* * * * * * * * * 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 Monday, Feb 11, 2019, Issue No. 979

– What’s New — Toyota – Late to the Party and Making Up for Lost Time
– News — 10-day golden week could cause financial chaos
– Corrections/Feedback
– Travel Picks — Farm Stays in Ishikawa, Pottery in Shizuoka
– News Credits

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+++ Toyota – Late to the Party and Making Up for Lost Time

Last week Toyota made the latest in a string of press announcements
that show how seriously the company is taking multiple threats to its
current top-3 position in the global auto market. It announced that
one of its subsidiaries had set itself the goal of developing a
“supercomputer-on-wheels” self-driving vehicle ready to demonstrate at
the Tokyo Olympics one year from now. The subsidiary company, called
“Toyota Research Institute Advanced Development” (TRI-AD), already has
500 employees and a cash pile of JPY300bn invested by Toyota itself
and two large suppliers – Aisin Seiki and Denso. TRI-AD expects to
have over 1,000 employees by the end of the year.

Experimenting with autonomous cars is nothing new for Toyota – the
company has messed around with a variety of strategies for over 10
years, ever since it became interested in Tesla in the late 2000s.
However, despite coming up with a number of experimental models
revolving around the Lexus range of sedans, the company couldn’t break
its addiction for its current complex internal combustion engine
business model. It also underestimated the momentum of the market
accelerating towards electrics, and some powerful emerging car user
paradigms (self-driving vehicles, car sharing, and subscription
ridership). It’s been interesting to watch Toyota wrestle with the
massive changes coming through. Initially they tried to partner with
the new kid on the block, Tesla, then they tried to create a new
business model that would give them infrastructure/size leverage over
their scrappy competitors (Hydrogen electrics), but in the end they
have been forced to re-center to the obvious consumer preference for
straight-forward electrics with advanced software – as epitomized by
Tesla.

And so it is that with TRI-AD and it’s Highway Teammate self-driving
project, along with a battery tie-up with Panasonic in January, Toyota
appears to have realized that it either needs to be out in front or
else watch its current manufacturing advantages quickly drain away.
The company has moved fast, applying a mountain of cash to buy out or
build the components it thinks it needs to compete. Apart from the
billions for TRI-Ad, in 2018 alone Toyota also invested billions in
Getaround (co-invested with Softbank in US$300m round), Metawave
(US$10m), Uber (US$500m), Japan Taxi (co-invested with Mirai Fund for
US$60m), Grab (US$1bn), and a number of other firms.

The appeal of autonomous vehicles is easy to understand. Commercial
and delivery operators are salivating at the idea of vehicles that
don’t have human drivers and which can be run 24 hours a day. All over
the developed world, the aging and thinning of the blue collar
workforce is giving rise to significant wages pressure on delivery
companies and an inability to keep up with the online shopping
revolution (who will deliver those millions of smiley face boxes at
low cost?). Nowhere is this challenge more pronounced than here in
Japan. Amazon may be convenient for city dwellers, but it’s hell for
e-commerce delivery companies, and this (volume and low prices) is why
Yamato “fired” Amazon as a customer a couple of years ago. Then of
course there is the appeal of car sharing, ride sharing, and ride
subscriptions – where you no longer need a car parked in the garage
but instead can dial one up. Yes, you may have to wait 30 minutes for
a vacant vehicle so it won’t be as convenient as going to your garage
or parking lot, but if it costs just a fraction of having your own
vehicle, and means safer rides, AND it comes to you, this is going to
be a huge game changer.

Which of course is exactly the value proposition of driverless cars
being developed by Uber and Waymo.

[Article continues below…]

—— Inbound Travel Business Matching – Last Call ——-

In 2018, 31 million visitors came to Japan, over 3,000 international
conferences were held here, and the Rugby World Cup and the Olympic
and Paralympic Games are just around the corner.

Holding an event in Japan is not difficult any more, as many new
meeting facilities and hotels open one after the other. Working with
the right partners is now the key to success in organizing a MICE in
Japan. IME 2019 will be held on Thursday Feb 28 at Tokyo Int’l Forum
and will help you find your right partner.

Come and join as a buyer at IME 2019. (https://www.ime2019.jp/en/index.html)
———————————————————–

[…Article continues]

One of the interesting things to witness in the Toyota strategy
evolution is how the company is starting to realize that while
traditionally they, with tons of money and thus getting to make the
rules (as in “he who has the gold makes the rules” – Johnny Hart’s
“Wizard of Id”), in the brave new world of unicorn companies, the guys
with the ideas can now get funded from other sources – such as venture
capital funds like Son’s US$100bn Vision Fund, crowdfunding, or even
just the reinvestment of earnings from an entrepreneur’s previous
earn-out. This makes it hard for a big firm like Toyota, used to
buying its way into new technology, to stay in the game. Probably the
realization that the world of financing was changing started after
Toyota bought US$50m of Tesla stock in 2010, just as that company was
going public. In the following 5 years it struggled mightily to
monetize the relationship in the form of technology transfer, but
couldn’t get used to the idea that it wasn’t the boss.

