Osaka – Sunday, August 29, 2010
Nikkei, Japanese newspaper specialized in business and economy, reported today that Japanese IT related companies started to enter the U.S. healthcare IT market, when the U.S. counterparts have been accelerating their investment in this market. NEC is to enter the U.S. healthcare inspection business in the summer 2011. The company invests in the U.S. healthcare venture business and develops a system that determines risk of having disease by inspecting proteins in the blood. Fuji film integrated their U.S. healthcare information system affiliates to establish and strengthen their business of diagnostic imaging systems.
The U.S. preventive healthcare market is expected to grow with president Obama’s healthcare reform, and the U.S. companies have been entering and/strengthen their businesses in this market. Competition in the new promising healthcare IT market has started and is expected to get fierce.
1. Why is the U.S. preventive healthcare marketing promising and is expected to grow?
The healthcare IT demand is expected to grow dramatically with the increase in the healthcare insurance consumers. This is because of the healthcare insurance reform law was enacted in March. This law aims all of the U.S. citizens to benefit from the healthcare insurance.
Demand of preventive healthcare is also expected to grow because all the preventive healthcare cost is to be paid by insurance.
2. How are Japanese companies to enter and/or strengthen their healthcare IT business in the U.S.?
1) NEC
NEC is to enter the U.S. healthcare inspection business in the summer 2011 and to make healthcare IT business as a new business pillar. The company is to develop a new system that determine risk of having diseases by inspecting proteins in the blood, whose market size is expected to grow as big as more than 200 billion yen worldwide, the U.S. being the biggest market.
NEC invested 5 million USD (approximately 400 million yen) in a U.S. venture company and made alliance with the venture company. The venture company has a technology of inspecting in details proteins in blood. Based on the data from this inspection, NEC is to system that immediately determines risk of having diseases. The system will be located in a data centre in the U.S. The inspection result will be delivered to the customers by the Internet, precisely speaking, “cloud computing”.
NEC will be entrusted with the inspection from pharmaceutical companies that initiates “order made healthcare”, treatment tailoring to meet constitution of each patients, from summer 2011. From 2012 the company is to be entrusted with the inspection also from hospitals. The company is also to study health check service for individuals; collecting bloods in places such as at super market and send the inspection result to mobile terminal.
2) Fuji Film
Fuji Film integrated an affiliate strong in diagnostic imaging management (located in Indiana) and another affiliate engaged in system supporting diagnostic tasks earlier this month.
Fuji Film had acquired the two affiliates after 2006 and has been supplying systems to approximately 700 U.S. and worldwide healthcare organizations. By integrating the two affiliates, the experts believe that the company is to broaden the range of services to expand their business, so that they can achieve the target of supplying their systems to 1000 organizations very soon.
3. How have the U.S. companies been developing their healthcare IT business?
The U.S. companies of IT and healthcare have been accelerating investment in healthcare IT business. This is because with President Obama’s healthcare reform aims to reduce 32 million citizens without healthcare insurance in the next 10 years, meaning growth of healthcare IT demand such as electronic clinical record.
GE and Intel agreed to integrate their in-home healthcare system business earlier year. They plan to invest more than 250 million USD by 2014 and develop in-home healthcare system for senior citizens and demented patients.
Oracle acquired a software company specialized in healthcare software with 68.5 million USD.
Dell acquired an IT company with 3.9 billion USD to enter electronic clinical record business.
2010年8月29日日曜日
2010年8月22日日曜日
Japan Ventures Filing IPO in Asia Emerging Equity Markets
Osaka – Sunday, August 22, 2010
Nikkei, Japanese newspaper specialized in business and economy, reported today that Japanese Venture companies are filing IPO in Asia emerging equity markets instead of in Japan stock exchange market. It is estimated that by the end of next year more than 10 companies are to file IPO not in Japan where IPO filing has been sluggish but in Korea and Taiwan where IPO has recovered and stock trading is active.
In addition to effectively raising capital, such companies aim to enhance company awareness and leverage in expanding business in Asia emerging countries.
If more leading and promising companies should list in stock market outside Japan instead of in Japan market, it is possible that hollowing of Japan’s emerging equity market accelerates.
1. Which companies are filing in Asia emerging equity market?
Major Japanese Venture Companies Filing IPO Abroad
(Source: Nikkei, translated by the author)
Company Name / Business / Year of Foundation / Sales (million yen/year)
DLE Inc / Production of animation and videos / 2001 / 800
Zero / Internet payment / 1989 / 3,000
Food Discovery / Lecture on vegetable sommelier, green vegetable sales / 2001 / 1,300
Office 24 / OA equipment sales, office convenience / 1993 / 7,500
Salvatore Cuomo Japan / Pizza franchise chain / 2005 / 5,600
DLE Inc http://www.dle.jp/en/, an animation production company based in Tokyo, is to file IPO in Taiwan equity market by June, 2011. They had been planning to file in Japan but changed their policy because Japanese animation is highly evaluated abroad. The company has already made alliance with a Taiwan production company, and aims to expand their business, taking the opportunity of IPO.
Zero http://www.zeroweb.co.jp/, an Internet payment company based in Tokyo, is to file IPO in an emerging equity market called “Catalyst” of Singapore. The company aims to raise capital necessary for future growth and enter Asia market.
Quite a number of companies are planning to file in an emerging equity market called “KOSDAQ” of Korea. Food Discovery http://fooddiscovery.jp/, a company based in Tokyo that is engaged in businesses including lecture on vegetable sommelier and green vegetable sales, is to file IPO in KOSDAQ in October this year. Office 24 http://www.webjapan.co.jp/, a company based in Tokyo engaged in business of OA equipment sales and office convenience, also has established its policy of filing IPO in KOSDAQ around November this year. Salvatore Cuomo Japan http://www.salvatore.jp/, a Tokyo based pizza chain company, also is studying to file in KOSDAQ. The companies aim to raise capital in Korea and utilize it in building and establishing local branch network.
Internet (online) business companies and semiconductor related companies are also planning to file IPO in emerging Asia instead of Japan.
2. Have Japanese venture companies been filing IPO in Asia emerging equity market until today?
No, only 1 Japanese venture company (excluding local joint venture companies) had filed IPO in KOSDAQ. One after the other Japanese venture companies filed IPO in NASDAQ in the U.S. around 2000. Then Japan local emerging stock exchange markets (e.g. Mothers = Market of the High-Growth and Emerging Stocks, JASDAQ = Japan Association of Securities Dealers Automated Quotations) were drastically improved and Japanese venture companies has been filing IPO to such markets instead of those of abroad.
3. Have Japanese companies been active in filing IPO lately?
No. Japanese companies filing for IPO has been decreasing in the last 4 years, with the negative effects of the worldwide depression. In 2009, only 19 companies filed for IPO, which is 1/10 of the peak in 2006. Experts estimates that only 20-30 companies will file for IPO in 2010.
The amount of capital raised by IPO and after being listed has also been sluggish. The average capital raised in 2009 was 3 billion yen, which is less than that of 2006.
4. Why Japanese venture companies are aggressive in filing IPO in Asia emerging stock exchange market?
1) Asia emerging stock exchange market is active
Asia emerging stock exchange markets are now attracting investment capital, and many companies are filing IPO in such stock exchange markets. According to WFE, 56 companies filed IPO in KOSDAQ in 2009, which is 47% increase from 2008, and 14 companies filed IPO in Catalyst in 2009, which is double of 2008.
In addition, Asia emerging stock exchange markets are making upmost efforts in attracting companies abroad filing IPO in their market. Taiwan Equity Market has abolished regulation for foreign companies being listed in their market. KOSDAQ also are focusing on attracting foreign companies to list in their market.
2) Hurdle for filing IPO in Asia emerging equity market is low
Time required to be listed after filing is far shorter for Asia emerging equity market compared to those for Japan. It takes more than 2 years in Japan, when it takes only approximately 1 year for KOSDAQ and 1-1/2 years for Taiwan.
Profit criteria, a critical requirement for filing IPO, is less for Asia emerging equity market compared to that of Japan. The criterion is 500 million yen for JASDAQ, when it is approximately 150 million yen of net profit for KOSDAQ. For Catalyst, there is no regulation on this issue.
5. What are the disadvantages of filing IPO in Asia emerging equity market?
1) Additional cost is necessary
Additional cost would be necessary. Such cost includes cost of local IR to be performed in local language, and cost to be paid to lawyers accompanied by information disclosure.
