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THE AMERICAN CHAMBER OF COMMERCE IN JAPAN IN COMMERCE OF CHAMBER AMERICAN THE STOP-START Open and shut case of global e-biz firm 毎月一日発行第五十三巻 11 号ジャーナル二〇一六年十一月一日発行 WE NEGOTIATE. WE CREATE. WE REDEFINE. WE SPEARHEAD. WE NAVIGATE. FOR OUR CLIENTS.

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VOL. 53, ISSUE 11

4 FEATURED CONTRIBUTORS 24 ENTREPRENEUR Breaking the Mold 5 EDITOR'S DESK Mio Yamamoto leads social Buying Bytes entrepreneurship C Bryan Jones John Amari

7 SOCIAL MEDIA 26 PARTNER CONTENT Trending on the Web Koike’s Commitment Tokyo’s new governor promises 8 RETAIL openness Stop-Start Nikkei Asian Review Open and shut case of global e-biz firm J-MEDIA Brandi Goode 27 Diet Dailies 14 FINANCE China proposes Get Shorting environmental classification Japan Inc.’s potential corporate failures Database discourages rise in vacant residences Richard Smart translation of news from Keizaikai 18 FINANCE M-Commerce 37 ACCJ MEMBER NEWS Online vendors learn from brick-and-mortar Dr. Florian Kohlbacher and Rehabya Wijaya

22 REVISION JAPAN DISCLAIMER Dyer Straights Fourth generation of traditional artisans Custom Media and the ACCJ will not accept liability COVER IMAGE: for any damages caused by the contents of The Journal, DSKDESIGN / 123RF Kit Pancoast Nagamura including, but not limited to, any omissions, errors, facts CONTENTS IMAGE: or false statements. Opinions or advice expressed in LEUNGCHOPAN / 123RF the The Journal are not necessarily those of the ACCJ or Custom Media. BRANDI GOODE JOHN AMARI FLORIAN KOHLBACHER

“Breaking “M-commerce: “Stop-Start” the Mold” Back to basics” page 8 page 24 page 18 MEET THE AUTHORS MEET THE

Hometown: Lake Charles, Louisiana Hometown: Oxford, England Hometown: Rosenheim, Bavaria, Germany Languages: English; Spanish; a Languages: English, Luo, smattering of French, Japanese, conversational Japanese Languages: German, English, daily German Japanese; French and Spanish Years in journalism? Five Years in Japan: Five; relocated to Years in Japan: Close to 12 Most memorable interview? Manila in May 2016 Ari Horie, founder of Women’s Most memorable interview? Seoul Years in journalism? Nearly 10 Startup Lab, and Akiko Naka, founder Mayor Won Soon Park, live on stage of Wantedly Most memorable interview? Who inspires you? People who are Rick Perry, governor of Texas, for Who inspires you? Entrepreneurs passionate about what they do The Journal and freethinkers One change you would like to see in One change you would like to see One change you would like to see Japan by 2020? Banning smoking in in Japan by 2020? Significant in Japan by 2020? More Japanese public spaces, especially indoors improvement in the ratio of women students majoring in English living in What are you currently reading? to men in leadership roles an English-speaking country for a year Moshi ino, the sequel to Moshi dora by Thoughts on the importance of Thoughts on the importance of Natsumi Iwasaki print journalism and its future? print journalism and its future? What projects are you currently Nothing can replace the look, feel, If print journalism can adapt to the working on? Writing a book on aging and entertainment of a magazine. digital revolution then it will be fine. and business Plus, what would people read at the What are you currently reading? beach or during takeoff and landing What is one thing that you can’t let Thinking, Fast and Slow by if print were to vanish? go of right now? Finding the right Daniel Kahneman school for my kids What are you currently reading? Favorite podcast that our readers Americanah, by Chimamanda How can people find you in social should be listening to? Ngozi Adichie media? Twitter: @ecn_kohlbacher StarTalk Radio by Neil DeGrasse Tyson

Publisher Marketing Manager To advertise or subscribe: Simon Farrell Megumi Okazaki [email protected] [email protected] Advertising Sales Director Editorial: President Anthony Head [email protected] Robert Heldt Custom Media Account Managers Editor-in-Chief Publishers of The Journal for the American Chamber Andrew Williams Christopher Bryan Jones of Commerce in Japan. Specialists in bilingual brand www.custom-media.com Reiko Natsukawa strategy/visual communications, corporate bespoke Studio Manager Edvard Vondra solutions. Producers of Business in Japan TV. Paul Leonard Business Development Graphic Designers Director Michael Pfeffer Kotaro Toda Ximena Criales Daiwa Azabudai Bldg. 6F 2-3-3 Azabudai, Minato-ku, Project Coordinator Client Services Director Tokyo 106-0041 Sam Bird Yoshiki Tatezaki Tel: 03-4540-7730 Client Services Manager Media Coordinator Joy Fajardo Kiyoko Morita © 2016 Custom Media K.K.

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4 THE JOURNAL n NOVEMBER 2016 BUYING DESK EDITOR'S BYTES

current state of m-commerce in Asia Assistive Limb (HAL) once sent and what online vendors can learn from the company’s stock soaring, but their brick-and-mortar counterparts. delays in bringing the tech to market have resulted in a sharp decline. On GO GLOBAL page 14, we explore this and other Christopher Bryan Jones To find an online shopper in Japan who concerns, and how they are intertwined [email protected] is unfamiliar with Rakuten would be with the Japanese approach to difficult. The Internet retailer guided corporate governance. by Hiroshi Mikitani has a pervasive Our November issue of The Journal presence across the country. From an HELP OTHERS takes you shopping—online—as we online marketplace to brick-and-mortar Lastly, let’s not forget that, while we’re explore the evolution of electronic cafés to sports—the company’s Nippon enjoying the benefits of technology, commerce into mobile commerce. Professional Baseball League club, the there are many who need our help. The Eagles, is beginning its second decade ACCJ offers a wonderful opportunity SHOP NOW of play—Rakuten is everywhere. But to do this while having a great night Those of us who have been in Japan for unlike competitor’s such as Amazon, out at the annual Charity Ball, which decades can recall how difficult it once they aren’t well known abroad. In recent will take place on December 3 at the was to access goods from back home. years, Mikitani has sought to change Hilton Tokyo Shinjuku from 6:00 p.m. As the Internet became more integral this. On page 8, we check on the current to midnight. The theme for this year’s to everyday life, and online shopping status of Rakuten’s European and event celebrates the 50th anniversary came into its own, walls fell and Asian expansion. of Truman Capote’s iconic Black and almost any product became available. White Ball, which was held at the Plaza Of course, we had to sit down at the GO HYBRID Hotel in New York City. In this issue, computer to make the purchase. Today, While handheld technology powers Charity Ball Committee Chair Barbara even that limitation has disappeared m-commerce and other aspects of Hancock introduces you to some of the as e-commerce is being supplanted by daily life, more sophisticated assistive entertainment lined up for the evening. m-commerce—shopping from your technology is slowly becoming a part We hope you will come out and support mobile device. Virtually the entire of who we are as individuals. On a path this year’s charities. n world is now accessible while on-the- that seems to lead out of science fiction, A flagship publication of the American go. But the experience varies depending mechanical body parts are changing Chamber of Commerce in Japan (ACCJ), on what country one finds themselves the lives of the physically challenged. The Journal (formerly the ACCJ Journal) is a in. On page 18, we take a look at the The prospects of Cyberdyne’s Hybrid business magazine with a 53-year history. SUCCESS

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THE JOURNAL n NOVEMBER 2016 7 STOP-START Open and shut case of global e-biz firm

By Brandi Goode

IMAGE: GAJUS / 123RF

Rakuten and its charismatic CEO, Hiroshi Mikitani, The closures are in line with Rakuten’s 2020 Vision, also announced by Mikitani in February. Addressing the press, are often-cited examples of progressive Japanese he said the vision is based on three main principles: “strong, companies and their forward-thinking leaders. The smart, and speed.” Removing dead-weight operations with minimal growth potential is just part of the long-term strategy. Internet retailer is among a handful of domestic Mikitani hailed the disruptive potential of mobile technologies titans recognized as a global player, and consistently such as messaging app Viber, video platform Viki, and shopping site Ebates, all companies acquired by Rakuten in ranks among Forbes Magazine’s annual list of “Top the past three years. 20 Most Innovative Companies.” Often, it has been Still, the company’s disparate acquisitions and abrupt shifts in regional focus have left many investors and the only Japanese company listed. analysts wondering if it can effectively compete with international rivals. Until 2016, Rakuten had been aggressively securing new “Rakuten’s major weakness could be its initial scattergun overseas assets, with acquisitions having totaled about approach to investment, such as its $100 million investment $4 billion through 2015. Thus, the company’s announcement in Pinterest in 2012. While it is creative and exciting to in February that it would shutter operations in four Asian invest in businesses like Pinterest, unless Rakuten actually nations—Singapore, Malaysia, Indonesia, and Thailand—after links purchasing or endorsement to visual pinning, then its proclaiming its focus in 2014 on the important Southeast past strategy feels more acquisition-based rather than truly Asian market, shocked many tech insiders. Further questions leveraging potential,” Nicole Fall tells The Journal. Fall is the surfaced on the heels of a decision, in June, to exit three of founder of innovation and trend forecasting consultancy Rakuten’s five European markets: Austria, the UK, and Spain. Asian Consumer Intelligence.

8 THE JOURNAL n NOVEMBER 2016 RETAIL

When asked about Rakuten’s global Rocket Internet, which operates the Lazada prospects versus e-retail giants such as shopping site, has funneled more than $1 Amazon and Alibaba, Fall says: “The bottom billion into its two largest Southeast Asia line is many Japanese companies do not 110.44 players in recent years. know how to market effectively outside of million users The rapid adoption of mobile platforms in Japan. There appears to be a real problem the region is a promising avenue for business effectively communicating brand values to development. “This is very different from a consumers. One of the core tenets of being winner-take-all environment,” Mikitani told a Japanese company is quality. In this digital Bloomberg in a recent interview. “Consumer marketing age, that is no longer enough.” behavior tells us there is room for several trillion players on the screens of smartphones.” NICHE MARKETS 7.1 yen on transactions In its February announcement, Rakuten Rakuten claims a 27% share of Japan’s indicated a new consumer-to-consumer mature e-commerce market, with business model in Southeast Asia, which 44,453 sellers, 110 million members, and replaces its traditional business-to-business- total sales of $17 billion. Almost 90 percent to-consumer (B2B2C) approach. The of Internet users in the country are company has placed its bets on Rakuma, a registered on Rakuten. flea-market-style app, where users can sell However, the company, which declined 44,453 unwanted goods. In 2016, the app has grown requests by The Journal for comment, is sellers 20 percent month-on-month in Japan. struggling to retain market dominance, with new entrants such as Yahoo! Japan and other competitors ESTABLISHED MARKETS more adeptly responding to changing consumer preferences. While Rakuten may have some time to experiment in Rakuten’s profit in domestic e-commerce operations Asia’s emerging markets, maintaining a presence in plunged 25 percent to ¥17.5 billion in the second quarter of developed markets will be more challenging. Amazon 2016, even as revenue rose 7 percent to ¥72.5 billion. has been heavily investing in its global distribution With a baseball team, travel agency, financial services network. Rakuten, meanwhile, has little brand arm, and even an online beauty salon booking portal, recognition outside Asia, as we see in the 2013 Fortune the company’s domestic reach is boundless. The current article “Rakuten: The biggest e-commerce site you challenge is transplanting the Rakuten Ecosystem into new haven’t heard of.” markets, as Japan’s e-commerce reaches saturation point. The structure of Rakuten’s site differs largely from Since its first foray into international waters in 2008, with that of Amazon. Rakuten operates a virtual mall, where Rakuten Taiwan, the company has learned many lessons. each vendor pays the company to set up its own online The Taiwan site and business model were initially modeled shop, with a unique page design, shipping policies, and on its Japanese parent, but management soon recognized customer service. It is focused on providing a rich and the need for localization. Rakuten Taiwan is still thriving, personalized shopping experience. Amazon buys directly in large part due to the company’s dominance of a niche from vendors and centralizes customer service and market: online sales of gourmet foods. The company says inventory under its brand name and in its warehouses, Taiwan continues to be a priority market for its global focusing more on efficiency and convenience. strategy, especially in the hotly contested Asian region. In the Fortune article, Mikitani describes the company’s approach to e-commerce as characterized by SOUTHEAST ASIA, THE NEXT FRONTIER traditional Japanese hospitality, omotenashi. E-commerce is still ripe for development in Southeast “In Japan, if you go to a local coffee shop, grocer, or Asia, but competition is fierce, with China’s Alibaba any local business, you will find a very high level of and Germany’s Rocket Internet taking the lion’s share. personal service; the Internet should be that way as well.”

