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짜800 / September / 2008

Why Foreign Firms Fail Eight ways to mess up your business in Japan.

Exploiting public pensions Changing tastes of luxury Charity begins at the Ball

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Contents

Volume 45 / Issue 9 / September 2008

12

22

特集 Features カバーストーリー 外資系はなぜつまずくのか

世界的なブランドが日本市場を読み誤って ビジネスにつまずき、 手痛いツケを払っている。 そんな事例をいくつか紹介する。

Cover Story Why Foreign Firms Fail 12 Here’s how several global brands misread the market here and paid a high price for failure. By Nicole Fall

ニコル・フォール

大いなる年金のムダ

1兆5000億ドルに上る日本の公的年金基金。 もっとしっかり運用していれば、 利回り増、 雇用創出、 税率抑制につながったばかりか、

The Great Pension Waste 22 If Japan’s $1.5 trillion of public pension funds was better managed, it could boost yields, create jobs, cap taxes — and swing votes. By Anthony H. Rowley

有権者の心もつかむことができたのだが。 アンソニー・H・ローリー

変わる 「贅沢」 の意味合い

ニューリッチ族が昔からの資産家と肩を並べるなか、 贅沢品・高級品業界は上得意客をこれまでどおり 大事にしつつ、 一般客も取り込もうとしている。

Luxe’s Different Tastes 30 As new money challenges old, the luxury goods industry is adapting to accommodate the masses without neglecting loyal clients. By Catherine Shaw

キャサリン・ショー

ACCJのチャリティイベント開催

今年の 「ダイヤモンド・チャリティ・ボール」 の収益は飢餓

撲滅、 ホームレス救済、 人身売買撲滅に役立てられる。 ジェフリー・シマモト

ACCJ Diamond Charity Ball 40 Proceeds from this year’s Diamond bash will help fight hunger, homelessness and human trafficking. By Jeffrey Shimamoto

Cover illustration for the ACCJ Journal by Eric Kim

September 2008 / ACCJ Journal / 3


Contents

Volume 45 / Issue 9 / September 2008

Departments Note from the Editor 9 President’s Message 11 Media Watch 19 Whistleblower woes. Consumer hits. Efficient driving. Digital countdown. Unusual gadgets. By Mark Schreiber

On the Spot 28

illustration for the accj journal by darren thompson

Tetsuzo Matsumoto, senior executive vice president, Softbank Mobile Corp., is interviewed by Julian Ryall

Opinion Leader 38 Haruhiko Kuroda,
President of the Asian Development Bank. アジア開発銀行 (ADB)  黒田東彦総裁

Classic Journeys 46 Nikko’s abundant culture takes a back seat in the autumn to scenery erupting in flaming colors, and nearby Lake Chuzenji is hiking country. By Jeffrey Tanenhaus

Science, Technology and Inventions 52 Municipalities are ordering a new incinerator that doesn’t expel noxious carcinogens, whatever it burns. By Julian Ryall 38

FDI Portfolio 53 Discounted brands. Qantas cuts. Branding. Intelligent networking. Barneys Kobe. Jimmy Choo flagship. By Nicole Fall

Business Profile 56 Andrew Shuttleworth is the classic matchmaker, linking companies, customers and vendors in design, property, training, IT and consulting. By Richard Smith

Advocacy Update 58 Starting this month, we will outline a number of ACCJ Viewpoints and other advocacy issues.

EBC Advocacy 62 European Business Council calls for better energy efficiency in buildings. By Julian Ryall

Jeffrey Tanenhaus

Behind the Book 63 How Toyota Became #1: Leadership Lessons from the World’s Greatest Car Company by David Magee, is reviewed by Tom Baker.

In the Final Analysis 64 46

4 / ACCJ Journal / September 2008

By Samuel H. Kidder, ACCJ Executive Director


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ACCJ Leaders President Allan D. Smith AIG Companies, Japan and Korea Chairman Charles D. Lake II Aflac Japan Vice Presidents Michael J. Alfant Fusion Systems Japan Co., Ltd. Laurence W. Bates General Electric Japan, Ltd. William R. Bishop, Jr. Bishop & Associates Michael D. Bobrove (Kansai) Nihon Medrad K.K. Kumi Sato Cosmo Public Relations Corporation Mark F. Schwab United Airlines, Inc. Michael D. Weenick (Chubu) PAE Design & Facility Management Treasurer Nasir Majid PricewaterhouseCoopers Brett Jensen (Kansai) Colliers Hallifax Steve Burson (Chubu) H&R Consultants ACCJ Governors Vicki L. Beyer Morgan Stanley Japan Securities Co., Ltd. Charles M. Duncan Continental Airlines Christopher K. Ellis Chrysler Japan Company, Ltd. James Foster Microsoft Japan Harry Hill (Chubu) oak Lawn Marketing, Inc. Tad Johnson Pratt & Whitney Aftermarket Japan KK John Kakinuki GE Consumer Finance Co., Ltd. Jiri Mestecky Kitahama Partners L.P.C. Sharon Baker Morin State Street Trust and Banking Co., Ltd. Douglas L. Peterson Nikko Citi Holdings Inc. Nicole W. Piasecki Boeing Japan Jay Ponazecki Morrison & Forester LLP Jim Weisser Weisser Consulting Ira Wolf Pharmaceutical Research and Manufacturers of America (PhRMA) ACCJ Executive Staff Samuel H. Kidder Executive Director Aron Kremer Deputy Executive Director

PAE’s value adding approach to our work focuses on our ability to thoroughly understand our clients’ needs and then tailor our wide variety of expertise and services in response. By combining contemporary global best practices and methodologies with the deep understanding of Japan that we have gained over the last 50 years, PAE is uniquely qualified to successfully serve both Japanese and foreign companies operating in Japan. Our services: Architectural Design & Engineering Interior Design Retail Design & Rollout Project Management Facility Management Sustainable Design Consulting Urban Design/Planning

PAE Shiba Building 1-3-10 Shiba Koen, Minato-ku Tokyo 105-0011 Tel 03-3436-0591 Fax 03-3436-0889 www.pae.co.jp

ACCJ Committees American Auto Industry Randy Krieger Architecture, Construction & Real Estate Kevyn Johnson/Michael P. King Asia Business Philip C. Jones B2B Sales Karl Hahne Banking and Finance Thomas Clark/Ernfred olsen Capital Markets Douglas Hymas Charity Ball Barbara Hancock Competition Policy Task Force Robert Grondine Corporate Social Responsibility Patricia Bader-Johnston Direct Marketing Joseph Peters Environmental Naoki Arai Financial Services Forum Charles D. Lake II Food and Agriculture Collin Benson Foreign Direct Investment Nicholas Benes Government Relations Andrew Conrad Healthcare Steve Plunkett Human Resource Management Chris Lamatsch/Ken Somers Independent Business Doug Jackson Information, Communications & Technology Darren McKellin Insurance Jonathan Malamud/Grant Tanabe Intellectual Property David Case International Education Patricia o’Keefe Investment Management David Monroe Legal Services Eric Sedlak Corporate Counsel Clair Chino Marketing Programs Dominic Carter Membership Relations Andrew Silberman Privatization Task Force David Hoover Retail Victor Luis Special Events Barry Bergmann Young Professionals Group John Ghanotakis/Daniel Lintz Taxation Jack Bird/Michael Shikuma Toiletries, Cosmetics & Fragrances yukiko Tsujimoto Transportation and Logistics Jeff Bernier/Mitsuyo Teramura Business Aviation Task Force Gary Konop Travel Industry Vincent you University Briefing Program Richard May/David Satterwhite Kansai Chapter Business Programs Jiri Mestecky Community Service Kojiro Dan External Affairs Kiran Sethi Living in Kansai Barry Louie Membership Douglas Schafer Women in Business Mari Nogami Chubu Chapter Community Service Steve Burson Independent Business Jeremy Cowx/Jason Morgan Living in Chubu Lowell Sheppard Membership Relations Chris Zarodkiewicz Programs Steve Brown American Chamber of Commerce in Japan Masonic 39 MT Bldg. 10F, 2-4-5 Azabudai Minato-ku, Tokyo, Japan 106-0041 Tel: 03-3433-5381 Fax: 03-3433-8454 www.accj.or.jp / www.ecentral.jp


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Publisher Vickie Paradise Green paradise@paradigm.co.jp Editor-in-Chief Simon Farrell simonfarrell@paradigm.co.jp Senior Editor David Umeda Art Director Paddy O’Connor Graphic Designers Akiko Mineshima, Mayumi Ohara COLUMNISTS Tom Baker, Robert Cameron, Nicole Fall, Mark Schreiber CONTRIBUTORS Vicki L. Beyer, Alana R. Bonzi, Geoff Botting, Martin Foster, Justin McCurry, Darren McKellin, Tony McNicol, Anthony H. Rowley, Julian Ryall, Catherine Shaw, Richard Smith, Jeffrey Tanenhaus PHOTOGRAPHERS / ILLUSTRATORS Jeremy Sutton-Hibbert, Darren Thompson Published by Paradigm President Vickie Paradise Green Creative Director Richard Grehan Advertising Sales Eileen Chang, Melissa Daines, Sarit Huys, Leai Kubotsuka Kamiyama Ambassador 209 18-6 Kamiyama-cho, Shibuya-ku Tokyo, Japan 150-0047 Tel: 03-5478-7941 Fax: 03-5478-7942 e-mail: inquiries@paradigm.co.jp www.paradigm.co.jp

Published monthly in Tokyo, on the 25th of the month, since 1964. Indexed in the PAIS BULLETIN. All rights reserved. The views and opinions expressed herein (other than editorials from the ACCJ itself) are solely the opinions and views of their authors. The ACCJ is not responsible or liable for any portions thereof. Subscription rates for non-ACCJ members One year ¥9,000; two years ¥15,000; three years ¥22,000. ¥800 per copy. Rates include domestic postage or surface postage for overseas subscribers. Add ¥7,500 per year if overseas airmail is preferred. Please allow eight weeks for changes of address to take effect. Subscription requests should be sent to info@accj.or.jp The ACCJ Journal welcomes story ideas from readers and proposals from writers. Letters to the editor may be edited for length and style. The ACCJ Journal is produced entirely on Apple computers


Note from the Editor

How CAC Helps ACCJ Communications

We encourage you to have your say in matters relating to the ACCJ Journal, the ACCJ Web site, and all things ACCJ Communications by contacting Bill Bishop (william_bishop@bd.com), ACCJ communications head Peter Rolufs (prolufs@accj.or.jp), or myself.

T

hose of you deeply familiar with the ACCJ know that Advisory Councils play an important role. Upon taking office, the ACCJ President appoints chairs who assemble councils of ACCJ members that provide advice on key areas of ACCJ operations. The council most relevant to the Journal is the Communications Advisory Council (CAC), chaired by Bill Bishop. The Journal and the CAC have been seeing a lot of each other lately. Fresh from overhauling the ACCJ Web site (which you may have noticed has added plenty to offer in Japanese and an entire site dedicated to ACCJ history), the CAC’s attention to the Journal has resulted in a new Advocacy Update section (page 58) starting this month. But that is just the beginning. We have laid the groundwork for entirely new Journal design and content to help kick off the ACCJ’s next 60 years, starting in January 2009.

simonfarrell@paradigm.co.jp

Letter I was surprised to read in the August issue of the ACCJ Journal that “Mac OS users have been left out in the cold, at least for now” (Media Watch, page 27). In fact, numerous online data backup services exist that are compatible with Mac OS. Among others are the iDisk feature of Apple’s MobileMe (FKA dot mac) service, Mozy, and Simply Offsite. And contrary to the article, the Windows Live Skydrive product does work with Macs. Best to fact check the Japanese media. Aside from this point, I continue to be impressed by the high quality of the ACCJ Journal each month. Colin Cook


By Allan D. Smith / President’s Message

Does Your Company File a Lobbying Report?

E

arlier this year, the U.S. Congress enacted comprehensive federal lobbying reform legislation that imposes new reporting requirements for companies that engage in lobbying activities with senior U.S. government officials. The definition of “lobbying activities” is complex, as are the reporting requirements themselves. Each company that thinks it may engage in lobbying activities with senior U.S. Government officials and, therefore, may be subject to the reporting requirements should check carefully with its own internal or outside legal counsel for a determination. Essentially, if a company has an employee or outside agent that spends 20% or more of his or her time working for the company on lobbying activities in any fiscal quarter, that company needs to file a report with the U.S. federal government for that quarter. Some of our larger companies, particularly those with offices in Washington, D.C., that have employees who regularly meet with senior administration officials and members of Congress and their staff have concluded that they need to file the lobbying report. Some have also concluded that, even though the ACCJ does not fall within the definition of “lobbyist” for

purposes of U.S. federal law, they nevertheless need to report on the ACCJ’s expenses incurred in connection with contacts with such senior government officials as well. The ACCJ can provide companies that ask for it a number that represents the amount of the fees paid to the ACCJ that is proportional to the amount of time the ACCJ staff spends working on contacts with senior U.S. officials compared to their overall, total working time. The number is quite small because such contacts are limited to the DC Doorknock the ACCJ conducts in the spring

of each year and the occasional visit to the ACCJ of a senior U.S. Government official. However, compliance with U.S. laws is essential even if the number is small. If you conclude that your company needs this information, please contact Aron Kremer at: akremer@accj.or.jp While most of the ACCJ contacts with the U.S. Government do not fall within the definition of lobbying, either as defined in U.S. federal law or the common understanding of the word, those contacts are critical to our advocacy efforts. Because we have the ear of the U.S. Government, other constituencies who might not otherwise be attentive to our Viewpoints and other messages take notice. The ACCJ is indebted to the U.S. Government and the U.S. Embassy, in particular, for taking up so many of our issues as their own in the various trade and other discussions they conduct on a regular basis. We should particularly thank our Committee liaisons from the U.S. Embassy who attend our Committee meetings and work so closely with us on specific topics.

asmith@accj.or.jp Allan D. Smith is ACCJ President.

September 2008 / ACCJ Journal / 13


Illustration for the ACCJ Journal by Eric Kim

Why Foreign Firms Fail How not to do business in Japan.

W

hat do the following companies have in common: Sephora, Dunkin Donuts, Marks & Spencer, Boots, Vodafone, IKEA, Burger King, eBay, Gateway 2000, Ogilvy & Mather, KFC, Pret a Manger and Agfa Japan? All of these global businesses have exited the Japanese market at one time or another — some with the proverbial tail between their legs. Others — including Ogilvy & Mather, IKEA and Burger King — have returned from the dead and gone on to be extraordinarily successful, the second- and, in some cases, thirdtime around. Yet, these and many more businesses — some equally well known; others, smaller startups — were launched on

14 / ACCJ Journal / September 2008

the Japanese market with high hopes of conquering the world’s second-largest economy. In reality, though, they exited, sometimes ungracefully, burnt and with reputations in tatters and millions of dollars written off. Such measurements of failure do not take into account the human cost, of jobs lost and the enormous stress for the foreign executives appointed to run the equivalent of a Titanic, answering to overseas head offices with little or no comprehension of the Japanese market, or why business should be less than peachy. With this in mind, when Tommy Kullberg, former IKEA president and now chairman and representative director at Kullberg & Partners K.K., gave a talk on June 3 for ACCJ members on

“Eight Successful Ways to Mess Up Your Business in Japan,” a packed room including managers and presidents of leading brands not surprisingly clung to his every word. Here was a man who understands failure in Japan better than anyone, leading the formerly defunct IKEA brand in Japan to what now seems like an overnight success. A fairly impressive achievement, considering the last time the Japanese public had heard about IKEA was when it was involved in a nasty court case; the next, when its launch store was so successful that the majority of products sold out in days and Japan became IKEA’s most successful worldwide market at the time. Kullberg has been involved in about 100 market entries


By Nicole Fall / Why Foreign Firms Fail

into Japan; and while he references IKEA as an example of a successful foreign market entrant, he is keen to point out that his eight rules can be applied to businesses across all categories. As an aside, just in case you are wondering exactly how many businesses have failed in the Japanese market, there are no official records. According to a spokesperson for JETRO (Japan External Trade Organization), however, when asked how many brands have exited, the optimistic response was: “No foreign businesses to our knowledge have failed. JETRO is usually more about keeping tabs on expansions or entrants to the Japan market.” So it comes as no surprise to learn that failure is a major taboo in Japan; and, more often than not, foreign executives are reluctant to share their true feelings in print for fear of jeopardizing future business relationships. Japanese employees, as well, are hesitant to talk about working for businesses that have failed. Part of this reluctance is embarrassment at being associated with a “tainted” company, other reasons being strong loyalties, while some workers hold on to the anger at having placed their trust in a company that, more often than not, was managed poorly. Kullberg kicked off his presentation with lesson No. 1 on how to fail in Japan: “Underestimate the Size and Opportunities of the Japanese Market.” Citing persuasive statistics that included 9% of the world’s GDP comes

ACCJ

With spending power on average of $3,020 a month and average savings of $114,000 per capita … Japanese housewives held the key to making or breaking a brand.

At an ACCJ event on June 3, Tommy Kullberg shared his experiences of market entries.

from Japan and two-thirds of business in Asia is related to Japan, he explained that all too often global companies are just not serious enough about the sheer economic wealth there is locally. With spending power on average of $3,020 a month and average savings of $114,000 per capita, Kullberg explained that Japanese housewives held the key to making or breaking a brand. “Japan is driven by domestic demand, which equals consumer demand. “In order to be successful, there needs to be a fair amount of adjustments by any company to the local market,” said Kullberg. When Wal-Mart Stores, Inc. entered the Japanese market, it sold lawn mowers, not exactly a high-priority purchase for the majority of Japan’s urban dwellers. So unless imported

products are adjusted for local tastes and adapted to suit living arrangements, a foreign retailer will struggle to remain competitive with Japanese brands that understand what people here need. Is the glass empty or is it half-full, asks Mark Ferris, representative director of Ascendant Business Solutions K.K., who takes a different view to what is perceived as failure. “What is failure? Is it failure when a company does not achieve stated goals, which may be too ambitious or lofty?” he queries. “Or is it the need to exit Japan because the business doesn’t have a rationale here?” Ferris, who consults foreign multinationals that are undergoing change in the local market, uses ice-cream retailer Cold Stone Creamery, Inc. as a key example.

