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 Topic: BusinessThe new items published under this topic are as follows.
Posted by: Timmy on Thursday, September 02, 2010 - 05:01 AM
Business
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Japan Airlines (JAL) has announced its restructuring plan after filing for bankruptcy protection on 19 January.
The struggling airline intends to cut a third of its workforce, more than 16,000 jobs, and close unprofitable domestic and international routes.
Some of the job reductions will be gained through early retirement and the sale of subsidiaries.
The company also intends to reduce by 103 aircraft the number of planes in its fleet.
'Rehabilitate quickly'
JAL is a member of the One World alliance, which includes American Airlines and British Airways.
Like other major global airlines, JAL has been hit hard by falling passenger numbers during the global economic downturn and faces an increasing challenge from Japanese rival All Nippon Airways.
"By fully implementing these measures, the JAL Group will aim to become profitable from the first fiscal year of the plan and thus rehabilitate quickly," the airline said in a statement.
It said its headcount would be cut from 48,714 at the end of 2009 to 32,600 by the end of this year.
The restructuring plan is being orchestrated as part of a government-backed bail-out after JAL's bankruptcy in January with more than $25bn in debt.
The bankruptcy of Japan Airlines was one of the country's biggest corporate failures to date.
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Posted by: Timmy on Sunday, August 29, 2010 - 11:34 AM
Business
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Japan’s prime minister, Naoto Kan, said Friday that he would take steps as needed on currencies as the yen surges, and would meet with the Bank of Japan governor, increasing the possibility of the central bank’s easing policy soon.
The yen edged lower after Mr. Kan’s remarks as Japanese policy makers struggled over how to put a cap on the currency, which hit a 15-year high against the dollar this week and threatened to derail a recovery led by exports.
The ruling Democratic Party’s options on fiscal policy are limited because of the country’s large debt burden, so it is leaning on the central bank to ease policy.
“There are investors who are expecting the Japanese authorities to take some measures if the yen appreciates sharply,” said Mitsuru Sahara, chief manager for currency derivatives trading at Bank of Tokyo-Mitsubishi UFJ.
“It’s possible that the government’s stimulus steps and the B.O.J.’s easing measures will be announced together, even before its next meeting,” he said, referring to the central bank’s rate review in early September.
“There’s a growing view that Japan could even conduct solo intervention if the yen rises sharply.”
The governor of the Bank of Japan, Masaaki Shirakawa, is scheduled to be in attendance at the Federal Reserve’s seminar in Jackson Hole, Wyo., until Monday. Mr. Kan said he would meet Mr. Shirakawa after his return to Japan.
Mr. Kan said the government would outline measures on Tuesday to support the economy and grapple with the strong yen.
“Excessive currency moves can harm the economy and the financial system,” he told reporters after visiting a small factory in the Tokyo suburbs. “We will take firm measures when needed.”
The fate of any economic package could be complicated, however, by a ruling Democratic Party leadership vote on Sept. 14, in which a party powerbroker, Ichiro Ozawa, is challenging Mr. Kan.
Debt markets are already pricing in the chance of an easing of rates. With short-term rates already very low, investors are pushing down the longer end of the yield curve — in other words, anticipating lower interest rates for longer-term debt — although the yield curve steepened on Friday as banks sold superlong bonds to take profits.
The Bank of Japan is hesitant to return to a full-blown easing of monetary controls since that policy, which involves flooding markets with extra cash under a liquidity target, had little effect in beating deflation when it was in place until March 2006.
Japan has not intervened in the currency market since March 2004, when it ended a 15-month, 35 trillion yen ($315 billion) selling spree aimed at rescuing an economic recovery.
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Posted by: Timmy on Saturday, August 28, 2010 - 01:24 AM
Business
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Japan's core consumer prices index fell for the 17th month in a row in July, underlining the country's entrenched problems with deflation.
The index, which excludes fresh food, fell 1.1% from July last year.
Deflation is adding to economic worries in Japan, where the strong yen is making exports more expensive.
Japan's "lost decade" of deflation in the 1990s hit company profits as consumers delayed purchases to await even cheaper deals.
The fall in the consumer prices index was slightly bigger than the 1% drop in June.
The Bank of Japan has so far held off from any substantial measures to tackle deflation, forecasting that consumer prices will turn positive in the fiscal year to the end of March 2012.
Japan's government was due on Friday to outline measures to support the economy and contain the strong yen, which hit a 15-year high against the dollar this week and could derail an export-led recovery.
"Given the yen's gains, exports will slump temporarily and slow Japan's economic recovery. Japan will thus remain in deflation for another two to three years," said Takeshi Minami, chief economist at Norinchukin Research Institute.
Earlier on Friday, Finance Minister Yoshihiko Noda told reporters that the yen's strength was having "various impacts" on the economy and that the situation was "serious".
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Posted by: Timmy on Monday, August 16, 2010 - 08:15 AM
Business
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The strength of Japan's economic recovery came under question on Monday as second-quarter growth figures came in sharply below economists' expectations.
Growth in the country's gross domestic product slowed to an annualized, seasonally adjusted pace of 0.4 per cent in the three months ended June 30. That was far below the revised 4.4 per cent pace posted in the first quarter and economists' predictions of 2.3 per cent for the latest period.
The figures also appear meager against those posted for the quarter by the world's other giant economies. The US reported annualized growth of 2.4 per cent while Germany generated a robust 9.1 per cent, its fastest pace since reunification, on the back of surging exports amid a weaker euro. China may have overtaken Japan to become the world's second largest economy after posting year-on-year growth of 10.3 per cent in the quarter. Beijing published revised data on Monday raising its GDP for the first quarter.
The sharp deceleration of the Japanese economy was due to slower net export growth and weaker personal and residential consumption. Private inventories were also a drag, though this could mean that companies are rebuilding stockpiles after having wound them down in the second quarter.
With Japan reliant on trade for growth, slower exports will add to concerns that the global recovery is weakening at a time when the effects of domestic fiscal stimulus are waning. Economists are likely to trim their Japanese GDP growth estimates for the year.
Slower export growth is a challenge for Japanese companies at a time when the yen is trading close to a 15-year high against the dollar as risk averse investors pile into the currency. Although authorities have stepped up verbal intervention, analysts are skeptical that direct intervention from the Ministry of Finance is likely.
Monday's GDP figures could add to pressure on policymakers to find other ways to deal with slowing growth and the impact of the stronger yen on the recovery.
Last week the central bank kept its economic assessment unchanged and did not announce any further easing measures.
"The appreciation of the yen [is one of the biggest risks] which could damp yen-denominated profits of exports, which then may have negative repercussions on domestic capital spending," said Kyohei Morita, Japan economist at Barclays Capital.
Naoki Iizuka, an economist at Mizuho, predicted that if the yen rose to about Y80 and stayed there, companies would focus their capital spending overseas.
