business

Japan Inc not enthusiastic over Abe's stimulus, BOJ easing

18 Comments

The requested article has expired, and is no longer available. Any related articles, and user comments are shown below.

© (c) Copyright Thomson Reuters 2016.

©2024 GPlusMedia Inc.

18 Comments
Login to comment

Japan Inc not enthusiastic over Abe's stimulus, BOJ easing

When Japan Inc starts saying things like this, and the following;

“It’s disappointing that the stimulus focuses on public works, and it lacks attention to promoting industry and technology that would lead to future growth,” said a manager at a precision-machinery maker.

And here...

“Unless drastic steps are taken to fix the root of Japan’s problems - the falling birthrate and working population - solid economic growth won’t return ... only public debt would pile up without sustainable growth,” said an electrical machinery firm.

Abe had better listen, as his days will be numbered if business is against him.

These folks should realize by now that when you have a dinosaur leading you, you are only going to get what you asked for, out-dated, old, stale ideas that do nothing to improve the stituation.

Abe doesn't have the vision to see that investing in the future is the way to save this nation. He needs more than new glasses, he needs a new head! Abe and the government only see building "things" as the way to improve the outlook. It may have worked a generation ago, when the infrastructure merited the development, but things have changed, and someone needs to whack Abe upside the head to make him realize it too!

3 ( +3 / -0 )

Yes please, bring on the structural reform and deregulation. I'll buy into Japanese stocks again if it happens, but won't touch them with a barge poll otherwise.

Abe had better listen, as his days will be numbered if business is against him.

Alas, businesses don't get a vote, people do, and increasing numbers of people in this country are living off the sweat of others. Those people represent vested interests opposed to reforms and anything that could change their way of life...

someone needs to whack Abe upside the head to make him realize it too!

Abe himself had a "third arrow" plan, so I think he knows it, but he doesn't have the political guts or power to actually execute.

The Osaka Ishin party is the only political force with a will to implement structural reforms and deregulate, but they attract less than 10% of the vote.

There will be no serious change in this country until after a crisis strikes.

2 ( +3 / -1 )

The problem is that the structural reform that Japan needs is not the one they think they need or want.

They want the birth rate to increase but then they go out and hire, in some cases, more than half of their staff from temp agencies, workers who are on short term, less paid roles. The problem is having a family is a long term commitment, but the families' income streams are short term, variable, and uncertain. The employers themselves could at least start helping out in addressing the problem by shunning these agencies.

Yes, some structural reform could help, but once again, not the kind of reform that they would necessarily like. For instance, I understand the need for flexibility, so temping should not be made overly difficult. But, after two years the temp should either be made permanent or the role should not be replaced for at least a couple of years (i.e., headcount would be reduced by one every time a two year temp contract expires - unless they hire the person permanently - after all, if the role is needed for more than 2 years, it is hardly what one would deem a temporary situation).

Admittedly, there are things the government could do to make this a bit easier. Get rid of this transportation subsidy. This is effectively a business to business transaction. Companies know that many commuters have their costs covered by their employers, so the transportation companies are no longer competing as if they were targeting consumers. Thus, the usual competition that would arise is at least partially suppressed. Let the employees cover their costs, and then transportation, construction decisions will be based on actual needs, as decisions where to live will then be driven by actual needs by those who have to live and commute.

Also, why should permanent employees get one to two years salary upon retirement? If the pension system is not up to scratch, it should be reworked. But it is admittedly, not business' responsibility (or should not be) to provide welfare. It should be the governments' responsibility. If it is not up to scratch, then that is another area where I admit some structural change should be implemented.

In addition, they want free money for themselves (more money for R&D into IoT, robotics, other tech) but no helicopter money for the average person. Apart from hypocritical, it is also missing the point that what is lacking is demand. People are making do with the essentials given the large numbers of people who are in precarious jobs (and thus putting away money for when the rainy does come).

Also, with this obsession with stability, no matter how much money you throw at innovation, it will not happen. Innovation happens because people go out on a limb and take risks. When you take risks, sometimes you hit a jackpot, but other times you will fail (otherwise it would not be called a risk). But then those who take the risks and are not immediately successful are stigmatized...try going back to work for a regular company if you tried to set up an innovative business and then things don't work out...you are more likely to end up scrounging as an temp worker through an agency.

