ACCJ Journal Sept 2009 by Paradigm

¥800 | September 2009

Journal

Real Estate Perspectives ■ Business Profile: Advertising ■ Tokyo Stock Exchange CEO ■ The Venturesome Economy ■

The

Business of Health Prevention is better than a cure.

SPECIAL Advertising SECTION

Human Resources/ Recruitment Consulting/ Corporate Training September 2009 | The Journal | 1

E g j j a k g f >g ] j k l ] j d d h J ] _ a k l ] j ] \ 9 k k g [ a Yl ] \ G ^ ^ a [ ] k g ^ Alg Ealgea

Experience speaks volumes. When it comes to selecting legal counsel for business disputes, focus and experience count. Morrison & Foerster has what it takes: The only international law firm with a full-service litigation capability in Tokyo, with more than two dozen full-time litigators in Tokyo Extensive experience in international and domestic litigation, international arbitration and internal investigations Ranked Tier 1 for Intellectual Property in Japan by the Asia Pacific Legal 500, Chambers Global and PLC Which Lawyer? Supported by the 110 attorneys of Morrison & Foerster’s Tokyo office - Japan’s largest international law firm More than a thousand lawyers in key finance and technology centers internationally. One compelling mission: to deliver success for our clients. For more information regarding our Japanese Litigation practice, please contact Ken Siegel at +81 3 3214 6522 or visit www.mofo.com.

ADVERTISING – PRIOR RESULTS DO NOT GUARANTEE A SIMILAR OUTCOME.

ACCJ Mission Further the development of commerce between the United States of America and Japan, promote the interests of U.S. companies and members, and improve the international business environment in Japan.

CONTENTS

Volume 46 | Issue 9 | September 2009

Features COVER STORY 12

The Business of Health Preventing illnesses saves money and lives while boosting productivity and profits. By Julian Ryall 健康ビジネスの奥義

病気の予防は命と国家財政を救う。生産性を高め利益を生むライフスタイル。文／ジュリアン・ライアル

ACCJ Event The Real Estate Market, Whither from Here? Perspectives from a Developer, a Lender and an Investor. By Julian Ryall

ACCJイベント

これからどうする？不動産マーケットデベロッパー、賃貸業者、投資家からの視点と先行き文／ジュリアン・ライアル

September 2009 | The Journal | 3

DEPARTMENTS 9

Note from the Editor

Discovering the Tokyo Datum by William Bishop

President’s Message

Out and About Speakers, members and guests photographed at recent ACCJ events.

Media Watch Creative Kansai retailers. Consumers cut back. Akihabara’s Chinatown. Shotgun weddings. Eco no. Fleeing creditors.

On the Spot Atsushi Saito, President & CEO, Tokyo Stock Exchange Group, Inc. is interviewed by Julian Ryall.

Global Entry Initiative Expanded

Behind the Book The Venturesome Economy. How Innovation Sustains Prosperity in a More Connected World by Amar Bhidé, is reviewed by Tom Baker.

Jesper Koll Writes New Government vs. Old Realities

Events Line-up Business and leisure-related happenings in September. By David Umeda

FDI Portfolio CSR event. U.S.-Japan Entrepreneurship. Lifestyle brand expands. Hotels deal. By Nicole Fall

Business Profile David McCaughan, Regional Strategic Planning Director, McCann Worldgroup Asia Pacific. By Tony McNicol

Advocacy Update ACCJ Viewpoints

In the Final Analysis By Samuel H. Kidder, ACCJ Executive Director

4 | The Journal | September 2009

TONY MCNICOL

WILLIAM BISHOP

Volume 46 | Issue 9 | September 2009

CHRISTOPHER DOMITTER (HTTP://DOMITTER.NET)

CONTENTS

Presidents Emeriti Thomas F. Jordan (1994-1995) Robert F. Grondine (2000-2001) Debbie Howard (2004-2005) Charles D. Lake II (2006-2007) Allan D. Smith (2008) ACCJ Leaders President Thomas W. Whitson KPMG FAS Co., Ltd. Chairman Allan D. Smith AIG Companies, Japan and Korea Vice Presidents Michael J. Alfant Fusion Systems Japan Co., Ltd. Laurence W. Bates General Electric Japan, Ltd. William R. Bishop, Jr. Nippon Becton Dickinson Co., Ltd. Michael D. Bobrove (Kansai) Nihon Medrad K.K. Kumi Sato Cosmo Public Relations Corporation Mark F. Schwab United Airlines, Inc. Chris Zarodkiewicz (Chubu) Cezars International K.K. Treasurer Nasir Majid PricewaterhouseCoopers Brett Jensen (Kansai) Colliers Hallifax Steve Burson (Chubu) H&R Consultants ACCJ Governors Andrew Conrad Aflac International, Inc. Christopher K. Ellis Chrysler Japan Company, Ltd. Bruce J. Ellsworth Johnson & Johnson Family of Companies James Foster Microsoft Japan Harry Hill (Chubu) Oak Lawn Marketing, Inc. Tad Johnson Pratt & Whitney Aftermarket Japan KK John Kakinuki GE Consumer Finance Co., Ltd. Jiri Mestecky Kitahama Partners L.P.C. Kinji Yasu Stone Container Japan Co., Ltd. Douglas L. Peterson Nikko Citi Holdings Inc. Nicole W. Piasecki Boeing Japan Jay Ponazecki Morrison & Forester LLP Mitsuyo Teramura Federal Express Corporation Jim Weisser PBXL ACCJ Executive Staff Samuel H. Kidder Executive Director Aron Kremer Deputy Executive Director ACCJ Committees American Auto Industries Rick Brown Architecture, Construction & Real Estate Kevyn Johnson/Michael P. King Asia Business Philip C. Jones B2B Sales Karl Hahne/Craig Saphin Banking and Finance Thomas Clark/Ernfred Olsen Capital Markets Douglas Hymas Charity Ball Barbara Hancock Competition Policy Task Force Robert Grondine Corporate Social Responsibility Patricia Bader-Johnston Direct Marketing Joseph Peters Environmental Rebecca K. Green Financial Services Forum Charles D. Lake II Food and Agriculture Collin Benson Foreign Direct Investment Nicholas Benes Government Relations Ira Wolf Healthcare Steve Plunkett Human Resource Management Chris Lamatsch, Adam Kassab Independent Business Doug Jackson Information, Communications & Technology Darren McKellin, Ann Rollins Insurance Nate Graddy/Jonathan Malamud Intellectual Property David Case International Education Patrick Newell Internet Economy Task Force Yoshitaka Sugihara Investment Management David Monroe Leadership Forum Michael J. Alfant/Kumi Sato Legal Services Arshad Karim/Eric Sedlak Corporate Counsel Clair Chino Marketing Programs Koichi Hama Membership Relations Andrew Silberman Privatization Task Force David Hoover Retail TBA Soft Landing Task Force Adam Kassab/Mariko Nakazono Special Events Barry Bergmann Young Professionals Group John Ghanotakis/Daniel Lintz Taxation Jack Bird/Michael Shikuma Toiletries, Cosmetics & Fragrances Yukiko Tsujimoto Transportation and Logistics Jeff Bernier/Jeremy Goldstrich Travel Industry Kayoko Inoue/Vincent You University Briefing Program Richard May/David Satterwhite Kansai Chapter Business Programs Pabel Delgado Community Service Kojiro Dan External Affairs Kiran Sethi Living in Kansai Barry Louie Membership Paul Dupuis Women in Business Mari Nogami Chubu Chapter Community Service Steve Burson Independent Business Chris Oostyen/Jason Morgan Living in Chubu Lowell Sheppard Membership Relations Chris Zarodkiewicz Programs Steve Brown American Chamber of Commerce in Japan Masonic 39 MT Bldg. 10F, 2-4-5 Azabudai Minato-ku, Tokyo, Japan 106-0041 Tel: 03-3433-5381 Fax: 03-3433-8454 www.accj.or.jp / www.ecentral.jp The ACCJ is an independent membership organization with no affiliation with any government or other chamber of commerce. The ACCJ is a member of the Asia Pacific Council of American Chambers and values its relationships with Japanese, American and other nationsâ&#x20AC;&#x2122; business organizations.

REFUGEES INTERNATIONAL JAPAN RIJ ᅗ㝷㞬Ằᨥᥴఌ

WE CAN HELP THEM REBUILD THEIR LIVES AND RESTORE HUMAN DIGNITY. REFUGEES INTERNATIONAL JAPAN FUNDS PROJECTS THAT SUPPORT SOME OF THE MILLIONS WHO HAVE LOST EVERYTHING AS A RESULT OF CONFLICT AROUND THE WORLD. RIJは、世界中で起こる紛争のためにすべてを失った、何百万という人々の中の一部を支援するプロジェクトに、資金を提供しています。皆様の支援のお陰で、彼らが人間としての尊厳を回復し、生活を立て直す手助けをすることができます。

TEL: 03-5500-3093

WWW.REFUGEESINTERNATIONALJAPAN.ORG

Journal

Publisher Vickie Paradise Green paradise@paradigm.co.jp Editor-in-Chief Simon Farrell simonfarrell@paradigm.co.jp Senior Editor David Umeda Art Director Paddy O’Connor Graphic Designer Akiko Mineshima COLUMNISTS Tom Baker, Nicole Fall, Jesper Koll CONTRIBUTORS Alana R. Bonzi, Geoff Botting, Martin Foster, Justin McCurry, Tony McNicol, Anthony H. Rowley, Julian Ryall, Catherine Shaw PHOTOGRAPHERS / ILLUSTRATORS Tony McNicol, Jeremy Sutton-Hibbert, Darren Thompson, Mattias Westfalk Published by Paradigm President Vickie Paradise Green Creative Director Richard Grehan Advertising Sales Eileen Chang, Sarit Huys, Helene Jacquet, Leai Kubotsuka Kamiyama Ambassador 209 18-6 Kamiyama-cho, Shibuya-ku Tokyo, Japan 150-0047 Tel: 03-5478-7941 Fax: 03-5478-7942 e-mail: inquiries@paradigm.co.jp www.paradigm.co.jp

Published monthly in Tokyo, on the 25th of the month, since 1964. Indexed in the PAIS BULLETIN. All rights reserved. The views and opinions expressed herein (other than editorials from the ACCJ itself) are solely the opinions and views of their authors. The ACCJ is not responsible or liable for any portions thereof. Subscription rates for non-ACCJ members One year ¥9,000; two years ¥15,000; three years ¥22,000. ¥800 per copy. Rates include domestic postage or surface postage for overseas subscribers. Add ¥7,500 per year if overseas airmail is preferred. Please allow eight weeks for changes of address to take effect. Subscription requests should be sent to info@accj.or.jp The ACCJ Journal welcomes story ideas from readers and proposals from writers. Letters to the editor may be edited for length and style. The ACCJ Journal is produced entirely on Apple computers

NOTE FROM THE EDITOR

Unleashing Animal Spirits

t’s very encouraging to see ACCJ advocacy efforts rewarded with real action, not just words. After all, advocacy is a fundamental thrust of the Chamber and a key reason for its existence. In our cover story, we are pleased to feature the latest advocacy success; and what an important one it is, not just for business but also for everyone in Japan—healthcare. After months of pressure from the ACCJ Healthcare Committee, led by Chair Steve Plunkett, the Japanese government in May established a ¥24.6-billion program offering free breast cancer tests for women aged 40 to 60 and cervicalcancer screening every five years for women aged 20 to 40—along with a high-profile public awareness campaign. With screening partly behind falling U.S. cancer rates, Plunkett sums it up, “That was a huge win.” There’s much more on the Committee’s agenda to cut mortality and costs, as you can read in “The Business of Healthcare” on page 12. Two major pillars of an economy often among the first to indicate the start and end of a recession are real