On a price-adjusted basis, effective exchange rates are slightly below the average of the past 30 years, suggesting there is still room for the currency to rise further without direct government intervention.
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Posted by: Timmy on Wednesday, June 09, 2010 - 03:06 PM
Business
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Honda has had to halt production at two of its four car assembly factories in China after another strike by workers at one of its Chinese parts facilities.
The Japanese firm said work had stopped on Wednesday because of industrial action at exhaust-maker Foshan Fengfu Autoparts, which it part-owns.
It is the second time in two weeks that its Chinese production has been hit by a walkout over pay at a local supplier.
The earlier strike at a gearbox plant closed all four of its China factories.
Growing pay disputes
Honda said the walkout at the Foshan Fengfu facility, which is 70%-owned by its Chinese subsidiary Yutaka Giken, started on Monday.
Negotiations to resolve the dispute are now continuing.
The two strikes to hit Honda come as labour disputes over pay are growing in number in China.
Honda runs three of its four car assembly factories in China as joint ventures with Chinese carmakers to supply the domestic market.
It has two factories in association with Guangzhou Automobile and one with Dongfeng Motor Corporation.
Honda's fourth Chinese factory makes its Jazz small car model solely for export.
The Japanese firm currently makes 650,000 cars a year in China, and intends to increase this to 830,000, as the Chinese car market continues to grow strongly.
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Posted by: Timmy on Saturday, February 27, 2010 - 07:31 AM
Business
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Japan Airlines (JAL), which entered bankruptcy protection last month, has announced a massive increase in loses.
The airline said it lost 177.9bn yen ($1.99bn, £1.3bn) in the last nine months of 2009 - up from a loss of 1.9bn yen a year earlier.
JAL is continuing to operate flights while it undergoes major restructuring under court supervision.
The company is expected to cut staff, routes and aircraft numbers in an attempt to return to profitability.
Reflecting on the company's failure, JAL said it was "deeply apologetic" for the situation that shareholders, creditors and customers now found themselves in.
"[We are] working fervently... to draw up an effective corporate revitalisation plan to rebuild the airline, while continuing to provide safe and stable flight operations and services to customers," the airline said in a statement.
JAL collapsed earlier this year after racking up $16.5bn in debts.
It is one of the most high-profile airlines to fall victim to the global recession, which caused a collapse in passenger numbers and left many airlines facing big losses.
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Posted by: Timmy on Monday, September 21, 2009 - 10:26 AM
Business
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Not long ago, many Japanese bought so many $100 melons and $1,000 handbags that this was the only country in the world where luxury products were considered mass market.
Even through the economic stagnation of Japan’s so-called lost decade, which began in the early 1990s, Japanese consumers sustained that reputation. But this recession has done something that earlier declines could not: turned the Japanese into Wal-Mart shoppers.
In seven years operating in Japan, through a subsidiary called Seiyu, Wal-Mart Stores has never turned a profit. But sales have risen every month since November, and this year, the retailer expects to make a profit.
That is an understatement. Across the board, discount retailers are reporting increases in revenue — while just about everyone else is experiencing declines, in some cases, by double digits.
As a result, the luxury boutiques, once almighty here, are reeling.
Sales at LVMH Moët Hennessy Louis Vuitton, makers of what has long been Japan’s favorite handbag, plunged 20 percent in the first six months of 2009. In December, as the global economic crisis unfolded, Louis Vuitton canceled plans for what would have been a fancy new Tokyo store.
In the 1970s and ’80s, and even as the economy limped through the ’90s, a wide group of consumers spent generously on Louis Vuitton bags and Hermès scarves — even at the expense of holidays, travel and, sometimes, meals and rent.
Now, the Japanese luxury market, worth $15 billion to $20 billion, has been among the hardest hit by the global economic crisis, according to a report by the consulting firm McKinsey & Company. Retail analysts, economists and consumers all say that the change could be a permanent one. A new generation of Japanese fashionistas does not even aspire to luxury brands; they are happy to mix and match treasures found in a flurry of secondhand clothing stores that have sprung up across Japan.
“I’m not drawn to Louis Vuitton at all,” said Izumi Hiranuma, 19.
“People used to feel they needed a Louis Vuitton to fit in,” she said. “But younger girls don’t think like that anymore.”
In the new environment, cheap is chic, whatever the product.
In supermarket aisles, sales of lowly common vegetables — like bean sprouts, onions and local mushrooms — are up. (Bean sprouts, which sell for as little as 25 cents a bag, are a particularly good substitute for cabbage, which can go for about $4 a head.)
And instead of melons, Japanese shoppers are buying cheap bananas, pushing imports up to records.
“I’ve cut down on fruit since last year, because of the cost,” said Maki Kudo, 36, a homemaker shopping at a Keikyu supermarket in central Tokyo. “Instead of brands, I now look much more at cost.”
Thrift is being expressed even in unlikely measures like umbrella sales, which have spiked as more Japanese opt to brave rainy weather on foot rather than hail a taxi, according to a survey by the Dai-Ichi Life Research Institute.
In 2008, average household spending fell a record 69,509 yen, or $762, to 3.5 million yen, or $38,475, from a year earlier, and is expected to fall again this year, said Toshihiro Nagahama, chief economist at Dai-Ichi Life.
Underlying Japan’s accelerating frugality is a “deflationary gap” of 40 trillion yen in the Japanese economy, a situation where total demand falls short of what an economy produces. When this happens, companies cut prices, but since they still do not make money, they have to lay off workers. Fewer workers mean still less demand, creating a vicious circle, and prices fall further.
The dismal economy encourages thrift, too. Unemployment is at a record high of 5.7 percent, compared with 9.7 percent in the United States. A troubled government pension system, as well as ballooning government debt, has driven a widespread fear of the future, prompting people to save, not spend.
The Democratic Party, which rode a wave of discontent over the economy to electoral victory last month, has pledged to increase household incomes through tax breaks and generous subsidies for families with children. But economists here worry that the deflationary cycle could prove hard to break as competitive price-cutting rages.
A heated price war has erupted, for instance, in the already cut-rate category of “imitation” beers, a poor man’s brew made with soy or pea protein instead of barley and hops.
In July, Seven & I Holdings Company, which runs the 7-Eleven chain, introduced a new line of imitation beer for $1.35 a can; the same month, the Aeon shopping center brought out its own beer beverage for about $1.09. The Daiei supermarket chain then lowered prices on its beer to less than a dollar.
U.G. — the sibling brand of Uniqlo, the global clothing retailer known for its low-cost fleeces and T-shirts — started a jeans war when it introduced pants for 990 yen this year. Aeon soon followed suit with jeans selling for 880 yen.
Seiyu, the wholly owned Wal-Mart subsidiary, says it plans to sell similarly priced jeans this year.
Of course, for some retailers the circle is more virtuous than vicious.