This attitude not something that the government to change. That is for businesses to change themselves....there is only so much the government can do...and most of it is in terms of helping the population directly rather than businesses.

And why all this need for technology? There are plenty of skilled people who could do some of the work themselves...but they have ridiculous policies that excludes a large part of the population from being hired to contribute to the company

3 ( +3 / -0 )

Wonder if that third arrow is aimed at his foot.

-1 ( +3 / -4 )

Wonder if that third arrow is aimed at his foot.

More like his backside.

The problem is simple, the cost of living in Japan is too high. Because it is too high, people consume less, and have fewer children. That is the only cause of the problem, and the only thing which needs to be addressed.

The cost of living his high because the LDP buys the votes of the elderly (who make up the majority of the famers in Japan) with subsidies paid for by agricultural tariffs. And the cost of living is also high because Japan has limited competition within the domestic economy by keeping out foreign companies, and doing nothing to prevent price fixing. This has allowed Japanese companies to become bloated, inefficient, and carry a large overhead. Then there are the weight and cost of regulations, which are passed on to both employees and consumers.

For Abe and the government, they are more than happy to spend as much of other people's money as they can, because that is what politicians have always done. But they are not happy to do what needs to be done to get the economy back on it's feet, which is to cut off subsidies to their main voting block and pass the savings on to consumers, reduce their power and authority by reducing regulations, allowing these costs to be removed from the backs of companies, employees, and consumers, and by allowing more competition in the marketplace, which would force companies to find ways to reduce their overhead while at the same time reduce the cost of their goods and services.

And why all this need for technology?

There is no need, these companies are simply complaining that they are not getting enough of the taxpayer's money, and that they should get more than the construction companies are getting. They can't swim, and they can't sink, all they can do is hope that the government continues to feed them taxpayer money so they can continue to tread water.

7 ( +8 / -1 )

fjlm44,

Very interesting comment.

They want the birth rate to increase but then they go out and hire, in some cases, more than half of their staff from temp agencies,

IMHO the real problem is that there's a lack of good full-time jobs, but enough low-value crappy jobs, and so those who are willing don't have the options.

I don't think stale old existing businesses can create the conditions for a more competitive labour market themselves.

The government needs to step up and eliminate all manner of barriers that stand in the way of new businesses, so they can spring up and offer a better deal to those who want to be in full-time work than the stale old companies of last century.

But instead the government has been trying to destroy the value of the currency (rather than accept and embrace it) and spend money it doesn't have on propping up favoured industries...

it is also missing the point that what is lacking is demand.

I believe new demand only arises after risk-takers produce new stuff and consumers who didn't know they wanted something before it existed then realise that they do.

Personally I put money away for the future via overseas investments, but if some new product came out and I wanted it now, there's nothing stopping me from hitting the pause button on my investment and buying it - except it doesn't yet exist. Japan needs more new business starting up, offering potential consumers like myself valuable stuff. At least if the government would implement structural reforms like Abe said he would, I'd divert some of my investment back here.

This attitude not something that the government to change. That is for businesses to change themselves....

I don't think Japan's stale old businesses will change. So we need them to go out of business instead. The government has to make it incredibly easy to start new businesses in any field, and take on the establishment companies. Admittedly Japan would need to experience a major cultural shift in favour of business risk-taking for this to come about, but I see no other way.

3 ( +3 / -0 )

I don't think Japan's stale old businesses will change. So we need them to go out of business instead. The government has to make it incredibly easy to start new businesses in any field, and take on the establishment companies. Admittedly Japan would need to experience a major cultural shift in favour of business risk-taking for this to come about, but I see no other way.

We are already on track for such change. By subsidizing Japan Inc (with our money), the government has removed the impetus for changing their ways, which has allowed things to get continually worse. Eventually Abe, the BOJ, and their like will run out of other people's money to spend (or borrow, or print), and the the system they have created will collapse under it's own weight.

One of the problems in the Japanese system is he severity of bankruptcy law. A bankrupt in Japan is akin to a criminal, and bankrupts lose the right to vote, and to get full time employment. Companies and individuals will pull out all stops to avoid bankruptcy, even if this means borrowing money they likely cannot repay, or, on a larger scale, hide or shift debts, roll them over, or somehow put off the day of reckoning as far as possible. But that day eventually comes. JAL went bankrupt a few years ago, and they are still paying the price. Ordinary Japanese shun JAL for ANA, and the airports refuse to give more slots to JAL. If you asked people 15 years ago what their favorite airline was, they would say "JAL." But ask them now, and they will all say "ANA." And if you ask them for a reason, they will almost invariably say "because JAL went bankrupt."