September 2008 / ACCJ Journal / 15


IKEA Japan’s women-friendly policy resulted in then-Prime Minister Junichiro Koizumi asking to meet Kullberg to thank him in person for “strengthening the family unit.” While we see lines around the block on sunny days and waiting times reaching an hour to buy a single cone, the perception of how well the brand is performing to shareholders based overseas is different. “Cold Stone Creamery set aggressive targets in terms of numbers of stores in Japan it planned to open within certain time periods,” says Ferris. “It hasn’t reached all of these targets, so is this considered a failure?” Coming in at No. 2 on how to fail is “Disregard the Emerging Trends in Japan.” Kullberg stated some powerful facts, including that 740,000 people will reach 65 years of age every year for the next 25 years, meaning 25% of the population will be retired by 2020; and there are more people dying than being born. In this context, Kullberg said, more often than not, global brands fail to do their ethnographic and market research before launching. After all, a foreign retailer bringing to market a maternity brand, where a diminishing birth rate exists, should have a solid proposition — otherwise the business could be an uphill struggle. Equally as bad as failing to research local market conditions is failing to research the Japanese companies with whom your enterprise has decided to partner through a joint venture or licensing agreement, says Ian de Stains, OBE, executive director of the British Chamber of Commerce.

16 / ACCJ Journal / September 2008

UK retailer M&S (Marks & Spencer) pulled out of Japan after “choosing the wrong partner.”

“British retailers have not had much success in the Japanese market, with the exception of HMV, Paul Smith and Vivienne Westwood,” says de Stains. “But the example of a failure that still lingers is Marks & Spencer [premium private-label supermarket chain]. It entered the market around 30 years ago, but its fundamental error was it chose the wrong partner, a down-market supermarket chain. Marks & Spencer sees itself as a brand that offers quality products. Daimaru, at the time, stacked its products at Peacock supermarket, alongside cheaper items.” Ironically, Marks & Spencer could probably do well in Japan now, should it choose to re-enter the market. Consumers, especially the older, more traveled ones, are choosing premium brands that offer reassurance of quality, in a

food market increasingly polarized between cheap and expensive products. “Marks & Spencer should be successful [now], but the marketplace has a long memory, especially with failed brands,” de Stains says. “IKEA learned from its earlier mistakes; and, in a sense, IKEA is the model to which Marks & Spencer ought to aspire.” “Women — So What …” is Kullberg’s lesson No. 3. Not utilizing 50% of the population is a sin, he said, explaining that a foreign business creating equal career opportunities for men and women, offering employment benefits to part-timers equal to their full-time counterparts, and being flexible about maternity leave will attract top female talent to their team. By looking at the shift in values of Japanese people toward their families, from a mere 18% who


Why Foreign Firms Fail

IKEA

Happy, contented employees also are more likely to carry out their jobs more efficiently — an essential quality in “the world’s pickiest market.”

Offering onsite daycare facilities to parents helped IKEA attract qualified staff.

said their first priority was family in 1973, which increased to 45% in 2003, and people being less work-orientated, from 44% to 26%, Kullberg proposes that a company looking out for its employees will be rewarded with hard work in return. IKEA Japan’s women-friendly policy resulted in then-Prime Minister Junichiro Koizumi asking to meet Kullberg to thank him in person for “strengthening the family unit.” Following on very nicely is the No. 4 misconception, “Your employees’ children are not your business.” For many mothers, the hardest decision is not deciding to return to work, but rather finding good childcare. In a country where sponsoring a nanny is all but impossible, having to select among the few who hold the proper visa, regardless of affordability, and applying for state kindergarten means having to join a long waiting list, there is little choice but to stay

at home to raise the kids — there being no other options. IKEA introduced onsite daycare facilities offered to all parents who work at the Swedish furniture brand in Japan. While other companies may have felt incredulous at such employer generosity, IKEA comfortably filled positions for its labor-intense networks of stores, while competitors struggled to attract qualified staff. Happy, contented employees also are more likely to carry out their jobs more efficiently — an essential quality in “the world’s pickiest market,” said Kullberg. “It’s the toughest market in the world because it’s the most consumer-orientated market in the world.” Kullberg has spent more than a year consulting Swedish fashion retailer H&M Hennes & Mauritz AB, on its Japanese market entrance. A visit to any of H&M’s European retail stores will testify that the brand’s merchandise

is competitively priced, but nonetheless during busy periods when stock, while flawless, is being continuously replenished, unpacked straight from boxes, the items look disheveled. This might fly in the UK, but in Japan it will not. “H&M has employed a quality manager, a world first, to ensure H&M stays on top of things,” said Kullberg. “After all, in Japan we can’t afford to take risks with loose seams and wrinkly clothes on display.” “Most companies need to modify what they do in Japan. A rare example to this rule is the power-tool company Snap-On Tools,” says Ferris. “Its closure rate is high and it’s managed to tap into a real niche and become successful seemingly overnight. “But Snap-On clearly did some research,” he says, “including asking the following questions: What products compete with yours? How do consumers distinguish between the different products? What are the drivers of sales? How important are these drivers? How important is price? What market segmentations exist? — and so on.” According to sources close to British drugstore chain Alliance Boots, which notoriously failed in Japan, sometimes even the best plans come unstuck. “Boots appeared to solve the usual problems of finding affordable but prime real estate in Tokyo by teaming up in a joint venture with Mitsubishi Real Estate. On the surface

September 2008 / ACCJ Journal / 17


“It’s a bit difficult to find out what really happened in the past, as people don’t tend to be very good historians of their failures.”

it appeared to be the perfect match,” says an executive who was involved in helping Boots enter the Japanese market. “Anecdotally, Japanese consumers loved its products, which even had to be completely reformulated for the local market to meet strict regulations. “Boots had a strong commitment to quality; but what it didn’t expect was that in every location Boots launched a store in Tokyo, Japanese discount drugstore Matsumoto Kiyoshi would open just a few meters away,” the executive continues. “Mitsubishi asked Boots to dilute its brand value by also discounting prices so it could compete; but Boots refused and it had to close down because consumers naturally headed to its nearby competitor because it was cheaper.” “our advice at the British Chamber is avoid joint ventures if possible,” says de Stains. “If you need to do a joint venture, then go into it having done your homework. “Talk about the divorce before the marriage,” he advises. The adage “try, try and try again” can work for some businesses. Advertising agency ogilvy & Mather retreated twice from the Japanese market before eventually succeeding the thirdtime around, explains John Goodman, president of ogilvy & Mather Japan. “It’s a bit difficult to find out what really happened in the past, as people don’t tend to

18 / ACCJ Journal / September 2008

be very good historians of their failures,” he says. “But briefly, ogilvy’s first venture into Japan was a joint venture partner with Tokyu International, in the early 1980s. This did not succeed, work out; and we returned a couple of years later with another joint venture — this time with an agency called I&S. “This also foundered,” says Goodman. “Finally, we returned in 1993 as a 100% owned business. This took greater investment, but has proved to be a great success — we are often quoted, described as being Japan’s most successful and largest foreign-owned agency.” British supermarket chain Tesco PLC has entered the Japanese market in the right way, offers de Stains. “It left its ego at the door by initially coming in very quietly. It bought two local chains and has introduced its own name gradually,” he says. “Better that your brand doesn’t get associated with failure while its still finding its feet.” Rule No. 5 states “Spread out your Business Geographically.” Actually, probably don’t, said Kullberg. There are 13 mega cities in Japan, all with populations over 900,000. Couple this with the astonishing statistic that 70% of the population, or 89 million people, live in four regions, and you build a strong case for launching most operations in a fairly concentrated area. “Germany is IKEA’s largest market, with 38 stores. Applying the same logic regarding

SNAPSHOT

Eight ways to mess up in Japan ■

■ ■

Underestimate the size and opportunities of the Japanese market Disregard the Emerging Trends in Japan Women — so what … Your employees’ children are not your business Spread Out Your Business Geographically Don’t do your market research yourself—you can easily get it from somewhere else Why should we treat Japan differently? Don’t show any respect for local business customs

population to Japan, and there should be a large enough population to support 29 IKEAs just in a 50-square-kilometer radius of Tokyo, an area that has around 33 million people,” explained Kullberg. The rule that should be avoided at all costs, said Kullberg, is No. 6: “Don’t do your market research yourself — you can easily get it from somewhere else.” “yes, you can use professional market research companies, but you need to get deeply involved to get behind the ‘right standard answers’ usually coming out from mechanical polls. If we had listened to what we were told, we would have followed these basic ideas about Japanese consumers, including Japanese do not pay for their own shopping bags, Japanese never wrap their own merchandise, Japanese do not use self-service


Why Foreign Firms Fail

© The New Yorker Collection 1992 Edward Sorel from cartoonbank.com. All Rights Reserved.

“It really is a place where logic doesn’t apply. There are so many hidden rules, and that makes doing business here so complicated.”

restaurants, and Japanese do not assemble their own furniture,” said Kullberg, when IKEA was researching what should and should not be done in the local market. Ten days after its first location in Funabashi was launched on April 24, 2006, IKEA received 350,000 visitors, served 38,000 self-service lunches and sold 50,000 hot dogs — proving that, while Japan is undoubtedly a tricky market to break into for global brands — the archipelago also is riddled with clichés regarding local consumer behavior. Everyone involved in an enterprise in Japan may not all agree with Rule No. 7, “Why should we treat Japan differently?” said Kullberg. IKEA’s mattresses are generally softer than the ones sold at Japanese furniture stores.

That’s because IKEA has concluded that softer mattresses are better for bodies than harder beds. “We had a decision to make. Should we adapt and do the same as everyone else in Japan, or challenge what’s best for consumers,” said Kullberg on the approach IKEA took when sourcing stock. For Kullberg, it was an easy decision to make because the company’s credo is “creating a better everyday life for people,” so educating consumers to buying softer mattresses fitted IKEA’s ethos. Nevertheless, even Kullberg believes every brand proposition should be challenged. “The Japanese themselves feel that they are different,” he said. “It really is a place where logic doesn’t apply. There are so many hidden rules, and that makes doing business here so

complicated.” Last but not least is rule No. 8, “Don’t show any respect for local business customs.” IKEA may have challenged clichés regarding consumer behavior; but when it came to building its 40,000-square-meter stores, IKEA kick-started the process in a most traditional Japanese fashion, with a groundbreaking ceremony performed by a Shinto priest. IKEA also worked in a more traditional method by preparing as much work as possible early on in the project, rather than leaving most details to the last minute (à la the Western style of doing business). More positively, Kullberg advises to maintain “a sense of urgency” when deadlines are due, because “Japanese are used to working under stress,” an anecdote that should please managers adhering to a tight project deadline. In addition to his eight rules, Kullberg has some parting advice. “Sometimes businesses have to make a number of mistakes,” he said. “It’s part of the process of doing things in Japan, for a new company.” “There is one broad lesson to be learned,” de Stains concurs. “Businesses need to do their homework scrupulously because there is no shortcut to success.” Nicole Fall is a journalist and entrepreneur who runs Asian Consumer Trends agency, Five by Fifty.

September 2008 / ACCJ Journal / 19


By Mark Schreiber / Media Watch

Toothless Whistleblower Law A certain Mr. A, a middle manager employed by a major precision instrument maker, spilled the beans on his superiors over an attempt to hire two experts away from a vendor supplying test equipment — a violation of the company’s compliance directives. Mr. A pointed this out to the offender, but was callously disregarded. So he set up a meeting with the company’s compliance officer. “If what you’re saying is true, it’s a problem,” the officer agreed. “We’ll investigate, take remedial measures and get back to you.” But when the compliance officer e-mailed his findings, reports Yomiuri Weekly (June 15), Mr. A was horrified to find the message had been copied to both the company’s personnel manager and the men he had accused. Three months later, Mr. A, who up to that point had overseen six subordinates, found himself transferred to a dead-end job. His year-end performance evaluation also fell 20 points, resulting in his December bonus being cut by over ¥230,000. The former boss he’d squealed on had written that he was “disobedient” and had “disrupted the organization.” Mr. A’s claim against his employer and two senior managers is now working its way through the courts. The Diet initially was spurred to enact legislation protecting corporate whistleblowers who act for the public benefit after it was revealed a chicken farm in Kyoto had covered up a mass outbreak of avian influenza. Unfortunately, it’s become pretty clear that, like chickens, the law lacks teeth. According to data from the Cabinet office, the number of reports filed nationwide in fiscal 2006 — the first year the law went into effect — came

to 5,527, and declined to 5,192 last year. The Yomiuri Weekly suspects an equal number of companies managed to keep the news from going public. “Companies, particularly those listed on the stock exchange, have got to set up a means to make it easier for employees to report things, including acts that reflect on corporate ethics,” says Prof. Koji Morioka of Kansai University. “The actual situation is completely different. Even in a splendid organization, only a tiny minority of workers report complaints. That’s because, once they start being harassed by their colleagues, they’re left with no option but to resign. In most cases, such as the recently closed Senba Kitcho restaurant chain, companies only took action after it was reported in the media. In many other situations, infractions just go ignored.” “If I’d known it would come to this, it would have been better if I hadn’t done it,” the aforementioned Mr. A tells the Yomiuri Weekly. “It’s a great thing to put your trust in the law, but I don’t want to see anyone else made a victim. That’s why I’m fighting it.” Despite the law’s noble spirit, the article concludes, as long as the cases of retaliation against whistleblowers continue to occur, the law is just a worthless shell. As long as employees remain vulnerable, there is no means for them to raise their voices.

September 2008 / ACCJ Journal / 21


In the first half of 2008, the east and west yokozuna (grand champion) making the biggest splash on consumer markets were private-brand food products and sparkling malt beverages with low or no carbohydrates. According to the thrice-weekly Nikkei Marketing Journal, which released its sumo-style banzuke ranking list of hit products on June 18, the former includes Top-Valu from Aeon and Seven Premium from Seven-Eleven, appealing to thriftconscious consumers who are starting to feel the pinch of inflation. Asahi Soft Drinks Co., Ltd.’s Wonda Zeromax canned coffee drink was enjoying particularly strong sales (1.24 million cases sold by the end of May).

Named as the two ozeki (champion) are notebook PCs selling in the ¥50,000 range, such as the Eee PC models from Taiwan, and brand-name mobile phones from Sharp and other TV manufacturers. The two sekiwake (junior champ) are so-called carbonoffset products and services that claim reduction in greenhouse gases and Jin-Lian, the debit card service in mainland China that has already signed up about 11,000 participating stores, hotels and other businesses in Japan. The next lower rank, komusubi, is claimed by energy-saving fluorescent light bulbs and Konaka’s business suits, which can be washed by stepping into a shower with them on. Nikkei also followed the sumo

Asahi Soft Drinks Co., Ltd.’

Sumo Marketing

practice of bestowing three special awards. Apple’s lightweight Mac Air laptop took the “technical prize”; the high-tech LZR Racer competition swimsuits were accorded the “controversy prize”; and two booby prizes went to gasoline and frozen gyoza. Prices for the former continue to soar; the latter, or at least imports from China, are nowhere to be seen on store shelves since agricultural pesticides from an undetermined source sickened numerous consumers back in February.

Keep on Naggin’ As the price of kerosene, used to power mediumsize trucks, roughly doubled from ¥64 a liter in 2004, according to Nikkei Business (June 23), the Teikoku Data Bank reported bankruptcies by transport companies in 2007 rose 1.6-fold over the year before. To promote more efficient driving, truck manufacturer Isuzu began offering an onboard fuelconsumption monitor and voice-guidance system called the Mimamori-ku Online Service, from 2002. As fuel prices soared, the device has been catching on with a vengeance, with sales of 6,000 units last year moving at an even faster pace so far in 2008. When the system detects driving behavior that’s not conducive to fuel conservation, it bombards the driver with recorded messages, such as “Your engine is revving too fast.” Isuzu sells the onboard unit for

22 / ACCJ Journal / September 2008

¥87,330, with an additional monthly fee of ¥945. From last February, the Yamazaki bakery adopted Mimamori for its entire 183-truck fleet. “We’ve been able to reduce fuel consumption by about 10%,” company Director Junichi Koga tells Nikkei Business. Since the company’s fleet travels an average of 5,000km per day, it estimates it will be able to recover its initial outlays within nine months. In the past, truck driving appealed to some workers for the sense of freedom it afforded, compared to factory or office jobs. But many companies utilize GPS systems that monitor the vehicle’s position round the clock, and now they’re monitoring the action of the accelerator pedal as well. It’s not just corporate management, the magazine notes wryly, that is sighing over the higher fuel costs.


Media Watch

3 Years to Digital Despite a rising chorus of grumbles from consumers upset over the planned obsolescence of their analog TV receivers, the switchover to terrestrial digital broadcasting, planned for July 24, 2011, can be expected to bring a boost to Japan’s economy of ¥10-20 trillion, according to a special advisory “If you don’t upgrade to digital, you’ll have to buy council appointed by the Ministry of Internal Affairs a tuner for your analog TV,” the magazine quotes a and Communications. In a June 27 decision, the business reporter. “These have become cheaper, but council — chaired by Hitachi Chairman Etsuhiko it’s going to be difficult to sell them below ¥10,000. Shoyama and comprising private citizens from corpo“The antenna wiring in a lot of the older apartments rations, academic institutions and NPOs — will turn its and condos is for analog use,” the reporter continues. attention proactively to ensure that “digital refugees,” “Replacing the wiring in the walls may come to such as people in isolated areas with no TV reception, ¥100,000 per household, which is a heavy burden.” are kept to a minimum. In addition to outlays for welfare recipients, Makoto Sankei Shimbun (June 28) reports that freeing up a Odagiri, editor of GALAC magazine, estimates the portion of the frequency bandwidth now occupied by overall cost — including a new 610m-high tower in analog will open these airwaves to other applications, Tokyo’s Sumida Ward, digital TV cameras, studio such as police, fire, and emergency, mobile communiequipment and so on — will reach as much as ¥2 trilcations, and the Intelligent Transport System used to lion, of which one-quarter will be funded from taxes. guide drivers. It will also free up the bandwidth. “To recover their massive outlays, I suppose the But the weekly magazine Shukan Taishu (July 7) networks will cut back on their already low producaddresses the 2011 changeover from the perspective tion budgets,” remarks a broadcast industry source. of how much it will cost Mr. Average Person. “So don’t expect to see any interesting programs.”

Neat Gizmos Monthly Shohisha (June), Japan’s answer to Consumer Reports magazine in the U.S., has a department that covers unusual gadgets. The first, from Kaijirushi, is a pair of scissors combined with a tiny comb to be used as an eyebrow trimmer. It is especially handy for older men concerned with their shaggy eyebrows. In addition to the stainless steel scissors and plastic comb being fully washable, both right- and left-handed versions are available. Price: ¥661.