Thrift has propelled Hanjiro, a secondhand clothing store chain popular among young Japanese, to 19 stores, from just one store in 1992. When Hanjiro opened a new store in Saitama, which borders Tokyo, in April, about 1,000 eager young fans lined up for a door-buster 290-yen T-shirt special. Of course, frugality is good for Wal-Mart, which posted better-than-expected second-quarter earnings last month. Japanese consumers are snapping up Seiyu’s $6 bottles of wine — sourced through Wal-Mart’s international network — as well as $86 suits and $87 bicycles.
In fact, Seiyu has ignited a price war of its own, with its “bento” lunch-in-a-box of rice and grilled salmon for 298 yen. Abandoning a custom here for supermarkets to make their bento boxes on site, Seiyu cut costs by assembling the lunches at a centralized factory.
Seiyu bet that Japan’s frugal consumers would not care about the change, as long as the bentos were cheap. Seiyu was right; the bentos have set off a line of copycat supermarket bentos.
“Price is No. 1 in my mind,” said Chie Kawano, an elderly shopper at Seiyu’s Akabane store in northern Tokyo, a bento box in her basket. “I don’t need anything fancy.”
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Posted by: Timmy on Sunday, September 20, 2009 - 06:34 AM
Business
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Fishermen here call it “black gold,” referring to the dark red flesh of the Pacific bluefin tuna that is so prized in this sashimi-loving nation that just one of these sleek fish, which can weigh a half-ton, can earn tens of thousands of dollars.
The cold waters here once yielded such an abundance of bluefin, with such thick layers of tasty rich fat, that this tiny wind-swept seaport became Japan’s answer to California’s Napa Valley or the Brie cheese-producing region of France: a geographic location that is nearly synonymous with one of its nation’s premier foods.
So strong is the allure of Oma’s tuna that during the autumn fishing season, tens of thousands of hungry visitors descend on this remote fishing town, located on the northernmost tip of Japan’s main island of Honshu. On a recent Sunday, dozens of tourists, filmed by no fewer than three local television crews, crowded into an old refrigerated warehouse on a pier where Oma’s mayor presided over a ceremony to slice up a 220-pound bluefin into brick-size blocks for sale.
“This is a pleasure you can only have a few times in your life,” said Toshiko Maki, 51, a homemaker from suburban Tokyo, as she popped a ruby-red cube of sashimi into her mouth.
But now the town faces a looming threat, as the number of tuna has begun dropping precipitously in recent years because of overfishing. This has given Oma another, less celebrated distinction, as a community that has stood out by calling for greater regulation of catches in a nation that has adamantly opposed global efforts to save badly depleted tuna populations.
Just a decade or two ago, each boat here could routinely catch three or four tuna a day, fishermen say. Now, they say Oma’s entire fleet of 30 to 40 boats is lucky to bring in a combined total of a half-dozen tuna in a day.
The problem, they say, is that all the fish are being taken by big trawlers that come from elsewhere in Japan, or farther out to sea from Taiwan or China. Some of these ships even use helicopters to spot schools of tuna, which they scoop up in vast nets or catch en masse with long lines of baited hooks. According to local newspapers, there have been repeated incidents of small fishing boats from Oma and other ports intentionally cutting such trawl lines.
“I’m furious at Tokyo’s bureaucrats for failing to protect our tuna,” said Hirofumi Hamahata, 69, the president of the Oma fishermen’s co-op, who has worked as a commercial fisherman since age 15. “They don’t lift a finger against the industrial fishing that just sweeps the ocean clean.”
Such flares of temper are rare in normally reserved Japan, and especially in conservative fishing communities like this one. But this is a town fiercely proud not only of its tuna, but also of how it catches them: in two-man open boats, using hand-held lines and live bait like squid.
Mr. Hamahata described catching tuna in this traditional way as a battle of wits against a clever predator that he called “the lion of the sea.” After hooking one, the contest becomes a battle of strength: he said it typically took one or two hours to pull a big tuna close enough to the boat that it could be stunned with an electric charge.
In one Hemingwayesque battle, Mr. Hamahata said he fought for 12 hours with a huge bluefin that finally broke free.
Despite such difficulties, Oma’s fishermen said they preferred their generations-old fishing method because it allowed them to catch just large, adult fish, leaving the smaller young ones to sustain local stocks.
Fishing experts say the overfishing is a result of a broader failure by the Tokyo authorities to impose effective limits on catches in its waters. Indeed, Japan, which consumes some 80 percent of the 60,000 tons of top-grade tuna caught worldwide, has lobbied hard against efforts to limit tuna catches, such as are now being proposed by European countries for the Atlantic Ocean.
“There are too many entrenched interests whose objective is maximizing profit, not sustainable use,” said Masayuki Komatsu, an expert on the fishing industry at Tokyo’s National Graduate Institute for Policy Studies.
In Oma, catching a big tuna has become rare enough — and the market price high enough — to be cause for celebration. On a recent evening, family members rushed to the pier to greet one boat that had caught a 410-pound bluefin, whose tear-shaped body had to be hoisted off the boat’s deck with a forklift.
Moving quickly to gut and ice the fish to preserve its value, workers from the fishing co-op presented the footlong dorsal fin as a trophy to the captain’s wife, who said it was the first catch in 10 days. The workers said the fish would fetch more than $10,000 at Tokyo’s Tsukiji Fish Market.
“Catching a tuna is like winning the lottery,” said another fisherman, 23-year-old Takeshi Izumi, who said his boat had yet to catch a tuna this season.
To maximize prices, Oma has registered its name as a trademark that can be used only with tuna brought ashore here. This has made Oma a brand that is gaining recognition even outside Japan. In March, a sushi chef from Hong Kong paid some $50,000 to buy half of a 280-pound Oma bluefin.
The prices can be even higher: In 2001, a Japanese buyer paid a record $220,000 for a 444-pound Oma bluefin.
One unfortunate side effect, said the town’s mayor, Mitsuharu Kanazawa, was that few of Oma’s 6,200 residents can now afford their own town’s tuna. However, he said the fish have been a boon to the town’s economy, pumping in some $15 million a year from fishing and tuna-related tourism.
After a popular 2000 TV drama featured Oma, the town increased tourism by starting a three-day tuna festival every year in mid-October, which now draws 15,000 visitors a day, as well as hordes from the Japanese media, Mr. Kanazawa said.
“We Japanese have a weakness for brands,” said Ryuko Nishimura, 43, a homemaker from Kuroishi, a three-hour drive away. “It makes the tuna taste two or three times more delicious.”
But with tuna now in danger of perhaps disappearing, the mayor said the town was struggling to find another local product to keep the tourists coming.
“We tried kelp and abalone,” Mr. Kanazawa said, “but nothing has the appeal of tuna.”
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Posted by: Timmy on Tuesday, September 15, 2009 - 05:11 PM
Business
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Every day, the impeccably dressed “elevator girls” of Tokyo’s Odakyu department store greet customers, ushering them in and out of the cars. During breaks, they practice their greetings and meticulously reapply their makeup.
