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 AOYAMA VIEW

IT'S NOT SUPER MARIO, IT'S SUPER ABE! -- AND SUPER JAPAN!
Rio Olympics are over, it's Tokyo next! Yuriko Koike, Tokyo's newly elected governor in stylish kimono, received the Olympic flag from the Cariocas and was waving it proudly from her plane door after landing back in Haneda. Tokyo's presentation in the Rio closing ceremony was clever and attractive with combined live and video using all Japan clichés from old temples, school girl karate and Shibuya crossing to well-known manga and anime characters. Topping it all was the surprise appearance of Prime Minister Abe from a green tube dressed as Super Mario – something you could hardly expect from, say, leaders of China, USA or Finland! You can say what you want about his policies, but Abe certainly goes to any length to promote Japan – and himself.

As the new Olympic Minister Marukawa also visited Rio - "to get to know what Olympics are all about" using her own words – new political players are again at place to speed up the preparations, especially to finally start building the new National Stadium. The Gaien site has been standing empty soon two years after the old one was demolished and I'm sure all construction companies, timber merchants and lamina beam makers are burning to get going with Kenko Kuma's all-wooden wonder design. It seems equally clear that getting it built – and many other things around the country - necessitates government opening up borders for foreign work force in construction industries where lack of workers has reached crisis level with 3 jobs now to be filled against each applicant. This could turn out to be the first big positive impact of many that Olympics are supposed to bring to Japan business and economy.

Looking back at Rio, it all went pretty well, after all, despite all doomsday predictions for crisis in economics and politics, facilities uncompleted, pollution and virus, terror, robbery and simply general mayhem in a developing country. All participants got to their events on time, Olympic village was (almost) ready in time, tourists found hotels and transports, no virus poisonings reported so far and robberies were not more than usual, the most spectacular one even turning out to be a hoax by US athletes. In the sport field, we could enjoy the usual spectacular glory and joy in winning as well as pain in losing out. New nations rose up to get their first gold medal including Singapore, Vietnam, Fiji and Tajikistan from this part of the world while some veterans renewed already their fourth gold in row including Japanese female wrestler Kaori Icho. It was a national sorrow that the other one, Saori Yoshida, who has ruled women's wrestling for 16 years, got "only" silver this time, but that's sports. While Michael Phelp's count of swimming golds is beyond anybody in Olympic history, many of us would still rate Usain Bolt's triple-triple gold dominance of 100 m, 200 m and 4x100m sprints higher. Always as funny as impressive, he now has 9 Olympic golds in track and field, something only Carl Lewis and Finland's Paavo Nurmi have done before. For many Finns, it was as exciting to see whether Mohammed Farah can do same as our Lasse Viren and reach double-double on 5000 m and 10,000 m. He did it in true style, even falling down once and still catching others and win, just like Viren did in Munich 1972.

It was the best ever medal score for Japan with 41 total and 12 golds, something that spurred up the national excitement for 2020. Remarkably, more than half of the medals came from women, something that suits well with their crucial importance in Japan's economy, business and society at large. As well, it was good to see so many Japanese athletes with multiethnic background doing well in variety of sports, a healthy reminder that Japan is not that inward looking, closed homogenic society as claimed. Many of these "half's" are still young, so you can count on them and more of their likes to feature heavily in Tokyo 2020. The No.1 standout performance for Japan, silver in men's 4x100 m relay beating clean the long time champion USA, could even change to gold: still leading at last exchange, Japan actually only lost to "Bolto-san" and he won't be around anymore.

In contrast, it was the worst ever Olympic performance for Finland with just one medal, bronze from women's boxing of all sports. In London four years ago it was still 4 medals, but now even the perennial javelin failed, something that was noted several times by NHK commentators. With this letdown coming after several millions' input in a top athlete program, you can just imagine the heated discussion going on now back in Finland: what went wrong and who should take the blame for that? Maybe Finnish sport leaders should just accept that among small nations, Finland was a new rising star with big ambition to show the world what it can back in 20's and 30's – in Paris 1924 it won 27 medals, most of them in track and field! – and today that role belong to new nations from Africa and Asia.