Hero Corporation has come up with Bra Bowl. No, this is not a postseason football tournament, but rather two concentric eggshaped balls that enable ladies’ brassieres to be dropped in the washing machine without forcing the elastic or foam pad sections to take a beating. Price: ¥398. Finally, Memokku adhesive tape from Yamato takes the concept of 3M’s Post-it notes a step further, combining the ability to stick things together with a writable

surface. Shohisha’s tester determined that a sheet of paper with the tape attached can be copied or smoothly faxed without getting snagged in the mechanism. Available in three varieties: three 15mm-wide rolls, two 25mm-wide rolls or single 50mm-wide roll. Price: ¥420.

Mark Schreiber is an authority on Japanese print media.

September 2008 / ACCJ Journal / 23


The Great Pension Waste

Manage public superannuation funds better.

J

apan is virtually alone among leading Asian nations in not yet having launched a sovereign wealth fund (SWF), but moves are underway to get one off the ground. Rather than using part of its ¥100 trillion foreign exchange reserves (the world’s second-largest after China’s) for this, the country seems likely instead to dip into its ¥150 trillion public pension funds to seed the SWF — a move that some market practitioners in Tokyo argue is putting the cart before the horse. The first step toward getting a Japanese-style SWF off the ground is expected soon, when an official SWF project team, headed by former Financial Services Minister Yuji Yamamoto, presents its interim report. A likely recommendation would be spinning off “baby” funds from the “mother” public pension fund. That could signal the start of a new era of higher returns — and new opportunities for private fund managers in Japan and elsewhere. Yamamoto has been cautious in his public statements about prospects for reforming the public pension fund, and even more so about redeploying Japan’s foreign exchange reserves. But he said in an interview that he is “100% optimistic” about getting some kind of SWF scheme in Japan, and that legislation to that end could appear before the end of 2008. The fact that the Yamamoto team is proposing to use public pension funds as the initial basis for a

24 / ACCJ Journal / September 2008

planned SWF dismays John Vail, chief global strategist at Nikko Asset Management Co., Ltd. in Tokyo. The pension money is invested mainly in yen, which implies foreign exchange risk in redeploying it internationally. Foreign exchange reserves, on the other hand, are, by definition, denominated in foreign currency (mainly U.S. dollars), and can thus be redeployed more easily and safely, he says. The debate in Japan began with the idea of a conventional SWF to raise returns on the foreign exchange reserves, or, at least, on the interest component. But the issue of the public pension fund has become more urgent and practicable, says Yamamoto. “In Singapore, the Government Investment Corporation [GIC] and Temasek invest government surpluses. They are considered to be SWFs, so a pension fund can also be regarded as an SWF.” In fact, seven different types of SWFs are listed by management consultants McKinsey & Co. These range from oil wealth-based funds operated by Middle Eastern and other oil producers, pension fund-based SWFs in Europe and North America, to a different type of fund already launched by China and South Korea that uses part of the foreign currency acquired by governments through foreign exchange market intervention. Japan’s reserves are also the result of foreign exchange market intervention. The common purpose behind having an SWF is to


By Anthony H. Rowley / The Great Pension Waste

raise returns on official wealth — something that all parties agree is essential in Japan, given the government’s huge outstanding debt, financial shortfalls in public pension and social welfare funds, and the need to raise taxes to close such gaps. But the sense of urgency among the reformist clique, led by yamamoto and other members of his team, is being met by caution on the part of Prime Minister yasuo Fukuda, who has instructed the group to “discuss the idea [of an SWF] proactively,” but to “act passively” for the time being. Likewise, Japan’s Finance Minister and the Health, Labour and Welfare Minister, who is responsible for the public pension funds, have been non-commital toward the idea of an SWF. But all are aware of a pressing need to raise the meager returns on public pension funds, at a time when the Japanese population is ageing rapidly, and fewer and fewer workingage people are contributing as more and more retirees are drawing down pensions. Many ways aimed at heading off a looming crisis for the public pension funds have been tried, or discussed. The statutory retirement age to qualify for a payout has already been raised from 60 to 65 years old, and there is talk of raising the age further to 70. Also, pension fund contributions have been increased and benefits trimmed from time to time. Increasing the national consumption tax (currently 5%) is a much-discussed (though politically controversial) means to bolster pension and social security funds. From next year, the government will step up its contributions to the pension funds by some ¥2.2 trillion annually, but it has yet to say from where the money will come. Until recently, the need to raise returns on the huge pension fund reserves has not been examined seriously. However, a report published in June by an experts committee of the Cabinet-level Council on Economic and Fiscal Policy (CEFP) revealed the urgency of such a review. The yen return on the investment portfolio of the Government Pension Investment Fund (GPIF) — which manages the assets of the Employees Pension Insurance and the National Pension schemes — has averaged just 3.5% annually over the past five years, one of the lowest anywhere. This is just one half of what similar public pension

Domestic Bonds 64%

Domestic Bonds 7% Domestic Stocks 1%

Foreign Stocks 11% Foreign Bonds 8%

Japan

Domestic Stocks 17%

Others 21% (real estate,

private equities, commodity futures, etc.)

Netherlands

Foreign Stocks 35%

Foreign Bonds 36% As of end of March 2007

As of end of 2006

Left, Japan’s Employees’ Pension Insurance and National Pension (GPIF) and, right, Strichting Pensioenfonds (Netherlands)

funds in Norway, Sweden and the Netherlands have achieved in local currency terms over a comparable period, despite being smaller, and less than one-third of the investment returns enjoyed by Canadian and French public pension plans. “If the money had been invested at Canada rates in the last five years, Japan could have gained ¥36.7 trillion,” says Japan’s official SWF project team head yamamoto. “I regret that this should have happened, [and] our main theme now is [to expose] why returns on the GPIF are so small.” The reasons, though, are not hard to find. No less than 67% of the GPIF policy asset mix is in Japanese government bonds (JGBs), where the yield on the benchmark 10-year JGB has languished at under 2% for well over a decade. The public pension funds, in other words, are used as a captive source for helping to defray the government’s more than ¥600 trillion debt, and this massive amount excludes other money loaned to the government by the GPIF. This approach of applying funds for purposes not originally intended is a major dilemma permeating the entire Japanese financial system. The country’s vast postal savings and insurance network, for example, which is currently undergoing a decadelong privatization under a plan launched by former Prime Minister Junichiro Koizumi, is serving as yet another captive vehicle for absorbing a huge government debt. Furthermore, a very large portion of the colossal ¥1,500 trillion household savings accounts is also held in JGBs, through banks and pension schemes. Liberal Democratic Party member Kotaro Tamura, one of the young Turks in the ruling coalition and part of the yamamoto project team, warns that

September 2008 / ACCJ Journal / 25

MINISTRy oF HEALTH, LABoUR AND WELFARE, AND WEBSITE oF STRICHTING PENSIoENFoNDS

This approach of applying funds for purposes not originally intended is a major dilemma permeating the entire Japanese financial system.


Japan Landscape ad FA.pdf

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The Great Pension Waste

Country

Japan

Norway

Netherlands

Sweden

National Pension National Public and Employees Service Personnel Pension Insurance Mutual Aid (GPIF)

Government Pension Fund – Global

Strichting Pensioenfonds (ABP)

National Pension Funds (AP1,2,3,4)

Number of Staff

81

151

2,387

Approx. 50-60

Average Annual Returns (2002-2006)

3.5% (FY2002–2006)

3.3% (FY2002–2006)

6.9%

7.2%

7.5%

there could be a “big impact” on the Japanese government bond market should the public pension funds begin divesting their JGB holdings on a significant scale. Despite the infusion of funds, government debt is continuing to expand, and so the squeeze on captive fund holders is likely to intensify. Some critics charge, for example, that Japanese pensioners and savers are being held hostage under the government’s poor financial stewardship and lack of fiduciary duty. In response, yamamoto and others argue that the return on the GPIF can be improved through diversification, in incremental steps away from JGB holdings over time, and by altering the mix of other assets presently held in the public pension funds. Foreign bonds now account for just 8% of the GPIF portfolio — a minute proportion compared with public pension funds elsewhere — while foreign stocks at 11% are also a relatively tiny piece of the total assets held. The remainder of the GPIF consists of domestic stocks. Before the portfolio can be restructured, though, the GPIF needs to be reformed, says Takatoshi Ito — a prominent academic and a former senior Ministry of Finance (MoF) official — as well as others who authored a recent report by the CEFP experts committee. As an “incorporated administrative agency,” the GPIF falls under strict restrictions regarding the scope of its management activities, and has no clearly defined fiduciary duty to the pension fund contributors whose interests the GPIF is intended to represent. As a result, the GPIF operates under a “complex and rigid” five-year plan regarding asset management, and is answerable to multiple government ministries and agencies.

Canada

France

Ireland

Fonds de Reserve National Pensions Canada Pension pour les Retraites Reserve Fund Plan (CPPIB) (NPRFC) (FRR) Approx. 260

35

10.4% 10.5% (FY2002–2006) (2004.6–2006.6)

84 (as of 2003 end) 6.8%

The CEFP experts committee proposed “radical reform” of the GPIF. The government, for example, would set a target on the management return to be realized by the new pension agency, but decisions on asset allocation and selection of external asset managers would be based entirely on the professional expertise of the GPIF. The committee said that independence, professionalism and transparency would be key concepts governing the reformed fund, and accountability to the public would be of paramount importance. The new pension agency could be an independent body, according to the committee, modeled along the lines of the Bank of Japan. The CEFP committee cautioned that the sheer size of the GPIF, as it stands at present, remains a barrier to any reform of its portfolio management. In this light, the GPIF should be “split into several funds [baby funds],” whose determined size allows for optimal efficient management in the future. An initial two baby funds — ¥10-20 trillion each — would compete with each other in a “transparent” manner; and after a number of years, more baby funds would be launched, each having its own management committee and selecting its own external asset managers. A former senior Japanese finance official who is now a senior executive with a leading U.S. investment bank in Tokyo told The Bank of TokyoMitsubishi UFJ, Ltd. that restructuring of the funds managed by the GPIF is essential. “These funds are too large to be more active” at present, he said. “They have to have a passive investment policy, [and] to buy index funds. otherwise, if they buy a particular stock, they can

September 2008 / ACCJ Journal / 27

MINISTRy oF HEALTH, LABoUR AND WELFARE AND WEBSITE oF EACH PUBLIC PENSIoN FUND

The new pension agency could be an independent body, according to the committee, modeled along the lines of the Bank of Japan.


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The Great Pension Waste

Each percentage point in additional return on Japan’s foreign exchange reserves is worth around $10 billion, or ¥1 trillion.

move it alone. Of course you can make the funds a smaller size and let them compete.” Private investment banks would be happy to cooperate in reform, he added. While there may be growing agreement on the feasibility and need for reform of Japan’s public pension funds and designating them as an SWF, the same cannot be said yet of the way in which the nation’s foreign exchange reserves are being handled. Granted, there are echoes of the debate about a need to avoid disturbing government bond holdings by reforming the management of the foreign exchange reserves, just as in the case of the pension funds. But, with these reserves, the holdings of U.S. Treasury bonds, rather than JGBs, are at issue. An undisclosed, yet major part of Japan’s foreign exchange reserves are in the form of dollars — more specifically, U.S. Treasury bonds — and Japan’s official SWF project team head Yamamoto says that the MoF is nervous about upsetting economic and diplomatic ties between Tokyo and Washington by any sudden, or significant diversification away from U.S. Treasury holdings. Some also argue that such moves might trigger a decline in the dollar or a rise in U.S. Treasury yields in a similar way that diversification of public pension fund reserves could spark a crash in the JGB market. Yamamoto also feels that using the approximately ¥3 trillion annual interest earned on the Forex reserves — which academic and former senior MoF official Ito and others would like to see — could cause problems in this regard. Furthermore, so long as the foreign exchange reserves continue to be classified as such, they need to be kept in liquid form, for use at short notice for market intervention. “We need to take time for deeper discussions with the MoF on using foreign reserves. It is a delicate issue,” he says. “I would first ask both the U.S. Treasury Secretary and the Japanese Finance Minister to amend agreements on foreign reserves [so as] to allow conditional use of income from the reserves.”

Japanese officials cite what they call the “unfortunate” incident in June 1997, when thenPrime Minister Ryutaro Hashimoto said in a speech in New York that Japan had sometimes been “tempted to sell” its large U.S. Treasury holdings. At the time, Japan was under heavy criticism from Washington over its large trade surplus with the United States, so the prime minister’s comments were seen as an intentional warning shot across the bows of the U.S. to ease up on the Japan bashing. The idea that U.S.-Japan relations could suffer if Japan decided to diversify its (mainly dollar-denominated) foreign exchange reserves through an SWF is rejected by Vail of Nikko Asset Management. “I think they should have done it a long time ago,” he says. “They can do it without damaging the relationship with the U.S., especially if they diversify dollar fixed-interest [holdings] into dollar equity, or into dollar strategic stakes in U.S. banks. “The U.S. Treasury can never say ‘don’t sell your Treasury bonds,’” he continues. “And the [U.S.] government as a whole would be quite okay [with the idea] for Japan to diversify out of two- or threeyear average Treasuries such as they have now.” Each percentage point in additional return on Japan’s foreign exchange reserves is worth around $10 billion, or ¥1 trillion, notes Vail. That improvement would reduce the need to raise taxes — the national consumption tax especially. And if Japan had formed an SWF from its foreign exchange reserves several years ago, the government would not even need to think about raising taxes now, he adds. “At the political levels, it seems like an incredible vote winner if you can say there’s no need to raise taxes. We’re going to get a better return on your money,” says Vail. “It is the people’s money after all.”

Anthony H. Rowley is Tokyo correspondent for the Singapore Business Times and field editor (Japan) of Oxford Analytica.

September 2008 / ACCJ Journal / 29


SoFTBANK MoBILE CoRP.

on the Spot

Tetsuzo Matsumoto Senior executive vice president, Softbank Mobile Corp.

S

oftbank introduced Apple’s iPhone 3G to Japan in early June, believing that the device will take mobile Internet access into a new era. Consumers first complained of shortages and costs, but the overwhelming feedback has been positive, especially since the data fee was slashed and queues shortened. But with a weakening economy and hungry competition, what does the future hold for the mobile communications industry?

APPLE

People were lining up to buy iPhones and stores were selling out, but now I see you have plenty in stock. Although they are not plentiful, we do have some in stock now. The first week was crazy. Many

30 / ACCJ Journal / September 2008

people had been waiting for the iPhone for a long time and the initial lot we received ran out very quickly. Why did you change the pricing system after the launch? The price of the handsets has not been changed, but on August 6 we slightly modified the structure of the data communication fee. In Japan, most heavy data users now sign up for a flat-fee program. As all iPhone users will inevitably be interested in its many data services, we initially made it a condition that any user has to sign up for the monthly flat fee of ¥5,985, which makes the total minimum communication cost ¥7,280 for one month. That is an amount that heavy data users will not care about, but housewives or students might. However, after seeing the reaction of consumers in the first couple of weeks after the launch, we came to the conclusion that we should expand the scope of our target customers. So we changed the initial flat rate to ¥1,695. After exceeding that amount, the charge increases depending on actual usage, until it reaches ¥5,985, which was the rate we originally set. This change has made the minimum communication cost for one month for any user ¥2,900. That’s

BIOGRAPHY

Tetsuzo Matsumoto Age: 69 Married: Since 1972, to Motoko Children: Masaki, 35, Hiroko, 32, Kenzo, 26 Languages: English, Japanese Hobbies: Travel, studying world history

not bad, is it? It is also true that we had some concerns over our network capacity because we were afraid the amount of traffic created might go crazy, but we are no longer worried. Comments by the chief executive officer of Softbank, Masayoshi Son, have underlined how impressed he is with the technology. Is the iPhone truly pushing changes in the way that Japanese do business and the lives of the public? Just as Mr. Son has always said, the “cellphone” is going to evolve into the “mobile Internet machine.” I think iPhone has made that vividly clear to many people. Japan’s economy is not strong at the moment; do you anticipate the mobile phone industry playing a part in boosting the national economy? Mr. Son is very unhappy with Japan’s current economic growth and he believes that the


By Julian Ryall / On the Spot

one big advantage of the iPhone is that the software is designed to continue to grow, which means that more features and applications can always be added according to each user’s needs. information technology sector here should be a driving force to change this situation. However, the present landscape is not bright. Japanese engineering skills in the components sector have contributed greatly to the success of the mobile phone business globally, but their contribution in the areas of overall communications technology, infrastructure systems and handsets has lagged behind European, American and other Asian companies. Why did 3G have faster market penetration in Japan than in Europe and the U.S.? I think there were three key reasons. Firstly, NTT DoCoMo had the guts to get into 3G before anyone else, even though there may have been no real economic justification; and, in fact, they struggled for the first couple of years. Secondly, KDDI did not blindly follow that lead, but imported a different new technology from the U.S., provoking a new level of competition. Thirdly, consumers reacted positively to the technological innovations that these communications carriers brought to market. There was no particular application that could be called the “killer application,” but the general quality of services — which are only possible with the existence of a high-speed network — has eventually made 3G indispensable. A typical example is the quality of the screen display. The QVGA

SNAPSHOT

Softbank Mobile Corp. Main Business: Mobile Communications Location: Higashi-shimbashi, Minato-ku, Tokyo Founded: April 1, 1994 Annual Revenue: ¥1,562,000 million Number of Employees: About 3,800

display, which was introduced around the time the 3G network was expanding, had an obvious attractiveness in comparison with its predecessor, the QCIF display. But as it requires more bits, it needed to be supported by the higher-speed transmission capabilities of 3G. Why did a Japanese company not invent the iPhone? My answer is very simple: There was no Steve Jobs in Japan. If you had asked me why Japanese companies make good motorbikes, my answer would have been because of Soichiro Honda. Are you concerned about competitors introducing cheaper but equally effective products? We welcome competition. There will be a lot of similar products and some users will prefer some of these products to ours. That’s quite normal and I don’t see any reason to be concerned about that. All we have to do is always try to make ours better and more reasonably priced. Some people have said the Japanese mobile phone market is already saturated and are

predicting a significant decline in new handset sales. If a mobile handset remains only a cellphone, that might be true. But if it’s evolving from a cellphone to an Internet gadget, that’s a different story. Mobile handsets are already a part of everybody’s life. That’s especially true for young people. They can’t survive without them. And young people are keen on all kinds of new Internet services. If you try to take the new Internet gadget away from your son or daughter, they will hate you forever! Mobile phones are constantly evolving; what is next? If someone says he knows all about what is coming next, he is wrong. only users know that, and every user has different needs and tastes. We need to always learn from [users] and constantly try to provide whatever they may need or love. one big advantage of the iPhone is that the software is designed to continue to grow, which means that more features and applications can always be added according to each user’s needs. We already have many new ideas; but the good news is that, while we are thinking, other people are also thinking. I am very optimistic for the future because the ideas will come one after the other to always keep us busy.

