Japan's economic future

[Anonymous]

Right now I know Japan's economy sucks, and I've read so many posts with people saying that Americans wanting to work in Japan don't have a chance because there are so many bilingual Japanese with out jobs that are so much better qualified than we are, so why would we get hired. Soooo much negative stuff!!! However, I still have about 4 years of college left (already finished 2) so right now their economy doesn't bother me too much, it's the future I'm interested in. Are there any people here that have any kind of idea where their economy is headed (like if anything the government is trying will be likely to work)? Does ANYBODY have anything POSITIVE to say??? I'm a very optimistic and positive person and it's so sad to see people (myself included) get disheartened by what other people are posting. Even if it is the reality, there ARE people that can work hard enough to achieve it.

tb

[Anonymous]

Japan's economy doesn't suck and I should know because I'm an economist. (No, really I am).

Japan has a big public spending deficit. No-one really knows how big it is. Some people say it's 25% of the Gross Domestic Product (the amount of money Japan makes in a year) others say it's many times bigger.

Imagine that, having a debt that could be \12million or \600man. One's manageable if you've got a regular income the other's scary. BUT what if every member of your household had a couple of million stashed away too?

The easy answer is to get them to spend their money on the house. But the problem is that if the debt's really big, they'll need as much money as they can get for when belts get tightened. And there's the crux of the problem. Japan's public debt is big but it's private savings are also huge.

The cruel irony is that the average salaryman did not bring this situation upon themselves directly - it was a decade or so of fudging accounts and backscratching - hey when the sea's calm and the sun's out who wants to steer the boat? The salaryman is paying for it though - oh yeah - if the government had it's way, people would pay for the banks decade of mismanagement out of their own pockets in taxation. But Japanese politics has taken such a nosedive recently that politicians know that if a pot smells, keep a lid on it.

OK, back to that debt. Imagine you have a mortgage. Then well, you probably have a \12million debt, but you're not running scared, are you? That's because your debt is being managed. The bank has deemed you creditworthy (wait till you get home and try to open a new bank account then you'll know what creditworthy means). How did the bank deem you creditworthy? Well, they looked at your salary and your health and other stuff and they made a few guesses.

Back to Japan. The bank is the rest of the world. But principally America and Europe by dint of their bankability. Moody's is a credit rating agency for countries and Japan doesn't rank very highly. Why not? Well, firstly, they don't understand the Japanese economy well. They actually never did. Imports and exports, tangible goods, stuff we can see coming in and going out. What brand is your walkman? Your TV? Your watch? Computer? They're all Japanese right? Same if you were in your home country? But what of the future? Taiwan's not bad at making computers. Korea can do walkmans (kind of). What about all of those really hard working people? Trying to get the British to work is like blood from a stone compared to the Japanese (the telephones are actually *switched off* in my current company at 5.30pm!!!).

And Japan has this big debt - something to do with "pork barrel spending" (I seriously doubt if many economists actually know what this phrase means though).

So until either a) the debt is managed or b) Japan spends it's way out of recession there's really little chance of it pulling out. And if there's little chance of it pulling out then Moody's will down the rating a bit more.

The most likely scenario is similar to the UKs. Gradual loss of the competetive edge, steady deflation of the economy (cheaper prices = cheaper wages = cheaper prices ... ) and an increase in tourism (because of devaluation of the yen relative to other currencies). In fact that's Japan's next hot industry.

The Japanese will learn to relax a bit more, and value quality of life. The bond of trust between the company and employee may be lost, or may remain depending on Japanese CEO priorities. People will have less disposable income, but the cost of living will come down. It's not gloomy it's a part of every economy's cycle.

The best is to come though, as young Japanese decide ultimately how their economy will be steered in rough water.

Some hot economic trends: pharmeceuticals, healthcare and beauty products, tourism, video gaming, traditional creative industries. These are healthy domestic and export markets and will continue to be so for some time.

Some distinctly cold trends: banking, software development (Japan was never really hot there though) and generic consumer electronics (computer components are generally from Taiwan nowadays).

[Anonymous]

Bongo the Whippet Rides Again!: Thanks for the post, it was really informative!! I was hoping there would be an economist around to answer!! I am always trying to keep up with what's going on in Japan economically, but I have yet to find any really good reliable and updated sources of information.

and Wasabi: I'm glad you had something positive to say!

Too bad bla had to come in and be entirely negative.

tb

[trip_hop]

Bongo TWRA - Pharmaceuticals and healthcare - forget it. Like many of the Western companies there are NO new products in the research pipeline for future sales and marketing. Japanese companies are only good for sales and distribution in Japan, and the West has now found out that these huge mega-mergers do not bring in huge research dividends; rather inventiveness is quashed in the corporate bureaucracy. Big pharmas are just centres of finance for the bioindustry, CROs and CSOs.

Silver care - again - unbudgeted - Japanese are looking to farm their old out to Australia and the Philippines for cheaper but quality care.

Traditional crafts - sorry too. All dying out, and few apprentices will be available to study and learn. They all want jobs in finance or IT, or become sports heroes. Craftsmanship has been sent overseas to other Asian countries, and Japan has lost its skills. The "secundem artem" of the artisan is long gone.