Because of the severity of bankruptcy law, more than a few Japanese are unwilling to take risks in starting a business, or enlarging an existing business. The consequences of failure are too high. If Japan wants more people to start businesses, and allow zombie companies to die and be buried as they should, bankruptcy laws must be reformed.

5 ( +6 / -1 )

One of the problems in the Japanese system is he severity of bankruptcy law. A bankrupt in Japan is akin to a criminal, and bankrupts lose the right to vote, and to get full time employment. Companies and individuals will pull out all stops to avoid bankruptcy, even if this means borrowing money they likely cannot repay, or, on a larger scale, hide or shift debts, roll them over, or somehow put off the day of reckoning as far as possible. But that day eventually comes. JAL went bankrupt a few years ago, and they are still paying the price. Ordinary Japanese shun JAL for ANA, and the airports refuse to give more slots to JAL. If you asked people 15 years ago what their favorite airline was, they would say "JAL." But ask them now, and they will all say "ANA." And if you ask them for a reason, they will almost invariably say "because JAL went bankrupt."

One of the possible measures about restructuring, perhaps? Allow bankruptcy to be an opportunity for the viable parts of a business to be spun off and the deadwood to disappear. It would bring back the concept of managed/manageable risk to Japan. Investors would know that when they invest there is a chance they may not get all their money back and so they would think about the business model and its viability before plunging money in.

If there is no reform to the bankruptcy law, the Japanese companies will be sold off at bargain basement prices and purchased by foreigners (look at Sharp) and then there will be wholesale restructuring, which would be much worse than a controlled and managed change in the whole corporate environment.

But if people really do prefer ANA because it has not gone through a bankruptcy restructuring, then it is not only Japan Inc, but all of Japan that needs a lesson in how business works and about how the rest of the world is evolving.

6 ( +6 / -0 )

Thanks to all of the above for posting. Nice to read sense and logic for a change, keep it up folks!

-1 ( +4 / -5 )

Mr Kuroda, time to bring out the Bazooka again. Japan needs a weak Yen to be competitive. Period.

-3 ( +0 / -3 )

sangetsu03

One of the problems in the Japanese system is he severity of bankruptcy law. A bankrupt in Japan is akin to a criminal, and bankrupts lose the right to vote, and to get full time employment.

Rubbish.

You should get with the times, if you're going to opine.

The Japanese Civil Code concerning bankruptcy was changed in 2012 and Japanese bankruptcy laws are now less draconian than the Anglo-Saxon ones.

http://beaconreports.net/going-broke-japan/

-2 ( +1 / -3 )

You should get with the times, if you're going to opine.

No, it is not "rubbish." A friend of mine runs a company which restructures small businesses which are in danger of going bankrupt. Recently he told me of a business which his company had been hired to turn around. The business was run by a father and son, and employed 40 people. My friend was impressed by the son's education, personality and work ethic, and was interested in hiring him to work in his firm, but since the son was one of the owners of the company, and was listed in the bankruptcy, he could not be hired. Legally-speaking, he could have given the young man a job, but in practice it was not possible. You forget that in business matters in japan, culture often overrules regulation and the fine print of law.

And after bankruptcy, starting a business is simply not possible. If you know anything about the credit and banking systems in Japan, you know how arbitrary they are. No bankrupt or former bankrupt is going to be able to get financing from a bank. If you borrow the money privately, you still need to open a bank account to do business, and in case you have never tried it, opening a business account at a Japanese bank is no cake walk, even for those with a strong business plan, or even an established and successful business.

Businesses require credit, credit requires working with a bank. Banks require that all directors have clean noses, and even if the law allows bankrupts to obtain a director's position in another company, banks will not tolerate it. Japanese law allows banks to deny credit without giving any reason why.

1 ( +3 / -2 )

The problem is simple, the cost of living in Japan is too high. Because it is too high, people consume less, and have fewer children. That is the only cause of the problem, and the only thing which needs to be addressed.

The cost is too high or the incomes are too low. Ultimately, what matters is the difference between income and expenses.

