By James Santagata
Principal Consultant, SiliconEdge


Japan is like a supertanker laden with oil.

It's very valuable but its contribution is often underappreciated or even unappreciated.

It's slow to turn, hard to maneuver but it's buoyant and true.

And once it gets moving and its course is set you better get out of its way. :)

By Mike Rogers, MarketingJapan, Universal Vision Ltd., and Smart Research 
& James Santagata, Principal Consultant, SiliconEdge

TV as a Mirror of Society

I met the boss of the biggest international television network in the world the other day. He is a Canadian. He travels all over the world and, because he is in the TV business, he told me that one of his favorite things to do in every country was to judge by TV commercials what things were important to that particular society. 

Japan's TV commercials? Insurance for this or that; home sales; automobiles; financial instruments and plans; candy, cosmetics, fast food... Companies like Zurich, Sekisui, Kanebo.... Japanese commercials that soft sell and are emotive commercials.

I think that's right. 

He also told me that he was "astounded" by just how many over the counter drug medication commercials there were on US TV all the time. US TV commercials? Drugs, Cholesterol, Machismo ("my ding-a-ling is bigger than yours" commercials); fast food; commercials to make your dick hard, make it soft, put you to sleep, keep you awake, lower blood pressure, lose weight; not to mention commercials galore for people with extreme anxiety and panic attacks.

Oh, and don't forget the side effects disclaimers! Cholesterol, etc.

The Wall Street Journal recently reported that Japan ranked toward the bottom of the list in an internationally recognized test of English for nonnative speakers.

Japanese test-takers ranked 40th of 48 countries in 2013 on their average score on the Test of English for International Communication (TOEIC), organized by Educational Testing Service, a private, nonprofit educational testing and assessment organization.

Japan scored an average of 512 points out of a possible 990, placing it between Mexico with 535, and Thailand with 493.

So does this matter? 

The answer is yes and no. Mostly no.

And that is because of the Tip of the Spear or the Tip of the Sword Theory.

The Sun Also Rises (陽はまた昇る), starring Ken Watanabe (Westerner's will know him from The Last Samurai and Inception) is a great movie showing Japanese Leadership & Innovation at its finest -- in this case concerning the development of the VHS tape standard and VHS Video Tape Recorder by Victor Japan (JVC).

By James Santagata
Principal Consultant, SiliconEdge


If it seems that we're under a constant barrage of the Western Media Myth (WMM) that (a) Japan is "failing" and that (b) this "failure" is primarily due to Japan's "talent problem" don't fret because we are.

Further, we are told that Japan's supposed "lack of talent" has manifested itself in such as way as to be responsible for Japan's supposed "lack of creativity" and "lack of innovation"".

But not to worry according to the WMM as we're then told that these "problems" that Japan faces can simply solved by (a) increasing the number of English-speaking Japanese and (b) internationalizing "backwards" Japanese-only speaking Japanese and (c)  increasing the number of immigrants in Japan, preferably by engaging in a sort of US-Open Bordersfashion.
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The Western Media's argument or framing of the issues, especially in terms of Japan's supposed lack of  "English-speaking" talent becomes even more silly when we consider that it ignores what I have deemed the "tip of the spear" or "tip of the sword" strategy.
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Japanese Start-Ups Channel Samurai Spirit: The Samurai Startup Island, in a low-rent office district built on a landfill on Tokyo Bay, is at the vanguard of what many hope is a new generation of innovators.

By Martin Fackler, New York Times
Published: December 25, 2013

TOKYO — The 20-somethings in jeans sipping espresso and tapping on laptops at this Tokyo business incubator would look more at home in Silicon Valley than in Japan, where for years the surest signs of success were the gray suits of its corporate salarymen. But for those hoping the nation’s latest economic plan will drag Japan from its long malaise, the young men and women here at Samurai Startup Island represent a crucial component: a revival of entrepreneurship.

The signs of that comeback are still new, and tentative enough that the statistics on start-ups and initial public offerings have not caught up. But analysts and investors report that hundreds of new Internet and technology-related companies have sprung up in the last two to three years, creating an ecosystem of incubators like Samurai Startup Island and so-called accelerator new venture investment funds, which invest in early-state start-ups in hopes of cashing in.