2) Alliance with sponsor company is required (in some cases)
In filing IPO in Catalyst, companies are requested to make an alliance with a sponsor company that is responsible as guarantee of listing. Finding an appropriate sponsor company and making an alliance for this purpose means much additional work.
Nikkei, Japanese newspaper specialized in business and economy, reported today that Japanese Venture companies are filing IPO in Asia emerging equity markets instead of in Japan stock exchange market. It is estimated that by the end of next year more than 10 companies are to file IPO not in Japan where IPO filing has been sluggish but in Korea and Taiwan where IPO has recovered and stock trading is active.
In addition to effectively raising capital, such companies aim to enhance company awareness and leverage in expanding business in Asia emerging countries.
If more leading and promising companies should list in stock market outside Japan instead of in Japan market, it is possible that hollowing of Japan’s emerging equity market accelerates.
1. Which companies are filing in Asia emerging equity market?
Major Japanese Venture Companies Filing IPO Abroad
(Source: Nikkei, translated by the author)
Company Name / Business / Year of Foundation / Sales (million yen/year)
DLE Inc / Production of animation and videos / 2001 / 800
Zero / Internet payment / 1989 / 3,000
Food Discovery / Lecture on vegetable sommelier, green vegetable sales / 2001 / 1,300
Office 24 / OA equipment sales, office convenience / 1993 / 7,500
Salvatore Cuomo Japan / Pizza franchise chain / 2005 / 5,600
DLE Inc http://www.dle.jp/en/, an animation production company based in Tokyo, is to file IPO in Taiwan equity market by June, 2011. They had been planning to file in Japan but changed their policy because Japanese animation is highly evaluated abroad. The company has already made alliance with a Taiwan production company, and aims to expand their business, taking the opportunity of IPO.
Zero http://www.zeroweb.co.jp/, an Internet payment company based in Tokyo, is to file IPO in an emerging equity market called “Catalyst” of Singapore. The company aims to raise capital necessary for future growth and enter Asia market.
Quite a number of companies are planning to file in an emerging equity market called “KOSDAQ” of Korea. Food Discovery http://fooddiscovery.jp/, a company based in Tokyo that is engaged in businesses including lecture on vegetable sommelier and green vegetable sales, is to file IPO in KOSDAQ in October this year. Office 24 http://www.webjapan.co.jp/, a company based in Tokyo engaged in business of OA equipment sales and office convenience, also has established its policy of filing IPO in KOSDAQ around November this year. Salvatore Cuomo Japan http://www.salvatore.jp/, a Tokyo based pizza chain company, also is studying to file in KOSDAQ. The companies aim to raise capital in Korea and utilize it in building and establishing local branch network.
Internet (online) business companies and semiconductor related companies are also planning to file IPO in emerging Asia instead of Japan.
2. Have Japanese venture companies been filing IPO in Asia emerging equity market until today?
No, only 1 Japanese venture company (excluding local joint venture companies) had filed IPO in KOSDAQ. One after the other Japanese venture companies filed IPO in NASDAQ in the U.S. around 2000. Then Japan local emerging stock exchange markets (e.g. Mothers = Market of the High-Growth and Emerging Stocks, JASDAQ = Japan Association of Securities Dealers Automated Quotations) were drastically improved and Japanese venture companies has been filing IPO to such markets instead of those of abroad.
3. Have Japanese companies been active in filing IPO lately?
No. Japanese companies filing for IPO has been decreasing in the last 4 years, with the negative effects of the worldwide depression. In 2009, only 19 companies filed for IPO, which is 1/10 of the peak in 2006. Experts estimates that only 20-30 companies will file for IPO in 2010.
The amount of capital raised by IPO and after being listed has also been sluggish. The average capital raised in 2009 was 3 billion yen, which is less than that of 2006.
4. Why Japanese venture companies are aggressive in filing IPO in Asia emerging stock exchange market?
1) Asia emerging stock exchange market is active
Asia emerging stock exchange markets are now attracting investment capital, and many companies are filing IPO in such stock exchange markets. According to WFE, 56 companies filed IPO in KOSDAQ in 2009, which is 47% increase from 2008, and 14 companies filed IPO in Catalyst in 2009, which is double of 2008.
In addition, Asia emerging stock exchange markets are making upmost efforts in attracting companies abroad filing IPO in their market. Taiwan Equity Market has abolished regulation for foreign companies being listed in their market. KOSDAQ also are focusing on attracting foreign companies to list in their market.
2) Hurdle for filing IPO in Asia emerging equity market is low
Time required to be listed after filing is far shorter for Asia emerging equity market compared to those for Japan. It takes more than 2 years in Japan, when it takes only approximately 1 year for KOSDAQ and 1-1/2 years for Taiwan.
Profit criteria, a critical requirement for filing IPO, is less for Asia emerging equity market compared to that of Japan. The criterion is 500 million yen for JASDAQ, when it is approximately 150 million yen of net profit for KOSDAQ. For Catalyst, there is no regulation on this issue.
5. What are the disadvantages of filing IPO in Asia emerging equity market?
1) Additional cost is necessary
Additional cost would be necessary. Such cost includes cost of local IR to be performed in local language, and cost to be paid to lawyers accompanied by information disclosure.
2) Alliance with sponsor company is required (in some cases)
In filing IPO in Catalyst, companies are requested to make an alliance with a sponsor company that is responsible as guarantee of listing. Finding an appropriate sponsor company and making an alliance for this purpose means much additional work.
2010年8月15日日曜日
New Retirement Concept in Rapidly Aging Japan
Osaka – Sunday, August 15, 2010
Nikkei, Japanese newspaper specialized in business and economy, reported in their special article about emerging new retirement concept of baby boomers in rapidly aging society of Japan. One of the trigger is the fact that the age people can start receiving a part of their welfare pension insurance is to be raised from 60 to 61 in 2013, as the first step of gradual rise to 65 by 2025.
The official retirement age in Japan is 60, and it means that people currently below 57 years old will temporarily lose means of income unless their employment is extended. Also, leveraging people over 60 is vital for the economy and the society of Japan when it is estimated that in 2025 two people of the generation still working is to support one elderly citizen.
1. How Japan is an aging society?
1) Japan is already a super aged society
Japan is already a super aged society, with 23% of its population being over 65 years old. This is because according to categorization, it is aging society if the ratio of population over 65 years old is over 7%, aged society if it is over 14%, and super aged society if it is over 21%.
Moreover, in a few years, baby boomers will reach 65 years or older to join elderly citizen and according to the estimation by the UN the percentage of the elderly (i.e. people above 65 years old) is to be over 30%. This is more than 18% of the U.S., 22% of France and 25% of Germany. Thus, Japan is to face a super aged society that no other countries in the world have experienced.
2) Japan is to face decreasing population and shortage of labour
In super aging society, Japan is to face decrease in population and shortage of labour. It is estimated that in 2025 the population will be 119 million, which is minus 7.9 million from the current 127 million. On the other hand, labour population (people whose age is 15 – 64) that supports the country’s economy is to decrease by 10.3 million. This means that potential economic growth will further decrease.
3) Social security benefit cost will expand
With slowing down/decrease in economic growth meaning less income, social security benefit cost will reach 141 billion yen in 2025, which is a drastic increase from 98 billion yen in 2009. Therefore, managing to pay cost for pension, healthcare and nursing care is a critical challenge for Japan.
2. How some companies and organizations started to adapt to super aged society?
1) Re-employment
In April 2010, Honda implemented a system in which in principle the company re-employs all retired workers (60 years old) who would like to continue working until they reach the age of 65, with the stance of “eliminate anxiety of employees when we are to face 2013, the start of year without pension benefit.” And the company already has re-employed 90 employees out of 228 retired workers.
This is an evolutional system because only 40% of companies allow, upon their request, retirement employees to continue working, when including business owners, 70% men of 60-64 years old and 40% women of 60-64 years old work already.
2) Employing people over 60 years old exclusively
A manufacturer located in Gifu prefecture that produces parts and components for consumer electronics been recruiting people over 60 years old exclusively. They do so by recruiting with the catch copy of “we are looking for motivated people, but the candidate must be over 60 years old”, and recently hired 8 new people. For this reason, half of their 90 employees are what is called “silver human resources” who are over 60 years old. The objective is minimizing personnel cost while improving factory operating ratio at weekends and holidays.
