Japanization

Soon my friend, soon enough ...

An article I found on Japan; despite all of its accumulated wealth, the country still lacks maturity, and unwillingness to "grow up". A bit confusing, but still interesting nonetheless.

Is Japan Changing?

But didn't the Americans already do that in WW2?

This morning, I suddenly recalled this article which I read on Choosun Ilbo - which pretty much explains on what we can learn from Japan from South Korea's perspective. Out of all the things being discussed and elaborated in the article, I found one to be most agreeable - Japan's inability to change and adapt to modern times, in essence, failure to ride the wave of globalization. Now yes, I know, how can say such a thing for a country whose manufacturing goods are all over the place? If you look closely, they're not anymore. You want to talk about TVs? Samsung is now the world's largest TV maker, and Hyundai overtook Toyota in America's market. They're still up there, but they're not as dominant as they were during the 1980s and 1990s. South Korea has started to take up their fair shair of the world, even their music industry is starting to shine brighter than Japan's J-Pop.

Now I can give hundreds of reasons why (too nationalistic, their attitude being less inclined to learn English compared to South Korea, and there's also the factor where they have such an advanced robotics industry, losing ground in the automotive and electronics industry may not seem to be such a big deal) they are falling behind against their Korean rivals - maybe I'll do another post on that later. But for now the question is, are they changing? Are they reacting positively to these signs? Seems like like they are.

Ex-CEO of Olympus - Michael Woodford

Let's start of with the Woodford Olympus Controversy - the first Non-Japanese to become the CEO of a Japanese corporation, only to be fired 6 months into the job for investigating what seemed to be a potential (okay, maybe the appropriate word would be apparent) coverup by the directors. For being a whistleblower, he was fired. But now since the issue went to headlines, and after much pressure from the public, he was invited to attend a Board Meeting this week, which he accepted. This is definitely fresh and different to how the old-school hard headed Japanese would normally handle things - cover up with your superiority in rank and lobby the media and politicians.

Hiroshi Mikitani - CEO of Rakuten

In another two cases, Yamada Denki, Japan's largest electronic retail chain decided that they will now sell more foreign brands in their stores in a response to an increasing demand and interest for Samsung and LG products. They recently opened a procurement office in China - something which Japanese companies would not normally do. The CEO of Rakuten, one of Japan's largest online retailer, shocked the media by giving a press conference in English - and in response to fears in losing their Jobs, more and more Japanese are taking English lessons to justify / exert their importance in their respective companies.

This is, without a doubt, signs of change - from their inclinedness to learn English, to the way they run companies. However, one key area which still requires improvements is their political system; they need a strong and visionary leader to take them out of this trap. These are good signs - they're probably 10 years behind South Korea now, but that does not mean that they won't be able to catch up. Knowing the level of rivalry between them, and the advantage that Japan has in certain industries, I'm very confident that Japan can pick themselves up again - maybe not to a point as high as where they were, but to the least, high enough to ride the tide of total globalization.

The only question is - how long will it take?

Diasporas; Benefits on Having Immigrants

I used to work as a Hooker - as in a person who hooks things.

I love how they titled the topic of the article which I was reading - magic indeed. Based on the article I was reading, migrants to a foreign country can actually be beneficial based on several key reasons ( map source can be seen here ) ;

1. The "diaspora network" - where one could actually benefit in terms of the networks in which the migrant has to his/her country of origin. In other words, companies/institutions hiring them may not be limited to local networks alone but also be given the opportunity to expand its operations outwards.
2. Spreading money - it is a fact that in general the migrants will be earning more than they would compared to working back home; repatriation of their monies to their homeland therefore would benefit both the domestic and foreign country.
3. Innovation carriage - upon returning to their country of origin, apparently many would set up companies carrying with them the knowledge and experience in which they have gained overseas; allowing their countries to develop.

If we were to exclude Hong Kong (although they have that two government one country thing) from the map; Malaysia would have the second highest number of Chinese emigrants overseas. Although technically speaking, this is entirely wrong - its too apparent that these figures take into account Malaysian-born Chinese (but in reality, as a result of having a large number of dumb Malay politicians they're still treated as China-born Chinese).

But to be fair bringing immigrants into a country is not all that well - if you examine the article earlier, it talks mostly about high skilled immigrants, and by right they would benefit any country they go to. What I believe is meant to be of much more concern is low-skilled immigrants (particularly evident for Malaysia) and how it depresses local wages for works in similiar category, carrying market distortion effects. How would labors of this category be beneficial overall for a country? Repatriation of wages back to their home country is applicable, but what about carrying valuable contacts, innovation or creativity? Even if there were to be any, the amount would be minimal.

