Foolish things sell in retail,
but sports are to be serious
Always intrigued by the imagination of Japanese retailers to come up with new ideas to get people to spend their money on their offerings. Commercial Christmas was introduced to Japan decades ago even if there is no such holiday in the official calendar and Jingle Bells have been ringing ad nauseam in all kind of shops ever since. Halloween was found a few years ago to fill in the long wait to Xmas and now has become pretty big: lots of kids, even adults were running around town in ridiculous dresses three weeks ago. This year's invention was Black Friday, a big shopping day in US related to their Thanksgiving. Now here, too, it seemed every second shop was running some kind of Black Friday Sale last weekend. Nothing big yet like in USA where USD 15 billion worth of goods were sold just online, but after a few years who knows?
Japanese consumers just love this kind of special days. There's Boys' Day, Girls' Day, Olds' Day, Green Day, Star Day, Moon Day, Meat Day, Eel Day, the list is endless. Beaujolais Nouveau Day, the third Thursday in November, hardly known in most countries, has been big in Japan for long, too. In fact, Japan is the No.1 export market for this great marketing trick by French wine growers to sell their product before it's ready. It's a bit like selling bread when it's still dough before oven, yet wine experts debate in all seriousness whether this year's crop is as good or better than last year's etc. And, yes, I fall for it, too, every year for one bottle like hundred thousands others. We all know it's a trick but it's nice to be foolish once a year. At least we don't put on some stupid black cape and skull mask!
In fact, in all kind of business here you must keep coming up with new or redesigned products and services to keep the customer satisfied. If you rest on past laurels for long, somebody else will try to take your place with something better. In industrial machines and materials, no tricks will do but you've gotta keep developing your offering. A long term relation usually gives you an opportunity to respond to the challenge, but in consumer business where customers walk in and out of shops or look for the better price on internet, it's ferocious competition every day.
Even big behemots are now reorganizing their game with more drastic steps than seen before, redirecting and rationalizing their long-time activities before the bad apples bite your profits too much and force you to even more radical changes – like Toshiba is now going through because of Westinghouse. In recent news, Fujitsu announced it will sell its PC's - No.1 market share in Japan! - to Lenovo in order to focus on global IT service business while Hitachi plans to sell its chip systems maker unit to focus on digital technology, car parts, trains and energy. The USD 3 billion price tag for the latter, if realized, will provide nice pocket money to invest in the preferred areas. In Toshiba's case, the memory chip unit it has agreed to sell off in desperation, ironically more than doubled its profits in April-September to JPY 231 billion (USD 2,2 billion), the best ever in 28 years! It won't warm up Toshiba's pockets for long any more, but it at least helps to justify the agreed high sale price JPY 2 trillion (USD 18 billion). In contrast, Toshiba's tv-unit went to a Chinese company as cheap as USD 113 million.
Big banks, too, will finally rationalize their consumer business closing hundreds of branches and cutting back thousands of jobs that can be substituted by IT services – like done elsewhere years ago. Of three "megabanks", Mizuho said it's looking to chop off 19,000 jobs from its current 60,000 in its 800 branches, Mitsubishi UFJ says it will close 20% of its 480 branches with automation substituting 9500 jobs while Mitsui Sumitomo will add 4000 job cuts to bring the total to 32,500 bank service jobs soon gone in Japan. What's different from Western countries, however, is that Japanese banks plan to implement the reduction mainly by natural retirements over a long period of time, upto 10 years for Mizuho and 3 years for the two others. Neither is the move really to maximize profits, but rather to minimize losses: in stark contrast to non-financial companies, the three big banks saw their profits tumble upto 60% during first half year FY2017 in the market dominated by negative central bank rates.
Elswhere Japan and Japanese companies power ahead. That Japan placed 10th in new UN ranking of nations on their level of ICT development does not sound much, but looking at the results closer, you will notice that the other Top 10 nations were mainly small European countries like Switzerland, Denmark and Norway as well as Hongkong, an Asian city. One notable exception has been South Korea, the acknowledged ICT world No.1, yet even that was upsurped this year by Iceland. For more comparison, Sweden ranked 11th, USA 16th, Finland 22nd and China 80th between Ukraine and Iran despite its recent boom. It was also reported that for industrial robots, Japanese manufacturers had 52% global market share with over 150,000 units sold in 2016, two third of them to export markets. Recalling how already 30 years ago people came from all over the world to Japan to have a look at Fanuc's factory close to Mt. Fuji where "robots were making robots", think it's quite an achievement that Japan has held to the top spot ever since in that business. Surely active product development has been instrumental in this one, too.