12 estate and the stock market. That’s why the ACCJ invited a developer, a lender

and an investor to tell members and their guests the latest on opportunities in this challenging market (page 20). Likewise, our interview on page 22 with Tokyo Stock Exchange CEO Atsushi Saito is also a rare insight into what a top business leader sees as the threats to his industry, causes of the current economic malaise and, thankfully, reasons for optimism. By now, of course, we all know the result of Japan’s election held on August 30. Before the poll, our Japan pundit Jesper Koll outlined in detail for the Journal on page 30 what the new government must do in the face of old realities. Naturally, strong leadership is needed to tackle a huge public deﬁcit. Koll adds a classic Keynesian—that success will be ultimately measured by how the government “re-kindles animal spirits” to drive entrepreneurship Simon Farrell simonfarrell@ and risk-taking, creating paradigm.co.jp opportunities for wealth, jobs and GDP growth. ■

Discovering the Tokyo Datum JAPAN’S LATITUDES AND LONGITUDES START HERE. Photos and text by William Bishop

eference points are important in figuring out exactly where things are in relation to everything else. The use of latitude, longitude and height is common for representing a position on the earth. With the advent of GPS (global positioning system) technology, establishing the exact longitude and latitude of any point on the planet has become as easy as pushing a button. Finding the exact height of a point on earth, however, is a bit trickier. The height of a place is usually stated as so many feet or meters above sea level. To establish the “mean sea level” as the zero point requires long-term and continuous measurements. For Japan, the numeric value of the Nihon Suijun Genten (the origin point for the vertical datum)— located at 1-1 Nagata-cho, Chiyoda-ku, Tokyo—is 24.4140m above the mean sea level of Tokyo Bay. Interestingly, this measurement was originally determined to be 24.0000m by tidal observation, from 1873 to 1879, between the origin point and the Reiganjima observation station in Tokyo Bay. This numeric value was revised to the present one due to tectonic shifts caused by the Great Kanto Earthquake in 1923. Readers at this point might be wondering, “Alright already, this stuff is kind of interesting, but so what?” Considering how busy everyone is these days, I can understand—and fully agree with—such sentiment. Had it not been for my desire to find a better view of ongoing construction at the site of the new Tokyo American Club (TAC) in Azabudai, I would have never run across the Nihon Keiido Genten (the origin point for the horizontal datum)—known as the “Tokyo Datum,” or origin point—tucked between the Afghan Embassy and the property line of the Tokyo American Club, along the far corner of the next-door parking lot. Surprised by my find, I felt compelled to research its meaning.

12 | The Journal | September 2009

Though there is a long history stretching back to 1874—in which the U.S. Navy played a central role in the establishment of a geodetic system in Japan for the precise fixing of locations and the creation of maps— worldwide “classic” geodetic reference systems have been replaced by space geodetic technologies, such as VLBI (very long baseline interferometry), LLR (lunar laser ranging), SLR (satellite laser ranging) and GPS. Japan is located in a tectonically active region—where Pacific, North American, Eurasian and the Philippines’ tectonic plates meet. Maintaining precise measurements has been a challenge due to the near-constant crustal deformations associated with plate motions, earthquakes and volcanic eruptions. As a way to keep up with the shifting sands, over 100,000 triangulation points have been established over the years throughout Japan, branching off the 973 points that make up the framework of the 1st-order triangulation network surrounding the Tokyo Datum. In recent years, these old triangulation points have been augmented by GEONET, a system of over 1,200 permanent GPS stations set up throughout Japan that are able to provide valuable near real-time data on crustal deformation. Taking into consideration the evolving technology that is quickly creating a semi-dynamic datum system where objects are able to be located with precision anywhere and at anytime, what makes the Tokyo Datum uniquely interesting is that the latitude, longitude and azimuth at this origin point remain the legal starting values of latitudes and longitudes throughout Japan. In this age of ephemeral cyber-relevance, it is comforting to know that the origin point in Japan is William Bishop, defined as “The intersection point of the cross carved an ACCJ Vice on the metal mark of Nihon Keiido Genten.” President, For those of you now bursting at the seams with a is Director, desire to share this trivia tidbit with others, the next Government & Public Affairs at time you hear someone remark that the new TAC Nippon Becton will set a new standard, you can quip with confiDickinson dence that it already sits astride the origin point from Company, Ltd. which all else is measured in Japan. ■

PRESIDENT’S MESSAGE

ACCJ Gears up for Events and New Era

he ACCJ re-energizes this fall with a full set of programs, committee activities, and the Internet Economy White Paper. We will be gearing up for contacts with the Japanese government to meet new senior appointees in the Kasumigaseki ministries following the summer transfers and the new political lineup in Nagatacho following the election. We also welcome the new U.S. Ambassador John Roos and his family to Japan and look forward to working with him. Speaking of diplomacy, I don’t envy those Embassy staff who must be busily revising all the detailed briefing papers on Japanese politics that they had prepared to help Ambassador Roos through the confirmation process. Now they have to go back and change their analysis to reflect the new Japanese political realities. Maybe this is a time when poor short-term memory would be useful for a U.S. government official.

I recall that when former Vice President Walter Mondale made his ﬁrst address to ACCJ members as honorary Chamber president, he said all the usual things about working with the ACCJ, etc. Then he went further and said, “I’d like to get to know you better so that when I meet you, I can say, ‘Hi Alan’ or ‘Hi Tom.’ And you can just call me ‘Mr. President.’ I like the sound of that.” Mr. Mondale’s rueful references to his failed presidential bid and his self-deprecating sense of humor made him a very human, approachable, and effective U.S. ambassador. Meanwhile, the ﬁrst ACCJ Charity Ball Walkathon in Tokyo starts on September 12 at the Imperial Palace. The Tokyo Walkathon is a key lead in to the 2009 ACCJ Charity Ball on Friday, December 4. These fun events are major fundraisers that underpin the ACCJ’s CSR activities. I urge members to sponsor, walk, and dance to support our contributions to worthy charities in our communities.

Members can also participate in the Kansai Walkathon on October 3. Finally, although the signs are mixed, there are promising indications that many Asian economies are emerging from recession. This should help Japan restart its own economic growth. I don’t think that the cliché “a rising tide ﬂoats all boats” is necessarily true, but there seems to be many movements in the right direction. The challenge, of course, is that the recovery will be into a different world than the one we left. The size and relative strength of the players will be different. The lessons different countries learned from the meltdown and have applied to reform their regulatory processes to prevent future disasters will be different. And how countries and economies deal with the massive debts taken on to stimulate their economies will be different. We can all look forward to ringside Thomas Whitson is seats in one of the most imporACCJ President. twhitson@accj.or.jp tant of the world’s economies. ■

September 2009 | The Journal | 13

The Business of Health Better healthcare means lower costs. By Julian Ryall

CCJ health experts encourage devoting more effort and government resources to preventing disease, catching illness earlier, and educating the Japanese population about ways in which citizens can make lifestyle choices that reduce the likelihood of being taken ill in the first place. They point to how the Japanese government will save itself money, and ensure its people lead longer and healthier lives. The opinions of the ACCJ Healthcare Committee have been published in a recent updated Viewpoint that covers

14 | The Journal | September 2009

the issues facing Japan, including the rise in illnesses brought about by modern lifestyles. The paper calls on the government to take measures that have been tried and tested in other countries—and demonstrated to be effective. “It has been shown that if you are able to get in early when there is a specific disease that needs to be dealt with, say heart disease, and the patient is given anti-clotting agents, then the treatment Steve Plunkett will cost around

$1,000 a year,” says Steve Plunkett, general manager of the Government Market Development division at GE Healthcare and chair of the Chamber’s Healthcare Committee. “But if that does not happen and the patient suffers a heart attack later, then the cost goes up to $100,000 a year.” In general, the Japanese national healthcare system requires someone to be showing signs of an illness before he or she can receive treatment coverage, according to Plunkett, which places greater strain on the medical system. This delay also means a significantly higher risk of the patient not recovering,

THE BUSINESS OF HEALTH

SNAPSHOT ACCJ Recommendation The ACCJ encourages the Government of Japan to increase its focus on prevention, early detection, and wellness in its healthcare policies, including by creating incentives for people to adopt healthy lifestyles and promoting appropriate use of the latest and most effective vaccines, medicines, medical technologies and services available. Focusing on healthcare spending and healthcare professional efforts earlier in the disease continuum can facilitate early intervention, improve the quality of life for patients, increase the productivity of the workforce, and achieve multifold cost savings and efficiency gains for the overall healthcare system.

and postponing identifying the illness until later drives costs higher. There are exceptions, though. The screening for the hepatitis C virus, which can cause liver cancer, has been encouraged over the last six years. More recently, a free screening program for women regarding either breast or cervical cancer has been introduced. The hepatitis project has screened 8.6 million people considered to be at high-risk and identiﬁed 100,000 infected people, providing a chance for undergoing new treatments that are effective in 70% of the cases. While the Viewpoint applauds the government’s efforts, it also believes a lot more can still be done. “We have a lot of expectations for the new cancerscreening program, and believe it will increase screening rates; but more really needs to Bruce Ellsworth be done,” says Bruce Ellsworth, director of government affairs at Johnson & Johnson Family of Companies. “We need a nationally integrated, free system throughout Japan that is convenient to the public; and, ideally, it would be part of people’s annual medical checkup.” At present, 70% of the Japanese population over the age of 20 undergoes a full medical checkup every year. However,

hepatitis- and cancer-screening schemes are administered separately and are not carried out at the same time, causing inconvenience for users of the system, according to Ellsworth. That separation is compounded at the higher levels of authority by a lack of coordination across ministries and those with health insurance. A further problem is the fact that many of the tested and approved vaccines in regular use in other countries have yet to be allowed in Japan, while some other vaccines are prohibitively expensive because their use is not covered under the Japanese national healthcare system. The same delay and consumer cost applies to many medical devices. The ACCJ committee is calling for more systematic and comprehensive use of vaccines, along with the review and certiﬁcation process being grounded on science-based criteria. According to research by health experts, there is a clear need for greater pre-emptive treatment in the Japanese national healthcare system. A leading cause of death in the country is chronic diseases—deﬁned as illnesses that are prolonged, not

resolved spontaneously, and rarely cured completely. Cancer, heart disease, strokes, respiratory disease and diabetes, for example, are collectively responsible for eight out of every 10 deaths in Japan, according to the World Health Organization (WHO). The majority of healthcare funds go toward the medical treatment of chronic diseases—with a signiﬁcant amount of that spent on elderly patients with two or more complaints. Had those complaints been detected in advance, early intervention conceivably could have prevented serious and costly complications—and even repaired some of the damage. The ACCJ committee is calling on the government of Japan to shift its healthcare model from purely treatment to a prevention-oriented paradigm, and to introduce a comprehensive range of new policies, including promoting the use of drugs and devices that help manage complications. Such an approach would create incentives for healthcare professionals to promote prevention and early detection, bring about the systematic use of innovative new vaccines, and encourage screening for population sectors at high risk for particular diseases

September 2009 | The Journal | 15

THE BUSINESS OF HEALTH

A study in 2001 by the Institute for Health Economics and Policy suggests that annual healthcare costs linked to tobacco-induced illnesses is ¥1.3 trillion. SNAPSHOT The ACCJ believes these policies deserve the government’s priority consideration: ■ Create incentives, including into the health insurance system, for people to reduce the risk of disease by adopting healthy lifestyles and behaviors long before the onset of illness. ■ Build incentives into the healthcare system for healthcare professionals to promote prevention, early detection and wellness. ■ Promote diagnostic screening of high-risk populations for disease indicators and communicable infections. ■ Promote systematic utilization of innovative vaccines that can prevent disease and incur healthcare savings. ■ Promote use of drugs and devices that help manage complications. ■ Incorporate reimbursement for preventive care and early detection costs in the national health insurance system. ■ Increase use of safety-engineered devices with an emphasis on healthcare worker and patient safety, including active surveillance to reduce healthcare-associated infections.

and communicable infections. Plunkett also is hopeful that the recent Viewpoint will play a similar role as the study that helped encourage the government to establish in May free breast cancer tests for women between the ages of 40 and 60, and a cervical-cancer screening program every ﬁve years for women aged 20 to 40. “That was a huge win,” says ACCJ Committee Chair Plunkett. “We went out and promoted our proposals, and we were most deﬁnitely not alone, as there were breast cancer doctors, women’s health groups and patients’ groups calling for the same thing. “But in the end, we applied pressure,” he says, “and we are encouraged that the government has now put this program in place.”

