TOKYO SKY TREE
Weekly News from Tokyo
DITP TOKYO (2013 April13 – April19)
24Jul. 2015 ~ 31Jul. 2015 (No.201530)
July 24, 2015
Govt adopts budget request rules for FY2016
TOKYO— The government adopted at a Cabinet meeting on Friday budget request
guidelines for fiscal 2016 that call for a 10 percent cut in discretionary policy spending and
set a special quota of about ¥3.9 trillion for priority areas including the privatization of public
services.
By the deadline at the end of August, government agencies will request their budgets for the
year starting next April in accordance with the guidelines.
Speaking of the guidelines designed to pursue both economic growth and fiscal
reconstruction, Finance Minister Taro Aso said at a news conference that he wants
government agencies to prioritize, eliminate wasteful spending and give clear focus.
The guidelines allow only social security costs, including pension payments, to expand from
the previous year, by ¥670 billion, in light of Japan’s aging population.
However, the government’s new fiscal rehabilitation plan, to be implemented from fiscal
2016, calls for limiting an annual increase in social security spending to ¥500 billion to
achieve the goal of securing a primary budget surplus in fiscal 2020.
Meanwhile, government agencies can request up to year-before levels of mandatory
spending including payroll costs. But if they make lower requests on the item, they can apply
for more funds in the special quota.
Tax revenue grants to local governments are projected to be flat. (Jiji Press)
July 25, 2015
Ajinomoto operating profit seen surging 60% for April-June
Photo : Ajinomoto seasonings on display at a store in Indonesia.
TOKYO -- Food giant Ajinomoto is expected to post a
group operating profit of around 21.5 billion yen ($171
million) for the April-June quarter, up around 60% from a
year earlier.
The first growth for the quarter in five years was driven
by a recovery in the volatile market for livestock
feed amino acids. The company's food business saw
continued sales growth in overseas markets, such as Southeast Asia and South America.
Sales likely grew nearly 30% to around 290 billion yen. The November purchase of a
U.S. frozen-food maker helped boost earnings, along with the April conversion of Ajinomoto
General Foods from an equity-method unit into a wholly owned subsidiary.
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TOKYO SKY TREE
Weekly News from Tokyo
DITP TOKYO (2013 April13 – April19)
24Jul. 2015 ~ 31Jul. 2015 (No.201530)
Amino acids are mixed into livestock feed as a nutritional supplement. The business
returned to the black last quarter after having suffered an operating loss a year earlier due to
low-priced Chinese and South Korean competition. It also found success expanding original
products not susceptible to price wars.
The overseas food products segment did well, with sales of seasonings in five strategic
countries, including Thailand, Indonesia and Brazil, proving strong. Frozen-food sales in the
U.S. also grew.
Domestically, sales of the Hondashi soup stock recovered from the heavy blow of the
consumption tax hike. The Cook Do Japanese prepackaged seasonings sauces also
performed well. The weak yen drove up raw materials costs, but this was partly absorbed by
price hikes.
Ajinomoto's profit headed toward recovery in the second half of last fiscal year. But in the
current second half, the company sees the percentage growth in profit softening as a result.
For the full year ending March 2016, it sees group operating profit rising 10% to 82 billion
yen and will likely maintain that forecast when it announces April-June results July 31.
(Nikkei)
July 26, 2015
‘Cool Biz’ campaign spreads to job hunters
Photo : Necktie-free fashions for job hunting are shown at an event hosted by the
Environment Ministry and the Cool Biz Promotion Council in Minato Ward, Tokyo, in
June.
The “Cool Biz” campaign, which encourages people to wear
lighter clothes and eschew neckties in the summer so that they
can tolerate higher office temperatures and so help prevent
global warming, has begun to make its way into job hunting
activities.
The starting date for job hunting comes late this year, and
companies’ screening and interview process will spill over into
the summer. Feeling the heat, necktie manufacturers are hoping
for a comeback through such initiatives as developing neckties that are light and breathable.
The standard for men’s job-hunting fashion has traditionally been a suit and tie. However,
the job-hunting period for college students graduating next spring has been pushed back
under a new industry rule.