Julian Ryall is The Daily Telegraph’s Tokyo correspondent.

September 2008 / ACCJ Journal / 31


Luxe’s Different Tastes Affluent Asians’ love affair with luxury.

F

or centuries, luxury goods were the provenance of society’s elite, who would buy beautifully handcrafted products from predominantly family-owned businesses that met the highest standards of style and craftsmanship. Fast forward to May 2008 and the Grand Hyatt, Tokyo, where captains of luxury — from Moët Hennessy Louis Vuitton, to Tiffany & Co. — have gathered, creating a sea of Zegna suits, Prada shoes and the like, to discuss the challenges facing “new luxury.” Today, it’s a global market serving a much expanded customer base. “Business of Luxury” annual summits hosted by The Financial Times (FT) are usually in cities worthy of discussing the business at hand (e.g., 2009 in Monaco). Where else is more appropriate than Japan, whose legendary fascination with luxury goods translates into 94.3% of Japanese women in their twenties owning at least one Louis Vuitton bag, and where appreciation of quality and a willingness to pay handsomely for it is firmly imprinted on the national DNA? It becomes immediately clear at the FT summit that, while the love between Japan and luxury business has settled into a comfortable long-term

32 / ACCJ Journal / September 2008

relationship with steady sales, the latest love affair — with all its associated passion and excitement — lies with China and India, the rising stars of the luxe world. Asia alone contributes more than half of the $80 billion garnered by the luxury brand global industry, and is the world’s largest market for Western luxury brands, say Radha Chadha and Paul Husband, co-authors of The Cult of the Luxury Brand: Inside Asia’s Love Affair With Luxury. “Between the brand-obsessed Japanese on the one hand, and China and India’s rising new money on the other, the present and future of luxe lie squarely in Asia,” say the authors in their fascinating account of how brand awareness has developed amongst Asian consumers. The luxury industry is hoping that Chinese and Indian consumers follow a similar path as Japan, transforming itself from a frugal society to a mature luxe-loving market buying millions of expensive bags, shoes, watches and such along the way. China is the obvious favorite, thanks to the sheer numbers, a booming capital market, strong GDP growth and the emergence of a number of high-net-worth individuals keen to show off their economic success.


By Catherine Shaw / Luxe’s Different Tastes

Doing business in China is fraught with problems.

Unsure what’s stylish, young Shanghai show-offs buy posh brands for street credibility.

But some with experience in China caution that many of the country’s economic and social fundamentals are in stark contrast to Japan, even though the unbridled passion for brand names is seemingly similar. Japanese have a strong sense of style, an appreciation of quality — and although most luxe spending is by 20 to 35 year olds, the purchases are often bankrolled by wealthy parents and grandparents. In China, meanwhile, an emerging cash-rich middle class is wanting everything from designer clothes to mobile phones, but without a reference point for how to deal with the choices and how to spend the money. “In China, outside Shanghai it’s like starting with a blank slate, where there are no yardsticks for beauty and elegance, no standards for what is tasteful and what is not. Developing a sense of style after living in a visual vacuum for decades is very hard indeed,” say Chadha and Husband. Luxury brands are not complaining, after all, sales are their raison d’être; but many at the FT summit expressed concern about the dilution of luxury and the loss of exclusivity in what Fortune magazine calls the “age of McLuxury.” Many of China’s new

deep-pocketed consumers are very young — about 22% who are deemed “affluent” are under 30 years old, and 64% are under 47 — says Yuwa HedrickWong, author of Succeeding Like Success: The Affluent Consumers of Asia. Most Chinese people associate international brands with global success, say Chadha and Husband, who advise newcomers to the market to play to younger consumers firmly planted in the show-off stage (new money looking for status markers). They also say to maximize a brand’s profile through the use of logos (Chinese having a highly developed symbol memory), and to never dilute the “international aura” of the brand. “The real value resides in the brand name itself,” they say, “its connotations of prestige and luxury easily transferable.” Doing business in China is fraught with problems, warns Allison Pyrah, vice president of Operations for Swarovski Consumer Goods Business, Greater China. Pyrah famously steered the brand from a predominantly wholesale business to operating its own retail shops throughout the region. “It is still too early, too messy [in the China retail market], and you need to keep control,” she

September 2008 / ACCJ Journal / 33


Luxe’s Different Tastes

The power of the media in China is unsurpassed elsewhere, as editors serve as style leaders to the readers lacking a reference point of how to apply their new wealth. only to wrestle them back in recent years in an effort to preserve their brand integrity. Pierre Cardin, for example, is the industry model of how not to license; the name became associated with everything from clothing to frying pans, and its cachet was very quickly tarnished. Ermenegildo Zegna, on the other hand, shows how to do it the correct way in Asia. The Italian company is one of the most successful international brands in China, having established itself in 1991 as the first luxury men’s brand there. Its network of fully owned and franchised stores in over 60 countries reached consolidated sales of 843.4 million euro in 2007, taking the global lead in its category. “We started with shops in hotels [in China] providing a ‘business look’ for the new elite. We then moved to a shop in department stores, featuring a sportswear look with new wealth,” says CEo Ermenegildo Zegna. “Pioneers must take a risk like we did in China. “We learned that consistency is very important. Shops in China must be the same as overseas,” he says. “It’s also important to keep things simple and clear at first. once you’ve established your position, you can introduce new things.” Chinese consumers are fascinated by history and innovation, explains Swarovski’s Pyrah, whose company reaped considerable success from advertorials explaining the crystal designer’s heritage. The power of the media in China is unsurpassed elsewhere, as editors serve as style leaders to the readers lacking a reference point of how to apply their new wealth. “Good editorial is very important in China, where a magazine with a 50-million circulation has a real

Some luxe labels never lose their cachet.

cautions, recounting one experience where, after negotiating the perfect high-profile — and highrental — location in a Beijing department store, she returned unannounced to find the entire display dismantled and relocated to the basement. Many companies encountered the pitfalls of licensing (a device traditionally used to break into a new market), says Patrizio di Marco, president and CEo of Bottega Veneta, manufacturers of distinctive leather bags. “It is important to keep complete creative control when signing a license,” he says. “Some licensees have different products and timing to your core product.” This was a lesson first learned in Japan, where many foreign brands signed away licensing rights,

THE CuLT oF THE LuXurY BranD

Evolution of Asian Luxe Stage 1 Subjugation

Stage 2 Start of money

Stage 3 Show off

Stage 4 Fit in

Stage 5 Way of life JAPAN

HONG KONG / SINGAPORE TAIWAN / SOUTH KOREA CHINA INDIA

September 2008 / ACCJ Journal / 35


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Luxe’s Different Tastes

The big question is at what point does the mass penchant for a luxe label mean a loss of exclusivity … 

SNAPSHOT

Travel in Style Where once it was Japanese tourists whom New York City welcomed, the new wave of customers is from mainland China, providing a much-needed boost to a cooling economy. In 2007, Chinese travelers, on average, each spent $2,204 per visit to New York City, in contrast to $1,807 each, on average by some 283,000 visitors from Japan, according to NYC & Company, the city’s tourism and marketing bureau. Though there were only 160,000 visitors from China, a new agreement between China and the United States now permits travel agencies for the first time to offer packaged tours to New York and other American cities. Since previously business and government travelers were the ones being approved, the accord is likely to significantly increase the flow of Chinese visitors. Growth in the Chinese economy and the falling U.S. dollar — dropping 7% against the Chinese yuan last year — have made New York a buyer’s market to Chinese tourists, who have their eyes on luxury brands unavailable at home because of existing limited supply and import restrictions.

[greater] readership of around 150 million,” she says. “It gets passed around.” However, local contacts are critical to smooth the business process. China operates in a complex world of guanxi, a type of “gifting” used to iron out relationships. (Swarovski has appointed a Chinese director whose sole responsibility is in this regard.) Success in the business often depends on good relationships and knowing how the rules work, even if often made up along the way. It was guanxi that initially drove the luxury goods market in China, and today accounts for at least half of luxury sales. The extension of luxe from the elite to the mass market was not only due to an increase in disposable income among middle-class societies. Radha and Husband retrace the democratization of luxury to the 1990s, when European industry shed its family-business mindset and reinvented itself “as a lean, mean corporate machine with global retailing ambitions.” New measures included more affordable clothing and accessories (broadening the market for luxe consumers), improved distribution, a new “sexier” style and the “logofication” of the handbag. Cultural and fashion writer Dana Thomas points to the wildly popular Prada backpack made of black or brown parachute fabric with leather trimming and the Prada label as a marker of the shift to a

more accessible luxury — and the corporate growth and emergence of branding in the late 1980s. It is affordability that sets today’s luxury products apart from “old” or real luxury items, says Michael J. Silverstein, co-author of Trading up: Why Consumers Want new Luxury Goods and How Companies Create Them. old luxury still remains out of the financial reach of most people in society, but new luxury will do for now. So a handbag from Coach (new luxury) will suffice until a Hermès Kelly bag in alligator skin (old luxury) is within one’s budget. New luxury stays at a branded hotel, but old luxury heads straight for the discreet private check-in and butler unpacking service at exclusive classic hotels like the oriental Bangkok and Peninsula Hong Kong. Luxury companies also have democratized luxury by providing entrylevel teasers — sunglasses, wallets and key rings that feature the all-important logo as a statusdefiner — but at a much lower price than the topof-the-range bag. New luxury consumers keep coming back for more, eventually working their way up to the more expensive old-luxury items. “There is no such thing as a luxury object. It’s just an object with a luxury story attached to it,” declares James Twitchell, author of Living It up: our Love affair with Luxury. In effect, if people believe something is a luxury, they will select it and pay the premium. Industry leaders anticipate China and India to reflect the Japanese consumers’ willingness to spend a disproportionate amount of their income on luxury products, even if patently beyond their budget. The big question is at what point does the mass penchant for a luxe label mean a loss of exclusivity and an end to its cachet? There seems to be no end, should the staggering number of Louis Vuitton bags carried in omotesando be a fitting indicator. Many in the industry are confident that, for some brands, like the Louis Vuitton bag, it could be never-ending — as long as brand purity and integrity are maintained — pointing to the fact that it is easier to sell a second bag from the

September 2008 / ACCJ Journal / 37


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Luxe’s Different Tastes

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“They want brand information, and are looking for things that are personal and individual.” same brand, than a completely different new one. yet, several recent buying trends in Japan are making the leaders in the luxury market sit up and take note. The consumers’ increasing awareness of environmental issues and greater sense of individuality are already impacting some brands. According to Sung-soo Kim, chairperson of the Sunjoo Group (South Korea) and MCM Group (Germany), these social and personal issues will become very important as more women move from low-paying to middle-management jobs. There has also been a consumer shift in focus regarding values, to an increased awareness of corporate, environmental and social responsibility. “Asian women are no longer ducklings following one another in a line,” says Kim. “Women are looking for something more intelligent, more eco-friendly.” Kim Winser, oBE, president and CEo of the British luxury fashion brand, Aquascutum, agrees. “Consumers are more knowledgeable and discerning than before,” Winser says. “And this has led us to change our business plan accordingly.” Individualism is not just a trend, says Botega Veneta’s di Marco. “It is a structural change where Japanese consumers resist [to] all being the same. There is an evolution of tastes and needs. Loyalty

SNAPSHOT

New Money According to the 2008 Cap Gemini/Merrill Lynch 12th Annual World Wealth Report, the millionaire population growth in India and China is rapidly outpacing growth in the U.S. The March report shows the number of Indian billionaires jumped 47.2%, from 36 to 53, over the previous year. China had the second-fastest-growing millionaire population, which grew 20.3% over last year, to 415,000. The billionaire population grew even faster; Forbes’ annual list includes 42 Chinese billionaires, up from 20 the previous year.

is very important, as we look to generate repeat consumers over a lifetime.” older women in Japan are a new powerful consumer force, says Kazuhiro Saito, president of publisher Condé Nast, and president and editor of Vogue nippon. “The focus [of the luxe industry] may be on younger people, but [the] consumer profile is changing, with women in their forties wanting things, too,” Saito says. “They want brand information, and are looking for things that are personal and individual.” And what of the über rich? With their housekeeper toting the latest LV bag and their driver wearing Gucci loafers, the very definition of luxury for society’s elite has changed forever — with even greater emphasis on exclusivity. VIP rooms, private audiences with a master watchmaker, bespoke handmade shoes, limited edition handbags with discreet monograms, and pure-white leather travel trunks for the price of a small apartment. Luxury has not forgotten its original love. Should the global credit and stock markets descend into further turmoil, it will be these loyal über rich to whom they quickly will turn. But, in the meantime, they hold their breath and pray that the world’s unabashed love affair with luxury — new or old — continues. As they say, “Everything changes, but nothing changes.”

Catherine Shaw is a freelance writer based in Tokyo.

September 2008 / ACCJ Journal / 39


L

ast April, the Asian Development Bank (ADB) predicted Asiaâ&#x20AC;&#x2122;s growth rate would slow down from 8.7% in 2007 to 7.6% in 2008. A somewhat downward trend has been seen in many emerging economies in Asia, so we may have to make a downward adjustment for many economies in the region. On the other hand, China appears to be still growing quite rapidly, around 10%, and

India may be still growing around 8%, so general Asian Pacific growth is still very robust and fairly strong. Although the share of Asiaâ&#x20AC;&#x2122;s exports destined for the U.S. has declined, it still remains very significant. However, should the U.S. experience a prolonged slowdown, Asia would obviously be affected. A 1% reduction in U.S. growth translates into an approximate 0.5% in aggregate growth in Asia. Similarly, an escalation in the global financial instability that started with the subprime market crisis about a year ago would be worrisome. But it is the continued rising inflation, especially in energy and food prices, that is of highest concern at this moment. Many countries face a growing dilemma on monetary policy: How to gauge the right mix to control rising inflation, without excessively slowing economic growth. Raising rates may hamper domestic demand growth, precisely when it is needed most. Moreover, the rapid drop in U.S. interest rates has left several emerging Asian economies with large interest rate differentials. If Asian authorities raise rates to combat inflation, the wider

differential may attract volatile portfolio investments and fill asset price inflation, including the risk of a hard landing. But, the risk would be even greater if prices spiral out of control. Emerging Asian economies are highly vulnerable to surging oil prices, given their high dependency on oil imports and low energy efficiency. Signs of stress are emerging, including cost-rising inflation and fiscal strains in the countries where oil subsidies or energy price controls are still used. With the global economy slowing and oil subsidies phasing out, high oil prices could have a more visible impact on domestic consumption and growth in the region this year and in 2009. Facing this challenge requires global efforts to increase oil production and improve energy self-sufficiency. By the end of last year, food prices were roughly double the 2002 figure. Since then, they have almost skyrocketed. The World Bankâ&#x20AC;&#x2122;s food crisis index climbed 57% in the first quarter of 2008. These trends have contributed to sharp increases in inflation, which in May reached 7.7% in China and 7.8% in India, 8.9% in Thailand and 26% in Vietnam. And even Japan, long trying to break out of a deflationary trend, experienced a 1.3% increase in May. The explosion in food prices also increases the fiscal cost of food subsidies and the current Views expressed in the Opinion Leader column are those of the author and do not necessarily represent the views or policies of the ACCJ.

40 / ACCJ Journal / September 2008

illustration for the accj journal by darren thompson

Protect Poor Against Inflation


By Haruhiko Kuroda / Opinion Leader

account deficit in food-importing countries. This could become a very sensitive economic and social issue, as about one billion people in Asia spend at least 60% of their income on food. In the short run, we believe governments should strengthen safety nets for the poor. The ADB made available $500 million as immediate budgetary support for the hardest-hit countries in the Asian Pacific, for safety nets to protect the poor and vulnerable. Agricultural sector reforms and measures to increase productivity must be put in place soon to avoid a structural crisis. The ADB made available $1 billion for agricultural lending in 2008, and will raise the figure to over $2 billion in 2009, to make input supplies more reliable and increase agricultural outputs. Countries should also make efforts to free up trade and avoid protectionist policies. In the medium term, institutional capacities and governance should be improved, and investment should be increased to improve post-harvest facilities. Substantial investment is needed in the long run to build and upgrade infrastructure, improve agricultural technology, increase productivity and provide education in broader areas. The ADB is committed to assist Asian countries in all these areas, and also continue supporting the International Rice Research Institute and other institutes in the field of agriculture. Haruhiko Kuroda is
President of the Asian Development Bank.

貧困層をインフレから守れ アジア開発銀行(ADB)は今年4月、 アジア

めている。 世界経済の減速と石油補助金の段

の成長率が2007年の8.7%から2008年は

階的削減を背景に、 今年から来年にかけてア

7.6%に鈍化すると予測した。 多くの新興国に

ジアでは原油高が国内の消費や成長にはっ

やや下降傾向が見られるため、 アジア域内の

きりとした影響を及ぼす可能性がある。 そこ

多くの国々で下方修正が必要になる可能性

で原油増産やエネルギー自給率向上に向け

がある。一方、 中国は依然として10%前後の

た世界的な取り組みが必要である。

急成長、 インドも8%の成長を遂げており、 ア

 食糧価格は昨年末までに2002年の水準

ジア太平洋地域全体の成長率は引き続き好

からほぼ倍増し、 インフレの急加速にもつな

調で非常に力強い。 アジアの対米輸出シェア

がった。 また、食糧補助金の財政負担増、食

は減少しているが、依然としてその数字は高

糧輸入国の経常赤字拡大も引き起こしてい

い。 しかし、 米国の景気減速が長引けば、 アジ

る。所得に占める食費の割合が60%以上の

アに影響が及ぶことは明らかだ。 米国の成長

人はアジアにおよそ10億人にいるだけに、

率が1%落ちると、 アジア全体の成長率はお

経済的・社会的に深刻な問題に発展する恐

よそ0.5%落ちる。

れがある。

 同様に、1年前のサブプライム問題に端を

 短期的には、各国政府が貧困層のための

発した世界的な金融不安が悪化すれば厄

セーフティネットを強化すべきだ。 ADBでは、

介なことになる。 しかし目下最大の懸案事項

アジア太平洋地域で特に影響の大きい国を

は、 特に食糧や原油価格のインフレが続いて

対象に、 貧困層や弱者を守るため、 5億ドルの

いる点だ。多くの国が通貨政策に関してジレ

緊急財政支援を実施した。構造的な危機を

ンマを抱えている。過度に経済成長を鈍化さ

回避するため、 農業分野の生産力向上に向け

せることなくインフレ率上昇を抑えるという

た改革や対策を早急に実施しなければなら

サジ加減が難しいのだ。 利上げに踏み切れば

ない。ADBとしては、2008年に10億ドルの

内需拡大の妨げになりかねないが、 今こそま

農業支援融資を実施、 さらに2009年には融

さに内需拡大が必要な時なのだ。 しかも、米

資総額を20億ドルに引き上げる。 また、各国

国の大幅利下げを受けて、 アジア新興国の一

も貿易自由化や保護主義政策回避に向けて

部に大きな金利差が生じている。 アジア各国

努力する必要がある。 中期的には、 組織・制度

の当局がインフレ対策で利上げを実施すれ

的な能力やガバナンスを強化し、 収穫後施設

ば、 ますます金利差が拡大するため、 ボラティ

の改善のために投資を拡大すべきだ。 長期的

リティの高い投資を促し、資産インフレの高

にはインフラの整備・増強、 農業技術の向上、

進を招く恐れがある。 ハードランディングのリ

生産性向上、幅広い分野での教育実施に多

スクも否めない。

額の投資が必要である。 ADBは、 アジア諸国

 アジア新興国は原油の輸入依存度が高く、

の支援に全力を注ぐとともに、 国際稲研究所

エネルギー効率が低いため、 原油価格急騰の

など農業分野の研究機関の支援に引き続き

影響を受けやすい。 石油補助金やエネルギー

取り組む方針である。

価格統制が残る国々では、 インフレによるコス ト増、財政への負担といったひずみが表れ始

黒田東彦:アジア開発銀行 (ADB) 総裁

オピニオンリーダーに掲載されている意見はすべて著者個人の意見であり、 ACCJの意見や活動を代表するものではありません。

September 2008 / ACCJ Journal / 41


ACCJ Diamond Charity Ball This year’s event will aid fight against hunger, homelessness and human trafficking.

