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The Australian’s revisionist history December 22, 2006

Posted by fukumimi in crime, Economy & Business, IT, Japan.
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via JapanProbe

Original article here

Horie is a discredited figure and his attempts to blame his downfall entirely on the system are clearly self-serving. Yet he has a point. Well before he was accused of breaking the law, members of Japan’s business elite had already condemned him as a pariah. In their eyes, his biggest sin was daring to challenge vested interests and the status quo. Doing so was worse than impudent – it threatened the existing order.

Take the Keidanren, the influential business federation, whose head, Fujio Mitarai, has doggedly fought plans to allow foreign bidders to use their shares to finance takeovers, a step that could put many Japanese companies in play.

It is funny that the article mentions the Keidanren, as  Livedoor was actually admitted to this cozy old guard club. (And then chairman Okuda-san was terribly embarassed when the scandal hit, calling Livedoor’s acceptance into that club an embarassing mistake) If that club isn’t the epitome of the old guard business elite, I don’t know what is. (Well I do, it’s the regular meetings of the keiretsu CEOs that have names like the “Friday Club – Kinyokai – 金曜会”, “2nd Thursday Club – Nimokukai – 二木会”, “Whitewater Club – 白水会 – Hakusuikai” all of which get the big keiretsu CEOs together for regular meet-ups, ostensibly to hold study sessions over lunch or somesuch.)

Livedoor seemed cozy enough with the LDP top brass too, and those PR opportunities don’t happen without serious consideration and consultation.

Without doubt, the established old guard did initially resist, but in characteristic ovine behaviour, they seemed to embrace the new guard (as they did with Rakuten and Softbank before Livedoor) as a pretty coherent unit when some invisible signal (a dog whistle?) was sounded (albeit perhaps begrudgingly).

Clearly Son and Mikitani are more intelligent and/or more well connected than Horie and pals, as Son especially has done (and is doing, though I feel to a lesser extent these days – maybe he has learnt to play by the “rules”) a lot more to ruffle feathers of the old guard and disrupt the old order of things, at least on the surface.

The article continues:

 The key to raising the economy’s anaemic growth rate lies in the services sector. Its backwardness ought to be an opportunity for entrepreneurial innovators ready to have a go. But while Japan does not lack promising start-up companies, few have broken through to become big businesses.

That statement contradicts the facts. If you look at IPOs on MOTHERS and Hercules and JASDAQ, you’ll see a whole host of services companies who have become significant players. Everything from restaurant businesses to outsourced professional services to wedding planning companies to internet advertising firms (a whole bunch of them….), investment funds and debt recovery services have seen IPOs this year. (not all are equally valuable to society in my estimation)

I think the problem isn’t that there aren’t successful companies in the services sector. There are 2 problems.

1. The vast majority of companies in the service sector are (almost 100%) domestically focussed, and as such they are just redistributing the pie, taking share away from the backward businesses the author alludes to. Only by marketing its services overseas and repatriating the profits does the pie really grow. I know it that is simplistic and it is not a zero sum game, but I think that is the big difference between the Japanese service industry and national economies which have successful service industries who are competitive internationally. In the end, if Japan depends solely on the manufacturing sector to be competitive in international trade, the future is bleaker and bleaker as low cost (and increasingly high quality) competitors become more and more competitive. (Not to say that Japanese manufacturers aren’t trying (and suceeding) in being competitive by innovating and pushing the envelope – they are, but the lower value businesses are being decimated by competition from other nations and that means less of the pie for the Japanese)

2. Consumer spending remains weak, and with corporate-world’s recovery having been built in no small part on the backs of redundancies and switching from a predominantly full-time workforce to one that is increasingly dependent on contract, temporary, and part-time employees who are naturally paid a lot less for their time (in terms of both hourly wage and benefits), I’d say the odds of a resurgence in consumer spending (especially to the levels seen in the heady days of the bubble) are bleak. Of course, you wouldn’t think that is the case if you went shopping in Ginza or Omotesando, but that is just a factor of the increasing disparity in disposable income.

I do agree that Abe isn’t going to make things much better. He doesn’t even have the Koizumi talent of making bold but substance-less assertions and making the electorate feel warm and fuzzy inside whilst not actually changing anything material at all.

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Comments»

1. Japan Probe -Japan News & Culture Blog » Blog Archive » Japan News for December 23, 3006 - December 23, 2006

[…] -Solid criticism of The Australian’s editorial, which sympathized with Takafumi Horie’s view of Japan’s business community. […]

2. Ken - December 24, 2006

I agree with you fully on the consumer spending. Western analyst after western analyst keeps pondering in articles as to why consumer spending isn’t increasing, but not a single one of them seems to have picked up on the fact that after 10 years of the average wage declining about 400,000 yen a year, over the past year the average wage has increased about 10,000 yen. If people don’t make more, they can’t speand more. Further, there is no sign that they will make more on the horizon. The media talks about better business profit and better bonuses, but we know that per captia, that money is being redistributed to a smaller and smaller set of folks.

Back to your point: the western media never seemed to have picked up on the fact that Livedoor was admitted to Keidanren (and that this was embarassing to Keidanren). Without the folks on the ground fluent in the language and culture, it’s easy to miss ‘details’ such as that. Livedoor surely broke the rules, but probably felt as though Keidanren membership was a license to do so.

From the average person’s point of view, Horiemon gets no sympathy. Here’s a guy who build a company, become a member of Keidanren and ran as a diet candidate with LDP backing, as an LDP candidate – a member of the ruling party. Doesn’t sound like much of an outsider to me (the average person).

3. Carl - December 24, 2006

I’d interpret Horie’s membership in Keidanren as more of a recognition on the part of the old guard that Horie wasn’t going away, and an attempt to co-opt him into becoming one of them–do things our way, adopt our manners, follow our rules, and we’ll accept you eventually. Membership was a tatemae acceptance; real acceptance would have come later. Horie was an outsider. If he hadn’t been, he wouldn’t have been arrested.

4. midwest airlines - February 14, 2007

midwest airlines

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