TT-511 -- The Power of Rumors, 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, Mar 29, 2009 Issue No. 511

+++ INDEX

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

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+++ WHAT'S NEW

Japan is a highly competitive society. With the downturn in
the economy, it's fast becoming a battle for survival of
the fittest. Weak and vulnerable companies are being culled
by the banks and their creditors at a rapid pace, and
healthier firms are shoring up their finances as best they
can, to make sure that they are the last ones left
standing. It's all very Darwinian.

In this environment, another Darwinian behavior for humans
at least, is that the rumor mills are working overtime.
Partly because of scared workers speculating whether their
employers are stable, in lieu of proper information from
their management. And partly due to hard-nosed managers
trying to deal their competitors a fatal blow by scaring
the competitor's creditors and lenders. While we're not
saying that firms are deliberately trying to invent rumors
to kill off their weaker competitors, an illegal act,
certainly once the word is out on the street that someone
is in trouble, most companies have little problem in
fueling the speculation. "Business is war" is an apt
description of what Japanese companies are willing to do
to each other to gain the upper hand.

Rumors can be enough to tip for scales for a company under
pressure -- especially if the rumors reach the ears of the
bank. Loans and credit lines are revoked, and the
lifelines are cut. It is happening with ever-increasing
frequency, as the media are wont to inform us.

Of course the rumors are not just about companies, overall
gossip levels in Japan, especially in cyberspace, are
extremely alive and viciously well. The Justice Ministry
announced yesterday that Internet slander cases rose 23%
this last year, to 515 cases. While this may not seem a
lot, it is only the tip of the iceberg. Those who have
been slandered know that with the advent of the anonymity
of the Internet, there is little chance of getting justice.
Those prone to slandering know this, too, and so the
problem is escalating.

By far the biggest purveyor of slander (is that a
slanderous statement?) according to traditional media in
Japan is 2-channel ("ni-channeru"), a massive site where
people can post whatever they feel like, with very little
fear of retribution. You either love or hate 2-channel.
Certainly you can't believe half of what you read on there,
but then on the other hand some of the posts are quite
perceptive and provide food for thought. The site has
around 10m members, who post on average about 2.7m posts a
day! (Yes, you read that right, this is one VERY active
forum.)

[Continued below...]

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[...Article continues]

As an example of what appears on 2-channel, for example, is
a thread that appeared a few days ago speculating that the
government is planning to sign up freeters and unemployed
young people for 6 months military service. Like most
rumors, this is based on a seed of truth, that an LDP
politician did float the basic idea -- as reported in the
Asahi newspaper. However, the context of the politician's
remarks was less about imposing the draft and more about
giving unemployed young people some new skills via the
resources the military has to spare.

We have heard of a number of foreign businesspeople (as
well, of course, as many Japanese) who have been targeted
by 2-channel slander and who have successfully won libel
judgments against the website. One of these was Debito
Arudou.

http://www.debito.org/?p=2240

To their subsequent disappointment, however, they find that
civil rulings are almost impossible to enforce, especially
when the company running the website doesn't actually own
it -- as in the case of 2-channel, and thus the police do
little or nothing to the perpetrator.

As Debito points out, there are a number of frustrating
disconnects in the Japanese law when it comes to civil
suits -- which in other countries can be escalated to
criminal actions if there is contempt of court judgments.
For example, here a defendant has to be served with
papers at their registered place of address, not just once
they have been accosted. In the case of Hiroyuki
Nishimura, the founder of 2-channel, he is effectively a
homeless person, moving from place to place and thus
is unable to be legally served. Even if he was served, the
result would be that the claimants would only be able to
garnish income not considered necessary for his daily
living expenses (and typically this is around
JPY250,000/month). Thus Nishimura only has to be sure to
keep his income low and his assets out of the country.
Ironically the site apparently makes Nishimura (uh, sorry,
some "other" beneficial owner) around JPY100m a year.

What this means is that up until now, Nishimura has been
able to slither around the law and indeed brazenly boast
about how ineffective the courts are. As such, he has
become a counterculture folk hero and the otaku love him.
However, we guess that the noose is starting to tighten,
because in January, the Japanese blogosphere was surprised
to learn that Nishimura had sold the business for an
undisclosed sum to a Singapore company called Packet
Monster.

The rumor, though, is that Packet Monster is just a foreign
front for Nishimura to continue his sparring with the
Japanese authorities. In an interview with the Japan Times
on January 24, he admitted that he would be flying to
"somewhere cheap" to continue his blogging, and separately
has said that he would be working as an adviser with Packet
Monster.

Whatever you might think of Nishimura's law-evasion
tactics, they work, and consequently, 2-channel has become
a safe haven for all kinds of opinions from a society that
deters people from speaking their minds in public. The
police follow it and use it to counter suicide and murder
threats. The ad researchers follow it, and Dentsu Buzz
Research reckons that about 75% of the consumer comments
they track are coming from 2-channel.