Rakuten’s Kobo e-reader competes with Amazon’s Kindle. Mikitani says he is focused on linking his recent investments, which could provide more synergy and . . . specialized tie-ups PHOTO: ANDSLEONARDO [CC BY-SA 2.0] VIA FLICKR THE JOURNAL n NOVEMBER 2016 9 Reach your entire multi-media market! Like never before, showcase your company in three key media:

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Fresh design for easy use, Weekly newsletter packed The Authority on Global Business Rakuten’s practice of providing rankings for its vendors accountant to review site analytics and which products are maximum exposure, with news, information, and in Japan was relaunched in also makes it quite popular with sellers. “We are really an selling best. and vital information on much more emailed to all April 2015 with a fresh design, more incubator, people trust our curation,” Mikitani adds. “We see “The ECC is a vital part for our shop to approach our advocacy, networking 3,000-plus members. focused content and an expanded our role as amplifying the characters of the shop.” target,” a representative from Hokkaido Omiyage Tankentai For Hokkaido Omiyage Tankentai, Rakuten has been a told The Journal. and events: It is the key communication distribution targeting readers winning partner since the purveyor of the nation’s best- Rakuten’s approach to customer service could be crucial www.accj.or.jp tool between the ACCJ and beyond the ACCJ membership. selling edible souvenirs joined the site in 2000. Although to survival in new markets. Linda Locke, former marketing its membership. journal.accj.or.jp it also has a presence on Amazon.jp and Yahoo! Japan, the director of luxury fashion retailer Club 21 eCommerce, company says 70 percent of online sales come from Rakuten. says, “Going forward, more players will look to exceptional Like all Rakuten vendors, Hokkaido Omiyage Tankentai customer service and omni-channel presence, as well as was assigned an e-commerce consultant (ECC), who acts omni media, to remain top-of-mind and be seen as exciting. With the broadest reach possible to speakers as an advocate for the merchant. Because of a commission “A unique and differentiated product is still a must have, of both English and Japanese across Asia, structure, there is a shared interest in the success of each and is far too underestimated. There also need to be clever to the U.S. and beyond, your adverts will be store. Every week or two, the ECC calls their merchant tie-ups to stimulate traffic and desire,” she adds. seen by a diverse and influential readership of leaders and senior decision makers—at great value cost.

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INTEGRATING ASSETS For now, Mikitani says he is focused on linking his recent investments, which could provide more synergy and the kind of specialized tie-ups that bring success in the e-retail sphere. He wants to turn Viber into a mini-app store, selling games, e-books (through Rakuten-owned Kobo reading devices), music, and videos, and hopes to use Lyft drivers to deliver Rakuten purchases. Lyft is a user-driven taxi service competing with Uber, and was acquired by Rakuten in 2015. “You need to always have several alternatives,” Mikitani says. Viber, which boasts more than 600 million users, seems key to the company’s future. Talmon Marco, the app’s founder, says, “Viber makes Rakuten instantly The Viber app could become a portal to Rakuten’s services. global.” Initially, Marco explains, he met with Mikitani in early 2014 to discuss an investment, but the Japanese billionaire persuaded him to sell. “I built the original model for B2B2C, but now I Furthermore, the app opens doors to social think e-commerce is going to the next stage. We need commerce. Neeraj Gulati, managing director of to be more open, to become more like a cloud service, ingenuity at IPG Mediabrands, says, “The new face rather than an integrated marketplace. For the time of e-commerce is not just taking offline products and being, Viber is a strong brand, and our e-reader Kobo is selling them online, but using data from the online number one in Canada, the Netherlands, France, Italy, space and customizing products and services for the and Spain. Ebates is very popular among high net-worth user to make them relevant to that moment. It will individuals. become ‘data-commerce.’ ” “The concept is, build a very strong membership Gulati views Rakuten’s moves as simply “the next program and maybe we can monetize it through revolution in the e-retail space, where shopping will our e-commerce service, media business, or fintech take a more contextual face.” He predicts that in the [financial technology] service,” he concludes. near future, data from chat apps such as Viber and Analyst Fall also views Rakuten’s scaling back as Whatsapp will blend seamlessly into services and “part of a wider global business trend, reflecting a products for sale. If this holds true, Rakuten’s Viber more cautious approach to what is effectively a post- acquisition positions the company well for the future. recessionary world.” In a video released earlier this year, Mikitani “Rakuten is one of the few to make money in e-com, explains how his new acquisitions fit into the so I view its chances of continuing that success over the Rakuten Ecosystem. medium term as fairly high.” n

For Hokkaido Omiyage Tankentai, Rakuten has been a winning partner since the purveyor of the nation’s best-selling edible souvenirs joined the site in 2000.

THE JOURNAL n NOVEMBER 2016 13 Get Shorting New breed of investor seeking out Japan Inc.’s potential corporate failures

By Richard Smart

Cyberdyne, a Japanese robotics maker that over the years has NEW ON THE BLOCK What has happened to Cyberdyne become a media darling, this summer found itself on the receiving would perhaps have been end of brutal language from companies questioning its public and unimaginable a few years ago. International companies are looking financial statements. through financial reports for discrepancies, missed problems, and Well Investments Research was one of covered by insurance in the US, and in plain old gobbledygook that could the first to question the company’s claims. Japan coverage is extremely limited.” fool investors and lead to inflated “[Cyberdyne’s] current valuations on an Next came Citron Research, which share prices. Some of their clients earnings basis are potentially the highest released a report in August that grabs then use this knowledge to make bets we’ve seen since the Internet bubble burst attention with its headline, “Cyberdyne on declines in stock prices, cashing in Japan in 2000. The valuations may is the most ridiculously priced stock in in once the firms go public with make you think Cyberdyne is about to the world.” their information. This is not “the become the next big thing. The reality is, The problem, for Well Investments Japanese way.” the company’s never made a profit. It is and Citron, is that Cyberdyne has been Toward the end of last year, Well not present in the world’s biggest market all talk and no action. In fact, a June Investments was first to make public for wearable robots and deliberately 2015 request for an interview with a report that targeted Marubeni for eschews the lucrative military sales on the company’s founder, Dr. Yoshiyuki misstating earnings. This was followed ethical grounds. Its products are not Sankai by The Journal was turned down in spring by a report on the company by Cyberdyne, which said its device, Jigsaw, which accused it of being

PHOTO: YUICHIROCK [CC BY-SA 2.0] VIA FLICKR VIA 2.0] BY-SA [CC YUICHIROCK PHOTO: the Hybrid Assistive Limb (HAL)—the “a high-tech forgery,” which is little world’s first cyborg-type robot that more than “a small server monitoring allows a wearer’s bodily functions to be and maintenance company,” despite improved—“will launch it in [the] US grandiose claims of tie-ups with market in the very near future.” A year some of the giants of the technology later, an interview request was turned industry. According to Bloomberg, down in an almost identical fashion. shares in the three companies had And a US launch remains elusive. declined an average 35 percent by the For its part, Cyberdyne believes the middle of September. short-selling issue, which has seen the “In our three reports, first the company’s stock plummet from ¥2,600 companies attack us as an entity,” on May 31 to around ¥1,600 today, says Yuki Arai, the Hong Kong-based is based on a misunderstanding. lawyer that founded Well Investments. Citron sees the stock eventually Arai has other business interests falling to ¥300. unrelated to the companies he targets

The Hybrid Assistive Limb (HAL) . . . allows a wearer’s bodily functions to be improved The Cyberdyne Hybrid Assistive Limb (HAL)

14 THE JOURNAL n NOVEMBER 2016 FINANCE

The faint neurological signals that HAL picks up and uses . . . separates [the] technology from that of competitors PHOTO: CYBERDYNE, INC. CYBERDYNE, PHOTO: The Hybrid Assistive Limb (HAL) assists physically challenged people, allowing them to move more easily.

and is, to all intents and purposes, Cyberdyne eventually granted investors choose to stay, put pressure running a one-man operation. “What The Journal an interview with Shinji on the company, or pull out is likely [the targeted companies] need to do is Uga, its chief financial officer. He to define Cyberdyne’s future. counter-argue and explain to investors argued that the faint neurological [why our claims are incorrect].” signals that HAL picks up and uses— SPEAK NO EVIL Cyberdyne chose to attack. “We to move the device, which helps The problem for Cyberdyne is one have even received comment that this the brain’s “muscles” get stronger that is shared by many companies in may be a scheme backed by clients and patients recover from injuries Japan. Communications departments such as short-selling funds or activists faster—separates their technology tend to be weak. Akira Kiyota, CEO who have commissioned the analysis,” from that of competitors, which of the Japan Exchange Group, which the company wrote in an email to The creates movement with the primary runs the Tokyo Stock Exchange, Journal just after the Well Investments aim of increasing mobility. “HAL is a earlier this year called short sellers report was released in July. device for treatment, not transport,” “ethically questionable.” Many see “Their report has had no influence Uga insisted. things differently. on Cyberdyne’s stock value today, and “Our business is not focused on “There is not a lot of pressure does not merit any comment. The selling devices, but on collecting from shareholders on management report is based on a comparison with data throughout society to help to explain what they are doing,” other robots that have completely advance healthcare,” he said. “We are stated Rupert Sutton, a consultant different principles of motion and heading into a field that is new, and and director working in the fast- purpose of use, and suggests a lack does not have a lot of regulations.” moving consumer goods sector with of understanding of Cyberdyne’s That, he says, has led to delays in companies such as Weben Asia Ltd. technologies and potential.” getting technology to the market, and Exigo Marketing Pte. Ltd. He Arai says his clients include short as healthcare regulators have, in pointed to incidents such as Calbee’s sellers. “We provide our reports to many countries, proved unable to recent foray into China, which saw clients in advance of their release.” keep up with innovations that could the company’s venture there achieve He also said Cyberdyne was cynical change lives. 3 percent of its sales target before in calling out his “misunderstanding” “The HAL device that we have, being sold on after three years. “The of their technology. “Not all investors and others that we have made coverage was minimal in the press understand the technology in detail,” public, probably constitute about and probably at the shareholder he countered. He said that he had 10 percent of the technologies we meetings nobody will ask questions,” conducted thorough research on the are developing,” Uga said. “We are Sutton said. company using publicly available eventually expecting a valuation of Dentsu is another case in point. information, as most investors have around ¥4 trillion.” In October, the This year, it has been implicated to do before choosing where to place company was valued at ¥221 billion. in scandals involving suspicious their cash. “If they feel I am not Uga said that most investors in the payments made in the buildup to knowledgeable about the technology, company were institutional, and in Tokyo’s winning bid for the Olympic then that is their fault.” it for the long haul. Whether those Games, and overcharging a multitude