Starting this academic year, companies have been allowed to conduct recruiting activities,
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TOKYO SKY TREE
Weekly News from Tokyo
DITP TOKYO (2013 April13 – April19)
24Jul. 2015 ~ 31Jul. 2015 (No.201530)
such as holding explanatory meetings, only from March 1 onward, rather than from
December, while the screening process, such as offering job interviews, has been put off
until Aug. 1.
As the dates are delayed for three months and four months, respectively, university students
will have to do their job-hunting in sweltering summer temperatures.
Some companies have begun encouraging job seekers to come to explanatory meetings
and interviews without a tie. An official at Nissan Motor Co., headquartered in Yokohama,
said, “As a company that is tackling environmental concerns, we strongly recommend it.”
An official at Kokuyo Co., an office equipment manufacturer headquartered in Osaka, said,
“We think that students will be able to demonstrate their ordinary abilities if they come to the
screening sessions in comfortable clothing.”
In June, the Environment Ministry cohosted an event introducing job-hunting fashions
without ties in Tokyo. Shinichiro Takahashi, 22, a senior at Hitotsubashi University who is in
the middle of job hunting activities, said: “Wearing a tie under
the blazing sun is hot and unpleasant. I hope more companies
will allow lighter clothes.”
Photo: Judges examine necktie design proposals by art school students in Hachioji,
Tokyo, on June 29.
Makers struggling
Necktie manufacturers are paying the price for the spread of
Cool Biz. The initiative was introduced in 2005 as a measure to
prevent global warming. According to the Necktie Cooperated
Association of Tokyo in Chiyoda Ward, Japanese necktie production came to 5.13 million in
2013, making for a decrease of roughly 60 percent over the previous 10 years.
Katsuzo Akiyama, 74, and his wife run Akiyama Textiles in Hachioji, Tokyo, a center of
national necktie production.
“In 10 years, our sales have declined from ¥30 million to less than a third of that,” he said.
Some factories have switched over to producing light or heavy scarves, but the cost of
investing in new equipment is considerable. “If the no-necktie trend spreads to job hunting,
then things will become much harder,” he said.
But there are recent signs that a comeback may be in the offing.
In Kyoto, home to Nishijin textiles, the industry has been developing new products since
2006 like neckties with cool, breathable designs and lightweight ties made of silk. The
manufacturers have been pushing these products through online stores and other outlets.
Wearing neckties — even in the summer — is recommended at the Kyoto municipal office.
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TOKYO SKY TREE
Weekly News from Tokyo
DITP TOKYO (2013 April13 – April19)
24Jul. 2015 ~ 31Jul. 2015 (No.201530)
“We want to dispel the image that ‘necktie’ means ‘hot,’” said an official at the city
government’s traditional industries section.
In an effort to bring a youthful fashion sense to neckties, a competition was held in Hachioji
at the end of June, soliciting design proposals from students from Musashino Art University
and Tama Art University, among others.
Regarding some youthful designs that would be just right for job hunting, Takaji Okamoto,
executive director at the Hachioji Textile Industrial Association, said, “We want to spread the
idea among young people that ‘wearing a tie is stylish. (Yomiuri)
July 28, 2015
Wine, chicken tariffs to be lifted / Several stages for elimination eyed under
TPP accord
The government plans to abolish tariffs for imported wine, chicken and some other items in
stages over several years under the Trans-Pacific Partnership free trade framework, it has
been learned.
Japan has been in working-level bilateral talks
over tariffs with 11 other TPP participating
countries in Hawaii, where chief negotiators from
the countries have also begun talks.
In bilateral talks with the United States, Australia
and other agricultural exporters, Japan is now in
final negotiations to do away with tariffs on wine
in stages over five to seven years, according to
sources.
Currently, tariffs on wine are set at either 15
percent of the price or ¥125 per liter, whichever is lower. Abolition of the duty would give
consumers greater benefits when buying
inexpensive wine.
Photo : This photo, taken on February 2014, shows a wine
sales floor at a Kintetsu department store in Abeno Ward,
Osaka.
Japan has already agreed to gradually
abolish tariffs on wine from Australia and
Chile under economic partnership agreements it has with those two TPP countries. If the
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TOKYO SKY TREE
Weekly News from Tokyo
DITP TOKYO (2013 April13 – April19)
24Jul. 2015 ~ 31Jul. 2015 (No.201530)
TPP participants reach a broader deal, the same would apply to wine imported from the
United States, New Zealand and other countries as well.