High tide for change?

TPP : Japan is in the Bandwagon

Picture unrelated - was meant to be Japan kkk

So now we have Japan trying to join in talks for the Trans-Pacific Partnership thingy - an issue which has definitely left its Mr. Noda in a tough spot; receiving both support and protests from his own people. I have been reading much about this TPP every morning during my Asahi scans. It seems that as much as a number the public try to push Mr. Noda in joining the talks - it is apparent that other industries such as agriculture fear that liberalizing its barriers would result in them having to fight for their lives (even though they pretty much are fighting for their lives in their economy's current state). Here we have some the concerns in which other countries like America have on Japan joining the talks; in short they fear that Japan will be asking for more than they are willing to give.

If you were to ask me I think its high time that Japan starts to shift away from its export-minded economy. Domestic consumption (albeit near ZERO interest rate) is still not up to par as other developed countries. Much of the countries' income is based on manufactured-exports, where technically they should be more skewed towards high-income service based exports by now. This is probably one of the reason which I believe why they're still stuck in the same spot for what, the last 20 years? Actually, to be frank I think this might have something to do with their reluctance to adapt and learn this one language; English. Sure they've got the goods to sell, but if you want to sell a service, you'll need to speak a global language (although there has been reports that this might change in the future).

So what now Japan?

Resource-rich Countries; Cursed or Blessed?

True - at least, at the rate we're going.

In a blog post at one of my favorite blogs / author, a recent study was conducted to refute a research paper claiming that countries with natural resources tends to result in slower economic growth compared to those which are lacking in natural resources. The so called Resource Curse (not to be compared to Dutch Disease) claims that the abundance or availability of natural resources within a country would eventually lead to unfavorable economic outcomes compared to countries which are bare stripped. Since I have yet to find the time to read both papers (will probably write up a summary plus my own personal opinion into it), I'll start by analysing both the Resource Curse and Dutch Disease terms to see whether both of them are justified.

Resource Curse essentially states that countries rich in natural resource tend to grow much slower than countries without them. Based on my readings, the curse is meant to affect a country in several ways;

1. Ineffecient Government System - Revenues from natural resources tends to place the government in a complacent position, in addition to not needing to develop an effecient taxation system (therefore, the public will not scrutinize the government as they pay a miniscule amount of tax). Naturally, arguments over budget allocations would also ensue between each government departments and agencies resulting in a further ineffecient system; emphasizing on one's needs rather than the people.
2. Revenue Volatility - During peaks of commodity prices, both the government and private sector will attempt more aggressive and expansionary policies; borrowing excessively without any proper justifications or evaluations. This may result in bankruptcy or large amounts of debts due as a result of the illusion from the high price of natural resource.
3. Non-diverse Economy & Human Capital - Naturally, the country's economy and human capital would encircle around the natural resource due to the high revenue it which it brings in. There are also claims that this would eventually result in the country neglecting its education-infrastructure, as resource-extraction does not require a large number of highly skilled and talented workforce.

On the other hand, the Dutch Disease refers to the relationship between increase in dependance of natural resource exports resulting in a decline within the manufacturing sector. Essentially, the term refers to the shifts from the manufacturing sector, to both the natural resource sector (be it in the form of raw, manufactured goods or service related) in what is coined as both direct (manufactured) and indirect (services)deindustrialization. In order to minimize the effect, the revenues should be stored or invested abroad (through soverign wealth funds for example) and then revenues brought back over time in order to allow a more stable flow of income (something which I think Brunei is doing; rich, prosperous, and definitely resource dependant - they even have their currency pegged to the Singapore Dollar).

So.

What does all of this tell us? That at the end of the day, essentially (the way I see it) is just how you manage your resource. Now apparently the newer paper does not find any correlation or links between natural resource and economic growth (at least not negative; in fact they found some positive relationships). You can either go with a capitalistic approach (Netherlands, America) or a more socialist approach (Brunei) however at the end of the day, its the corruption-free and effecient management that truly matters. Despite America's criticism over Hugo Chaves' move to nationalize their state-owned oil company, if corruption still runs rampat; it would not pay its fair share on the toll. In any case, until I read both of the papers seperately, I can't really jump to a conclusion on this matter.

But I'm really curious as to which of the two I'll end up supporting.

Capitalism 4.0

Damn Socialists 4.0!

An article I found on Chosun Ilbo (my new favorite English-based Korean newspaper) on how Korea is meant to be a model for a new type of Capitalism (hence, Capitalism 4.0). If so, who were meant to be the holders of the previous versions?

Kinda makes me curious now.