Budget - better learn about "zaito" - you never mention it in your post - the unofficial second budget - 60% gone. Lost. Spent. Finished.

And the National Pension Scheme - no old age money for anyone under 45 at the current rate of investment and expenditure. No youngsters want to contribute to it either, or they switch to 401ks!

Tourism is being promoted, but the biggest potential market, Asia itself, is subject to many visa regulations and difficulties, as so many stay illegally. Talk about shooting yourself in the foot!

Transportation/ service sectors may grow, but future is bleak.

th

[Anonymous]

For pharmaceuticals I wasn't talking about the export market quite as much as the others. Western pharmaceutical companies tried to take advantage of the increasing price difference between "innovative" and "generic" prescription products. But the underlying market for OTC drugs is 5 times the size for that of US according to 1999 figures (late I know but that's jp beauracracy!)

Traditional crafts - they're currently unpopular enough to enjoy a second wind. (Like when those young things work out there's no jobs left in IT and finance). As a parallel, if you want to earn really good money in the UK right now, become a builder, tree surgeon, thatcher (yes for thatched cottages), a humble plumber or a woollen products manufacturer. No University education required. Healthy export potential. Japanese kiln fired products of budget quality are sold (freight notwithstanding) as luxury elsewhere in the world - one mans dirt ...

The other problems you hint at are generic to advanced economies right now. Scandinavian (don't like that word) countries like Norway and it's very socialist-oriented national pension system are a great example - and they can afford it no more than Japan. Even more for healthcare provision - right now if you go into a UK hospital the chances are you'll be greeted by a fully qualified Fillipino nurse. Again labour issues such as these are generic to advanced economies. High value, high wage vs. high value, low wage. Hmmm.

Zaito? You mean Mr Mori's idea of public corps issuing bonds on their own credit worthiness? That was a loser to begin with, just like the other shopping vouchers scheme. When you're credit line is running out, issuing credit notes against yourself doesn't work.

Someone else pointed out the highly qualified workforce. This again is a cultural asset (by that I mean an asset arising from a cultural bias toward education/hardwork) is something many countries would proverbially fight for.

Things will not be better economically in Japan, but they will be different. Globalisation (and that's the reason for a lot of the ailments of advanced economies now) is doing exactly what it said on the packet. No reason for gloom.

[Stu]

I did a report on this while at Waseda U. I found that there is something huge in the way of Japan's economic growth. Monopolies. NTT has a hold of all the telecommunications (practically) in Japan. You can't buy internet service form anyone else. So what did the government do about it? They broke them up into NTT East and NTT West. Wow! That did a lot of good! Not!

There is so much regulation of imports into Japan, its unbelievable. Japan is rated as having some of the lowest tariffs in the world. Yet, if you look at NTBs, they're enormous! Everything from inspections to culture. It is what is holding back the Japanese economy.

Japanese don't seem to understand that you need innovation to get ideas. But you need freedom to get innovation. You see hardly any HPs taking on the old IBMs of Japan. Just isn't happening.

Instead you have all these little girls on the street selling themselves for Loui Vitton, and somehow, I believe they're supporting the economy. How? They're getting all those sukebe old guys at the top to spend their savings. Think about it. The porno industry is one of the fastest growing in Japan. Why? Cause women can't get good jobs cause their stupid glass ceiling. And even if the paying field was even, the demand is so high, it's freaking unbelievable. Go into any konbini and check out how many pornos you can buy. In America, you have like 3 or 4 you can buy at the corner liquor store. Japan... 20+? And if you want to go to a strip joint, you have to look out and seek for one in America. And I live in LA. Japan... you can't escape it. Even in the country-side you still find hordes of Soaplands and hostess bars. I could get started into the morality of the Japanese, but to keep it in context, think about how much money is moved by this industry. I'd venture to guess its almost as much as home appliances.

Basically, Japan is scared. Xenophobic if you will. But competition scares them. Thats why the whole Keiretsu system is set up. Everyone is scratching everyone else's back. If there is to be change, there needs ot be companies willing to go against this grain in business and political society. I've heard there are about 25-30 companies lead by Sony and Toshiba to get a more "American" corporate structure.

The truth is, it will hurt Japan before it ever gets better. Shinsei Ginkou, the only bank to make a profit lately in the industrial sector. It went broke in what? 1999? And then was auctioned off by the government the next year. Foreigners bought it, and restructured everything. They let go of some gimungous food chain, I forget the name, but everyone was saying, "Hey! If you don't extend them more credit, they'll go out of business." And Shinsei basically said, "Yes. They will." They're making profit right now. Citibank is too, but they're most commercial. But all the other banks, if they want to make a profit, have to learn that scratching a loser's back is going to bring you down too.

Is this all making sense, or am I a wacko? Sorry for this bein' so long. I like Japan, I just don't like what the Japanese people have done to it.

[Anonymous]

Are you talking about the Daiei/Maruetsu chain? I asked my wife about them a while ago - she said they've been limping along in and out of Chapter 11 (I think that's what the Americans call it) for years. They might be turning over an operating profit but they're backed up to the hilt in debt through mismanagement of the supply chain (as I understand it).