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of companies for online promotion. The problem for Cyberdyne is one that is shared It has also been accused of working a member of staff to death. by many companies in Japan. Communications For Sutton, these scandals are departments tend to be weak. part of a larger problem for Japan. Shareholders are quiet, but so are the media. “If the Dentsu overcharging we are talking about generational Well Investments told The Journal. scandal hadn’t been published change here. Companies are top- “Institutional investors need to overseas (Australia-based AdNews heavy, delegation is not encouraged, be more aggressive, and we need got the scoop) I don’t think anybody and autonomy is not given, so to see people such as Daniel Loeb would have been any wiser,” he said. business becomes very slow.” [founder of hedge fund Third Point “Publishing that [in Japan] would LLC] become more engaged in the have been rocking the boat, and ABE’S ANGLE Japanese market. I expect there will [Japanese media] do not like to have The criticisms are not unknown be more lawsuits, so management the boat rocked.” to Japan’s elites. Traditionally, the will begin to feel more concerned Major incidents have attracted issues have been shrugged off, about what it is doing.” serious attention. Over the past and discussion of them has been Short sellers are seen, by people few years, Takata airbags have considered taboo. But that changed such as Japan Exchange Group’s exploded, Toyota brakes have failed, when Prime Minister Shinzo Abe Kiyota, as cynics looking to make a Tepco nuclear reactors have melted came to power, promising to get the fast buck by exploiting weaknesses in down, and GS Yuasa batteries have economy back on a growth track. companies that could be internally burned in Boeing Dreamliners. But His government saw corporate resolved. Critics say that all the there are also minor incidents, and governance as a way of helping employees of these companies are bookkeeping issues that have, in part, companies improve their behaviors put at risk by short-sellers’ reports led to the rise of the short sellers. and make Japan a more international in favor of allowing the wealthiest in A major issue is the reluctance place for doing business. society to make easy money. of Japanese companies to meet By September, nearly all listed But to their advocates, short international standards and companies had brought outside sellers play an important role in the become more intertwined with directors on board and a new economy, weeding out the negligent, the global economy, Sutton said. stewardship code had been adopted inefficient and untruthful. This Effectively, “the Japanese way” by more than 200 institutional makes for a more efficient economy, is leading to more sympathetic investors. “I have stressed many times increases accountability and, in the treatment of management and less that corporate governance reform is end, is a social good. At base, short competitiveness. at the top of my agenda,” Abe said in sellers see themselves as mopping “If there was greater openness from New York last year. up the problems that corporate management, more international “It is too early to make a decisive governance may miss. staff, more joint ventures, and more evaluation, but so far, from an In that way, Abe has helped make willingness to transfer knowledge, we investor’s perspective, the stewardship the case for the short seller to come might see progress,” he added. “But code is far from sufficient,” Arai of to Japan. Arai says Abe’s economic plans helped him decide to launch Well Investments. “If there had been no Abenomics,” he said, “I may not have started Well Investments. But in general, favorable winds are blowing, so . . .” As for governance and stewardship, last year The Journal spoke with Nicholas Benes, representative director of the Board Director Training Institute of Japan, who said the Government Pension Investment Fund needed to take the lead in stewardship for reforms to really take hold. A year on, the fund has revealed its individual investments. Based on the most recent figures, it held 59,300 shares

PHOTO: NATIONAL TRANSPORTATION SAFETY BOARD (NTSB) VIA WIKIMEDIA COMMONS WIKIMEDIA VIA (NTSB) SAFETY BOARD TRANSPORTATION NATIONAL PHOTO: in Cyberdyne. n GS Yuasa batteries have burned in Boeing Dreamliners.

THE JOURNAL n NOVEMBER 2016 17 A mutual acquaintance recently recounted his RAPID GROWTH The recent global growth of e-commerce has been remarkable. experience purchasing shoes online from the UK. The market research company eMarketer estimates that in The shoes were delivered by an international courier 2016, worldwide e-commerce sales will grow 23.7 percent to reach $1.915 trillion, and hit $4 trillion by 2020. Purchases service when the buyer was not at home, so he was of goods and services using the Internet then are expected to surprised and irritated when he found he could not account for some 14.6 percent of retail sales worldwide. Moreover, while sales of goods and services using mobile request another delivery attempt through the courier’s devices accounted for 20.8 percent of e-commerce sales website. Instead, he was obliged to call a number in 2013, the ratio is expected to expand to 46.6 percent by 2018. Asia is the center of this growth. In 2015, The Economist which connected him to an automated answering Corporate Network (ECN) published a report—Asia’s Digital system. He had to wait two days for redelivery. Disruption: How technology is driving consumer engagement in the world’s most exciting markets—in which it identifies three digital trends in Asia. First, the number of mobile phone There are two takeaways from this anecdote. First, it is subscriptions—increasingly meaning smartphone usage—has becoming increasingly easy to purchase goods from all parts of been rising fast. By 2019, the ECN estimates Asia will have the world through the Internet. Second, despite its rapid growth 4.3 billion mobile subscriptions, or 117 for every 100 people, and penetration, e-commerce around the world continues to meaning more people in Asia will have access to the Internet in provide different customers with differing experiences. the palm of their hands. While such mobile devices as smartphones and tablets In 2010, for example, there was just one smartphone in India are making purchasing more convenient for consumers, for every 100 people. Fast forward to 2015, and the number m-commerce and related technologies are presenting was 19 for every 100 people. Every three seconds, three more vendors with a number of challenges—and opportunities. people in India experience the Internet for the first time and, This is the result of the market being accessible almost by 2030, 1 billion people in the country will have access to anywhere and anytime. the Internet. M-COMMERCE: Back to basics How online vendors can learn from brick-and-mortar stores

By Dr. Florian Kohlbacher and Rehabya Wijaya

18 THE JOURNAL n NOVEMBER 2016 FINANCE

The second digital trend concerns social media. The E-commerce as % of total retail sales ease of going online has manifested itself very strongly in terms of the use of social media, especially in Southeast in 2013, and forecast for 2018 Asia, where about 80 percent of Internet users access social media sites. This has led to advertising and China marketing through social media, and many businesses in the region exploiting the popularity of social media South Korea for targeted advertising. However, since social media penetration as a percentage of the total population WORLD remains relatively low despite the large number of users, there is still massive room for growth. The third trend concerns the growth of e-commerce, Japan which is growing faster in Asia than anywhere else. In 2013, China overtook the United States as the world’s Australia largest e-commerce market. The share of e-commerce as a percentage of total retail sales in many Asian countries is expected to double Singapore between 2013 and 2018. In China, about 13 percent of total consumer retail sales now are online, with more Thailand than half on mobile devices. So what about Japan? In 2013, e-commerce accounted Malaysia for about 4 percent of all retail sales—a higher share than in many countries, including Australia, Singapore, and Indonesia. Moreover, about half the sales involved Indonesia 2013 mobile devices. 2018 Interestingly, despite its high Internet penetration India rate of 91%, Japan has relatively low social media usage; only slightly more than 60 percent of online consumers 0 2 4 6 8 10 12 14 16 18 using social media. This contrasts with the 90 percent- Sources: Euromonitor International, eMarketer, Economist Intelligence Unit. plus social media usage rate in countries with much less Internet penetration, such as Indonesia, In 2013, China overtook the Thailand, and the Philippines. United States as the world’s Marketplace website operated by largest e-commerce market. the Alibaba Group—is north of MOBILE COMMERCE 70,000, according to AliResearch. EXPERIENCE One of the main reasons The rapid growth and deepening penetration of Japan and the United States do not have e-commerce e-commerce and m-commerce has made it easier for villages is that their transportation and communication people to browse, compare, and purchase goods and infrastructure, as well as the courier services, are far more services anytime, (almost) anywhere. But e-commerce advanced than those in China. and m-commerce customer experiences vary widely. In the case of Japan, that is reflected in the country’s Recall the earlier anecdote. In highly-connected Tokyo, e-commerce and m-commerce. According to a study our mutual acquaintance was able to buy shoes online published by Kurt Salmon in 2016, only about 25 percent from the comfort of his apartment. For residents of of brands provide a buy-online pick-up in store (BOPIS) China’s e-commerce villages, however, online shopping service. This is a low number, compared with 54 percent for means going to a physical store to browse and order the UK and 51 percent for the US. goods using communal computers or mobile devices There are two ways to interpret this comparison. First, shared by the community specifically for online shopping. we can conclude that Japan is behind in terms of delivery Imagine a store without any items in stock, just a counter options, compared with the UK and the US. To us, more where one can place orders online. convincing is the second interpretation: Japan does not Urban dwellers in high-income nations may find this have a great need for BOPIS because its courier services sounds counterintuitive, but the fact that rural China are reliable. has been able to adopt and catch up with e-commerce Delivery in Japan is fast. The average total delivery lead is impressive. How many villages or small towns in time is 3.6 days, and continues to improve. By comparison, rural Japan or the United States have such an innovative the average in the UK is 5.6 days and in the US 5.7 days. approach to e-commerce? We believe it is closer to Moreover, courier companies in Japan offer very flexible zero than in rural China where, as of 2014, the number delivery time options. Rescheduling of missed deliveries of so-called taobao villages—with clusters of online can also be easily arranged (unlike with the global courier entrepreneurs who have opened shops on the Taobao service the UK shoe vendor used).

THE JOURNAL n NOVEMBER 2016 19 TOKYO SHINTORA MATSURI

Development of the Shimbashi/ Toranomon area is growing ever more rapidly, and it is a new international urban centre. The TOKYO SHINTORA MATSURI will be the first major event to TOHOKU ROKKON utilize the space created with the opening FESTIVAL PARADE of Shintora Avenue between Tokyo’s An 80-minute parade Shimbashi and Toranomon. symbolizing the With the themes of “Tohoku x Tokyo” renaissance of the Tohoku and “Tradition x Innovation”, the TOKYO region through cultural entertainment from Aomori, SHINTORA MATSURI is a declaration of Akita, Morioka, Yamagata, the attractions of Japanese culture and Sendai and Fukushima. the recovery of the Tohoku region from the Great East Japan Earthquake. FREE Tickets to The Journal readers! These themes will be introduced through 50 parades, food, traditional arts, festival To apply, send your full name, postal PR PARTNER Sunday, 20 ornaments, gaming, anime and music address and requested number of tickets from Tokyo and Tohoku. to: [email protected] November, 2016 For more details visit www.shintora.tokyo Parade starts 10:15am FINANCE

But while Japanese courier services are advanced, not understand how different customers may prefer different every vendor in Japan makes full use of them. Global and methods of engagement, and the possibility of using luxury brands in Japan lag behind local brands in terms of metadata to understand individual customer behavior delivery time options. According to the Kurt Salmon study, and preferences. while all local Japanese brands and online department He also mentioned the need to address barriers stores offer delivery flexibility, only 50 percent of luxury that often stop people from completing their online brands and 57.1 percent of global brands in Japan offer purchases, such as the need either to install an app before such flexibility. a purchase can be made, or to sign up to the website That said, e-customers and m-customers in Japan are before or during checkout. A possible solution is offering lucky compared with their counterparts abroad. Separate m-customers the chance to sign up or install an app after Kurt Salmon studies found that no vendors in the UK, the they complete their purchase. US, Germany, or France offer delivery flexibility. At the center of all this is the need to understand what Yet Japanese vendors lag behind vendors in the UK and the customer wants, in terms of products or services, Germany in terms of their adoption of mobile apps. The as well as ways in which they are delivered, and the same Kurt Salmon study found that only 22 percent of methods vendors use to engage with them. Given the Japanese brands have mobile apps, while 73 percent in the rapid turnover of new technologies, the biggest challenge UK and 49 percent in Germany do. However, Japanese facing many businesses is keeping up. This requires that brands lead in having websites that are responsive to mobile businesses have the right people with the right skills. devices, with 92 percent, compared with 87 percent and In Japan’s case, according to Prof. Alfred Taudes of 86 percent, respectively, in the UK and Germany. Vienna University of Economics and Business, one of the main issues is that many CEOs are not up to date IMPLICATIONS FOR BUSINESS with the latest IT and related technologies. He believes What does all this mean for businesses considering that today, all employees of businesses engaged in m-commerce in Japan? Harry Hill, CEO of Nagoya-based e-commerce and m-commerce need to have the skills to Oak Lawn Marketing, believes that m-commerce is more tackle IT issues. IT is no longer just for the guys in the than just about sales. Increasingly, mobile devices are IT department. being used to research or inquire about products. The need to understand customers and improve The question is, then, how do m-commerce vendors customer experience is not a new concept. It has long improve their conversion rates, making sure more people been recognized by brick-and-mortar vendors. Through who browse their products actually buy them? the use of the Internet and other communication Faced with an abundance of competition and rapidly technologies, e-commerce has made shopping more advancing technology, vendors are realizing that, whatever convenient and accessible to many people. Yet, this has competitive advantage they may have at any given time, come at a cost. As the customer has become distant and it will hold for increasingly shorter periods of time. abstract, the shopping and selling experience has become They have thus begun to invest less in new product less personal. development and more in improving user experience. But with the advent of m-commerce and the associated Increasingly, m-commerce vendors’ mobile apps are new technologies, a more personal online shopping being used for customer engagement, rather than for the experience is possible. M-commerce vendors will have to purchase or sale of their products. do what physical vendors do: get close to the customer But vendors can improve their customer engagement and put themselves in the customer’s shoes, albeit in a by using new technologies. Hill spoke of the need to digital setting. n

smartphone , units 2108 m-commerce 1,089 buyers

According to Euromonitor, e-commerce eMarketer, and Goldman Sachs .6% sales Research, global mobile 46 commerce will continue to rise steadily through 2018.