Critics see the women as the embodiment of this country’s productivity problem — squandering of one of the world’s best educated labor forces on banal jobs that do little to make the economy grow. But others, including the Democrats, Japan’s new ruling party, see them as beneficiaries of a more humane capitalism, a capitalism that values employment and stability over growth.
Japanese manufacturers taught the world to be competitive — reshaping the landscape in industries like cars and electronics, and introducing a vocabulary of quality and efficiency that became a mantra on business school campuses and shop floors.
But productivity growth in Japan’s service sector has slowed in recent years, weighing on the labor productivity of the entire economy, which ranks only 18th among the 30 countries in the Organization for Economic Cooperation and Development and just 70 percent of levels in the United States.
With the service industry making up 70 percent of Japan’s economy, and manufacturers battered by the global slowdown, economists say Japan’s ability to emerge from the worst recession since World War II will depend partly on its ability to make its service sector more productive.
“Structural reforms have absolutely no popularity in the current climate,” Yorio Ota, a strategist at the Mitsubishi UFJ Trust and Banking Corporation, said in a recent report. “But what is needed for a true recovery are reforms of the Japanese economy.”
But Yukio Hatoyama, the leader of the ruling Democratic Party, bases his political philosophy on what he calls “fraternity,” meaning empathy with workers, rather than concern for corporate profits.
Hirohisa Fujii, a leading contender for finance minister when Mr. Hatoyama announces his cabinet this week, has criticized even some of the moderate changes made by the departing Liberal Democratic Party.
“Market economics is supposed to make a lot of people happy by letting skilled people fully utilize their skills,” Mr. Fujii, an elder statesman and former finance minister, wrote in a newspaper column last year. But recent pro-market changes in Japan “did not make everybody happy,” he said. “ That must be corrected, and we must build a politics led by the people.”
Evidence of low productivity in the service sector is everywhere: office workers still pour over paper files; a veritable receiving line of security guards and receptionists greets visitors at building entrances; and Japanese retailers employ twice the average number of workers per outlet as their peers in other Organization for Economic Cooperation and Development countries. Odakyu does not consider its “elevator girls” a wasteful extravagance. The store says the 14 full-time workers it employs to operate fully automated elevators provide a benefit.
“These girls are the first employees our customers see,” said Tatsuo Iwasaki, manager for customer services. “We take training them very seriously.”
Mr. Hatoyama is especially critical of changes championed by the former prime minister, the pro-American, free-market Junichiro Koizumi. Among other things, Mr. Koizumi took aim at Japan’s stagnant labor market, lifting a ban on the use of temporary laborers at factories.
He hoped to increase flexibility in hiring at Japanese companies, many of which are saddled with more employees-for-life than they need, protected by labor laws and social norms. The inability to fire these redundant workers even in lean times keeps productivity at ailing companies low, while hurting upstarts that could use experienced workers.
But critics blamed those changes for a widening income gap between lifetime workers and their poorer “temp” colleagues. The number of temporary workers, with low pay, few benefits and little job security, has surged in the last decade, reaching a third of the work force of 67 million. The plight of temporary workers let go en masse in the fallout from the global financial crisis has prompted a public outcry.
“People started to see high levels of economic inequality. The quality of jobs started going down, and there was a growing number of temporary workers,” said Steven K. Vogel, a professor of political science at the University of California, Berkeley. “They associated that with Mr. Koizumi’s reforms. From an economic standpoint, it was wrong. But there was a big backlash.”
The Democrats’ economic platform centers on consumer relief, including cash allowances for families rearing children and lower gasoline taxes. Economists say such policies could stimulate Japan’s flagging consumer spending and help spur a modest recovery. But with wages in decline, it is unclear how much consumers can be expected to increase spending in the long term.
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To generate lasting growth, Japan needs to change old rules and dictates that have guarded a sclerotic establishment with heavy-handed government protection and squashed entrepreneurship with cumbersome barriers, some economists say.
A cautionary tale, repeated by market proponents and opponents, is about QB Net, a start-up that took on Japan’s highly regulated barber market 10 years ago. QB Net’s string of super-efficient shops took the market by storm by offering quick haircuts for 1,000 yen, or about $10. Last fiscal year, the company logged sales of 6.73 billion yen, while the rest of the industry slumped.
Threatened, a nationwide association for barbershops called for more regulation. Among other things, the association argued that it was unclean for QB Net to offer haircuts to clients without first washing their hair; soon, ordinances were passed across the country requiring all barbershops to install shampooing facilities, an expensive investment that slowed QB’s growth.
“It’s not right to be penalized for being successful,” said Kazutaka Iwai, chief executive at QB Net. “We simply came up with a way to be more productive.”
Others, however, argue that Japan’s traditional barbershops, though outdated, are worth saving. These tiny salons have consistently employed about 250,000 barbers for three decades, and the shopkeepers are often central figures in a kind of community life that many Japanese fear is being lost.
“There are many structural factors that may influence the relationship between productivity and social welfare,” said David J. Brunner, a Japan specialist and research associate at Harvard Business School. “So firms should fire their excess employees and leave them feeling betrayed and worthless, and without income? That certainly would not contribute to economic growth or the general welfare.”
Even the Liberal Democrats have spoken out in recent years against the pro-market changes introduced by Mr. Koizumi, one of their own. The most fervently antichange Liberal Democrats — who left the party to form their own after opposing a proposal to privatize the postal service — will join in a coalition government with the new prime minister-elect, Mr. Hatoyama.
The Democrats’ other coalition partners are the Social Democrats.
“We will fight with all our might to rebuild the livelihoods the public so sorely misses,” the Social Democratic leader, Mizuho Fukushima, said this week. “We will build a politics that values life, and corrects widening inequalities.”
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Posted by: Timmy on Tuesday, September 15, 2009 - 03:47 PM
Business
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Japan Airlines said Tuesday that it would cut 6,800 jobs, trim routes and quickly secure emergency funds from an overseas carrier, stepping up restructuring efforts amid mounting losses that threaten to pull the company under.
Delta Air Lines, the world’s biggest airline, and American Airlines are battling over a stake in Japan Airlines, which had a loss of ¥99 billion, or $1 billion, in the three months that ended in June.
Japan Airlines is also reportedly in talks with Air France-KLM and Korean Air Lines over investments amounting to several hundred million dollars, which would give the successful bidder a minority stake in the carrier.
Japan Airlines, the biggest carrier in the country, is struggling to stay afloat despite three government bailouts since 2001. It was hurt by a slump in air travel, the continuing weakness of the Japanese economy and what many analysts see as years of mismanagement.
On Tuesday, the president of Japan Airlines, Haruka Nishimatsu, said to reporters that the company would cut 6,800 jobs over three years and carry out a reorganization of its routes, many of which lose money.
He said the airline, known as JAL, aimed to conclude talks by mid-October on a tie-up with an overseas carrier, but declined to comment on a likely partner or how much JAL hoped to raise. He did not specify how many routes the airline planned to cut or change.