The keiretsu have served Japan well. Not defined efficient in US/European terms but their goal was full employment rather than capital accumulation. Let's just forget about Japanese banks. They're way off the mark. Look at your average bank and they're advertising in the one place bank advertising is redundant - their shop windows. Dear oh dear. Yamaichi was the number one bank. And the first to go against the wall. I met someone who worked for Yamaichi and moved to the UK shortly after it went - he was still kinda shell shocked.

The porn industry? I see your reasoning, but this has always been the case - assuming most frustrated salarymen think of this as a luxury errrr ... purchase, the industry is probably not doing as well now as it was a few years ago. Again, foreign workers and high value, high wage vs. high value, low wage. Do the maths. But

In the end of course, wealth creation is about jobs. tb's post belong in the career forum after all. If a multinational can move capital assets overnight (and they frequently do), then how will you define what "nationality" a company is - where is the company based? Is it where the MD/CEO lives? The Bahamas. No, it's where the majority of workers are employed.

Japan's is a high value, high wage economy. If you can do something either of extremely high value or at extremely low cost, you WILL make money in Japan. In the end, Japan's culture is it's most bankable product (and whatever culture the associated tangible goods reflect) and that is where people will continue to make money.

Onsen. Have a look at how an establishment gets a license to call themselves "onsen". Is it the water mineral content? Nope. The proximity to source? Nope. The depth? The location? No no. It's the license. If you can beg/steal/borrow an onsen license, you ARE an onsen and can build a bath and ship in water from 50km away. Think about that rule, and think about its potential.

If you buy Loius Vutton products, that money will fly away to Milan, where the products are made - because that's where most of the people are employed making the product on the factory floor. If 80% of a company's expenditure is wages, then 80% of your purchase is going on keeping those people in jobs.

OK, bear with me.

If your brand is immobile - they'll never make Louis Vutton bags in China - you are onto a winner. You can't relocate an onsen, nor a tourist park, nor a traditional pottery factory, nor a cultural icon.

Bank? Software house? Generic manufactures? Call centre (not so much for Japan) Food? (especially Japan) Globalisation has plans for you, baby.

The irony is that immobile industries are the winners of globalisation. The tradition of video games (which is the same tradition which gives us ceramics and kimonos) can be easily exported but not easily moved.

English language teaching is a probable winner too, as globalisation increases it's perceived value. Whaddyaknow!

[Anonymous]

Bongo,

Positive is one thing, but as bullish as people have been over the past few weeks looking at Jpaans market resurgence, you will the award for speculative optiomism. But then, you know what they say about economists, the one thing that they fear most is that the economy actually does improve and then they have nothing left to promise :)

If you look at the problems in Japan a little more closely you might discover other indicators that will drastically effect the economy in the near to long term. Bongo mentioned the national debt, but look at some comparisons. The debt right now has surpassed the 160% of GDP and maitanance on the debt alone is over 11% or nearly 75% of the annual reveues of all listed Japanese companies. The debt problem is going to cripple the governments ability to effect reform for years to come. While this in itself may not be the crisis that people fear, it does tie up resources needed to fix what I think are the real problems with Japans future. Namely, the people, or more precicely the lack of people.

Looking at population trends you can see that the birth rate in Japan has slacked off, and Japan is now in a negative population growth situation. At the same time life expectancy has continued to rise steadily for decades. I was looking at a chart the other day that correlates Japans GDP with working age population to within a 10% margin of error. That means that as the population shrinks, so does the economy. However other metrics do not reflect that the society has adapted to this at all. In real terms, spending has actually gone up over the past 5 years, while income hase gone down. The personal savaings rate has fallen from over 20% to close to 8%. Unemployment is reaching record levels, underemployement (those working less than full time) is also breaking down the walls.

In other words, while individual industries will continue to have thier ups and downs, the basic fundamentals of the ecomony are going to ensure that Japan will continue to shrink and decline as a world player. If spending is not brought under control you could see the collapse of government services within a decade. As things stand now, it is a scary dark future, but if anything big happens (earthquake, regional military conflict, terrorism, SARS, etc) you can expect to see this all turn nightmare very quickly.

OK that's enough doom and gloom. there is a silver lining here.

First of all fro tb. You have 4 years ahead of you. I todays world, my best advice to you is enjoy your time and what you are doing. If you like Japan and want to study Japanese, I see no reason why that is a bad idea. During college I took a bunch of meteorology courses. I never once thought I might be a weatherman, I just enjoyed the classes. Japan is a very rich country in ways of culture and history. Nothing that happens to the economy will ever change that. Speaking the Japanese language well is a difficult task for non natives, and I doubt you will ever consider speaking Japanese a disadvantage to you. Again, if you like it, go for it.

As was stated above, no one can tell you now what Japan will look like in say five or six years. THings may be pretty much the same as now, they may be slightly better or slightly worse. One thing I can guarentee you is that the country will still be here and the people will still be here (well sans a nuclear strike from the happy freak boy up north, or a nuclear powere pland going kaflooie).

