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Summer heat, new scandals and export worries - but Tokyo is best

It's "back to work" time following last week's Obon, the traditional peak of summer holiday time. Even Prime Minister took time off to play golf at his Kawaguchiko villa. His partners were two ex-PM's Aso and Koizumi, both still important political figures, and one more ex-PM Mori joined for the post-round barbecue at Abe's Finnish log house. Bet you their main topic was not whether the beef was from Japan, US or Australia. Or from EU next time when the new free trade deal has taken effect.

The heat has cooled down in Finland and elsewhere in Europe, but here we're hitting back to top after one coolish weekend. It's been so hot that drink companies have run out of capacity to meet demand and price for fresh veggies have shot up double as the farmers' fields have dried up. Defying the hot weather, the number of foreign tourists hit new monthly record in July at 2.8 million. With big summer bonuses paid last month it looks good for private demand impact in the ongoing quarter's economic growth.


GDP resumed growth track again in April-June following sudden drop in January-March. Both private demand and business investment contributed; it's the external trade that's now in doubt at mercy of Trumpian whims. As everything for the US president is transactional and subservient to pleasing his back country supporters, it would not be a surprise if he goes forward with his plan to seriously damage Japanese automakers with 25% tariffs.

It does not matter to him that 2 out of 3 Japanese brand cars sold in USA are made in Kentucky, Tennessee and Mississippi - rural societies were old industrial jobs were in decline before Japanese investment. Moreover, US-Japanese car factories buy every year USD 70 billion worth of US made cars parts for their production lines just like other local makers. In fact, Honda made in Kentucky is said to be the US car with highest US made content. All put together, US-Japanese companies have invested over USD 400 billion in USA and employ, directly and indirectly, close to 1 million Americans. But facts and reason have no place in Trump's inflammatory campaign propaganda.


Japan escaped in recent trade talks with US as Trump focus now on hammering Iran and Turkey to divert attention from his failings with China and North Korea, the embarrassing embrace of Putin in Helsinki and the slowly tightening net of investigations into his domestic doings. Going forward, too, it's more likely that Trump will rather angle for bigger fish China as his next campaign target. His threats have already had slowing impact on Chinese economy: business outlook and share market are down, bubbles are pricking. Earlier "superstar" Tencent has lost quarter of its Apple-like top value USD 600 billion. Hainan Group that grew from a regional airline to an international multi-business behemoth with government finance, has sold USD 14 billion worth of assets to pay back debt and stay alive. Things don't look good there and that's bad for Japan, too.

As continuous economic growth and social well-being is the basic presupposition for Communist Party's rule, it is said that Mr. Xi, who was only recently declared life time leader of the country, was heavily criticized in the party leaders' annual beach resort meet for risking party's position by standing up too strong against USA. Xi, who loves parading himself as much as Trump, has stayed away from limelight for long time now.


In Japan, too, some nuisances have emerged to Abe-san's shoo-in re-election next month to continue lead LDP. In his overconfidence, Abe decided he does not have to condescent to any policy debate with his lonely opponent, but instead just grandstand in Vladivostok Economic Forum with Putin and other regional leaders - possibly even meet Kim Jong Un! - leaving poor Ishiba-san watch it all on TV at home. Further on same haughty path, he declared that Constitution change – his Holy Mission inherited from grandfather - should be the central campaign issue, not country's economy and people's well-being. This could cost Abe votes as it contrasts deeply with general opinion that says economy and well-being of people remain the two most critical issues for voters ranking at 40-50% while Constitution is important only for 6%.

While the vote involves just 800 party members, some of them might actually reflect their voters' preferences and not only future favors from The Boss. No doubt, Abe will get elected but it could be without same overwhelming support inside the party as before. Lame duck prime minister haunted by his own colleagues would be a bad result for leading Japan these difficult times.


Maybe it was lack of public interest to LDP's internal election that Suga-san wanted to change when he, on country tour in Hokkaido, blurted out that mobile phone fees should be 40 pct cheaper. Sure, we all agree that the three big mobile carriers, a clear oligopoly, charge outrageous rates from Japanese consumers in comparison to what phone calls and internet costs elsewhere. However, when it comes from the government No.1 spokesman it can have a much bigger, unintended impact. In just one day, Docomo, AU and Softbank lost USD 10 billion value! Another warning example that politicians should stick to creating free and open playing field for companies, but keep their nose out of actual business details.