Japan Airlines hopes that a cash infusion from an overseas partner, as well as a drastic turnaround plan, will persuade its creditors to provide fresh capital.
The cash could also let the airline upgrade to newer, more fuel-efficient aircraft and turn around money-losing routes by teaming up with a new partner.
Meanwhile, JAL’s rivals are looking to expand abroad to tap a lucrative market in international business travel.
For Delta, a stake in JAL would add to its trans-Pacific and Asian routes and secure access to coveted berths at the busy Narita International Airport in Tokyo. But Delta is still integrating its $2.6 billion purchase of Northwest and it lost $1.05 billion in the first six months of 2009.
A Delta-JAL deal would hurt American, which could see its current code-sharing agreement with JAL canceled. American lacks a hub in Asia and is expected to bid hard to keep its ties with JAL.
An investment in Japan Airlines would be a high-stakes deal for any player in an industry exposed to wild swings in profitability. Moreover, equity ties between airlines have been rare, with carriers forging looser alliances like code sharing on flights.
An alliance with JAL could be beneficial for U.S. airlines in light of recent talks between the American and Japanese governments on a so-called “open skies” agreement that could open up trans-Pacific routes to greater competition.
Only two U.S. passenger airlines — Delta and United Airlines — are permitted to fly between Narita Airport and cities in the United States.
Despite the potential advantages for the bidders, analysts say that JAL needs to show it is serious about turning itself around if it is to ink a deal.
The company has already forecast a ¥63 billion loss for the current fiscal year, which ends next March. Although it recently secured ¥100 billion in government-backed loans, analysts say the airline needs at least ¥250 billion to get through the year.
JAL is mired in negotiations with its eight unions over staff and pay cuts, holding back the company’s restructuring efforts. The company’s holdings, which include a global hotel chain and credit card business, have also drained its resources. Meanwhile, the carrier is losing out to its rival, All Nippon Airways, on domestic routes.
“On one hand, it’s not a such an expensive purchase, considering the possible rewards,” said Yasuhiro Matsumoto, an analyst at Shinsei Securities. On the other, “nobody wants to invest in a company in such dire straits.”
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Posted by: Timmy on Monday, August 17, 2009 - 02:52 AM
Business
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Japan’s economy rebounded in the latest quarter for the first time in a year, signaling the possible end of the country’s deepest recession since World War II and brightening prospects for a widespread global recovery.
Japan’s economy, the world’s second-largest, has been sluggish for years, but it plunged into recession in the wake of the global financial crisis last year. Exports, its mainstay, at one point fell to half their precrisis levels.
But a turnaround in exports and a vast fiscal stimulus program helped produce a modest 0.9 percent economic expansion in the three months that ended June 30, government figures showed on Monday, equivalent to annualized growth of 3.7 percent.
The expansion was in line with the 0.9 percent growth forecast that was the average of 10 economists surveyed last week. A 1.2 percent growth in public demand helped offset a 1.3 percent fall in demand from the private sector, the data showed. Overall domestic demand fell 0.7 percent from the previous quarter.
“The results were very positive,” said Takuji Aida, senior economist at UBS Securities Japan. “It’s true Japan would not have achieved growth without government stimulus. Still, the data shows that inventory adjustment is all but over, and we can expect growth going forward.”
The Japanese economy’s resurgence after four consecutive quarters of contraction — including a historic 14.2 percent fall in annualized terms in the previous quarter — adds to a slowly improving picture of the world economy.
Last week, the German and French economies also showed unexpected growth. The Federal Reserve also said last week that the United States, the world’s biggest economy, appeared to be “leveling out.” China, Hong Kong, Singapore and South Korea have reported rebounds as the effects of stimulus efforts across the globe take effect.
Recovery in these critical overseas markets whittled down inventories and released some pent-up demand, bolstering Japan’s exports of cars and electronics. Exports grew 6.3 percent from the previous quarter, while imports fell 5.1 percent. At home, new tax breaks and incentives to help sales of energy-efficient cars and household appliances, coupled with lower gas prices and a rebound in share prices, spurred consumer spending. Prime Minister Taro Aso has pledged 25 trillion yen (about $263 billion) in stimulus money to revive the economy, including a cash handout scheme and more public spending on programs like quake-proofing the country’s public schools.
Investors have shown recent optimism in Japan’s economy; shares in Tokyo recently rallied to their highest levels since early October.
But the Nikkei 225 average dipped 1.5 percent in early trading Monday after the numbers were announced, after weak consumer sentiment data in the United States sent Wall Street lower on Friday.
Still, the outlook for Japan remains unclear, and analysts question whether the economy can sustain this recovery after stimulus measures at home and elsewhere run their course. Falling employment and wages are also expected to weigh on consumer spending for some time.
Japan’s jobless rate hit a six-year high of 5.4 percent, and wages showed a record drop in June on an annual basis, dragging down consumer spending. Weak demand, coupled with falling oil prices, have put downward pressure on prices here, raising fears of prolonged and damaging deflation.
“With the factors driving the current rebound being temporary in nature, a self-sustaining recovery is still not in sight,” Ryutaro Kono, Tokyo-based economist for BNP Paribas, told clients in a report published ahead of Monday’s numbers.
The latest growth recoups only a small fraction of the 8.8 percent the Japanese economy has lost since peaking in early 2008, Mr. Kono said.
Private capital investment and real estate values also remain weak, economists say.
Although production activity has increased with the turnaround in exports, “we have yet to see ‘active production’ backed by capital investment,” Kyohei Morita, chief economist for Japan at Barclays Capital, wrote in a note.
Though exports and industrial production are recovering, their levels remain well off their peak, saddling companies with excess capacity and employment, Mr. Morita said.
The Bank of Japan struck a similarly cautious note over prospects for a sustained recovery in a recent report. While the bank said the Japanese economy had stopped deteriorating, it warned that employment and wages would stay low for some time, hurting consumer spending. Despite this quarter’s growth, the bank predicts that Japan’s economy will contract 3.4 percent in the year to March 2010.
The latest uptick is unlikely to enhance the standing of Mr. Aso’s Liberal Democratic Party ahead of national elections this month, when many expect the party to lose its grip on power for only the second time in over half a century.
Voter surveys show that the Democratic Party, Japan’s main opposition party, which vows to put more money in the hands of consumers, is favored to beat the Liberal Democrats in the Aug. 30 balloting.
Support has soared for the Democrats and their ambitious election platform, which includes cash allowances to families with children, free tuition and lower gasoline taxes.
But some economists warn the Democrats’ plans will add to Japan’s growing debt, which already surpasses 180 percent of its gross domestic product.
Others say that Japan needs deeper structural reforms to raise productivity, especially in the face of a shrinking population. An overhaul of the tax and social insurance systems are also priorities for Japan.