Of course, those who have been slandered are understandably
not enamored with 2-channel, and so for corporations at
least, there are now a number of tracking software
applications that can help figure out what is being said
about them. The latest such application was announced by
CSK earlier this month. It costs JPY1m/month, and comes
with consulting on how to counter such rumors. Fujitsu also
has an application, called BBSwatch, which it released some
years ago.

It will be interesting to see if the Japanese government gets
riled enough with 2-channel to ask the Singaporeans to shut
down Packet Monster, or to make it answer charges from
Japanese court judgments. The two nations are very close,
and if we were Nishimura, we'd have picked somewhere just
as warm and cheap, but a bit more independent of Japanese
influence and with a stronger respect for freedom of the
press, like India for example...

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

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+++ NEWS

- International gay marriages to be recognized
- Enoteca has big loss last year
- Lehman bonuses cause problems for Nomura
- Individual Chinese tourists to get visas
- Easier for temp workers to get unemployment payments

-> International gay marriages to be recognized

An interesting legal change was announced by the Justice
Ministry this week. While it is still illegal for Japanese
gay couples to marry here, it will be legal when one of the
partners is a non-Japanese and where the marriage occurs in
a country where gay marriage is legal. Countries that allow
gay marriage include Spain, Holland, Belgium, Canada, South
Africa and some states in the USA. ***Ed: Do we detect a
move towards harmonizing civil rights for Japanese with an
international relationship? If so, then this bodes well for
the multiple nationality discussion for children of
international marriages as well.** (Source: TT commentary
from google.com, Mar 28, 2009)

http://tinyurl.com/czbdss

Enoteca has big loss last year

Major wine distributor Enoteca is typically a well-run
firm, but has proven to be just as vulnerable to the
recession as other luxury goods providers. The company says
it will suffer a loss of about JPY800m this year, due in
part to JPY1bn in write-downs from foreign exchange losses.
Sales fell 5% to JPY10.5bn, and operating profit was
JPY450m -- actually higher than forecast thanks to strong
margins from Chilean and New Zealand wines the company has
exclusive distribution rights for. (Source: TT commentary
from nikkei.co.jp, Mar 28, 2009)

http://www.nni.nikkei.co.jp/e/ac/tnks/Nni20090327D27JFA24.htm

-> Lehman bonuses cause problems for Nomura

Reuters has done an excellent piece on the impact on morale
at Nomura as the financial industry flounders in its worst
downturn in 70 years. Nomura is on the hook to pay out
retainer bonuses to 8,000 ex-Lehman staff it acquired with
the Lehman asset purchase late last year. Apparently for
the bankers (versus mid- and back-office staff) at least,
the bonuses will be at 2007 levels. Reuters says that most
incumbent Nomura bankers will not receive significant
bonuses this year, and what they do receive will be stock
rather than cash, while the ex-Lehman bankers will in a
number of cases receive up to US$3m of cash each! ***Ed:
Hmmm, sounds like the makings of a huge HR disaster to us.
Highly likely that the ex-Lehman people will leave because
of the differences in corporate culture, and the Nomura
people will leave because of poor morale.** (Source: TT
commentary from reuters.com, Mar 27, 2009)

http://tinyurl.com/d32jy8

-> Individual Chinese tourists to get visas

Until now, Chinese tourists have only been allowed to enter
Japan if they were in groups of 4 or more, or there were at
least 2 family members in the party -- thus blocking the
entry of individual travelers. This rule will be dropped
for residents of Shanghai, Beijing, and Guangzhou,
providing they have an annual income of at least 250,000
yuan (US$36,590). ***Ed: Obviously a very smart move by the
authorities in an effort to increase the number of Chinese
tourists from 1m last year to 1.25m this year.** (Source:
TT commentary from bloomberg.com, Mar 26, 2009)

http://www.bloomberg.com/apps/news?pid=newsarchive&sid=atgzNr_B4LGI

-> Easier for temp workers to get unemployment payments

With about 1/3 of the Japanese workforce in temp,
part-time, or contract positions, a significant piece of
legislation was passed this week by the Diet. The
government changed the rules so that "non-regular" workers
can receive unemployment benefits after just 6 months of
contributing to the social insurance system, rather than
the 12 months previously required. Further, the benefits
will be available for up to 60 days after registration.
(Source: TT commentary from japantimes.co.jp, Mar 28, 2009)

http://search.japantimes.co.jp/cgi-bin/nb20090328a4.html

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.

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+++ CANDIDATE ROUND UP/VACANCIES

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+++ CORRECTIONS/FEEDBACK

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by readers. We encourage you to spot our mistakes and
amplify our points, by email, to editors@terrie.com.

=> No feedback this week.

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+++ ABOUT US

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