* * * * * * * * TERRIE’S TAKE – BY TERRIE LLOYD * * * * * *
A weekly roundup of news & information from Terrie Lloyd, a long-term
technology and media entrepreneur living in Japan.
(http://www.terrielloyd.com)

General Edition Sunday, January 15, 2017, Issue No. 879

– What’s New — Predictions for Japan for 2017
– News — Asthma herbal medicine a hit in China
– Upcoming Events
– Corrections/Feedback
– Travel Picks — Bizen pottery in Okayama, Daigo temple in Kyoto
– News Credits

SUBSCRIBE to, UNSUBSCRIBE from Terrie’s Take at:
http://mailman.japaninc.com/mailman/listinfo/terrie

BACK ISSUES
http://www.japaninc.com/terries_take, or,
http://mailman.japaninc.com/pipermail/terrie/

+++ WHAT’S NEW

Five Predictions for Japan for 2017

Well, after a good break and a trip out of Japan, we’re back with our
predictions of 2017. Going overseas reminded us just how slowly Japan
changes unless forced by circumstances to do so. It’s a risk-averse and
conservative society where generally the only domestic sources of change
are scandals and deaths. Externally-induced changes are far more
prevalent, especially when they involve the U.S. For example: think of
the Plaza Accord in 1985 that stoked the yen to historic highs at the
time, the 1990’s dotcom bubble and resulting bust, 9/11 attack, “Open
Skies” that ended JAL/ANA’s local duopoly, and now of course the Trump
Shock.

Why is Japan so conservative? Our take is that decades of mind control
at school then through the media, coupled with 50 years of relative
prosperity – at least offering an ability to live and eat decently – has
taken the nation away from the mentality of a glass half full, to that
of a glass half empty. Its rapidly aging society accentuates this
aversion to risk and change, and this trend will only continue.

The result is that Japan is creating a society of young people who
desire to work in safe jobs, lead safe but entertaining lives, and avoid
the burden of families and risk of (entrepreneurial) failure. It’s sad
to see, but at the same time, this systemic atrophy of ambition and
competitiveness does mean that predicting where changes will come from
becomes easier – they’ll either be in entertainment, longevity, food
supply, or containment caused by external shocks (natural and political).

1. Year of Trump and Japanese Economy

…Donald Trump is just such a shock. Nicknamed the “Human Hand Grenade”
by U.S. film maker Michael Moore, Trump’s populist message and thought
processes pretty much ensure that Japan will be lumped in with those
other Asian countries that are flooding the U.S. with cheap products,
apparently to the detriment of U.S. workers. He has already said that he
wants to levy an import tax on Japan and China, and although we think
that cooler heads will prevail and tell him to back off from that course
of action, his bullying will nonetheless elicit a concerted reaction
from both targeted countries.

Japan, ever the loyal puppy wagged by the U.S. defense/economic tail,
will do its best to ingratiate itself with the Trump administration.
This process has already started. In fact, the Japanese understand how
to deal with bullying quite well, since it’s embedded in the culture –
starting with bullying in the schools. Kids are expected to internalize
it, which is one reason they don’t like risk and confrontation. And
given that the bullied (and bullying) kids of the last 50 years are now
the leaders of the country, they will placate the U.S. bully as best
they can. They may actually be pretty good at it – as Masayoshi Son and
Abe have both demonstrated so far.

Japan’s economy in 2017 will follow the rest of the world. Trump is
going to kick off a huge spending and tax-cutting splurge in the U.S.,
worrying about the side effects later. Thus the global mood is one of
skittish expectation, but certainly a desire to believe in a global
economic recovery. As a populist leader, Trump will do his best to
encourage America’s “animal spirits” and in our opinion he will
initially be good for the U.S. and indeed the rest of the world.
However, we don’t think this euphoria will continue much past the
beginning of 2018 (see more below).

Although only about 15% of Japan’s economy is export related, record
profits by those exporters will mean recovering tax revenue, more
government spending, and thus a general easing of conditions here.
Simultaneously, the BOJ’s re-inflationary efforts will gain traction
later in 2017, and so interest rates are likely to move up. If you have
a variable home mortgage, now would be a good time to ask the bank about
changing over to fixed rates.

2. Number of inbound tourists drops

Trump’s attacks on China, conversely, are likely to worsen the
relationship between the U.S. and China, and we foresee a series of
tit-for-tat trade disputes that could escalate quickly. This has as much
to do with Trump’s bullying personality and quick temper as it does for
his need as a populist politician to have a convenient scapegoat. And
while the Japanese learn at school to accept bullying and repress their
feelings, the Chinese education system is much less evenly applied, so a
culture of fighting back is alive and well. Not to mention that half the
population still has to struggle to survive. As a result, China’s
reaction to bullying will be to hit back, both at the U.S., and because
the Chinese government is smart enough to steer public outrage, to hit
their favorite whipping boy – the Japanese.