Unless Japan can maintain robust growth into next year, the country will have suffered another “Lost Decade” of economic growth, after limping through much of the 1990s with little growth, Yutaka Harada, chief economist at the Daiwa Institute of Research, wrote in a recent note.
“Ten years after our Lost Decade, we’re finding ourselves in the midst of a second Lost Decade,” Mr. Harada said.
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Posted by: Timmy on Tuesday, August 04, 2009 - 03:32 PM
Business
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In a recent YouTube video posted by Japan’s governing party, a smooth talker with an uncanny resemblance to the country’s main opposition leader, woos his date with sweet promises: a life without worries about child care costs or retirement, if only she will marry him.
The wide-eyed woman asks how he will pay for such a carefree lifestyle.
“Just choose me,” the suitor snaps. “I’ll sort out the details after we’re married.”
The not-so-subtle message from the governing Liberal Democratic Party is that the opposition Democratic Party of Japan is offering voters much the same kinds of promises. The voters have seemed ready to be wooed.
The opposition party is riding a surge in popularity before elections for the lower house of Parliament on Aug. 30. Its platform promises more cash in hand for Japanese struggling through a deep recession: cash allowances to families with children, free tuition and more social security — all without adding to the country’s growing debt.
The Liberals have called the plan nonsensical and sure to bankrupt Japan. Instead, they promise to stimulate the economy by investing in strategic industries, like solar power and “green” cars. Growth will then quickly trickle down to the common people, the Liberals say.
The opposition “focuses on giving out money with no strategy for economic growth,” Prime Minister Taro Aso said of the Democrats. “We can no longer afford to pass our debt onto our children and grandchildren.”
The two parties are, in essence, pushing two versions of how Japan, the world’s second-largest economy, should work: as it has for the last half-century, by propping up its corporations, or by distributing wealth to the people.
If voters embrace the Democrats, Japan’s economy could shift from a long reliance on exports for growth, a model that has been largely discredited in the recent collapse of exports in the global downturn. Instead, a Democratic Party victory could result in a redistribution of wealth to ordinary Japanese to spur consumer spending.
“We will not pursue a traditional growth model — that is, rely on exports to grow our economy,” Katsuya Okada, secretary general of the Democratic Party of Japan, told reporters on Monday. “First and foremost, we need to improve peoples’ livelihoods.”
But the party’s smorgasbord of policies — which include yearly allowances of 312,000 yen ($3,297) per child, free tuition at public high schools and an end to highway tolls and gasoline tax — will not come cheap.
The Democrats say the program will cost 7.1 trillion yen to start next April, and an additional 16.8 trillion yen in 2011. That comes to more than 3 percent of Japan’s 510-trillion-yen economy.
With its public debt already surpassing 180 percent of gross domestic product, Japan cannot afford such spending. By some measures, its debt-to-G.D.P. ratio is second only to Zimbabwe’s.
But the party’s proposals have proved attractive. The Kumano family in central Tokyo, for instance, would receive 624,000 yen ($6,593) in child benefits a year for its two boys, now 8 and 9, until they are about 16. The father, Eiichi Kumano, who runs a child care business, says the money would be a relief.
“The boys are getting older, and we have to start thinking about college,” Mr. Kumano said. “In the short term, we’re thankful for the cash. But I do worry about how the government will pay for all this in the long run.”
The Democrats say they intend to finance their program by eliminating the governing party’s wasteful public spending, a legacy of decades of pork-barrel politics.
“We intend to rebuild the entire budget from scratch,” said Masaharu Nakagawa, the Democrats’ shadow finance minister. “We will eliminate all that’s wasteful.” Economists agree that the opposition party would have a freer hand in uprooting vested interests and writing a more efficient budget. The party has, until now, been virtually ignored by corporate Japan. In 2007, Keidanren, the country’s main business federation, contributed almost 2.9 billion yen to the governing Liberals, and just 80 million yen to the Democrats.
“A growth strategy that focuses on ordinary citizens could be better than current policy, which is constrained by longstanding business interests,” said Ryutaro Kono, chief economist for Japan at BNP Paribas.
The opposition is also exploring raising money by eliminating generous tax breaks and subsidies that have long supported weak Japanese companies at the expense of the wider economy. About two-thirds of Japanese companies, and half of large companies, do not pay corporate taxes because of obscure tax subsides for research, investment incentives or because they lose money, according to the Organization for Economic Cooperation and Development.
By changing corporate tax policies and tapping idle government funds, the opposition party hopes to avoid raising Japan’s 5 percent consumption tax. The Liberals insist it will soon be necessary to raise that tax to meet government expenditures.
Businesses say the Democrats’ proposals would hobble Japanese companies in international competition. Executives are already stepping up the pressure on the opposition to ease its tough stance on corporations, which includes much tighter emissions goals for greenhouse gases.
“The economy will stall, or even worse — backslide,” Tetsuya Nomura, president of the construction company Shimizu Corporation and the leader of the industry’s main lobbying group, told reporters. “None of us can put food on the table,” he said.
Some analysts question the ability of the opposition party, which has never been in office, to navigate Japan’s complex economy. Formed a decade ago, the party is a mix of lawmakers from a spectrum of political views, including socialists and free-market advocates. Its agenda is likely to face fierce resistance from Japan’s powerful bureaucrats, whom the Democrats have vilified as keepers of the status quo.
Economists note that neither party has a viable plan for long-term growth. With the elections for Parliament’s more powerful lower chamber looming, neither side has addressed some of the more painful changes that Japan must make to build a more productive economy, including bringing more competition to domestic industries, revising rigid labor laws and increasing efficiency in financial markets.
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Posted by: Timmy on Sunday, August 02, 2009 - 07:30 AM
Business
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SHOPPERS who stop into Toyota dealerships here and across Japan generally have just one thing on their minds: buying a Prius.
After years of indifference toward hybrids — in part because many gas-only models that got excellent mileage were already available in showrooms — drivers in Japan are lining up for the Prius, the Honda Insight and other models powered by gasoline and electricity.
The enthusiasm for hybrids is also a result of new models arriving in showrooms. Toyota introduced the third-generation Prius in May; in June, it was the best-selling car in Japan, elbowing aside the Insight, which in March became the first hybrid to hold the top sales spot.
Honda has been selling about 10,000 Insights a month, twice as many as had been expected in the company’s internal forecasts. There has been a five-month waiting list for the Prius in Japan, similar to the situation in California last year when gas prices swept past $4 a gallon.
“Ordinarily, small cars don’t have much status, but people don’t care about changing from a bigger vehicle to a smaller vehicle if it’s a Prius these days,” said Toshiyuki Yokoyama, the general manager at Kanagawa Toyota Motor Sales, which runs about 50 dealerships in and around Yokohama. “Suddenly, everyone wants the car as soon as possible.”
Japanese consumers are only now embracing hybrids because, as in Europe, there have been plenty of cheaper fuel-efficient alternatives. But the sales of new, reasonably priced models have jumped in the past year or so because of government subsidies and a blizzard of media coverage that has fueled Japan’s fad-conscious consumers.
