Moomin, Muji, Movies and Mobile Phone Fees
Finland continues to stay in headlines here. After highflying ideas how to turn the world better in World Circular Economy Forum, it's more down-to-earth news that Metsa Village, part of the new Moomin complex in Hanno, Saitama, will open this week. On popular culture front, too, the annual Finland Film Week this week shows new Finnish movies, both human drama and crazy comedy (click here for link).
Meanwhile, the news from Finland tell us that Muji, the brand-less design brand, will open its biggest shop in Europe in central Helsinki, namely Kamppi shopping center. Even bigger headlines here was, of course, that figure skating idol Yuzuru Hanyu won the Helsinki GP. His 3500 fans, all middle aged ladies, spent one week in Helsinki hotels for that. That's more than any big international conference there.
Our pre-opening tour to Hanno showed that the forsaken forest and lake site we saw two years ago there has been developed beautifully by Moomin Monogatari, the special company established to build and operate the Moomin Theme Park, a.k.a. Metsä. So close to metropolitan Tokyo, it's rare you could not see any sign of the usual congestion of urban infrastructure in the horizon, just lake and forest with new lawns, walkways with nicely designed shops and restaurants added in. The actual Moomin Valley Park with the familiar fairytale Moomin House, lighthouse etc. will open only next spring (16 March), but already now you can paddle with locally made canoes on the lake. Hanno is proud for its traditional wood industry. The shops feature both Finnish, Swedish and locally made handicraft. Same for the food selection from rhubarb jams, sea buckthorn juice and berry flavored teas to cookies baked in local school for handicapped children. Special mention for rye bread and Karelian pies from Raimugi, the Finnish bakery in Kamakura.
Another special connection to Finland: through the darkest season December-February the lakeside will feature digitized light show designed by TeamLab, the Japanese creative group who won big acclaim for its light arts in the newly opened Amos Rex art museum in Helsinki. Let's all wish success for this special venture of Finnish culture in Japan!
JAPAN-FINLAND BUSINESS AND INVESTMENT UP
At a Embassy luncheon last week, it was good to hear from Business Finland CEO Pekka Soini that many kinds of Finnish SME's are keen to start business in Japan and that recent Japanese corporate investments to Finland have been all successful and much appreciated. The new interest to Japan among Finnish companies is certainly related to growing disappointment for lack of success in China: many have found it is not such an easy place to sell your products and services after all. The playing field is increasingly favoring the locals and your new ground breaking ideas get rapidly copied, not least by the local people you hire to sell them.
In contrast, Japanese companies, who used to be unreceptive to any new ideas– many of us remember the old "we know everything better ourselves" syndrome – have learned from their tough times that new fresh ideas from outside are, after all, necessary and welcome to invigorate their business. The government, too, has turned from protective against imports to inviting new business and competition here as evidenced at highest level by the two big free trade deals with EU and Asia Pacific countries.
Building on from that, Abe government has now embraced India and welcomed China to join in a further expanded regional "Indo-Pacific" free trade and investment scheme. In fact, Tokyo targets to finalize still this year a tentative agreement on the massive Regional Comprehensive Economic Partnership (RCEP) trade deal that would add the other two Asian giants into current 11 TPP countries. As well, Britain would be welcome in TPP when it cannot stay anymore in the EU trade pact. Government thinks all this will be beneficial for Japan before it is forced to unwillingly start bilateral talks with Trump government next year.
OLD JAPAN LIVES: GOVERNMENT GUIDANCE STILL POWERFUL
The old Japan still lives – and not always to bad effect. One example of old "gentle" government guidance was the recent case of mobile phone fees. With oligopoly of just three big companies sharing the market, we consumers here have been subjected to exorbitant fees up to 3-4 times higher than in other countries. When Suga-san, a head honcho in Abe government, publicly complained about this after hearing locals' pleas on a trip to Hokkaido to review quake damage, we knew something would happen.
First, as always, the financial markets reacted to the comments and the three carriers lost almost overnight 10-15 pct. of their share value. Second, after called in to Prime Minister's Office for personal dress-down on the issue, the three CEO's started one by one announcing "voluntary reviews" to their pricing policies – unsurprisingly exactly 40 pct down as Suga-san suggested in Hokkaido. As it also happens, the cuts will take place next October, just when government is upping the VAT from 8 to 10 pct. and allowing a new entrant Rakuten into the highly lucrative mobile business.
