased from 8 million to 28 million probably this year and Japanese business confidence going forward hasn't been this high ever since pre-crisis 2006– but what we expect now is bolder reforms that will set lasting economic base for future. It's not enough to overcome the inbuilt challenges at home, but to further cope with the rapid changes in the rest of the world.

Despite all talk of corporate exports, profits, stocks and investments, heritage and culture, Japan is through and through a consumer society. Private consumer spending makes over 60% of the GDP and whether it's up or down some marginal percentage one month to another, the consumers' spending is huge and highly varied, so understanding people's taste is important for any company that wants to sell its products here. The annual list of hit products published by Nikkei Marketing Journal every year end is always useful to read for that purpose - and fun, too. According to magazine's jury, 2017 top product was Amazon: the Japanese operation expanded its product range to fresh food and streaming TV and movies, yet struggles with sufficient staff to deliver its gigantic "normal" sales. Significantly, Nintendo's new game unit was listed as equal winner in recognition that the gaming market is much bigger than some of us old fogies understand. Following behind these two top rankings were AI speakers, retiring songstress Namie Amuro, new Ginza Six shopping complex, Zozo Town - Japan's largets online apparel retailer, whose owner CEO spent over USD 100 million for an abstract painting by an uknown New York artist - and new (highly expensive) anti-wrinkle cosmetics from Shiseido and Pola, just to mention a few.

Like in golf competitions, the magazine also handed out Booby Prize for the worst performer. It went to Abe govern ment's Premium Friday proposal for companies to allow staff leave home early one Friday every month: less than 10% of companies followed it and even in them barely half of the staff dared to do it. It's not only Fridays: Japanese workers are afraid to even take out their legally allocated holidays. According an international survey Japanese use up only 50% of their paid vacation days and 63% feel guilty doing even that. It's clear it's the social pressure in Japanese companies – the unwritten rules more than the written ones – that make for all this. Foreign companies here with different atmosphere benefit from this more than many understand: the No.1 criteria for Japanese considering a career change is "getting more vacation days" according to same survey.

The extreme result of the moral dilemma that makes you work more than necessary or even physically can, is the "karoshi" or death by overwork. Every year there are 100-200 cases and this year a number of them got big publicity. Naming and shaming the worst offending companies, where managers willingly force their staff through such hell, is more effective than government's feeble wishes to grant a few hours off once in a month.

Ironically, the new "Black Corporation Awards" that started this year, named government's own public broadcaster NHK as the worst offender following tragic death of a young female reporter for politics. Another "winner" was Taisei Corp, the big construction company contracted to build the new Olympic stadium: a young overworked employee died at the site. Others on the list were well known names like Panasonic, Yamato delivery company and house builder Daiwa House as well as a moving firm and a city hospital.

Despite all this strain, Japan remains poster child for human health. Japanese topped again the longest life expectancy list for women with men at third position, had by far lowest obesity and death by heart attack as well as the highest number of hospital beds per capita, just in case, despite spending only slighly more on healthcare than OECD average. Crimes continue to decline further in the already worldfs most law abiding society, yet what is clearly up is domestic violence and child abuse. Wonder if these are convulsions of bad feelings beneath the surface of happy social harmony or changing attitudes to report such things easier than before. Sadly, also repeat offenders are up, not least shop lifting by old people whose pensions are not enough to feed them properly. The prison population is getting older – at least there's warm bed and regular dinner every day.

General concerns that are bothering people are cyber crime, environmental problems, nuclear safety and genetically engineered food while No.1 concern for companies is neither profits or share price or taxes, but shortage of workers.

Finally, the ultimate index of good life, Michelin Guide confirmed again that Tokyo remains "the world center for gastronomy" ahead of Paris with more stars than ever. We have now 12 restaurants with three stars, 56 with two and 166 with one. Some of them are outrageously expensive, yet Michelin also lists 279 Bib Gourmand locations with "quality food at affordable prices" below JPY 5000 (EUR 35). My New Year target is to visit the first ever Michelin starred ramen shop, who continues to charge no more than JPY 1000 (EUR 7) for its bowl of noodles despite the new international fame. You just have to get there early in the morning: they say the line of customers starts forming already at 8 am when they open up the door.

That's one of the challenges for Heisei 30.

Timo Varhama  
Tokyo, December 20, 2017   


Previous Columns

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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