THE JOURNAL n NOVEMBER 2016 21 Dyer Straits Text and Photos by Kit Pancoast Nagamura

Back when Tokyo was known as Edo (1603–1868), the capital’s main konya-cho (dyer’s town) was located in Kanda, near an aqueduct. This made it convenient for the process called mizumoto, the unfurling of lengths of cloth to rinse clean in the natural downstream flow. However, as the city expanded, the dyers’ water source grew increasingly sullied. Artisans began to modern sensibilities to inexpensive and virtually disposable clothing, Kobayashi eye the pristine rushing rapids upstream, at Ochia, an area at the understands that the survival skills of confluence of the Kanda and Myoshoji Rivers. Between the Meiji traditional dyers cannot but be sorely tested. He also believes, however, that and Taisho periods (1868–1926), some 300 to 400 dyers hung showing people the techniques used in their shingles out in Ochia, creating a new dyer’s center. traditional Edo era dyeing processes would give them a deeper appreciation of the art. Standing outside Futaba-en’s windows, anyone strolling by can watch Today, few of these operations remain, a stack of ancient paperbacks. The dye artisans Kengo Shibuya or Hanako and the rivers are no longer used for atelier’s chic minimalistic concrete Inoue applying dyes to 13-meter rinsing. But one dye works, Some-no-Sato facilities, instructional display screens, lengths of kimono fabric stretched and Futaba-en (Dye town Futaba), is uniquely and floor-to-ceiling windows that suspended from one end of the studio progressive and prospering. allow passersby to observe the dyeing to the other like cirrus radiatus clouds. Today, in Shinjuku Ward, the process from outside, all resemble Producing both Edo Komon (a highly Myoshoji River still churns through more a modern art museum than a detailed resist-dyeing technique using what is now called Shimo-ochia. The production shop. handmade stencils developed during the waterway rushes past humble homes The somewhat camera-shy Motofumi Edo period) and Sarasa (a Japanese form clinging to the river embankment, slicing Kobayashi, who represents his family’s of pattern dying evolved from Indian through the soporific atmosphere of the fourth generation of dyers, and is the and Javanese techniques), the artisans neighborhood. In this setting, coming representative director of Futaba-en, pass deer-hair brushes laden with dye across Some-no-Sato Futaba-en is not intentionally designed his atelier in a mesmerizing rhythm over the unlike finding an iPad peeking out from this way. Noting the gradual shift in fabric. Next, they painstakingly examine

22 THE JOURNAL n NOVEMBER 2016 REVISION JAPAN REVISION

HAIKU

rinsing kimonos— ocre and yellow leaves in the river’s fabric

every centimeter of the work with remote areas of Japan—it wouldn’t do more than 15,000 people attended, and tweezers, picking out stray brush hairs for customers to discover they could the entire town got involved; in 2017, that might mar the work’s perfection. come to us directly, just 10 minute’s Kobayashi anticipates even larger crowds Recounting Futaba-en’s 96 years of drive from Shinjuku, and get goods for at the February 24–26 event. history, Kobayashi reveals one of the reduced prices,” he explains, “so, our Between setting up festivals, managing secrets behind his company’s longevity. existence was sort of kept under wraps. sales, and holding exhibitions in Europe, His great-grandfather, Shigeo Kobayashi, Now, I’ve decided Kobayashi also learned all he could about both Edo that we need people Showing people sponsors events dying techniques and corporate business to know we’re here.” where the locals management. In 1920, when building his To entice visitors, the techniques . . . learn to concoct first production plant along the Myoshoji Kobayashi has set give them a deeper natural dyes from River, Shigeo split responsibilities with up an attractive gift recycled onion a partner, and set up Futaba-en. The shop with unusual appreciation of the art. skins, or bitter company’s crest—of two interconnected fabric goods—hair persimmons. arrows—reflects the respect the two men clips with fabric encased in acrylic, “You know, I heard that Ochia used to had for each other’s strengths. Today, phone straps shaped like mini kimonos, have a thriving persimmon-growing Kobayashi spearheads the business end pillow covers, etc. Futaba-en also offers business,” Kobayashi says with a gleam of Futaba-en, “but I could get nowhere classes in various dyeing techniques. in his eye, “and looking around, I found without the artisans who craft our wares,” But most significantly, Kobayashi that, sure enough, there are many very he says, “They are essential.” intends to revive Ochia’s pride in its old persimmon trees everywhere here.” Kobayashi also attributes Futaba-en’s colorful history. Kobayashi’s plan for the future includes prosperity, at least in part, to cutting out In 2009, he was instrumental in having nearly every private balcony or the middleman in sales. “For a long time, organizing an annual three-day festival roof in Ochia growing indigo plants for department stores handled our goods, in the district, the Some no Komichi dyeing projects. Ambitious? Yes, but the and because we are local—not dyers from (Small streets of dyers). Last year, man is dye-hard. n

THE JOURNAL n NOVEMBER 2016 23 Breaking the Mold

By John Amari Mio Yamamoto leads social entrepreneurship in Japan

When the Great East Japan Earthquake and Tsunami struck the “I saw that they had a lot of skills challenges at the orphanage—they Tohoku region in March 2011, Mio Yamamoto was relaxing at her lacked the staff to provide proper home in New Jersey. As the scale of the disaster unfolded, Yamamoto care for the kids, many of whom had psychological problems.” was shocked to her core. When Yamamoto suggested that more expert professionals should be “I was in New Jersey when the disaster friends could help, she imagined, was hired to provide the necessary care, happened. We all sat there and watched to provide capacity building support— she met with a heartbreaking—but the news streaming all these awful such as management skills and financial thought-provoking—response: the images,” she tells The Journal. resources—for people on the ground. orphanage did not have the funds. The next day, Yamamoto went to a “That’s where we thought we could “The director told me that they nearby shopping mall, where she saw play a part.” did not have the money to hire more banners with the words “Save Japan” In the summer of 2011, Yamamoto and staff, which made me wonder about inscribed on them. There, countless two co-founders created Word In Tohoku my own limited skills and what I volunteers manned donation boxes and (WIT), a not-for-profit organization could offer in such a situation. So collected funds to help those affected. that works in disaster-affected areas of I decided to go to business school, “There was a lot of support coming the Tohoku region. Yamamoto is the which would give me the skills from around the world, and I was really managing director at the NPO, originally needed to help social ventures such grateful for that,” Yamamoto recalls. called World In Asia. as this one.” In the immediate aftermath of the Through WIT, she, her colleagues, Following graduation, and disaster, she came to realize that the and their supporters have helped over wanting to increase her knowledge people in affected areas would need a a dozen social ventures with their of business, Yamamoto followed great deal more support—especially capacity building, market expansion, a career in the private sector, at a when the initial influx of aid and and sustainability needs. chemicals company in Japan. When volunteers began to draw down. the opportunity arose for her to With a background in business SOCIAL IMPACT relocate to the United States, she and social impact entrepreneurship, Yamamoto and her co-founders have a did so, going to the Massachusetts Yamamoto wondered how she could use long history in social entrepreneurship. Institute of Technology (MIT), where her skills to help those in need. “Some “I was involved in a social impact venture she graduated with a masters degree of my friends and I realized that, after fund in Tokyo, and my co-founders were in business administration. the initial passion to help and funding involved in a similar organization in Today, Yamamoto relies on her to support victims slowed down, there Thailand and as academics,” she says. experiences in Japan and the United would be a need to aid the communities A graduate of international relations States, where she lives most of the in a sustainable way.” from the University of Tokyo, Yamamoto year, to recruit supporters for WIT. Many people in affected areas, did an internship at a Malaysian orphanage Her connections in both countries for instance, may not necessarily in 2003, while still a student. There allow her to recruit human resources have the skills required to maintain she taught English and math, gaining and raise funds to support the NPO their activities. One way she and her experience that proved instructional. and its beneficiaries.

24 THE JOURNAL n NOVEMBER 2016 ENTREPRENEUR 25 n NOVEMBER 2016

THE JOURNAL “Focus on your strengths,” she she strengths,” your on “Focus Diversity has also has been a hallmark Diversity still was the in time she at Since in society, value create to want you “If a good social for makes what And “What is unique about WIT is that our our that WIT is about unique is “What the through instance, for So, the days, three over held Typically passion with one’s career path is vital, is path career one’s with passion sometimes you more, is What she says. fan. own be to your have perfect, from I far I’m “While says. weaknesses and my look at to tend is it them. But then try improve to them all, eliminate to impossible so I focus onat.” what I’m good of such retreats, with men and women women and men with retreats, such of taking part.aged 20–70 WISE WORDS a social-impact not NPO has Creating however. challenges, its been without instance, for year, second WIT’s In faced becoming was with Yamamoto the incumbent director, executive its remain to been unable having suddenly health reasons. in the post for ability her MIT, school at graduate was output time and her manage to said, That point. breaking to stretched a number are believes there Yamamoto starting a to socialventure. of benefits in a challenging do that to wish and then entrepreneurship— environment, call social to it or want whether you go.” to a good way not—is Aligning one’s entrepreneur? impact maintains most of its operations through through operations its of most maintains scheme. a membership the from recruited are members—who fee annual an community—pay business matched then are They beto volunteers. in disaster- social with up entrepreneurs bring their Members areas. affected act skills as bearexperience and to and each for advisers or coaches, mentors, explains. Yamamoto venture,” Learning Cross-border organization’s program—involving Journey the United and Japan from entrepreneurs in Tohoku— a retreat at meeting States that ventures to introduced are members support. their benefit from may participants—such allows program social of directors entrepreneurs, as business planners, urban foundations, and journalists, lawyers, people, and the vision assess designers—to Participants venture. each of strategy strategy. then devise a support business model. Today, the NPO the NPO Today, model. business “Like many other NPOs, we initially we NPOs, other many “Like ran stream income when that But “After attending one of our sessions, one our sessions, of one attending “After try figure to “We says: Yamamoto As Another startup—called the Kizuna startup—called Another One WIT beneficiaryOne an enterprise is BUSINESS MODEL BUSINESS still is WIT itself that admits Yamamoto founding, its Since a startup. of something new find ways to had has the organization beto sustainable. had that funds relief disaster on relied of in the aftermath been available made says. Yamamoto the disaster,” new a find and pivot to WIT had dry, around the world. around decided to States the United from member the Japanese to this socialconnect venture the York—where in New community service post- and will in the pre- be tested there.” market natal grow. those enterprises help to ways out we that all means connections the This practical to advice leading are created have and both in Japan results, concrete and similar challenges.” facing places other an ambition that has received a boost received has that an ambition WIT mentors. from a knowledge- created Project—has Mail post- and service pre- sharing targeting bridges the company The mothers. natal exists sometimes that gap information up-to-date providing by in childrearing emails and via messages text information expecting those thoseto and who are mothers. become recently who have in Japan, a foothold established Having new markets to looking is the company access to new markets, and a pathway a pathway and new markets, to access to sustainability. the traditional revitalize to aims that Although of lacquerware. craft Japanese the Prefecture, based in Fukushima the US market, enter to wants company Over a dozen enterprises that provide provide that Over enterprises a dozen “Good mentors have the ability to the ability have mentors “Good “WIT’s community of mentors mentors of community “WIT’s Mentors, meanwhile, benefit from such benefit from meanwhile, Mentors, Access to such expertise such to allows Access “Mentors are really important for social for important really are “Mentors POWER OF MENTORING The result? Accelerated development, development, Accelerated result? The services such as housing, education, elderly elderly services education, housing, as such women, support to assistance and care, in this way. backing received have governance, market entry, and business-to- and entry, market governance, matchmaking. business based volunteers, have provided support support provided have based volunteers, training, leadership building, team for corporate development, business-model support,” Yamamoto explains. Yamamoto support,” CHANGE DELIVERING skills- who are members, WIT’s date, To listen to someone, understand their understand someone, to listen a different from insights needs, provide effective the most provide perspective, and points out. But, one may ask, what makes what ask, may one But, out. points mentor? effective an and social entrepreneurs has become socialand entrepreneurs Yamamoto family,” a big like something partnerships. In affected areas, theymeet areas, affected In partnerships. they whom of many people, with work and otherwise not meet, broadening would networks. their skills and to tap into a mentor’s business networks networks business a mentor’s into tap to resources. and ventures to broaden their perspectives, broaden to ventures skills, Yamamoto base, and knowledge also a social allows entrepreneur It adds. not necessarily have all the skills needed have to necessarily not it successful.” make entrepreneurs, many of whom started their whom of many entrepreneurs, do but passion, pure of out organization matchmaking, capacity building, and and building, matchmaking, capacity important is latter The mentoring. that gaps knowledge bridging for face. inexperienced entrepreneurs WIT’s work involves three main pillars: pillars: main three involves work WIT’s KOIKE’S PHOTO: ASAHARA KEIICHIRO PARTNER CONTENTPARTNER COMMITMENT Tokyo’s new governor promises openness

By Takanobu Iwamura Yuriko Koike, Tokyo’s first female governor.

