Jim Beam buyout last chance for Suntory: president

“This was the final and only chance for Suntory to survive in the world, in the 21st century,” said Nobutada Saji, president and chairman of Suntory Holdings.

Wow, hell of a statement for the head of such a big company to make. Indicates how desperate they were and why they paid such a high price. Also supports what anyone objective observing the Japanese economy over the last ten years has long ago concluded -- Japan's domestic economy will continue shrinking for at least the next two decades, so growth can only come via international business. And since Japanese companies are generally not good at building buisnesses from scratch in foreign markets, acquisition is the best route.

As I recall there were quite a few hate postings as Jim Beam was bought out by those 'evil' Japanese.

What a statement from the CeO!! 14 billion dollars?!?! Wow.

jerseyboy, you hit the nail on the head. With Japan's shrinking population, international expansion is a matter of survival.

I wonder if they'll plan some market research and look into exporting some of their domestic product into the states.

@jerseyboy

I don't fully understand that dynamic. It's all relative: if Japan has a shrinking population: then it will have a smaller society, and thus its industrial base should be expected to shrink accordingly. The worry should be if living standards are impacted.

In fact, Japan's GDP per capita remains positive, and generally outpaces other industrialized countries, meaning that its shrinking population has occurred in tandem rising living standards.

I don't fully understand that dynamic. It's all relative: if Japan has a shrinking population: then it will have a smaller society, and thus its industrial base should be expected to shrink accordingly. The worry should be if living standards are impacted.

In fact, Japan's GDP per capita remains positive, and generally outpaces other industrialized countries, meaning that its shrinking population has occurred in tandem rising living standards.

Jefflee -- here's the dynamic. A shrinking population in Japan cannot maintain the required economic base to pay all the country's outstanding debt and the ever-increasing pension and social costs associated with the oldest population in the industrialized world. (See the JT article about this reverse pyramid problem.) The only way for Japan to maintain its position is to grow the per-capita GDP, so there is an increased tax base, especially corporate taxes, to carry the load. And since, as you say, the domestic economy will shrink along with the population, that growth must come from profits repatriated from overseas.

jerseyboy,

Just a heads-up, JeffLee isn't worried about the ever expanding outstanding debt.

It sounds like a tough ask to me. With a shrinking population and growing proportion of it consisting of retirees, those who are still working would have to work their @rses off more and more to maintain GDP per capita growth. Workers in countries with population growth will surely have it easier.

The future in Japan would look brighter if each generation was responsible (at least, more so than now) for paying it's own retirement costs, rather than burdening the proportionally shrinking workforce to keep dishing up more and more. I can only see the current system driving living standards down over time (as I don't believe the government can use more debt as the answer for everything forever, without consequences).

He's right, and the Japanese citizenry needs to hear it.

Japan is shrinking and aging. Whether the Japanese like it or not they're part of a global economy and part of a global world. Japanese firms need to market outside these emerald isles. People need to learn English, and Japan has few choices other than to change, begin immigration reform or accept a permanent position as a non-first world economy.

They massively borrowed to do this, knowing their out look in the future is shaky. Just might not be enough income to cover existing debt. Massive gamble.

In fact, Japan's GDP per capita remains positive, and generally outpaces other industrialized countries, meaning that its shrinking population has occurred in tandem rising living standards.

The number remains positive if you are following the officially published numbers, which are comically optimistic. If per-capita GDP was really positive, Japanese companies would not be merging/acquiring/outsourcing overseas as aggressively as they are, and Abe wouldn't have to be pleading for foreign investors to bring their money to Japan.

Japan's economy is not export-based, as more that 60% of domestically made goods are sold domestically. And domestic sales are only strong because of how protective Japan has been of it's domestic market. This over-protection of the market has driven up costs to consumers, and allowed companies to get by without innovating or competing in the international marketplace. Now that the population is decreasing, these companies are waking up and finding out that they have one foot in the grave, and the other on a banana peel. Those that can are jumping as far away from Japan as they can.

Hmmm,... I've always believed the perspective of the demographers who say, "Once the Boomers die off, the effects of responsible birthrate management will finally begin to show itself. The burden will be on the social programs established decades ago that may have miscalculated the lifespan and needs costs of current Boomers (who incidentally put those number together - selfishly I'm sure, after all, I'm a boomer, too!).

So, this "rapidly aging population" will lose the boomers in twenty years or so. And, the Generations X, Y, and up to the Millennials don't have the critical mass to tip demographics disproportionately (at least not as much as the Boomers).

The issue will of course, still be the "hangover" from the costs of health and geriatric care. But, the 30's and 40's here in Japan will see dramatic easing in the need/demand for such services (once I too, am gone)... 'Course, if by then Japan eases up on immigration, there'll be more younger folk and newly-born also balancing out the economics... Or, World War III...

if by then Japan eases up on immigration, there'll be more younger folk and newly-born also balancing out the economics.

How many immigrants that can't flock to Japan now would flock to Japan if they could, anyway?

Japan is a great country to live, but given the choices I don't see how Japan would be able to compete for immigrants. While personally I live here, I won't be instructing or expecting my kids stick around. Young residents in Japan and would-be immigrants to Japan alike are facing the prospect of an increasing tax burden in order to support a growing bunch of old people's retirements. Would that sort of a future really be able to attract immigrants, ahead of plenty of other possible destinations?

@jerseyboy

"A shrinking population in Japan cannot maintain the required economic base to pay all the country's outstanding debt."

That's a non-issue. All that debt is in Japan, so "paying back" the debt is issue of how and where the money is distributed....IN Japan. The money doesn't leave the system. What's more, all the obligations are denominated in yen, and Japan can never run out of yen, since it makes yen.

"The only way for Japan to maintain its position is to grow the per-capita GDP"

The fact is, Japan is expanding its GDP per capita, faster than most other developed countries. (http://data.worldbank.org/indicator/NY.GDP.PCAP.CD)

"The number remains positive if you are following the officially published numbers."

Indeed, my views are based on data and evidence, as opposed to ideology, like, ahem, some people. There's no evidence so far that Japan's demographics are causing any real damage. The demographics argument is only a theory, and one that so far hasn't panned out.

Extra profits are good for corporations and really rich people, but as the Occupy movement has shown as, there is an ongoing decoupling between corporate health and the economic health of a nation as a whole. When Apple stashes its surplus profits in Caribbean tax havens, the only Americans who benefit are the very wealthy ones.

"Its eponymous whiskey played a starring role in the 2003 film “Lost in Translation” starring Bill Murray."

For relaxing times, make it Suntory Times.