There's been more scandals to cheer us up from summer slumber and get our blood running. Worst public storm came from the revelation that the prestigious Tokyo Medical Science University had been systematically cutting off points from female applicants' test results for years to keep number of female doctors' below 30% of the total with explanation that "women tend to stay away from their work when marrying and having children". This, of course, flies against the face of prevailing opinion and Prime Minister's official policy promoting women in the work place and helping them remain active when married with children. Naturally, the whole board of the university was forced to resign and Education Ministry, who just had two scandals of its own, had to launch a nationwide study of all 82 medical universities to check if they have similar hidden systems discriminating women.

Potential further embarrasing results will take time, but it is clear to all that Abe's talk of "creating a society where women can shine" is far from realization. Outside Japan, the news of the scandal confirmed views why Japan is ranked No.114 out of 144 nations in UN survey of equality between men and women. These things sit deep and don't change just by PM's declarations.

Further international embarrassment was heaped on Japan by a UN Human Rights Commission report on working conditions in cleaning up the Fukushima No.1 nuclear power plant wreck. It's been well-known that big part of the 10,000 strong work force there is hired by shady yakuza-like private agencies from people who are attracted by high wages and do not care or fully understand the risk of exposure to nuclear radiation. As they work for sub-contractors, not Tepco itself, the big power company, now owned by government, has claimed "it is difficult" to control what kind of work force is hired and how they are treated. It's clear to all that the business is good, wages are attractive and it's all paid by tax payers, so it's government's responsibility to control any wrongdoing and misspending at the site.

In business news, Suzuki and Mazda, under METI pressure, admitted to similar test data falsifications or unauthorized quality checks as Mitsubishi and Nissan before. They're again minor issues in comparison to Volkswagen's world wide exhaust scheme but we certainly could have done without another blemish on Japanese manufacturing reputation.

There's been even scandals in sports. In one, National Boxing Federation chairman was forced to resign after it was exposed he operated the sport organization as his private business. All boxers had to use "federation gloves" that came at high price from chairman's friend's company and pugilists from chairman's home area were often declared winners by the referees. That sounds all typical yakuza operation and the old man even looked perfect for his "oyabun" role. Yet nobody had stood up against this mismanagement until an Olympic gold medal winner, now World Champion professional well out of Federation's reach, did. Guess boxing is "different" in many other countries, too. Better than horse racing still, I hope.


Happily, the summer did not pass without positive news about Japan in international media. our Tokyo was selected one of the top cities in the world to live in two separate surveys. Monocle magazine declared it No.2 behind Zurich while Economist figured it's No.5 behind No.1 Wien and No.2 Osaka. With both New York and London way down in 40-50th range Economist explained that "it's medium sized cities in wealthy countries that do well in these surveys". Seems British journalists need to study a bit more: Tokyo is actually bigger than NY and London put together! Our city and the whole country is a place where everything works despite some bungling at top every once in a while as all who visit here can testify.

In Aoyama View it all comes from normal people, who live honestly, work diligently and sometimes perform outstanding tasks that seldom make the news overseas. The piece that attracted me most in recent weeks was about a 78 year old man, who drove hundreds of kilometers in his minivan to join search for a lost child. The 3 year old boy had got lost walking unattended just 100 meters from beach to his home and 1500 policemen had been looking for him 2 days. Worst was already feared, when the old man came and, counting on his instincts, found him in just 2 hours only 500 meters from home.

When TV-crews wanted to interview the man again two days later, they found him hard working with other volunteers in far-away Kure town that was badly damaged in recent floods, lifting heavy sand bags together with much younger ones to build barriers against a potential new violent flood.

No doubt, the best thing about Japan is its people.

Timo Varhama  
Tokyo, August 23, 2018  

Previous Columns

8 August 2018
"Petty politicians, bungling bureaucrats and profitable business"

30 July 2018
"While we were on holiday"

17 June 2018
"From Singapore to soccer - wrapp up for summer"

11 June 2018
"Showdown in Singapore, commotion in Canada and cover-ups in Tokyo"

28 May 2018
"Morals and responsibility, blind loyalty and power harassment"

17 May 2018
"Big Business in record results again, but consumer are not convinced - North Korea spectacle continues under Kim direction"

26 April 2018
"Political spectacle approaches grand finale
- people's trust sinking ever lower"

17 April 2018
"Cruise missiles and cronyism, business boom, old people and sumo"

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

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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