TT-465 -- 200-year Rabbit Hutches, ebiz news from Japan

* * * * * * * * * T E R R I E 'S T A K E * * * * * * *
A weekly roundup of news & information from Terrie Lloyd.
(http://www.terrie.com)

General Edition Sunday, April 13, 2008 Issue No. 465

+++ INDEX

- What's new
- News
- Candidate roundup/Vacancies
- Upcoming events
- Corrections/Feedback
- News credits

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-----------------------------------------------------------

+++ WHAT'S NEW

About a year ago, PM Fukuda announced a government program
to encourage the building of more permanent homes --
durable enough to last 200 years. The government reckons
that increasing the replacement period of the nation's
housing stock from the current 26 years would reduce the
amount of construction-related trash the nation disposes
annually by about 10m tons. Dubbed the "200-Year Home"
project, the idea is that homes will be multi-generational
dwellings, that can be easily renovated according to family
size and age.

The government points out that compared with the average
life span of its citizens, the average life span of a home
at 26 years is too short -- and clearly they have a point.
In the USA the average life of similarly built homes (e.g.,
2x4 houses built of wood and some synthetic materials) the
life span is 55 years, while in the UK it is 77 years.
Indeed, when you think that the average Japanese couple
buys the family home in their late 30's, and that typically
they have to take a 35-45 year mortgage to buy the home --
it is ironic that the life span of their dwelling is less
than that of the mortgage.

The government has said that it will encourage more durable
housing by: i) introducing a requirement for all home
repairs to be recorded, ii) requiring better quality
construction methods, iii) providing tax cuts and lower
interest bank loans, and iv) introducing financial
subsidies for housing builders to churn out longer-life
homes.

This got us to thinking about why the Japanese insist on
tearing down their homes so frequently. While we can see
that tax cuts would definitely help improve the situation,
we believe there are some other factors that strongly
influence homeowners' decisions to pull down their homes.
If these fundamental problems are not addressed, then it is
unlikely that the government will be successful in its
goal to have people build and live longer in a single
dwelling.

[Continued below...]

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-----------------------------------------------------------

[...Article continues]

Incentives to Spend on Quality

Typically Japanese homes cost around JPY30m-JPY40m, so the
average family is still paying through the nose to build
somewhere to live. It is estimated that the major builders
(Sekisui, Daiwa, Misawa, etc.) are charging about 20% more
for their cookie cutter solutions than if a homeowner was
to get their own architect and do it themselves.
Unfortunately, people feel so unsure about their own
abilities in the so-called expert area of homebuilding,
that they allow the housing titans to do it all for them.
This means that any initiatives to start making houses more
durable have to start with these building firms.

In the 200-Year Home project, the government acknowledges
that the quality of design and construction needs to be
improved, and they estimate that durable houses will only
cost 20% more than conventional ones. We doubt this figure
very much, unless they are considering the inflated prices
charged by the building firms, and most likely their
assumption is based on timber houses that will continue to
be full of health-affecting cheap synthetic materials.

Instead, we think the starting point should be choosing a
building material far more appropriate for permanent homes
in Japan -- concrete. Unfortunately, concrete costs more
than 20% over its timber counterpart.

Why concrete? Well firstly because the nation has plenty
of the raw material and is unlikely to run out any time
soon. Secondly, if used properly with in-ground and
internal insulation and good thermal design, it is within
the experience of existing builders to improve the housing
stock. Concrete can significantly cut the power consumption
for a house, as well of course as offering structural
integrity in earthquakes and for building upwards.

If you're going to have concrete, then you need glass as
well -- and double glazed windows need to become standard
for all parts of Japan from Northern Kyushu northwards.
Again, Japan has an ample supply of glass and is home to
the world's leading glass companies. They are proficient
at making strengthened product that looks good, lasts
forever, and can withstand medium-strength earthquakes.
We find it strange why the product costs so much.

Thermal Properties

One of the biggest problems of Japanese houses constructed
over the last 30 years is the fact that they are made of
lightweight synthetic materials and low-quality timber.
Basically they are constructed for convenience rather than
thermal design. In the winters the walls sweat with
condensation and the wallpaper goes moldy. In the summer
the rooms become humid boxes with poor ventilation, and
the occupants have to resort to all-day air conditioning or
going out to a comfortable shopping mall.

It amazes us that such an advanced nation as Japan hasn't
made greater use of insulation and made double-glazed
windows, or that apartment builders are still making
concrete floor slabs that extend to the outside of the
building and conduct heat and cold into the building. This
is starting to change, but it seems that government
regulation forcing the speed of such change is in order.
The nation's biggest box builders: Sekisui and the others,
make good money churning out the same designs they have
done for several decades and they are not about to change
unless forced to do so.