3) New working system for engineers over 60 years old
A manufacturer located in Chiba prefecture that produces components of construction machinery implemented a flexible working system for engineers over 60 years old. The target engineers can work from 3 hours a day and from 3 days a week. The reason for hiring senior employees is the necessity of smoothing out and balancing optimum employment. They had 50 veteran engineer at the peak but now only 16 with the worldwide recession. The company plans to call back engineers who used to work for them.
4) Nursing assistance volunteer system
A city in Tokyo implemented a nursing assistance volunteer system in 2007. In a case of a 72 year old man who leverages this system, he volunteers 2 days a week, helping with house cleaning, washing dishes and serving trays. He acquires 1000 points for 10 duties and can save up to 5000 points a year. He can utilize the point (1 point = 1 yen) for premium for nursing-care insurance.
A professor comments that this kind of system contributes to acquiring caregivers and decreasing insurance cost if network of elders expands. Since the implementation in 2000, premium for nursing-care insurance increased by 40%. People who are certified as being in need of care above 65 years old is already as many as 4.7 million people and caregiver is chronically insufficient.
Nikkei, Japanese newspaper specialized in business and economy, reported in their special article about emerging new retirement concept of baby boomers in rapidly aging society of Japan. One of the trigger is the fact that the age people can start receiving a part of their welfare pension insurance is to be raised from 60 to 61 in 2013, as the first step of gradual rise to 65 by 2025.
The official retirement age in Japan is 60, and it means that people currently below 57 years old will temporarily lose means of income unless their employment is extended. Also, leveraging people over 60 is vital for the economy and the society of Japan when it is estimated that in 2025 two people of the generation still working is to support one elderly citizen.
1. How Japan is an aging society?
1) Japan is already a super aged society
Japan is already a super aged society, with 23% of its population being over 65 years old. This is because according to categorization, it is aging society if the ratio of population over 65 years old is over 7%, aged society if it is over 14%, and super aged society if it is over 21%.
Moreover, in a few years, baby boomers will reach 65 years or older to join elderly citizen and according to the estimation by the UN the percentage of the elderly (i.e. people above 65 years old) is to be over 30%. This is more than 18% of the U.S., 22% of France and 25% of Germany. Thus, Japan is to face a super aged society that no other countries in the world have experienced.
2) Japan is to face decreasing population and shortage of labour
In super aging society, Japan is to face decrease in population and shortage of labour. It is estimated that in 2025 the population will be 119 million, which is minus 7.9 million from the current 127 million. On the other hand, labour population (people whose age is 15 – 64) that supports the country’s economy is to decrease by 10.3 million. This means that potential economic growth will further decrease.
3) Social security benefit cost will expand
With slowing down/decrease in economic growth meaning less income, social security benefit cost will reach 141 billion yen in 2025, which is a drastic increase from 98 billion yen in 2009. Therefore, managing to pay cost for pension, healthcare and nursing care is a critical challenge for Japan.
2. How some companies and organizations started to adapt to super aged society?
1) Re-employment
In April 2010, Honda implemented a system in which in principle the company re-employs all retired workers (60 years old) who would like to continue working until they reach the age of 65, with the stance of “eliminate anxiety of employees when we are to face 2013, the start of year without pension benefit.” And the company already has re-employed 90 employees out of 228 retired workers.
This is an evolutional system because only 40% of companies allow, upon their request, retirement employees to continue working, when including business owners, 70% men of 60-64 years old and 40% women of 60-64 years old work already.
2) Employing people over 60 years old exclusively
A manufacturer located in Gifu prefecture that produces parts and components for consumer electronics been recruiting people over 60 years old exclusively. They do so by recruiting with the catch copy of “we are looking for motivated people, but the candidate must be over 60 years old”, and recently hired 8 new people. For this reason, half of their 90 employees are what is called “silver human resources” who are over 60 years old. The objective is minimizing personnel cost while improving factory operating ratio at weekends and holidays.
3) New working system for engineers over 60 years old
A manufacturer located in Chiba prefecture that produces components of construction machinery implemented a flexible working system for engineers over 60 years old. The target engineers can work from 3 hours a day and from 3 days a week. The reason for hiring senior employees is the necessity of smoothing out and balancing optimum employment. They had 50 veteran engineer at the peak but now only 16 with the worldwide recession. The company plans to call back engineers who used to work for them.
4) Nursing assistance volunteer system
A city in Tokyo implemented a nursing assistance volunteer system in 2007. In a case of a 72 year old man who leverages this system, he volunteers 2 days a week, helping with house cleaning, washing dishes and serving trays. He acquires 1000 points for 10 duties and can save up to 5000 points a year. He can utilize the point (1 point = 1 yen) for premium for nursing-care insurance.
A professor comments that this kind of system contributes to acquiring caregivers and decreasing insurance cost if network of elders expands. Since the implementation in 2000, premium for nursing-care insurance increased by 40%. People who are certified as being in need of care above 65 years old is already as many as 4.7 million people and caregiver is chronically insufficient.
2010年8月14日土曜日
Japan Enters and Expands Mobile Content Business in China
Osaka – Saturday, August 14, 2010
Nikkei, Japanese newspaper specialized in business and economy, reported on August 12 in its evening paper that Japanese mobile content developers/suppliers are starting to provide contents to Chinese online customers. Since the start of “I-mode” mobile service in 1997, mobile content companies developed and provided variety of mobile contents and services and were successful
The Japanese web content companies are to leverage know-now and systems they have acquired and established through their business in Japan in expanding their business, first in China, for their further growth and sustainability.
1. What is the background of Japanese mobile content developers/suppliers entering Chinese market?
1) China’s mobile content market has an enormous potential
China has become (one of the) largest mobile phone market, and it is expected that 3G mobile phones and smart phones will drastically become popular. This means that it is quite possible for the China’s mobile content market to drastically grow, and China’s mobile content market potential is huge.
2) Japanese mobile content developers have abundant know-how
Japan is ahead of China in 3G, and mobile content developers have already been successful in their businesses in Japan. They could leverage know-how and systems they already possess in entering and penetrating Chinese mobile content market for their further growth, expanding their business globally.
3) Growth of Japan’s mobile content business slows down
Japanese mobile content companies have been successful in developing and providing such contents as fortune telling and decoration mails; however, Japan domestic market for that kind of business is no longer to growth much as it has been. Therefore, Japanese mobile content companies need to create and/or seek for other markets or start new businesses for growth and sustainability.
2. What kind of content businesses are being started in China?
1) Weather information
A mobile content company called Weathernews Inc http://weathernews.com/global.html decided to start providing mobile paid contents on weather, for China Mobile. It has already started providing mobile web service from April 2010 in which subscribers in China can participate in, and post weather information around the nation.
The company first started the service free of charge to maximize their subscribers, and after a certain period plans to upgrade the services with high added value and navigate the subscribers to continue enjoying the paid contents. This is the strategy they used in Japan and was successful.
2) Fortune telling
Another mobile content company called Zappallas http://www.zappallas.com/en/ started providing service of fortune telling by tarot reading in the end of July 2010. The company has made alliance with a Chinese motile content distributor called Vogins, and receives revenue from the online customers via mobile terminal that can use mobile web site managed by Vogins. The fee is 2 RBM (approximately 25 yen) for utilizing the service 15 times.
The top management of Zappallas comments that with slowing down growth rate of Japan domestic mobile content business it is urgent for them to start and establish new businesses. It is for this reason that the company is speeding up penetrating the Chinese mobile content market.
3) Online comics
Nihon Enterprise http://www.nihon-e.co.jp/, a Japanese printing/publishing company started providing Japanese comics on mobile to 3 mobile-server provider including China Mobile. They first plan to provide total of 50 titles such as comics on golf, and aim to expand their overseas content business, starting with China.
The company has been providing online comic contents free of charge and is to switch to paid content in the beginning of November, 2010. The company has signed with approximately 50 China local comic writers. Their China business has been in the red until the fiscal quarter ending May 2010 but hopes that in annual base it turns to black. In addition, they are thinking of providing comics by Japanese writers in the future.
Nikkei, Japanese newspaper specialized in business and economy, reported on August 12 in its evening paper that Japanese mobile content developers/suppliers are starting to provide contents to Chinese online customers. Since the start of “I-mode” mobile service in 1997, mobile content companies developed and provided variety of mobile contents and services and were successful
The Japanese web content companies are to leverage know-now and systems they have acquired and established through their business in Japan in expanding their business, first in China, for their further growth and sustainability.