Some top universities — the same ones that have long defined success as a job in an established company or elite government ministry — have begun not only to create their own incubators and venture funds, but also to develop curriculums on birthing start-ups. And while some young entrepreneurs say real progress will come only if Prime Minister Shinzo Abe acts as promised to shake up Japan’s hidebound corporate culture, they say the stock market rally and broader optimism created by the economic plan known as Abenomics are already making it easier to find investors and customers.

“This is the beginning of something that could rejuvenate Japan,” said Mitsuru Izumo, the founder of Euglena Corporation, a biotechnology start-up valued at $1 billion, and one of the country’s most prominent new entrepreneurs. “If we don’t unleash our youth, then Japan will become too weak to survive another blow like Fukushima. Entrepreneurship is Japan’s last chance.”

For years, sagging entrepreneurial spirit has been cited as a major reason for Japan’s inability to save itself from a devastating deflationary spiral. The nation that produced Sony, Toyota and Honda has created few successors.

By Chikako Mogi and Masaaki Iwamoto

Takashi Nakajima earns $100,000 a year growing lettuces, employs Chinese laborers to harvest them, and has four months off in winter to indulge his passion for speed skating. He’s the result of a protected farming system that Japanese Prime Minister Shinzo Abe is about to dismantle.

“I don’t trust the government at all,” said Nakajima, 35, whose village of Kawakami in the picturesque valleys of Nagano prefecture boasts incomes five times the national average. “They want to streamline Japan’s farming business. Small farmers won’t be able to survive and the community will die.”

Government support, including payments to some farmers for not producing, accounted for 56 percent of the total earnings for Japanese agriculture last year, behind only Norway and Switzerland, according to the Organisation for Economic Cooperation and Development. Abe plans to cut the 161 billion yen ($1.6 billion) support for rice farmers’ incomes and reduce import barriers, forcing thousands of hand-tended smallholdings like Nakajima’s to consolidate.

“The current system is so unproductive that it’s hurting the nation as a whole,” said Robert Feldman, head of Japan economic research at Morgan Stanley MUFG Securities Co. “The price of some agricultural goods is higher than it should be. Changing the agricultural laws is a good way to promote the conversion of land to more efficient use.”

At the heart of the battle is the Japan Agricultural Cooperatives group, or the JA, which has unique powers to finance and insure farms, supply them with equipment and fertilizers and buy their produce. With almost 10 million members, that makes the JA the country’s fourth-biggest financial services provider, its largest political lobby and the supplier of nearly half of rice distributed across the country.

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“In the absence of fundamental reform, the agricultural sector will continue to wither, trapped in a cycle of low productivity, low earnings and dependence on subsidies and import protection,” OECD economists Randall Jones and Shingo Kimura wrote in a May report.

Japan’s proliferation of small farms was the result of a postwar restructuring of land ownership under General Douglas MacArthur during the U.S. occupation, which broke the power of the landlord class and allocated plots to tenant farmers that tilled about one third of the nation’s fields and rice paddies.
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[read more]

By Stephen J. Smith | NEXT CITY


When New Yorkers imagine real estate development in their city, they tend to imagine voracious builders – they think about the crop of towers rising in downtown Brooklyn, in Williamsburg and around the High Line, the construction sites that litter the far west side and Hudson Yards, and the Billionaire’s Row of supertall skyscrapers massing south of Central Park on 57th Street, and they imagine a city overcome by developers.


The narrative of New York as captive to builders overrunning any rational bounds to growth is a popular one, but the statistics – annual housing production numbers so meager that they’d surprise even Amanda Burden, New York’s chief city planner – tell a different story.

According to numbers compiled by James Gleeson for a paper released by Greater London Mayor Boris Johnson’s office on the need to build more housing, New York’s housing production lags far behind its main “world city” competitors, London and Tokyo. In fact, despite New York’s skycraping reputation – it has more high-rises, however you count, than relatively squat Tokyo and London – it actually has more in common with Paris, a city with a reputation for being frozen in its 19th century urban form, when it comes to current growth.

We've talk about this here before, primarily focusing the the so-called three arrow of Abenomics and how it was misguided, misordered and worst of all, most likely untenable.