According to the National Cancer Center, breast cancer is the leading killer of Japanese women between the ages of 30 and 64, claiming 11,175 lives in 2006, and more than 36,000 women diagnosed with the illness. “Cancer rates in general in the United States are falling, and that is attributed to many different things; but one of the key elements is screening,” says Plunkett. “Catching it early has been shown in many studies to cut costs and reduce the mortality rate.” The new ¥24.6 billion government scheme mails coupons that entitle women to free screening, and also funds a public awareness campaign. The government hopes to improve the screening rate from the present 14% to 50% within the next five years. As a way of comparison, in the U.S., that figure already stands at 70% and is around 80% in the Netherlands. According to the American Institute for Preventive Medicine, for every ¥100 invested in wellness programs and early prevention measures, the savings in healthcare expense can be as much as ¥600 in the future. Many companies have recognized the benefit to their bottom line and provide supplementary, free screening as part of their annual health examinations—considering it a wise investment. While Japan enjoys one of the lowest infant mortality rates and the longest life expectancy, the quality of life for many people in their later years here places an undue burden on patients, families, caregivers, the healthcare system, society and the greater economy. The ACCJ committee also believes that it is in the companies’ best interests to

keep staff healthy, and suggests that both firms and health authorities try to find ways to incentivize people to take the necessary steps. The WHO estimates that 80% of heart disease and strokes, 80% of type 2 diabetes and 40% of all cancers could be prevented if people followed three cardinal rules: maintain a more healthy diet, become more physically active, and stop smoking. The Ministry of Health, Labour and Welfare estimates that more than 110,000 Japanese die from complications related to smoking every year. A study in 2001 by the Institute for Health Economics and Policy suggests that annual healthcare costs linked to tobaccoinduced illnesses is ¥1.3 trillion, with loss in labor resources standing at ¥5.8 trillion, and damage stemming from fires triggered by cigarettes reaching ¥2.2 billion. “Tobacco control is a key area in Japan, and there is serious concern here that the smoking rate among young Japanese women in their twenties has been rising for the last 10 years,” says Ellsworth of Johnson & Johnson. “The ideal solution is for further initiatives to target young people—when they are in high school, before they begin to smoke.” A combination of health awareness programs and stricter controls to prevent children from purchasing cigarettes is required, he says. Research in other countries suggests that the single most effective way of curbing underage Julian Ryall is The Daily smoking is for the authoriTelegraph’s Tokyo ties to increase the price correspondent. of cigarettes. ■

September 2009 | The Journal | 17

ACCJ Event Highlights

Naoko Fuwa Thornton, Ph.D., of Japan Women’s University (JWU), speaks at the 4th Soft Landing Program organized by the ACCJ and JWU on July 2 to support women taking a career break. The program included lectures, a practical business session, job interviews, and networking between students and ACCJ member companies.

ACCJ UPCOMING EVENT

Green Marketplace Forum: The Future of Where We Live & Work and How We Get Around Wednesday, September 30 (8:30-18:00) — Four Seasons Hotel Tokyo at Chinzan-so The Green Marketplace Forum (GMF) is an interactive event that explores the future trends and business challenges and opportunities around core areas of sustainability—integrated economic, social and ecological needs and opportunities. This GMF will focus on Green Design/Building and Green Mobility/ Transportation as they relate to our lifestyle and the many changes resulting from efforts to achieve a Carbon emission-free society. The GMF brings us together as policy-makers, thought leaders, organization leaders, innovators, entrepreneurs, experts, students and citizens—and provides us with a process to begin moving from dialogue to action in these core areas of our lives. The GMF builds on the success of last year’s Kanreki “Faces of CSR” event that attracted 264 people to hear keynote addresses by Lord Michael Hastings and former Minister Yoko Kamikawa; ask questions of a panel of Japan leaders such as Mr. Christopher LaFleur of JPMorgan, Mr. Peter Sykes of Dow Chemical Company,

18 | The Journal | September 2009

Mr. Eiji Wakiwaka of BP, and Mr. Tom Pederson of Shinsei Bank; and engage in a facilitated group dialogue and the sharing of best practices around Authenticity, Diversity, Energy & the Environment, and NPO Collaboration. The launch of the GMF will be held at the Four Seasons Hotel Tokyo at Chinzan-so on Wednesday, September 30. This event is led by the American Chamber of Commerce in Japan’s CSR Committee with support from the ACCJ Environmental Committee, the ACCJ ACRE (Architecture, Construction and Real Estate) Committee, and the ACCJ American Automotive Industries Committee. We are also engaging with other Chambers of Commerce, the Keidanren, and the EU-Japan Centre for Industrial Cooperation. The GMF Task Force would like to extend a special thanks to the Four Seasons Hotel Tokyo at Chinzan-so, who has come on as our extremely generous Grand Sponsor for the event.

MEDIA WATCH

Creative Kansai While much of the nation’s retailers are sorely hurting for business, the Kansai region is spawning new retailing innovations that may become models in other parts of the country. The Nikkei Marketing Journal (July 15) introduced innovative retailing in Osaka’s Senri New Town, where Hankyu Hanshin Holdings Inc. launched Hankyu Oasis Senri Chuo, a small-size (less than 890m2) outlet that the company says combines the attributes of a department store and supermarket under one roof. The north Osaka suburb of Toyonaka was built up prior to the 1970 World Exposition, and has recently undergone redevelopment with some 1,000 new condominium units to be completed over a four-year span. At the other end of the spectrum, Weekly Playboy (July 27) introduces a type of discount retailing that’s been thriving in the Kansai region. The term “outlet-style supermarkets” may be catching on in the future, and they’re a bargain-hunter’s dream. Nishinari Ward-based Supaa Tamade boasts some 50 branches in Osaka Prefecture. The stores operate round the clock and make it a point each day to offer several products at the price of ¥1 each. The company even buys up dented cans from operators of soft-drink vending machines and puts them on sale for a fraction of the normal retail price. In hot competition with Tamade are two other chains, one that expanded from an egg wholesaler in Fukushima Ward, named

Osaka Jidama, and the other a chain of 50 Lamu stores operated by Daikoku Bussan. “Large supermarkets will only sell cheap at the expense of manufacturers and wholesalers,” says a cash-and-carry wholesaler in Osaka’s Nipponbashi district. “They won’t last long in Osaka.” To please thrifty customers who seek low prices, he advises, the smaller outfits should form alliances so that sales of items at low prices don’t wreak havoc on anyone’s bottom line.

Consumers Cutting Back Setsuyaku suru means to economize. When the weekly be between’s Internet survey in the Asahi Shimbun (July 11) asked 6,147 subjects if they were making efforts to cut down on their spending, 89% gave positive replies. The reasons stated (multiple responses permitted), in descending order, were that income has declined or can be expected to decline, with 3,316 responses, followed by lack of sufficient savings (2,112); the future of the economy is uncertain (2,083); because of the recession (1,709); value of property assets have declined (1,280); indulged too much in unplanned outlays (809); and work has declined (809). And the means of saving? “Do everything possible not to buy things I don’t need” was the most popular, according to 3,009

respondents. The top five were rounded out by trying to find cheaper prices, (2,144); make use of what they already have (1,245); cut down on eating out (1,066); cut down on consumption of electricity and other utilities (1,041); and reduce outlays for recreation and leisure (549). But just suppose you were to find yourself on the receiving end of an unexpected windfall of, let’s say, ¥1 million. How would you spend it? Save it, said 1,980 respondents. Buy something I wanted, replied another 978. Use it for my family, said another 871. These were followed by pay off a loan (688); use for various living expenses (500); and invest in securities (465). In response to the question, “Do you think you can be content to live without

money?” the replies were split almost down the middle, with 51% responding yes versus 49% who said no.

September 2009 | The Journal | 19

Electrictown=Chinatown?

Akihabara, Tokyo’s center of consumer electronics for nearly six decades and currently the Mecca of Japanese otaku (geek) culture, may be threatened with encroachment by the Chinese. It seems that on June 24, Suning Dianji, a major retail chain of 700 stores based in Nanjing, Jiangsu Province, announced the purchase of 27% of ailing appliance retailer LAOX shares. Concerns also have surfaced that Suning may be taking aim at the vaunted Akiba culture. “The Chinese market for anime is said to be about ¥500 million,” and numerous Japanese characters such as Doraemon

are big hits there,” Shinichiro Akematsu, an analyst at Aizawa Securities, tells Shukan Post (July 17). “Cosplay gatherings are regularly held in major Chinese cities by thousands of people. So Akihabara has achieved wide brand recognition. By boasting that they have an outlet in Akihabara, the chain thought it could boost its brand power.” LAOX CEO Mitsuhiro Furuta says the move will enable Suning to provide after-service back home for the growing numbers of Chinese who purchase goods at LAOX while visiting Japan, a figure likely to soar thanks to the dropping of entry restrictions on individual visitors. The

number of Chinese visiting Japan in 2009 is projected to increase to 1.14 million, up by about 140,000 from last year. Another factor behind Suning’s move is believed to be the availability of credit. According to Akematsu, while Chinese are restricted on the amount of foreign currency they can carry out of the country, the Yinlian (Union Pay) credit card is widely accepted by Akihabara retailers. “Suning is expected to be planning to staff LAOX with Chinese employees,” says Akematsu. “It will post signs in Chinese and open Chinese restaurants, raising the possibility that Akihabara will take on the image of a Chinatown.” Weekly Playboy (July 13), meanwhile, frets that Suning will give a foothold to low-priced appliances manufactured in China, such as at Haier. “Most of them don’t feature energysaving functions, making them ineligible for eco points,” says the pseudonymous bargain shopper Kunda Jitsuhata. “But their prices are so low they cancel out any savings in power consumption. After the eco point system ends by next spring, Haier should have the low-end market all to itself.”

Expectant Brides It’s not just entertainers and celebrities such as the recently hitched TV personality Ryuta Sato who attracts headlines for tying the knot while the bride is “showing.” (In Sato’s case she was seven months along at the time.) The vernacular J-Cast News (July 16) cites 2007 data from the Ministry of Health, Labour and Welfare that found that, of 507,272 newborns registered as their parents’ first child, 136, 271 had been born within less than nine months from the time the marriage was registered. This suggests the bride was already expecting in the case of 26.8% of all marriages. Yasuharu Sugiura, a staff member handling wedding-related operations at LADIRB, based in Tokyo’s Minato Ward, confirms that brides are expectant in about 30% of his firm’s clients. At Dekorute Co. in Hyogo Prefecture, the figure is said to be closer to 40%. The term deki-kon, as shotgun weddings are referred to in

20 | The Journal | September 2009

Japanese, carries a somewhat negative connotation, and efforts to develop an alternative expression have produced such neologisms as omedeta-kon (celebratory marriage) and sazukari-kon (bestowed marriage), and even enjeru-kon (angel marriage). LADIRB has coined its own term—“mama-rige” (an amalgamation of “mama” and “marriage”). The Recruit wedding magazine Zexy is experimenting with “double happy-kon.” Wedding organizers also have started specializing in ceremonies for brides that consider their growing family. “We’ll arrange for a wedding dress with ample room in the middle,” one is quoted as saying. “We’ll make adjustments to the environment, such as booking wedding halls with no steps. Sometimes the bride becomes nauseated and regurgitates, so we will arrange to set a bucket under her table, and post a staff member nearby with a drink and towel for her.”

