TT-787 -- Predictions for 2015 in Japan, 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, January 11, 2015, Issue No. 787

- What's New -- Predictions for 2015 in Japan
- News -- New law to force employees to take vacations
- Upcoming Events
- Corrections/Feedback
- Travel Picks -- Tarutama Onsen, Kumamoto; Yosakoi Festival, Tokyo
- News Credits

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+++ WHAT'S NEW

Welcome back to Terrie's Take for 2015. We hope you all had a great
break, as we did (eating, skiing, onsen, visiting temples, and lots of
sleep-ins). As is our tradition for the last few years, we will make
some predictions about the coming year, but with a slight departure --
all the predictions this year are about the same theme, the economy.

1. Abenomics probably is the right medicine

While we hate to say it, because Abenomics is basically using
increased taxation to rob from the general population to enrich
government and its cronies, their actions are probably the right
medicine for Japan right now. We can think of two obvious reasons: a)
the increasing hardships caused by a sinking yen will jolt more people
out of their comfort zone and wake them from complacency. This may
take several years, but sooner or later families won't be able to
manage any more, and change will happen. It may not necessarily be in
the form of protests and civil unrest, but there will probably be more
popular discussion about income disparities and "selfish" companies
sitting on cash piles. The average worker will start to seriously
question whether he/she wants to work for a company that won't share,
and will seek alternative employers. b) It will force the Japanese
government to start to turn to the relatively convenient and easy
"foreign connection" as a source of income -- which will manifest
itself as a softening on trade and immigration. Yes, we know that this
has all been said before, but until the pain is great enough, and the
Japanese are really good at dealing with pain, then there will be no
significant change. Will this happen this year? Probably not, but the
signs will be there.

2. Increasing demand through the foreign connection

If you have a population that has been educated to "gaman suru" (put
up with physical and/or psychological pain rather than try to fix the
problem), then in the face of adversity everyone battens down the
hatches and prepares for worse to come. We think the blame for this
type of thinking can be directly laid at the feet of the Japanese
education system, which avoids Socratic-style discussion and critical
thinking in favor of a teacher-led dogmatic instruction and docile
acceptance by students. Given that the education system is almost
sacred in Japan, and teachers own the kids' minds so thoroughly, this
aspect of society isn't going to change any time soon.

The effects of this type of "inbred" education are highly visible and
are strong causes (we believe) of what ails Japan today, being:
falling birth rate, lack of entrepreneurs, hesitation by those with
money to lend to risk takers, obsession with material goods instead of
intellectual causes, desire to maintain status and status quo, etc. So
our prediction is that the government will do whatever it can to avoid
disturbing the status quo by instead focusing on opportunities that
are not owned by local stakeholders. This means foreigners. The
largest opportunities open to the government are: exports, creating
patron-state relationships through soft loans, tourism, and
immigration. Yes, we did say immigration... see the next prediction.

------ 2015 Internships for Japantravel.com Now Open ------

Japantravel.com is now accepting applications for its 2015 season
journalism internships. The internship program, which was started in
2013, brings approximately 40 talented journalists and journalism
students to Japan every year, to help us document Japan and its
people. Nationals from any country whose major language is represented
on our site are welcome to apply. Currently those languages are:
English, Japanese, Mandarin, Cantonese, Korean, Thai, French,
Indonesian, and Russian. Selection will be made by merit, with
applicants expected to show previous examples of writing, photography,
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Japantravel.com is also looking for intern hosts all over Japan. If
you are a regular family and are interested in hosting an intern for
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In return for your generosity, Japantravel.com will provide 10,000
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http://en.japantravel.com/reward-store.

