One of the most significant trends of the past several years has been austerity measures taken by governments all over the world in order to try to keep their budgets in control. Much of the support for these actions came from a 2010 paper by Ken Rogoff and Carmen Reinhart of Harvard entitled Growth in a Time of Debt.
Japan is the world’s third largest economy and the United States is the largest economy in the world ranked by GDP. But, these two huge economies do not have a free trade agreement, which strikes the question – why not? Obviously, there are a lot of reasons why these two great nations have not struck a deal yet, but one could be on the horizon.
On April 4th, the Bank of Japan shocked the world by unveiling a stimulus package that plans to inject $1.4 trillion into the Japan economy over the next two years. This large stimulus package is designed to help Japan out of a deflationary cycle and end two years of stagnation.
As political season in China begins between the National People’s Congress and the Chinese People’s Political Consultative Conference, there have been concerns with the consumption of luxury goods. China has gone to extremes measures to prevent the issue of inequality by banning politicians to speak publicly about spending on luxury goods. With increases in social media, people have been able to show how wealthy they are by posting to websites such as Tumbler, Instagram, Twitter, and Facebook. Recently, there was an online argument between a Chinese socialite and a member of a sports car club over who has more money. As Asian countries begin to crack down on the over the top display of wealth, could luxury goods retailers be affected?
“Export or Die”, a phrase that Americans and other countries seem to neglect, has become an emergent dilemma in Japan. An annual trade balance report released last Thursday triggered a sense of crisis in Japan by displaying a huge trade deficit. This is the second straight year that exports have been in the red for Japan. As an export-reliant country, Japan is going to be hit hard by this news without doubt.
Despite already being a large investor in Southeast Asia, Japan is looking to increase its economic ties with countries in this region. To address economic as well as security issues, Japan’s recently elected Prime Minister Shinzo Abe is currently visiting countries in this region. China, as of late, has increased its presence in Southeast Asia both commercially and militarily and Japan is intent on remaining competitive in this region.
With an increasingly interconnected world and growing international marketplace, many companies are searching for opportunities at a global level. Businesses are looking to expand overseas for many reasons—stagnant economies at home, desired growth in their customer base, or even the pursuit for higher profit margins. Whatever the case may be, these businesses are becoming very important for the global economy. Surprisingly enough, not all of these businesses are large multinational firms. In fact, there is a recent trend where small businesses are beginning to follow larger companies in expanding their business operations into foreign markets.
The New Year began with the United States barely avoiding sequestration that many economists agree would have been a giant setback for the U.S. economy that would pile on to the global economic troubles. Not the way to start things off. With the major economies of the world still struggling to return to the growth needed to bring down unemployment there may be good news after all.
The last few blogs here on globalEDGE have not been too optimistic and may make one think that the world may indeed end in December (as the Mayans allegedly predict). This blog will not be much more optimistic. However, instead of just talking about recessions, this will explore some of repercussions or causes that are being observed right now. Specifically, this will explore the potential permanent change in the financial services industry.
Many analysts anticipated the growing possibility of the 3rd largest economy falling into recession in the short future and the time has now come. The analysts expect that Japan will stay in recession in the final quarter of the year due to sluggish trade to China, a strong yen, and the effects of the tsunami that ravished the country over a year ago.
Official data on Monday morning showed Japans economy contracted during the second quarter this year by .03% and then by another .09% between July and September. The increasing contraction trend of the economy is putting more pressure on the government and Bank of Japan to take more steps to boost the economy.
As many of you news readers may know, China and Japan have been involved in a territorial dispute over a small chain of islands in the East China Sea. They can’t agree on a name—Japan calls them the Senkaku Islands and China calls them the Dioyu Islands, but both countries view those islands as part of their territory. They are technically controlled by Japan now due to war treaties, but China has had claims on them in the past so both countries have a case to make for ownership. However, as the islands do not really have much of significance on them, they are viewed as an important symbol of dominance in the often tumultuous relationship between China and Japan. While war or other extreme actions have not been taken yet, the dispute has impacted businesses in the area which could easily impact the world’s economy.
Over a year after the Fukushima nuclear disaster, the future of nuclear energy in Japan is in jeopardy. On March 11, 2011 an earthquake off the Eastern coast of Japan triggered a tsunami that killed nearly 20,000 people, devastated many towns along the Eastern coast, and severely damaged the Fukushima Daiichi nuclear reactors. The damage to the reactors led to a significant release of radioactive chemicals, and a mass evacuation of the surrounding area was conducted. Now, Japan is intent on cutting back and possibly even eliminating nuclear power productions, and the economic repercussions of such a transition are coming to fruition.