1. What is the background of Japanese mobile content developers/suppliers entering Chinese market?
1) China’s mobile content market has an enormous potential
China has become (one of the) largest mobile phone market, and it is expected that 3G mobile phones and smart phones will drastically become popular. This means that it is quite possible for the China’s mobile content market to drastically grow, and China’s mobile content market potential is huge.
2) Japanese mobile content developers have abundant know-how
Japan is ahead of China in 3G, and mobile content developers have already been successful in their businesses in Japan. They could leverage know-how and systems they already possess in entering and penetrating Chinese mobile content market for their further growth, expanding their business globally.
3) Growth of Japan’s mobile content business slows down
Japanese mobile content companies have been successful in developing and providing such contents as fortune telling and decoration mails; however, Japan domestic market for that kind of business is no longer to growth much as it has been. Therefore, Japanese mobile content companies need to create and/or seek for other markets or start new businesses for growth and sustainability.
2. What kind of content businesses are being started in China?
1) Weather information
A mobile content company called Weathernews Inc http://weathernews.com/global.html decided to start providing mobile paid contents on weather, for China Mobile. It has already started providing mobile web service from April 2010 in which subscribers in China can participate in, and post weather information around the nation.
The company first started the service free of charge to maximize their subscribers, and after a certain period plans to upgrade the services with high added value and navigate the subscribers to continue enjoying the paid contents. This is the strategy they used in Japan and was successful.
2) Fortune telling
Another mobile content company called Zappallas http://www.zappallas.com/en/ started providing service of fortune telling by tarot reading in the end of July 2010. The company has made alliance with a Chinese motile content distributor called Vogins, and receives revenue from the online customers via mobile terminal that can use mobile web site managed by Vogins. The fee is 2 RBM (approximately 25 yen) for utilizing the service 15 times.
The top management of Zappallas comments that with slowing down growth rate of Japan domestic mobile content business it is urgent for them to start and establish new businesses. It is for this reason that the company is speeding up penetrating the Chinese mobile content market.
3) Online comics
Nihon Enterprise http://www.nihon-e.co.jp/, a Japanese printing/publishing company started providing Japanese comics on mobile to 3 mobile-server provider including China Mobile. They first plan to provide total of 50 titles such as comics on golf, and aim to expand their overseas content business, starting with China.
The company has been providing online comic contents free of charge and is to switch to paid content in the beginning of November, 2010. The company has signed with approximately 50 China local comic writers. Their China business has been in the red until the fiscal quarter ending May 2010 but hopes that in annual base it turns to black. In addition, they are thinking of providing comics by Japanese writers in the future.
2010年8月12日木曜日
R&D / Patent Trend - Emerging Countries Enhance Presence When Japan Stagnates
Osaka – Thursday, August 12, 2010
Nikkei, Japanese newspaper specialized in business and economy, reported on August 11 that emerging countries such as China and India are enhancing their presence in R&D. Patents of emerging countries in fields such as life science and energy are drastically increasing in particular. The number of patents applied and released by China in environment field is more than that of western countries and Japan, indicating that China is enhancing its presence in R&D.
On the other hand, Japan seems to be stagnating. This is because companies have been narrowing down the technologies to be applied in line with their patent strategy. Also, patent application by Japanese companies to growing emerging markets tends to be less aggressive compared to western counterparts. Some experts give warning to such situation.
1. How the number of patent application and release by China and India has been increasing?
1) China
According to WIPO (World Intellectual Property Organization), Chinese companies have applied 203,257 patents in 2008, domestically and abroad, which is 14 times as much as 10 years ago. Japanese companied applied the most with 500,034 patents followed by the U.S. companies with 389,073 patents, then Chinese companies. The number of patents applied by Chinese business owners and small businesses increased eightfold from 2000 to 2008. The increase is prominent not only of patents of technologies that support high economic growth such as water pollution but also of advanced technologies such as LED (light-emitting diode) illumination.
One reason for the drastic increase in patent applied by Chinese companies and business owners is the policy of China government. When the government gives subsidy or reduces tax, one of the requirements is the number of patents held by the company or business owners. Also, whether it leads to patent is taken into account when giving financial R&D support to universities.
According to NISTP (National Institute of Science and Technology Policy), as many as 104,164 scientific articles by Chinese scientists were introduced in worldwide major journals in 2008, which is only behind the articles by the U.S. scientists In addition, they are often cited, implying that quality as well as quantity of articles by Chinese scientists has been dramatically improving.
2) India
Companies of India made application of 4,537 patents domestically and abroad in 2008, which is increase by over 60% from 2005. More than half of them were made in the U.S., mostly in such industries of IT and pharmaceuticals.
2. How Japanese companies have been increasing patent applications in China
1) Overall trend
In order to validate patents abroad, patents need to be applied and acquired in that particular country/region abroad; therefore, Japanese companies have been increasing their application in China when China market is growing. Approximately 20,000 applications were made in Japan and the U.S. n 1998 but as many as 58,000 applications were made in 2008. Today, application made from Japan to China is greater than those made to Europe. In fact, it is only behind 80,000 applications made to the U.S.
2) Some examples of companies that are increasing applications in China
For Hitachi, the ratio of patents applied for Japan domestic vs overseas was 53% vs 47% in 2009, and would like to make overseas percentage more than 50% in 2010. The R&D executive of Hitachi says that until today patents applied abroad were mostly in western countries, but would like increase applications made in emerging countries in order to establish IPR (intellectual property right) in such countries where their businesses are expanding.
Panasonic is also increasing its application abroad, in China in particular because more R&D of home appliances and AV products are performed in such countries than ever. Similarly, Toshiba is increasing their application made in China in PC and digital consumer electronics, and semiconductors and electronic components.
3) Applications made in other emerging countries
Japan is behind western countries in increasing applications in other emerging countries such as India and Brazil. Among applications made to India, the U.S. covers 36% but Japan is only 10%. Similarly for applications made to Brazil, the U.S. covers 41% when Japan is only 6%.
3. Why Japan’s patent application is stagnating and what does it mean?
1) How patent applications by Japanese companies have been stagnating
The number of patent released by Japan in 8 growth areas (including environment, life science and energy) that Japan has been focusing on was 149,842 in 2009, which was only 0.5% increase from 2008. This is less than the U.S. and China is catching up with more than 120,000. Japan is said to be applying patents mostly in advanced technologies such as energy saving technologies, but some experts assume that by simple comparison of the number of patents applied, China may well overtake Japan within few years.
The result of the recent survey on R&D executed by Nikkei supports this assumption. 45% companies responded that the number of patents applied domestically decreased in 2009 from 2008, when only 23% responded that it increased.
2) Reasons / background for stagnating patent applications by Japanese companies
Primary reason is that Japanese companies have been focusing more on quality rather than quantity (number) of patents in order to improve R&D ROI, including patents of the 8 growth areas mentioned above.
Companies have been extremely selective in choosing which technologies to apply and acquire patents, to minimize patent related cost. Also, more companies are making application not in Japan but overseas where they do business (manufacture, market and/or sell).
3) Meaning of stagnating patent application by Japanese companies
Stagnating patent application by Japanese companies is not aligned with policy management of the Japanese government that has been trying to strengthen R&D with the slogan of “world leader in science and technology”. It is with this policy that 16 billion yen in accumulation from 2001 to 2009 was spent on R&D in the 8 growth areas. However, whether the global competitiveness of Japan’s industrial technology has improved is a question.
Moreover, an expert warns about the “quality over quantity” patent strategy of Japanese companies. The expert says that patents are deeply related to future of technology, and reduction of patent application is a sign of decrease in promising technologies.
Nikkei, Japanese newspaper specialized in business and economy, reported on August 11 that emerging countries such as China and India are enhancing their presence in R&D. Patents of emerging countries in fields such as life science and energy are drastically increasing in particular. The number of patents applied and released by China in environment field is more than that of western countries and Japan, indicating that China is enhancing its presence in R&D.
On the other hand, Japan seems to be stagnating. This is because companies have been narrowing down the technologies to be applied in line with their patent strategy. Also, patent application by Japanese companies to growing emerging markets tends to be less aggressive compared to western counterparts. Some experts give warning to such situation.
1. How the number of patent application and release by China and India has been increasing?
1) China
According to WIPO (World Intellectual Property Organization), Chinese companies have applied 203,257 patents in 2008, domestically and abroad, which is 14 times as much as 10 years ago. Japanese companied applied the most with 500,034 patents followed by the U.S. companies with 389,073 patents, then Chinese companies. The number of patents applied by Chinese business owners and small businesses increased eightfold from 2000 to 2008. The increase is prominent not only of patents of technologies that support high economic growth such as water pollution but also of advanced technologies such as LED (light-emitting diode) illumination.