So Trump causes direct financial hardship in China, and the authorities
there create a territorial incident with the Japanese to divert the
attention of their citizens. If this process is allowed to escalate too
much, regardless of whether there will be any border clashes, the
Chinese economy will come under pressure and this may cause another run
on the shadow banking system. This would of course have a huge dampening
effect on Japan inbound tourism, not to mention the global economy at large.

Whether it’s territorial or financial, we don’t expect this period to
last beyond 2019, for the reason that if Trump does destabilize major
U.S. political relationships in 2017, the Republican party itself may
take action sooner or later. There is an interesting piece in the
Independent this week about the probability of Trump being impeached
within his first term.

http://ind.pn/2jx7F81.

——— Micro Loans Program in South Pacific ————

SPBD and MicroDreams seek to combat poverty in the South Pacific by
enabling women to become entrepreneurs. These women apply for small
loans, as low as US$120, to launch, grow, and maintain small businesses.
Previously, many of our clients did not have a stable source of income
to support their families. We work alongside these hardworking women,
teaching them essential business and financial skills to expand their
businesses and generate steady income and improve their quality of life.
With our program, these women turn dreams into reality as they reap the
rewards of their efforts.

Read about our remarkable clients
http://www.microdreams.org/success-stories. You can also donate to the
program at: http://www.microdreams.org/donate-today.
———————————————————–

[…Article continues]

3. Immigration increases, along with racist incidents

So long as aged voters are more important to politicians than families
with non-voting kids, the graying of Japan will continue apace and those
legions of elderly will need more home and hospice care. Although there
probably are enough nurses in Japan to support the nation’s elderly for
some years to come, the jobs offered are so poorly paid and the
conditions so trying, that nurses in their 30’s and older are willingly
leaving the profession as they have families and are not returning
later. Like so many sectors in Japan, health sector employers have
little sympathy or financing to improve conditions – and so the system
declines and if nothing is done it will collapse.

We will also say at this point that employers who have the cash (many)
but who won’t pay employees more are likely doing so because they fear
the future. In a way, they are engaging in the same bullying behavior
they learned at school sports teams – that of pushing your charges
(employees, team members) to the limit. It’s hard to break the habit and
the government hasn’t yet gotten to the stage where it will force wage
increases through law. But we do think that this stage will come in the
next 5-10 years if things get desperate enough. The problem at the
moment is that things are NOT desperate, just difficult. And the
Japanese are good at “gaman” (stoic acceptance).

Anyway back to immigration. We can already see a strong under-the-table
pro-immigration policy by the Abe government. For now they just want
cheap bodies to man dilapidated factories and under-utilized farms. This
means that although the official stance is one of attracting
well-educated, high-value engineers and professionals, in fact the need
currently is for the desperately poor (and usually under-educated)
people from developing countries. This will inevitably lead to abuse,
anger, disillusion, and desperation by some, and crime. We’ve already
seen foreign workers beat and kill local Japanese. Our prediction this
year is that there will be one or more similar incidents, and this will
incite more anti-foreigner hate speech.

4. New foods

One of our favorite activities in 2016 was going to the supermarket to
see what new foods are appearing on the shelves. While the beverage
industry has always been competitive and innovative, regular food
products have been more about price – with the exception of the gradual
introduction of more western delicacies (cheeses, olives, crackers,
candies, cookies, etc.). But recently there has been a marked change in
Japanese staples. We noticed the trend start back in 2014 when the media
started commenting that in order to psychologically deal with tighter
personal budgets (as wages and the yen’s buying power continued to fall)
people were splurging on “small luxuries”. This was especially so with
western food items. Then in 2015 and 2016 we started seeing Japanese
makers following suit, making more luxurious versions of staple foods
that previously they’d been under pressure to keep at the same cost for
20 years.

A good example of this is tofu, probably one of the cheapest and safest
sources of protein around. Until recently, no one ever paid more than
JPY100 for a block, and if you wanted to spice it up, you could top it
some kind of flavored miso or an exotic fish sauce from some remote part
of Japan. But last year, specialty versions of tofu appeared and they
have been a huge hit. Nowadays you can buy tofu that mimics mozzarella
cheese (“Burrata” tofu), and various other textures and flavors (but
uniquely tofu flavored variants). The Burrata is delicious! We have no
doubt that as inflation starts to gain traction this year, a sure thing
as the USA re-prices bank interest rates, Japanese food makers will
accelerate their food offerings.