In fact, after experiencing software and drive train problems with the
Toyota RAV4 in 2014, Toyota finally dumped all of its Tesla stock in
2016 (but only announced this in 2017) for a tidy sum that we estimate
to be north of US$1bn. As stock analysts in the U.S. mentioned at the
time, Toyota probably made more money from its Tesla investment than
Tesla had ever made for itself. However, now with the Model 3
turn-around, it looks like Toyota may have made a hasty decision and
Tesla is rebounding strongly to possibly become one of next decade’s
market challengers.

In fact, after the news broke that Toyota had sold its Tesla stake,
the markets reacted badly and sent Toyota shares 1.92% lower by the
end of the day, contributing to a year-long decline of the stock price
by an overall 13.1%. What the markets appeared to be telling Toyota
was that while it may be a big Kahuna today, all its expertise and
infrastructure won’t amount to much in the future when the way we use
and own autos is likely to change so dramatically. Indeed, as Tesla
and now other electric converts are preaching, by going electric the
hardware is becoming commoditized and the barriers to entry for
competitors are shrinking. Instead, the main value of a car will be in
the software and how you use the car as a multi-functional tool. This
had been Apple’s lesson to IBM, Dell a decade ago, and soon perhaps it
will be Google’s lesson to Apple.

Once you get past the software of operating the car, which as the
smartphone paradigm has demonstrated does eventually reach a point of
diminishing or negative investment return, you need to have a better
point of differentiation – some way in which your software has more
scope and relevance, more impact on users, than your competitors can
make. Apple’s answer was a content ecosystem, that stood strong for 10
years, and is only just now being threatened (by Netflix and Disney).
For auto manufacturers, the equivalent will be driverless vehicles and
the business models that will follow. Of course there are always going
to be customers who want to own their own car, for status or comfort,
or because they live in remote areas, or for professional needs, but
for the average person if you can get the same benefits from ordering
a shared vehicle that comes to you, for a small per-use fee, why would
you invest in a car? This is the same argument as power to the home.
Most of us don’t have a coal-fired power station (or even a hydrogen
one) in the basement.

Toyota definitely understands how fundamental and threatening the
changes will be, and it has done a good job of creating a massive
ecosystem (Page 3) that looks a bit like “Apple for cars”. You can see
the presentation here:

http://bit.ly/2ByJznX [Toyota competitiveness presentation for investors.]

Japan is a great example of the post-automobile era will look like.
Essentially because of a stagnant economy for more than 20 years,
there has been a generation of young people who haven’t had the money
(initially), then the interest (eventually), to own a car. Over the
last 10 years auto production in Japan has fallen from a peak of 9.94m
in 2007 to 8.3m in 2017, a fall of 17%. Yeah, it’s not a precipitous
drop, but if you look at the trends of who is getting by without using
a car recently, Toyota has to be worried about its home market. In the
major cities where all the young people have moved to, and who should
be the vehicle buyers of tomorrow, car ownership is way below the
national average. As an example, in Gifu there were 75 cars per 100
people (a rather surprising statistic) in keeping with its position as
one of the top prefectures for old men (No. 8 for male death by old
age), while in Tokyo there are just 23 per 100. Japan overall, the
rate of ownership is 48.95%, or 61.2m vehicles (stats from MLIT 2017).

So if the next generation isn’t buying cars, they’re not getting
driver’s licences. Then if Toyota wants to stay in business it needs
to quickly develop a new business paradigm to offer private
transportation as a service.

…The information janitors/

***————————****————————-***

—— German-speaking Travel Consultant Internship ——-

Japan Travel KK (www.japantravel.com) is experiencing strong growth of
its German desk for inbound travelers to Japan, and we are looking for
a German-English speaking intern to join the team, with a view of
transitioning to a full-time position and work visa in Japan. The
internship will be for a minimum 3 months and a maximum of 6 months,
after which there will be a management and peer review. You can be
either a student who needs to do an internship to meet academic course
requirements, or you can be a person in the workforce thinking to
reset your life and location. Apart from German you should be able to
speak basic English and/or Japanese (either is OK).