MEDIA WATCH

“No” to Eco To help manufacturers get through what is being called “the crisis of the century,” the Japanese government has been offering incentives in the form of eco-points equivalent to ¥3,000 – 36,000 to those willing to purchase eco-friendly vehicles and home appliances. But if the respondents to the Asahi Shimbun’s be between (June 6) survey are any indication, most people are not likely to take the bait. Of the 6,194 subjects polled via the Web, 60% said they would not trade in their current product for an eco-friendly item. The main reason given, stated by 3,645, was that the product they currently own is still usable. Other reasons include the fact that they can’t afford it (1,528 responses); are confused about the eco point system

(1,052); discarding what they have also burdens the environment (855); and don’t understand the program (851). Among the 40% who plan to jump on the bandwagon and upgrade to an eco-friendly product, the items of choice were digital TV (1,741 responses); refrigerator (764); automobile (743); and air conditioner (659). “In our family, we keep things until they don’t work anymore,” remarked a 46-year-old housewife in Chiba who works part time. “The repair shop assured us we can drive our car for 20 years. But, on the other hand, the subsidies are generous and we’d hate to miss out on them … It’s awful—a no-win situation where you go broke saving money.”

Fly-by-nights Since the “Lehman Shock” last September, demand for yonige-ya— specialty movers who assist customers fleeing their creditors—have been enjoying a booming business. Takayoshi Uragami, president of SRA, tells Weekly Playboy (June 22) that his business has doubled since last year. “The 20 or so companies that do this sort of work have backlogs.” Uragami accepts requests for a quick run to safety only when a customer or a family member is in physical danger. “Even those who are unable to pay off debts have legal recourse and can take their troubles to an attorney.” After gasoline prices soared from last autumn, Uragami was flooded with requests from small companies supplying components to the Toyota Group, operators of sex businesses, luxury car dealers, and owners of hot springs hotels.

Actually, the term yo-nige is a misnomer since moving generates noise, which would more than likely attract people’s attention at night. Uragami says he times the flight for morning. “Typically, we aim for a complete evacuation within 30 minutes, which is about half to one-third the time an ordinary mover requires.” While we’re on the subject of moving, Nikkan Gendai (May 28) noted that real estate companies have begun to include “sweeps” for hidden electronic bugs and cameras within their repertoire of services, particularly for property rentals to females. “In addition to having the locks changed, more women are worried about bugs,” a broker is quoted as saying. “We don’t go around telling everybody, but informing customers that a place has been swept helps clinch the sale. Particularly so when the whole building is to be rented out to females.”

September 2009 | The Journal | 21

ACCJ Event THE REAL ESTATE MARKET, WHITHER FROM HERE? PERSPECTIVES FROM A DEVELOPER, A LENDER AND AN INVESTOR By Julian Ryall Photos by Hitoshi Maruyama

he real estate market in Japan, in the same way as other sectors, has taken a battering in recent months. The bankruptcy of several key global players and the need to protect investments at home have forced others to scale down—or retire entirely from—their Japanese presence due to such economic downturns as vacancy rates rising and rental yields coming down. Yet, according to the three panelists at a Chamber discussion on the issue held on June 25, even in a challenging market there are opportunities for developers, lenders and investors. The Mori Building Co.’s presentation room on the 12th ﬂoor of the Roppongi Hills Mori Tower proved to be a most appropriate setting. There was an intricate scale model of much of central Tokyo that was presented earlier to the visiting Olympics siteselection panel. Available facilities were put on display should Tokyo win the rights to host the Summer Games in 2016. The 1:1,000 scale model takes up approximately 260m2 and took a team of 30 people 14 months to complete. Alongside it was a model of an identical scale depicting Manhattan Island, with the stark differences in vertical integration visibly apparent to the viewer. New York’s skyscrapers and the vast communal

22 | The Journal | September 2009

space of Central Park, for example, were in direct contrast to Tokyo’s generally much lower skyline and limited green space available to the public. As a developer, that is something that Hiroo Mori, senior managing director of Mori Building, hopes to rectify. “The big issue for us is that Tokyo is a sprawling metropolis that means long commutes, a lack of green space in the center, and inefficiency,” he said. “There is a great deal of potential for the city to become more attractive and efficient, and to make it into Asia’s leading city—above Singapore, Shanghai and Hong Kong.” Deregulatory measures in the 1980s permitted arguably Japan’s most famous property developer to help lead the expansion in provision of office space. It was a period in which many companies left the Marunouchi and surrounding districts for new developments in the Akasaka area, such as Mori’s ARK Hills, which shares space with the prestigious Suntory Hall, the international ANA InterContinental Tokyo hotel, and multi-use office tower. In line with the increase in office space was the demand for Western-style housing and leisure facilities (e.g., spa, fitness center) for a new generation of expatriate workers in Tokyo.

ACCJ EVENT

Left: Mori Towers’ 1:1000 scale model of Minato-ku shows the impact of the proposed Tokyo Olympic sites. Above: ACCJ Architecture, Construction & Real Estate Co-chair Michael King and Mori Building Co., Ltd. Senior Managing Director Hiroo Mori.

The 1990s was a testing decade, Mori admitted; but the crisis that was triggered by the subprime debacle in the U.S. and then the “Lehman Shock” have provoked what Mori termed a “oncein-a-century crisis. “The real estate market has been affected, although the initial panic and shock has now abated, the market has not yet completely recovered,” he said. In his closing remarks, Mori stated that the company remains committed to redevelopment of Tokyo and the creation of a “Vertical Garden City.” Although there has been a major shake up among lenders, Douglas Smith, managing director and head of the Commercial Real Estate division in Japan for Deutsche Bank AG, said his company is “a willing lender looking for willing borrowers. “The bottom line is that Deutsche Bank is arguably the only surviving active foreign lender in Japan,” he said. “We are very active and are looking for transactions.” As early as 2007 there were signs in the U.S. and Europe— although not evident in Japan—that a corrective phase could be imminent in those markets, according to Smith, including cap rates lower than risk-free rates. In regards to the Japanese market, in large part it was not a case of people over-buying and

over-building, but rather being hit hard by foreign investors and lenders obliged suddenly to focus attention on their balance sheets and home markets. With foreign lenders securitizing their books and then exiting, the market here was unable to replace all the disappearing capital—a situation aggravated by the global economic slowdown. Yet, transactions are continuing, Smith emphasized, and the market will rebound. The scenario today “is a chance to create stronger foundations for the market to grow again in the future,” he said. The investor’s perspective was represented by Steve Bass, president of CB Richard Ellis Investors (Japan) K.K. He underlined the cyclical nature of the real estate sector—with the years between 2004 and 2007 being a boom stretch for property, as Tokyo prime ofﬁce rents doubled from the previous historic bottom levels, and prices escalated, which were all followed by the sharp downturn we witness today. Vacancy rates for top-class properties in central Tokyo are up to as high as 7%, and rents were down from their peak by as much as 24% at the end of the ﬁrst quarter. For fund managers, a fall in implied values is a “major challenge,” Bass said, but also pointed out that the predicament at present poses a very good opportunity for anyone with capital to invest. “There is a lot of downward pressure on price, and that is a good opportunity for an investor to buy,” he said, adding that rents could bottom out by around the end of the calendar year, although it cannot be forecast with certainty. Turning to the situation in markets beyond big city limits, Bass said the lack of liquidity makes risk premiums very high, and the recovery—when it comes—will unquestionably be led by the market in Tokyo. Despite all the bad news, Smith said there has been a relative upsurge in interest in Japanese Julian Ryall is The Daily property among other Asian investors, notably in Telegraph’s Tokyo Hong Kong, in recent weeks as Tokyo “is always correspondent. an attractive market.” ■

September 2009 | The Journal | 23

Atsushi Saito PRESIDENT AND CEO OF THE TOKYO STOCK EXCHANGE GROUP, INC. By Julian Ryall Photos by Tony McNicol

There have been few more difﬁcult periods to endure for the Tokyo Stock Exchange—and, indeed, bourses around the world—than the last 12 months or so. Atsushi Saito, president and CEO of the Tokyo Stock Exchange Group, Inc., says challenges remain ahead, but there are signs of a slow but steady recovery. There appears to be a recent trend of companies delisting from the TSE. Why is that? Naturally, more listed corporations or IPOs are always welcome, but the reason why there have been so many delistings recently is not primarily because of problems at the corporations. It is because quite a lot of companies have undergone mergers or acquisitions, so their counterparts are automatically delisted. But I must admit there have been a couple of companies that have not been operating satisfactorily, or have faced a shortage of capital, in which case they became delisted. When do you think IPOs will pick up again? We have a lot of candidates who have a very strong wish to list their stocks; but because of slow business at present, they 24 | The Journal | September 2009

are worried that the initial price of the IPO will be lower than expected, so they are waiting until the market recovers. If the market returns to stability and normal levels, they will come back into the IPO market. We have also started a new market, Tokyo Aim, together with the London Stock Exchange. This market is very attractive for viable, emerging corporations all over Asia that are desperately looking for risk money. I think IPOs on the main market, together with some response from the Aim market, will accelerate from the end of this year. What can the exchange do to make itself more attractive and bring in new investors? Unless we have attractive and proﬁtable products on the market, for domestic investors as well as foreigners, then investors will not be interested. China

SNAPSHOT Tokyo Stock Exchange Group, Inc. ■ Tokyo Stock Exchange Group, Inc. ■ Number of staff: 818 ■ Date established: August 1, 2007 ■ Location: 2-1 Nihombashi, Kabuto-chi, Chuo-ku, Tokyo 103-8224 ■ Capital: ¥11.5 billion ■ Issued shares: 2.3 million ■ Web site: www.tse.or.jp/english/

has enjoyed growth, and a lot of international and Chinese money is gathering in the Shanghai Stock Exchange. Japan used to be like that and enjoyed aggressive investment, particularly from European countries—because of the growth of the Japanese economy, rather than because of a high return on equity. But Japan has now reached maturity and we cannot expect so much growth; instead, we have to improve quality, such as a higher return on investments. Our

ON THE SPOT

“Blind trades and a lack of information for the authorities or anyone else—those were the causes of this current crisis.”

BIOGRAPHY Atsushi Saito ■ Age: 69 ■

Education: BA in commerce from Keio University, graduated 1963

■

Languages: Japanese and English

■

Hobbies: Gardening, walking

■

Career: Joined Nomura Securities Co. after graduating, rising to Executive Vice President of international operations in New York in 1983 and Executive Vice President in July 1995. Moved to Sumitomo Life Investment Co. in 1998 and named chairman in June 2002. Became President and CEO of Tokyo Stock Exchange, Inc. in June 2007.

ROE, in comparison with other listed, first-class corporations, is lower and for the past 15 years investment has not been rewarded. The current capitalization of the TSE is the same as 27 years ago, but the Shanghai market’s capitalization is the same as one year ago. Twenty-seven years means the return on equity, or the usage of capital, is very bad at Japanese corporations. To attract investors to our market, we have to improve the quality of corporations, protect shareholders’ rights, and managers should pay more attention to capital efficiency. The Tokyo Aim market has been launched to attract new companies, but are they waiting for the market to recover before listing? I know many corporations are staying away from the TSE and the Aim market, but I’m patient and I believe Aim will be workable. I know there have been criticisms—about a lack of liquidity and because only professional investors are permitted to invest—but if the economy starts to recover gradually, then risk money will be desperately needed for entrepreneurs who cannot get loans from banks or can’t issue corporate bonds. I’m not expecting 20 or 30 companies to join the Aim market this year— just a few would be fine for me.