We are particularly expecting the appearance of functional foods that
are cheap and healthy, and which people on student-like budgets can live
on and thrive. JPY38 packs of vegetable sprouts have been a good example
in the past. So maybe we can expect small packs of pre-mixed vegetable
powders and nutritive gels that can be added as ramen toppings – thus
making a ramen meal not only cheap and fast, but healthy as well. Then
of course there are product improvements on supplement bars such as
Soyjoy. Really hoping to see some Japan-made “raw” bars that are so
common recently in the U.S., but without the sugar load.

5. Toyota electric cars to compete with Tesla?

Finally, it’s not every day that a manufacturing behemoth like Toyota
puts its president, grandson of the firm’s founder, in charge of a new
division. But that’s what happened on November 30th last year. It looks
like the company is finally going to get serious about electric cars,
and particularly battery plug-ins (BEVs). The firm has mostly been
announcing products relating to its fuel cell technology, which it
believes provides yet another bridge between pumped fuels and electric.
But now that Tesla is building a huge battery factory with Matsushita
and has its low-cost Model 3 due out late this year, and even other U.S.
and German car makers are introducing full-range electrics, obviously
Toyota has decided it had better get moving with its own vehicles.

Tesla has done a great job of defining the future for electric vehicles
– integrating them into homes and domestic power ecosystems.
Unfortunately for them, oil fracking and the increased output of
low-cost oil put off the precipitating factors to move the general
population into electrics by at least 5-10 years, and so they have been
ahead of their time. But with their focus on high-end vehicles, that
hasn’t been too much of a hurdle until now.

So our prediction is that this year Toyota will announce specifics about
a hot new BEV. Not only that, but maybe they will get back into bed with
Tesla and put out a vehicle with a Tesla power plant.

Why wouldn’t Toyota do it on their own? Probably because with the
remarkably lower complexity of connecting parts (although the parts
themselves may be technically complex), Toyota is probably worried that
there won’t be enough differentiation for them to keep a healthy
business and so doesn’t want to speed up the natural evolution of
automobiles. But, yep… that’s exactly what Sony thought back when
Apple introduced the smartphone. We think cars are next on the list and
in ten years time customers will be buying autos for the software not
the base hardware. So instead, Toyota will take a short-cut to keep a
presence, and get the parts from someone else – as they did in 2012. For
clues, watch for new investment in Tesla. Heck, with a cash pile of more
than US$47bn and Tesla’s market cap of US$38bn, maybe they can buy Tesla
out…?

…The information janitors/

***————————****————————-***

— Japan Travel Inbound Travel Professional Services —–

Japan Travel’s inbound company travel professional services team now
serves incentive and group training logistics and support. We assist
your headquarters HR teams in hosting your foreign employee groups in a
successful program in Japan. Our services include: hotels,
transportation, meals (including special diets), entertainment,
activities, help desk support, telecommunications, guest speakers, and
of course the core training (delivered by our professional training
services partners). We work on a menu-basis, providing as much or as
little as your management team needs to get the project done.

If you have a group needing assistance, we invite them to contact us at:
tours@japantravel.com.

Or visit our pages at:http://bit.ly/29c2eG5
———————————————————–

***********************************************************

+++ NEWS

– The real JP contribution to US economy
– Asthma herbal medicine a hit in China
– Emperor to get his wish to abdicate
– Uniqlo on a roller coaster ride
– Dolphins-1, Taiji-0

=> The real JP contribution to US economy

The Japanese government has quickly realized that they need to
differentiate themselves from the Chinese, or risk being lumped into
trade tariffs or worse, as U.S. President-elect Trump’s new government
starts to deliver on election promises. As a result, they have put out a
statement that gives some facts about the real value of Japan to the
U.S. economy – which Reuters has reported as being:
– 47,000 people are directly employed by Japanese companies in the U.S.
– More importantly, those companies have created more than 839,000
downstream jobs for Americans. Japan reckons this is about 30x more than
Chinese firms.
– Cumulative investment into USA of US$411bn, about 30x that of China also.
– Japan trade surplus with the U.S. has shrunk substantially in the last
few years – to about 9% – while China’s surplus gap yawns wider.
– Toyota, the main target of Trump’s vitriol so far, says it will invest
US$10 billion in the U.S. through 2022. (Source: TT commentary from
reuters.com, Jan 12, 2017)