O

ne way the ACCJ gives back to the community is through the annual Charity Ball in December. Formerly called the Crystal Ball, this glitzy and glamorous affair became the ACCJ Charity Ball in 2003 — an annual gathering for ACCJ members and their guests that directly benefits worthy causes. The 2008 Diamond Charity Ball on Friday, December 5, at the Cerulean Tower Tokyu Hotel Ballroom signifies the ACCJ’s 60th Anniversary. The Charity Ball Committee, chaired by Barbara Hancock, works with the Community Service Advisory Council (CSAC) to help ACCJ philanthropy. The CSAC selects up to five Primary Charities every year to receive Charity Ball donations, but choosing recipients is very challenging as there are many good causes. Key requirements are

42 / ACCJ Journal / September 2008

that recipients be based in Japan and be small enough for the donation to be significant. Charity Ball funds have helped Tokyo’s homeless, children’s homes, children and families with serious illnesses, abused women, neglected children, the fight against breast cancer, camps for mentally and physically disadvantaged children, TELL (Tokyo English Life Line), food distribution, orphans, and the fight against human trafficking. There is no shortage of fundraising activities by expatriates in Japan. What makes the ACCJ Charity Ball so unique, however, is that only ticket sales fund the event, allowing cash and prize donations to go directly to the charities, without deducting expenses. Once the Charity Ball Committee’s annual target is reached, donations are distributed evenly among


By Jeffrey Shimamoto / ACCJ Diamond Charity Ball

Key requirements are that recipients be based in Japan and be small enough for the donation to be significant.

provides emergency groceries to needy individuals and families — the only such programs in Japan. It also delivers large volumes of food to more than 40 agencies each week in the Kanto area, distributes in the Nagoya and Kansai areas once a month, and five or six times a year as far away as Miyazaki, Kyushu. Second Harvest Japan — which also works closely with the ACCJ to promote and develop food banks in Japan — always welcomes volunteers to help hand out food.

the selected charities, with any excess going to the CSAC-administered ACCJ Community Service Fund and other worthy causes. A financial report is sent to ACCJ members each year. The ACCJ is pleased to announce this year’s recipients: Elizabeth Saunders Home Also celebrating its 60th Anniversary, it was established by the late Miki Sawada, granddaughter of yataro Iwasaki, founder of the Mitsubishi conglomerate, to help raise abandoned children of Japanese women and U.S. soldiers in Japan. Named after a longtime British resident in Japan who helped found the home with her life savings, it has since accommodated more than 2,000 children. About 100, aged between 2 and 18, currently live there, including those who cannot live with their parents due to abuse, neglect or their parents’ mental illness. Second Harvest Japan The first incorporated food bank here, Second Harvest Japan places donors’ unsold products into orphanages, welfare institutions, women’s shelters and groups aiding the homeless. In Fy2007, Second Harvest Japan helped donor companies — including many ACCJ members — save ¥35 million in disposal and return costs, while distributing goods worth more than ¥180 million to good causes. Second Harvest Japan delivers 500 hot meals on Saturdays to hungry recipients in Ueno Park and

Polaris Project This international NGo’s Tokyo office is working to eliminate human trafficking here by offering advocacy, a 24-hour multilingual hotline, a database and other victim services. The Polaris Project also works closely with agencies to strengthen their efforts to combat trafficking. Programs include Multilingual Direct Services, Victim outreach, Victim Support Services, Social Services Provider and Law Enforcement Training, Research Database and Alert System, Public Awareness Raising, and Advocacy — all supported by people who are concerned about humanitarian issues. ACCJ Homeless Fund Maintained by the CSAC for charities that focus on the homeless, the ACCJ Homeless Fund’s first scheme was the onigiri Project, and involved volunteers distributing rice balls to hundreds of homeless in areas such as Ueno Park and Shinjuku. The  SNAPSHOT  fund now supports Elizabeth Saunders Home deserving charities and Tel: 0463-61-0007 activities that go much Fax: 0463-61-7000 further — such as those E-mail: esh@ap.wakwak.com that offer the homeSecond Harvest Japan less free medical care www.secondharvestjapan.org and temporary shelter. Tel/Fax: 03-3838-3827 Jeffrey Shimamoto is Vice President, Head of Legal and Compliance, Lazard Japan Asset Management K.K.

E-mail: info@2hj.org volunteer@2hj.org The Polaris Project www.polarisproject.jp Tel: 050-3496-7615 E-mail: info@polarisproject.jp

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he greater presence of foreign investment in the real estate sector and the encouragement of westernstyle property management focusing on ROI have spurred urban revitalization to greater heights. According to the “White Paper on Land and Real Property (2007),” issued by the Ministry of Land, Infrastructure, Transport and Tourism (MLIT): “Japan’s land markets appear to have been structurally transforming into a market where market mechanisms appropriately work to price land assets according to their utility values. With the development of real estate-based financial products, it has become important to establish a stable flow of funds in the financial and real estate markets. “In the context of such structural changes to the land market, land demand has been increasing in regions that offer convenience and profitability,” the report says. “The expanding real estate securitization markets have helped invigorate investment focused on profitability in the real estate sector. Under such circumstances, land price hikes have shown remarkable growth in the three largest metropolitan regions and in major cities in other regions.” Within a relatively short time, urban development and construction has produced astronomical alterations to the Tokyo skyline, which includes multipurpose towers. The same MLIT White Paper notes, “In Fiscal Year 2005, newly constructed floor space of offices in Japan totaled 7.759 million square meters [83.518 million square feet], representing a decrease of 4.0% on the previous year.” Most critically, residents have responded. According to the Statistics Bureau of the Ministry of Internal Affairs and Communication, the “Current Population Estimates as of October 1, 2007” (two years following the last five-year census) indicate that the top-five prefectures are Tokyo, Kanagawa, Osaka, Aichi and Saitama, representing about 35.1% of the total population. While Tokyo, not surprisingly, had the largest population, it also enjoyed having 10.0% of the total population for the first time in 28 years and the highest rate of increase in population, to 12.758 million. In this context, the ACCJ and its member companies play a vital role in ensuring sensible urban growth, both commercial and residential. Three committees come to mind in regard to providing fora for discussion and effective instruments for advocacy endeavors. The ACCJ Architecture, Construction and Real Estate Committee (ACRE) designs and implements programs to facilitate networking opportunities within the committee

Urban Renewal More people and businesses coming to town. and among other committees that have similar interests. In particular, the committee expands the knowledge base of members by discussing general industry issues and specific situations at regular programs and closed committee meetings. Also, ACRE expands committee membership to include a broader spectrum of related industries, thereby improving networking, information sharing and learning opportunities for members. Furthermore, the committee identifies and supports advocacy issues that are of concern to the committee members. Most critically, the committee provides an interactive forum for U.S. and Japanese businesses and organizations that are involved in architecture, construction, engineering and real estaterelated industries, as well as for individuals who have an interest in these businesses and activities. ACRE functions as a proactive point of contact among member companies, U.S. and Japanese government agencies, and the Japanese business community. The ACCJ Environmental Committee works on various kinds of environmental issues, recognizing the increasing legal, as well as market-driven, imperatives to address environmental issues in all sectors of business. The ACCJ Information, Communications and Technology Committee supports and promotes the expansion and diversification of sales of high-tech goods and services by U.S. companies in Japan. Programs include guest speakers from government, leading technology companies and service providers. In addition, there is an active advocacy component addressing issues such as privacy, telecommunications tariffs, and international standards. The divisions of the committee are Telecommunications, Aerospace, e-Business and Healthcare IT. Such sustained coordination and consensus building can provide a solid foundation for Japan’s further urban redevelopment. David Umeda Senior Editor ACCJ Journal

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Serviced Offices CBRE Japan K.K. Tel: 03-5470-8800 www.officiajapan.com OFFICIA provides premium-grade serviced office accommodation in Central Tokyo. This tastefully appointed facility has the perfect balance of service, style and technology—setting the new benchmark for serviced offices in Japan. Businesses of all sizes will benefit from a workspace solution provided by OFFICIA. Each room is professionally fitted to cater to your unique business requirements, and a variety of office solutions with flexible terms are available immediately. • Meeting rooms and conference space available for client reservation • The latest in telecommunications and connectivity • A functional business center • Superior security systems Located in the recently completed Shiodome Building, conveniently located next to Daimon and Hamamatsucho Stations (JR Yamanote Line, Tokyo Monorail and Oedo Lines). The building is centrally located within the core business districts of Shiodome, Shimbashi and Hamamatsucho. With such an appreciation of detail and originality, we are sure to match your corporate image. To find out more about OFFICIA, visit www.officiajapan.com or contact CBRE Japan at 03-5470-8800.

Office Solutions & Furnishings Herman Miller Japan Ltd. Tel: 03-3444-7552 Fax: 03-3444-7580 www.hermanmiller.co.jp

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If you’re looking for a solution for your workplace problems, Herman Miller has the answer. We have been changing and enhancing office landscapes here through our consulting services, and by applying award-winning products such as the Aeron and Mirra Chairs, together with Abak Environments and Resolve furniture systems. With over 30 highly experienced staff, we serve both multinational and domestic companies who increasingly view the workplace as a resource to achieve their corporate goals. In response to the evolving work/lifestyles and the varied demands placed on people and facilities, workplaces need to enhance brands, support organizations and their employees. Herman Miller solutions aim to increase productivity and creativity of staff and teams, facilitate collaboration and maintain motivation. We have served an ever-increasing number of clients since we began doing business in Japan, and continue to consult and support those clients. Herman Miller helps create great places to work at and live in by researching, designing, manufacturing and distributing innovative interior solutions that support companies, organizations and individuals all over the world. Our corporate belief is that our business must be sustainable, so we recognize the importance of the environment to our business. Our products are developed on the cradle-to-cradle basis, maximizing the use of recycled materials.

Architecture, Engineering & Interior Design PAE Design & Facility Management Tel: 03-3436-0591 Fax: 03-3436-0889 E-mail: mweenick@paejapan.co.jp www.pae.co.jp Established in Tokyo in 1955, PAE Design & Facility Management has evolved into one of the most progressive providers of both

design and facility services in Japan. Although PAE provides the widest variety of value-added development, design and maintenance management services of any western firm operating in Japan, PAE is at its best when working side by side with our clients to help them manifest their brands and corporate philosophies into creative, inspiring built environments. Our success can be seen in the projects we’ve completed for leaders in IT, financial and legal services, luxury retail and high-end residential clients. With a clear focus on providing world-class design services, our team of award-winning designers are supported by experienced project managers, and in-house engineering and cost estimators to ensure that each of our projects deliver the highest level of value to our clients. And finally, PAE’s long-established ability to provide “cradle to cradle” design and operating solutions allows the firm to seamlessly support sustainable design solutions, whether LEED accredited, CASBEE based, or simple common sense energy-saving solutions that come from years of experience in designing and maintaining buildings in Japan.

Commercial Real Estate Services & Consulting Mitsubishi Estate Co., Ltd. Tel: 03-3287-5549 Fax: 03-3216-6161 http://office.mec.co.jp Mitsubishi Estate is Japan’s leading office building developer/owner that owns and manages over 30 office buildings in Tokyo’s central business district; Marunouchi, and a total of approximately 100 buildings in major cities of Japan. Marunouchi has been considered Japan’s most prestigious office location for over 100 years, and still enjoys such a reputation because of its proximity to Tokyo Station, the nation’s largest railway hub, and the


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Imperial Palace Gardens. The area possesses the advantage of being home to 10% of the companies listed on the First Section of the Tokyo Stock Exchange and an incomparable number of major multinational corporations Committed to further enhancing the value of Marunouchi, we are undertaking continuous redevelopment of the area. Starting with the Marunouchi Building, completed in 2002, 10 redevelopment projects (including seven already completed), such as the ShinMarunouchi Building that opened in May 2007, have been announced and more projects are currently being planned. Mitsubishi Estate is confident of fulfilling your office-space needs with a full lineup of high-quality office buildings located throughout the nation.

Office Relocation Services Asian Tigers Premier Worldwide Movers Co., Ltd. Tel: 03-6402-2371 Fax: 03-6402-2305 E-mail: sales@asiantigers-japan.com www.asiantigers-japan.com Moving can create all manner of expectations. But it’s the best Asian service that we admire. The politeness, the manner in which people tend to your every need, the caring attitude and accompanying comfort are, for us, the most important. Combine this with a decisive action-oriented team that allows you the freedom to make decisions and plan your move. All so that you can have a better experience wherever in the world you choose to go. At a recent celebration honoring the company’s 10th anniversary, Managing Director Nick Masee said, “After 10 years of hard work by a very dedicated and talented team of professionals supporting all of our activities and competing head to head with long established competitors, we are the market leader here in Tokyo.”

Our team members are masters at keeping everything under control. We can offer you services in English, French, German, Italian, Chinese, Japanese and Dutch in order to understand perfectly all your needs. We are able to provide you full services for all family members by extending special attention & care to your children and pets. Through our own Asian Tigers network and by our co-ownership with our OMNI network, we can take care of any move, to any destination in the world.

Window Solutions

Telecommunications

3M

Research In Motion Limited Tel: 03-5573-4610 Fax: 03-5573-8312 E-mail: rimj_sales@rim.com www.rim.com or www.blackberry.com Research In Motion Limited is a leading designer, manufacturer and marketer of innovative wireless solutions for the worldwide mobile communications market. Through the development of integrated hardware, software and services that support multiple wireless network standards, RIM provides platforms and solutions for seamless access to timesensitive information, including e-mail, phone, SMS messaging, Internet and intranet-based applications. RIM technology also enables a broad array of third-party developers and manufacturers to enhance their products and services with wireless connectivity to data. RIM’s portfolio of award-winning products, services and embedded technologies are used by thousands of organizations around the world and include the BlackBerry® Enterprise Solution, the BlackBerry® smartphone product line, software development tools and software/ hardware licensing agreements. The BlackBerry® Enterprise Solution is a complete, end-to-end and world-leading wireless solution offered by over 370 carriers and channels in 140 countries/regions. With 16 million subscribers worldwide (2009 Q1 result), it’s a trusted, reliable and mission-

critical solution for many enterprises. The BlackBerry® Internet Service is for individual customers, where up to 10 ISP accounts can be used on a single BlackBerry smartphone. Founded in 1984 and based in Waterloo, Ontario, RIM operates offices in North America, Europe and the Asia-Pacific region, as well as Japan.

Tel: 03-3709-8321 Fax: 03-3709-8765 E-mail: ecp.jp@mmm.com http://solutions.3m.com/ja_JP/WW/ Country/ 3M remains committed to innovation, creating new technologies and products that place us exactly where our customers need us. For more than 100 years, people around the world have looked to 3M for products and ideas that solve problems—and make their lives easier and better. With more than 55,000 products, 30-plus core technologies and leadership in major markets served worldwide, 3M develops ingenious solutions to meet your varying needs. 3M window films are a fade-resistant, energy-efficient security window technology for your home or office. This solar-control film is designed to offer fade protection for furniture, artwork, floors and window treatments. It also reduces up to 99% of the sun’s harmful ultraviolet rays, and provides increased comfort and energy savings. Most critically, it prevents injury by glass fragments from earthquakes, burglaries and other disasters—safety & security for your window. 3M products are simple to use, yet complex enough to help make the world healthier, safer and better. Every day, 3M people find new ways to make amazing things happen. This ingenuity and quality are found in the 3M brands of Scotch®, Post-it®, Scotchgard™, Thinsulate™, Scotch-Brite®, Filtrete™, Command™ and Nexcare™ that you’ve come to love and trust. Contact our Japan office at ecp.jp@mmm.com

September 2008 / ACCJ Journal / 47


Nikko’s Autumn Glory

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n the spiritual stillness of Tochigi Prefecture’s wilderness creaks the essence of erstwhile Japan. Sculptural trees and moss-covered statues make Nikko a storybook setting of a bygone era — the early-17th century to be exact. That’s when the grandson of Shogun Tokugawa Ieyasu rebuilt a simple shrine honoring his grandfather, the final unifier of Japan. The grandiose Tosho-gu Shrine ever since has been the arresting jewel in Nikko’s crown. Nikko, which means sunlight in Japanese, lives up to its name year round. There’s no untimely season to visit this popular daytrip from Tokyo, but there is a timely one — autumn. Come early November, a blazing backdrop matches the beauty of Nikko’s architecture. Peak koyo season features flaming trees and bushes landscaped around red-lacquered shrines and burgundy temples. The sun warmed my hands one crisp morning visit. Underneath a blue and white patchwork sky, leaves radiated red, yellow, orange and green. Like theater spotlights, bursts of sunshine illuminated the fall season in its most colorful moment, sharing a stage with World Heritage Sites.