You get a lot of negative attitiude from people on this site regarding Japan. I tend to believe that it is mostly about attitude and expectations. If you come to Japan because you think things will be easier than living where you are, it may not be. If you want to meet lots of Japanese girls and watch anime all day... get a life. If you think your going to come here and make bunches of moolah, well.. no. BUT, if you want to take from this country what it has to offer, you can find a way to make it happen. Personally I think Japan has some of the best hiking trails anywhere and I suugest you try them someday.

For sure I will say that the situation in Japan economically (and socially) are going to get worse. In fact I am convinced they are going to get really bad. At the same time I am sure they will recover and things will get better. When this happens and how long it will take is anyones guess. Two years ago I would never had thought I would be back here in Japan working. Two years from now who knows where I will be. All I can advise you to do is to get skills, get experience, enjoy what you do, and prepare yourself for an interesting life. If you do that I figure things will at least be fun.

-k

[Anonymous]

I have nothing left to promise? I'm not promising you anything! You don't employ me.

On the other hand, you could do with some guidance, as your conclusion is err, inconclusive. And the problems you mention are (again) generic to advanced economies. Hiking trails. Yes. Can you move those hiking trails to Taiwan? Then there's a healthy future for them.

[Anonymous]

Kakyou :

Ok I AM a girl so I'm not interested in Japan to chase girls!! I'm interested because I really like the culture and I would like to experience Japan, but be able to have a job as well so that I have enough money to actually enjoy the experience. I also want to travel, thus the international business degree.
Thanks for the posts!!!

tb

[Stu]

Girls huh? You know, when I went to Japan, I saw so many guys out there who were losers in America and they heard somewhere that any American can go over to Japan and live their samurai sex fantasy. In part, its true. In part, its an imature attempt at being cool. But for one thing, I've noticed most the gaijin not really interested in actually fitting in or doing anything particularly more than screwing their students. Sux to say, but true.

Now, and I am an optomist for the most part, sorry if I don't sound it, but I am. If you go to Japan and you can somehow tune yourself out to the salarymen reading pornos next to you, the degredation of women all over the place, the racism, the lack of common courtesy, the whishywashyness and the summer humidity, Japan is a great place. Things I like about Japan is the night life, I actually like trains, and coming from LA, thats heresy. I like the younger people and the really old people. The oyaji bastards can suck it. Sorry. I like the inaka. I like the coolest electronics like MP3 and MD players. The keitais are the best too.

I guess I'm in the middle when it comes to enjoying Japan. But as for their economy. I'll still stick by the fact that they're not using the human resources they have available to them. I believe that if they are to get a growing economy again, there has to be the spirit of entrepeneuralship(sp?). This can only be achieved by dregulated NTT, a major restriction. Broadband cable modems and DSL are taking off here in the states. Everyone is getting it. Apartments come with it installed already. My host family in Japan, extremely rich, still had dial-up. And they paid by the minute! You can't tell me thats not a major drain on creativity. Not only that, but because of the sexist ideals they have there, women aren't putting out everything they can. I went to Waseda. One of the best universities in Japan. And as a guy, I took it upon myself to talk to girls there. I would ask them, "What do you want to do when you graduate?" and the overwhelming majorit said... drum roll please... "Marry a nice guy."!!! What? A girl with an engineering degree wants to do what? Marry a nice guy? You can't tell me thats not a misallocation of resources either!

Well, I like Japan. My fiancee is from Japan. Not Tokyo, heavens no. That would be like marrying someone from the Valley here in California. But she's from Shizuoka. But until I jump on the Japan bandwagon anymore, I'm going to have to see some fundamental changes in their thinking.

[trip_hop]

Bongo TWRA - Thank you for the reply - Zaito is the Fiscal Investment and Loan Programme - around 350 trillion yen - supervised directly by the MOF. It originated under a different name in the 1870s (!) to collect the savings of Japanese people and funnel them into modernisation. The allocations are subject to Diet Approval, but are usually to MOF controlled institutions or interests.

It is/ was funded through individual deposits from Post Office savings and the Public Pension system. It was helpful towards electric power, shipping, coal and steel in the 1950s and 60s, as well as roads, transport and communication, and saved the government from raising taxes. As the "Industrialisation" was achieved, it switched to social infrastructure such as housing. By 1995, it was supplying 45% of all loans to public-sector finance. There are attempts to merge the national budget and the Zaito system, which comprises 1/2/ to 2/3 of the size of the National budget, but they are basically unable to replace the losses. These debts will go to further generations.

The Japanese OTC market for pharmaceuticals is decreasing as "iyaku bungyo" is increasing, and pharmacies are less reliant on selling junk meds, as well as the increasing knowledge of patients/ customers. "Bungyou" is the separation of prescribing and dispensing, and one of the reasons for the polypharmacy of Japanese prescriptions, as the hospitals or Drs made money through the difference between the purchase price and reimbursement price of drugs - "yakka-sa". Many of the products made in the West for the OTC markets are restricted here, or sold with lower amounts of active ingredients.

The successive mergers of Japanese distributers, so that the leading one now is larger than the largest pharmaceutical company has also decreased the selling power of the pharmas, as the wholesalers can demand lower prices, though the lower costs are not passed on to the patients.