http://www.reuters.com/article/us-usa-trump-japan-trade-idUSKBN14W0UL

=> Asthma herbal medicine a hit in China

Kobayashi Pharmaceutical’s Dusmock product, a herbal remedy for
alleviating chest infections, has become a hit in China. The product has
gained a large following on the internet by users there after concern
peaked about PM2.5 particulates in smog. It supposedly increases
bronchial secretion and moves foreign particles out as phlegm (coughed
back out). Chinese tourists visiting Japan are snapping up the product
and Kobayashi says it will increase production by 30% to meet demand.
***Ed: Pollution medicine? For sure Kobayashi’s competitors will be
watching this with interest.** (Source: TT commentary from nikkei.com,
Jan 12, 2017)

http://asia.nikkei.com/Markets/Tokyo-Market/Japan-s-Kobayashi-plays-to-i…

=> Emperor to get his wish to abdicate

Finally an elderly couple will be allowed to retire in peace. The
Emperor and Empress will shortly receive a one-off permission to retire,
thanks to special legislation to be passed mid-this year by the
government. The new legislation comes after a favorable finding by a
select council to permit a change in rules. As a result, the Emperor
will retire on December 31, 2018 – just after he turns 85. The new
Emperor will be Crown Prince Naruhito, who will assume the throne on
January 1st, 2019, a date chosen to allow the traditional Japanese
calendar coincide with the Gregorian calendar used by most of the rest
of the world. ***Ed: Nice piece of dramatic pantomime by the government
and media after the Emperor expressed his wish to retire last year.
Although it was a genuinely gutsy move, in the process he also earned
the Imperial family sympathy and admiration from the people – surely Mr.
Abe and other traditionalists must be happy.** (Source: TT commentary
from asahi.com, Jan 11, 2017)

http://www.asahi.com/ajw/articles/AJ201701110051.html

=> Uniqlo on a roller coaster ride

Investors in Uniqlo are nervous as the company’s fiscal results gyrate
quarter to quarter. Even as the firm announced that Q1 net profit was up
by 45% over the same period last year, the stock fell 6.7% on January
9th (Yanai’s personal fortune fell by JPY160bn that day), before
rebounding on buybacks later in the week – because of poor December
sales. Behind the turmoil is Fast Retailing’s struggle to recover from a
disastrous 2015 (profits halved), due to a renewed surge in the US
dollar coupled with an admission that a price increase introduced at the
same time was ill-timed. Nonetheless, the company is still saying that
the fiscal year prediction of JPY1.85trn in sales and JPY100bn in net
profit is on track. ***Ed: Our take is that Uniqlo needs to rein in CEO
Yanai’s gigantic ego and force him to “listen” more proactively to the
market, rather than chasing hell-for-leather an unrealistic goal of
JPY5trn in sales by 2020. On the other hand, he could achieve that
number if he buys out a major competitor or two…** (Source: TT
commentary from japantimes.co.jp, Jan 12, 2017)

http://www.japantimes.co.jp/news/2017/01/12/business/corporate-business/…

=> Dolphins-1, Taiji-0

Someone or something apparently cut nets holding dolphins in an open
water pen in Taiji harbor, allowing the dolphins to escape. Although the
Telegraph article reporting the incident doesn’t say whether it was the
work of activists or not, given that the police are investigating, we
can assume it was. A “classic” comment by the Taiji facility owner, that
appeared in a blog post, read “We are enraged by the heinous act which
can easily lead to the dolphins dying. They [ed: the activists] think
that once out of their pen, dolphins will swim far away, but that is not
true. Dolphins will not stray far and they will not leave their group.”
Taiji is of course the site of the annual and well-documented dolphin
slaughter every year. Whether or not the escaped animals were born in
captivity is unknown, but again, given the fact that only 3 animals
returned after the unplanned release suggests they were wild-born and
the facility owner is an ass. ***Ed: Ugly practice, ugly all round.
Given that the government can subsidize rice farmers, why not pay the
Taiji fishermen to do something else each year? More dolphin experiences
for tourists perhaps?** (Source: TT commentary from telegraph.co.uk, Jan
05, 2017)

http://www.telegraph.co.uk/news/2017/01/05/dolphins-held-captivity-escap…

NOTE: Broken links
Some online news sources remove their articles after just a few days of
posting them, thus breaking our links — we apologize for the inconvenience.

***————————****————————-***

+++ UPCOMING EVENTS

—————- BIG DATA ANALYTIC TOKYO —————–

AI, machine learning, and data science are redefining competition and
disrupting markets, corporate cultures, and industries. Gain early mover
advantage by connecting to the most promising innovations from overseas.