For more information on the internship opportunity, rules, and cost
recovery system, please see http://en.japantravel.com/interning
--------------------------------------------------------

[...Article continues]

3. Increased immigration

Immigration is a political hot potato in Japan. There are enough
xenophobic politicians and groups that we can confidently say Japan
will not in the next generation officially open its doors to
foreigners. However, bureaucrats and business owners know that the
nation needs fresh blood badly, so they will operate in the grey
sector. Japan has essentially had an open-door immigration policy
since 1990, when they changed the rules about how many foreigners a
company could hire. It used to be that (unofficial policy) a company
had to have JPY50m of sales for every foreigner they employed, which
meant smaller companies didn't bother -- it was too much trouble. But
after 1990, even smaller companies, now those under the greatest
pressure, have been able to employ as many non-Japanese as they like,
and that is still true today.

The real hold-back on bringing foreigners in has simply that they
don't speak Japanese, and until now most openings have been white
collar -- which require language skills. However, with the shortage of
construction laborers, farm workers, hospital assistants, truck
drivers, factory workers, etc., there will be a dramatic increase in
the number of foreigners being sponsored into the country over the
next 5 years.

The Special Zones legislation changes are expected to start from this
year, and the example of ordinary wealthy Japanese households suddenly
being allowed to hire Filipina houseworkers will be an interesting
case study. We are particularly interested to hear what the
restrictions on the visas will be, since the current labor laws allow
equal treatment (including freedom of movement) for foreigners and
Japanese alike. Therefore, if Japan wants to restrict these
houseworkers to Tokyo as a Special Zone, they will need to introduce a
visa category that looks more like the trainee visas -- where the visa
is tied to a particular employer and where the government pretends the
person is not there for work (and thus doesn't have rights).

4. Real wages will continue to decrease

Real wages declined 4.3% from November 2012 to November 2013, which
naturally is inhibiting consumer spending. Abe's government is raising
the straw man that selfish corporations withholding pay raises are to
blame for falling wages. The real and simple reason is the
government's unprecedented debasing of the yen, and thus the rise of
the cost of imports. Given that Japan imports more 61% of its food,
families can hardly cut back on "foreign luxuries". Much of what they
buy as local foodstuffs, including for example, bread and milk,
consist of foreign raw materials mixed with local. Your Tohoku
high-fat milk isn't just from Japan, it probably has milk powder from
other foreign sources mixed in. Then of course there is the increased
cost of energy and gas, which affects transport firms and the cost of
pretty much everything physical.

So why is the government devaluing the yen if it is bad for the
incomes of its voters? Because of a long-term vision; Japanese
companies can't be competitive otherwise. In other words, Japan is
part of a global market where there are vast disparities in costs. To
survive, corporations naturally gravitate to the cheapest locations,
which in the last 10-15 years were China and SE Asia. But something
interesting has happened recently. China and SE Asia are suddenly no
longer as cheap as they were, and in fact in some cases it is now more
expensive to produce Japanese products (when you factor in management
costs, taxes, shipping, and quality issues) in coastal regions of
China than it is in rural Japan. This is why Canon announced a few
days ago that it will increase the volume of cameras and other
high-tech products manufactured in Japan from 40% to 60%. We expect to
see many other companies make similar announcements.

OK, then if more manufacturers returning means more jobs, and doesn't
that mean higher wages will occur due to competition for labor? No, we
think the Japanese government well understands that to keep
manufacturing in Japan it has to lower local costs to be in line with
its neighbors. It will do this by continuing the devaluation trend and
by stealthily bringing in cheap labor. The decline in real wages will
continue to fall until Japan feels that it is sufficiently
cost-competitive with its neighbors.

Now, this doesn't necessarily mean absolute wage parity between
Shizuoka and Saigon, because as we mentioned there are other non-wages
costs to consider when operating overseas, but it does hint that we
can expect real wages to drop another 20% (i.e., 4%-5% a year) for the
next 5 years. Our guess is that the costs experienced in Singapore are
a kind of benchmark for the Japanese, and already we can see wages
parity coming up. Singapore wages used to be less than half that of
Japan in the 2000's, and now they are only 20%-30% less.

