TT-774 -- The Economy and the University Drop-out Rate, e-biz news from Japan

* * * * * * * * 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, September 28, 2014, Issue No. 774

+++ INDEX

- What's New -- The Economy and the University Drop-out Rate
- News -- Asset sales to raise funds for government
- Web Content/Tech Job Vacancies -- Community Manager position
- Upcoming Events
- Corrections/Feedback
- Travel Picks -- Tales of two onsen -- both in Gunma
- News Credits

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+++ WHAT'S NEW

The basic premise of Abenomics is that if you loosen up the supply of
money to economic producers, i.e., companies and investors, the
resulting financial stimulation will create a trickle down of spending
to the rest of the population, via wages, plant upgrades, and other
investment. That would be great if it actually worked, but it seems
that there are two major problems standing in the way.

Firstly, top management believe that the Japanese economy will
continue to shrink, and so they are not willing to put any more
investment into domestic business than they have to -- meaning that
unless Abe introduces a surplus-capital tax on companies, their cash
piles will continue to build and they will continue with domestic
economy-unfriendly spending, such as buying back their own shares or
investing offshore.

Secondly, the Abe government seems to have overestimated how much idle
cash there is in the hands of private investors, and particularly cash
that doesn't mind the lower returns of investment at home. To be sure,
the Japanese public still own plenty of assets, but it's not in the
hands of the masses who would actually spend it in consuming lots of
stuff. Instead, the US$15trn in private savings is mostly held by an
elderly few, who either have no particular need to buy more (OK, they
are buying some) and who in any case have much of their holdings in
illiquid assets.

So instead of trickle down, we have disconnection, and while a favored
few get rich on artificially pumped up stocks, the rest of the
population winds up getting poorer and having a tougher time in life.
Thus it is no surprise that a news article published earlier this week
claims that a lot more students are dropping out of university because
of financial difficulties. About 600,000 kids enter university every
year (approximately 50% of all kids), amounting to about 3m students
in tertiary education (universities, 2-year colleges, and vocational
colleges). Of this 3m, about 170,000 kids, or 5%, are now dropping out
either temporarily or permanently. That's a lot.

[Continued below...]

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companies from Japan ready to pitch their businesses on a unique
"one-on-one basis" to major VCs, incubators and startup CEOs based in
Silicon Valley.

Our "Wild Tour Kickoff 2014", part of the larger Wildcard Incubation
Program, will be held during October, from the 12th - 19th, and we are
currently accepting participants based in Japan, who are willing to
take the challenge!

More info (Japanese) at:
http://www.innovations-i.com/release/13597.html. Contact:
nobu.kumagai@koei-company.com
-----------------------------------------------------------

[...Article continues]

The numbers come from a recent education ministry survey, and show
that 20.4% of the kids dropping out, an increase of about a quarter
over the last 7 years, are doing so because of financial reasons. For
private universities this number rises to 22.6%. Interestingly, the
second largest group of kids leaving college is those planning to
study abroad, perhaps indicating as these kids get squeezed out of
their comfort zones, they are willing to take on the challenge of
going bilingual and multinational, which would be a good unintended
consequence of Abenomics.

OK, so the trend is that kids are being forced out of tertiary
education. From a capitalist point of view, maybe that's not a bad
thing, given that there is a labor shortage at present and more bodies
are needed in manual labor jobs. If Abenomics continues its current
trends for another 3 years, we will probably see the drop-out rate go
up another 25%, creating a freshly enlarged pool of laborers and lower
salaries. We suppose someone has to do these jobs -- but it does seem
tough on the kids involved. In particular, let's remember that
lower-skilled jobs come with at least the following major
disadvantages:

1. Lower earnings. In Japan, the top 20% of the population earn about
JPY5m a year, whereas the bottom 20% have to live on just JPY2.3m.
That gap is increasing.

2. Worse job security. We don't have any numbers on job security, but
obviously with 30% of the population in non-full time jobs (let alone
skilled jobs) there are a lot of people feeling vulnerable and who are
aware that they will be first fired when/if the economy hits another
pot hole.

3. Lack of jobs in future. While there is a manual labor manpower
shortage right now, looking at the big picture it is a truism of
capitalism that capital will seek the most efficient locations and
resources to produce profits, and in today's age of borderless trading
that means producing in China and China-plus-one countries. We don't
see manufacturing and other lower skilled jobs returning to Japan en
masse for a long time to come, even with a yen rate of 140 to the
dollar. So once the temporary boom in labor-intensive jobs is over
after 2020, we believe there will be far fewer opportunities for the
lower skilled.

4. Lower birth rate. By forcing your youth into low-paying jobs you
also get lower population growth. How? Well, surveys show that young
Japanese women don't like marrying a partner who is not economically
viable. We suppose this is a pragmatic decision based on the fact that
most women stop working for 3-5 years to have each child. So of course
they want to be sure that their partner is able to support the family.
Tough on the young guys, though.