The thing is you can tolerate a slightly lower income if you have some degree of stability. Credit is of limited risk if you can plan ahead. What you cannot have is credit under volatile conditions (or very limited credit). Hence, if you have some measure of being able to predict your income, you can afford to start making investments for the longer term rather than having to put away for the rainy day when it eventually does come.

0 ( +0 / -0 )

Okay everybody ... to see how Abenomics is working ... look in your bank book to see how much interest you have earned since last time. You will be surprised to see how much the interest payment has dipped. This is the result of the BOJ's adoption of negative interest rates this year. Couldn't believe how much my interest return dropped. Bet yours is lower too.

So ... is Abenomics helping you? Your call ...

1 ( +1 / -0 )

Alas, businesses don't get a vote, people do, and increasing numbers of people in this country are living off the sweat of others. Those people represent vested interests opposed to reforms and anything that could change their way of life...

Ahh, but the business interests are the one's who make the engine of the country run, the "people" didnt vote Abe into office, the LDP did. Abe only has to worry about one little corner of Japan to get his seat in the Diet, BUT he has to keep Japan Inc happy to keep his place as PM.

If business here start complaining about his policies it will undercut his support within the LDP which has a ton of factions , without their support Abe loses the PM seat.

Most of the big businesses here can survive without government support, but Abe can't.

1 ( +1 / -0 )

sangetsu

And after bankruptcy, starting a business is simply not possible. If you know anything about the credit and banking systems in Japan, you know how arbitrary they are. No bankrupt or former bankrupt is going to be able to get financing from a bank. If you borrow the money privately, you still need to open a bank account to do business, and in case you have never tried it, opening a business account at a Japanese bank is no cake walk, even for those with a strong business plan, or even an established and successful business. Businesses require credit, credit requires working with a bank. Banks require that all directors have clean noses, and even if the law allows bankrupts to obtain a director's position in another company, banks will not tolerate it. Japanese law allows banks to deny credit without giving any reason why.

This is the crux of the problem, not as you earlier claimed, the bankruptcy laws themselves.

-1 ( +1 / -2 )

Japan has to manage its decline. It's fine as long as it follows population as it goes down. It's was never reasonable to expect endless growth, and that expectation needs to be corrected to meet the reality

1 ( +2 / -1 )

The cost is too high or the incomes are too low. Ultimately, what matters is the difference between income and expenses.

What matters is efficiency. An efficient household or business will keep costs low and savings or profits high. The margin varies with the scale of the household or business.

This is the crux of the problem, not as you earlier claimed, the bankruptcy laws themselves.

Law in Japan is a murky thing, as you may know if you have been here long enough. Practices which are illegal by the letter of the law are sometimes ignored or unpunished. The yakuza are "tolerated", along with a fair amount of the illegal activities they participate in. Price fixing is clearly illegal in Japanese law, but if you visit any movie theater, real estate agent, or car dealer at this moment, you will see an example of price fixing in practice.

And then there are those things which are not technically illegal by the letter of the law, but which punishable officially or unofficially. Like the recent scandals involving campaign funds. What constitutes illegal use of these funds is not clearly defined, and there is no official guideline on how to punish "offenders." Yet misusing these funds will get one tossed out of office.

In Japan the law is is not evenly applied in all cases, it can be fair or unfair, depending on what it is you have done or are trying to do. An acquaintance of mine went to pick up her child from daycare, and found ambulances waiting outside. Her child died while at the daycare center. The daycare center violated at least two of the laws governing the care of young children, yet in the end, it was ruled that her child died from "Sudden infant death syndrome", and none from the daycare center were punished, and lawyers hired to sue the daycare center see only a 20% chance of success in prevailing in court. That the daycare center admitted to violating safety regulations in statements to the police made no difference at all, those violations went unpunished.

Laws in Japan are not very protective of the little people, or anyone outside the establishment. Laws of all types need to be in black and white, they need to be free of cultural restraints, and they need to be enforced as written. And if they are not written clearly enough, they must be rewritten until they are.

2 ( +2 / -0 )

Login to leave a comment

Facebook users

Use your Facebook account to login or register with JapanToday. By doing so, you will also receive an email inviting you to receive our news alerts.

Facebook Connect

Login with your JapanToday account

User registration

Articles, Offers & Useful Resources

A mix of what's trending on our other sites