The TSE has dominated trading here for a long time, but there has recently been a rise in other markets; do they pose a threat to the TSE? Yes, we have recently seen some private exchanges playing a major role. One of them has a 22% share in the London Stock Exchange, and New York now only has 33% of the market share in the U.S.; but the TSE has 92%. It has been suggested that major markets will lose out to these new markets, but I’m puzzled about the fragmentation of the market. What is the purpose of this fragmentation? Who is this good for? I’m particularly concerned about the “dark pool,” which means no information is released. We have already had our fingers burned on credit trading or securitized product trading on the OTC market, which has caused the current crisis. We have to learn from that. Blind trades and a lack of information for the authorities or anyone else—those were the causes of this current crisis. We should go back to the open, original market because, statistically, the more trades in one place, the easier it is to discover the right price. Are you concerned about a double-dip recession? In January and February, governments found ways to counter the crisis, using a lot of public funds. The market is expecting an upswing late this year, but there is still a vacuum—there are no buyers. Now we’re in the second stage, and from here the problem is whether we can expand the GDP figure and corporate profits rebound. The commodity market will be the first to recover, but the point remains how much product can be pushed out to the consumer. That data is due out in September. If the figures are slow, but there is continued growth in the number of end users, then we won’t see a double-dip. But if consumer purchasing power is disappointing and

unemployment remains high, then that will cause political unease. I expect to see low and slow growth, and no double-dip; but the Julian Ryall is The Daily recovery will take time Telegraph’s Tokyo and we have to be correspondent. very careful. ■ September 2009 | The Journal | 25

Global Entry Initiative Expanded

U.S. Department of Homeland Security (DHS) Secretary Janet Napolitano on August 12 announced the expansion of the Global Entry initiative—a U.S. Customs and Border Protection (CBP) pilot program that streamlines the screening process at airports for trusted travelers through biometric identiﬁcation—to 13 additional airports across the United States. Global Entry expedites the customs and security process for trusted air travelers while helping DHS ensure the safety of all airline passengers,” said Napolitano. “Expanding this vital program allows us to improve customer service at airports and concentrate our resources on higher-risk travelers.” On Aug. 24, new Global Entry enrollment centers and kiosks opened at 13 additional international U.S. airports in Boston, Dallas, Detroit, Fort Lauderdale, Fla., Honolulu, Las Vegas, Newark, N.J., Orlando, Fla., Sanford, Fla., Philadelphia, San Juan, Puerto Rico, San Francisco and Seattle. Global Entry allows pre-approved members an alternative to regular passport processing lines. At the kiosk, Global Entry members insert their passport or lawful permanent resident 26 | The Journal | September 2009

card into a document reader, provide digital fingerprints for comparison with fingerprints on file, answer customs declaration questions on the kiosk’s touch-screen, and then present a transaction receipt to U.S. Customs and Border Protection (CBP) officers before leaving the inspection area. Global Entry applicants may complete their interview and biometric data collection at enrollment centers at any of the expansion sites, while approved members can use kiosks at any of the expansion sites to complete their CBP processing upon arrival from international travel. To date, approximately 16,000 members have enrolled in Global Entry, which began on June 6, 2008. Global Entry kiosks have been used more than 51,000 times at the seven

existing locations in Atlanta, Chicago (O’Hare), Houston (Intercontinental), Los Angeles, New York (JFK), Miami and Washington (Dulles). Global Entry reduces average wait times by 70 percent, with more than 75 percent of travelers using Global Entry processed in under ﬁve minutes. Global Entry is currently open to citizens and nationals of the United States and lawful permanent residents of the United States. Citizens of the Netherlands may also apply under a special reciprocal arrangement that links Global Entry with the Privium program in Amsterdam. For more information on this or other CBP trusted traveler programs, or for an application to enroll in the Global Entry pilot program, please visit: www.globalentry.gov

BEHIND THE BOOK

The Venturesome Economy How Innovation Sustains Prosperity in a More Connected World By Amar Bhidé Princeton University Press, 508 pp, $35 Reviewed by Tom Baker Columbia University Prof. Amar Bhidé uses the term “technonationalists” to describe politicians and pundits who fear the United States is “falling behind” in basic scientific research. The modern economy depends on products and services rooted in scientific or technological breakthroughs—from Google searches to laser eye surgery—so it is easy for techno-nationalists to imagine that the U.S. economy will run into trouble as other countries grab a larger share of the world’s patents and Ph.D.s. Prof. Bhidé’s new book, The Venturesome Economy, quotes a number of such authorities as saying the government should be spending more money on high-level scientific training and research. Yet, the author is no technonationalist; rather, he contends that the key to science-based prosperity is not more scientists, but more salesmen. This notion is not as crazy as it might first sound. The discoveries made by pure scientists, wherever they may be, quickly become available worldwide through publication in scholarly journals. The trick to realizing economic value from these discoveries, however, is to turn them into items people want to buy—and then getting the word out. “Why should the tax code assume that developing a new drug is always better for society than improving the effective use of existing treatments through more intensive marketing?” he asks. Furthermore, “Why should public policy encourage individuals to pursue careers in science and engineering, instead of taking a liberal arts degree and becoming managers or entrepreneurs?”

Prof. Bhidé has conducted an extensive study of U.S. technology firms backed by venture capitalists who hope for big payoffs through big breakthroughs. He finds they focus mainly on “mid-level” innovations—as opposed to high-level, pure research or ground-level consumer applications. Many mid-level innovations are aimed at improving the productivity of companies, and crafting them requires a thorough understanding of not only the technology (usually IT), but also the target businesses and their customers. This approach makes it difficult to get the work done offshore, regardless of where the underlying science had been developed. Moreover, the work of such tech firms tends to be “iterative.” That is, several versions of a product are put out on the market in quick succession, each one building on the previous release with the support of feedback from early customers. Speaking of customers, Prof. Bhidé writes that “innovators tend to favor markets where users are willing and able to take a chance on new products.” This description fits many customers in the United States; while in Japan it would, perhaps, be truer of individuals than of organizations. (Compare the perpetual buzz over the latest personal electronic gadgets with the many years it took for ATMs to be deployed effectively.) “Japan has shown great prowess in developing new technologies,” he remarks, “but not in using new technologies in the services sector.” The Venturesome Economy is clearly, if not vibrantly, written; and it tends to lump Japan in with “other advanced countries.” Yet, Prof. Bhidé’s Tom Baker is ideas are a useful counterbalance to the alarmism a staff writer at The Daily you sometimes hear in the United States about Yomiuri. progress in the rest of the world. ■ We are giving away 3 copies of The Venturesome Economy. Simply e-mail editor@paradigm.co.jp by September 16. The winners will be picked at random. Winners of Reality Check: Robert Heldt, Custom Media K.K.; Robert Marsh, UPS; Jonathan Goodman, Sompo Japan DC Securities Inc.

September 2009 | The Journal | 27

HUMAN RESOURCES/RECRUITMENT CONSULTING/CORPORATE TRAINING Special Advertising Section

Recruitment Business in Japan: ahead of the changes

n today’s Japanese recruitment business—which is relatively still

Even though it was still possible to recruit candidates, in some cases

in its early stages—you might often feel bothered by persistent

due to major layoffs, it became increasingly difﬁcult to ﬁnd new

calls from young consultants. However, I think as most of you

employment opportunities for them. Companies started to reduce

have experienced in other countries, support and advice from a

their hiring and, in some cases, even announcing a complete freeze on

professional consultant for human resources management issues

hiring. This new situation affected all the recruitment companies, and

is of great value. In this time of economic downturn, especially, the

some were forced out of business.

recruitment business is facing many changes also in Japan. Future New Business

In difﬁcult times, the key for survival and success is no longer based on

Starting in the 1990s with the collapse of the “lifetime employment”

simply fulﬁlling the client’s requests. Instead, it has now evolved to a

system and the advent of rapid technological innovations, big changes

more professional consultancy-type of business; utilizing knowledge

started happening within the Japanese employment environment. A

of market trends, industries and competitors, we must support clients’

new era, where changing jobs between companies started to become

strategies—as well as promote candidates who can play an active role

more socially acceptable, led to an increasing employment of contract

in the future development of our clients’ core businesses.

workers in response to fast-changing business needs. At that time,

In addition to that, domestic ﬁrms need to reach out globally—

due to deregulation in laws along with the increasing movement of

especially in Asia—due to shrinking domestic demands caused by a

people between companies, the business for professional recruitment

declining birthrate and a growing proportion of elderly people in Japan.

agencies grew dramatically.

Therefore, recruitment agencies that can take the lead in supporting

The booming economy and the Labor Law were supporting the

and consulting on a global scale—while not losing sight of the hiring

workers more than the companies, and such an environment made it

issues of foreign companies in Japan, which is still considered a difﬁcult

easy for the recruitment companies to earn proﬁts and increase their

task—will gain great advantage in the market.

business by just introducing jobs to candidates. According to the Ministry of Health, Labour and Welfare, there

This prolonged time of recession is an important turning point for the Japanese recruitment industry, where service quality is to reach

are 15,453 recruitment companies registered in Japan as of

new heights, moving from a job introduction focus to a business

December 2008.

consultancy one—and where long-term partnerships are going to be the key to success in this very competitive market.

Rising Competition However, since the world economy entered a recession last year, and

Takeshi Matsuzono

especially after Lehman’s fall in September 2008, the recruitment

Senior Director and COO

business faced its ﬁrst major setback after years of growth.

JAC Recruitment

28 | The Journal | September 2009

Address

Nomura No1 Bldg. 5F, 2-23 Kandasuda-cho, Chiyoda-ku, Tokyo 101-0041

Tel

03-5297-8243

Fax

03-5297-8689

E-mail

mb@globalinx-itc.com

Web site

www.globalinx-itc.com

Year established

1968

Staff Size:

Industry sectors:

Corporate Training, HR Consulting,

Contact:

Mark Beresford, Program Director

Company Activities / History GLOBALINX CORP. specializes in developing management and business communication skills for people working in global business environments. Programs and service areas include: - Executive Management: Leadership / Business Management / Global Executive Program - Project Management: Teamwork / Facilitation / Negotiation / Team Management - Human Resource Management: Employee Performance / Workplace / Risk Management - Business Skills: Presentation / Meeting / Teleconferencing / Negotiation / Contracts / Customer Service - Communication: Global Communication / Assertive Mind and Skills / Cross-Cultural Communication - Language: Effective English Study Program / E-Learning - TOEIC Basic - Advanced

LEGAL FUTURES ADVANCE YOUR CAREER

LEGAL | COMPLIANCE | FINANCE

Legal Futures Japan K.K. Address

Level 6, Gloria Building, 3-6-15 Kasumigaseki, Chiyoda-ku, Tokyo 100-0013

Tel

03-3580-3101

Fax

03-3580-3116

E-mail

japan@legalfutures.com

Web site

www.legalfutures.com

Year established

1999

Staff Size:

Industry sectors:

Law ﬁrms, Investment Banking, Corporate

Contact:

Damion Way

Company Activities / History Legal Futures was established in 1999 and is now one of Japan’s leading specialist legal, compliance and financial services recruiters. We cover a wide variety of position types across the Private Practice, Commerce & Industry and the Banking & Finance sectors. Our Private Practice Division services the full spectrum of law firms, sourcing qualified lawyers and attorneys (both local and overseas admitted) at all levels, from associates through to partners, also practice support lawyers, paralegals, legal secretaries and business services positions. Our Corporate Division services both domestic and international companies sourcing qualified lawyers and attorneys (both local and overseas admitted) at all levels, from corporate counsels, in-house counsels, legal counsels through to regional general counsels, also corporate compliance officers, company secretaries and commercial/contract managers. Our Banking & Financial Services Division provides for the full financial services industry with experience in the areas of Asset Management/Trust Banking, Corporate and Retail Banking, Insurance, Investment Banking/Securities, Private Equity and Real Estate sourcing qualified lawyers and attorneys (both local and overseas admitted) at all levels, from corporate counsels, in-house counsels, legal counsels through to regional general counsels, also documentation and transaction management specialists and paralegals. Our Compliance Division services the full financial services industry with experience in the areas of Asset Management/Trust Banking, Corporate and Retail Banking, Insurance, Investment Banking/Securities, Private Equity and Real Estate. We are celebrating our 10th year in Japan, and have built our reputation on the quality of our service and our dedication to excellence.

September 2009 | The Journal | 29

HUMAN RESOURCES/RECRUITMENT CONSULTING/CORPORATE TRAINING | Special Advertising Section

GLOBALINX CORP.