5. Higher self-harm rate. These disadvantaged 170,000 kids will carry
the scars of the government's misallocation of economic pump priming
for the rest of their lives. Lucky for Japan that its kids are so
docile. In other countries, bitterness drives kids to delinquency and
crime, but surveys show that in Japan the usual outcome is either
suppressed anger or depression (leading to suicide).

OK, so we agree that Abe did not create the recent downward-spiral in
the economy, and yes, something needs to be done. However, while
goosing the financial markets and devaluing the yen have been two
excellent opening acts, now he needs to be concentrating on market
reforms, so as to reinvigorate the real employers of the nation: the
SMEs, and also to invest in the nation's human capita and move the
economy upstream. Sure, returns on investing in your nation's kids is
not so quick, but it seems to us that Japan's problems are so deeply
systemic, that nothing less than a radical overhaul, starting with the
education system and resources allocated to it, will give the nation
the tools for survival and perhaps eventual return to its golden
years, in a post-industrial age.

...The information janitors/

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

------ Social Innovation to Increase Food Security --------

Are there really nearly 20 million people in Japan living below the
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Cost: 3,000 yen (to cover drinks and food)
Time: 19:30 ~ 20:30 (doors open at 19:00)
Date: October 15th (Wednesday)
Location: Shangri-La Hotel
Reservations can be made here: http://2hj-social-innovation-night.peatix.com
-----------------------------------------------------------

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

+++ NEWS

- Another apparel store starts accepting overseas orders
- Asset sales to raise funds for government
- Japan Post to start new international parcel service
- Kirin buys into top craft brewer
- Inflation recedes, stoking fears of choked economy

=> Another apparel store starts accepting overseas orders

Perhaps taking advantage of news that Japan Post is about to introduce
a new cut-rate overseas parcel service, apparel chain Cox, an
affiliate of Aeon, has said that it will start deliveries of orders
from its online store to customers abroad. The deliveries won't be
cheap to begin with, however, with Cox quoting JPY2,000/kg for
shipments to China. Cox has a store in Narita and this is how foreign
tourists are finding the company. ***Ed: We are going to see a lot of
me-too services popping up over the next couple of years, especially
now that tourists can buy virtually anything less the 8% consumption
tax.** (Source: TT commentary from asia.nikkei.com, Sep 27, 2014)

http://s.nikkei.com/1vokPmN

=> Asset sales to raise funds for government

This is a good article about the Abe government's strategy to cut
public spending by moving assets ownership from the public domain to
private ownership. Although this is a thorny area of policy, and is
obstructed by bureaucrats who will lose their cushy amakudari (descent
from heaven) positions prior to retirement, nonetheless, it is
estimated that the public purse will save about JPY3trn a year if
aging assets were in private hands. Apparently there are about JPY3trn
of airports, roads, waterworks, and sewerage systems up for sale in
various parts of the country -- just the tip of the iceberg, if the
trend catches on. ***Ed: The downside is that private ownership will
almost always mean higher costs and possibly a lower level of service
(in low-population areas).** (Source: TT commentary from
businessweek.com, Sep 25, 2014)

http://buswk.co/1nrauaP

=> Japan Post to start new international parcel service

After missing out on the recent massive increase in international
parcel shipments thanks to cross-border online shopping around Asia,
Japan Post is remedying the situation by introducing a new parcel
delivery service covering China, India, and SE Asia. The parcels will
be delivered by Geopost, a French company with substantial logistics
around the region. As part of the deal, Japan Post will invest JPY5bn
into a HK affiliate of Geopost. ***Ed: No word on what Japan Post will
charge in the way of rates, but they really need to be matching the
pricing that consumers currently enjoy between the USA and Japan
(around JPY1,500/kg for volume merchants).** (Source: TT commentary
from asia.nikkei.com, Sep 26, 2014)

http://s.nikkei.com/1yvGkrD

=> Kirin buys into top craft brewer

In a move that might set off an M&A trend, Kirin has just bought a
major stake in the nation's largest craft brewer, Karuizawa-based
Yo-Ho Brewing. Kirin valued the Yo-Ho business at JPY3.3bn, and bought
itself a 33.4% stake -- meaningful, in that Kirin will have veto
rights on board decisions. The main investor of Yo-Ho is none other
than luxury hotel operator, Hoshino Resorts. Yo-Ho shipped 240,000
cases of beer (20 x 633ml bottles) last year, and has enjoyed 9
straight years of growth. ***Ed: What's a bit strange about this deal
is that Kirin will start up its own craft brew brand next year. Maybe
this is just a case of keeping a potent competitor close?** (Source:
TT commentary from the-japan-news.com, Sep 24, 2014)

http://bit.ly/1rCwq2J

=> Inflation recedes, stoking fears of choked economy

Inflation numbers released by the government show that the consumer
price index rose 1.1% year-on-year in August, about 15% lower than
that for July, and an extension of a reversing trend on inflation,
despite the efforts of the Bank of Japan and the Abe administration to
stoke inflation. The BoJ appears to be sticking to its guns that it
will achieve a 2% inflation rate by the end of the fiscal year, but
financial analysts are saying that they think the rate by March might
be as low as 0.6%. This will mean that the BoJ will have to embark on
an even more aggressive easing program than what they have in place
now. ***Ed: We certainly don't see any improvement in the flow of
spending and funds by small companies or the man in the street, so
it's easy to be negative on Abenomics. HOWEVER, the Japanese
government has many powers, and perhaps desperation will encourage
them to do something truly beneficial for the economy, versus just
sprucing up a few vested interests. A huge step forward would be for
the government to open up its spigots for small to medium-sized
companies, thus encouraging these firms to hire more people and pay
more salaries.** (Source: TT commentary from wsj.com, Sep 26, 2014)

http://on.wsj.com/1u567mr

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.