One reason for the drastic increase in patent applied by Chinese companies and business owners is the policy of China government. When the government gives subsidy or reduces tax, one of the requirements is the number of patents held by the company or business owners. Also, whether it leads to patent is taken into account when giving financial R&D support to universities.
According to NISTP (National Institute of Science and Technology Policy), as many as 104,164 scientific articles by Chinese scientists were introduced in worldwide major journals in 2008, which is only behind the articles by the U.S. scientists In addition, they are often cited, implying that quality as well as quantity of articles by Chinese scientists has been dramatically improving.
2) India
Companies of India made application of 4,537 patents domestically and abroad in 2008, which is increase by over 60% from 2005. More than half of them were made in the U.S., mostly in such industries of IT and pharmaceuticals.
2. How Japanese companies have been increasing patent applications in China
1) Overall trend
In order to validate patents abroad, patents need to be applied and acquired in that particular country/region abroad; therefore, Japanese companies have been increasing their application in China when China market is growing. Approximately 20,000 applications were made in Japan and the U.S. n 1998 but as many as 58,000 applications were made in 2008. Today, application made from Japan to China is greater than those made to Europe. In fact, it is only behind 80,000 applications made to the U.S.
2) Some examples of companies that are increasing applications in China
For Hitachi, the ratio of patents applied for Japan domestic vs overseas was 53% vs 47% in 2009, and would like to make overseas percentage more than 50% in 2010. The R&D executive of Hitachi says that until today patents applied abroad were mostly in western countries, but would like increase applications made in emerging countries in order to establish IPR (intellectual property right) in such countries where their businesses are expanding.
Panasonic is also increasing its application abroad, in China in particular because more R&D of home appliances and AV products are performed in such countries than ever. Similarly, Toshiba is increasing their application made in China in PC and digital consumer electronics, and semiconductors and electronic components.
3) Applications made in other emerging countries
Japan is behind western countries in increasing applications in other emerging countries such as India and Brazil. Among applications made to India, the U.S. covers 36% but Japan is only 10%. Similarly for applications made to Brazil, the U.S. covers 41% when Japan is only 6%.
3. Why Japan’s patent application is stagnating and what does it mean?
1) How patent applications by Japanese companies have been stagnating
The number of patent released by Japan in 8 growth areas (including environment, life science and energy) that Japan has been focusing on was 149,842 in 2009, which was only 0.5% increase from 2008. This is less than the U.S. and China is catching up with more than 120,000. Japan is said to be applying patents mostly in advanced technologies such as energy saving technologies, but some experts assume that by simple comparison of the number of patents applied, China may well overtake Japan within few years.
The result of the recent survey on R&D executed by Nikkei supports this assumption. 45% companies responded that the number of patents applied domestically decreased in 2009 from 2008, when only 23% responded that it increased.
2) Reasons / background for stagnating patent applications by Japanese companies
Primary reason is that Japanese companies have been focusing more on quality rather than quantity (number) of patents in order to improve R&D ROI, including patents of the 8 growth areas mentioned above.
Companies have been extremely selective in choosing which technologies to apply and acquire patents, to minimize patent related cost. Also, more companies are making application not in Japan but overseas where they do business (manufacture, market and/or sell).
3) Meaning of stagnating patent application by Japanese companies
Stagnating patent application by Japanese companies is not aligned with policy management of the Japanese government that has been trying to strengthen R&D with the slogan of “world leader in science and technology”. It is with this policy that 16 billion yen in accumulation from 2001 to 2009 was spent on R&D in the 8 growth areas. However, whether the global competitiveness of Japan’s industrial technology has improved is a question.
Moreover, an expert warns about the “quality over quantity” patent strategy of Japanese companies. The expert says that patents are deeply related to future of technology, and reduction of patent application is a sign of decrease in promising technologies.
2010年8月10日火曜日
How to Make Smart Japanese Eco-Consumers Buy
Osaka – Tuesday, August 10, 2010
Nikkei, Japanese newspaper specialized in business and economy, reported on August 7 on how “eco-consumption (economic and ecological consumption)” is proliferating among Japanese customers, and how companies are trying to adapt to such customer needs. Japanese customers today seek to gain maximum satisfaction with minimum spending for maximum ROI of their spending. Such trend attributes to deflation, making consumers becoming smarter and smarter, to set extremely high standard in selecting which products and services to buy. In order to make smart consumers buy、 companies are forced to review their business strategy.
1. Why Japanese consumers are so keen on value of “low price plus something”?
It is because of their annually income when deflation is proceeding as mentioned in the previous article How Japan Can Get Out From 10 Year Deflation?. According to the survey executed by MLHW (Ministry of Health, Labour and Welfare), average income of household with children in 2008 was only 6.88 million yen, a decrease by 12% from the peak in 1996. It is estimated that the average income has decreased further in 2009 due to the worldwide economic recession.
2. How companies are trying to convince smart Japanese consumers to buy?
There are mainly 2 ways in which Japanese companies are trying to convince smart Japanese consumers to buy their products and services.
1) “Trial” campaign
This helps and encourages customers, who evaluate and select products and services severely based on their values, to judge ROI (return on investment) and convince that the products and services is pays and match their value.
Tryfeel Collection http://www.tryfeel.jp is a website that provides services that lets its customers try for the first time with average of 30% discount services hotels, restaurants and hair dressers, of total of 2800 nationwide. Its membership increased tenfold to reach 120,000 in only a year. The business owner of Tryfeel comments that women who want to confirm if they can really be satisfied with the products and services with discount rate by trial have increased in particular.
Companies have also been attentive to this strategy as an effective way of acquiring new customers. Many companies including high class hotels have already joined this campaign and the membership hotels and shops quintupled in a year. The Ritz Carton Osaka spokesperson says it pays as long as the new customers are converted into repeaters.
2) Low price plus appealing value/benefit(s)
Low price alone does not appeal to smart customers today; appealing value/benefit(s) to consumers in addition is also crucial. Defining the additional value/benefit(s) appropriately is the key for this strategy.
A good example is laundry detergent, “Attack NEO”, Kao’s best selling brand that recorded sales of 20 billion yen in a year. What attracted consumers is the product concept of “minimizing the number of rinsing in addition to its strong detergency. The concept leads to not only saving water and electricity but also wash time by 13 – 16 minutes in the case of drum-type washer-dryers. Decrease in wash time is supported by housewives, who are happy that that the product saved their house work time.
3. What new trend of customer and company relationship is emerging?
A few new trends of relationship between customer and company are emerging, that was not seen in the old economy. Underlying issue of this new trends is “who decides price = reflecting the value of products and services”.
1) Joint purchase
This is a system in which individuals (not acquaintances) connected on the Internet get together and seek to buy the products they want with low price. In this system, the more individual buyers get together, the lower the price it gets, sometimes as low as the price of major customers.
A good example is the recent case of a leading website called “netprice” http://www.netprice.co.jp/. The website attracted nearly 100 people who wanted to buy Adidas sports shoes in the beginning of this month. As a result, the price dropped from the original recommended retail price of 9,450 yen to 4,700 yen.
2) New pricing restaurant
In this new system, it is the customers that decide the price they pay for the foods they enjoyed.
The event of this new system is held by an organization that supports opening of restaurants in Yokohama. On average 3 events are held monthly and 40 reserved seats are always fully booked. The chef monthly serves cuisines full of originality. There is a rule that each customer needs to pay an admission fee of 1,500 yen and additional fee of the cuisine, maximum being 15,000 yen; however, the final decision of how much to pay is made by the customers who have enjoyed the cuisine.
4. What is the assumed future trend?
The eco-consumption style for lean and streamlined household spending is assumed to accelerate. It is companies and business owners that can catch up with such change and trend that is to open the new door to the new market. There are 3 points that support this assumption.
1) Result of recent household budget survey
A private financial institute recently executed household budget survey, to which 78% respondents answered that they want to review their household budget to make it lean and streamlined. Citizens just need to cut spending when their income decreases. In such a situation, if they want to maintain pleasure of living, they would need to focus more than they used to on spending performance in addition to low price.
2) Further downsizing in household budget
Household budget, that supports consumption, is estimated to further downsize in number of household as well as amount per household (= income). Due to low birthrate, the growth in the number of household in Japan is estimated to become negative in 2016 and by 2030 it will become 48.8 million households, which is decrease by 4% from today.
