Message from the Publisher

Terrie Lloyd

Talking to a local economist at the beginning of this year, he said that if no serious downturn occurred in the US markets by mid-year, then he reckoned that Japan would have a good chance of seeing its growth continue for the rest of 2007. It looks like the US has had a soft landing and escaped the possible fall-out of low-end forced mortgagee sales, and thus the economies of both nations are doing well.

This puts the ball back in Japan’s court, and the business environment appears to revolve around Bank of Japan interest rates and the ability to get timid consumers spending again. The great thing is of course that Japanese companies are so good at creating products that consumers want. Two years ago it was digital cameras and last year large-screen LCD TVs. This year it is home improvement and gadgets, and next year hopefully we’ll be seeing the prototypes for the first batch of electric cars, as well as Toyota’s next-generation hybrids. On top of that, from April 2007, we have the first 4 million or so Dankai (baby boomer) generation starting to retire. The Nikkei says that they’re big spenders on digital SLRs in the JPY100,000 bracket, as well as travel with the wife, and moving house.

So as far as we can see, it’s all systems go and many others in the market are feeling this as well. We are seeing a renewed interested in M&A after a short lull in Q2, and our guess is that there will be a number of mid-sized deals as well as a couple of whale-sized ones by the end of the year. Additionally, triangular mergers by foreign firms using their parent company shares will provide an added boost for pricings of takeovers.

And speaking of whales, we wonder if the Japanese will go ahead with their threat to establish an alternative whaling organization in competition to the International Whaling Commission (IWC)? After a humiliating defeat at the IWC annual conference in May, there were a lot of nationalistic mutterings about doing just that. Given that the whaling business is almost non-existent in terms of value for Japan, and that it creates immense negative publicity internationally, we hope that someone in the Ministry of Forestry and Fisheries will come to their senses and see that there are bigger issues to take care of – such as how to replace the aging farmer population of the nation. In another 10 years, more than 50% of the current farming workforce will be too old to work the land. For the whaling issue, it is probably much better that the nation establish a whale watching tourism industry – something that will attract younger employees – and use that to try and improve tourism numbers, as well as its global image.

Terrie Lloyd

Publisher, J@pan Inc Magazine
Writer of Terrie's Take
terrie@japaninc.com