To compete in the global economy, a country’s workforce must be knowledgeable, well-trained, and understand the complexities as well as the benefits created by globalization. It’s true that accomplishing these objectives is easier said than done but in our hands lies a great tool to assist us with these goals—and this great tool is simply education. Just as globalization has changed business around the world, it is also changing education. A common trend in higher education policy is the internationalization of education to help students live, work, and be successful in today’s interconnected global economy.
The deals and sales offered during this year’s holiday season captured us all, but companies have been shopping as well. In fact, Japan’s multinational corporations seem to have gone on global shopping spree. This past year, Japanese companies spent a record $80 billion on approximately 620 foreign companies. These international investments could be seen as not only a sign of economic strength, but also as an indication of domestic weakness.
Japan's strong yen has increased companies' desire to grow internationally to the point where the nation is now ranked the third biggest cross border acquirer - a significant jump from being placed 10th last year. Japanese companies have taken advantage of the fact that many of their international competitors have been weakened by the European financial crisis and moved into the market with successful M&A transactions. Data shows that the value of mergers and acquisitions abroad by Japanese firms has more than doubled since last year.
The largest earthquake ever to hit Japan had detrimental effects on its economy. It also crippled Japan's top automakers, causing millions in lost revenue and almost a complete shutdown of the automakers' plants. What caused this supply chain disaster was the Just-In-Time production model that many automotive manufacturers have turned to in the recent years to decrease carrying costs and inventory. For the most part, this model is very safe but during times of supply shortages, having little on hand causes a big problem. As such, one vehicle contains roughly 50 to 100 microchips that control everything from brakes to navigation systems. To continue the car on the assembly line, not one part can be missing. During the earthquake, the main vendor of microchips had damage at its production facility creating a large shortage of a very hard to manufacture product. This shortage of microchips caused the automotive companies to cut production down to 20 to 50 percent of full operating capacity. Consequently, Japanese automakers are losing market share to American car manufacturers because of this shortage.
With the recent concerns in Japan over nuclear power hazards, many around the world are questioning the use of nuclear energy. Some ask if the benefits outweigh the costs while others just question the precautions necessary when using nuclear energy. Of the questions asked, Germany has an answer. Don't use nuclear energy at all.
With articles starting to surface saying that the recent Japanese earthquake could cost the Japanese people over $300 billion in economic damage, I thought it would be pretty interesting to try to put that number into focus. In other words, while $300 billion is a lot of money no matter how you put it, is it really that much damage if a typical hurricane does about $350 billion in damage? Thankfully, the people at The Economist have created this graph that shows the world’s costliest natural disasters so we can put the Japanese earthquake into perspective. What the graph shows is very intriguing.
Recently, we've discussed a lot about oil prices and the factors that drive those prices up. Increased commodity prices are not just isolated to oil or to the Middle East region. According to a recent article in the Washington Post, Japan is getting ready for jumps in food prices as well.
Thanks to significant global price increases in wheat and corn, Japan is likely to take a significant hit. The issue is further complicated by high tariffs imposed by Japan on agricultural imports. The dynamics of global commodities have taken on new facets with the increased interdependence of regional economies.
After 42 years as the world’s second biggest economy, Japan officially fell behind neighboring China in 2010. Many projections indicate that China will go on to surpass the United States as the world’s largest economy by the year 2025.
It is hardly surprising that the world’s most populated country would pass its tenth largest. Japan maintains a significant lead on China when population is accounted for in per-capita measures of wealth. Regardless, this does draw attention to recent economic struggles in Japan. Several indicators of the nation’s economic well-being have recently fallen and Standard & Poor’s went as far as to downgrade the Japanese credit rating from AA to AA-.
One of the most significant events in the flower industry is the annual International Flower Expo in Tokyo (IFEX).
Who is going to be there?
Widespread use of the Internet has led to a decline in the prevalence of traditional brick-and-mortar businesses, and this disparity will continue to shift as more people worldwide are provided with Internet access. Buying online is simply more convenient, and most of the time more affordable than traveling to a physical location and purchasing a good or service. Even more convenient, however, is the ability to conduct business and make purchases while on-the-go. With an increasing number of smartphones sprouting up all over the world, making purchases has never been easier. Mobile commerce is a trend we can expect to see entire business strategies built around.