The educated/ qualified workforce is an interesting concept - as many of my company friends and neighbours do not see this in their new, young employees. They consider them poorly educated, inflexible, difficult to train, and liable to quit at the first sign of a challenge. The increasing number of "freeters" bodes ill for a stable base, and while the traditional "temporary staffing agencies" are doing well, supplying staff in accordance with the needs of more flexible corporations, they are finding it harder to recruit (and keep) good staff. The continuing transfer of manufacturing to cheaper Asian countries has also eroded the skill base, and they are unable to bring those factories back now, as the labour force has gone.

The keiretsu have done well, but have been able to dispense with their small local supply companies and make their products in house. The small local makers are now having the hard time, as historically they made a very limited range of products for one main customer, and find it hard to diversify. Loans for expansion and re-training are also hard to find, while many of their small loans are being called in leading to their bankruptcy. Of course the big loans are ignored!

[Anonymous]

th, thanks for your reply!

This scheme is not much different to the UK's Public Sector Borrowing Requirement (recently renamed to the Net Cash Requirement), which at a stable level is 35-40% of GDP for the UK. It is currently around GBP30bn, and is unlikely to shrink. If this were very big and couple with an unmanaged private sector loan issue I can understand the concern about the latter's size. Ultimately, the Japanese people will almost certainly pay for this debt, but they won't be happy about it.

As you mention, there has been a shakeup of the pharmaceutical market recently. It's not fair sounding, but if they can charge that price and customers pay it, there's a healthy market for OTC drugs. Is it sustainable at that price level. There's the question. I think it is, as most of the people buying the drugs are older and are good for it!!

What your neighbours say about the state of today's youth and intl literacy levels could be different things. I have a feeling that anyone not attending Tokyo, Waseda or Keio, Meiji etc are viewed as permissible failures in Japan. Actually those folks are immense assets. I'd need to get more information on literacy and numeracy levels but I'm sure Japan's is the highest for literacy.

There is an opportunity for a buying group representing independent suppliers in Japan I believe - if they can vet supplier accounts and take a membership of retailers, an guarantee payment from suppliers there's great potential. But for the inevitable bureaucracy!

Thanks for the input - economics is never completely objective!

[trip_hop]

Bongo TRWA - thank you again.

The intl. literacy that you mention and the "state of today's youth" are quite different factors - some of the best and brightest from those so-called good universities are unemployable - connections aside - as it is their attitudes make them quite tiresome. While you may be impressed with those names outside of Japan, many Japanese here view them as arrogant, narrow-minded, and boorish, and one of the reasons for Japan's current poor performance. Certainly Todai Drs. have a poor name in medical circles, as few of them have ever touched a patient in their medical studies, learning clinical medicine from books, as patients refuse to be used as students material.

Japan maybe does score high for literacy, but it does not produce thinkers; and neither does it score well in applied thinking, sacrificed for rote learning and passing exam questions.

However, when my neighbours and I talk and look at the youth of Japan, and the recent graduates; we can see that they may be getting more creative and possibly more individual, but they are spoiled, selfish, unable to communicate well, and embarrassingly ignorant of the state of the world and their own country. And the difference between the city folk and those back in the country is become bigger and bigger each day. The centralisation of Japan on Tokyo and to a less extent Osaka is really hurting the place.

th

[Stu]

I thought about this and actually came up with it on my own.

When I ask my peers coming out of my college, I ask them what they want to do eventually, most will say they want to start their own business. That's where the money is. And that is also how you get to be your own boss, something truly valued here. So basically, if you're successful, you run your own business, if you're not, you work a the company till you retire.

In Japan, if you're successful, you climb the same corporate ladder until you die. If you fail, you have to start your own mom and pop store. There's no innovation. Of course in the cool high-tech crap there is, but in the day to day aspirations and dreams of the common graduate. Nope.

Kind of an odd thing to ponder when comparing societies.

Stu!

[Kent Brockman]

Embrace nihilism. There is serenity in the blackness. There is blackness in the serenity.

"I used to have a mind
I used to wonder why...

Now I go from day to day...
and wait around to die".

[wasabi]

It's an interesting when people say Japanese aren't creative or great innovators. I suppose the majority follow the company line, but there are plenty of quiet acheivers out there. Here's one interesting story I found:

http://www.reuters.com/newsArticle.jhtml?type=topNews&storyID=3096592

[Stu]

Oh, do not get me wrong, the Japanese are great at techinical innovation. Having the Lexus be the first assembled with ever touching human hands was no mistake. Japanese engineers are the finest. The ingenuity there is, well... ingenious.

I'm talking about the basic spirit of entrepeneuralism(sp?) as even in this article, you can see. I'm not saying that what this guy is doing is wrong. In fact I wish more people had this humbleness in their life. Bill Gates is impressive to me as well as he gives away hundred of millions of dollars at a time just because he has it and realizes he'll never ever ever has to worry about money even for generations to come.

The part that is lacking is not the greed driven entrenpeneuralism of capitalism, but the sense of wanting to be your own boss value of it. And deep down, I believe thats what drives most college grads to want to own their own business and be successful in that respect. To be the decision maker. Even if your business never makes you more than $60k/year.

Stu!

[JerseyBoy]

This thread has been dormant. Maybe it is a fitting time to resurrect it.

[-英雄-]

how do you think Japan's lack of natural resources and inability to feed itself is going to affect the situation?