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One of the most photographed is Shin-kyo Bridge, which elegantly spans the Daiya River. This sacred vermillion bridge marks the gateway to Nikko’s shrines and temples. Legend has it that snakes divinely appeared here to enable priest Shodo Shonin, founder of Buddhism in Nikko, to cross the river. Walking north from Shin-kyo, Rinno-ji is the first temple to greet visitors. Its salient Three Buddha Hall is Nikko’s biggest building, housing three gilded Buddha statues. Leaving Rinno-ji through the west gate, a wide path leads to Tosho-gu. On the way, a Five-Storied Pagoda pierces the canopy of cedars. Zodiac images adorn this colorful 36m-high structure that was engineered with prescience in 1819 as being able to withstand earthquakes. A stone torii marks the entrance to the lavish precincts of Tosho-gu. With more than a dozen buildings drawing upon Shinto, Buddhist and Chinese designs, the mausoleum is monumental in size, yet meticulous in detail. Be prepared to spend time in line admiring the woodcarvings, notably the


By Jeffrey Tanenhaus / Classic Journeys

beloved monkeys above the Sacred Stables. These wise primates depict the “hear no evil, speak no evil, see no evil” moral tenet of Tendai Buddhism familiar to Japanese of all ages. More intricate craftsmanship is on display at yomei-mon (or Higurashino-mon). The Chineseinfluenced Gate of Sunlight (or Twilight) is dually named because viewers could spend all day admiring its 500 carvings of animals and spiritual creatures. West of Tosho-gu stands Taiyuin-Byo. Towering cedars filter sunlight and shield this impeccably designed complex from too many visitors. Here lies the tomb of Tokugawa Iemitsu, the third Tokugawa Shogun who commissioned Tosho-gu for his grandfather Ieyasu. Although intentionally more modest than Tosho-gu, Taiyuin-Byo is just as impressive. Wind down a day of temple-hopping with a walk parallel to the small rapids of the Daiya River. A leisurely path along the Kanman-ga-fuchi abyss passes through a stone park lined with some 70 weathered statues of Jizo, the guardian deity of children and travelers. other trails in Nikko National Park reward even the casual hiker. The road from Nikko snakes up 30 switchbacks to Lake Chuzenji, one of Japan’s highest lakes with a touristy onsen hot springs. Steps from Chuzenji’s bus stop is Kegon-no-taki, the best known of the area’s 48 waterfalls that plummets 97m to a misty meeting with earth. Follow the lake’s north shore (or hop on a bus) to Ryuzu Falls, where vibrant thickets frame silky white rapids gliding over a natural staircase of boulders. Farther north is spectacular Senjogahara, a marshy plateau of golden grass populated with wild birds. Hiking trails cut through open fields and forests of Japanese elm, birch and crabapple trees. Sacred volcano Mt. Nantai presides over the plateau from a distance. Low-hanging clouds shrouding mountainsides add to the magical feeling of walking through a landscape from the pages of national Geographic. High elevation causes leaves here to turn in early- to mid-october, weeks before than in Nikko, which the foliage faithful could save for a

PHoToS JEFFREy TANENHAUS

There’s no untimely season to visit this popular daytrip from Tokyo, but there is a timely one — autumn.

Kegon-no-taki, a standout among Nikko’s 48 falls.

follow-up viewing. For color-changing updates in English, try contacting the Japan National Tourist organization’s information center in Tokyo at 03-3201-3331. Getting there The most direct and least expensive route to Nikko from Tokyo begins at Tobu Asakusa Station. Limited express trains arrive at Tobu Nikko Station about two hours later after a transfer at Shimo-Imaichi (¥2,720). Each hour, a few buses to Lake Chuzenji depart from Nikko Station (¥1,100, 50 min). Tobu Railways’ Marugoto Nikko Free Pass (¥4,400) includes round-trip rapid train service from Tokyo and unlimited travel on NikkoChuzenji buses over four consecutive days. Jeffrey Tanenhaus is a freelance writer and photographer based in Buenos Aires.

Nikko

TOKYO

September 2008 / ACCJ Journal / 49


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fulfilling life overseas has many components, with no single satisfying aspect compensating for a lack of other essentials. Who among us can say that a great working environment, for example, should make up for the non-working spouse feeling isolated in the community? Or, the thrill of traveling in Asia can balance the equation when school life is mainly a reminder of what the kids miss back home? Japan certainly has come a long way since the early 1980s, when this writer recalls a pamphlet for Yokohama’s Motomachi/Minato-mieru-oka-koen suggesting that a major draw are the foreigners whom Japanese will encounter for a priceless photo op. One of the major impetuses for change (for the better) has been the long-standing foreign enterprises that make living (and moving here) effortless— and rewarding. Even government agencies have promoted their multilingual services that answer daily-life questions, such as residences and apartments, garbage and recycling, taxes and pensions, insurance and hospitalization, weather and natural disasters, transportation and travel, banking and mailing, working and volunteering — not to mention leisure activities and seasonal customs not to be missed. The ACCJ, for its part, has a number of committees that touch upon the quality of life (QOL) and services while residing in Japan. Most crucially, opening up the markets includes how to improve what is available here for both Japanese citizens and foreigners — in effect, impacting positively the QOL in urban areas with a high concentration of foreigners. The ACCJ Banking & Finance Committee, among other matters, recommends and facilitates changes in the financial markets in Japan that will enable new products and services, open new distribution channels, promote enhanced efficiency and risk management, increase regulatory transparency and fairness, and protect consumers of financial products and services from questionable market practices The ACCJ Healthcare Services Subcommittee aims to bring together companies with an interest in expanding the healthcare services industry in Japan, promote greater value in the Japanese medical system via the increased productivity and efficiencies offered by member companies,

Making It Easy Experts provide services and improvements. and aim to bring market forces to bear on solutions to emerging healthcare reform. It also seeks to facilitate the availability of choice to users of the Japanese medical system. The aims of the ACCJ Medical Devices & Diagnostics Subcommittee include to improve the welfare of Japanese patients through the adoption of advanced medical technologies, to work closely with the Ministry of Health, Labour and Welfare to encourage further deregulation and promote adequate reimbursement, cooperating with domestic industrial associations and other healthcare bodies. Also, the committee tries to convey the value of medical technologies to the public through a Public Awareness Campaign, patients advocacy programs, and through the Diet and policymakers. The ACCJ Travel Industry Committee promotes travelrelated businesses and provides networking opportunities and educational programs for members. Active participants include representatives from hotels, airlines, resorts, agencies, tourism offices and other travel-related industries. The ACCJ Insurance Committee focuses on the development of the insurance and insurance-related industries in Japan. It provides input to the Japanese and U.S. governments with regard to the impact of regulatory measures by the Government of Japan on U.S. insurance and insurance-related companies operating in Japan. Individuals and families seek the comforts of life while residing overseas. And nothing short of hard work by public and private entities — including organizations such as the ACCJ — maintain and upgrade the quality of life for all concerned. David Umeda Senior Editor ACCJ Journal

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Apartment Hotels Sakura House Co., Ltd. Tel: 03-5330-5250 Fax: 03-5330-5251 E-mail: info@sakura-house.com www.sakura-house.com Sakura group is one of the pioneers in budget accommodations for the foreign community in Tokyo, from daily to monthly or yearly stays. If longer than a month, visit www.sakura-house. com and search for your home among 183 locations throughout Tokyo, Kanagawa and Saitama. We offer four types of accommodations: selfcontained private apartment; guesthouse with common kitchen, living room and bathroom with other tenants; 2-3 people share a room; and dormitory beds. All rooms are furnished and can be rented for one month or more without agent fee, key money or a guarantor. Rents include utilities, and are also payable by VISA/ MasterCard. Most rooms have a free Internet line. Our Shinjuku office is open seven days a week. If you are looking for daily accommodations, friendly staff at Sakura Hotel welcome you at Kanda-Jimbocho, or at recently opened branches in Ikebukuro and Hatagaya. No matter the purpose of your stay, three Sakura Hotels are conveniently located to help you explore Tokyo. Visit www.sakura-hotel.co.jp, or call 03-3261-3939 for reservations. Our over-160-bed Sakura Hostel in Asakusa is ideal for a single traveler or a group of 100; friendly staff help plan your trip and include you in fun events and parties. For reservations, visit www.sakura-hostel.co.jp, or call 03-3847-8111.

Hotels & Resorts The Pacific Islands Club Tel: 03-3436-0777 (for inquiries/ reservations) E-mail: reservations@picsaipan.com www.picresorts.com The Pacific Islands Club (PIC) is the ultimate family resort in Guam and Saipan. We boast an all-inclusive facilities concept where guests can

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enjoy over 40 (Saipan)/70 (Guam) different sports and recreational activities at no additional cost. PIC has by far the best and most exciting water attractions. At PIC-Guam: our “Swim-thru Aquarium,” waterslides and various games at seven different pools. At PIC-Saipan: our “Point Break Wave Machine,” where you ride a perpetual wave machine and rage down one of two 20m waterslides. For PIC’s younger guests ages 4 to 12, a daily activities program is available by enrolling in our Kids’ Club, where your children can experience a unique international environment created by our Clubmates. Both Guam and Saipan have recently built the Siheky Splash Pools for our youngest guests. PIC takes pride in our friendly, seasoned staff who make your stay pleasurable, exciting and educational. When it comes to comfortable accommodations, as well as excellent choice of restaurants, PIC makes guests feel welcomed. Whatever you do, PIC has it all for your next holiday.

Media The Daily Yomiuri Tel: 0120-4311-59 (toll-free) 03-3216-8866 Fax: 03-3216-4145 www.yomiuri.co.jp/dy The Daily Yomiuri, Japan’s No. 1 Englishlanguage newspaper in terms of ABC-audited home-delivery circulation, provides a nationwide international readership with a broad range of domestic news stories, features, analyses and commentaries as the Englishlanguage medium of Japan’s leading vernacular newspaper, the Yomiuri Shimbun. The Daily Yomiuri also runs up-to-date information from abroad. In addition to international news agencies, we have access to a number of influential newspapers and magazines in Asia, Europe and North America. We enjoy partnerships with The Washington Post, Los Angeles Times, Chicago Tribune and The Times, as well as all leading English-language newspapers in Asia via the Asia News Network. In addition, The Daily Yomiuri provides extensive reporting on weekend entertainment and Japanese subculture.

A readership survey shows that nearly 70% of non-Japanese readers have lived in Japan for more than five years, proving that The Daily Yomiuri is a daily must for the majority of the non-Japanese community in Japan.

Real Estate Services & Consulting Kimita Estate Plan Co., Ltd. Tel: 03-5770-4649 Fax: 03-5770-4650 E-mail: info@kimita.co.jp www.kimita.co.jp/e Since our establishment 10 years ago, Kimita Estate Plan has been offering extensive property listings. From the beginning, we have committed ourselves to interact with our customers with an attitude that’s 100% genuine and sincere. Whether it is in buying, selling, renting or investing, we always strive to provide better service and consider customer satisfaction a primary source of joy. Why not own your own home! We have good working relationships with Japanese banks and mortgage companies. Please feel free to contact us for the latest information on the best properties for rent or sale in the Greater Tokyo area, or visit our Web site for the latest property recommendations.

Serviced Apartments Fraser Place howff Shinjuku, Tokyo Tel: 03-5925-3111, 03-5925-3831 (DID) Fax: 03-5925-3555 E-mail: Kelly.wong@frasershospitality.com http://www.frasershospitality.com Introducing its first Gold-Standard fullyserviced apartments in Japan, Fraser Place opened its East Tower with 175 units on March 1, 2008. The chic & contemporary apartments are fully-equipped and an ideal choice for extended-stay or relocation including business or leisure travelers on short or daily stays. The East Tower highlights a limited inventory of


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designer-styled apartments including duplex and triplex types. On June 1, 2008, Fraser Place howff Shinjuku, Tokyo opened a further 209 units in its West Tower. With a total inventory of 384 units, Fraser Place is one of Tokyo’s largest international serviced apartments. Located within easy walking distance of Shinjuku’s business area, it is conveniently located while being away from the main hustle and bustle of Shinjuku’s business district, providing an ideal balance between work and life’s little pleasures for discerning people. A 3-minute walk to Okubo Station and 15 minutes to Shinjuku Station, one of Tokyo’s main transportation hubs, enables quick and easy access. Facilities include a gymnasium, Residents Café/Lounge with daily complimentary continental breakfast and Internet stations for complimentary Internet access. The West Tower offers additional features with a Kids Area and meeting rooms to meet the varying needs of every resident.

MORI LIVING (Mori Building Co., Ltd.) Tel: 0120-52-2481 E-mail: residence@mori.co.jp www.moriliving.com Mori Building Co., Ltd. prides itself on its long experience in Tokyo, where the firm operates 14 residences, including four serviced apartment properties. Most are located in Minato Ward. Included among them are Tokyo landmarks Roppongi Hills and Omotesando Hills. Mori Building residences and apartments are marketed under the MORI LIVING brand, which, say company spokesmen, stands for the highest standard of living in Tokyo. MORI LIVING residences are typically surrounded by greenery, and the highest levels of earthquake resistance are combined with state-of-the-art security systems to ensure resident peace of mind. Mori Building takes special pride in its residents from all around the world, and in staff who offer the highest standard of skills and hospitality. A MORI LIVING neighborhood is “a city within a city,” with residences, workplaces, schools, entertainment, shopping, recreation

and dining facilities all within easy walking distance. The community includes prominent business and opinion leaders. The friendships you make, and the new ideas and possibilities you encounter are the MORI LIVING experience you are likely to treasure the most. MORI LIVING, Bringing new ideas to life in Tokyo.

Oakwood – Tokyo Tel: 03-5338-3131 Fax: 03-5338-3130 www.oakwood.com Oakwood Worldwide is the global leader and most trusted provider of serviced apartments, with nearly 30,000 distinctive residences in the most desired locations throughout Asia, North America and Europe. Featuring an expansive portfolio of award-winning, luxurious residences virtually everywhere, Oakwood offers a full spectrum of housing solutions to meet the varying needs of today’s personal and business travelers, delivered with a consistently rich standard of quality, reliability and value. Our focus and commitment to customer service makes us easy to do business with to fulfill your temporary housing needs. A division of Oakwood Worldwide, Oakwood Asia Pacific manages Asia’s finest serviced apartments for business and leisure travelers in China, India, Japan, South Korea and Thailand. An additional 19 properties are scheduled to open within the next two years in strategic locations across Asia Pacific. Oakwood Asia Pacific operates properties under the following brands: Oakwood Premier, Oakwood Residence, Oakwood Apartments. And, coming soon, will be Oakwood Premier Resorts and Oakwood Resorts.

Space Design Inc. Tel: 0120-710-677 (toll free) www.space-d.co.jp/en/ Space Design Inc. is proud to serve many of the global visitors to Tokyo and Yokohama via our Bureau and B-site Serviced Apartments. Space Design follows a strict 4 “F” policy to respond Flexibly, Fast, Fairly and in a Friendly way to

the requirements of our guests. Each of our 17 buildings (total of 1,400 units) is perfectly appointed with high-speed Internet connection, 33-channel cable TV with many English channels, 24-hr toll-free hotline “virtual concierge” service, in-suite washer/dryers, full kitchenette and appliances, housekeeping/linen service and much more. Locations are within 10-minutes’ walking distance of central Tokyo stations and each building is less than six years old. Utilities and services are included in the rent, and there is no surcharge, consumption tax or service fee. With a wide range of pricings and locations, we are sure we can offer the best alternative to extended hotel stays in Tokyo and Yokohama.

Wealth Building The National Australia Bank

150 Years New!

Expat Yen Loans Build Financial Security Borrowing in yen, at low interest rates, to fund property investments here in Japan or overseas is a definite winner. All you need are enough funds to put down the deposit. The cash flow from your salary can make up the difference between the property’s rental income and the payments for the loan. In some markets, the property could be cash flow positive, in which case the tenants are paying the loan off for you! If you are buying here in Japan, you can convert your current rent into ownership of your own place. You may choose to live in it, rent it out for many years, or sell it in the near future and benefit from capital growth. In Japan, seeing your property maintain or increase its value is particularly dependent on which type (apartment, house or vacant land) and, of course, on the age and location of the property. The National Australia Bank, celebrating its 150th year, is the leader in Japan in providing yen loans for property purchases in Japan, the UK, Australia and New Zealand. For the details on how to make your time in Japan work for you, call “Mr. Real Estate” Richard Henderson at 3241-8923, or e-mail to MrRealEstate@ nabasia.com

September 2008 / ACCJ Journal / 53


Science, Technology and Inventions / By Julian Ryall

Ultimate Incinerator

H

ouseholds and companies across Japan produce millions of tons in waste material annually. Regulations on the disposal of trash have been tightened in recent years, largely out of concern for the amount of harmful by-products being released into our atmosphere — from PCBs and heavy metals, to carcinogenic dioxin. The nation’s waste landfills are unable to keep up with demand, and existing incinerators cannot completely screen out dangerous residues and gases before they are vented. A new incinerator designed by Dr. Hideo Katayama will solve all those problems by returning anything inside the burn chamber to its elemental components. “I don’t have the words to explain just how big a problem Japan is facing with trash,” says Katayama, 77. “One of the biggest problems is asbestos because there is no way to treat that material. My furnace is the only one that will be able to render such material safe for humans.” Asbestos has been a popular construction material since the late-19th century because it was relatively pliable, light and heat resistant. It was not until the 1930s that the potential dangers inherent in inhaling the tiny fibers were recognized, and it was much later before production was scaled down. “The fibers are like needles in a person’s lungs, but this machine’s

54 / ACCJ Journal / September 2008

melting process reduces them to tiny pebbles that are not harmful to people,” says Katayama, who was commissioned by then-Environment Minister Yuriko Koike in 2006 to write a report on asbestos, which has since been adopted as the government’s official position. Head of the ship-testing headquarters of the U.S. Navy at Yokosuka for 20 years from 1974, he has lectured at universities in the U.S. and Brazil, and holds a number of patents. He places high hopes on his Electric-Resistant Type Melting Furnace. “Other incinerators burn waste at a temperature of 800ºC, but that temperature will not dissipate dioxins,” he says. “My furnace burns at a minimum temperature of 1,500ºC and as high as 1,800ºC. But more important than the temperature is the fact that it burns at the same high heat throughout the chamber, meaning all the waste is treated equally.” Heated to that temperature, asbestos is reduced to tiny, harmless nuggets and a gas that is sucked out of the burning chamber and undergoes a filtration process. If contaminants (CO2 or dioxin) are still detected, the gas goes through another sprinkler and second filtration. This is repeated until acceptable levels are reached for the gas to be vented. The furnace is rectangular, instead of round in shape, enabling it to better maintain the balance between the high

Dr, Hideo Katayama: making asbestos harmless.

temperature and the electrical current by using electrodes that move horizontally within the chamber, instead of vertically. A pilot model built seven years ago was able to reduce one ton of household trash within a day; larger, commercial-use versions will be able to dispose of far larger amounts. It is not able elementally to reduce only high-level nuclear and radioactive waste. He estimates that $800,000 has been invested in the project, and a new demonstration furnace is scheduled for the year’s end to show potential customers its value. “We expect municipalities and large corporations to buy the system, and we have had lots of expressions of interest already, although they have so far been reluctant to build one because they are waiting for someone else to make one operational so they can actually see it in action,” he says. “That’s not really a surprise, I guess, because it is hard to believe what this incinerator actually does. As soon as one is operational, I think we will have trouble keeping up with demand.” Julian Ryall is The Daily Telegraph’s Tokyo correspondent.


