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Page history last edited by Brian D Butler 9 years, 4 months ago

Japan Economy:


Japan's economy was the second largest economy in the world,[1] after the United States (2nd largest is now China, as of August 2010), at around US$4.5 trillion in terms of nominal GDP[1] and third after the United States and China when adjusted for purchasing power parity.[2] The workers of Japan rank 18th in the world in GDP per hour worked as of 2006...read more here: 


"Japan is the world’s third-largest economy, a bit behind China now. It is also the third-largest industrial economy, behind only the United States and China. Japan’s problem is that its enormous industrial plant is built in a country almost totally devoid of mineral resources. It must import virtually all of the metals and energy that it uses to manufacture industrial products. It maintains stockpiles, but should those stockpiles be depleted and no new imports arrive, Japan stops being an industrial power."  Stratfor.com, Japan the Persian Gulf and Energy, Mar 15, 2011[1]



Table of Contents








"To mitigate the risk of oil dependency — which cannot be eliminated altogether by any means — that Japan employs two alternative fuels: It is the world’s largest importer of seaborne coal, and it has become the third-largest producer of electricity from nuclear reactors, ranking after the United States and France in total amount produced. One-third of its electricity production comes from nuclear power plants. Nuclear power was critical to both Japan’s industrial and national security strategy. It did not make Japan self-sufficient, since it needed to import coal and nuclear fuel, but access to these resources made it dependent on countries like Australia, which does not have choke points like Hormuz......   it is essential to understand what energy has meant to Japan historically — miscalculation about it led to national disaster and access to it remains Japan’s psychological as well as physical pivot."     read more from:   Stratfor.com, Japan the Persian Gulf and Energy, Mar 15, 2011[2]



The role of Energy-security and the origins of WWII


"The comparison with World War II was apt since it also began, in a way, with an energy crisis. The Japanese had invaded China, and after the fall of the Netherlands (which controlled today’s Indonesia) and France (which controlled Indochina), Japan was concerned about agreements with France and the Netherlands continuing to be honored. Indochina supplied Japan with tin and rubber, among other raw materials. The Netherlands East Indies supplied oil. When the Japanese invaded Indochina, the United States both cut off oil shipments from the United States and started buying up oil from the Netherlands East Indies to keep Japan from getting it. The Japanese were faced with the collapse of their economy or war with the United States. They chose Pearl Harbor."  read more from:  Stratfor.com, Japan the Persian Gulf and Energy, Mar 15, 2011 [3]





Macroeconomic situation:




"Over the last few years, Japanese savers have been willing to finance their government deficit. However, with Japan's population aging, it's likely that the domestic savers will begin using those savings to fund their retirements. The newly elected DPJ party that favors domestic consumption might speed up this development. Should the market re-price Japanese credit risk, it is hard to see how Japan could avoid a government default or hyperinflationary currency death spiral."  David Einhorn, Greenlight Capital



Role of Banks in Buying Government Debts:


"MUFJ executives describe their role in buying JGBs as part of a “public mission”: they recycle an excess of money in the household sector to the government, which is short of funds. The banks have a vested interest in keeping the bond market stable. If they were rapidly to reduce their holdings, long-term interest rates would rise, which would hurt them, their customers and the economy at large. But if loan demand starts to grow again, the banks will have to respond if they are not to lose business to international rivals. To stay competitive, the banks need the flexibility to switch from buying JGBs to funding private-sector growth." read more from the Economist







Bank of Japan Governor Masaaki Shirakawa said in Tokyo today that the yen’s gains hurt Japanese exporters and the economy in the short term. Toyota Motor Corp., Sony Corp. and Honda Motor Co. are cutting jobs and closing production lines as profits and sales dwindle.


Intervention (to weaken YEN)


2004: Japan’s intervention in currency markets included selling a record 20.4 trillion yen ($229 billion) in 2003 and 14.8 trillion yen in the first quarter of 2004.


Japan 2011:  "The world's richest nations have carried out coordinated action in the currency markets to try to stabilise the Japanese yen.  It is the first time since 2000 that G7 countries have jointly intervened in the currency markets...   Earlier this week, the yen hit 76.25, its strongest since World War II, adding to fears over Japan's recovery.   NOTE:  Japan is the world's third-biggest economy and relies heavily on exports. A rise in the yen makes Japanese products less desirable abroad."  [1]


see also:  currency manipulation






The politics and power structure of Japan are built around exporting. The incentives are all to save, invest, and export. 


Exports have driven Japan’s economy in recent years, contributing close to half of its GDP growth on average from 2002 to 2007.  But there is concern that Japan’s growth engine may be stalling.  Export growth fell to 2.3% yoy in March - the slowest pace in three years.  Analysts point to the strong yen and weak U.S. demand as key factors in the slowdown.  Others, however, do not foresee a major stall in export growth. Given Japan’s growing reliance on other Asian markets, exports should continue to power the economy, they say, as long as these economies stay relatively insulated from the U.S. and EU slowdown.  See “Japanese Exports: Will The Growth Engine Stall?