5. Tourism will accelerate

OK, this isn't so hard to predict, given that the government has a
simple tourist flow "faucet" to pep up its target numbers -- being
visa relaxation. Historically the Japanese have restricted the inflow
of visitors from SE Asia and China because it's been worried about
overstayers. Nothing has really changed politically, so why are they
not worried now? We think the new pragmatism arises from two factors:
a) more tourists mean more direct spending, without the social costs
normally associated with local residents, and thus it's free money,
almost. b) If you think about it, overstayers are among the most
obedient and least troublesome cheap workers you can have. Our guess
is that the government has decided that overstayers are tolerable, and
that will certainly make many factory owners in Nagoya and Saitama
happy. You'll never see that printed in the news media, though.

6. Land ownership controls will be introduced

A cheaper yen and unsophisticated land market means that more
foreigners will be acquiring land in Japan. This is already going on
in the commercial sector, and last year was a record year for inbound
property investment by foreign firms -- primarily in office buildings.
But there are two other land sectors that foreigners are interested in
and both of these are politically sensitive and thus likely to trigger
land ownership controls. The first is the ownership of rural natural
resources, such as water, forests, onsen, seafood production, and
other food-related resources. The primary acquirers at the moment
appear to be Chinese, natural antagonists to the Japanese rightwing,
and already we have seen political uproar over the acquisition of land
in rural watershed areas.

The other land sector likely to be targeted by foreigners will be in
the travel sector, where the investors are anticipating the rise of
repeat travelers from SE Asia and China who want to enjoy an annual
dose of onsen, skiing, and high-grade food and shopping. These
investors are interested in two types of real estate: high-end
apartments and land in Tokyo, Osaka, and Fukuoka, and trophy
properties near the coast, lakes, and ski fields. Niseko and its high
level of foreign ownership is not an aberration. Already Hakuba is
enjoying a mini-boom of foreign investment, and we think this will
spread to other resort areas of Niigata and Nagano.

7. Continuing exodus of long-termers

So if you're in business as an exporter, Japanese teacher, tourism
player, financier, or land-owner, 2015 might actually be a good year
for you. If you are a regular worker in a company not involved in one
of these industries, then it's going to be a tougher year than 2014,
as the cost of living mounts. In that case, you might be part of our
last trend for 2015, the continuing exodus of long-term foreign
residents looking for a friendlier fiscal climate to work in. This
exodus will be numerically offset by a surge of newcomers on the
low-wages visas, so it won't be noticeable statistically, but it will
certainly change the face of the foreign community and dilute the
institutions that have been in place for decades to help foreigners
live a bit easier here (foreign schools, supermarkets, medical
services, etc.). Yes, sure, this trend has been happening since the
Lehman Shock then the 3/11 earthquake. So our prediction is simply
that despite an improving stock market and export surpluses, the
exodus will continue, not reverse.

...The information janitors/

--------- Food Banking Workshop ---------

If you are in the food industry, your experience and expertise is
needed. Second Harvest Japan, the national food bank, is hosting a
half-day workshop to get feedback on a new business model they would
like to bring to Japan. This innovative model has the potential get
more food to welfare agencies as well make food banks in Japan
sustainable. Knowledge of food banking is not necessary. They will
provide lunch and drinks after the session. Date: March 19th. Lunch
(optional) at noon and workshop starts at 13:00. Location: Shangri-La
Hotel Tokyo. For more information and to register send email to
Charles McJilton charles@2hj.org

More info here: https://www.facebook.com/events/910191302338645/
-----------------------------------------------------------

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

+++ NEWS

- Line's new taxi booking service
- Half of 20-year olds yet to find love
- Freelance guides are possible
- Columbia U. to receive JPY500m for Japan studies
- New law to force employees to take vacations