With chicken, tariffs vary depending on the parts or whether they come refrigerated or frozen.
For example, for thigh meat, the tariff is set at 8.5 percent. Japan is in final negotiations to
do away with tariffs for most parts over several years in stages, according to the sources.
Benefits for consumers
Under the TPP negotiations, pork sausages, liquid egg and salt are also among the items
considered for abolishing tariffs. Japanese consumers will most likely enjoy the benefits of
the free trade framework.
With wine, the abolition of tariffs would have a greater effect on inexpensive products,
according to an importer of California wine in Tokyo.
“We can expect products sold at ¥1,000 or cheaper to see bigger price cuts as the duty
accounts for more of their prices [than those for higher products],” said the importer.
Tariff abolition would have limited benefits for higher-end products. For example, wine sold
at ¥10,000 per liter would see its price cut by just ¥125.
With regard to chicken, cheap frozen products are imported in great quantity from Brazil,
mainly for commercial use. If tariffs are cut for chicken produced in the United States,
another major exporter to Japan, retail prices could go down as a result of fierce competition
between the two exporters.
The United States is also the largest exporter of liquid egg to Japan, shipping 6,000 tons,
worth roughly ¥1.8 billion, in 2014. If the tariffs are abolished, it would help domestic
producers of bread and confectioneries cut material costs and likely have favorable effects
on retail prices.
The government will promote branding of Japanese wine as a countermeasure to the
negative effects the tariff abolition could inflict on domestic wineries. On the other hand, the
government believes domestic poultry farmers would not be greatly affected as use for
domestic and imported products vary and the price range differs.
In Hawaii, bilateral talks at the working level are being rushed to finalize their agreements,
as a broader agreement under the TPP framework can come only after each of the 12
participants wraps up negotiations with their 11 counterparts.
However, Japan is expected to leave talks over tariffs on rice and auto parts unfinished at
the working level. The government is protective in these areas and TPP minister Akira Amari
aims to reach deals at his level with the United States, Australia and Canada on the
sidelines of the ministerial talks that were to kick off Tuesday. (Yomiuri)
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TOKYO SKY TREE
Weekly News from Tokyo
DITP TOKYO (2013 April13 – April19)
24Jul. 2015 ~ 31Jul. 2015 (No.201530)
July 29, 2015
Japan's part-timers entering era of 1,000-yen wages
Photo ; A sign offering part-time work for 1,030 yen an hour.
TOKYO -- Part-time workers of all stripes are seeing their wages rise as desperate
employers compete for a dwindling pool of
young laborers.
Private studies show average hourly wages
in the Tokyo metropolitan area have surpassed
1,000 yen ($8), with the Japanese average
falling just short at 993 yen. Companies'
earnings
are
growing
while
the
younger
population is diminishing, driving pay hikes nationwide. With full-time workers seeing salary
bumps as well, consumer spending is expected to climb.
Recruit Jobs, a Tokyo-based company that handles job placement information, found
average hourly wages of 1,003 yen offered to job applicants in the Tokyo area in June, the
second straight month the figure topped 1,000 yen. Omitting the typically higher December
wages, those figures are at highest level since the study began in 2006.
A tally by Intelligence, a Tokyo-based employment firm, shows average wages for June
rising to 1,032 yen in the greater Tokyo area.
Workers at Kentucky Fried Chicken Japan's city-center restaurants saw average pay
climb 40-50 yen from last year, crossing into 1,000-yen territory.
Part-time workers nationwide have seen roughly 1% year-on-year bumps in hourly pay
every month since May 2014, Dai-ichi Life Research Institute says. The May 2015 figure
grew 1.5% to 993.4 yen, the highest since 1993 where direct comparisons can be made.
People in their 20s make up 40% of Japan's part-time workers, and they totaled 12.88
million in 2014, down as much as 30% from the 1996 peak.
"The labor shortage is especially grave for eateries and retail shops, since they are
experiencing demand from foreign tourists," said Kuniko Usagawa, head of Recruit Jobs'
research center. "That environment will continue until at least the Tokyo Olympics."