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

+++ WEB CONTENT/TECH VACANCIES

=> Are you in web content, sales, or engineering- If so, this section
is for you.

** HIGHLIGHTED POSITION

- Community manager

www.japantravel.com's "special sauce" as a travel website is its
community. We are recruiting a bilingual person with an outgoing and
friendly manner to manage our 3,000-person community both in Japan and
abroad. The person will be involved in recruiting, contracting,
managing, and motivating the key leaders in the community, as well as
assisting with troubleshooting of downstream contributors and other
participants. Ability to multitask, show empathy, and yet maintain
discipline in terms of results are important attributes for this
position. Location of the job for the first 12 months will be in
Tokyo. Some travel around the country is also anticipated. JPY4M -
JPY6M base + incentives. We are interested in both Japanese and
foreign applicants. For language fluency, ability to listen, speak,
and read emails in your non-native language are necessary.

Interested individuals may e-mail resumes to: info@japantravel.com.

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

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

+++ UPCOMING EVENTS/ANNOUNCEMENTS

-------------- BizDo Introduction Seminar -----------------

Discover The Secret of Leadership Success : Gyoku Shin

On November 7th, during the height of Kyoto's beautiful foliage
season, we will hold our next BizDo Introduction Seminar which
introduces the secrets of Leadership success hidden in the philosophy
and principles of the Japanese Martial Arts. This event is exclusively
for senior executives and only 20 seats are available.

To hear what other top Executives in Japan say about our Seminars and
to reserve your seat, visit: http://www.bizdo.co.jp/seminars/terrie/
-----------------------------------------------------------

------------------ ICA Event - October 16th ---------------

Speaker: Rei Hasegawa, Head of Corporate Communications, Japan and
APAC Social Media at LinkedIn Japan
Title: "Branding You"
Details: Complete event details at http://www.icajapan.jp/

Date: Thursday, October 16th, 2014
Time: 6:30 Doors open, Buffet Dinner included and cash bar
Cost: 4,000 yen (members), 6,000 yen (non-members) Open to all. No
sign ups at the door!!!!!!!
RSVP: By 10am on Monday 13th October 2014, venue is The Foreign
Correspondents' Club of Japan
http://www.fccj.or.jp/about/access.html
-----------------------------------------------------------

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

+++ CORRECTIONS/FEEDBACK

=> No feedback or corrections this week.

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

+++ TRAVEL DESTINATIONS PICKS

=> Hoshi Onsen Chojukan in Minakami, Gunma
Beautiful old ryokan & onsen in the Minakami mountains

Among the scores of ancient ryokan in Gunma, Hoshi Onsen is the real
deal. It was built way back in the day when inns had to be built over
the source of the hot spring. Consequently it is down a narrow, windy
5km long road which means it belongs to a special class of secluded
onsen. Situated on what was once the main route up from Kanto into
Echigo prefecture it is a real travellers' inn, offering a chance to
soak away the dust and grime of a long journey. The Mikuni Kaido is
still dotted with venerable ryokan that have been operating for
generations.

Secluded is definitely the right word, and the drive up the 5km track
takes you deeper into the mountains, providing awesome views through
the trees. Passing Akazawa ski resort and signs warning you of just
about every kind of wildlife in Japan, you finally reach Hoshi Onsen
ryokan and, yep, it certainly does look old.

http://bit.ly/1DMKU4N

=> Sekizenkan Ryokan, Gunma
Live the Edo period onsen experience

If you are after an authentic Japanese hot spring experience,
Sekizenkan Ryokan, an "onsen ryokan", should be one of your top
destinations. Sekizenkan Ryokan is a therapeutic hot spring resort
dating back to the Genroku era (1691), making it the oldest Ryokan in
Japan. Nestled within the rolling mountains of Nakanojo machi, the
winding road towards Sekizenkan Ryokan is dotted with traditional
structures reminiscent of olden Japan, informing the modern traveler
that the Japanese have traveled far and wide to enjoy the healing
properties of Onsen for centuries.

Arriving at the doorstep of Sekizenka Ryokan, you will be greeted by
Sekizenkan's famous red Keiun bridge and the Main building, which
served as one of the models for the bath house in the Hayao Miyazaki
film entitled "Spirited Away".

http://bit.ly/YyNpHc

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

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+++ ABOUT US

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

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