By Nicole Fall / FDI Portfolio

Luxury Brands Discount Salvatore Ferragamo Italia Spa hopes to kick-start stagnant sales in Japan by cutting retail prices of some pre-fall and fall-winter items by an average of 10%. According to a report in fashion newspaper WWD, Michele Norsa, CEO at Ferragamo, says that the company’s first-quarter sales in Japan were basically flat. He adds that Ferragamo may drop prices in the pre-spring selling season, too. “When the market is not easy, I think you should try to generate more traffic, attract more customers,” says Norsa. What is unique about this move is that luxury brands rarely disclose any form of discounting, but there are signs that this way of thinking is rapidly changing as the Japanese market stagnates and the strength of the euro makes European goods more expensive for shoppers here. The same report adds that Gucci has lowered retail prices in Japan in some categories and that

Louis Vuitton has acknowledged courting customers with its less expensive range of Neverfull tote bags, but says it does not plan markdowns. Japan is Ferragamo’s second-largest market after the U.S., generating about 20% of its annual sales. In 2007, Ferragamo’s consolidated sales rose 6.5%, to 687.4 million euros. Ferragamo plans to keep its Japanese prices stable for pre-spring, but “may have some space for further reductions,” Norsa says, explaining that the Japanese market is profitable, so the company can afford to offer discounts. Bargain hunters should look for five styles of ladies’ handbags, women’s shoes and men’s shoes that have been marked down. For example, a women’s tote bag will be marked down 11.8%, to ¥75,000 ($711), from an original price tag of ¥85,000 ($806).

G’bye Flights Qantas Airways Limited ABN has announced changes to its international services, and cited Japan and Southeast Asia as the most affected markets. CEO Geoff Dixon says the changes include market exits, capacity cuts, and the replacement of Qantas services with lower-cost budget carrier

Jetstar on a number of routes. According to Dixon, the cost of fuel has changed the way the group has to do business over the next two years. “The Japan-Far North Queensland market has been particularly difficult for Qantas for a number of years,” he says. “At current fuel prices, the group would lose more than $100 million operating to Japan under our existing schedule.” Inbound tourism to Australia will be affected

by the scheduled changes that include the withdrawal of Qantas’ thrice-weekly Melbourne-Tokyo return services, a reduction in Qantas’ Sydney-Tokyo return services from nine to seven—both starting September—and the replacement of Qantas’ 14 weekly Cairns-Tokyo services with a daily Jetstar service from December, among other changes. Dixon adds that, as a consequence of international scheduled changes, there would be a number of job losses in Cairns and Japan.

September 2008 / ACCJ Journal / 55


Brand Design Design companies Desgrippes and Laga have merged to launch Brandimage, a global brand design firm to leverage the rise of design over advertising as a key tool for building brands. The merger, which took place in June, will see Brandimage provide holistic services—from brand strategy, through to industrial design, graphics and retail experience, among other services.

Formed from the combination of Laga, one of America’s top design and innovation firms, and Desgrippes Gobé, a global brand design firm, the new entity will have billings of $60 million and 300 employees in three regions of the world: Asia, Europe and the U.S.—with offices in New York, Chicago, Cincinnati, Paris, Brussels, Tokyo, Seoul, Hong Kong and Shanghai. The Tokyo office of Brandimage will be headed by Hide Morioka (pictured), former representative of Desgrippes Gobé. Clients represent a variety of industries, such as packaged consumer goods, luxury brands, health & beauty, retail, finance, technology, sports, entertainment and tourism. Companies include Air France, Banana Republic and Toto.

Business Intelligence Networking If you’re in need of business intelligence and a forum to meet fellow professionals, signing up for Marcus Evans’ local events could be a smart move. As a specialist in major sectorfocused events, professional training products and businessto-business Internet marketplaces, Marcus Evans operates in 24 countries around the world. It has over 3,500 employees and generates revenue from a client list that includes 95% of the world’s top companies. Upcoming events this month

56 / ACCJ Journal / September 2008

include “Buyout & Leveraged Financing Japan 2008,” held September 10-11 at the Hyatt Regency Tokyo. It is designed to explore the market trends and business drivers that enhance the role of leveraged funds in the sophisticated buyouts and M&A markets. Not your field? Then try “Transformative NGN,” which suggests capitalizing on what you can do on next-generation networks in a ubiquitous era. This telecommunicationsfocused event will be held September 3-4 in Tokyo, and will

also include case studies from both domestic and international companies to cover next-generation business service internal/ external structure, including IPTV (Internet Protocol TV) and WiMAX (regarding broadband wireless access). Their conferences in Japan routinely attract 50-70 delegates, according to Esther Wong, marketing assistant at Marcus Evans in Hong Kong. “In Japan, marketing events are growing. In general, automotive- and marketing-related events attract the biggest interest.”


FDI Portfolio

Barneys in Kobe Barneys Japan is set to launch a Barneys New York store in Kobe in spring 2010, a move that will cement the retailer’s renewed expansion plans. The 8,361-square-meter outlet will occupy the first three floors of a hotel building in one of Kobe’s most upscale shopping streets. First-year sales are projected to be ¥3 billion. The new store in the Kansai port city will be Japan’s fourth Barneys New York, joining the specialist department store’s branches in Tokyo (the Ginza

and Shinjuku) and Yokohama. Barneys Japan is also planning to open smaller doors in Nagoya, Fukuoka, Osaka, as well as more in Tokyo. The retailer also

aims to experiment in outlets/ e-commerce, a first for the upscale brand in Japan. The Kobe store launch is the first expansion move for Barneys Japan since Sumitomo Corporation and TOKIO MARINE Capital Co., Ltd. bought the retailer from then-Isetan Company Limited in 2006, ending a long and bitter relationship between Isetan and Barneys New York, which, at that time, was owned by Jones Apparel Group, Inc., but is now owned by Dubai’s Istithmar PJSC.

Choo Ginza Flagship Luxury accessories brand Jimmy Choo has launched a flagship store in the Ginza, marking its fourth door in Tokyo. The store, which opened on July 26, has 165 square meters of retail space located over two floors and features a ground floor showcasing its handbag and small leather-goods collections, along with the complete Jimmy Choo sunglasses range. Its second floor is a salon-style environment, showcasing the most complete collection

of Jimmy Choo shoes in Japan, the product best known among fans of the brand. The store’s interior follows their global store design concept, evocative of a 1940s boutique. “I want it to feel as though you are walking into a lady’s dressing room, a woman’s boudoir,” says President and Founder Tamara Mellon. Jimmy Choo shoes were regularly name-checked on TV’s “Sex and the City” series, and the British brand developed a cult-like following among women wanting sky-high heels (with equally skyhigh prices).

Contact Nicole Fall at nicole@fivebyfifty.com if you have ideas for this column.

September 2008 / ACCJ Journal / 57


The Middle Man Bringing people together for business.

“H

ow can I help you?” asks Andrew Shuttleworth’s business card. CVP, a twoman operation, stands for “Customers, Vendors, People.” Shuttleworth’s title is neither president nor principal, but rather connector. That’s because he helps companies find good-quality vendors when they need outsourcing and related services. “Business matchmaking,” he says. This native of Blackburn in England’s Lancashire had been working in Japan for nine years, building up friendships and relationships along the way. When he launched his service in 2006, much of his business was with people he knew. As the CVP brand has grown, a lot of people and companies come to him and say, “OK, I want to be a CVP vendor.” Also, new companies doing interesting things may get some press; and after seeing the articles, Shuttleworth will try to meet the company president. “They’re all personal relationships; it’s not like I search the Yellow Pages,” he says. The fields in which Shuttleworth endeavors include design, property, training, IT and consulting. A car manufacturer, for example, was producing a prototype of an in-car PC and needed an interface designer to make the device attractive. Running the project were a couple of non-Japanese staff who didn’t have any local contacts for a good designer. They somehow heard about Shuttleworth and reached him through his Web site. He introduced Japan-based designer Eduardo Galvani of Galvani Creative Co., Ltd. to them. “It turned into quite a nice project,” he says. Sometimes, a company is looking for office space and doesn’t know where to start. Shuttleworth knows a property company that, instead of representing the landlord, represents the client looking for property.

58 / ACCJ Journal / September 2008

“I have no hesitation of putting such people together, because I know that the people looking for property are going to get quality advice, and get what they want,” he says. Once, a recruitment company was looking for people to give sales-related training to its employees, using a particular training book. Shuttleworth contacted all the trainers he knew, and discovered that Victoria Bolam of Action Japan (now representative director of Kepner-Tregoe Japan) had been in contact with the book’s author. “The training was pulled off successfully, ” he says. Shuttleworth’s business grew out of networking practices he started while employed by other companies. After three months here on vacation in 1995, he came back in 1997 for one year to


By Richard Smith / Business Profile

“I felt if I could set up an event where these people can come in and explain not just to me, but to a bunch of other people, then everyone would benefit.”

SNAPSHOT

study at the Kansai University of Andrew Shuttleworth Foreign Languages Founder: Customers, Vendors, in Hirakata, osaka People; Chief Marketing Officer: Prefecture, under Joblet; Evangelist at iKnow a requirement Married Hobbies: Mobile and Internet for the last year technologies of his degree in Lives in Yokohama marketing and Languages: English, Japanese Japanese at the Based in Japan since 1999 University of (www.cvp.jp) Stirling, Scotland. (www.joblet.jp) After working (www.iknow.co.jp) eight months (www.tokyo2point0.net) as a software http://hq.andrewshuttleworth.com localization engineer for UK company SDL plc, Shuttleworth was transferred to Japan, quickly moving into project and account management during four years for the software localization industry, and then two in IT outsourcing. “It seemed that, rather than diving straight into setting up my own business, it made sense to join someone else’s business and manage it for them,” he says. That’s what he did for two years at Concepci KK, a Tokyo company that offered as a main service the production of real-time restaurant coupons on the PC and mobile phone. Wanting to teach himself business skills, Shuttleworth figured the best way to do so is to ask other people about their experiences. However, going around to meet a lot of people and ask them to take an hour of their time just to explain how they run their business would not be very effective. “I felt if I could set up an event where these people can come in and explain not just to me, but to a bunch of other people, then everyone would benefit,” he says. Shuttleworth started running free monthly events called Pink Cow Conspiracy at the Pink Cow in Tokyo’s Shibuya Ward, which now attract 30 to 40 people each time. The event starts at 7:00, with 30 minutes of networking, and continues with a 

presentation, including Q&As, from 7:30 to 8:30, where speakers share some experience that people can apply in their own business, and finishes off with more networking. Subjects include “Training,” “Hiring Good People,” “How to Be Productive at Work” and “Small Business Finance and Taxes.” As the Web 2.0 was at its peak last year and there was no event to bring together people in the Internet industry, Shuttleworth, along with Lauren Shannon of Fujimamas restaurant and Michael Sheetal of UltraSuperNew Interactive Creative Agency, set up an event called Tokyo 2.0, to bring together foreign and Japanese professionals working in the industry. Attracting nearly 100 people once a month, two presentations feature new and unique products, services or technologies. “We charge just ¥3,000 for that, and the money goes into providing food and two drinks, and the meeting space,” he says. Because he is passionate about IT, and is looking for big opportunities and wanting to make headlines, Shuttleworth is now creating alliances with growing Internet companies and helping them with promotions. An unusual business practice is usually allowing customers to decide Shuttleworth’s fees. “Most people would be surprised to see how many people—if you tell them the vendor comes first, their profit margin comes second and CVP comes third—will come up with a reasonable suggestion,” he says. Shuttleworth also dispenses with an office, which would create costs and become a disincentive to get out there and meet people. “I’m a two-man company, so as long as I have my mobile phone, my smart phone and my PC with wireless connection, then I can work and be productive.”

Richard Smith is a freelance writer based in Tokyo.

September 2008 / ACCJ Journal / 59


Advocacy Update ACCJ Viewpoints are the core products of ACCJ Advocacy. An ACCJ Viewpoint is a brief paper, generated by a committee, that expresses the Chamber’s official position on a specific issue. Viewpoints are primarily used to express opinions on current policies, policies under consideration by the Japanese and/ or U.S. governments, and policies under discussion in bilateral or multilateral forums. They are also used to raise new concerns about issues not currently on the Japanese government agenda. Ensure that the Scheduled Review of the Money Lending Business Law is Conducted by a Qualified Independent Policy Research Organization

Ensure the Viability of the Policyholders Protection Corporation Insurance Committee Valid Through July 2009

Banking and Finance Committee

Immigration Law and Implementation Changes Would Forward Japan’s “Asian Gateway Initiative” and Help Japan Become a More Competitive Financial Center Human Resource Management Committee

Valid Through July 2009

Valid Through April 2009

Recommendation

Recommendation

Recommendation

The revised Money Lending Business Law (MLBL) should be reviewed in accordance with Article 67 of the Supplemental Provisions of the Law prior to June 2010, and in any event prior to full implementation. In order to ensure an objective and unbiased review is performed, the ACCJ recommends a qualified independent policy research organization conduct the review and report the results to the Diet and appropriate regulators, including the FSA, MOF and MOJ. To give effect to the purpose of Article 67, the review should be carefully considered by the Diet and appropriate regulators, and its findings considered in finalizing implementation of the MLBL revisions.

The American Chamber of Commerce in Japan (ACCJ) calls on the Government of Japan to: 1) continue improving its mechanisms for promptly treating the causes of life insurance company failure through ensuring accurate and timely disclosure and early intervention procedures by the Financial Services Agency (FSA); and 2) reform the life insurance safety net system called the Policyholder Protection Corporation (PPC) from a pre-funded to a post-funded system to ensure that the PPC is used as a last resort. The debate about this reform should occur promptly to ensure that an efficient safety net system is in place when current measures expire in March 2009. The ACCJ requests that all interested parties, including the insurance industry (both domestic and foreign), are provided meaningful opportunities to be informed of, comment on, and exchange views on proposed measures related to the PPC prior to their implementation and/ or submission to the Diet. These opportunities must include actively contributing to the deliberations on reforming the PPC, including deliberations undertaken by the Financial System Council Working Group or other groups which might be convened by the Government of Japan to address PPC reforms.

In order to help achieve the Government of Japan’s objectives of becoming an Asian Gateway and enhancing Tokyo’s competitiveness as an international financial center, and to make entry and exit procedures more efficient overall, the American Chamber of Commerce in Japan (ACCJ) urges the Ministry of Justice (MoJ) to make the following improvements to immigration law and its implementation: 1. Abolish re-entry permits; 2. Allow families to align the expiration dates of the residence permits of all family members; 3. Change the requirements for the domestic help visa so that more people are eligible to serve as the sponsor for persons applying for this type of visa. These changes are consistent with the Cabinet’s Asian Gateway Initiative, which calls for the government to “consider reviewing the visa system for highly-competent human resources” and to review immigration formalities in order to increase the number of highly-skilled workers in Japan. Implementing these changes would substantially improve the “immigration experience” for foreigners living and working in Japan and would make it easier for companies in Japan to attract highly-qualified staff from all over the world, thereby also enhancing the international competitiveness of Japan’s financial and capital markets, a key policy goal of the government.

Released ACCJ Viewpoints can be read in full in the Advocacy section of www.accj.or.jp 60 / ACCJ Journal / September 2008


ACCJの 「意見書」 は、特定の問題に対してのACCJの公式見解を表明する委員会が作成した簡潔な提言書であ り、提言活動の中核を成しています。現行の政策や、 日本又は米国政府で検討中の政策、二国間もしくは多国間 で協議中の政策についてだけでなく、新たな関心を高めるために現在日本政府の課題となっていない問題につ いても意見を述べています。

貸金業法の見直しにあたり適切

保険契約者保護機構の適正な

日本の「アジアゲートウェイ構想」

な独立政策研究機関の起用を

見直しを

を推進し、 日本市場を競争力の高

提言

保険委員会

い金融センターとする ための入

銀行・金融委員会

2009年7月まで有効 英語正文

管法とその施行方法の変更

2009年7月まで有効 英語正文

ヒューマンリソース・マネージメント委員会 2009年4月まで有効 英語正文

提言

提言

提言

改正貸金業法は、附則第67条の見直し規定によ

在日米国商工会議所(「ACCJ」)は日本政府に対

在日米国商工会議所 (ACCJ) は、 「アジアにおける日

り、2010年6月までに行われる完全施行より前に見

し、(1)正確かつタイムリーなディスクロージャーお

本の ゲートウェイ化を目指し、 国際金融センターとし

直しがされることになっている。 在日米国商工会議所

よび金融庁による早期介入制度を通じて、生命保険

ての東京市場の競争力を高める」 という日本政府の

(ACCJ)は、客観的かつ公平な見直しが行われる

会社の破綻につながりかねない要因を早期に解決

目標の達成に貢献するため、 また出入国管理を全体

ようにするため、適切な独立政策研究機関が調査を

する制度を引き続き改善すること、 そして(2)生命保

的により効率化するため、 法務省に対し、 出入国管

実施し、国会および関係省庁(金融庁、財務省、法務

険業界のセーフティーネットである保険契約者保護

理及び難民認定法 (以下、 「入管法」 ) とその施行方法

省など) に結果報告を行なうことを推奨する。国会お

機構(「保護機構」) を事前積立方式から事後拠出方

を次のように改善するよう要請する。

よび関係省庁は、第67条の趣旨に沿う

式に変更し、保護機構があくまでも最終手段として

 べく調査結果を十分に検討し、 それを改正貸金業

利用されるようにすることを要請する。政府はこのよ

1. 再入国許可の廃止

うな改善措置につい���の議論を早急に開始し、現在

2. 在留期限を家族全員で統一できる措置の

法の最終的な施行において考慮すべきである。

とられている対策が期限切れとなる2009年3月ま でに、効率的なセーフティーネットが構築されるよう 対応すべきである。ACCJは、国会への法案提出およ

施行 3. 家事/育児の手伝いのためにビザを取得す る人に対し、

び法令施行の前に、 (国内・外資系企業を含む)保険 業界を含むすべての利害関係

より多くの家庭が身元引受人の資格を得られるよう、

 者が保護機構について提示される対策案につい

この種のビザ申請における必要事項の変更内閣のア

て十分な情報を与えられること、意見を述べ、 また意

ジアゲートウェイ構想は、 日本に多くの高度技術者を

見を交換する実質的な機会を与えられることを要請

呼び込むため、 「有能な人材のビザ取得を支援する

する。 これには、金融審議会のワーキンググループに

ためのシステム改善」 および出入国手続きの簡略化

おいて、 もしくは日本政府により保護機構の改革に

を政府に求めているが、上記の変更事項はこの構想

ついて招集される他の会合があればそこで行われる

と一致するものである。 これらの変更を実現すること

議論等、保護機構改革についての議論に参加する機

により、 日本で居住・就労する外国人の 「出入国に関

会が含まれる。

する体験」 が大幅に改善され、 日本企業にとっても世 界中から高い技能を持つ労働者を募集しやすくなる と思われる。 またその結果、 政府の重要な政策目標で ある日本の金融市場・株式市場の国際競争力向上に も貢献できるはずである。