- FirstPoint Japan Editor

By Nathan Lewis, Contributor
Forbes Magazine

The administration of Shinzo Abe in Japan just approved a rise in the consumption tax (national sales tax) to 8% in April 2014, from 5%. This opens the door for another rise to 10% in 2015. At the same time, the Abe administration plans to spend ¥5 trillion on “stimulus” to offset the negative economic effects of the tax.

I’ve described a typical path of decline as a combination of “stimulus” and “austerity.” The “stimulus” mostly means spending money, or some kind of “easy money” policy. The “austerity” is some kind of tax hike. Put together, they add up to higher taxes, a moribund economy, more demands on the government as the private sector stumbles, more reliance by the government on distributing money as a way of bolstering political support, worsening finances, more waste, and a depreciating currency.
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This is completely contrary to the Magic Formula of Low Taxes, Stable Money — the formula that Japan itself used to grow wealthy during the 1950s and 1960s, and indeed in the 1870-1914 period as well.
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Most of the focus on “Abe-nomics” has been on the very aggressive monetary expansion being conducted by the Bank of Japan. To some degree this is warranted: the average yen exchange value over the past twenty years is about 120/dollar. However, once that point is reached … what then? I suspect that, soon, it will degenerate into not much more than a way of financing the flood of JGBs that still pours forth.

I think most people understand now that the “stimulus” spending isn’t really about Keynesian notions anymore. Rather, it has devolved into the simple purchasing of political support. Perhaps it was never really more than that, but any other justifications have worn too thin to be credible.
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The spending was deemed necessary to preserve political support. When even that didn’t work, they spent more on the military to suppress revolt and revolution. As the private sector economy crumbled under ever-higher taxes, and successive currency devaluations, the king was not so popular anymore. His ministers feared that cutting off payments to nobles and other cronies might erode their base so much that the dynasty could crumble.
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How much is ¥5 trillion in “stimulus”? It is more than half the total annual revenue of the corporate income tax, including prefectural and local taxes (about ¥9 trillion), or the projected amount of revenue expected to be generated by the increase in consumption taxes (about ¥6 trillion) — which won’t actually appear in any case.

What if, instead of “stimulating” the economy by throwing money down a hole to appease cronies, you reduced tax rates instead? It might be popular. But, they never think of that.

Nothing good is happening in Japan. Not much is likely to happen, until sometime after the present dingdongs reduce the economy to smoldering ruin.

By James Santagata
Principal Consultant, SiliconEdge

Richard Solomon of Beacon Reports recently wrote a very thoughtful piece first questioning and then analyzing the ability of Japanese firms to complete globally (see: Can Japanese Firms Compete In Global Markets?)

I. Myths & Memes
As so often happens with this and many other topics, ranging from war to innovation to relationships and dating, the question itself is beset if not hobbled with a series of Myths and Memes which we'll explore and unravel together in a series of future articles. 

II. Are Japanese Baseball Players Good Enough For Major League Baseball?
My first thought upon reading this article was simply how it parallels this modern reality: Are Japanese baseball players good enough for major league baseball?

Think about it.  We used to ask this very same question about Japanese baseball players. Could Japanese baseball players make it in the major leagues?  Sure, we all knew that the Japanese players were solid players, they were good, no one disputed that but we wanted to know could the Japanese baseball players really make it in the major leagues? (see: The New Age Of Japanese Baseball-Player Media Coverage Sam Robinson May 9, 2008)

III. Can Japan Compete Globally On A Military Basis?
From historical records we know that the Japanese can compete globally, industrially, cultural and, yes, even militarily. So let's start with the military perspective. Militarily, the fierce fighting tactics and spirits of Japanese soldiers during WWII lead to horrific allied battle casualties, both physical and psychological (see: Thousand Yard Stare), that in many cases easily outstripped what was encountered in the European theater (although there are obviously some exceptions). And, of course, some of the fiercest battles of WWII were held in the Pacific theater: Tarawa. Saipan. Midway. Coral Sea. Marshall Islands, Eniwetok. Guadalcanal. Iwo Jima, and, of course,Okinawa all come to mind along with the horrific casualties and loss of life among both soldiers and civilians.