The biggest failure in Rio arrangements was the empty stadium for the main events, partly due to tickets priced too high for the normal Brazilians, partly their interest for track and field not matching that for football where they finally got the gold they wanted. It did not help that the Irish Olympic Committee President was arrested for massive ticket fraud, a confirmation that there still is a lot to clean up in the top of world sports, not just Russia's state organized doping. Broadcasting records from USA also showed an alarming decline in interest for Olympic sports among younger generations, who are more into games and social media. This is a warning shot for IOC whose business model is based on multibillion income from television rights with even its own global channel just started up. Already it has difficulty to find countries and cities willing to pay the gigantic bills for local arrangements: the place for summer games after Tokyo is open while winter games after scandalous Sochi will be held in Korea and China, places never heard of for ski or skate. Hopefully, Tokyo's manga, anime and street fashion will raise more interest among the young nerds – the presentation in Rio certainly seemed to indicate to that direction. Behind the vivid images, the music was suitably senseless monotonic noise and in Tokyo 2020 you can just expect to see healthy looking samba dancers changed to skinny little AKB's jumping up and down belting out their nursery tales out of tune.

Next on the sports agenda here is Japan soccer team renewing its campaign to qualify to FIFA 2018 World Cup in Russia, another doubtful choice for host after all the recent happenings. The first match is tomorrow at home against UAE followed by visit to Thailand and with all Japanese internationals from Europe present except little Nagatomo from Inter Milan, the results should not be in doubt, but in football you never know. In fact, it was UAE who beat Japan in last Asian Cup quarterfinal.

The political agenda has also gathered speed after Olympics and all WW2 ending memorial events here during it. In foreign relations, FM Kishida called China's ambassador for a dress down to reign in its hundreds of "little white boats" from Senkaku waters, but got blunt response that they were actually China's waters followed by an open threat that if Japan ever take part in US Navy's "freedom of passage" sailings in South China Sea, China would respond with military measures. Such aggressive talk is hardly something expected from Ambassadors, but China seem to set its own norms even in this area. In UK, it got so upset for new PM's decision to delay the big nuclear power plant deal agreed two years ago with Cameron that the Ambassador there wrote in Financial Times that the two countries' "New Golden Era" will be off if Mrs. May procrasrinates the deal any longer.

In Tokyo, China FM Wang, whose role is to play "the good guy" and who has many friends here from his time as Ambassador himself, went out of his way last week in trying to calm down the feelings in the Trilateral Foreign Minister meeting that was held here with Japan and Korea. Suitably, North Korea managed to make a successful missile launch from a submarine just when the three ministers were meeting and Wang joining his colleagues to "condemn the provocation", something China refused to do before, took some of the heat off. As it has been repeatedly said, China amazingly keeps undermining all its talk of "peaceful rise" by its own assertive action building up border feuds with all its neighbors and now even flaunting international court and world opinion. The earlier "win-win" business relation between China and Korea, too, is now in strains after China demanded Korea stop installing a US designed radar and anti-missile defense against the growing threat from North. As first step, Korean tv-dramas and K-pop acts, highly popular in China as well as here, have been taken off air and now major Korean companies worry China will take some unilateral revenge on their successful China business as it did against Japan 4 years ago. This would hit Korea badly as China makes over 30% of Korea's exports and even more of its tourism. The Korean indignation and worries about China have naturally, in turn, helped to tighten up its relation with Japan.