3) Shift in main players of consumption market
The main players of consumption market will shift to people in 20s and 30s, who have been brought up in “2 decades of deflation” when household budget has been downsizing. This is assumed to accelerate the trend of eco-consumption.
Nikkei, Japanese newspaper specialized in business and economy, reported on August 7 on how “eco-consumption (economic and ecological consumption)” is proliferating among Japanese customers, and how companies are trying to adapt to such customer needs. Japanese customers today seek to gain maximum satisfaction with minimum spending for maximum ROI of their spending. Such trend attributes to deflation, making consumers becoming smarter and smarter, to set extremely high standard in selecting which products and services to buy. In order to make smart consumers buy、 companies are forced to review their business strategy.
1. Why Japanese consumers are so keen on value of “low price plus something”?
It is because of their annually income when deflation is proceeding as mentioned in the previous article How Japan Can Get Out From 10 Year Deflation?. According to the survey executed by MLHW (Ministry of Health, Labour and Welfare), average income of household with children in 2008 was only 6.88 million yen, a decrease by 12% from the peak in 1996. It is estimated that the average income has decreased further in 2009 due to the worldwide economic recession.
2. How companies are trying to convince smart Japanese consumers to buy?
There are mainly 2 ways in which Japanese companies are trying to convince smart Japanese consumers to buy their products and services.
1) “Trial” campaign
This helps and encourages customers, who evaluate and select products and services severely based on their values, to judge ROI (return on investment) and convince that the products and services is pays and match their value.
Tryfeel Collection http://www.tryfeel.jp is a website that provides services that lets its customers try for the first time with average of 30% discount services hotels, restaurants and hair dressers, of total of 2800 nationwide. Its membership increased tenfold to reach 120,000 in only a year. The business owner of Tryfeel comments that women who want to confirm if they can really be satisfied with the products and services with discount rate by trial have increased in particular.
Companies have also been attentive to this strategy as an effective way of acquiring new customers. Many companies including high class hotels have already joined this campaign and the membership hotels and shops quintupled in a year. The Ritz Carton Osaka spokesperson says it pays as long as the new customers are converted into repeaters.
2) Low price plus appealing value/benefit(s)
Low price alone does not appeal to smart customers today; appealing value/benefit(s) to consumers in addition is also crucial. Defining the additional value/benefit(s) appropriately is the key for this strategy.
A good example is laundry detergent, “Attack NEO”, Kao’s best selling brand that recorded sales of 20 billion yen in a year. What attracted consumers is the product concept of “minimizing the number of rinsing in addition to its strong detergency. The concept leads to not only saving water and electricity but also wash time by 13 – 16 minutes in the case of drum-type washer-dryers. Decrease in wash time is supported by housewives, who are happy that that the product saved their house work time.
3. What new trend of customer and company relationship is emerging?
A few new trends of relationship between customer and company are emerging, that was not seen in the old economy. Underlying issue of this new trends is “who decides price = reflecting the value of products and services”.
1) Joint purchase
This is a system in which individuals (not acquaintances) connected on the Internet get together and seek to buy the products they want with low price. In this system, the more individual buyers get together, the lower the price it gets, sometimes as low as the price of major customers.
A good example is the recent case of a leading website called “netprice” http://www.netprice.co.jp/. The website attracted nearly 100 people who wanted to buy Adidas sports shoes in the beginning of this month. As a result, the price dropped from the original recommended retail price of 9,450 yen to 4,700 yen.
2) New pricing restaurant
In this new system, it is the customers that decide the price they pay for the foods they enjoyed.
The event of this new system is held by an organization that supports opening of restaurants in Yokohama. On average 3 events are held monthly and 40 reserved seats are always fully booked. The chef monthly serves cuisines full of originality. There is a rule that each customer needs to pay an admission fee of 1,500 yen and additional fee of the cuisine, maximum being 15,000 yen; however, the final decision of how much to pay is made by the customers who have enjoyed the cuisine.
4. What is the assumed future trend?
The eco-consumption style for lean and streamlined household spending is assumed to accelerate. It is companies and business owners that can catch up with such change and trend that is to open the new door to the new market. There are 3 points that support this assumption.
1) Result of recent household budget survey
A private financial institute recently executed household budget survey, to which 78% respondents answered that they want to review their household budget to make it lean and streamlined. Citizens just need to cut spending when their income decreases. In such a situation, if they want to maintain pleasure of living, they would need to focus more than they used to on spending performance in addition to low price.
2) Further downsizing in household budget
Household budget, that supports consumption, is estimated to further downsize in number of household as well as amount per household (= income). Due to low birthrate, the growth in the number of household in Japan is estimated to become negative in 2016 and by 2030 it will become 48.8 million households, which is decrease by 4% from today.
3) Shift in main players of consumption market
The main players of consumption market will shift to people in 20s and 30s, who have been brought up in “2 decades of deflation” when household budget has been downsizing. This is assumed to accelerate the trend of eco-consumption.
2010年8月8日日曜日
Japan Leverages Bilateral Agreements to Initiate Low-Carbon Businesses
Osaka – Sunday, August 8, 2010
Nikkei, Japanese newspaper specialized in business/economy, reported today that METI (Ministry of Economy, Trade and Industry) of Japan will make individual bilateral agreements with 9 countries of South East Asia etc., to initiate infrastructure import* leveraging GHG (global greenhouse gas) reduction technologies that Japanese companies possess.
As the first phase, total of 15 businesses will be put onto trial. Such companies including Tokyo Electric Power, Toshiba and Mitsubishi Corporation will be the main participants to start constructing high productivity coal-fired plant and geothermal plant. The agreement includes a system in which Japan purchases the GHG emission allocation equivalent to local GHG emission reduced by technological transfer from Japan, hence initiating and optimizing countermeasure of global greenhouse effect.
1. What is the plan/system?
The plan/system initiated by METI is called “Bilateral Off-Set Mechanism”, based on the agreement made in COP 15 (15th Conference of the Parties) held in Denmark, 2009. With the agreement, allocation of GHG emission can now be traded as long two countries agree.
In this system, Japanese companies implement low-carbon technologies and equipments to partner countries. The GHG reduced as a result will be managed as allocation of Japan. The partner government is to provide the allocation almost free of charge, but high technology level businesses are expected to be executed because the Japanese government will provide financial assistance to the partner countries and companies and send experts to partner countries to support establishment of businesses. Private companies will also benefit from this because they can increase business opportunities through negotiation by the Japanese government.
2. How is the system compared with previous similar ones?
The new system of trading of GHG emission allocation is more beneficial than the previous ones. For example, there have been systems such as CDM (clean development mechanism), in which the UN (United Nations) examine business; however, it took 2 years to be approved by the UN, even if it was approved. Trading allocation based on bilateral agreement is far quicker and more assure. It would be easier and more feasible for private companies to initiate related businesses.
3. Which Businesses were selected by METI?
METI selected 15 businesses among 32 overseas GHG reduction businesses proposed by private companies.
Major Infrastructure Export Businesses Selected by the Japanese Government
(Source: Nikkei, translated by the author)
Partner Country /Primary Private Companies / Business /Annual GHG Reduction Target (1000 ton)
Indonesia / J Power / High-efficient coal-fired plant / 500
Indonesia / Mitsubishi Corp / Geothermal plant / 80
Vietnam / Tokyo Electric Power, Marubeni Corp / High-efficient coal-fired plant / 500
Vietnam / Tokyo-Mitsubishi UFJ, Morgan Stanley / Efficient electrical power grid / 25,000
India / Mizuho Research Institute, Tohoku-Electric Power / High-efficient coal-fired plant / 500
India / Nippon Steel / Waste heat of iron and steel plant / 200
Philippines / Toshiba / Geothermal plant / 350
Philippines / JFE Steel / Waste heat of iron and steel plant / 50
Thailand / Yokogawa Electric / Energy saving of plants / 50
Laos, Myanmar / Taiheiyo Cement / Energy saving of cement plants / 100
China / Nomura Research Institute / Energy saving housing /17,000
Peru / Mitsubishi Corp / Forestry preservation / A few thousand
1) Status of agreement with partner countries
Of course the Japanese government need to agree with the partner countries on calculation of GHG emission reduction and businesses but basic agreement has been made already with 4 countries (Indonesia, Vietnam, Philippines and India) out of 9. Japan is to proceed with sequential negotiations with Thailand, Laos, Myanmar, China and Peru.