Average pay at temp agencies also continues to rise. June's wages in the Tokyo, Osaka
and Nagoya areas were the highest ever, beating year-ago figures for the 25th straight
month. Companies needing information technology personnel and designers are particularly
hurting for workers.
But many are quick to note that raising wages can do only so much to fill jobs.
Companies appear to be offering more perks to part-time workers, such as turning them into
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TOKYO SKY TREE
Weekly News from Tokyo
DITP TOKYO (2013 April13 – April19)
24Jul. 2015 ~ 31Jul. 2015 (No.201530)
"limited full-time employees" that are hired on a semi-permanent basis.
"There will probably be an increasing number of companies creating permanent,
full-time positions [for part-time workers] in order to differentiate themselves from the
competition," said Hajime Takata, chief economist at Mizuho Research Institute.
(Nikkei)
July 30, 2015
Tokyo re-emerges as hot shopping hub for luxury brands
Photo ; Global luxury labels are shifting their focus back to Japan.
TOKYO -- Global luxury brand companies
are once again sharpening their focus on
Tokyo amid a slump in China, where a
frugality campaign and turmoil in the stock
market are taking a toll on conspicuous
consumption.
Italian fashion house Versace plans to
set up a major store in Tokyo's posh Ginza
shopping district this fall. It will be housed within a commercial building Mitsui Fudosan is
slated to open.
The company closed its directly run stores in Japan in 2009, and has been selling its
products at department stores. But now, as it shifts its attention back to Japan, it has opened
a boutique for luxury home goods this month.
American jewelry company Harry Winston, which operates seven Japanese outlets, will
renovate
its
flagship store
in
Ginza
in
October.
The
revamped,
more
than
500-sq.-meter store will sell top-of-the-line diamonds, among other things.
Italian fashion brand Max Mara will overhaul its key store in Tokyo's hip Aoyama district.
French fashion label Saint Laurent plans to open its first street-level store in Japan in the
fashionable Shibuya area of Tokyo.
Real estate services company CBRE reports that luxury brands opened 12 street-level
stores last year in three key areas, including Ginza, the most since it started its survey in
1979. Eight store openings are planned for this year so far. Competition is heating up to
secure good locations, according to a CBRE official.
Earnings at luxury brand companies are on the rise. Global leader LVMH Moet Hennessy
Louis Vuitton said Tuesday that January-June operating profit rose 15% on the year to 2.95
billion euros ($3.26 billion). Japanese sales soared 34% in yen terms, providing a boost to
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TOKYO SKY TREE
Weekly News from Tokyo
DITP TOKYO (2013 April13 – April19)
24Jul. 2015 ~ 31Jul. 2015 (No.201530)
overall earnings.
Hermes International saw a 30% jump in Japanese sales in the April-June quarter.
Growing ranks of affluent Japanese are a key target demographic for these companies.
The number of Japanese households with more than 100 million yen ($802,950) in assets
increased by 200,000 over the two years through 2013 to 1.01 million, according to the
Nomura Research Institute.
The other area of focus is Chinese consumers shopping in Japan. The Chinese account
for 30% of the global market for luxury goods, and they shop for such items outside of China
more often than at home. The ranks of Chinese tourists visiting Japan doubled in the first
half of this year to 2.17 million.
In the past, Chinese people have often bought luxury items in Hong Kong and Macau,
but large demonstrations last year in Hong Kong slowed the flow of shoppers there. In
addition, the government's frugality campaign is weighing heavily on consumer sentiment
in mainland China.(Nikkei)
July 30, 2015
Isuzu profit seen rising 20% as truck sales accelerate
TOKYO -- Isuzu Motors' operating profit for the April-June period likely increased about 20%
on the year to roughly 45 billion yen ($361 million), on par with a record reached in 2013 for
that quarter.
Sales are estimated at around 450 billion yen, up around 10%. Isuzu sold 13,750 trucks
and buses in Japan, a 9% increase, the Japan Automobile Dealers Association said.
Demand for cargo trucks rose after the slowdown following the April 2014 sales tax hike.
For smaller commercial trucks, in which Isuzu owns a 40% market share in Japan, the
company captured rising demand by rolling out a revamped version of the Elf. Bus orders
got a boost from the increase in foreign visitors to Japan.
In Thailand, where Isuzu holds a 50% share in trucks, monthly sales have risen since
early spring, signaling a market recovery after the May 2014 military coup.