Rabbit Hutches

Size is another issue. There are about 1.15m dwellings a
year constructed in Japan, and the average size is around
30 tsubo (100 m2), about half that of the USA (although
closer to the UK). Small rooms and low ceilings have less
air and less circulation and react more quickly to the
presence of a breathing person inside, or to heat outside.
Small dwellings also can't accommodate growing families.

While the shortage of land is hard to circumvent, local
government rules restrict the height of buildings to
8m-10m in many parts of Tokyo (other than main roads) and
thus people are forced to build and live in rabbit hutches
that match the footprint of the land underneath.

The technology is here to make safe 3-5 story timber
houses, and of course there is concrete, but the
authorities are more concerned about sunlight for the
neighbors' garden. Of course no one wants to be next to a
towering edifice, but you have to wonder what is more
important: a decent amount of room and height, and a
healthy living environment, or getting 8 hours sunlight
on the bottom floor. We think the reality of city living
needs to be recognized and height restrictions moved up
by at least one floor. This would immediately give home
builders 25% more space in which to grow a family or
lifestyle. Given that the population is no longer growing,
this one area of deregulation might make a huge difference
to the desirability of staying at home.

Lack of a Maintenance Culture

Another major contributor to the premature deterioration
of homes is the lack of a maintenance culture in Japan.
Most men are at work until late, sleep in the weekends,
and take few holidays. This fact, coupled with builders'
penchant to offer a "cradle to grave" service on their
standard house designs, means that home owners seldom take
personal responsibility for maintaining their own
dwellings. Timber homes overseas also fall down if they are
not painted, leaks are not filled, and rotting timber
replaced on a regular basis. A quick bicycle ride around
Tokyo suburbs reveals an astounding number of homes with
loose roofing, leaking walls, and unpainted surfaces
suffering from the weather. It not only looks ugly, it
virtually guarantees the home is going to fall down within
25 years, if not pulled down first. And in an earthquake
-- well forget about it...

Changing Attitudes

We assume that the status quo has remained because citizens
are obedient, and building your own home and maintaining it
is so inconvenient. Thus, there is little incentive to make
a structure last longer. Indeed, most people we know are
not home (well, apart from the housewives) that much
anyway. For most, "home" is a small space that is
comfortable for a single person in the evenings, but not a
space to actually "live" there for extended periods. There
is little room to cook, to store food and furniture, to do
hobbies, or do exercise in private, or other quality of
life activities that binds someone to their home. And for
growing families, cramped quarters are a recipe for stress,
so it is no wonder that the kids and Dad are typically out.

What we are saying here is that while the objective of
making more permanent homes is a good goal, practically
speaking there are many impediments which are beyond the
minor tinkering of regulations that the government is
considering. Instead, the LDP should launch a proper study
on the issue and take some major decisions that will make a
true difference. For example, instead of lowering building
taxes for 5 years, homeowners should be able to deduct
home loan interest from their other income (negative
gearing). This would have an immediate effect on people's
willingness to take on bigger home loans and to spend more
building high-quality buildings.

Likewise, the government needs to lean on the major home
building firms and require them to meet more stringent
standards. It is a fact that Japanese are unused to
building their own homes, and so with more than half the
nation's houses being churned out by factories, this is
an obvious place to start applying regulatory change.

...The information janitors/

***------------------------****-------------------------***

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-----------------------------------------------------------

+++ NEWS

- Japanese buy 10m CO2 credits
- Daido Gas to sell carbon credits to public
- Tax breaks to spur financial center plans
- Reflective paint keeps roads cool
- 100m using e-money

-> Japanese buy 10m CO2 credits

The New Energy and Industrial Technology Development
Organization (NEDO) has purchased 10m carbon offset
credits, known as CERs and representing offsets of 10m
tonnes of carbon emissions, from French chemicals company
Rhodia. The price paid was 14.1 Euros per tonne. The
purchase represents a large part of the overall 23.1m
tonnes that the government has purchased in FY2006 and
FY2007. ***Ed: Anyone doubting that the trade in carbon
emissions would become real will have their opinions
changed by this trade. The purchase was the largest by a
Kyoto Protocol signing country so far.** (Source: TT
commentary from reuters.com, Apr 11, 2008)