=> Line's new taxi booking service

Interesting article on Techcrunch about the massively popular
messaging app, Line, launching a taxi booking service with Nihon
Kotsu, the cab company. The article notes that not only does Line have
huge access to the Japanese mobile population (about 50m users), it
also seems to be able to hail taxis quicker than Uber can. This of
course could simply be a function of Nihon Kotsu keeping spare cabs
for its partner, but does indicate something that Techcrunch
completely ignored -- the fact that Line may usurp Yahoo Japan as the
online place to get stuff done. We say this because mobile services
are all about servicing real human on-the-go needs, whereas Yahoo and
other more generic web services are more infotainment based. This is
why Facebook paid so much for Whatsapp. It was after the platform and
time-to-market benefits, not just the users. To us this means two
things: 1) Line will become the target of a takeover bid by Yahoo, and
2) other mobile apps that have large user bases and service real needs
will become a lot more prominent in the next 12 months. Think train
timetable apps, dining apps, proximity dating apps, ticketing, etc.
(Source: TT commentary on techcrunch article, Jan 08, 2015)

http://tcrn.ch/1wNGzbI

=> Half of 20-year olds yet to find love

Yet another article about the lack of love life by Japanese youth. The
Japan Times reports that an annual survey by marriage counseling
company O-net has found that just under half of the nation's 20-year
olds have never dated, and just under 20% have never fallen in love.
As of the time of the survey, 74.3% of kids said that they were not
currently in a romantic relationship and only 62.6% said that they
were looking for a partner. ***Ed: This survey will add to the concern
about the ability of young Japanese to form relationships and
eventually reproduce. And, yes, the public should be concerned. The
problem, though, isn't necessarily the kids themselves, more likely
it's the messages and values they are receiving from the adults they
are most closely connected for most of their waking hours -- their
teachers. We are of the opinion that Japan will NOT solve its
reproduction problem until the education system changes. Fear of the
unknown, of risk, of failure, and warmth of feeling to the mothership,
suffering together, and absolute trust in authority, as drummed into
kids over 2 decades of intensive schooling, all serve to weaken the
ability of a population to be emotionally independent and confident.**
(Source: TT commentary on japantimes article, Jan 10, 2015)

http://bit.ly/1y1IY6I

=> Freelance guides are possible

Although there are severe penalties for non-licenced tour guides
trying to operate through online market places in Japan, it appears
that there are a number of unlicenced groups operating who are
tolerated because they don't charge for their services. The Yomiuri
has a feel-good story about one such group operating in Ginza, called
"Osekkai" (translated as "meddlesome" but more meaning that they are
actively concerned) Japan. The group is lead by a planning company
owner who wants to help foreigners enjoy their Japan experience the
same way he was shown kindness while abroad on his own travels. The
group has about 40 students and adults as members, and not a mention
was made of them being licenced. ***Ed: Interesting. We think there
will be a mini-boom of such no-charge support groups, more than some
of which will be covertly sponsored by travel-related companies hoping
to turn each interaction into a sales opportunity. The Japanese do
love their shades of grey when it comes to skirting inconvenient or
stupid laws.** (Source: TT commentary from therecord.com, Jan 10,
2015)

http://bit.ly/1B7ZxPu

=> Columbia U. to receive JPY500m for Japan studies

In what could be the start of an Abe government plan to spread its
revisionist views around the globe, the government will apparently
provide JPY500m to Columbia University to "maintain" Japan-related
courses by paying the salaries of Columbia's professors. ***Ed:
Ostensibly the money is to ensure that Japan-related study maintains a
high profile in the face of declining interest by students (who are no
doubt opting to study China-related courses instead). However, one
wonders why the money isn't being used to attract students to the
courses rather than actually paying to run them? After all, as a
commercial operation, if there is demand for Japanese, then Columbia
U. would continue their Japan studies operations. No, this smacks of a
need by the government to have more direct control over what is being
taught, something easy to do if they are paying the salaries of the
professors themselves. Whether this is in fact the start of a
propaganda network or not will depend on how many other universities
around the world receive similar funding. We expect they will, and it
will be very direct, as in this case.** (Source: TT commentary from
the-japan-news.com article, Jan 10, 2015)