Meanwhile "Super Abe" has continued his flight around the world to promote Japan. Not many days back from Rio, he flew last weekend to Nairobi together with an entourage of 200 businessmen for a development conference with no less than 34 African country leaders. He promised "faith in Africa's future" together with USD 30 billion investments that will focus in electricity projects, urban transport systems and training teachers. Following earlier USD 20 billion pledge, this is double to what USA has pledged to Africa, but still only half what China's president promised the Africans in similar "co-development" conference one year ago. Needless to say such money all target to benefit each country's business there as well and the only difference really is that the Chinese model is based on money from state banks, work by state companies and using Chinese workers there leaving little for Africans themselves to do.

It remains to be seen how Japan's private companies can squeeze out commercial value out of the proposed projects. As well known, only small part of such development money usually reach its intended targets in Africa, but rather disappears to greed and corruption on the way. In fact, photos show the biggest recipient flew to Nairobi in much better, brand new private plane than Abe's 30 year old Jumbo (click here).

It seems PM's actual target was more political: Abe was brazen enough to clearly state that, in return for Japan money, he expects African recipients' support for "rule-based maritime order" against China as well as for Japan's quest for a permanent seat in UN Security Council, something China is steadfastly against. Totaling 54 of UN's 193 member countries, African nations make 30% of the total vote, so winning their vote is crucial for any issue.

After making it back to Tokyo just barely before Tuesday's typhoon, the globetrotting PM is tomorrow off again to Vladivostok for a meeting with President Putin. We'll see what comes out of that. Advance info says Abe will use for Putin same tactic as for the Africans - money and business - and offer big package of finance and technology to develop the Russian Far East, from oil and gas fields to health care and hospitals. It is also rumored that the long postponed Putin visit to Tokyo will be fixed for December.

After another two weeks it will be G-20 meeting in Hangzhou where feverish preparations are being made for another face-to-face with President Xi to show "mutual efforts to improve relations". As price for that China is demanding that Japan will not join USA insisting the meeting should discuss International Tribunal's demand China must back off from its South China Sea island fortifications, something we know President Obama is under pressure to do for domestic politic reasons. We'll see how this play will turn out finally.

Finally, some updates to economic and business issues.

Employment: having just 3,1% unemployment rate does not give full picture how tight the market is. The Japanese way of saying the same is better: there's now 1,37 jobs for each applicant around the country, the highest rate since "bubble time" in 1991. It is obviously less in remote countryside and more in big cities like Tokyo and it also applies differently for different work. There's still too many office clerks and "office ladies", who must fight out for just 0,5 jobs available for each applicant, but, construction companies who must built that Olympic stadium, over 800,000 new homes every year and repair old and damaged infrastructure around the country, have 3 openings for each applicant, while in service industries there's 2,5 jobs open for each applicant. No wonder, the infrastructure repairs progress slowly in Tohoku and Kumamoto and worries are real how Tokyo will manage to get its Olympic constructions done in time or to serve the growing crowds of millions of tourists.

Opening up the gates for foreign blue collar workers is the obvious answer, but that comes extremely hard for the government and the public opinion even if 76% companies are asking for it. Already more than 1 million foreigners are working in Japan officially and unofficially the figure is much higher. Especially, all night convenience stores, low cost eateries and construction companies - even those doing government contract work - are relying on them. Officials are trying hard to pretend they don't know what's going on and even have their own way around the rules with public "international trainee system", which mainly provides cheap labor for agriculture and fishing industry and has often been caught for serious abuse of its workers. With long delay in decision and low salaries, it could be that Japan can even end up without foreigners interested to come work here but rather go to other countries where they are paid better. This trend is already visible in "white collar" jobs and it could spread to "blue collar", too.

Abenomics can claim it has created 1 million new jobs over its 4 years and got women and old people to fill them, but it's all low-paid temporary contracts substituting regulars retiring from their well-paid positions in much bigger numbers. Companies are naturally happy with being able to keep the costs down, but the decline in total pay does not support consumer demand, the No.1 pillar for economic growth.