Inflation (for the wrong reasons)


Shouldn’t inflation in Japan be good news?  After a decade-long fight against deflation, Japanese prices are finally rising at their fastest pace in twenty years.  The problem is rising energy and raw material costs, rather than growing demand, are the inflation drivers.  This could further depress Japan ’s already anemic consumer spending.  See: “Japan's Inflation Irony: Price Rises Driven By Energy Costs, Not Growing Demand







"Lost Decade" in Japan


Japanese version of the 2008 Credit Crisis:  what are the comparisons?  see our discussion on Japans lost decade of the 1990s



Technology companies


Google is set to sign a deal with Japan’s biggest mobile phone operator NTT DoCoMo that will see Google become the default search provider to 48 million NTTDoCoMo customers. The deal will also see NTT DoCoMo switching to Google Apps for the provision of email to it customers.



Japan is one of the few markets globally in which Yahoo is ahead of Google in search, holding 65.9% of the market in April to Google’s 27.8%. The overall gap amongst all Yahoo and Google properties however isn’t quite as wide, with Yahoo properties totaling 41 million unique visitors in August (comScore) to Google’s 31 million. The deal will be a much needed boost for Google in a search market that it has failed to lead, unlike nearly every other country on the planet. According to Reuters, the alliance may eventually lead to the development of new functions and handsets.



Does Japan Need the iPhone?


The world's most sophisticated users of wireless technology may be unimpressed by Apple's high-tech gadget


The Japanese fell for the iPod. So why should they not embrace the iPhone, too? It's tempting to think that Japan's love affair with Apple's (AAPL) iPods would extend to the mobile phone that shares the same high-tech DNA. After all, the iPod controls about 50% of the Japanese market for portable media players, according to Tokyo market researcher BCN, and Apple's carefully cultivated image as a maker of hip, edgy, yet user-friendly gizmos should work in its favor.


But when the Cupertino (Calif.) company wades into the world's most advanced wireless market next year, it could find Japan's 98 million cell-phone users a hard bunch to please. For one thing, consumers here won't be as starstruck by the iPhone's high-tech gadgetry as users elsewhere. Japan's 10 handset makers, which dominate the domestic market, already offer dozens of models typically costing several hundred dollars that send e-mail, browse the Internet, shoot photos and videos, and even pick up live TV broadcasts. Most come with a built-in global positioning system, and some even double as credit cards and commuter passes or safeguard personal data using fingerprint or face-recognition technology.


In its current form, the iPhone doesn't work on Japan's advanced third-generation, or 3G, network. Rumors abound that Steve Jobs & Co. will release a new, faster 3G iPhone next year. But analysts are skeptical that will be enough to please consumers in Japan. In its current form, the iPhone's 3.5-inch touchscreen and its access to online applications such as YouTube and Google (GOOG) Maps are about all that set it apart from other handsets in Japan.


Potential Turnoff

In other ways, the device is inferior, and some of its functions won't be all that useful. The iPhone's Wi-Fi networking, for instance, won't get much of a workout since few Japanese retailers are wired for such short-range broadband wireless Internet service. "I don't think it's going to do that well," says Makio Inui, a managing director at UBS (UBS) in Tokyo. He predicts the iPhone's high price and limited features will be a turnoff for many in Japan.


Where the iPhone will fill a need is with consumers like Keiko Ohashi. The 32-year-old sales manager already owns an iPod, doesn't care for all the bells and whistles of Japanese handsets, and prefers the full QWERTY keypad and browser of a computer-like device. "I'd love to get an iPhone," she says.


She may get her wish. In recent months, Jobs has met with Masao Nakamura, chief executive at Japan's No. 1 wireless operator, NTT DoCoMo (DCM), to discuss a possible deal, DoCoMo spokesman Shinya Yokota said. Connecting the iPhone to DoCoMo's high-speed 3G network isn't the only draw for Apple. It also could tap into DoCoMo's sales and marketing muscle. That gives Apple a better shot at grabbing a chunk of the roughly 50 million cell phones sold in Japan annually, and meeting its target of selling 10 million iPhones worldwide by 2008. (Apple had sold 1.4 million by Oct. 22.)





more commentary from the WSJ:


iPhone coming to Japan's NTT DoCoMo?

According to the Wall Street Journal Asia, Jobs and Co are in Japan working out the details for a domestic iPhone launch. It's no surprise then that Jobs was rumored to have just met with NTT DoCoMo's president, Masao Nakamur, to discuss the deal with the largest carrier in the world's second-largest economy. As usual, Apple seems to be playing the carriers off one another with rumors that The Steve is courting Softbank as well. However, "people familiar with the situation" say that DoCoMo is the first choice. While the revenue sharing is a sticking point as usual, WSJA says that Apple doesn't expect to have any difficulty closing the deal. Funny, that's what everyone was saying about Vodafone in Europe.


P.S. -For what it's worth, NTT DoCoMo does not run a GSM / EDGE network. Any iPhone released on DoCoMo's FOMA service will be UMTS / HSDPA -- right, the 3G iPhone.




External Links


other wikis:







  1. "Japan, the Persian Gulf and Energy is republished with permission of STRATFOR." Read more: Japan, the Persian Gulf and Energy | STRATFOR http://www.stratfor.com/weekly/20110314-japan-persian-gulf-energy
  2. "Japan, the Persian Gulf and Energy is republished with permission of STRATFOR." Read more: Japan, the Persian Gulf and Energy | STRATFOR http://www.stratfor.com/weekly/20110314-japan-persian-gulf-energy
  3. "Japan, the Persian Gulf and Energy is republished with permission of STRATFOR." Read more: Japan, the Persian Gulf and Energy | STRATFOR http://www.stratfor.com/weekly/20110314-japan-persian-gulf-energy

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