HUMAN RESOURCES/RECRUITMENT CONSULTING/CORPORATE TRAINING Special Advertising Section

Randstad K.K. Address

New Otani Garden Court 21F, 4-1 Kioi-cho, Chiyoda-ku, Tokyo 102-0094 (Main Reception)

Tel

03-5275-1877

Fax

03-5275-1880

Web site

www.randstad.co.jp

Year established

1960, The Netherlands (2006, Japan)

Staff Size:

34,000 (global)

Industry sectors:

HR (temporary stafﬁng, permanent placement, outplacement)

Contact:

Koizumi Akimasa, Representative Director

Company Activities / History Good to know you! Randstad Group is a top-class HR service provider in the world and is listed on the NYSE and EuroNext. From a temporary staffing agency in the 1960s, we have developed into a multi-national HR organization with more than 34,000 employees working from 5,200 branches covering over 52 countries worldwide. In a dynamic and unique market like Japan, Randstad chose to integrate our “”international best experience”” with “”local unique practices,”” so as to offer our clients a wide spectrum of services to accommodate their various HR needs. Randstad’s vision is to meet those needs and demands of our client companies by becoming an industry leader in shaping the work world and offering a complete range of solutions that cover every aspect of HR services, from temporary staffing, recruitment to outplacement services. Due to the merger with Vedior Group, Randstad’s Japanese head office will be moved to a new office from September 7, 2009, New Otani Garden Court 21F, Akasaka-mitsuke. For more information, please visit www.randstad.co.jp

MDS Global K.K.

MDS GLOBAL

Address

1-5-15-202 Yoyogi, Shibuya-ku, Tokyo 151-0053

Tel

03-3373-7749

Fax

03-3373-7756

E-mail

info@mdsglobal.com

Web site

www.mdsglobal.com

Year established

2001

Staff Size:

Industry sectors:

Finance, Law, Real Estate, IT

Contact:

Mike Stensrud, Managing Director

Company Activities / History MDS Global K.K. is a boutique agency licensed to recruit permanent staff and to provide temporary staff. MDS Global K.K. was established by an IT professional who felt there was a lack of actual IT experience amongst the recruiters who are tasked with helping companies find qualified IT staff in Tokyo. We primarily provide permanent, temporary and contract IT staff, as well as administrative staff, to foreign firms in Tokyo. Our clients include both domestic and international investment banks, asset managers, insurance companies, real estate, law, IT and apparel firms. Our candidates, both Japanese and non-Japanese, come from a variety of backgrounds spanning IT support and infrastructure to development, to project management and management. Many of the candidates are bilingual and almost all of them have previous experience working at foreign firms in Japan. If your firm has a need for IT or administrative staff, or you simply require temporary or contract staff on a short- to medium-term basis, please feel free to contact MDS Global K.K. about your requirements. We’d be glad to help.

30 | The Journal | September 2009

Address

14F Jinbocho Mitsui Building, 1-105 Kanda Jinbocho, Chiyoda-ku, Tokyo 101-0051

Tel

03-5259-9221

Fax

03-5259-9893

E-mail

c-moser@jac-recruitment.jp

Web site

http://corp.jac-recruitment.jp/english/

Year established 1988 Staff Size:

503

Industry sectors: Recruitment Agency Contact:

Moser Christian ,Business Development Team

Company Activities / History JAC Recruitment Co., Ltd., established in 1988, provides a comprehensive international recruitment consulting service backed by a global network encompassing Japan and six other countries worldwide. It currently has ofﬁces in Tokyo, Yokohama, Nagoya, Kyoto, Osaka, Kobe and Fukuoka, providing job change support to over 50,000 candidates annually. Through overseas partners, JAC Recruitment conducts the international recruitment of high-skilled permanent employees. Large numbers of people are recruited, ranging from assistant-level personnel to executives and specialists of all kinds. Our corporate customers are also highly diverse, ranging from local enterprises to multinational, and from almost every sector of the economy. A ﬁeld in which JAC Recruitment is particularly strong is the recruitment of multilingual personnel, who, in today’s era of internationalization, are becoming important to corporate business.

September 2009 | The Journal | 31

HUMAN RESOURCES/RECRUITMENT CONSULTING/CORPORATE TRAINING | Special Advertising Section

JAC Recruitment.Co., Ltd.

New Government vs. Old Realities J

apan’s new government faces a simple task: pull the economy out of recession. To do so is, of course, easier said than done. No matter how young, how new, how different the prime minister and his team are, politics will always be constrained by the economic realities left behind by previous administrations. Don’t get me wrong—I am hopeful that the new team will bring a fresh “can do” attitude to policymaking. But let’s have a look at some of the constraints and challenges it faces. How do the ruling party and the prime minister exercise power? The party has two principal tools that the opposition does not have. First, it controls all personnel decisions, whether senior executives—the ministers and vice ministers—or senior administrative technocrats. Sure, some compromises will have to be made. Old favors have to be paid back, possible internal challengers have to be engaged and kept busy, while young talents need to be developed. But make no mistake—Japan’s prime minister has close to total control over all personnel decisions. Indeed, his personnel choices are the ﬁrst concrete read of the true character of his rule. The second tool of political power is money: the prime minister and his Cabinet control the national budget. This is where the rubber hits the road, where past realities and future aspirations collide. Rather than focusing on the absolute size of the budget—which has actually stayed almost constant in recent years—what matters is the allocation. What are the major

32 | The Journal | September 2009

expenditure categories that public money is spent on? This is what the Japan Budget Realities chart does. Japan Budget Realities Japan Government Spending by Major Budget Category (% of GDP)

4.5 Social Security 4.0%

4.0

Debt Services 3.7%

3.5 Local Allocation Tax Grants etc. 3.1%

3.0 2.5 2.0

Public Works 1.4% Other Expenditures 1.4% Education & Science 1.4% Defense 0.9%

1.5 1.0 0.5

1985

1995

2006

You see that three budget categories have been rising steadily over the decade—Social Security, Debt Service and Local Allocation Tax Grants (which is basically the central government re-distributing money to local authorities). Against this, Public Works and the general discretionary category Other Expenditures have been cut back. These budget realities highlight the real-world constraints Japan’s new government faces; it will be very difﬁcult to cut back on the major expenditure items. Indeed, the easy part of cutting discretionary spending (the Other category) and cutting back public works spending was done by

JESPER KOLL WRITES

Problem: Inefficient Tax System Note: Tax Multiplier is the average over past cycles; based on OECD estimates

Japan Euroland Germany U.S. South Korea OECD

Tax Multiplier 0.4 0.9 0.9 1.0 1.3 0.9

former Prime Minister Junichiro Koizumi. Against this, cutting back on Social Security and Local Allocation Grants will demand very strong political leadership, if not a complete re-design of the socio-economic consensus. No matter which way you look at this, aggregate social security spending will have to be cut and support for local authorities curtailed. In other words, less money will flow into people’s pockets. The new government is highly unlikely to advocate this anytime soon, while the opposition will go out of its way to accuse the new leaders of fiscal irresponsibility. What about the other side of the budget—revenues? Here the economic reality is even more challenging than on the expenditure side. The sad truth is that Japan currently has one of the most inefficient tax systems in the world. An efficient tax system should allow for revenues to grow about as fast as national income. That seems fair—if the total pie grows by 2%,

the share of public-sector revenues, basically taxes, should grow by just as much. This ratio is called the tax multiplier, and it is outlined in the table. You see that, for most countries—the U.S., European nations—that is, indeed, the case. Their tax multiplier is close to 1. However, for Japan, the tax multiplier is less than 0.5; for every 1% of national income growth, tax revenues grow by less than 0.5%. Simply put, this means that, with the current tax system, Japan cannot grow enough revenue to finance new programs, let alone repay its huge outstanding debts. Building a better, more efficient tax revenue system is even more complicated than cutting back social security spending or transfers to local governments. Introducing a unified national tax number system would be one step in the right direction, in my view. However, while many proposals exist to change personal income taxes and corporate tax rates, it would take a heroic effort to actually get all this done. No wonder the national debate focuses on hiking the consumption tax—not because it is the best economic policy solution, but because it is the easiest one to actually implement. In any event, Japan’s tax system realities leave little room for the new government to hope for a rise in revenues without increasing taxes. Again, this will probably be postponed for as long as possible. Japan’s new government does face some pretty harsh economic constraints. The public deficit is at a record high; the expenditure choices are limited and painful; and, before long, government claims on the Japanese people will have to go up. However, the real world of business and economics is not just dictated by numbers and statistics. “Politics is the art of the possible,” someone wise has claimed. I, for one, remain optimistic. Japan’s new leadership team has what it takes to lead with a “can do” attitude. Sure, hard choices will have to be made, but the real success— or failure—of the new government will be determined by its ability to re-kindle animal spirits and entrepreneurial drive. After all, it is risk takers who create wealth, entrepreneurs who create jobs, and the people’s passion for a better future that creates GDP growth. Re-kindle this passion Jesper Koll is President and for growth, and economic CEO of Tantallon constraints quickly turn into Research Japan. opportunities. And, yes, I wish the new team the best of luck. ■

June 2008 - October 2009 www.bh-project.jp/eng/event/data/ tokyo_mm2008

The fair is expected to attract 30,000 visitors. Japan’s spa market expanded by 30% last year to ¥730 billion (per METI), and is expected to soon reach ¥1 trillion. Tokyo Big Sight, West Halls 1-2 & Atrium

Part of the Tokyo Culture Creation Project, which aims to create and transmit the distinctive art forms and culture of Tokyo, and educate children by introducing them to the arts and culture.

1st Ad:Tech Tokyo 2009

Tokyo Music Marathon

September 2-3 www.ad-tech.com/tokyo/adtech_tokyo.aspx The emphasis is on case studies whenever possible, featuring 120-220 presenters as keynote speakers, panelists or workshop providers; there also are breakfast forums and networking parties. The Prince Park Tower Tokyo, Conference & Expo Hall, Shiba Koen

Games of the XXXI Olympiad in 2016 8th Diet & Beauty Fair 2009 September 1-3 10:00-18:00 (last day, -17:00) www.dietandbeauty.jp/en/ “Reliability, Efﬁcacy” are the current buzzwords in the Japan beauty market.

34 | The Journal | September 2009

September 2 http://multimedia.olympic.org/pdf/en_ report_1318.pdf The International Olympic Committee (IOC) announced back on June 4, 2008 that Chicago (U.S.), Tokyo (Japan), Rio de Janeiro (Brazil) and Madrid (Spain) had made the short list for hosting the

2016 Summer Olympics and Paralympic Games. The Report of the IOC Evaluation Commission is due no later than one month before the election of the host city on October 2, 2009, at the 121st IOC Session in Copenhagen (2016 Candidature Procedure and Questionnaire, page 21).

WTC IV September 6-11 exhibition: 7-11 www.wtc2009.jp/pdf/second.pdf The 4th World Tribology Congress 2009 reﬂects on the conservation of energy and resources through improved efﬁciency, and increased durability of machinery and equipment. Manufacturers of automobiles, electronics, machinery, lubricants and chemicals, and testing and measurement equipment are among the more than 10,000 visitors. Kyoto International Conference Center

68th Tokyo International Gift Show Autumn 2009 September 8-11 10:00-18:00 (last day: -16:00) www.giftshow.co.jp/

EVENTS LINE-UP

More than 2,300 exhibiting companies at 4,200 booths, covering 28 goods genres, attract over 200,000 visitors to a space that is the equivalent of six Tokyo Domes. Tokyo Big Sight, East 1-6, West 1-4 & Atrium Note: 42nd Osaka show, Sep 29-30, 10:00-18:00 (30th: -17:00), My Dome Osaka (www.giftshow.co.jp/english/42oigs/ outline.htm).