http://bit.ly/1IhdRY3

=> New law to force employees to take vacations

According to a Labor Ministry survey, only 48.8% of Japanese employees
took paid leave in 2013, with most volunteering to work through and
give up their right to holidays for that year, instead. The government
plans to get this number up to 70% by 2020, and will do this by
introducing new legislation that forces companies to be responsible
for employees taking leave. ***Ed: How much "force" is not yet clear,
however, since the government target is only 70% and not 100%, so we
assume that the new law will not carry criminal penalties -- and thus
have little or no teeth, especially with desperate small and
medium-size companies. The most prevalent reasons for not taking leave
are: not wanting to burden colleagues, and being overworked and
fearing work will pile up while they are away.** (Source: TT
commentary from rt.com article, Jan 10, 2015)

http://bit.ly/1A6Nu0r

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/ANNOUNCEMENTS

------------------ Charity Project for JHELP --------------

The Japan Emergency Team arrived in Tohoku hours after the March 11,
2011 Disaster and continues to assist in its 87th disaster response
since 1989. Help them get Japan's only Disaster Relief Vehicle
repaired after three years of on site operations and back to work!

http://bit.ly/1DzwLJB
-----------------------------------------------------------

------------------ ICA Event - January 22nd-------------------

Speaker: Brent Conkle - President & CEO Business Across Cultures Co.,
Ltd. Executive Leadership Coach and Talent Management Consultant
Title: "If your employees aren't growing they're going! Solution:
create an employee value proposition that focuses on unleashing,
empowering, and engaging leadership."

Details: Complete event details at http://bit.ly/1FJyONi

Date: Thursday, January 22nd, 2015
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 19th January 2015
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

=> Bathing at Tarutama Onsen, Kumamoto
Hot spring baths on the slopes of Mt Aso

Tarutama Onsen lies on the southern slopes of massive Mt Aso. There's
not much here to indicate to visitors that this is one of the region's
most beloved bathing spots, especially in autumn. A lone complex, the
rambling Ryokan Yamaguchi, stands at the southern end of the Tarutama
area. (The more sulphurous Jigoku Onsen is just up the road.)

While Ryokan Yamaguchi happily welcomes overnight guests, they are
also open for day bathers. A ¥600 entry fee gains visitors access to
the spa's spacious indoor baths. On the women's side, the tub itself
was sprawling, and was built to offer sweeping views of the valley and
the forested hills beyond. The temperature was nearly perfect - the
only slightly sour note was the tepid temperature of the water
falling, cascade-style, onto bather's backs in the corner of the bath.

I would have thought that was all there was to the onsen had another
bather not exited through a door just beyond the waterfall corner. A
short wooden hallway led to a small flight of stairs, which opened out
onto a small deck. Two small wooden tubs were set into the planks,
allowing for individual bathing under the crisp blue skies. There was
also a small square tub, almost unbearably hot, tucked into the small
building that stood next to the outside baths.

http://bit.ly/1y1JyBv

=> Super Yosakoi Festival, Tokyo
The ultimate Yosakoi dance festival experience

It is the hottest week of Summer. The sweltering sun hangs high over
Shibuya, drenching everyone in sweat. But the crowd does not recede,
neither do the megawatt smiles on the dancers' faces. Showcasing the
vibrant Yosakoi dance, wave upon wave of performers take to the stage
with energetic moves and youthful exuberance. This is the Harajuku
Omotesando GenkiMatsuri Super Yosakoi Festival.

The Yosakoi dance originates from Kochi, Shikoku, where it evolved as
a contemporary rendition of the famous traditional Awa Odori dance.
Infusing classic moves with trendy, upbeat tunes, the Yosakoi quickly
gained popularity throughout the country. In Tokyo, the Harajuku
Omotesando GenkiMatsuri Super Yosakoi Festival is a summer highlight,
drawing some 800,000 visitors annually since it was first held in
2001.

http://bit.ly/1B808R9

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

***********************************************************
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+++ ABOUT US

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

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