A little more than two months after taking office as Tokyo’s first-ever female governor, Yuriko Koike is pushing ahead with reforms to the metropolitan government at breakneck speed.

Her two immediate predecessors YURIKO OF ARC being burned at the stake, and make both resigned in disgrace over misuse Tokyo is considering a major review of the government more open and of public funds before their four-year plans for the Tokyo 2020 Olympic and transparent to citizens.” So far, Koike terms ended. A string of financial Paralympic Games, including canceling has made good on her vow, following scandals has left voters in the capital the construction of three venues and her landslide victory. cynical, but they have found new hope using existing facilities instead. Koike Although Koike enjoys wide in Koike’s vow to “make major reforms is keen to slash the cost of hosting the support from residents, questions in Tokyo.” games, which may reach ¥3 trillion, and remain over how she will manage The new governor has shown no ease the burden on taxpayers. her thorny relationship with the qualms about putting large projects on When the Tokyo gubernatorial metropolitan assembly, given that she hold, if they were decided opaquely. election was held in July, Koike vacated used it as a foil during the campaign. She doesn’t seem interested in Japan’s her lower house seat in the Diet, Japan’s Because Koike lacks a solid support traditional approach to consensus- parliament, and ran as an independent base in the assembly, it is unclear building. But it is Koike’s direct without the backing of the Liberal whether she will be able to work with political style that helps explain her Democratic Party’s Tokyo chapter, members to push through her agenda. popularity. to which she belonged. “It is as if I’ve In the near future, Koike plans to To take one example, the Tokyo already jumped off the cliff,” she said. launch a private academy called Kibo- government had planned to relocate “In every way, I’m resolved to run.” no-jyuku (“classroom of hope”) to teach the capital’s aging fish market at Tsukiji Koike graduated from Cairo University the political arts to future leaders. Some to the Toyosu district about 4 km to the and speaks fluent English and Arabic. LDP lawmakers have expressed worry southeast. Moving the 81-year-old fish After working as a TV news anchor, she that with an assembly election slated for market, one of the largest of its kind in entered politics in 1992, winning a seat next summer, the academy may become the world, is a massive undertaking that in the upper house of Japan’s parliament. a political party, depending on trends in is expected to cost around ¥580 billion She later served as environment minister public opinion. ($5.62 billion). and defense minister, and is well-versed Koike’s term as governor will end in But at the end of August, roughly two in security issues. In recent years, 2020, just before the Tokyo Olympics months before the market’s scheduled however, Koike has not held ministerial open. Will she run for a second term, relocation in November, Koike or key party posts. Her decision to run taking the opportunity to bask in announced a delay, citing lingering for Tokyo governor hints at a desire to Olympic glory, or seek a return to the concerns over soil contamination return to the political spotlight. Diet and perhaps a shot at becoming at the Toyosu site. That upset During the campaign, Koike Japan’s first female Prime Minister? wholesalers at Tsukiji and members cast herself as a heroine locked in How she performs over the next four of the Tokyo Metropolitan Assembly. a “one-person struggle” against a years could determine her fate. n When word got out that the previous group of bullies. On the final day of administration had not fully carried campaigning she compared herself © 2016 Nikkei Inc. out its pledge to remove and replace to Joan of Arc, saying, “I’m ready Nikkei Asian Review is published the contaminated soil, Koike’s bold to go into the Tokyo Metropolitan by Nikkei Inc. All rights reserved. decision earned widespread praise. Government office without fear of

26 THE JOURNAL n NOVEMBER 2016 J-MEDIA

Diet Dailies Japan policy updates translated from Keizaikai magazine PHOTO: HALFRAIN [CC BY-SA 2.0] VIA FLICKR VIA 2.0] BY-SA [CC HALFRAIN PHOTO: is easy to use in a variety of ways, abandoned. To help curb disasters and and requires less thermal energy in crime, as well as avoid eyesores that production than does concrete.” downgrade neighborhoods, the scheme The EU’s strong opposition to dropping is aimed at putting properties back tariffs reflects its position as a producer on the market and promoting their of such world-famous bicycle brands as utilization by the private sector. Italy’s Bianchi and Germany’s Canyon. In Property owners will be encouraged 2011, the EU accused China of dumping to donate empty residences to local bicycles and countered with an import governments or other bodies. An duty of 48.5% for a five-year period, official in charge remarked, “We have and other measures. In fact, 22 of the already studied similar systems, set up 28 EU member nations are opposed to by Nagasaki City and Okutama Town elimination of the tariffs. [in western Tokyo].” The previous round of EGA Until now, those in the market for a negotiations, which began in 2014, vacant property have had to obtain data dropped tariffs on 54 items in the APEC from local governments on a piecemeal region in 2012. The agreement is in the basis, since there has been no property process of expanding to incorporate bank to put potential buyers in touch other items. They currently include with property owners. electric generators powered by sources Currently Japan is estimated to have MINISTRY OF ECONOMY, including biomass boilers, heavy-duty some 8.2 million vacant residences, a TRADE AND INDUSTRY gas turbine generators, wind generators 1.8-fold increase over the past 20 years. and their components, solar panels, and The 3.18 million properties that are CHINA PROPOSES environment measurement instruments. being rented out or on the market CLASSIFYING BICYCLES AS Considering the basis according to aside, the ministry plans to reduce “ENVIRONMENTAL PRODUCTS” which such products are assessed, the EU the number of vacant residences to believes that, “recognizing bicycles as an 4 million by fiscal 2025. The World Trade Organization has been environmental product would represent a Halting increases in vacancies, trying to reach a general consensus on an strained interpretation.” however, will not be easy. While the Environmental Goods Agreement (EGA), rate of home ownership among the according to which solar panels and other postwar baby boomer generation MINISTRY OF LAND, environment-related products will be is about 80 percent, the figure for INFRASTRUCTURE, TRANSPORT accorded tariff-free status. the dankai junior (children of the AND TOURISM (MLIT) China came up with the surprising baby boomers) generation is about proposal, advocating that bicycles be 60 percent. EXPANDED DISTRIBUTION included in the list of tariff-free items. Recently, there have been instances DATABASE TO DISCOURAGE Japan’s domestic market faces a saturation of second-generation family members RISE IN VACANT RESIDENCES crisis, and various countries have reacted living in urban areas having neglected negatively to the proposal, which is or abandoned homes they have viewed as a coercive stance reflecting The Ministry of Land, Infrastructure, inherited in rural areas, due to their China’s desire to expand exports. Transport and Tourism had decided to inability to shoulder related costs. Beijing’s position is that bicycles “are develop a database that will enable lateral To deal with the problem, the a form of transportation that does not exchanges of information on properties ministry’s plan is to encourage produce exhaust gases, nor do bicycles to be registered in a vacant-residence donation of properties to local consume energy. Ergo, they should be bank, containing information on empty governments. The ministry expects treated as environmental products.” homes and vacant lots. The system is that setting up the proposed new China has also proposed that its expected to cover some 70 percent of the system to expand commercialization bamboo products (such as flooring nation’s municipalities. in the marketplace will make it panels) be designated environmental A growing number of houses and easier for local governments to products, since “bamboo grows quickly, apartments are being left unattended or accept properties.” n

THE JOURNAL n NOVEMBER 2016 27

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rant Thornton cooperates with, IT external funds for the employees’ Gand provides extensive and Traditionally, large Japanese companies retirement benefits by themselves distinguished services to, US companies have developed computer software for or with other companies in the same pursuing merger and acquisition (M&A) internal use from scratch while small industry. For this kind of fund, as well as transactions with Japanese companies and middle-sized companies have all retirement benefit plans, prospect or who are starting up in Japan. Here used external software packages made obligations arising from future payments are some insights from our experience in Japan. This externally produced to employees—or contributions to the that may help you: software is normally used with limited funds—must be booked on balance customization, if any. Recently, large and sheets even under Japanese GAAP. MANAGEMENT STYLE middle-sized companies have begun However, Japanese GAAP provides a Recently, public Japanese companies implementing branded enterprise simplified accounting method for such have been appointing external resource planning (ERP) packages, obligations for small companies with intellectuals as board members. but small companies still use the local less than 300 employees. Japanese However, the number of outside board packages, which are generally reputable M&A practice normally considers members is still limited because there and reliable. For security, many Japanese that companies with fewer than are circumstances in which internally companies obtained ISO 27001 300 employees possibly undervalue promoted directors who operate the certification, sometimes for development liabilities on their balance sheets, and companies—similar to officers in the of internal control system required for treats the difference as a typical debt- US—keep their seats on the board. compliance with J-SOX—Japan’s version like item. Generally, the boards of public US of the US Sarbanes-Oxley Act. Protection companies are meant to be kept more of personal information is also attracting FINANCE independent from management teams significant attention from Japanese The relationship with banking compared with Japanese companies, companies due to public awareness corporations is sometimes different in which are typically controlled by rather than regulation. Japan than in the US. These companies operating directors. In addition, internal are required to make many efforts to decisions are basically well supported by ACCOUNTING enter into new loan agreements with staff, therefore advanced negotiations Japanese generally accepted accounting Japanese banking corporations, even if with the staff of Japanese targets make principles (GAAP) have recently they have existing accounts. Therefore, projects go swiftly. converged with international standards, Japanese companies intend to keep however there are still differences. certain loan balances by renewing LEGAL PROTECTION Except for a famous rule of goodwill existing loan agreements, even if a Although some Japanese manufacturers amortization, an accounting method for company has sufficient cash to no were investigated by US officials— employees’ retirement benefits is unique longer need loans. Fully repaying loan resulting in anti-trust measures gaining and warrants attention. Employees balances can make it difficult to borrow popularity in Japan—US companies who work for Japanese companies funds for future cash needs. And, when have worked within these regulations generally join plans with defined benefits loaning, Japanese banking corporations longer than Japanese companies. When rather than defined contributions, as is do not require borrowers to assign it comes to anti-corruption measures, common in the United States, on the independent auditors for financial Japanese companies generally have condition that they will be continuously statements. But they certainly do require insufficient knowledge of the regulations. employed until a certain age of pledging sufficient value of collateral for Accordingly, due diligence should be retirement, typically 55–65. In addition, loans, except in the cases of substantial carefully considered, if needed. most Japanese companies establish blue-chip companies. n

Toru Shirai is a senior manager at the Tokyo office of Grant Thornton Japan, where he provides assurance services to multinational companies. When he was seconded to Grant Thornton’s Chicago office for three years (2012–2015), he also supported cross-border business expansion. Shirai has 15 years of experience in public accounting and specializes in ICT and manufacturing.