The type of work you’ll be doing is assisting German customers wanting
to plan trips to Japan. This would include the following:
* Responding to incoming leads and conversing (usually email/chat)
with customers
* Researching accommodation, transport, activities, diet
preferences/availability, entertainment, guides, and other things that
travelers require
* Using our quotation and itinerary systems to produce the customer materials
* Interacting with customers and consulting them on choices and areas of concern
* Translation of content about destinations
* Writing original content (articles) about destinations and activities
* Assisting us with German social media

For more details: jerome.lee@japantravel.com
———————————————————–

***————————****————————-***

+++ NEWS

– Another bedrock company caught cheating on data
– Japan getting (semi) serious about blue collar worker trafficking?
– 10-day golden week could cause financial chaos
– Itochu baring fangs in Descente tussle
– About time! Someone is introducing video interpreter kiosks

=> Another bedrock company caught cheating on data

Major real estate leasing firm Leopalace 21 has admitted that to cut
costs it has been fudging data on the fire worthiness of its apartment
buildings, and in fact as many as 1,324 buildings with more than
10,000 residents do not meet government standards on fire safety and
soundproofing. Leopalace operates about 40,000 apartment buildings
across Japan and says that immediately it will ask 7,782 residents to
move out of 641 critically defective buildings. The company has said
it will repair the buildings in question. ***Ed: So why is it that the
Japanese prosecutors think it’s OK to jail Carlos Ghosn on flimsy
white collar charges when here is a company whose cheating affects the
lives of thousands? Furthermore, will there be an investigation into
past fires at Leopalace apartments, to determine if there have already
been deaths and injuries resulting from the company’s cheating? Not
likely.** (Source: TT commentary from nhk.or.jp, Feb 07, 2019)

http://bit.ly/2tgoIBl

=> Japan getting (semi) serious about blue collar worker trafficking?

According to the Yomiuri newspaper, the Labor ministry plans to
introduce new rules about just who can be involved in the recruiting
and dispatch of the estimated 340,000 blue collar foreign workers
expected to move to Japan (actually many are already here, in the
current “broken” trainee system) over the next five years. Apparently
recognizing the futility of trying to control foreign organizations
that are recruiting these workers, the government is going to instead
put the onus on local licensed dispatch companies to monitor and
control the ethics of their foreign partners. In particular, the
objective is to curb the practice of charging laborers extortionate
fees for a chance to work in Japan. It was revealed in a worker survey
conducted by the Justice Ministry in 2017 that about 50% of the 2,870
trainees who absconded from their Japan contracts had paid brokers in
their home countries up to JPY1m or more for a chance to come to
Japan. They ran away so that they could take higher paying jobs and
try to pay off their debts. The Ministry said it will uncover bad
actors by randomly interviewing the workers, checking about fees and
on-boarding experiences. ***Ed: Unfortunately, as commentators have
said, the problem with these new rules is that there is no effective
paper proof of charges levied, and that is assuming that the broker
can even be found. We think that putting the onus on local players
will mean that they will effectively be forced to set up regional
offices and control the recruiting process themselves – but this may
not be permitted by the laborers’ home countries. Thus, this will
probably become yet another rule that has to be fudged to make the
system work.** (Source: TT commentary from the-japan-news.com, Feb 09,
2019)

http://bit.ly/2I7DsN2

=> 10-day golden week could cause financial chaos

In recognizing the change of emperors this year, the Japanese
government has freaked out the investment markets by unilaterally
declaring a 10-day national holiday from April 27 to May 6. This will
be one of the longest stock market holidays ever among developed
countries. In the USA the longest break was a market holiday of 6 days
after the 9/11 attacks. The fear is that over the 10 days some major
market moving event might occur and Japanese financial firms and
investors will be caught flatfooted as a result. This is particularly
likely for foreign exchange, where a Brexit no-deal scenario just 3
weeks earlier or the ongoing China-US trade spat could roil the
markets and cause the Japanese yen to become a safe haven for foreign
funds. A soaring yen while everyone is out on holiday could cause a
collapse of confidence in Japanese stocks once they return and thence
cause a run on the market itself. (Source: TT commentary from
asahi.com, Jan 30, 2019)

http://bit.ly/2MXkgQQ

=> Itochu baring fangs in Descente tussle

On the outside, Japan’s trading companies look polite and refined,
until they aren’t – which is regularly enough if you happen to have
them as a major investor. This is what the apparel firm Descente has
discovered with trading house Itochu. Apparently Itochu has tied up
with another major shareholder to try to seize control of the company.
Hostile takeovers overseas are normal enough behavior, but in Japan
usually the “hostile” part takes place behind closed doors. The tiff
apparently comes about because Itochu is fed up with Descente’s timid
management style. ***Ed: While it’s tempting to say that the hostile
takeover is a sign of business evolution in Japan, where shareholders
start pushing companies to apply their capital and management
resources more effectively, in fact it’s probably not. Instead, it’s
more likely that the Itochu guys were disrespected by the Descente
ones and Itochu’s move is a rather feudal public warning both to
Descente and other investees not to mess with it. (Source: TT
commentary from mainichi.jp, Feb 08, 2019)