Corporate results: while the total 2Q. profit for listed companies declined and some companies saw even big downhill for their special reasons, still 1 in 6 enjoyed record profit – especially construction, railroads and food - and many business areas met with no decline. Others finally resorted to long overdue reforms: the corporate wreck called Toshiba managed to book JPY 80 billion (USD 780 million) extraordinary profit for selling its fridges, washing machines and vacuum cleaners to a Chinese group. However, it's still facing the wrath of misled shareholders including Government Pension Insurance Fund, the world's biggest institutional investor, who decided to join others suing Toshiba for the 40% loss of money put in its shares. GPIF's total loss for changing its focus from government bonds to equities at wrong time was confirmed to have been USD 54 billion. Then again, with negative interest rates prevailing for JGB's, you won't get any return from them either any more. It all makes for bad prospects for investment as well as for your personal pension projections.

Some big companies have launched strange saving campaigns to compensate for their declining income. Toyota, who is expected to earn USD 2 billion less, closed two elevators in its Tokyo office, while Sharp ruled that office air conditioners must be set not lower than 28 C. These moves will not bring in any savings, but will "promote cost saving mentality", they claim. Sounds more like "ijime" against your own staff to me.

Pokemon Go's global dominance has met with resistance in expected and unexpected places. As expected, it is forbidden in China creating both fake substitutes and new software to break the internet wall and now Moscow, too, says it's a Western trick to break the Russian security and create social confusion. More unexpectedly, Pentagon has banned its staff playing the game within its vast premises, especially with ministry provided mobile phones. That US Defense Ministry is manned by not fully adult people, who search Pokemons in their famous office building, sure does not build confidence to rely on them when something serious happens in the real world.

Sony sold its battery business to Murata, who was a FCCJ member company for a while following its takeover of Finland's VTI, while Nissan is giving up its battery JV with NEC that it set up for the Leaf electric car. Instead, it will buy the products cheaper from Korea's LG as Leaf that we tested during FCCJ visit to Nissan factory two years ago, has proved a disappointment and sells only minor volumes. In Japan, hybrids continue to rule the top sales together with minicars below 660cc while in USA, Tesla's electric cars are selling now better and the company just officially opened the mega battery factory it built together with Panasonic in Arizona desert. A big new business opportunity for battery makers is opening up in China, where government has decided to grant huge subsidies to local car makers to build electric cars in a new effort to reduce the stinging pollution there. Chinese BYG already is the biggest selling electric car with 14 pct global market share even if it sells only in China while Leaf and Tesla each have about 9 pct with their worldwide sales.

On the nuclear front, the cost count for Fukushima decontamination, decommissioning and compensations has reached JPY 4,2 trillion (USD 40 billion). It translates to JPY 33,000 for each man, woman and child, so my family has paid JPY 100,000 on top of our share of the JPY 327 billion increase in TEPCO's electricity bills. Government claims that part of this will be compensated at the end by selling out its 50% shareholding in the company, but for that the share price should grow three-double from its current level. I have no reason to think that would ever happen.

In case of Monju fast-breed reactor that has failed to live up to expectations as linchpin of the grand nuclear cycle plan, the reality is dawning close. Since its start-up 12 years ago Monju has been operational only 250 days while building up JPY 1 trillion (USD 10 billion) maintenance cost. The consistent failure to get it working has come together with repeated safety scandals, so the government-owned operator was this year ordered by Nuclear Safety Agency to sell it to someone more reliable. Not unexpectedly, nobody has showed interest to take over the heavy load. Moreover, just to bring it to up-to-date with NRA's new safety standard would cost JPY 100 billion, so scrapping it with estimated cost of JPY 300 billion looks now safer alternative. It will be a big loss of face for Japan's nuclear strategists and leaves the country with no outlet for its big pile of nuclear waste, yet it seems government cannot any more defend its waste of money on this dream.

Not even Super Abe can change this.

Timo Varhama  
Tokyo, 31 August, 2016   


Previous Columns

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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