2) Partner country that implements the most businesses
Indonesia is the most with 4 businesses to be implemented. Mitsubishi Corporation etc. plan to construct geothermal plants, and J Power plans to construct High-efficient coal-fired plants.
3) Support from the Japanese government
Support including financial will be given from the Japanese government. For example, in the case of high-efficient coal-fired plant business that requires 125 – 150 billion yen to get to the stage of starting operation, private companies expects some financial support from the government. METI will collaborate with Foreign Ministry to support smooth execution of businesses by leveraging JBIC (Japan Bank for International Cooperation) and ODA (Official Development Assistance).
4. Effect of GHG emission reduction
If all 15 businesses are successfully put into practical use it is estimated that 5 – 10 million ton / year of GHG emission will be reduced, when 1.3 billion tons are emitted / year in Japan. It is also estimated that 15 – 20 billion yen is required to purchase the allocation of 10 million ton.
* Infrastructure Export (Source: Nikkei, translated by the author)
This is to leverage technologies etc. of Japanese companies and sell infrastructure facilities such as railway and nuclear plant to overseas countries. In many cases, target countries are developing and emerging countries. The new growth strategy of Japan approved by the cabinet in June 2010 includes initiating infrastructure export, and therefore public and private sectors are collaborating to acquire businesses from overseas countries and regions.
METI recently selected 11 focuses of infrastructure export.
1) Coal fired power generation, coal gasification
2) Electrical power grid
3) Nuclear power
4) Railway
5) Water
6) Recycle
7) Space
8) Smart grid, smart community
9) Renewable energy
10) Information and telecommunications
11) Urban development, industrial estate
The Japanese government is planning to implement all possible measures it has such as public financing and international trade insurance. However, global competition to acquire businesses of Asian countries such as China and Vietnam is extremely tough and in some cases falling behind Korea and other countries. Another risk/challenge is bloat private sector (e.g. public financial institutions).
Nikkei, Japanese newspaper specialized in business/economy, reported today that METI (Ministry of Economy, Trade and Industry) of Japan will make individual bilateral agreements with 9 countries of South East Asia etc., to initiate infrastructure import* leveraging GHG (global greenhouse gas) reduction technologies that Japanese companies possess.
As the first phase, total of 15 businesses will be put onto trial. Such companies including Tokyo Electric Power, Toshiba and Mitsubishi Corporation will be the main participants to start constructing high productivity coal-fired plant and geothermal plant. The agreement includes a system in which Japan purchases the GHG emission allocation equivalent to local GHG emission reduced by technological transfer from Japan, hence initiating and optimizing countermeasure of global greenhouse effect.
1. What is the plan/system?
The plan/system initiated by METI is called “Bilateral Off-Set Mechanism”, based on the agreement made in COP 15 (15th Conference of the Parties) held in Denmark, 2009. With the agreement, allocation of GHG emission can now be traded as long two countries agree.
In this system, Japanese companies implement low-carbon technologies and equipments to partner countries. The GHG reduced as a result will be managed as allocation of Japan. The partner government is to provide the allocation almost free of charge, but high technology level businesses are expected to be executed because the Japanese government will provide financial assistance to the partner countries and companies and send experts to partner countries to support establishment of businesses. Private companies will also benefit from this because they can increase business opportunities through negotiation by the Japanese government.
2. How is the system compared with previous similar ones?
The new system of trading of GHG emission allocation is more beneficial than the previous ones. For example, there have been systems such as CDM (clean development mechanism), in which the UN (United Nations) examine business; however, it took 2 years to be approved by the UN, even if it was approved. Trading allocation based on bilateral agreement is far quicker and more assure. It would be easier and more feasible for private companies to initiate related businesses.
3. Which Businesses were selected by METI?
METI selected 15 businesses among 32 overseas GHG reduction businesses proposed by private companies.
Major Infrastructure Export Businesses Selected by the Japanese Government
(Source: Nikkei, translated by the author)
Partner Country /Primary Private Companies / Business /Annual GHG Reduction Target (1000 ton)
Indonesia / J Power / High-efficient coal-fired plant / 500
Indonesia / Mitsubishi Corp / Geothermal plant / 80
Vietnam / Tokyo Electric Power, Marubeni Corp / High-efficient coal-fired plant / 500
Vietnam / Tokyo-Mitsubishi UFJ, Morgan Stanley / Efficient electrical power grid / 25,000
India / Mizuho Research Institute, Tohoku-Electric Power / High-efficient coal-fired plant / 500
India / Nippon Steel / Waste heat of iron and steel plant / 200
Philippines / Toshiba / Geothermal plant / 350
Philippines / JFE Steel / Waste heat of iron and steel plant / 50
Thailand / Yokogawa Electric / Energy saving of plants / 50
Laos, Myanmar / Taiheiyo Cement / Energy saving of cement plants / 100
China / Nomura Research Institute / Energy saving housing /17,000
Peru / Mitsubishi Corp / Forestry preservation / A few thousand
1) Status of agreement with partner countries
Of course the Japanese government need to agree with the partner countries on calculation of GHG emission reduction and businesses but basic agreement has been made already with 4 countries (Indonesia, Vietnam, Philippines and India) out of 9. Japan is to proceed with sequential negotiations with Thailand, Laos, Myanmar, China and Peru.
2) Partner country that implements the most businesses
Indonesia is the most with 4 businesses to be implemented. Mitsubishi Corporation etc. plan to construct geothermal plants, and J Power plans to construct High-efficient coal-fired plants.
3) Support from the Japanese government
Support including financial will be given from the Japanese government. For example, in the case of high-efficient coal-fired plant business that requires 125 – 150 billion yen to get to the stage of starting operation, private companies expects some financial support from the government. METI will collaborate with Foreign Ministry to support smooth execution of businesses by leveraging JBIC (Japan Bank for International Cooperation) and ODA (Official Development Assistance).
4. Effect of GHG emission reduction
If all 15 businesses are successfully put into practical use it is estimated that 5 – 10 million ton / year of GHG emission will be reduced, when 1.3 billion tons are emitted / year in Japan. It is also estimated that 15 – 20 billion yen is required to purchase the allocation of 10 million ton.
* Infrastructure Export (Source: Nikkei, translated by the author)
This is to leverage technologies etc. of Japanese companies and sell infrastructure facilities such as railway and nuclear plant to overseas countries. In many cases, target countries are developing and emerging countries. The new growth strategy of Japan approved by the cabinet in June 2010 includes initiating infrastructure export, and therefore public and private sectors are collaborating to acquire businesses from overseas countries and regions.
METI recently selected 11 focuses of infrastructure export.
1) Coal fired power generation, coal gasification
2) Electrical power grid
3) Nuclear power
4) Railway
5) Water
6) Recycle
7) Space
8) Smart grid, smart community
9) Renewable energy
10) Information and telecommunications
11) Urban development, industrial estate
The Japanese government is planning to implement all possible measures it has such as public financing and international trade insurance. However, global competition to acquire businesses of Asian countries such as China and Vietnam is extremely tough and in some cases falling behind Korea and other countries. Another risk/challenge is bloat private sector (e.g. public financial institutions).
2010年8月1日日曜日
Japanese Companies Recover Profitability to 90% of Before Recession
Osaka – Sunday, August 1, 2010
Nikkei, Japanese newspaper specialized in business/economy, reported today that emerging market business is driving drastic revenue and profitability recovery of listed Japanese Companies. According to financial announcements for April – June 2010 (Q1 for most Japanese companies), profit is five times that of April – June 2009, clearly showing the recovery of manufacturers such as automobile and consumer electronics supported by demand of emerging market and cost reduction. Profitability has recovered to the level of 90% before the worldwide economic crisis in 2008, and the Q1 profit is 29% of the total estimated profit for fiscal 2010.
However, there are many risks such as high yen and ambiguous worldwide economy trend; therefore, many companies are extremely cautious in their forecast of their latter 2010 performance.
1. How did Nikkei come to the conclusion?
Nikkei collected and analyzed financial data of 559 listed companies (excluding financial and new companies) that are:- a)fiscal year ends in March; b)financial announcement for 2010 Q1 has been made by July 30. These 559 companies cover 36% of total in number and 62% in market value.
2. What is the overall conclusion?
Total sales covering all industry increased by 14% from previous year (PY). This was because after the worldwide recession, companies reviewed which business to focus and initiated cost reduction, to streamline revenue structure. Then with demand increase of emerging markets their sales increased, and therefore their total profit reached 3.83 trillion yen, which is fives time that of PY, and 46% increase from Jan – Mar 2010. Compared with April – June 2008 before the worldwide recession, sales has recovered to 86% and profit to 93%.