This conference brings together 30+ experts and entrepreneurs from the
U.S. and Japan tech hubs. Hear 20+ talks, panel discussions, business
pitch sessions, and lightning talks. (Talks are bilingual with
simultaneous interpretation.) How are these technologies solving complex
problems and changing “business-as-usual”? Whether you are a business
leader, data scientist or investor, join us to find out.

Where: February 7-8
Where: Roppongi Academyhills
Website: http://www.bigdatacon.jp/
———————————————————–

***————————****————————-***

+++ CORRECTIONS/FEEDBACK

=> No feedback this week.

***————————****————————-***

+++ TRAVEL DESTINATIONS PICKS

=> Bizen Pottery in Okayama Prefecture
Traditional Japanese pottery in small-town Japan

On a cool Monday in early December, I made my way to Imbe in Okayama
Prefecture. The small town, a 35-minute ride from Okayama Station, is
home to Bizen-yaki (Bizen pottery), one of the six traditional kilns of
Japan. My first stop was the Bizen Pottery School, a 20-minute walk from
the station, where I got my first lesson in Bizen-yaki. Bizen is one of
a number of types of traditional Japanese pottery. It developed and
flourished in Imbe and traces its roots back about 800 years to the
Hei-an period.

Thick, pliable clay is dug up and through a process of drying the clay,
removing debris and adding water, the final clay used to make the
pottery is created. There are two types of kilns used to fire the
pottery: Noborigama (“climbing kiln”) built on an incline with various
chambers, and Anagama, a single, long chamber.

The friendly teacher at the center invited me to make something of my
own. A word to the wise: keep your nails as short as possible! She
explained that the center accepts students for one-month and six-month
courses. Foreign students stay for the one-month course and they even
have affordable housing for students in a traditional ryokan (a Japanese
inn).

http://en.japantravel.com/okayama/bizen-pottery-in-okayama-prefecture/34020

=> Daigo-ji Temple in Kyoto
An exquisitely beautiful temple, garden and museum

About twenty minutes east of central Kyoto on the subway, Daigo-ji
doesn’t get as many visitors as the more storied sights in the center,
but for my money, it’s as interesting and beautiful as anywhere else in
the city. It’s worth dedicating half a day to a visit here, more if
Kami-Daigo is open, to fully appreciate every part of the complex.

In 874, a Buddhist monk named Shobo Rigen Daishi climbed sacred Mount
Daigo, and met an old man with white hair. This old man was actually the
mountain god Yokoo Myojin, who gave the mountain to Shobo, along with a
richly flowing fountain. Shobo then carved two Kannon statues and
dedicated them on top of the mountain; following that, subsequent
emperors built and expanded the many halls of the temple.

Open only in spring and autumn, the Reihokan is where you can see
exhibitions of the temple’s treasures. These include documents, craft
works and carved statues, but only a fraction can be exhibited at any
time: I saw a selection of splendid large Buddhist statues, carved in
meticulous detail, some of them fierce, some dynamic, some serene.

http://en.japantravel.com/kyoto/garden-temple-daigo-ji/34687

***————————****————————-***

***********************************************************
END

SUBSCRIBERS: 6,604 members as of January 15, 2017 (We purge our list
regularly.)

+++ ABOUT US

STAFF
Written by: Terrie Lloyd (terrie.lloyd@japaninc.com)

HELP: E-mail Terrie-request@mailman.japaninc.com with the word ‘help’ in
the subject or body (don’t include the quotes), and you will get back a
message with instructions.

FEEDBACK
Send letters (Feedback, Inquiries & Information) to the editor to
terrie.lloyd@japaninc.com.

ADVERTISING INFORMATION
For more information on advertising in this newsletter, contact
ads@japaninc.com.

SUBSCRIBE
Get Terrie’s Take by giving your name and email address at
http://www.japaninc.com/newsletters/free_sign_up, or go straight to
Mailman at:
http://mailman.japaninc.com/mailman/listinfo/terrie

BACK ISSUES
http://www.japaninc.com/terries_take or,
http://mailman.japaninc.com/pipermail/terrie/

Copyright 2017 Japan Inc. Communications Inc.

—————– Japan Inc opens up Japan —————-

J@pan Inc authoritatively chronicles business trends in Japan. Each
posting brings you in-depth analysis of business, people and technology
in the world’s third largest economy.

Visit www.japaninc.com for the best business insight on Japan available.
———————————————————–

_______________________________________________
Terrie mailing list
Terrie@mailman.japaninc.com
http://mailman.japaninc.com/mailman/listinfo/terrie