[wasDOUGLAS]

how do you think Japan's lack of natural resources and inability to feed itself is going to affect the situation?

Oil. Bottom line. If it can make it through the next few years AND push ahead with massive changes in battery technology/BEV/Hybrid transportation AND succesful linkages with an emerging China (also making massive investments in electrical transportation), it has a shot.

Seeing the new BYD Phev (plug-in electric vehicle) and the Paris auto show was encouraging. BYD has already succesfully leapfrogged GM, Nissan and Honda.

If any of those above linkages fall apart...I don't Japan maintaining much of a standard of living within 10 years.

[JerseyBoy]

how do you think Japan's lack of natural resources and inability to feed itself is going to affect the situation?
I think the lack of natural resources is not the fatal issue as far as the country's economic growth (it could be a blessing--you see why it is so in the texts below). If you look in the past, nations developed its industrial base and its wealth regardless of the availability of the natural resources.

City states in Europe, England, continental Europe, North America, and Japan all followed this model (almost in that order). At the beginning of industrialization, the governments protect their nascent industries from the overseas competitions. Once the industries are established, the governments demand the other countries open their markets. European colonies served its masters very well as Europe made the products while colonies supplied natural resources or raw materials.

The good case studies is the post WW2 Germany. Initially, allied forces tried to bring Germany back to pastorisum and agricultural industries by destroying its industrial base (Morgenthau Plan). As every knows, that did not work. So, allied forces changed gears to make Germany develop its industrial base (similar to the Marshall Plan program for other war ravaged European countries).

Now, back in the current age.

If you look at the countries which specialize in agriculture, what would you see? You would see a poor country which cannot feed its own people even though they are producing food and raw materials. The market reform decimated the Russian industrial base and it now relies heavily on oil and gas (natural resources).

A lack of industrial base (including high tech, IT, and other new industries) makes those countries poor as a whole, even if it is rich in natural resources. If it specializes in producing rice, a country is too dependent on one agricultural area, which increases the risk of the mass crop failure, causes over production (which leads to reduced revenue), takes away the workers who could be deployed for building the industrial base).

Often, industrialized countries' advanced industrial base (and its human capital which supports those industries) afford better agricultural industries (in terms of supporting the agricultural workers at the decent wage level and implementing new methods in agriculture).

So, in a way, lack of raw materials and natural resources help the countries to invest in industrialization which make the whole country wealthy. For example, Australia set up its industrial base (even thought it is not competitive in the global market) which was a good way to make it maintain the higher living standard. If it succumbed to the colonial master's wish to make it stay in the agriculture and raw material producer, Australia would be a totally different country we see today.

The Japanese government is mindful of Japan's farm lobby. So, the prices on crop produced in Japan tend to have a minimum floor to maintain the certain standards for Japanese who engage in agriculture. Because of other industries in Japan, the residents in Japan can support the higher crop prices (trickle down effect from other industries to the agriculture industry). So far, Japan has been trying to diversify its economic base (industry, service, and raw materials) as some parts of economy can support others in time of crisis or market collapse.

If you follow this line of thinking, you could reach an conclusion that Japan would be able to import food and raw materials from other countries, as long as it can earn the foreign exchanges through trades and maintain the domestic economic growth (these caveats are the crux of the problems for Japan's future).

But, as far as Japan's future is concerned, I think its economic vibrancy and its living standard might decline. Its aging population will put a significant pressure on its working-age population and government spending. This will reduce the allocation for the future investments. Japan's domestic markets are basically a dead end now as its future growth is close to zero. My hunch is it will dip into a negative number. Other more dynamic countries will surpass Japan in the future.

[-英雄-]

I ... <snip> ... future.

thanks for the thorough answer.

[karuojisan]

Bongo TRWA - thank you again.

The centralisation of Japan on Tokyo and to a less extent Osaka is really hurting the place.

th


I agree. Japan can't just be centered around 2 cities. It causes a brain drain to the rest of the country, and more poeple flock to the 2 cities. It has also destroyed the agriculture sector. All the farmers have fled to the cities. They really need to farm some work out side of Tokyo and Kansai.

I also think that Korea has about caught up to Japan in its' ability to mnfg high quaility products. Making it harder for Japan to capture that market.

[karuojisan]

I thought about this and actually came up with it on my own.

When I ask my peers coming out of my college, I ask them what they want to do eventually, most will say they want to start their own business. That's where the money is. And that is also how you get to be your own boss, something truly valued here. So basically, if you're successful, you run your own business, if you're not, you work a the company till you retire.

In Japan, if you're successful, you climb the same corporate ladder until you die. If you fail, you have to start your own mom and pop store. There's no innovation. Of course in the cool high-tech crap there is, but in the day to day aspirations and dreams of the common graduate. Nope.

Kind of an odd thing to ponder when comparing societies.

Stu!

I think th elack of motivation drilled in since school mixes poorly with long days. WTF do business do at work for 12 hours a day, everyday? If I had that schedule I'd be less productive than if I worked 40hrs/week.
Being tired and miserable does not lead to an effiecent workforce. The Japanese seem to super believe in over training as the best way to success.