For more information, please contact your Grant Thornton representative www.grantthornton.jp/en at +81 (0)3 5770 8829 or email us at [email protected] THE ENTENTE_EDIT.pdf 1 10/25/16 2:57 PM

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[email protected] or email n originalstitch.com “Original Stitch lets you order online after browsing Nervous about ordering online? Farrell says peace of mind Many others agree. Sales have grown 30 percent month Setting up your own company is not for the faint of heart, His next aim, he says, is to “create a zero-waste, Simon Farrell, publisher at award-winning Tokyo-based fun to order, and you have a winning combination,” he says. dozens of fabrics, patterns, colors, buttons, collars, sleeves, pockets, and pleats at your own pace.” is paramount: free “As services, you even get to change your design within a limited post-order period, or have it redone if the fit isn’t perfect upon delivery.” over month, while third-quarter sales were in 2016 up 410 percent compared with the same period a year earlier. Jin agrees—he spent the nights during the first two weeks operationsof sleeping the factory on floor—but the results have been worth it. sustainable ecosystem for the production of apparel goods, and a business model to capture profits at an Internet scale.” And, of course, to make men look extremely stylish. finding long enough sleeves. However, the automatic general automatic the However, sleeves. enough long finding length calculator for the sleeves worked perfectly for me.” creative agency Custom Media, has two Original Stitch shirts—oneHawaii-style—and one office and the for is he delighted with both. Farrell, 56, says that for many tall, large, or otherwise non-standard-sized expats in Japan, it’s a challenge to find quality clothes for work or leisure that look good, feel comfortable, fit properly, and are good value. they“Add that are custom-made,guaranteed and actually For more, visit Perfect fit and personalized designs, quickly Perfect personalized fit and ORIGINAL STITCH

he way that people purchase shirts has remained virtually unchanged for 100 years. Jin In 2015, Koh realized the Leon Houwelingen, CEO at Tokyo-based 37, premium And customers have been impressed with the service, “We can acquire a customer at one-tenth the cost and Customers start by ordering all the unique components “We develop software that is based in data science, computer “Our software is better at selling than your salesperson,” Today, 90 percentToday, of his staff are engineers, and every one “I saw“I an opportunity to use software to innovate new The problem for traditional shirt makers has been a lack of His solution was Original Stitch, and just months 18 later high quality and feels smooth and comfortable against my skin. At more than 2 meters tall, my biggest problem is food importer Daabon Organic, saidservice,delivery, that packaging, and product were excellent. “The fabric is very while retailers can take as many as 30 days. detail. attention to product,the the and Original Stitch website. The shirt is then handcrafted in Japan and delivered quite remarkably within seven days. Other online shirt makers take double the time to deliver, “Imagine what we can do to this industry in the next decade.” custom-made their of shirt—including numerous size requirements, colors, materials, and cut—through the 10 times the speed that traditional companies can—and that is just with a team people of 18 he emphasized. in one year,” preferences than your own stylist. Our sizing technology is more accurate than your tailor. Our distribution reaches further than all your retail stores combined. players,” said Jin.players,” he said. “Our bots are better atunderstanding your style and sales or tailoring one. tailoring or sales outperformto traditional artificialintelligence and vision, who is originally from Malaysia. He has lived in San Francisco— where he set up the company in 2015—since he was 15. of his employees hasa technical background, as opposed to a technical insight combined with little ability to develop new business models to capitalize on new opportunities, said Jin, purchasing behavior in consumers, and to disrupt the underlying business model,” says 35-year-old Jin. that reflect the men that wear them. Each month, Original Stitch sells more than 3,500 custom-made shirts through its website—more than Nordstrom, Macy’s, or Isetan. time was ripe to inject technology into the equation. the company has earned a reputation for delivering shirts T more than almost half % base a company’s credibility 54of Japanese care on its web design most about visual impression most when making a purchase Businesses that are committed to good design add long-term value to their products. % % 84believe good design of60 Japan-based companies contributes to sales implement design- thinking strategies

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n sales, storytelling is our ability to express they are being told, the salesperson’s level of Iourselves in a way that is engaging and persuasive. communication skill really becomes apparent. We capture the attention of the buyer because we The balance between speaking to add light have taken the client to a world unexpected. This and employing silence to gauge reaction is a might be because the real essence of their problem critical facility. has just been revealed to them. The salesperson who When a salesperson hits resistance, there can marshal the discussion to elucidate the hidden is a natural tendency to want to pour it on to insights for the client is the storyteller par excellence. overwhelm the client and their objection with The content of the story can also be a description a thunderstorm of data, facts, and statistics. of a better place than where the client finds They want to dominate the discussion through themselves today. This discussion shows the sheer force of personality. This is never going path forward for the client to realize their goals. to fly. “A person convinced against their will is To understand this better place requires the of the same opinion still” is an old saw that we salesperson to set up a dialogue, where the salespeople forget at our peril. questions asked elicit a story from the client about Our way of telling the story makes a huge what success would look like. Examples of cases difference. We need to be matching the personality in which this solution has worked before must be of the person we are talking to, including their energy brought to life if the storytelling is to have impact. level, pacing, the degree of detail they require. The ability to vividly describe this better place All of this must go into the mix of telling the story. is what separates the average salesperson from If they are a very detail-oriented person, then we the master. need to get with the program. If they are action- The delivery of this story is not just constant orientated, we must become the same. We like to babbling, but rather a narrative that is punctuated do business with people we like and we like people by periods of silence. The client is given the chance who are on our wavelength. to talk without having their sentences finished for In sales we need to foster the ability to be on as them, or interrupted by a segue, observation, joke, many wavelengths as possible. Our clients will be or distraction. Often, salespeople are loquacious of various styles so we need to move graciously and ill-disciplined. They are in love with the beauty between each, without losing our core beliefs in of their words. Counterintuitively, being a skilled what we are doing. The telling of stories draws storyteller also requires the salesperson’s patience out the situational truths needed to understand as they encourage the client to tell their own story. the correct and best solution for the client. It also The words chosen are important. The majority means the capacity to package our solution in a of the conversation should consist of the client way that it is highly appealing to our buyer. This speaking, thus the quota of words allowed for the storytelling skill separates the professional from the master salesperson are limited. They only use clear dilettante. By the way, nobody wants to buy from an and concise constructs because they know they amateur, so let’s become more professional and tell need to give up the floor to the client as much as our story well for the client. possible. Short sentences of inquiry, which draw Engaged employees are self-motivated. The out rich information, are the golden path to sales self-motivated are inspired. 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M E ™ CONTENTS VOL. 53, ISSUE 11

39 FROM THE BOARD Perfect for Pittsburgh The many benefits of TPP Eric Sedlak

40 EVENTS ACCJ in pictures

41 ACCJ 2016 CHARITY BALL That’s Entertainment! What’s in store for the evening Barbara Hancock, Lori Hewlett, and Kevin Naylor

ACCJ EVENT 2 42 Town Hall Get more involved in the ACCJ C Bryan Jones

43 REGION UPDATE Chubu Women in Business Summit Erin Sakakibara

45 ACCJ EVENT On Message Hiroshi Nakaso on the Bank of Japan’s current thinking Richard Smart

47 ACCJ EVENT How Far Is Too Far

3 Tackling the rising tide of financial regulations Maxine Cheyney

1 Sachin N. Shah, director, representative statutory executive officer, chairman, 49 ACCJ LEADER president and CEO of MetLife Insurance K.K. speaks at a Young Professionals Public Affairs in Japan Forum Mentor Session on October 3. Jakob Edberg 2 The 25th Anniversary Chubu Walkathon donated ¥10 million to 30 local charities and another ¥10 million to the Chubu Children Fund at the Fund Distribution Ceremony at Nagoya International School on October 5. (PHOTO BY ANDY BOONE)

3 From left: US. Ambassador to Brunei Craig Allen, ACCJ President Christopher J. LaFleur, US Embassy in Tokyo Commercial Counselor Jonathan Heimer, and Deputy Chief of Mission Jason P. Hyland at the 2016 Japan International Aerospace Exhibition on October 12-15 at Tokyo Big Sight.

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OsakaYMCA_FP.indd 1 10/24/16 4:58 PM Perfect for Pittsburgh FROM THE BOARD The many benefits of TPP By Eric Sedlak Vice president, ACCJ–Tokyo

e hope that when you read this, other member countries will create Electricity reform will create many the Diet deliberations on Japan’s opportunities in telemedicine (and opportunities for Japanese and foreign Wratification of the Trans-Pacific its interactions with medical devices companies ranging from equipment Partnership (TPP) agreement are well and pharma), disruptive technologies, and software suppliers to virtual utilities, underway, with a clear path to passage. smart grid, virtual utilities, and demand power resellers, and service suppliers. A few weeks ago, I visited my native management. Those innovators will The administration of Prime Minister Pittsburgh where I spoke at our office seek more graduates in computer Shinzo Abe plans to expand residential on TPP, Abenomics, and opportunities science, electrical engineering, physics, sector energy efficiency and demand for US companies in Japan to a group and artificial intelligence. response efforts will also create a range of local Fortune 500 executives Abenomics’ Third Arrow successes of opportunities for suppliers of a variety and other internationally minded include corporate governance of innovative goods and services, leading Steelers fans. reform (which the ACCJ supports to more high-value added, highly Thousands of Pennsylvania via our Director Database program), skilled jobs in the United States, Japan companies export directly or indirectly restructuring the JA agricultural and elsewhere. Abe has put forward to future TPP member countries across cooperative system and price supports, 11 pieces of legislation to implement a wide range of sectors, including and the disaggregation of Japan’s reforms needed to meet the high chemicals and precision equipment. electricity generation, transmission, standards required by the TPP. Close to 200,000 Pennsylvanians are and distribution system, until now If TPP ratification and Abenomics employed in the production of exports controlled by Japan’s regional utilities. both stay on track, it seems likely that by companies large and small. The reform of the electricity supply centers of technological excellence in The TPP’s elimination of more than system creates opportunities for new Japan and the United States will continue 18,000 tariffs will create enormous market entrants. In response to Japan’s to hire and to thrive, with follow-on opportunity for those companies and attractive feed-in-tariffs, dozens—if not benefits in the development of new their current and future employees. hundreds—of foreign renewable energy technologies and the employment of Pittsburgh is known for its steel developers have entered the Japanese technicians, scientists, and engineers . . . manufacturing, but the largest market, most notably in solar, not as whichever football team they support. n employers in the region are now in widely as hoped in wind, but more The views and opinions set forth herein are the the new economy and healthcare. recently in biomass, for which high personal views or opinions of the author; they The complete elimination of tariffs quality fuel with a low life-cycle carbon do not necessarily reflect views or opinions of on data transferred to Japan and impact can be imported from the US. the law firm with which he is associated.

THIS MONTH’S FEATURED VIDEO:

2016 ACCJ KANSAI WOMEN IN BUSINESS SUMMIT: OPENING PRESENTATIONS

Opening presentations from Yukari Inoue (managing director, Japan/Korea, Kellogg Japan G.K.) and Gerald Lema (managing partner and representative director, Cylon Capital, Global)

Visit https://www.youtube.com/user/ AmChamJapan and subscribe today!

THE JOURNAL n NOVEMBER 2016 39 1 US Embassy in Tokyo Deputy Chief of Mission Jason P. EVENTS Hyland speaking at the ACCJ‘s Disaster Preparedness Session on September 26 at Tokyo American Club.

2 ACCJ President Emeritus Allan D. Smith (right) with Alyssa Smith at the Wine Tasting for the ACCJ Charity Ball event on October 6 at Roti Roppongi.

3 Tsuneo Watanabe, senior fellow, The Tokyo Foundation, speaking at Let‘s Asakatsu: Understanding the US Presidential Election in the 1 ACCJ Boardroom on October 13.

4 From left: Erin Sakakibara, Women in Business– Chubu chair; Patricia (Tish) Robinson, associate professor, Hitotsubashi University; Royanne Doi, corporate chief ethics officer, Prudential Financial, Inc.; Laura Younger, executive director, ACCJ; and Kaoru Kano, senior director, Human Resources, Eli Lilly Japan K.K. at the Westin Nagoya Castle on September 13. (PHOTO BY ANDY BOONE)

5 From left: Christopher J. LaFleur, ACCJ president; Sarah Casanova, president, CEO, and representative 2 3 director, McDonald’s Company (Japan), Ltd.; Mayumi Tateishi, executive vice president and member of the board, Oak Lawn Marketing, Inc. / senior vice President, NTT DoCoMo, Inc.; and Chris Zarodkiewicz, ACCJ vice president–Chubu at the Chubu Women in Business Summit on September 13.