Tokyo 2009 Asian Youth Para Games September 11-13 (competition) opening ceremony: 10th closing ceremony: 13th www.tokyo2009.jp/english/epitomization/ about.html Under the theme of “Your Dream, Our Legacy,” 700 young athletes with disabilities (and 300 staff) from all over Asia participate in this 2nd international integrated sports meet—from athletics, swimming and wheelchair tennis (exhibition sport), to boccia (toss leather balls as close to white target ball), table tennis and goalball (ball has bells inside for blind athletes). Tokyo Metropolitan Gymnasium, Kasumigaoka National Stadium, Yoyogi National Gymnasium No. 1 and 2, Tokyo Tatsumi International Swimming Center, and National Olympics Memorial Youth Center

Though the matches start around 8:30 (doors open at 8:00), with the Juryo Division commencing at around 14:20, the upper Makuuchi Division ring entering ceremony begins at approximately 16:00 and these matches run until 18:00. Ryogoku Kokugikan

4,600 members of the press from 30+ countries/regions. The over 1,500 booths exhibit more than 870 titles. Hundreds of attending costumed cosplayers and dozens of major games on display are key draws. Makuhari Messe, Chiba

MIH 2009

12th ICCV 2009

September 19 - November 23 9:00-17:00 (Oct-April: -16:30) http://mih2009.com/english/index.html

September 27 - October 4 main conference & exhibitions: 29th-2nd www.iccv2009.org/

Hamamatsu, near Mt. Fuji (western Shizuoka Prefecture), is hosting a unique art exhibition of sculptures (2D or 3D) composed of ﬂowers and plants: Mosaiculture. Hamamatsu Flower Park (30ha, not the Garden Park), adjacent to the zoo

The workshops at the biennial IEEE International Conference on Computer Vision focus on computer vision, pattern recognition, and related ﬁelds and applications. The comprehensive-overview, topicspeciﬁc tutorials are attended mostly by graduate students and young researchers from academia and the industry. Kyoto International Conference Center (conference & exhibition) and Kyoto University Clock Tower Centennial Hall (workshops & tutorials)

National Holidays Respect for the Aged Day (Keiro no hi), Sep. 21; Bank Holiday, Sep. 22; and Fall Equinox (Shubun no hi), Sep. 23.

Principal Trombone The Tokyo Philharmonic Orchestra End of September www.tpo.or.jp/english/musicians/pdf/ tb-audition_english.pdf

20th PIMRC ’09 September 13-16 www.pimrc2009.org/ The theme is “Gigabit Wireless for Real Personal, Indoor and Mobile Radio Communications,” from physical layer to applications technologies. The Westin Tokyo, Yebisu Garden Place

Sumo Tournament September 13-27 www.sumo.or.jp/eng/ticket/index.html

14th TGS 2009 September 24-27 open to the public: 26th-27th 10:00-17:00 (last day: -16:00) http://tgs.cesa.or.jp/english/ The Tokyo Game Show, organized by the Computer Entertainment Supplier’s Association (CESA), involves over 200 companies. The more than 180,000 visitors include over 60,000 industry professionals—along with more than

This is the inaugural concert with the orchestra’s new principal trombonist. Age and nationality were not criteria for screening applicants. Tokyo Opera City, Hatsudai Station

David Umeda is Senior Editor at Paradigm

September 2009 | The Journal | 35

CHRISTOPHER DOMITTER (HTTP://DOMITTER.NET)

CSR Event

The leaves may be starting to fall this month, but according to press reports, green shoots are thankfully appearing.

While talk of bonuses may be back on the menu, for some companies increasing their efforts in the area of corporate social

responsibility (CSR) is just as important. Alana Bonzi, co-founder of Soleil Provence, a French-language and culture school located near the Shonan seaside in Fujisawa, hopes to bring together foreign and local residents in a beach-cleaning activity. “The goal is to feel good and do good,” states Bonzi, on the community event slated for October 4. Bonzi, who is a member of the ACCJ CSR Committee and a part-time university lecturer, hopes corporations will sponsor cleaning teams comprised of employees and families. “Foreign companies fail in Japan because they believe that their employees’ families and their communities are not their business,” continues Bonzi. “From the crowded commuter trains heading to the city, I would estimate that more than 80% of the people who live in the Fujisawa area work in Tokyo. Management can keep their employees engaged by becoming involved in the communities, with the additional benefit of potential branding exposure.” If it rains, the event will be rescheduled for October 18.

Entrepreneurship Lecture “The Role of Entrepreneurs and Entrepreneurship in U.S.Japan Relations,” a lecture by Richard B. Dasher, director of the US-Asia Technology Management Center, Stanford University, at the FCCJ in June, was sure to draw an audience keen to hear an expert view on what has become a hotly debated topic of late. “Entrepreneurship is not a major U.S.-Japan bilateral concern,” states Dasher. “An Internet search for U.S.-Japan relations finds no mention of this at all,” Incongruous because, “U.S. diplomatic efforts have supported entrepreneurship in other countries.” As the world’s balance of power inches East—and Asia becomes the engine of the global economy—Dasher exclaims it extraordinary that, in Japan, economics is most linked to security issues. Considering the region sits at the crossroads of the global supply chain and boasts a new, young middle class who are early adopters of innovative technologies, Dasher posed the query regarding how Japan struggles, while America has led the world in entrepreneurship, and

36 | The Journal | September 2009

China, India and other Asian economies are making strides. Dasher presented the following facts. Some 1 in 1,000 individuals are business owners and 16 million people in the workforce are employed by companies with less than 16 employees—concluding that, in theory, Japan is a nation of SMEs. Yet, despite a large culture of small to medium-sized enterprises, the venture capital industry still has a long way to go in supporting growth. For example, VCs lent U.S. companies $30 billion to support 4,000 deals in 2008; but, in Japan, similar investment was a mere $3 billion for 3,000 deals. “Japanese start-ups and businesses tend to be more domestically focused than their U.S. counterparts,” says Dasher. “The first question any start-up looking for investment in the U.S. gets is, ‘What’s your China Strategy?’ But as Japan moves from managed growth to advanced-stage growth—a knowledgebased economy—these questions will become increasingly more important.”

FDI PORTFOLIO

Burch Branches Out Lifestyle brand Tory Burch LLC has signed exclusive deals in the Japan and South Korea markets. Tory Burch, a U.S. socialite who is as well known for her celebrity lifestyle as her fashion range, is rapidly expanding her footprint from North America to Asia. The company has signed a multi-year agreement with Look Inc, granting Mitsubishi Corporation the exclusive rights to import Tory Burch products into Japan. The deal commences with the autumn 2009 season, and distribution of the brand began in April 2009 at Isetan Shinjuku. The first freestanding retail boutique for the brand is expected no later than spring 2010, slated for central Tokyo. Tory Burch has partnered with Samsung Cheil Inc., which will distribute and retail its products in South Korea, beginning also with the autumn 2009 season. Samsung will open freestanding Tory Burch retail boutiques, the first in spring 2010, and arrange distribution at department stores.

Hotel Deal Accor Hotels has announced the signing of an agreement to manage the Mercure Yokosuka. The 160-room hotel is located 50km from central Tokyo, in the port and industrial city of Yokosuka. Near the U.S. Yokosuka Naval Base, the hotel is within a complex that houses a shopping arcade and arts theater. The Mercure Yokosuka follows the Mercure Ginza, Mercure Narita and the newly opened Mercure Sapporo; and features a restaurant and lounge, as well as eight meeting rooms, including an over 500m2 ballroom. This is the third Mercure Hotel that Accor operates on behalf of Mitsui Fudosan Co., Ltd. “It is an exciting year for the Mercure brand in Japan and throughout the Asia-Pacific, where 13 Mercure

hotels will open in 2009. This burst of mid-scale hotel development is an indication of an increase in demand by

owners and developers, seeking the reassurance of recognized hotel brands and the expertise of international hotel companies,” says Patrick Basset, vice president of Accor - Japan, South Korea, the Philippines and Vietnam. Accor operates 54 Mercure hotels throughout the Asia-Pacific and 690 Mercure hotels around the world—in nearly 100 countries and employing 150,000 staff. Other Accor brands include Sofitel, Contact Nicole Fall at nicole@ Pullman, MGallery, Novotel, ﬁvebyﬁfty.com if Mercure, Suitehotel, Ibis, you have ideas all seasons, Etap Hotel, for this column. Formule 1, and Motel 6.

September 2009 | The Journal | 37

David McCaughan REGIONAL STRATEGIC PLANNING DIRECTOR, MCCANN WORLDGROUP ASIA PACIFIC Text and photos by Tony McNicol

efore joining McCann Erickson in 1986, Dave McCaughan had jobs as a yoghurt maker, children’s librarian, menswear salesman and butler. Yet, his new career at the global advertising agency was hardly any less varied. After nine years in his native Sydney, he took up a role in Thailand, and several years later in Hong Kong. In 2003, he relocated to Japan, but has remained on the move since. “I’ve averaged 50 international trips a year for close to a decade,” says McCaughan. In his current role as regional strategic planning director for the Asia Paciﬁc at McCann Worldgroup, McCaughan works across 14 countries with long-term local and international clients such as Coca-

38 | The Journal | September 2009

Cola, Cathay Paciﬁc, Nestlé, and Johnson & Johnson. McCaughan maintains that the Japanese market is “the most demanding and the most interesting of all.” The market here is driven by a constant desire for precision and a depth of easy information, while fed by a huge magazine and manga culture, thriving keitai-based Internet, and the biggest blogosphere. Japanese people, argues McCaughan, “tend to read the back of the packet more than anyone else.” On the surface, Japanese advertising may look simple, even naïve, according to McCaughan. Straightforward taglines and celebrity endorsements are sometimes thought of by Western marketers as “lazy” creativity. But, actually, Japanese

BIOGRAPHY David McCaughan ■ Age: 53 ■ Occupation: Regional Strategic Planning Director, Asia Pacific, McCann Worldgroup ■ Raised in: Sydney, Australia ■ Education: University of Technology Sydney ■ Hobbies and interests: television, old westerns, running and Tottenham Hotspur football club (London) ■ Favorite saying or quotation: “Think about people, not consumers.”

consumers are looking well past that, stresses McCaughan. As often as not, they really do know about the product, and are making a highly informed decision. “My attitude is that people are not stupid; they know that celebrity is getting paid to hold that whisky,” says

BUSINESS PROFILE

SNAPSHOT McCann Erickson Japan, Inc. ■ Established: Dec. 16, 1960 ■ Employees: About 400 ■ Location: Minami Aoyama, Tokyo ■ Main business: Advertising ■ Major clients: Coca-Cola, Nestlé, Johnson & Johnson, MasterCard, Oriental Land, Cathay Pacific, American Airlines, Sunstar, Seiyu-Wal-Mart ■ Web: www.mccann.co.jp (Japan) www.mccann.com (global) ■ Tel: 03-3746-8010

McCaughan. “Japanese people look at the brand attributes of that actor, and decide if they match the brand attributes of the whisky.” As in many things, the Japanese have a sophisticated and unusual attitude toward brands, according to McCaughan. He still remembers one comment gathered from his McCann PULSE studies: “I’m perfectly loyal: I change my brand every week.” In other countries, consumers tend to look for reassurance and security from a brand. By contrast, in today’s Japan—with its dizzying turnover of new products in convenience stores and ubiquitous vending machines—“everything has become a limited edition,” he says. “People automatically assume you can rely on the product. A brand is not about assuring quality; it’s about providing something new.” Next year, McCann Erickson Japan, Inc. will celebrate its 50th anniversary. The branch is the third largest (following New York and Manchester) of the 200 offices worldwide. McCaughan defines his company’s role as blending Japanese innovation and insight with global best practice. As a result, McCann Erickson Japan not only improves clients’ success here, but also instills ideas to more offices in the McCann Erickson network than anywhere else. This largest foreign-owned ad agency in Japan also goes head to head with goliaths like Dentsu, which is many times its size. “Anywhere else in the world, an agency our size would be a market leader, but here you might call us a good

mid-sized advertising company,” says McCaughan. That said, his agency is the only foreign advertising company in Japan with a license to buy media space. “The Japanese industry this year is going to go through some fundamental changes,” says McCaughan. Japan’s large advertising agencies are often criticized for not disclosing how much they pay for advertising space, and fees have long been commission-based. Now,

however, the larger agencies are moving toward a fee-based system, according to McCaughan. Subsequently, they know that their commissions will shrink with the diminishing size of the market. Last year, the Japanese advertising industry shrank 6-7%. This year, a 20% drop is on the books, and a lot of foreign companies in Japan are already cutting back. While Japan still boasts the secondlargest advertising market in the world after the U.S., China is catching up fast. The global recession may very well speed