[Jacque_S]

I think th elack of motivation drilled in since school mixes poorly with long days. WTF do business do at work for 12 hours a day, everyday? If I had that schedule I'd be less productive than if I worked 40hrs/week.
Being tired and miserable does not lead to an effiecent workforce. The Japanese seem to super believe in over training as the best way to success.

It's an older paradigm, not that dissimilar from the way labor was considered just another input as the West industrialized as well. In Japan I believe this was exacerbated by their lack of humanistic tradition. They caught up in many respects - I'd never drive a N American made car over a Japanese one for eg - but in many they still lag very far behind. There's no evidence that they are more educated or more productive than those of us who didn't go to school on Saturday and insist on leaving work at a reasonably decent hour.

[karuojisan]

It's an older paradigm, not that dissimilar from the way labor was considered just another input as the West industrialized as well. In Japan I believe this was exacerbated by their lack of humanistic tradition. They caught up in many respects - I'd never drive a N American made car over a Japanese one for eg - but in many they still lag very far behind. There's no evidence that they are more educated or more productive than those of us who didn't go to school on Saturday and insist on leaving work at a reasonably decent hour.

Well I agree that their work ethic is sound. But I think the long hours have to have anumbing affect.
My host Dad worked 10-12 hour days, during the off season. It seemed to take a lot out of him. He was stilla cool fun guy though. It just seems like he had to work too much. It would be easier I feel to have him work 40-50 hrs a week, and give him real OT when they NEED him to work a lot.

The Auto mrkt is going to get bigger/more competative with Chinese/Korean/Indian companies coming up.

[edin日本]

The Auto mrkt is going to get bigger/more competative with Chinese/Korean/Indian companies coming up.

More competitive=yes. Bigger=no. The market is saturated now, the automakers were barely making money as it was, with the entry of new players the market share of the big carmakers will decrease. Expect a shakeout.

[steki47]

I agree. Japan can't just be centered around 2 cities. It causes a brain drain to the rest of the country, and more poeple flock to the 2 cities. It has also destroyed the agriculture sector. All the farmers have fled to the cities. They really need to farm some work out side of Tokyo and Kansai.

Actually, 3 cities. Nagoya has worked hard to build its white-collar sector in recent years. They have always had a large manufacturing industry, hence the extensive bombing in WWII. But they have moved some office work there as well. I am not trying to argue with you here, just correcting slightly. You make a valid point later in the paragraph, but the move into the urban centers is not just in Japan. Globally, we now live in an increasingly urban world.
If you really wanted to go forward with your idea, perhaps there should be a 4th urban center in Japan. Somewhere in Tohoku-ken. May not be too feasible, but it would spread the jobs a bit more evenly. Deflate Tokyo real estate prices a bit as well.


I also think that Korea has about caught up to Japan in its' ability to mnfg high quaility products. Making it harder for Japan to capture that market.

"Has about caught up to Japan"? Sorry, not yet. Not in the auto industry, certainly not in steel. The Japanese still have a huge lead. The Koreans are chipping away at Japan's marketshare in some areas, but they still have a long way to go before they can truly threaten Japan, Inc.

[karuojisan]

More competitive=yes. Bigger=no. The market is saturated now, the automakers were barely making money as it was, with the entry of new players the market share of the big carmakers will decrease. Expect a shakeout.

Sorry I meant bigger as in more competetion with more R&D costs.
For instance with more and more tech availible it takes tha much more to design a car. I read that is costs $50M to design a car door now.
So I think that will make small frys like Mitsubishi more dependent on other companies. Plus others like Chrys will go out.

[karuojisan]

Actually, 3 cities. Nagoya has worked hard to build its white-collar sector in recent years. They have always had a large manufacturing industry, hence the extensive bombing in WWII. But they have moved some office work there as well. I am not trying to argue with you here, just correcting slightly. You make a valid point later in the paragraph, but the move into the urban centers is not just in Japan. Globally, we now live in an increasingly urban world.
If you really wanted to go forward with your idea, perhaps there should be a 4th urban center in Japan. Somewhere in Tohoku-ken. May not be too feasible, but it would spread the jobs a bit more evenly. Deflate Tokyo real estate prices a bit as well.



"Has about caught up to Japan"? Sorry, not yet. Not in the auto industry, certainly not in steel. The Japanese still have a huge lead. The Koreans are chipping away at Japan's marketshare in some areas, but they still have a long way to go before they can truly threaten Japan, Inc.

True Nagoya too. But the problem is that they draw people in from all of Japan. Which make sthe rest of Japan well empty. Sure the US is urbanizing too, but not at the expense of the rural areas. We still have plnety of farmers.

As for tech, I read that Koreans though not the biggest producers of Steel did so with more profit than Japan.
Cars, they are lagging, but Japan is no longer in a comfortable lead. Japan still leads, but they will have to try hard to stay ahead.
With TVs, Samsung is basically the best. As Sony shares their tech to make HD tvs.

Japan no longer has the comfortable lead it once had. Soon it will not have the lead it once enjoyed.

[edin日本]

Sorry I meant bigger as in more competetion with more R&D costs.
For instance with more and more tech availible it takes tha much more to design a car. I read that is costs $50M to design a car door now.
So I think that will make small frys like Mitsubishi more dependent on other companies. Plus others like Chrys will go out.