6 ACCJ–Kansai 11th Walk-A-Thon “Better Workplace, Better Life for Working Mothers in Need” was held on October 15 at Canadian Academy. Donations raised through the event are used to support organizations helping these mothers through a variety of initiatives and programs. 4 5

7 Vice President–Kansai Stephen Zurcher accepts a certificate of appreciation on September 23 from US Department of Commerce Executive Director for Asia Jim Golsen, who was visiting from Washington, DC.

UPCOMING EVENTS

Please visit www.accj.or.jp for a complete list of upcoming ACCJ events or check our weekly e-newsletter, The ACCJ Insider.

• NOVEMBER 8 Many Languages, One Message: 6 Marketing in Multiple Languages (Chubu Event)

• NOVEMBER 18 Healthier Women, Healthier Economy

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40 THE JOURNAL n NOVEMBER 2016 7 ACCJ 2016 CHARITY BALL

That’s Entertainment! What’s in store for the evening

By Barbara Hancock, Lori Hewlett, and Kevin Naylor

or this year’s event, we wanted to recreate sounds back. His description is “imagine a some of the vibes of the legendary Black night where classical meets the street sound: F & White Ball of 50 years ago, while on edge, mad, movin’, groovin’ music that adding some new twists. One of the groups you won’t be able to get enough of.” To to play at the original ball was the Detroit achieve this, Jett has reached out to some Soul Brothers, also known as the Funk of the best of the best in Japan and put Brothers. They were a Motown band who together Tokyo’s Soul Funk Brothers. got everyone out on the dance floor. There And that’s not all. Our evening reception is probably only one person in Tokyo whose will start with a great selection of solo jazz. roots go back to that source: Jett Edwards. Then our ballroom will open up to the Most recently known for establishing the Tokyo Hot Rollers, an all-star string Japan Mass Choir—nominated for a 2016 band playing red-hot instrumentals GMA Dove Award for Best Traditional on guitar, mandolin, fiddle, Gospel album—Edwards was born into bass, and snare drum. This a musical family. His parents were both group will be led by veteran gospel and opera singers, and his father American roots and blues taught his boys how to play instruments and musician Rambling Steve perform. The Edwards home was filled with Gardner from Mississippi. music, as it was frequently visited by gospel We want to start off with a greats when they passed through his North bang, but then we also know Carolina hometown. It is not surprising, that you and your guests want then, that Edwards wrote his first hit song time to socialize and relax at the age of 14. The song was called Lonely during dinner. We hope Man, and he laughs about that now saying, you will enjoy our dinner “what did I know about being a lonely man trio who will keep our at age 14.” theme going with some From then to now has been a long and great jazz standards and a winding road. Jett was artist & repertoire few surprises that are akin to director for Jackson Records and has those enjoyed at the original managed, produced, and collaborated Black and White Ball, while with artists such as the Five Blind Boys of maintaining a level that doesn’t Mississippi, Five Blind Boys of Alabama, intrude on your conversation. Swan Silvertones, and Soul Stirrers, as well In countless ways, our as Janet Jackson, Diana Ross, The Crusaders, entertainers also give back to James Brown, Dionne Warwick, Leon Ware, the community, as is part of that The Temptations, George Benson, and great American tradition. While Motown Records. Who better could we ask they cannot survive working for to hook us up for this gala? free, they have all been most generous “On this night”, Jett says, “have your with their time in helping to make this dance shoes on and your tux and tails ready evening unique for the ACCJ community to fly,” because he is going to bring those and friends. n

We hope that you will support the Charity Ball this year by attending or becoming a sponsor. The ball will be held on December 3 at the Hilton Tokyo in Shinjuku with a theme that celebrates the 50th anniversary of Truman Capote’s iconic Black and White Ball, which was held at the Plaza Hotel in New York City. accjcharityball.org / [email protected]

We invite you to come dressed in the spirit of this legendary masquerade gala!

THE JOURNAL n NOVEMBER 2016 41 ACCJ EVENT

Town Hall Get more involved in the ACCJ

By C Bryan Jones

n October 19, President Christopher J. LaFleur led the been working on recommendations that will guide future third American Chamber of Commerce in Japan (ACCJ) programming and services. OTown Hall in the boardroom of the ACCJ’s Tokyo office. Speaking of programming, LaFleur praised the work of The gathering offered members an opportunity to catch up on the ACCJ–Chubu chapter in hosting a very successful Women the latest initiatives and to hear directly from the leaders who in Business Summit on September 13. Pointing out that fewer are guiding them. Attendees also had a chance to share their women are represented by Chubu area industries, he said that thoughts and ideas for getting more out of ACCJ membership. the summit injected great energy into the region. Key topics discussed at the October session included the Barbara Hancock provided an update on another bit of Diet Doorknock, the Chubu Women in Business Summit, upcoming activity: the ACCJ’s annual Charity Ball. This year’s the changing face of membership, the new ACCJ website, theme will take you back to Truman Capote’s iconic Black and corporate social responsibility (CSR), and the upcoming White Ball, and members are encouraged to bring friends and Charity Ball. guests to the event that will take place on December 3 at the ACCJ President Christopher J. LaFleur began the Hilton Tokyo Shinjuku from 6:00 p.m. to midnight. meeting by discussing the recent Diet Doorknock, Jonathan Kushner, vice president–Tokyo, provided an the annual three-day outing conducted since 1994 update on the new website and its impending launch. during which teams of ACCJ members take their policy The more streamlined, visually appealing, and responsive recommendations directly to the Diet through meetings design will improve event registration, maintenance, with dozens of Japanese lawmakers, sometimes including and security, and will enhance the chamber’s ability to cabinet members. He said this was the largest Diet communicate with members and the broader community. Doorknock to date, and many feel the most successful. LaFleur also spoke about CSR and the chamber’s increasing Membership played an important role in the Town Hall activities in this area since the Great East Japan Earthquake discussion. The ACCJ currently has the most members in and Tsunami of March 11, 2011. its history—more than 3,400—and the number of corporate The Town Hall meetings are open to all members, and sustaining members is also at its highest-ever level at 82. we encourage everyone to join for drinks, networking, and Vice President–Tokyo Marie Kissel expanded on the fruitful discussion. Watch the ACCJ website at accj.or.jp and topic of membership, talking about research being done the Insider newsletter for upcoming dates. n to refine the activities of the chamber to better serve the changing composition of the membership. With a focus on the growth in Japanese members, women, and young professionals, member-facing committees have The gathering offered members an opportunity to catch up on the latest initiatives PHOTO: REIKO WHITFIELD

42 THE JOURNAL n NOVEMBER 2016 REGION UPDATE

Chubu Women in Business Summit

By Erin Sakakibara

s Chair of the Chubu Women in Business (WIB) Committee, AI’m pleased to report that on September 13, we held our third Women in Business Summit. Titled “Shifting the Culture of Organizations to Create Inclusive Workplaces,” the Summit was held at the Westin Nagoya Castle with more than 150 people in attendance. We were honored to have Sarah Casanova as one of our keynote speakers. Casanova highlighted the importance of effective communication and unpacked the strategies that she has utilized throughout her career participants to really contribute and LaFleur and Kennedy, for their on her way to becoming CEO of interact with the various professionals contributions to the plenary session. McDonald’s Japan. Her talk was who came to share their talents and Thank you also to all of our breakout well received and provided concrete experience. Two “Strategies from the session leaders and changemakers: takeaways that were echoed throughout Frontline” roundtable discussions Masako Arakane, Royanne Doi, the rest of the day—and no doubt in allowed various presenters to share Kaoru Kano, Patricia Robinson, the days since. advice, from mentorship to networking Laura Younger, Rita Chhabra, and Mayumi Tateishi, executive vice and beyond. Tsukiko Tsukahara. president of Oak Lawn Marketing Inc. Other sessions on such important And, of course, all of this was and senior vice president of NTT topics as unconscious bias and made possible because of the DoCoMo, then shared the experience inclusive leadership—two very sponsors who also believe in the of her career path, as well as the history important concepts when considering importance of continuing this and growth of Oak Lawn Marketing the challenge of changing corporate conversation, including Gold Series and the Shop Japan brand. This culture—were very well received. Sponsors Eli Lilly Japan and MetLife; illuminated the corporate strategies in In addition, two more hands-on Bronze Sponsors, H&R Group, place at Oak Lawn Marketing that led workshops—one on taking charge of KPMG, and Shop Japan; and Support to its diverse workplace, and that make your career and another on speaking Sponsors, Adjustment Guidance, the company an exemplary model for out and advocating for yourself— Cezars International, the International creating and implementing diversity. had the participants taking part in Academic Forum (iafor), and the This is a particular point of pride for discussions and role playing to gain a Tokai Japan Canada Society. the Chubu area since the company was better understanding of the solutions. The ACCJ–Chubu office staff were founded in Nagoya. The evening ended with a chance also instrumental in making the The plenary session was rounded to network over refreshments, and to summit happen, together with student out by a video message from solidify contacts that had been made volunteers from the community. The US Ambassador Caroline Kennedy throughout the day. Again, for the third committee would like to recognize and a motivating speech by American year, the Chubu WIB Committee Noriko Kato and Masako Maeda for Chamber of Commerce in Japan was pleased to bring not just a their hard work. (ACCJ) President Christopher LaFleur. conversation, but tangible action As we look to next year, we hope to We were especially pleased that LaFleur strategies to Aichi. This is something see this event reach more participants, highlighted the recently published that we feel is important to keep and to continue the momentum that WIB white paper, Untapped Potential in the forefront, together with the we have created throughout Japan on and made sure that all participants Kansai and Tokyo WIB committees, these critical issues. n received a copy. and we appreciated the support of After the opening plenary session, both chapters. it was time to break out into smaller In addition, we’d like to thank Erin Sakakibara is chair of the Women sessions. The goal was to allow Casanova and Tateishi, along with in Business Committee–Chubu

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On Message Hiroshi Nakaso on the Bank of Japan’s current thinking

By Richard Smart

t is becoming a ritual for investors, business leaders, and journalists. Once a month they wait with bated breath for I the Bank of Japan (BOJ) to finish its policy meeting and announce the results. During his time in office, Governor Haruhiko Kuroda has sent the central bank on a daring PHOTO: RIEKO WHITFIELD course, surprising and shocking markets. September’s meeting was more intensely anticipated than any in the previous three years. A “comprehensive assessment” of what the central bank calls “quantitative and qualitative monetary easing” was announced. In layman’s terms, this means increasing the overall amount of money in the Japanese economy, and placing some into specific From left: Nakaso with ACCJ President Christopher J. LaFleur institutions considered good for growth. and Vice President–Tokyo Andrew J. Conrad What did the BOJ have to say of its efforts, which began back in April 2013? “[Quantitative and qualitative “Based on a candid assessment, we will decide whether easing] to a large extent has had the intended effects. or not it will be necessary to make adjustments to the Looking at financial and economic developments since current policy framework and, if judged necessary, in what the introduction of QQE, real interest rates have declined, way it should be adjusted,” Nakaso added. reflecting increased inflation expectations and a decline in After the assessment, the BOJ expanded its policies, nominal interest rates across the entire yield curve. Against giving the new platform the catchy title “Quantitative and this backdrop, Japan’s economy is no longer in deflation, Qualitative Monetary Easing and Yield Curve Control,” which is generally defined as a sustained decline in prices.” explaining the meaning as follows: “The new policy In essence, the central bank feels it has done its part framework consists of two major components: the first is for growth—although it could do more. Most important, ‘yield curve control,’ in which the bank will control short- the bank has failed to reach its target of 2 percent term and long-term interest rates; and the second is an inflation—by a lot. ‘inflation-overshooting commitment,’ in which the bank Significantly, the BOJ has in recent times appeared commits itself to expanding the monetary base until the to change strategy. Kuroda has been known to surprise year-on-year rate of increase in the observed consumer the markets: Earlier this year, days before introducing a price index exceeds the price stability target of 2 percent negative interest rate policy, he publicly insisted the bank and stays above the target in a stable manner.” would be doing no such thing. But now market watchers Market reaction has been muted. The yen remains are getting a clearer picture before announcements. pegged at around ¥100/$1; the Nikkei 225 is way below At a September ACCJ meeting, BOJ Deputy Governor its Abenomics highs of more than 20,000 points; and Hiroshi Nakaso laid out the case for his institution’s reasons consumers are turning against the economic project. to believe it had, by and large, succeeded in the past few Some analysts have gone as far as to suggest that the new years. He also made clear that there would be easing, which project is effectively a pullback on previous commitments was unlikely to be wound back after the assessment. to bring Japan back to inflation, and amounts to the “Through numerous discussions I have had with the leaders beginning of the end of the radical Kuroda era. of financial institutions, I think I fully recognize the effects of Others, including one member of the audience, wonder the large-scale monetary policy on financial institutions and whether we are entering an era of perpetual easing. financial markets, and the likely impacts if the policy is to “We are technocrats, and we are always thinking about how continue,” Nakaso said. “Based on this recognition, we will we can normalize policy going forward,” Nakaso responded. take measures that we judge necessary for Japan’s economy.” “The people at the BOJ are equipped with this capacity.”n His speech made clear that Nakaso believed—as the bank also proved to do, after its meeting later in September— that the bank’s actions had led to largely favorable Richard Smart has been living and writing in Japan circumstances for the Japanese economy. since 2002.