http://tinyurl.com/6hrcw2

-> Daido Gas to sell carbon credits to public

In a first for Japan, a major industrial gas company, Daido
Gas, is selling carbon credits to its customers. The
campaign, called the "Daido Carbon Zero Club" will start in
May and lets members purchase around 800kg of offsets for
the CO2 that they produce by consuming LP gas. The pricing
will be about JPY2,000 per household per year. Daido is
offering the credits under the carbon trading auspices of
Carbon Offset Japan (COJ), which is buying credits through
the UN. ***Ed: Readers can expect most other Japanese
energy companies to follow suit on this over the next 2-3
years.** (Source: TT commentary from nikkeibp.co.jp, Apr
11, 2008)

http://techon.nikkeibp.co.jp/english/NEWS_EN/20080411/150359/

-> Tax breaks to spur financial center plans

The government is planning to cut property taxes for major
developers by 50% for the next 5 years , so as to encourage
new building projects in certain parts of Tokyo. The tax
breaks only apply to areas in Marunouchi and Roppongi, and
are intended to help developers continue building large,
modern projects that will help turn Tokyo into a viable
financial center in Asia. Apparently the idea comes from
London's efforts to do the same thing with Canary Wharf
back in the 80's and 90's. The government also plans to
introduce high-speed trains between Narita and downtown,
cutting travel time to just 36 minutes, and to provide
hospitals, housing, nurseries, and schools for the families
of non-Japanese business people living in Tokyo. ***Ed:
Interestingly, this last initiative includes the
possibility that underutilized public schools in inner
Tokyo will be opened or shared with international
schools.** (Source: TT commentary from bloomberg.com, Apr
11, 2008)

http://www.bloomberg.com/apps/news?pid=20601101&sid=axm9.XUKBZJw&refer=j...

-> Reflective paint keeps roads cool

The Nagashima Special Paint Company has developed a new
super-reflective paint that keeps road and building
surfaces cooler than those finished with normal
treatments. The new Miracool paint can lower road heat by
up to 10 degrees C, even if the road is painted black.
This is possible because Miracool contains a special
nano-glass component that reflects up to 92% of all
infrared sunlight. By improving infrared reflectivity,
Miracool can still carry regular pigments (such as black)
and yet reflect a large percentage of the light energy.
(Source: TT commentary from nikkei.co.jp, Apr 10, 2008)

http://www.nni.nikkei.co.jp/AC/TNKS/Nni20080410D09HH415.htm

-> 100m using e-money

Not so long ago market research reports for foreign credit
card companies would say that Japanese prefer cash rather
than plastic. The Internet and some breakthrough
technologies have well and truly busted that myth.
Apparently around 100m Japanese will be using plastic
("e-money") by June, surging from 70% in March. e-money
includes the JR Suica debit card, convenience store cards,
online cash, and other forms of debit cards. ***Ed: One
wonders if the Japanese government will start to worry
about the fact that so much of the economy is shifting from
publicly produced cash to private "currencies". At some
point, the privatization of money may reduce the ability
of the Bank of Japan to influence money supply and interest
rates.** (Source: TT commentary from nikkei.co.jp, Apr 12,
2008)

http://www.nni.nikkei.co.jp/AC/TNKS/Nni20080411D11JFA06.htm

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

***------------------------****-------------------------***

+++ CANDIDATE ROUND UP/VACANCIES

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-----------------------------------------------------------

+++ UPCOMING EVENTS/ANNOUNCEMENTS

------- Marcus Evans Events - Supported by J@pan Inc ------

Customer Relationship Excellence, 15th - 16th April 2008,
Tokyo
http://www.marcusevans.com/html/eventdetail.asp?eventID=13548
Featuring speakers from American Express International and
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Compensation and Benefits Forum, 27th - 28th May, Tokyo
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This event provides Japanese firms the 'how-to' of
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Supported by JSHRM

3rd Annual LNG World, 15th - 16th July 2008, Tokyo
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-----------------------------------------------------------

------------------- ICA Event - April 17 ------------------

Speaker: Brent Reichow and Andrew Anderson
Co-founders of Blueshift Consulting

Event: The Growing Data Protection Market
- What's Changing and Why?

Details: http://www.icajapan.jp/ (RSVP Required)

Date: Thursday, April 17, 2008
Time: 6:30 Doors open. Includes open bar and light buffet
Cost: 4,500 yen (members), 6,500 yen (non-members)
Open to all
Venue is The Foreign Correspondents' Club of Japan

http://www.fccj.or.jp/aboutus/map
-----------------------------------------------------------
______________________________________________________
Events announcements are priced at JPY50,000 per week.
For more information, contact sales at japaninc.com

***------------------------****-------------------------***

+++ CORRECTIONS/FEEDBACK

In this section we run comments and corrections submitted
by readers. We encourage you to spot our mistakes and
amplify our points, by email, to editors@terrie.com.

-> No feedback this week.

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

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+++ ABOUT US

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

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