http://bit.ly/2DpXFbn

=> About time! Someone is introducing video interpreter kiosks

Such a simple idea – we have been wondering when someone would
actually start the service. Now an unnamed Tokyo subcontractor has won
a mandate to supply department store operator Aeon with video chat
interpreters so that store staff can communicate with foreign
customers. The new service, which works on smartphones and in-store
tablets, will offer 10 languages in real time. The company is rolling
the service out to 550 stores at Aeon (supermarkets) and Aeon Style
(department stores) initially, then once done will expand to all group
companies. ***Ed: Interesting to see this article state that tourists
were using an “antenna” shop service out at Narita 5-10 times a day.
That is not so demanding that you couldn’t support 100 stores with
more than 5-10 full-time staff, and maybe some part-time ones.**
(Source: TT commentary from asia.nikkei.com, Feb 5, 2019)

https://s.nikkei.com/2RTNxNg

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

No upcoming events this week.

***————————****————————-***

——— Japan Travel Corporate Travel Services ———-

Japan Travel’s Type-2 licensed travel agency business is one Japan’s
few independent foreign-owned inbound DMCs. One of our specialties is
looking after corporate groups of 10-300 people. To date we have
assisted in the successful holding of training events, incentive
travel, conferences, off-sites, and team bonding programs. We have
looked after the full gamut of services, such as: international air
travel, hotels, local travel, event logistics and venues,
entertainment, micro-management of dietary needs, and special needs
customers.

We are highly motivated and are happy to work in a variety of roles
tailored to suit your needs: as a full-fledged corporate travel agency
partner, as a logistics partner for a particular issue, or as a source
of innovative experiences and venues. Looking after hard-to-please
high-tech groups is our specialty!

For corporate travel assistance, contact us at: tours@japantravel.com.
Or visit our pages at: http://japantravel.co.jp/en/about/travel-agency/
———————————————————–

***————————****————————-***

+++ CORRECTIONS/FEEDBACK

=> No corrections or feedback this week.

***————————****————————-***

+++ TRAVEL DESTINATIONS PICKS

Old-Time Farm Life: Shunran-no-Sato, Ishikawa Pref.
Mountain village with authentic farmstay experiences

What was rural farm life like a century ago in Japan? You can
experience the answer to that yourself in the mountains near the small
seaside town of Noto, the ideal place to connect with the rich
agricultural heritage here. This place is also a base for exploration
of the Noto Peninsula and its scenic coastlines, thriving markets, and
traditional crafts. There is plenty to see and do in any season. Noto
has a long history of fishing, and the adult yellowtail caught in
winter, known as kamburi, are a standout. Other local products include
soy sauce, sea salt, blueberries, strawberries, and sake, as well as
festivals of fire, motivating monsters, and thanksgiving. And of
course, the countryside is full of alluring rice fields interspersed
with forested hills and mountains, making Noto a great destination for
visitors looking to connect with Japan’s nature.

http://bit.ly/2timCRj

=> Mimoroyaki Workshop, Shizuoka
Enjoy pottery pieces with a unique twist

The Mimoroyaki Ceramic Workshop sits on the grounds of Okuni Shrine in
Mori, Shizuoka. The pottery artisans here create a range of beautiful
pieces, including vases, incense burners, and even pendants for
jewelry items, and each item they create boasts a special touch. The
pieces at Mimoroyaki are glazed with natural items found on the shrine
grounds, giving them a special spiritual connection.

So what exactly do these natural glazes entail? Cedar ash, cedar
leaves, and stones are all used to create different hues for pottery
pieces. When you walk around the workshop and browse the items
available for purchase, you’ll see that everything on display comes in
very earthy colors, and that’s nature’s magic at work!

At Mimoroyaki, there are also pottery classes held every Monday if you
have an interest in learning to create pieces yourself. There are a
number of workshop time slots available, but registrations are
required in advance, so bear that in mind if you want to get your
hands dirty!

Alongside the spiritual connection to nature that the pottery created
here contains, every piece is completely unique. By purchasing
something from Mimoroyaki, you’re purchasing a story, and something
that was made with a person’s two hands. Nothing here is mass
produced.

http://bit.ly/2SG0Sxa

***————————****————————-***

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

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+++ ABOUT US

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

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