3. How are specifics?
April – June Profit of Major Japanese Listed Companies (in billion yen)
(Source: Nikkei, translated by the author)
Industry / Company Name / 2008 / 2009 / 2010
Automobile / Honda* / 224.2 / 5.4 / 256.1
Automobile / Nissan / 82.4 / -26.1 / 155
Electronics / Panasonic* / 119.2 / -51.7 / 84.3
Electronics / Sony* / 62.9 / -32.9 / 78.9
Electronics / Hitachi* / 83.6 / -80.8 / 144.2
Machinery / Komatsu* / 92.7 / 8.7 / 50.1
Iron & Steel / Nippon Steel / 144 / -56.6 / 61.8
Trading / Mitsubishi Corp* / 181.9 / 61.9 / 180.5
Real Estate / Mitsui Fudosan / 22.3 / 28.8 / 13
Maritime / NYK Maritime / 65.1 / -27 / 38.1
* GAAP: Generally Accepted Accounting Principle
1) Sales increase: electronics
60% of total 3.7 billion yen profit recovery was contributed by consumer electronics and automobile. Panasonic’s EBITA (Earning Before Interest, Taxes and Amortization) improved by 130 billion yen because sales were strong in most businesses including digital consumer electronics such as flat panel TVs and home appliances. China sales increased by 75%.
Sony’s business in emerging markets such as of flat panel TVs and PCs increased by 40%.
2) Sales increase: automobile and parts/components
Profits of automobile and parts/components recovered by almost 700 billion yen, which made it in total profit instead of loss. Nissan’s worldwide sales increased by 30%. Small car business was strong and their sales in China increased by almost 70%.
Komatsu’s China sales of construction machinery increased by almost 80%.
3) Restructuring
Restructuring effects such as fixed and variable cost reduction is also prominent. Toshiba had cut 430 billion yen of personnel and R&D cost in 2009. Toshiba’s sales were less than 2008 but operating profit was the highest.
4) Non-manufacturers
Profit of trading companies was 2.3 times that of 2009 attributing to high resources. For maritime and container ship businesses were strong and came back to black from red. Retailers and real estates decreased their profit because of weak domestic business.
4. What is the outlook for latter half of 2010?
Asia is assumed to remain the engine of further business/financial performance recovery of Japanese companies for fiscal year ending March 2011.
1) Cautious outlook
Despite recent drastic profit recovery, it is interesting to note that many companies are cautious in their outlook for latter half of 2010 (fiscal year ending March 2011). This is even though April – June profit of many companies was over 25% of total profit estimation for the whole year, such as automobile and parts/components that reached 45.7%.
2) Reasons for cautious outlook
(1) High yen and ambiguious worldwide economy
Yen has been high; recently it was been in just over 80 yen / USD. High yen is a negative factor for Japanese manufacturers.
In addition, there is a sense of economy recession in the U.S, and Europe, and risk of change in Chinese economy. NYK Maritime executive points out there is a risk that Europe’s economy anxiety spreads worldwide and latter half of 2010 is ambiguous. Nippon Steel executive comments that prices of raw materials and steel have not been decided yet and it is impossible to make rationale estimation for latter half of 2010.
(2) Termination of government’s economy stimulant incentives
Incentives to promote Japan domestic consumers purchasing ecological cars will end in the end of September. Also, similar incentives for consumer electronics will end in the end of December. Therefore, many executives of the industry are extremely anxious that domestic sales may fall by as much as 20% – 30%.
Nikkei, Japanese newspaper specialized in business/economy, reported today that emerging market business is driving drastic revenue and profitability recovery of listed Japanese Companies. According to financial announcements for April – June 2010 (Q1 for most Japanese companies), profit is five times that of April – June 2009, clearly showing the recovery of manufacturers such as automobile and consumer electronics supported by demand of emerging market and cost reduction. Profitability has recovered to the level of 90% before the worldwide economic crisis in 2008, and the Q1 profit is 29% of the total estimated profit for fiscal 2010.
However, there are many risks such as high yen and ambiguous worldwide economy trend; therefore, many companies are extremely cautious in their forecast of their latter 2010 performance.
1. How did Nikkei come to the conclusion?
Nikkei collected and analyzed financial data of 559 listed companies (excluding financial and new companies) that are:- a)fiscal year ends in March; b)financial announcement for 2010 Q1 has been made by July 30. These 559 companies cover 36% of total in number and 62% in market value.
2. What is the overall conclusion?
Total sales covering all industry increased by 14% from previous year (PY). This was because after the worldwide recession, companies reviewed which business to focus and initiated cost reduction, to streamline revenue structure. Then with demand increase of emerging markets their sales increased, and therefore their total profit reached 3.83 trillion yen, which is fives time that of PY, and 46% increase from Jan – Mar 2010. Compared with April – June 2008 before the worldwide recession, sales has recovered to 86% and profit to 93%.
3. How are specifics?
April – June Profit of Major Japanese Listed Companies (in billion yen)
(Source: Nikkei, translated by the author)
Industry / Company Name / 2008 / 2009 / 2010
Automobile / Honda* / 224.2 / 5.4 / 256.1
Automobile / Nissan / 82.4 / -26.1 / 155
Electronics / Panasonic* / 119.2 / -51.7 / 84.3
Electronics / Sony* / 62.9 / -32.9 / 78.9
Electronics / Hitachi* / 83.6 / -80.8 / 144.2
Machinery / Komatsu* / 92.7 / 8.7 / 50.1
Iron & Steel / Nippon Steel / 144 / -56.6 / 61.8
Trading / Mitsubishi Corp* / 181.9 / 61.9 / 180.5
Real Estate / Mitsui Fudosan / 22.3 / 28.8 / 13
Maritime / NYK Maritime / 65.1 / -27 / 38.1
* GAAP: Generally Accepted Accounting Principle
1) Sales increase: electronics
60% of total 3.7 billion yen profit recovery was contributed by consumer electronics and automobile. Panasonic’s EBITA (Earning Before Interest, Taxes and Amortization) improved by 130 billion yen because sales were strong in most businesses including digital consumer electronics such as flat panel TVs and home appliances. China sales increased by 75%.
Sony’s business in emerging markets such as of flat panel TVs and PCs increased by 40%.
2) Sales increase: automobile and parts/components
Profits of automobile and parts/components recovered by almost 700 billion yen, which made it in total profit instead of loss. Nissan’s worldwide sales increased by 30%. Small car business was strong and their sales in China increased by almost 70%.
Komatsu’s China sales of construction machinery increased by almost 80%.
3) Restructuring
Restructuring effects such as fixed and variable cost reduction is also prominent. Toshiba had cut 430 billion yen of personnel and R&D cost in 2009. Toshiba’s sales were less than 2008 but operating profit was the highest.
4) Non-manufacturers
Profit of trading companies was 2.3 times that of 2009 attributing to high resources. For maritime and container ship businesses were strong and came back to black from red. Retailers and real estates decreased their profit because of weak domestic business.
4. What is the outlook for latter half of 2010?
Asia is assumed to remain the engine of further business/financial performance recovery of Japanese companies for fiscal year ending March 2011.
1) Cautious outlook
Despite recent drastic profit recovery, it is interesting to note that many companies are cautious in their outlook for latter half of 2010 (fiscal year ending March 2011). This is even though April – June profit of many companies was over 25% of total profit estimation for the whole year, such as automobile and parts/components that reached 45.7%.
2) Reasons for cautious outlook
(1) High yen and ambiguious worldwide economy
Yen has been high; recently it was been in just over 80 yen / USD. High yen is a negative factor for Japanese manufacturers.
In addition, there is a sense of economy recession in the U.S, and Europe, and risk of change in Chinese economy. NYK Maritime executive points out there is a risk that Europe’s economy anxiety spreads worldwide and latter half of 2010 is ambiguous. Nippon Steel executive comments that prices of raw materials and steel have not been decided yet and it is impossible to make rationale estimation for latter half of 2010.
(2) Termination of government’s economy stimulant incentives
Incentives to promote Japan domestic consumers purchasing ecological cars will end in the end of September. Also, similar incentives for consumer electronics will end in the end of December. Therefore, many executives of the industry are extremely anxious that domestic sales may fall by as much as 20% – 30%.
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