Raw Japan

from Summit Notebook:

Expect action in Japanese M&A

After falling off a cliff at the start of this year as the global financial crisis gripped, mergers and acquisitions by Japanese companies overseas are likely to pick up again in the second half of this year, according to boutique Japanese M&A advisory firm Recof Corp.

There won't be a flood of deals, Recof President Hikari Imai says, but the ones there are, are likely to be chunky as Japanese companies expand their frontiers beyond domestic markets where growth prospects are limited.

Geographically the focus is likely to be Asia -- China, India in particular and possibly the Philippines or Australia. And the types of companies looking abroad will broaden as well, Imai told the Reuters Japan Investment Summit.

Recof expects Japanese power utilities, paper, food and beverage and retailing firms to look abroad at markets where they can put their advanced technology and inventory control systems to use.

The sort of companies that up till now have been focused on their home base. Driving all of this will be expectations of lack of growth in Japan's own markets as it climbs slowly out of recession and its population ages -- and saturation domestically.

So Imai reckons yen strength and the big drop in stock markets everywhere mean it may be an opportune moment for companies with overseas ambitions.

from FaithWorld:

Catholic regular at Shinto shrines to visit pope at the Vatican

Pope Benedict has been criticised for his handling of relationships with the world's other religions. On Monday Tuesday, he is due to receive at the Vatican Japan's Prime Minister Taro Aso, who has little difficulty with mixing and matching various faiths.

Though an avowed member of Japan's tiny Roman Catholic minority, Aso regularly pays respects and offers gifts at Shinto shrines. Japan's indigenous religion of Shinto is polytheistic -- its doctrine says the world is crowded with divinities, mostly in natural phenomena such as the sun, moon, wind and mountains. Combining this with Christianity's monotheism may sound like a contradiction, but it is something many Japanese Catholics take in their stride.

Aso's visits have in the past included trips to Tokyo's Yasukuni shrine, which is dedicated to war dead and to 14 people judged by an Allied tribunal to be Class A war criminals. Many in Asia see it as a symbol of Japan's past militarism. But Aso has stayed away since becoming prime minister last year, probably more to avoid offending China than for religious reasons. For more on Aso and his faith, see our post about him when he took office.

Whether visits to Yasukuni overstep the boundaries of Catholic doctrine is a difficult question, according to the Catholic Bishops' Conference of Japan. "This a very delicate problem," a spokesman for the conference told me. "There is the issue of how far the Vatican understands the real nature of Yasukuni."

In the 1930s, when visits to Shinto shrines were made compulsory by the military government, Japanese Catholics asked the Vatican for advice on whether this was acceptable. The reply was that the visits were an expression of patriotism and loyalty, and therefore permitted, the spokesman for the conference said, adding that this may have been an attempt to avert a repeat of the persecution that all but wiped out Christianity in Japan in the 16th century. A second request for instructions from the Vatican after Japan's World War II defeat and the official separation of religion and state got the same answer in 1951.

"But the problem is that Yasukuni shrine treats those who died in the war as gods. The Catholic teaching is that people cannot be gods," the spokesman said. "So worshipping is not allowed. It is not forbidden to go there to think of those who died, but worshipping is not allowed."

"It is the same for other Shinto shrines. As far as we are concerned, there is no god other than the Holy Trinity," he added.

Pyongyang back in black?

North Korea hasn’t yet rejoined the U.S. list of state sponsors of terrorism, but weekend comments from Secretary of State Hillary Clinton that the nation was mulling the possibility were replayed by Japanese media with the same gusto they gave reports on Japan qualifying for the 2010 World Cup.

Pyongyang, an initial member of President George Bush’s “axis of evil” in 2002, was removed from the U.S. blacklist last October, after agreeing to a series of nuclear site verification measures.

“Obviously, they were taken off the list for a purpose, and that purpose is being thwarted by their actions,” Clinton said.

Those actions include a nuclear test on May 25 and a raft of missile launches, all of which is expected to produce a new U.N. Security Council resolution as early as this week.

Japan’s Foreign Minister Hirofumi Nakasone met with his Chinese counterpart Yang Jiechi over the weekend in Tokyo and called for strong U.N. action to broaden measures imposed after the first nuclear test in 2006.

But just how strong is an issue for Beijing, Pyongyang’s traditional ally and biggest trading partner, which is worried that instability — financial or otherwise – in the North may spill over if measures are too stringent.

North Korea’s test of wills

Japan, perhaps the most nervous neighbor of unpredictable North Korea, is also the least able to overtly make its fears felt, after this week’s nuclear test.

Analysts point out the combination of Tokyo’s history of antagonism with the North and the fact that Pyongyang boasts missiles that could hit almost anywhere in Japan pose particular risks for the world’s second largest economy.

Sanctions have already wiped out much of Tokyo’s bilateral trade with Pyongyang, leaving little space for further punitive economic measures.

Developing a pre-emptive strike capability to enable destruction of enemy missiles on the launch pad is an option that some ruling party lawmakers advocate. Prime ministers, including incumbent Taro Aso, have said a first strike would be in line with Japan’s pacifist constitution, if there were no other options.