The question is whether the recent surge in sales of “eco cars,” as the Japanese call hybrids and alternative-fuel vehicles, is a lasting trend or one pumped up by short-term subsidies and high gasoline prices.
In the United States, where Japanese automakers had trouble keeping up with demand for hybrids in 2008, sales have slowed (along with the rest of the market). Toyota suspended work on a factory in Mississippi devoted to building the Prius.
Japanese are eager consumers of trendy products — everything from the latest handbags to video games — and sales often fall as fast as they rise.
Automakers in Japan say, however, that sales of hybrids will remain strong even if government subsidies of up to $4,000 are phased out. Though down from the peaks reached in 2008, gas prices are still relatively high, and in a weak economy consumers are looking to spend less on gasoline.
From an early age, Japanese are taught to be more efficient because their country has few natural resources. To reduce the use of air-conditioners, businessmen a few years ago were encouraged to do without neckties. Appliance companies eagerly promote waterless washing machines.
But it is price that matters most, which is why Toyota and Honda used less costly technology to cut the cost of their hybrids below three million yen, or $30,000, the rough benchmark for a luxury car in Japan.
Price was definitely an issue for Eiji Suga, a storekeeper in Kawagoe, a city one hour from Tokyo, who reserved a white Prius in April.
Mr. Suga’s 13-year old Honda Accord, which has 43,000 miles on it, had very little resale value. But because of the car’s age, he qualified for a 250,000 yen (about $2,500) government subsidy if he scrapped the car and bought a more fuel-efficient replacement.
He will receive another 150,000 yen in tax breaks for buying an eco car. The price of the new Prius was about 300,000 yen lower than its predecessor, too.
“Together with the tax breaks and other government benefits, it was easy to choose,” said Mr. Suga, who added that seven of his friends in the neighborhood were also buying the new Prius.
Nissan and Mitsubishi have also announced plans to leapfrog hybrids with new electric vehicles.
But the durability of the hybrids on the market may make it hard for automakers in Japan to persuade consumers to buy electric cars.
Tadashi Ishida, a retired electronics company executive, bought his Prius in 2006 to replace a Toyota Mark II, taking advantage of a 190,000 yen government rebate. Mr. Ishida, who lives in Yokohama, has been particularly impressed with the car’s fuel economy.
He uses just a quarter-tank of gas to get to his family’s summer house about 75 miles away, about half of what it took to get there in the Mark II. He said that hybrids were no passing fad.
“Average Japanese people do not consider the hybrid car a status symbol,” Mr. Ishida said. “Our Prius just fits our needs in terms of fuel consumption, daily family use and easy driving.”
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Posted by: Timmy on Thursday, July 30, 2009 - 04:15 PM
Business
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Given the magnitude of Japan's recession, it should perhaps come as little surprise that the fantasy-obsessed animation industry has gotten a hard dose of reality.
Yasuo Yamaguchi, executive director of the Association of Japanese Animators, said the industry has been rocked by the country's deepest recession since World War II.
"The spread of free Internet downloading is having a deadly effect," he said.
Japanese animation is roughly a $2 billion a year industry. Revenues peaked in 2006 but have since fallen off, as lower advertising revenues lead to fewer new programs.
Yamaguchi said the animation industry is important to Japan's economy and that the government should be helping it through these tough times with subsidies.
Unlike some big screen animated features from the United States that rely almost completely on computer animation, in Japan, almost all features are drawn by hand -- a labor-intensive craft practiced by thousands of young artists each year.
For the last six years, Nobuki Mitani, has been working as an "in-between" animator -- filling in the cells between "key" animations. It is one of the lowest paid positions in the animation hierarchy.
Many of these entry-level jobs have been outsourced to the Philippines and South Korea in recent years.
Mitani, 27, said the hours are long, and the pay is low -- about $800 a month.
"Every day I work about 10 to 12 hours," he said. "Often, we work on Saturday, and if it's busy, we work Sunday, too."
In Tokyo, the world's most expensive city, that means living in cramped conditions. Mitani lives in a tiny one-room apartment with no air conditioning.
In summer, the room is sweltering.
"I try not to drink water," he said, "to control the sweating." He has a shared sink at the end of the hall where he can wash his hands and face, but to bathe he has to go to a public bath.
At the Tokyo Animation Institute, the classrooms are filled with students honing the craft, faces close to their sheets of paper, the only sound a hum from the electric pencil sharpener.
The school's director, Yosuke Shimizu, said he knows many of his graduates will quit their first jobs after just months.
"Within half a year, some will take freelance jobs, some will take a key drawing job, and some will become sketch directors. Those who are good enough never complain about how hard the job is," he said.
At Toei Animation Studios, conditions are better for the animators than in smaller studios. Toei has produced countless successes over the years, including the "Dragonball" series and the ongoing favorite "One Piece."
But even here animation is an intense, demanding job. Naotoshi Shida has been working at Toei for 25 years. He said it takes much more than just a love of drawing to succeed.
"If someone is thinking of doing this just because they love drawing, that's called a hobby. They'd better think of doing something else."
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Posted by: Timmy on Sunday, July 26, 2009 - 02:02 PM
Business
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The slide in Japan's exports slowed in June in a sign government stimulus spending around the world may be propping up demand.
But they were still 35.7% lower than the same month a year earlier.
Japan, dependent on exports for growth, has been suffering its steepest recession since World War II.
It is a sign of just how badly Japan's economy has been battered that a drop in exports of more than one-third is hailed as perhaps a positive sign.
But the decline in June, of 35.7% compared the same month a year before, is better than May, when exports were down by more than 40%.
With imports also lower, Japan made a trade surplus of $5.4bn (£3.3bn).
Japanese companies have benefited particularly from government stimulus spending in China.
Japan's economy shrank at an annualized pace of 14.2% in the first quarter of the year, the worst performance on record.
The Bank of Japan recently said conditions had stopped getting worse.
But any improvement is mostly being felt by bigger manufacturers.
Smaller companies are still struggling and unemployment is expected to continue to rise.
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Posted by: Timmy on Sunday, July 05, 2009 - 07:34 AM
Business
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A survey of 2300 retail stores reveals that Apple has cleaned up in the smartphone market in Japan.
According to nikkei.net, market research company BCN surveyed the market and said the iPhone 3G 8GB, sold by Softbank, easily came in at number one. Second in line was the 16GB iPhone, while the NTT CoCoMo Aquos SH-04A came in at number three.
The report said that while ordinary cellphone sales are plummeting, smartphone sales have grown by nearly 80 percent in a year.
Apple released the iPhone 3G in July last year and it's estimated that over a million have sold in Japan since then.
The appeal is not only the iPhone's ability to download music, games software and other applications, but also a plan Softbank devised to cut the price of handsets and slash the price of the communications tariff.