To develop new technology is an expensive undertaking, most carmakers have a extensive library of designs, techniques and technologies that have been researched over time and can be used to develop new designs on the cheap.

The problem with designing a vehicle is to just put the bare minimum amount of technical innovation into the product and yet have it be innovative enough to be termed cutting edge design.

Funnily enough some of the most innovative and cutting edge car companies such as Tesla Motors and Zenn Car are purchasing their innovation from third parties such as EEstor or Scaled Composites.

[karuojisan]

To develop new technology is an expensive undertaking, most carmakers have a extensive library of designs, techniques and technologies that have been researched over time and can be used to develop new designs on the cheap.

The problem with designing a vehicle is to just put the bare minimum amount of technical innovation into the product and yet have it be innovative enough to be termed cutting edge design.

Funnily enough some of the most innovative and cutting edge car companies such as Tesla Motors and Zenn Car are purchasing their innovation from third parties such as EEstor or Scaled Composites.

You're right. Car tech is a slow going, but things are a changing. Ford's Fusion just wrecked the Camarys MPG in a recent article. Toyota the king of hybrids was seriousl slighted by Ford. Anyhow in this mess who knows who will emerge.


but back to our point. If you look at cellphones in the US, most of them are Samsung, LG, and Nokia. I see very few Sonys. I'm just saying that Korea has caught up and is in contention in many areas.

[edin日本]

You're right. Car tech is a slow going, but things are a changing. Ford's Fusion just wrecked the Camarys MPG in a recent article. Toyota the king of hybrids was seriousl slighted by Ford. Anyhow in this mess who knows who will emerge.


but back to our point. If you look at cellphones in the US, most of them are Samsung, LG, and Nokia. I see very few Sonys. I'm just saying that Korea has caught up and is in contention in many areas.

Same concept as used by the Japanese when they originally entered the world market. First was transistor radios, tapedecks and calculators and then they followed up with the big ticket items such as motorbikes, cars etc.

Korea would like to follow the same recipe but they can't due to their next door neighbour-a big nasty country that reverse engineers and copies everything it can and then sells it domestically and internationally at cut rate prices.

[Kisame]

As a Foreigner who wants to see the Japanese eccomony suceed I am wondering what kind of careers in Japan help contribute to this? I mean if I am living in another country I want to contribute if I can and not just take.

[steki47]

As a Foreigner who wants to see the Japanese eccomony suceed I am wondering what kind of careers in Japan help contribute to this? I mean if I am living in another country I want to contribute if I can and not just take.

Well, most of us pay taxes. That helps. Many of us teach them English. Some of us have made genetic contributions to this society. That may help, somehow.

[midnight rambler]

True Nagoya too. But the problem is that they draw people in from all of Japan. Which make sthe rest of Japan well empty. Sure the US is urbanizing too, but not at the expense of the rural areas. We still have plnety of farmers.

As for tech, I read that Koreans though not the biggest producers of Steel did so with more profit than Japan.
Cars, they are lagging, but Japan is no longer in a comfortable lead. Japan still leads, but they will have to try hard to stay ahead.
With TVs, Samsung is basically the best. As Sony shares their tech to make HD tvs.

Japan no longer has the comfortable lead it once had. Soon it will not have the lead it once enjoyed.
Interesting. My take on it is that in terms of technology and engineering Japan is still leaps and bounds ahead of Korea in most regards, and this will not change. There are a few exceptions, but Korean products are rarely better (Samsung makes a few products that match Sony et al, like flatscreen TVs, but nothing in a league of their own), most are just cheaper, and more often of inferior design and quality.

As another poster mentioned, cheap Korean products are now being displaced by Chinese ones (which are cheaper yet). This puts Korea into an tough spot, as overseas people shopping for quality will continue buying Japanese (or Western) products, and those shopping for bargains will buy more and more Chinese and less Samsung (Chinese products will keep improving over time, while Korean ones will get more expensive). So the question is whether or not Korean companies will be able match the level of Japan's to compete in that segment of the market. I would say it's not likely, the Japanese are too damn serious and good at it and have way more money and connections... (the other issue is pricing, nobody in the US wants to pay the same price for a Hyundai as a Nissan even if the quality were the 'same').
Basically my guess is that Korean manufacturing exports will get squeezed between those of China and Japan, and Korea will struggle to stay relevant.

[vinod]

JAPAN's FUTURE IS ANONYMOUS !
Right now I know Japan's economy sucks, and I've read so many posts with people saying that Americans wanting to work in Japan don't have a chance because there are so many bilingual Japanese with out jobs that are so much better qualified than we are, so why would we get hired. Soooo much negative stuff!!! However, I still have about 4 years of college left (already finished 2) so right now their economy doesn't bother me too much, it's the future I'm interested in. Are there any people here that have any kind of idea where their economy is headed (like if anything the government is trying will be likely to work)? Does ANYBODY have anything POSITIVE to say??? I'm a very optimistic and positive person and it's so sad to see people (myself included) get disheartened by what other people are posting. Even if it is the reality, there ARE people that can work hard enough to achieve it.

tb