But even that idea divides lawmakers in the conservative ruling Liberal Democratic Party (LDP), with a party panel pushing for it to be included in a national defence plan, while Defence Minister Yasukazu Hamada has expressed doubts and called for calm.

A general election many expect in August could see the main opposition Democratic Party take power, possibly in coalition with smaller parties opposed to any Japanese military action overseas, further reducing the chances of a drastic change in security policy.

Traffic hampers Japan’s ‘Top Guns’

Captain Takuha Shimoishi is a member of a crack squadron of fighter pilots at the front line of some of Japan’s most sensitive territorial disputes, ready to scramble to check out incursions into the country’s airspace at any moment.

 But however fast the slender 35-year-old leaps into his F-15 fighter, he is sometimes forced to wait in line behind planeloads of holidaymakers before taking off, he told me during a tour of the Naha military base on the southern island of Okinawa this week.

That’s the downside of sharing a runway with Japan’s fifth busiest commercial airport, a hub for tourists from across the region, attracted in droves by the balmy climate and clear, blue seas around Okinawa and its neighbouring islands.

Training flights for the F-15 pilots and their navy colleagues in P3-C surveillance aircraft, who track any incursions by foreign submarines, must be slotted into windows outside peak holiday flight times.

Such dual use of runways is symbolic of the curbs on Japan’s military under its pacifist constitution. It is also seen as a benefit for local people, helping assuage irritation over the noise and other inconveniences of living close to a military air base.

That’s a particularly important consideration in Okinawa, which suffered the bloodiest Pacific battle of World War Two and chafed under U.S. military occupation until its reversion to Japan in 1972. Runway sharing does exist at a small number of other bases, though none as busy as Naha.

Japanese military officers told visiting reporters they had made concerted, and to some extent successful, efforts to win local acceptance of their presence by recruiting islanders into the army.

Samurai night fever

Sports rivalries are bred by proximity, culture and history, and few match ups in Asia have more baggage or bragging rights at stake than baseball games between Japan and South Korea, the respective World Baseball Classic and Olympic titleholders.

Both crowns were sources of national pride, but Japan’s came in 2006 after losing twice to Korea before a semifinal victory over the Seoul side, which wasn’t enthused that a team it had beaten more than once could become  tournament champions.

The 2008 Beijing Games saw Tokyo and Seoul send their top non-MLB squads, but Japan returned medal-less and humbled, including a loss to Korea, whose gold made it the 2009 WBC regional favourite.

In the first rematch Saturday, Samurai Japan won 14-2, a laugher for everyone but the Koreans and pitcher Daisuke Matsuzaka, who displayed the erratic control bedeviling his Red Sox career so far. The “called game” victory ensured the hosts would advance to the second round, while setting up a game against the stunned Koreans Monday, who blistered the Chinese in their next outing.

But pitching, a by-product of near year-round Asian training and why regional teams have fared so well in the early season tournament, was the story in Game Two, with Japan’s Hisashi Iwakuma allowing only two hits but leaving down 1-0.

Ichiro Suzuki woke up the slumbering Samurai with a late single, but Japan immediately followed with a “kanri yakyu” (businessman baseball) sacrifice bunt, even with one out. Japanese media in the Tokyo Dome nodded in acknowledgement, while the foreign press saw this as certain futility, essentially killing the comeback opportunity.

from MacroScope:

Bye bye, Japan

Goldman Sachs has long been a keen advocate of the BRICs -- Brazil, Russia, India and China -- as a new power tool for world growth. Indeed, it is credited with coining the phrase.

In a note, the firm says that even though the group is being hit differently by the global slowdown -- Russia suffering most,  India least -- a uniform drive from the four will return as soon as the cycle starts to turn.

It is predicting big things as early as next year.  It says China's economy is already the third largest in the world and it sees it eclipsing current No. 2  Japan as early as 2010. Furthermore, as a group, the four countries are set to be dominant.

"Our long-term projections envisage the BRICs as an aggregate surpassing the G7 by 2035," it says.

Plum blossoms herald spring in chilly Japan

For many, the cherry blossom is the quintessential Japanese flower, its fragile pink petals symbolising the transience of life and its advent in spring an excuse for “hanami” picnics beneath the boughs, where sake and song flow in equal measure.

But some, myself included, confess to a deeper affection for the more modest plum, whose five-petalled white and pink flowers bloom in February, heralding spring despite a winter chill.

This coincides with the first month of the lunar calendar, and the flowers are included as a symbol of new beginnings in New Year decorations, along with the pine for longevity and bamboo for strength and flexibility.

Imported from China more than 1,000 years ago, the fragrant “ume”, also known as Japanese apricot, was a favourite in the poetry of royal courtiers in the Eighth Century.

Unseasonably warm weather last weekend meant plum trees burst into bloom, wafting sweet scent through Tokyo parks and residential streets.

For those willing to venture further afield, one newspaper listed the best spots for viewing the blossoms in all their variety, from palest white to nearly crimson.