As for other technologies, JR Central showed media the Tokyo terminal for its Maglev train line that the company is constructing to Nagoya targeting completion in 2027. Located 40 meters under Shinagawa station, the new Maglev line will complement its business area with uncountable office towers and "normal" station that has a wide variety of local train connections and feeds in 1/3 of the 300,000 daily Shinkansen passengers, who board their train there instead of Tokyo main station. Shinagawa will surely grow even more with the Maglev service and a new JR train line that will be added to current Keikyu service to Haneda that has become the fourth biggest airport in the world following its liberalization from bureaucratic shackles to serve only domestic traffic. A combination of deregulation and corporate customer focus working together at its best!
Once on topic of trains, it's good to hear that JR and Metro are now rushing ahead with installation of platform gates to no less than 882 stations around Tokyo before Olympics 2020. Today only 7% of some 10,000 stations around Japan has safety gates and with growing number of tourists it's getting really crowded in many places. Combined with old, narrow platforms, fast passing trains and foreigners not accustomed to Japanese patience for queing and moving around slowly, the risk of accidents to fall on tracks is many doubled. Go try experience it mornings and evenings at any Ginza line station or on Sunday afternoon at Shibuya Yamanote platform: can tell you it's not pleasant. There's already been some nasty accidents with blind or just drunken Japanese and now officials are clearly afraid what will happen with Olympic crowds. So here again, the Olympics work as the catalyst to get improvements done around the city that we Tokyoites have long been waiting for, as many predicted will happen when we got the games.
Once on sports, you cannot pass the scandal in sumo world that almost ruined the year's last tournament and still hangs uncleared over the ancient sport at the writing moment. It was a drunken brawl between two wrestlers in a country hotel karaoke room after a long and boring provincial tour: Harumafuji, a veteran Mongolian Grand Champion lost his patience and "taught manners" to a junior Mongolian colleague, who kept looking at his mobile phone when the "senpai" was adressing him. Whether it was a beer bottle or karaoke machine remote controller that flew first before it was close enough for fists, does not really matter; the victim looked badly bruised and the cut in his head had been stichet with half a dozen stiches in photos that were leaked out.
For many of us it did not sound that extra ordinary: sumo society is based on ancient rules and we all know the Big Guys are big drinkers, not just big eaters, with a constant eye also on young ladies, who were naturally involved in this incident, too. As friends from Finland pointed out, such behaviour from local wrestlers or ice hockey players there would be frowned upon if let out to media, yet here it's always been looked at between fingers. OK, one stable master was sentenced for 5 years for killing his young wrestler in similar discipline encounter and grand champion Asashoriyu was sent packing home to Mongolia ater similar brawl, but he punched an outsider on public street outside of night club in Roppongi. Living in cramped space in their stable I bet there's friction every day – and that's exactly why the behavioral rules are so old-fashioned strict.
Unfortunately, the victim's head injury was so bad that – one week later! - his stablemaster sent him to hospital instead of tournament ring and informed the incident to the police. That the stablemaster was Takanohana, the last Japanese "yokozuna" 20 years ago who tried and failed to become Sumo Association chairman earlier this year, made the matter somewhat political. Same for Kisenosato, who was last year promoted the first Japanese "yokozuna" since him, but failed to live upto expectations: he has not managed to attend or complete even one bi-monthly tournament this year.
With one Mongolian "yokozuna" in police hearings, another one off injured and the Japanese "yokozuna" giving up again when his loss account grew up, it was left to great Hakuho, the all-time winningnest wrestler today, to save sumo's reputation and the tournament. He did that with flying colors with 14-1 record for the two weeks and his 40th tournament win. On top of that, he made a great speech at the prize ceremony where he apologized on behalf of all sumo family for the scandal and promised to lift the ancient sport up from the tarnish that happened. At the end, he led the crowd, clearly touched by his emotional speech, to enthusiastic "banzai" cheers for the sport.
Always thought Hakuho is a great wrestler, but now tip my hat off also for a great speaker and thinker – not normal for stern bulldozers that most sumotori are.
Here's a "gaijin" who not only stands above anybody else in sumo today, but also truly feels for the ancient sport and its Japanese values Unfortunately some commentators and the old grey suits that lead the Sumo Association did not like his contribution at all. They want to rule the sport unchallenged and even the mightiest yokozuna must stick to his role as an obedient wrestler, nothing else. Sumo is the heart of Old Japan even in this way.
Tokyo, November 28, 2017
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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.