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How Far Is Too Far? Tackling the rising tide of financial regulations

By Maxine Cheyney

n the wake of the 2008 financial STABLE VS. ROBUST crisis, systems were put in Stevens suggested that a more robust I place to stabilize the economy. system was the way forward. The Multiple regulations were rolled out idea of stability should be simply to worldwide—mostly under the duress return the system to its original state of banks—to address weak areas. after the shock of the crisis. In some ways these measures have Although not arguing against achieved stability, but overregulation is regulations, Stevens emphasized that a growing problem for some industries the current approach is in need of and markets. an overhaul. Of course, regulation On October 19, Paul Schott Stevens, is needed to rebuild trust with president and CEO of Investment investors, but there are limiting Company Institute, gave a thought- factors to consider. provoking speech to members of the The capital markets highlighted American Chamber of Commerce were those of the science, technology, Paul Schott Stevens in Japan. He asked: “Has the wave of and engineering industries. “They are financial regulation from Washington all concerned with highly complex in the aftermath of the financial crisis systems and are in contrast to stable WHERE TO NOW? gone too far?” systems,” he said. Stevens explained that, in Japan, the A robust system is adaptable, system is beginning to witness change, WHERE ARE WE NOW? and will allow the market to meet turning “risk averse savers into risk- With four decades of experience in the changing needs of investors. taking investors, therefore [spurring] Washington, Stevens is no stranger to Capital market participants will economic expansion.” the ins-and-outs of regulatory politics. accept and manage risks based on Financial services are essential And from his perspective, the wave of “clear disclosure and the prospect of to economic growth, and many regulations coming out of Washington commensurate reward,” he said. in the financial services sector will not ebb any time soon. Further to this, robustness is view regulations that are being Many of the regulators appointed what will encourage and endorse imposed as hampering prospects for by Washington are bank lawyers. innovation and growth. “After their companies. Stevens says this is a problem because all, banks don’t fund startups and The banking system is becoming less “Everyone takes the limits of their ventures, and the creativity that we important, while asset management is own field of vision to the limits of want within the economy,” he added. becoming more so. And the regulatory the world,” and the constraint on Conversely, stable systems model that has been used in a banking financial institutions is unrelenting— are bank-centric, which Stevens context can’t simply be applied to asset not just in the United States, but in describes as being “rigid” and management without very significant other jurisdictions. only providing a “one-size-fits-all” social cost. Public perception of finance, solution. These systems narrow The way forward, according to capitalism, and free markets has down the sources of financing, Stevens, is engaging in dialogue. shifted, and faith in the system has creating dependence on large, highly Financial services companies should faltered. However, Stevens explained leveraged institutions for funding. be looking to get involved in the that implementing more regulations And this, he said, will hamper regulations conversation, and “not has a “direct bearing on other, more innovation and risk. accept this as fate. Voices need to be sweeping societal concerns.” In Stability should not be the goal raised around this.”. n particular, he focused on growth, itself; it should simply be a means innovation, and opportunity. to ensure sustainable growth “The time has come to pause and rather than to eliminate risk and Maxine Cheyney is a staff writer for take stock.” jeopardize growth. The Journal

THE JOURNAL n NOVEMBER 2016 47 Supported by: ACCJ LEADER

Public Affairs in Japan

s the Diet gets back to work, pressure on the administration Prime Minister Shinzo Abe of US President Barack Obama A could be forgiven for reveling to do the same in its final days. in his fourth consecutive national If the United States fails to do election victory. July’s election so, it risks losing the best chance for the House of Councilors gave in decades to liberalize Japan’s Abe’s Liberal Democratic Party markets on US terms, and to bring (LDP) a simultaneous majority in By Jakob Edberg, president & 12 Pacific nations closer together. each house of the Diet for the first CEO, GR Japan K.K. / vice-chair, US businesses active in Japan time in 27 years. While no new Globalization Committee (and other TPP member states) election is required until December still have work to do. They must 2018, there is talk of Abe calling remind US policymakers how the a snap election for the House of in parallel with deliberation on the TPP will help them expand and Representatives in January to allocation of several billion more in grow in the Asia–Pacific area, and transform that lead in the polls into the main FY2017 budget, which is to how failure to ratify the deal would parliamentary seats. A fifth victory be disbursed starting next April. leave US companies in the region at would keep the LDP in the driver’s LDP majorities in Diet committees a disadvantage. seat until at least 2021. should help the Abe administration Japan’s public affairs are Japan is thus enjoying a rare enact a number of key policies, entering a vital period: a stable period of political stability. With including deregulation of labor and empowered Japanese the United States having endured markets, controlled lifting of the ban government with the means, the most bruising presidential on casinos, and national support for motive, and opportunity to pursue election in recent memory—and the information and communications its reform agenda; the allocation European Union grappling with the technology (including the sharing of not one but two multi-billion- implications of Brexit—Japan is like economy, Big Data, artificial yen public-spending packages; an island of democratic calm. intelligence, and the Internet of intensification of preparations As businesses know, political Things). Naturally, the Tokyo 2020 for the Tokyo 2020 Olympic stability matters. For Abe, the Olympic and Paralympic Games and Paralympic Games; and the security of his position provides are increasingly becoming part tantalizing possibility of TPP a firm base from which to take of national policy and spending passage during the last days forward the policies set out in the plans—a trend that will accelerate as of the Obama administration. Japan Revitalization Strategy and the opening ceremony draws closer. The next few months will be the LDP policy platform. His first Even so, barring a major surprise, critical for those companies and priority will be passage of the giant the highlight of the current Diet industries from the United States FY2016 supplementary budget, session should be Japan’s ratification and elsewhere that have a stake with a headline figure of ¥28 of the Trans-Pacific Partnership in Japan and care about Japan’s billion—including several billion (TPP) agreement. If Abe succeeds openness to foreign investment, in new money. This will take place in passing the deal, that will put goods, and services. n

The highlight of the current Diet session should—barring a major surprise—be Japan’s ratification of the Trans-Pacific Partnership (TPP).

THE JOURNAL n NOVEMBER 2016 49 The ACCJ thanks its PRESIDENT Christopher J. LaFleur Corporate Sustaining McLarty Associates Member companies CHAIRMAN Their extensive participation provides a cornerstone in the Jay Ponazecki chamber’s efforts to promote a better business climate in Japan. TREASURER Nancy Ngou Abbott Laboratories/ KPMG Ernst & Young Advisory Co., Ltd. Abbott Japan Co., Ltd. Kreab Adobe Systems Co., Ltd. VICE PRESIDENTS Lenovo Japan Aflac Andrew J. Conrad Aflac International, Inc. Lockheed Martin Leanne Cutts Mondele z Japan Ltd. AIG Companies in Japan MasterCard Japan K.K. Marie G. Kissel Abbott Amazon Japan G.K. Jonathan Kushner Kreab McDonald's Company Amway Japan G.K. (Japan), Ltd. Eric W. Sedlak Jones Day Christopher Zarodkiewicz (Chubu) Cezars International K.K. Baxalta Japan Limited McKinsey & Company, Inc. Japan Dr. Stephen A. Zurcher (Kansai) Kansai Gaidai University Bayer Yakuhin, Ltd. Merrill Lynch Japan Becton Dickinson Japan Securities Co., Ltd. ACCJ GOVERNORS Alison Sayre Birch JPMorgan Securities Japan Co., Ltd. Bloomberg L.P. MetLife Tim Brett Coca-Cola (Japan) Co., Ltd. Boeing Japan K.K. Microsoft Japan Co., Ltd. Britt J. Creamer (Chubu) Lockheed Martin TAS Broadsoft Japan Mondelez Japan Ltd. International Corporation James Fink Colliers International Catalyst Monex Group, Inc. Rebecca K. Green ERM Japan Ltd. Caterpillar Morgan Lewis John D. Harris Cytori Therapeutics K.K. Chevron International Gas Inc. Morgan Stanley Japan A. Barry Hirschfeld, Jr. AIP Healthcare Japan GK Japan Branch Holdings Co., Ltd. Tad Johnson Pratt & Whitney Aftermarket Japan KK Cisco Systems G.K. Morrison & Foerster, Patrik Jonsson (Kansai) Eli Lilly Japan K.K. Ito & Mitomi Junichi Maruyama Citigroup Japan Holdings Corp. Citigroup MSD K.K. Arthur M. Mitchell White & Case LLP Coca-Cola (Japan) Co., Ltd. Sachin N. Shah MetLife Insurance K.K. Nanzan Gakuen Colliers International (Nanzan School Corporation) Yoshitaka Sugihara Google Inc. William J. Swinton Temple University, Japan Campus Cummins Japan Ltd. Northrop Grumman Aerospace Systems Deloitte Touche Tohmatsu LLC PRESIDENTS EMERITI Oak Lawn Marketing, Inc. Delta Air Lines, Inc. Debbie Howard (2004–2005) Oracle Corporation Designit Tokyo K.K. Charles D. Lake II (2006–2007) Procter & Gamble Japan K.K. Allan D. Smith (2008) Deutsche Bank Group Prudential Financial, Inc. Thomas W. Whitson (2009–2010) Dow Chemical Japan Ltd. Michael J. Alfant (2011–2012) PwC Japan Eli Lilly Japan K.K. Jay Ponazecki (2014–2015) QUALCOMM JAPAN Inc. en world Japan CHAIRMAN EMERITUS Randstad K.K. EY Japan Kumi Sato Robert Walters Japan K.K. Federal Express Corporation Cosmo PR Squire Patton Boggs Freshfields Bruckhaus ACCJ EXECUTIVE STAFF Deringer Tokyo State Street Laura Younger Executive Director Gilead Sciences K.K. Teijin Limited

Goldman Sachs Japan Co., Ltd. Teva Pharmaceutical Industries Ltd. Google Inc. Thomson Reuters Information as of October 20, 2016 GR Japan K.K. Markets K.K.

H&R Consultants K.K. Toll Express Japan Co., Ltd. The American Chamber of Commerce in Japan Heidrick & Struggles Japan Toys”R”Us, Japan Godo Kaisha Masonic 39 MT Bldg. 10F, 2-4-5 Azabudai United Airlines, Inc. Hilton Worldwide Minato-ku, Tokyo, Japan 106-0041 Visa Worldwide Tel: 03-3433-5381 n Fax: 03-3433-8454 The Howard Hughes Corporation (Japan) Co., Ltd. www.accj.or.jp IBM Japan, Ltd. The Walt Disney Company (Japan) Ltd. The ACCJ is an independent membership organization not affiliated with any government IMS Japan White & Case LLP or other chamber of commerce. The ACCJ is a member of the Asia-Pacific Council of Johnson & Johnson American Chambers and values its relationships with Japanese, American and other Family of Companies Zimmer Biomet G.K. nations’ business organizations.

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STOP-START Open and Shut Case of Global E-Biz Firm 毎月一日発行 第五十三巻 11 号 ジャーナル 二〇一六年十一月一日発行 WE NEGOTIATE

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