But demand remains sluggish in Indonesia, another key market for the company.
Isuzu is expected to announce its April-June results Aug. 4 and likely will not change its
full-year projections. (Nikkei)
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Weekly News from Tokyo
DITP TOKYO (2013 April13 – April19)
24Jul. 2015 ~ 31Jul. 2015 (No.201530)
July 30, 2015
Japan eyes big jump in minimum wage
TOKYO -- Minimum wages across Japan are expected to make a huge leap, putting more
money in the pockets of part-time and temporary workers.
An advisory council under Japan's labor ministry prepared guidelines at a Wednesday
meeting calling for an 18-yen increase in the average hourly minimum wage for the 2015
fiscal year. Minimum wages differ by region and industry, and the change would push the
average minimum wage to 798 yen ($6.45). The Tokyo metro area and Kanagawa
Prefecture would see the minimum wage reach the 900-yen range.
Prefectures use the guidelines to set minimum wages. The proposed increases will be
the largest since the current arrangement was established in fiscal 2002. The council
recommended the biggest increase of 19 yen for the Tokyo metro area as well as Kanagawa,
Osaka and two other prefectures. The remaining prefectures would have wage hikes of 16
yen or 18 yen.
Japan's Cabinet Office says 3 million to 5 million people earn slightly above minimum
wage. If the minimum wage rises by 20 yen, workers will have as much as 90 billion extra
yen to spend.
During this spring's labor negotiations, companies -- especially large ones -- gave pay
raises that beat last year's increases. A minimum wage increase will help part-time workers
who lack union representation.
If the minimum wage hike boosts part-timers' pay beyond the increases they currently
are getting, consumer spending may rise among nonsalaried workers, stimulating the
economy. But if workers don't spend the extra money as expected, companies face higher
labor costs without corresponding sales growth. Many others warn of added costs small and
midsize companies are likely to absorb if significant minimum wage hikes are enacted.
"I can't find part-time workers even if I offer 1,000 yen an hour," said the head of a
medium-scale Saitama Prefecture business that sells security cameras. "If the minimum
wage is increased, then we will be forced to raise our pay even more." (Nikkei)
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TOKYO SKY TREE
Weekly News from Tokyo
DITP TOKYO (2013 April13 – April19)
24Jul. 2015 ~ 31Jul. 2015 (No.201530)
July 31, 2015
Seven & i, Fast Retailing plan tie-up
including new apparel brand
Photo ; The partnership envisions letting Uniqlo customers pick up
online orders at 7-Eleven stores in Japan.
TOKYO
-- Japanese
retailers Seven
&
i
Holdings and Fast Retailing are making plans for a
wide-ranging partnership covering everything from
product planning and production to sales and
distribution.
The convenience store giant and the operator of the Uniqlo casualwear chain will create
a new brand for apparel as early as this year, tapping Fast Retailing's expertise as a clothing
designer, manufacturer and retailer. Seven & i has been pursuing an omnichannel strategy
integrating e-commerce and brick-and-mortar stores. It aims to cultivate a unique brand that
will become a major customer draw.
Uniqlo will let customers pick up online orders at any of the roughly 18,000 7-Eleven
stores across Japan. It is mulling permitting returns there as well, which would let
consumers use their neighborhood convenience stores as Uniqlo outlets of a sort.
The partners intend to work together overseas as well. Seven & i's 38,000 locations
outside Japan can complement the sales network of Uniqlo, which has sought to tap
overseas markets amid diminishing room for growth in Japan.
Seven & i and Fast Retailing will consider sharing logistics centers and jointly distributing
products. In addition to its convenience stores nationwide, Seven & i also owns Ito-Yokado
and Sogo & Seibu, which sell clothing and household goods in major urban areas. It aims to
streamline distribution through better use of logistics networks.
Seven & i's group sales, including convenience store franchises, broke 10 trillion yen
($79.9 billion) for the first time in the fiscal year ended Feb. 28. It is the uncontested winner
in the convenience store market, boasting a nearly 40% share. Fast Retailing leads Japan's
specialty apparel retailers, with a nearly 10% market share. This partnership between
industry giants with strong product development and sales capabilities could send rivals
scrambling to follow suit, industry watchers say. (Nikkei)
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