You might call this unforgivable, blatant government intrusion to free competition, but then I would ask you who gave these three companies sole rights to rip off the consumers? Call me old fashioned, but I think this was exactly the right kind of "guidance" that served Japan well in the past and it is pity it seem to have been forgotten in recent years' heavy preaching for benefits of free competition – which it many times is not. As in this case. Consumers' benefit was protected without any change of law, threats of financial punishment or public shaming by presidential tweets and the three companies were brought down to ground from their ivory towers which were not earned, but given. It would be nice if this lesson would also help improve the daily customer service at their branches – today you feel there like you are in a Finnish public health center or social security office, not a branch of big Japanese consumer business.
SOFTBANK'S GLOBAL PROBLEMS – AND PROFITS
The "voluntary" fee cut push did not come good time for SoftBank, who just week before, following the hideous murder of journalist Jamal Khashoggi, lost USD 10 billion of its share value due to its close connection to Saudi-Arabia's young ruler through the mutual USD 100 billion global Vision Fund. Even before that, Softbank valuation had taken a fall when its big holdings in Ali Baba – it's the biggest owner after Jack Ma himself! – lost part of their value in China's stock meltdown. To minimize damage, Son-san cut off his planned appearance at the big Mecca financial hobnob even if many US financiers, the finance minister himself included, pushed on to go there. It might be difficult now for Son to take on the additional USD 45 billion Saudi money that had been already agreed for the fund. Things are a bit different here than in Wall Street and Washington. Yet, many Americans seem surprised to learn only now that Saudis indirectly own big chunks of the most well known US start ups like Uber, Slack and WeWork.
The hit on Softbank asset value was unfortunate also in that it came just when its fresh earning report finally shows better than expected profits – and especially from its investments. The July-September earnings reached to almost USD 7 billion - two times more than even the highest expectation - and more than half of it came the global tech investments.
Not bad results from other Japanese techies either: Sony upgraded its already high outlook for FY2018 to next March on account of better than expected profits from PlayStation sales and so did Sharp thanks to continued cost-cutting under its Taiwan top management. Even Panasonic said it will get its huge Gigafactory for Tesla batteries in Arizona into profits now that the electric car production is finally rising after years of underperformance and losses. All this is not bad these days when China economy has slowed down and even Apple and Amazon warn of lower profits due to weakened markets.
Carmakers are also reporting better than expected results. First out, Toyota said quarter profit was 28% up from last year despite earlier predictions that this year would not be as good as last year's record. Much of its outlook is riding on what happens next in US and China markets, both demand and the rules.
THE TRUMP IMPACT: WHAT WILL HAPPEN NOW?
We'll see soon how the world will change on US midterm election results. If Trump will lose part of his grip on power, how will that impact on his turbulent behavior? Will he slow down to more temperate style or will he become even wilder in his lies and attacks on anybody on his way? How will that impact the financial markets and, consequently, world business and economies?
The first to take pulse on the US news is Tokyo's financial market today.
Tokyo, November 7, 2018
29 October 2018
"Towards better world? Circular economy, collaboration with China"
15 October 2018
"Circular economy, fish market and construction boom"
2 October 2018
"Abe's "third reich": challenges abound"
17 September 2018
"From Osaka typhoon to Osaka fever - dark side and bright side of Japan"
6 September 2018
"Emperor: love, peace and reverence"
23 August 2018
"Summer heat, new scandals and export worries - but Tokyo is best"
8 August 2018
"Petty politicians, bungling bureaucrats and profitable business"
30 July 2018
"While we were on holiday"
17 June 2018
"From Singapore to soccer - wrapp up for summer"
11 June 2018
"Showdown in Singapore, commotion in Canada and cover-ups in Tokyo"
28 May 2018
"Morals and responsibility, blind loyalty and power harassment"
17 May 2018
"Big Business in record results again, but consumer are not convinced - North Korea spectacle continues under Kim direction"
26 April 2018
"Political spectacle approaches grand finale
- people's trust sinking ever lower"
17 April 2018
"Cruise missiles and cronyism, business boom, old people and sumo"
6 April 2018
"Mystery train and other unpredictable moves in geopolitics around Japan"
26 March 2018
"Trump Unchained and Abelympics – Can PM Make the Party?"
16 March 2018
"Anniversaries, updates, fallacies and deception"
5 March 2018
"WHILE WE WERE WATCHING OLYMPICS..."
26 February 2018
"Korean Olympics: sports shine, politics stink"
14 February 2018
"Korea: Murky Politics and Big Business Behind the Sport Spectacle"
4 February 2018
"It's "smile time" in politics, Olympics, economics and business"
23 January 2018
"Moomin crisis, panda frenzy and Olympics turned into political farce"
12 January 2018
"Heisei 30 looks good: share prices soar, PM rides high "
The columnist is a Japan veteran among Finnish business, our Chamber ex-president and today Member of the Board of Trustees.
After running a major Finnish industry company's Japan business for over 20 years, he is now Senior Associate in a strategic consulting company.