Japan has received good news. There are now more optimists among Japanese manufacturers for the first time since 2008. Japan has the world’s second largest economy, and things are starting to look up as the country has struggled in past years to overcome its financial slump. One of Japan’s key banks released a report which showed that business manufacturers are improving for the fifth straight quarter, as exports such as gadgets, cars, and other goods are on the rise. The number of businesses reporting that conditions are good is higher than those reporting unfavorable situations, allowing Japan to look forward to future growth.
As of today (July 1st), Japan has significantly relaxed the visa restrictions for tourists allowing the single fastest-growing group of overseas travelers, the Chinese, to be able to travel to Japan. These new regulations will enable another 16 million households to be able to apply for a trip to Japan. This is 10 times the amount of tourist visas that were available before the new regulations. Up to now, Japan had strict regulations regarding visitors from their neighbor to the west; only allowing wealthy Chinese with high annual incomes to travel to Japan. The massive influx of Chinese travelers will hopefully result in a jump in income for many local shopping centers in Japan.
Tokyo, Japan is famous for the outrageous fashion designs that are found not only in expensive boutiques, but all over the streets as well. The Harajuku street styles are known for being extremely unique and inspire fashion designers all over the world. For years these distinctive looks have sparked global trends, but many Japanese designers still have not taken advantage of their designs’ popularity.
It is well known that the auto industry has taken a hit across the globe. With sales and production down and several plant closures, it seems that things are looking grim. However, several Japanese automakers are thriving, not internationally, but in China.
Tokyo was unsuccessful in becoming the host for the 2016 Summer Olympics but it is a city known for its success in many other areas, business in particular.
The damage the stronger yen is causing to Japan's export reliant economy has been large. The new government in Japan took an anti-interventionist policy, which has caused speculators to strengthen the yen even more. It made sense when the Japanese economy was healthy, but now with deflation and a decline in exports, an intervention is just what they need. While the cheaper imports are good for the consumer, Japanese Finance Minister Hirohisa Fujii sees this steep increase as signs of trouble. His concern may weaken the yen, making it easier for companies to export. While trade protectionism between the U.S. and China is a concern, the yen will keep increasing unless an invervention occurs. This short video explains the situation a little better.
As mobile technology improves, many of the cell phones people are using are becoming outdated at an increasingly-faster rate. This is especially the case in Japan, where the latest cell phone can be usurped by another within a few weeks. In fact, the Japanese are so far advanced in cell phone technology that they've had a difficult time taking their cell phones global. So, what does one do with a bunch of outdated phones that nobody wants? Recycle them for their precious metals!
Want to know more about how the top Japanese companies do business?
The Fall 2009 class at Sophia University in Tokyo, Japan has written and narrated a series of podcasts which explain many aspects of Japanese firm management, in addition to presenting the students' perspectives on the issues.
In the current economic downturn, it isn’t surprising to see workers avoiding vacations. Many need the money, and may even be unsure of whether or not they will have a job the next day. But, if they spend all their time working and saving their money, and not spending it, this creates a problem. In Japan, the issue has actually taken a noticeable toll on the economy. Japanese workaholics, or sarariman, often work late nights and stash away their money. Japan, then, needs to find a way to get Japanese households spending their $8 trillion in savings.
The United Kingdom recently unveiled a new plan to revamp its inter-city rail system, awarding Hitachi a contract to develop new, more efficient and lightweight trains, called the "Super-Express". The 7.5 billion-pound upgrade comes in the midst of the worst global recession in decades, but transport secretary Geoff Hoon is confident that investing now will pay off, both in the short term job creation and the long term infrastructure boost.
The average Frenchman works about 18 hours per week, the average Italian – close to 17. Even
Most teenagers dream about owning their own car. For some, it is a realistic expectation that in the near future, they’ll own a car. For others, it’s a long-term goal. Regardless, few can deny the convenience, comfort, and freedom of owning their own car. Japanese youth, however, seem to have other dreams. Japanese automakers say the youth in Japan are more interested in technological goods such as cell phones, computers, and many other Japanese technological marvels. For more on Japanese business, visit its page on globalEDGE!
Japan, the world’s second-largest economy, has a shrinking population of working adults and is expected to lose 70% of its workforce by 2050. This forecast is based on Japan having the world’s highest proportion of people over 65 and lowest proportion of children under 15. A recent article in the Washington Post explains that Japan’s social and corporate cultures are the catalysts of this trend.