In the list of the top 10 devices that are best sellers in Japan, the Blackberry Bold comes in at number six, while Taiwanese company HTC has blagged four of the top 10 slots.
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Posted by: Timmy on Thursday, July 02, 2009 - 11:28 AM
Business
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Even in the midst of Japan's deepest economic recession since World War II, the country's love hotel industry is thriving.
"I'd hate to use the term "recession-proof," but it's certainly proven very resilient over the last six to nine months," said Steve Mansfield, CEO of New Perspectives, which operates six love, or "leisure," hotels in Japan.
One of them, the Bonita Hotel in Isawa, boasts a 257 percent occupancy rate. Rooms can be rented for three to 24 hours.
Mansfield's company estimates the industry in Japan pulls in $40 billion a year in revenue.
"It's a natural human desire. Even these days, on the weekend, every love hotel is full of people -- it's hard to get in. You can never stop sexual desire," said a woman with her boyfriend in Tokyo, who laughed in embarrassment when asked for her name.
Love hotels fill a need for privacy in a country where high population density often means couples have little time alone.
Rooms offer a broad assortment of features, including karaoke machines, PlayStation game consoles, DVD players, a variety of cosmetics, customized condoms and indoor-outdoor Jacuzzis.
Though required by law to have a front desk, most can be rented and entered without talking to a clerk.
The days of Japanese being ashamed to enter love hotels are coming to an end, though, Mansfield said.
"Seventy-five percent of our guests are members of our points program," he said. "They carry our points cards, they collect points and they receive gifts. That's something people are very comfortable with, and I think that reflects the customers that we attract."
Takashi Yamamoto, who designs love hotels in Tokyo, agreed.
"The bad image that love hotels had has faded over time. Also, customers started to raise their voices and became more selective about choosing hotels. In response, management has improved."
The flashiest love hotels are found in Osaka, including a Hello Kitty-themed hotel and one with a room featuring a merry-go-round.
Tokyo hotels tend to be tamer, focused on winning customers with amenities. The Style A Hotel, for example, offers a suite for $190 that includes a full-size Jacuzzi and a private sauna.
Though young couples make up the majority of customers, they are not the only ones. One man, who declined to be named, said: "I go to love hotels when I'm drunk and don't feel like going home."
Whatever the reasons, the hotels have been doing well enough that Mansfield recently went to London, seeking investors to expand.
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"The industry has 25,000 hotels, and through our research we've worked out that 90 percent of owners have five or fewer hotels," he said.
That fragmentation is a structural inefficiency in the market, he said, one he would like to help correct.
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Posted by: Timmy on Wednesday, June 24, 2009 - 01:24 AM
Business
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The "prince" is taking the wheel of Toyota as the world's largest automotive manufacturer stands at a crossroads.
Akio Toyoda, the grandson of company founder Kiichiro Toyoda, was formally approved as president of Toyota Motor Corp. on Tuesday by the company board. Toyoda, 53, has been with the company for 24 years.
Nicknamed "the prince" by Japanese media, Toyoda is the first family member to run the company in 14 years. (His grandfather slightly altered the family name when christening the company "Toyota," which has eight brush strokes in Japanese -- a fortuitous number).
Toyoda takes the helm of a company whose current fortunes are decidedly mixed. Last year, Toyota became the world's largest carmaker, overtaking General Motors for the first time. Unlike GM, which filed for bankruptcy protection earlier this month, Toyota was ahead of the eco-wave by becoming the industry leader in hybrid cars, led by Prius.
But like other global automakers, Toyota has been hit by the financial crisis, posting its first ever loss annual loss of $4.5 billion for the year ending March 31; the company lost $7.7 billion alone in the first three months of this year.
The company's perch on the industry's pole position also faces a long-term threat due to its relatively weak market share in emerging markets such as China, Russia and Brazil, analysts said.
"Toyota's current strengths are its technological improvements, which you see with the Toyota Prius with hybrid cars," said Yoshiaki Kawano, an automotive analyst with CSM Worldwide in Tokyo.
In Japan, the company has 180,000 orders for its new Prius model, which sells for below $20,000. "They cut the price by $3,500 to remain competitive," Kawano said.
"On the other hand, the company's weakness is dependence on the North American region and Japan," he added. "For getting into developing markets like China, they came in slower than Volkswagen and GM."
Putting the wheel back in the hands of the founding family sends a "back to basics" message for the company, Kawano said. "He's a car guy ... he's not going to get the company involved in selling houses and motorboats," he said.
Strategically, it is an ideal time to put the relatively young Toyoda in place, Kawano said.
"I don't think it's going to get any worse than now, so there's nowhere for him to go but up," he said.
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Posted by: Timmy on Thursday, June 11, 2009 - 05:26 AM
Business
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Japan's economy shrank less than previously thought in the first three months of the year, but still contracted at a record pace.
Gross domestic product - the sum of the nation's goods and services - shrank by 3.8%, equivalent to 14.2% over a year.
Earlier it was estimated at 4%, but there have been brighter signs in recent weeks.
Japan has been hit hard by the global downturn because it relied on consumers abroad to buy its cars and electronics.
People in Japan are starting to hope that the worst might be over.
The Government now says in the first three months of the year the economy shrank by 3.8%, less than was earlier estimated but still the worst on record.
The reason for the revision is that capital expenditure - spending on factories and equipment - was cut by less than had been previously thought.
Modest growth?
In this quarter the world's second largest economy is forecast to grow modestly.
Firms are benefiting from increasing demand from China where the Government is spending nearly $600bn (£365.5bn), some of it on infrastructure.
And massive stimulus measures by Japan's Government, including cash handouts, are starting to have an effect.
But Japan's exports are still around a third lower than a year ago and factories are being run far below full capacity.
If companies continue to cut jobs and investments it could cause a fragile recovery to stall.
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Posted by: Timmy on Tuesday, May 12, 2009 - 02:51 PM
Business
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In the Land of the Rising Sun, the fiscal year is setting in a sea of red.
Electronics makers Hitachi and NEC Corp., and carmaker Nissan all ended the year with a loss. Japan's largest electronics maker, Hitachi lost $8 billion in the fiscal year ending March 31, with consolidated revenues down 11 percent from last year. It was the largest loss ever recorded by a Japanese manufacturer, according to Shinko Research Institute.
NEC Corporation lost $3 billion in the past fiscal year, down nearly 11.5 percent from last year. Meanwhile, Nissan lost $2.3 billion for the year
Declines in the automobile, semiconductor and industrial equipment industries especially hurt Hitachi, as well as write-downs of securities due to the sharp declines in global stock exchanges. Hitachi said it will cut unprofitable business lines, reduce staff and eliminate factories in Japan and overseas, but gave no specifics.
Japanese firms have been hit hard by the credit crisis, which has driven up the value of the yen -- driving up the export cost of products to markets like the US, where consumers are spending less on durable goods such as automobiles and electronic products.
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