ACCJが公表した意見書の全文は、www.accj.or.jp のアドボ カシーセクションでご覧頂けます。 September 2008 / ACCJ Journal / 61


lorem ipsum / by lorem ipsum

Advocacy Update Ensure a Level Playing Field between Regulated Kyosai and their Private Sector Insurance Competitors Insurance Committee Valid Through May 2009

Introduce a Legal Framework to Implement the Key Recommendations of the Corporate Value Study Group’s June 2008 Report

Modernize the Installment Sales Law Banking and Finance Committee Valid Through March 2009

Foreign Direct Investment Committee Valid Through July 2009

Recommendation

Recommendation

Recommendation

The American Chamber of Commerce in Japan (“ACCJ”) calls on the Government of Japan, consistent with Japan’s international trade obligations, to create a level regulatory playing field between regulated kyosai (mutual aid cooperatives) that provide insurance products and private Financial Services Agency (“FSA”) regulated insurance service suppliers. Until regulated kyosai and private insurance providers receive equal treatment under Japan’s laws and regulations, the Government of Japan should prohibit any insurance business expansion by regulated kyosai. All regulated kyosai, to the extent that they compete with FSA-regulated insurance services suppliers, ought to be brought under FSA regulation and Insurance Business Law (“IBL”). Such measures would ensure equivalent conditions of competition with FSA-regulated insurance service suppliers and enhance the welfare of Japanese consumers by requiring regulated kyosai, for example, to: 1) contribute to a safety net system to protect policyholders from potential failures; 2) follow the same rules and regulations as insurance companies including the same reserving rules; and 3) submit to FSA supervision consistent with globally accepted standards in accordance with the International Association of Insurance Supervisors’ “Insurance Core Principles and Methodology.” Additionally, regulated kyosai should be subject to the same taxes as their private sector competitors. As a first step toward achieving equivalent conditions of competition, the ACCJ urges the Government of Japan to conduct a thorough review of the rules and regulations governing the supervision and inspection of regulated kyosai to determine their conformity with FSA standards of supervision for private insurance service suppliers.

The American Chamber of Commerce in Japan (ACCJ) commends the advisory report (“the Report”) concerning takeover defenses that was issued in June 2008 by the Corporate Value Study Group formed by METI (Chair, University of Tokyo Professor Hideki Kanda). If these recommendations are enacted into law they have the potential to boost confidence in the Japanese stock market and facilitate transactions that enhance the value of the Japanese companies involved, most of which will ultimately be friendly in nature. Consistent with its past Viewpoints on this subject, the ACCJ calls on the Government of Japan to implement the Report’s recommendations by making specific changes to Japanese law to: (a) amend the Company Law by including a definition of “independent outside director” that is consistent with global best practices; (b) add detailed rules to the Company Law to require publiclylisted companies to (i) identify which, if any, directors or director nominees fit the definition of independent outside director and (ii) disclose all facts that may affect a director’s independence of judgment or create conflicts of interest; (c) amend the Company Law and/or listing rules of Japanese stock exchanges to require that at least one-third of a listed company’s board of directors be independent outside directors; and (d) amend the Company Law so as to permit a board of directors to formally delegate decisionmaking authority on specific matters to a board committee composed of elected directors, including a committee composed entirely of independent outside directors. These legal changes are necessary because the Report’s suggestions regarding director fiduciary duties and independent board decisionmaking require changes to the basic structure of Japanese companies that can only be implemented by amending the Company Law and the listing standards for Japanese stock exchanges related to corporate governance. The Report’s recommendations have the potential to boost confidence in Japan’s corporate governance and the Japanese stock market, and increase shareholder value, but in order to do so, the recommendations need to be enacted into law.

The American Chamber of Commerce in Japan (ACCJ) welcomes proposals from a METI-led council to amend the Installment Sale Law (“ISL”) so as to afford greater protections to consumers when they purchase goods on credit. Many of the proposed amendments to the ISL can be effective tools to combat fraudulent business practices, and afford consumers redress where they have incurred financial damage on account of such practices. At the same time, we urge the Government to ensure that these revisions recognize the important role of sales finance and credit card sales in enabling customers to purchase major household items and consumer durables, and in supporting a robust retail sector and overall economic growth. The ACCJ specifically recommends

62 / ACCJ Journal / September 2008

(i) that strengthened documentation requirements be realistic, and allow for common market practices such as electronic verification, (ii) that the law promote industry selfregulation as much as possible based on the principle of fair and transparent disclosures, and avoid imposition of arbitrary restrictions on sales credit that could constrict the retail sector, (iii) that cooling off periods take into account existing rights of consumers to cancel contracts, and contain safeguards against fraudulent use of cancellations, and (iv) that rights of customers to receive refunds of amounts paid ensure fair redress from merchants that have breached sales agreements or committed fraud, while avoiding the creation of excessive liability for sales finance companies that have acted in good faith to finance purchases.


by lorem ipsum / lorem ipsum

制度共済と民間保険競合者の間

企業価値研究会による2008年

現状に即した割賦販売法に

に平等な競争環境の確立を

6月の主要提言を実行する法的

銀行・金融委員会

保険委員会

枠組みの導入を

2009年5月まで有効 英語正文

対日直接投資委員

2009年3月まで有効 英語正文

提言

提言

提言

在日米国商工会議所(ACCJ)は日本政府に対し、

在日米国商工会議所(ACCJ) は、経済産業省による

在日米国商工会議所(ACCJ)は、 クレジット取引によ り物品を購入する消費者の保護強化を図る、経済産

2009年7月まで有効 英語正文

国際通商上の日本の義務に従い、保険商品を提供

企業価値研究会 (座長:神田秀樹東京大学教授) によ

する制度共済(相互扶助組織である協同組合) と金

って2008年6月に公表された企業価値研究会報告

業省が所管する産業構造審議会による割賦販売法

融庁の規制下にある民間保険サービス提供者との

書 「近時の諸環境の変化を踏まえた買収防衛策の在

の改正に向けた報告書を歓迎する。改正に向けた提

間に規制面で平等な競争環境を確立するよう要請

り方」 (以下「同報告書」) を高く評価している。 これら

案の大部分は、悪質商法の予防および悪質業者によ

する。制度共済とその民間保険競合者が日本の法制

の提言を法制化することで、 日本の株式市場は信頼

り被害を蒙った消費者の救済に役立つと思われる が、改正に際しては、家庭用品や耐久消費財を消費

下で平等な扱いを受けるようになるまで、 日本政府

を高め、 日本企業の価値を高める取引も促進される

は制度共済の保険事業拡大を禁止すべきである。金

であろう。 また、 それらの取引のほとんどは、 友好的な

者が購入することにより小売分野の売上が押し上げ

融庁の規制下にある保険サービス提供者と競合す

ものとなるであろう。

られ、 ひいては経済全体の成長を促進されるという

る範囲内において、 すべての制度共済は金融庁の規

 ACCJは、 本件に関する過去の意見書と同様に、 日

点からも、個品割賦販売およびクレジットカード販

制下に置かれ、保険業法が適用されるべきである。

本政府に対し、 日本の法律に具体的な変更を加え、

売が重要であることを日本政府は認識する必要があ

こうした措置がとられれば、以下のような点を制度

同報告書の提言を実現することを要求する。 すなわち

る。 そこでACCJは次の具体的な提言を行なう。

共済に義務づけることとなり、制度共済と金融庁規

(a)グローバル・ベストプラクティスに沿った 「独立社

制下にある保険サービス提供者との平等な競争条

外取締役」 の定義を加えるよう会社法を改正するこ

件の確保および日本の消費者の福利促進につなが

と、(b)会社法に詳細な規則を加え、上場企業に対し

るだろう。1)破綻が起きた際に契約者を保護するた

(i)独立社外取締役が任命されている場合、 取締役又

(2) 改正法において、公平性と透明性の原則に則り

め、 セーフティネットへ資金を拠出すること、2)準備

は取締役候補者が独立社外取締役の定義に適って

可能な限り業界の自主規制を促進し、小売業界 の足手まといとなる画一的な与信などの制限を

金積立規制等、保険会社に適用されるのと同じルー

いるかを特定し、 (ii)取締役の判断の独立性に影響を

ル・規制が適用されること、3)国際的に受け入れら

及ぼす又は利益相反を引き起こす可能性のある全て

れている保険監督者国際機構(IAIS) の 「保険コア・

の事実を開示する旨義務付けること、(c)上場企業の

(1) 書面交付義務強化を現実的な範囲内とし、電磁 的書面の交付等の通常の市場慣行を認める。

設けない。 (3) クーリングオフ導入においては既存の消費者の

プリンシプル(保険監督基本原則)」 に定められてい

取締役会の少なくとも3分の1が独立社外取締役で

契約取消権に配慮し、契約取消の不正利用を防

る保険サービス提供者の監督基準に則った金融庁

あることを義務付けるよう、 会社法及び日本の証券取

ぐ対策を講じる。

の監督下に置かれること。 これに加え、制度共済は

引所の規則を改正すること、 そして(d)取締役会が具

民間保険競合者と同じ水準の税金を課されるべき

体的な事項についての意思決定権限を、 独立社外取

である。平等な競争条件の確立に向けた第一歩とし

締役のみから構成される委員会を含む、特定の取締

約違反や不正行為に対し消費者が救済を受けること

て、ACCJは日本政府に対し、金融庁以外の省庁が

役から構成される取締役会の委員会に公式に委任す

ができるようにするとともに、誠実に与信を行った個

(4) 既払金の返還を求める権利により販売業者の販 売契

監督・検査を行っている制度共済に対する法規制

ることを可能とするよう、会社法を改正すべきである

品割賦購入あっせん業者に対して過大な責任を負わ

が、民間保険サービス提供者に対する金融庁の監

と考える。

せないようにする。

督基準と適合しているかを徹底的に調査することを

 日本企業の基本的仕組みに対する変更は会社法

要請する。

及び日本の証券取引所のコーポレートガバナンスに 関する上場基準の改正によってしかなされないこと から、 取締役の受託者責任と取締役会の意思決定の 独立性に関する同報告書の提言を実現させるために は、 これらの改正が必要となる。 同報告書の提言は日 本企業のコーポレートガバナンスと日本の株式市場 に対する信頼性を回復し、株主価値を高めることが できるであろう。 しかし、 その為には、 同提言は法制化 されなければならない。

September 2008 / ACCJ Journal / 63


EBC Advocacy / By Julian Ryall

EBC Calls for Energy Efficiency The government has long had strict regulations covering energy efficiency in areas such as automobiles, solar panels, heavy industry and, in particular, electrical appliances. But Japan is lagging badly behind other countries regarding insulation requirements for residential and commercial buildings, according to the European Business Council (EBC). Shortly before the G8 summit in Hokkaido (July 7-9), members of the EBC Construction Committee released a position paper detailing why a new regulatory framework to promote energy efficiency in buildings in general, and thermal insulation in particular, is critical if Japan wants to meet its own commitments to reducing CO2 emissions. “The Kyoto Protocol has been signed by Japan and many other OECD countries, and its objective is to reduce 1990 emissions by 6% by 2012, but instead emissions are up by 6%,” says Philippe Valery, president of Saint-Gobain HanGlas (Japan) K.K. “And the largest increase is in the building sector.” Some 31.3% of all energy consumed in Japan is in the building sector; and, for a country that is almost entirely dependent on imported energy, it makes a lot of sense to increase the efficiency of buildings, he says. Taking Germany as an example, Valery points out that regulations there mandate higher performances for both new buildings and the renovation of existing structures. The improved heating and insulation performances account for more than 15% of the reduction in CO2 emissions in Germany, and will reach some 41 million tons by 2020. In contrast, it is surprising to note the lack of Japanese government policies to promote energy efficiency, Valery says. While some schemes are in place and are a “step in the right direction,” they are not mandatory and fall well short of generally accepted international standards. A four-star standard for construction glass is the highest in Japan, he points out, but would be forbidden under current regulations in Germany.

64 / ACCJ Journal / September 2008

“The tools are in place, including the Energy Act, but the requirements are really very low in comparison with other countries, and are often not mandatory,” says Guy Prendergast, country manager for Japan at Halfen GmbH. “Perhaps part of the problem is that people want more energy-efficient buildings, but cannot afford them,” he says. “Research shows that quite simple measures will have a payback period of between seven and 15 years; and I think that makes this one of the best investment products in the Japanese market. “This is an issue that cannot be left [unresolved], as often the people who pay for the building are not the ones who are then paying the electricity bills,” Prendergast adds. “The only way this problem can be overcome is through government regulation, as has been done in other countries.” Insulation regulations on new buildings in China’s cities are as good as, or better than, those in place in Japan; and the situation is the same in South Korea, Valery says. The EBC position paper calls on the Japanese government to establish mandatory U values — a measure of the heat transmission coefficient described as W/m2.C — for doors, windows and walls that are in line with other OECD nations having similar climates. The EBC also wants action taken on insulation standards it describes as “ridiculously low” in commercial buildings that still often have only single-glazed windows. Julian Ryall is the Daily Telegraph’s Tokyo correspondent.


Reviewed by Tom Baker / Behind the Book

How Toyota Became #1 Leadership Lessons from the World’s Greatest Car Company by David Magee Portfolio, 239 pp, $25.95

N

o automaker would ever choose a tortoise as its mascot, but that image comes to mind — in a positive way — when reading How Toyota Became #1 by David Magee. Magee, who has written books on Nissan, Ford and John Deere, states in his introduction, “never before have I studied a company with more valuable management lessons to offer than Toyota.” Clearly, Toyota is doing something right. As of this writing, it’s global market share is even with that of General Motors, while its market capitalization is more than 20 times that of GM and more than 10 times that of Ford. A chart in Magee’s book shows such figures to be more than mere snapshots. They reflect a steady grip on the market. From 1990 to 2005, the line representing Toyota’s profits is virtually straight, angling slowly and modestly upward from below $5 billion to above $10 billion. The lines for Ford and GM zigzag wildly, rising above Toyota’s at times, but also plunging deep into the red. “While its American counterparts are facing possible extinction, Toyota has not had a money-losing quarter in more than half a century,” he writes. Nor has it resorted to major layoffs in that time.

Magee attributes Toyota’s success to its philosophy. He describes how long-term thinking (rather than short-term obsession with stock prices) — and the company’s propensity to “take time to study, then implement with speed” — have led to tremendous investments paying off in groundbreaking expansions, such as the Lexus luxury brand and the revolutionary Prius hybrid. Environmental commitment has helped Toyota’s bottom line (its factories are said to produce zero landfill waste), as does a production chain moved more by “pull” from consumers, than “push” from factories, thus avoiding costly overstocking. Toyota’s philosophy is reflected in its famous kaizen system of continuous improvement and a quality-control regime that empowers workers to pull a cord to halt production when potential problems are spotted. Magee stresses that white-collar employees also “pull the cord” in their own sphere, but he gives no specific examples. Similarly, he writes that Toyota embraces mistakes as learning opportunities, but concrete details are sparse. Magee touches on employment policy issues. “Because the company has neither the number of retirees or the binding benefit

contracts that competitors such as General Motors, Ford or Chrysler have, it earns close to $2,500 more per vehicle sold,” he writes. This difference holds true even at Toyota’s U.S. plants: “If the company can attract skilled workers in Mississippi by offering $20 an hour … and that wage is higher than what other companies in the area are paying, why would Toyota pay $28 an hour just to match what Ford’s union employees are earning in Michigan?” While each of the many reasons for Toyota’s success could probably fill its own book, Magee offers a quick readable overview of the company’s main strengths.

Tom Baker is a staff writer at The Daily Yomiuri. We are giving away three copies of How Toyota Became #1. Simply e-mail editor@paradigm.co.jp by September 12. Winners will be picked at random. Winners of Chronicles of My Life: John Tsai, MFS Investment Management; Timothy Connor, Newport Co., Ltd.

September 2008 / ACCJ Journal / 65


By Samuel H. Kidder / In the Final Analysis

James S. Adachi (1920-2008, ACCJ member 1951-2008)

I

f the ACCJ had a Hall of Fame, Jim Adachi would have been elected unanimously on the first ballot. Although not in our founding member group of 1948 he was close behind, opening his legal office here in 1951. Born in New Jersey in 1920 and earning his BA and J.D. from the University of Wyoming during the Pacific War, Jim became ACCJ President in 1971. Sadly, Jim passed away in June in California while the Chamber was well into its first year under the newly minted Constitution. I mention the Constitution because for five decades, Jim was the Chamber’s constitutional expert. The founding members were his friends and colleagues, as were many members who are still active today. Jim was instrumental in the revisions of the Constitution in the 1960s and when Japanese members were belatedly welcomed as members in the 1970s. And I know that members were soliciting his expertise well into the late 1990s on issues that arose in the Annual General Meeting. As we celebrate the Chamber’s 60 years of bringing business together, it is good to remember those like Jim who played such a long and active role in that process.

Doha Trade Talks In late July we had some hope for a successful conclusion of the Doha Round of trade talks. But the wheezing Doha patient took a turn for the worse and now appears comatose at best. While a successful Doha may have helped lay the groundwork for our proposed Economic Partnership Agreement between Japan and America, the collapse of Doha makes such an agreement even more crucial. Leadership from the world’s two largest economies in creating a model agreement would be a vital antidote to the maladies of rising protectionism, growth of regional blocks and the rise of a hopelessly complex network of bilateral trade deals.

Samuel H. Kidder is ACCJ Executive Director.


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ACCJ Journal September 2008