“Japanese people … tend to read the back of the packet more than anyone else.” up China’s advancement to within five years, according to McCaughan. Even if that should happen, Japan will remain far ahead of the next-largest advertising market, the UK. “Japan will still be a very important market for advertising for many years to come,” stresses McCaughan. “Marketers have both fantastic opportunities and fantastic challenges in Japan.” Even the aging population is not entirely bad news. “After all, the dankai generation [baby-boomers] are the world’s wealthiest retirees,” he points out. McCaughan’s own experience of life and work in Japan is surely a positive advertisement for his new home. “Before we came, people told my wife and I that Japan would be a very difficult place to live,” he recalls. But that couldn’t have been farther from the truth. “I can’t believe how many gaijin think of Japan as a difficult location . . . it is truly the leading-edge market of the world, with a very warm and friendly people,” he says, “and has high standards of everything.” Perhaps it comes down to the attention to detail that he’s encountered in business and elsewhere. “Japanese people are interested in the back story, in precision; and they don’t make judgments on face value,” says Tony McNicol McCaughan. “I find that is a freelance journalist based makes incredibly good in Tokyo. business sense.” ■

September 2009 | The Journal | 39

Advocacy Update ACCJ Viewpoints are the core products of ACCJ Advocacy. An ACCJ Viewpoint is a brief paper, generated by a committee, that expresses the Chamber’s official position on a specific issue. Viewpoints are primarily used to express opinions on current policies, policies under consideration by the Japanese and/or U.S. governments, and policies under discussion in bilateral or multilateral forums. They are also used to raise new concerns about issues not currently on the Japanese government agenda.

ACCJ Supports Comprehensive Pharmaceutical Pricing Reforms that Promote Innovation

Expansion of the Legal Profession is Critical for Judicial System Reform

Pharmaceuticals Subcommittee

Legal Services Committee

Valid Through January 2010

Valid Through December 2009

Recommendation

The American Chamber of Commerce in Japan (ACCJ) calls for the Government of Japan (GOJ) to: 1) Implement comprehensive reform of the pharmaceutical pricing system in a way that promotes long-term investment in the health of the Japanese people and the promotion of efficiency and innovation in the pharmaceutical industry; 2) Abolish antiinnovative pharmaceutical pricing practices, including special repricing for market expansion and biennial price revisions; 3) Not implement price revisions annually. Any short-term fiscal benefit in the form of reduced expenditures for pharmaceuticals that come from these anti-innovative pricing practices are more than cancelled out by their cumulative negative impact on patient access to innovative medicines and innovation in the pharmaceutical industry. Until comprehensive pricing reform is adopted, steps that would further erode the prices of patented products should not be pursued.

The American Chamber of Commerce in Japan (ACCJ) supports the goal of the Government of Japan (GOJ) of expanding the nation’s pool of legal professionals to increase access to legal services throughout the country. The ACCJ also strongly encourages the GOJ to fulfill its plan of increasing the number of newly licensed attorneys by specific numeric targets.

Reform Rules for Defined Contribution Pension Plans Investment Management Committee Valid Through July 2010

Recommendation The American Chamber of Commerce in Japan (ACCJ) renews its request to the Government of Japan (GOJ) to review the current policies regarding the Defined Contribution (DC) Pension Plan, including: a) further increasing the limits on tax deductible contributions; b allowing employee matching of employer contributions, with the only applicable limit on employee contributions being the level of employer contributions; c) allowing withdrawals prior to age 60, under certain conditions; and d) introducing a DC pension plan for public workers.

Prevent Consumer Confusion Over Carbon Footprints by Ensuring Global Harmonization and Avoiding Government Certification of Numerical Consumer Product Labels Toiletries, Cosmetics and Fragrance Committee, Environmental Committee, and Retail Committee Valid Through March 2010

Recommendation The American Chamber of Commerce in Japan (ACCJ) urges the Government of Japan (GOJ) to prevent consumer confusion over carbon footprints (CF) by refraining from certifying CF calculation methodologies for use in numerical consumer product labeling and by ensuring global harmonization of calculation methodologies. While the ACCJ supports the development of a CF calculation methodology that is technically valid and globally harmonized, we are concerned that methodologies for calculating and displaying numerical carbon footprints on consumer product labels that the GOJ certifies could lead to unnecessary consumer confusion. In particular, the ACCJ is concerned that the GOJ might certify CF calculation methodologies that may not be accurate and inadvertently give rise to legal challenges, are inconsistent with methodologies used in other countries and may hinder free international trade and fair competition, and may shift attention away from other effective ways of reducing greenhouse gas (GHG) emissions and promoting environmental sustainability. Finally, the ACCJ believes that any certification process for CF calculation and display methodologies should occur in a public, fair and transparent process offering technical experts and all relevant stakeholders a meaningful opportunity to provide input.

Further, the ACCJ urges the GOJ to engage in an active review of the assumptions underlying present target replacement rates of workers’ current income by retirement income.

Released ACCJ Viewpoints can be read in full in the Advocacy section of www.accj.or.jp 40 | The Journal | September 2009

ACCJの「意見書」は、特定の問題に対してのACCJの公式見解を表明する委員会が作成した簡潔な提言書であり、提言活動の中核を成しています。現行の政策や、日本又は米国政府で検討中の政策、二国間もしくは多国間で協議中の政策についてだけでなく、新たな関心を高めるために現在日本政府の課題となっていない問題についても意見を述べています。

イノベーションを促進する薬価制度

法曹の増加は司法制度改革におい

消費者製品へのカーボンフットプリ

の抜本的改革への支援

て決定的に重要である

ント数値のラベル表示について政

医薬品小委員会

法務サービス委員会

府認定の中止及び算定方法の国際

2010年1月まで有効英語正文

2009年12月まで有効英語正文

的な統一により、消費者の混乱を防止トイレタリー・化粧品・フレグランス委員会、環境委員会、リテール委員会

提言

在日米国商工会議所（ACCJ）は、日本政府に対し、(1)

在日米国商工会議所(ACCJ)は、日本において司法サー

日本国民の健康と医薬品産業の効率性・イノベーション

ビスを受ける機会を増大させるため、国内の専門家人

の向上に対する長期的な投資を促す形での薬価制度の

口を増加させるという日本政府の目標を支持する。また

包括的改革の実施、(2)市場拡大に伴う薬価特別再算定

ACCJは、日本政府が、資格を取得した新人弁護士を一

や隔年の薬価改定を含む、イノベーションを阻害する薬

定数増加させるという計画を完全に遂行するよう強く求

価算定の仕組みの廃止、(3)薬価の毎年改定の導入断念

提言

める。

在日米国商工会議所（ACCJ）は、消費者製品へのカ

を要求する。このようなイノベーションを妨げる薬価の仕

ーボンフットプリント数値のラベル表示の政府認定を

組みを使った薬剤費支出の削減がもたらす短期的な財政メリットよりも、患者の革新的医薬品へのアクセスや医薬品産業のイノベーションに対する長期的な悪影響の方がより深刻である。薬価制度の包括的改革が実行されるまで、特許期間中の製品の価格をさらに蝕むような措置は検討されるべきではない。

2010年3月まで有効英語正文

中止し、むしろ算定方法の国際標準化を促すことによ

確定拠出年金制度の改善について

って、消費者の混乱を防ぐよう日本政府に対し要望する。ACCJは、技術的に妥当で国際的に統一されたカー

投資運用委員会 2010年7月まで有効英語正文

ボンフットプリント算定方法の開発を支持している。しかしながら、日本独自の算定方法に基づいた製品やサービスのカーボンフットプリント数値算定やラベル表示を認定する制度を導入する日本政府の計画が、消費者に不要な混乱を招くのではないかと懸念している。特に懸

提言在日米国商工会議所 (ACCJ) は日本政府に対し、確定拠出年金に関する現行制度について、以下の措置に関する見直しを要望する。 a) 非課税限度額をさらに引き上げる b) 事業主の拠出額に応じた従業員のマッチング拠出を認め、従業員拠出限度額について事業主拠出額と同水準となるような取扱いを認める c) 一定条件の下での、60歳前の積立金引出しを認める d) 公務員に対して確定拠出年金制度を導入する

念しているのは、日本政府が正式に認定したカーボンフットプリント算定・表示方法が、必ずしも正確でないがために異議申し立ての原因となるおそれがあること、また海外の算定・表示方法と調和していないため国際自由貿易や公正競争の妨害になるおそれのあること、さらには、日本政府が正式に認定した方法であるがために、他の有効な温室効果ガスの排出量削減方法や環境保全を促す方法が軽視されることである。最後に、カーボンフットプリントの算定・表示方法を認定するプロセスは、公開され、公正・透明であるべきであり、技術的専門家や全ての利害関係者の意見が反映され得る機会を設けるべきである。

さらにACCJは、労働者の現行所得に対する退職後所得の比率を表す目標所得代替率について、現行比率算出の前提条件を積極的に見直すよう日本政府に強く求める。

ACCJが公表した意見書の全文は、www.accj.or.jp の政策提言活動でご覧頂けます。 September 2009 | The Journal | 41

IN THE FINAL ANALYSIS

After Fruitful Summer, ACCJ Awaits APEC

his summer our relationships with other business organizations, cultivated over the years, have begun to produce fruit. In July we published a joint message with Nippon Keidanren urging both the Japanese and American governments to enter in to negotiations on an Economic Partnership Agreement (EPA). Later the same month we launched our joint statement with Keidanren and the European Business Council on the treatment of Net Operating Losses. The idea for doing the EPA statement was planted during Allan Smith’s presidency last year; and since the fall of 2008 we have held a number of working level meetings with Keidanren members and staff. After pruning some of the less fruitful branches, I think we’ve now got a text that will help us move forward with the Japanese and American governments. We owe a special thanks to Steve Plunkett, Chair of the Healthcare Committee, for overseeing this important initiative. It is looking more and more like President Obama will be in Japan in November either on his way to, or from, the APEC meeting in Singapore. We’ll do our best to see if we can get some opportunity for an ACCJ event during his visit. If anyone has close kin in the President’s inner circle, please let me know. One of the popular features to a number of high-level overseas visits by American Presidents and Cabinet members in the past few years has been the Town Hall Meeting, most often at a university. I don’t see anything wrong with that. But I think it is time for the President to meet with the American business community. If the White House advance team insists, we could restrict attendance to ACCJ members who’ve been to university or who have, or will be paying for, children to attend. While we are hopeful that President Obama will come to Japan and, if so, that he will have time for an ACCJ event, we are certain that APEC will be a key policy forum for our advocacy efforts over the next several years. After Singapore, the next two APEC meetings will be in Yokohama in 2010 and then in the United States in 2011. And although the trade architecture in Asia is continuing to evolve, APEC will remain our most important regional trade forum. Each APEC member economy has a Business Advisory Council, and the ACCJ intends to work with both the American and Japanese councils to advocate member interests. Some of our member companies have representatives on the U.S. Council. If you are interested in being part of this process, please let me or Ryan Armstrong know. The senior American ofﬁcial charged with organizing U.S. participation in APEC will be Kurt Tong, who is a longtime friend of the Chamber. Kurt has served at the Embassy in Tokyo and in key trade policy roles in Washington. We are grateful that he took time to meet us when we were in Washington on our Samuel H. Doorknock in June, and then again when he came Kidder is through Tokyo in July. We look forward to working ACCJ Executive Director. with Kurt and his APEC team. ■