miércoles, 4 de diciembre de 2013

miércoles, diciembre 04, 2013

December 2, 2013 4:08 pm

Abenomics brings dilemmas for business

The talking robot launched to the International Space Station in August has sent its first audio/visual message to Earth. Kirobo, the mini Japanese robot is just .34 meters (13.4-inches) long. Kirobo is designed to be able to have conversations with its astronaut crewmates and to study how robot-human interactions can help the astronauts in the space environment©Toyota
Robot dreams: Kirobo travels to the International Space Station to support a Japanese astronaut


The outlook for Japan’s engineers and entrepreneurs is the brightest for 20 years – on the face of it. Prime minister Shinzo Abe’s three-pronged strategy to revive the economyknown as Abenomics aims to help both ventures starting out and conglomerates that have existed for decades.

Tokyo kicked off the year with fiscal stimulus followed by an unprecedented monetary loosening from the Bank of Japan. Following that was the promise of additional reform measures, such as special zones in urban commercial centres where deregulation will go further than at the national level. To add to all that came the apparent removal of funding barriers for entrepreneurs.

For those budding enterprises that do make the grade, a stock market rally instigated by a new flush of investor optimism about the world’s third-largest economy is boosting the chances of successful initial public offerings, should the enterprises wish to raise further capital.


Japanese companies compete hard to remain technological frontrunners in traditional areas of strengths such as the automotive industry. Nissan and Toyota want vehicles with self-driving technology to start rolling off their mass production lines by the end of the decade.

But businesses in other traditional areas, notably consumer electronics, continue to struggle.


Last month Sony slashed its full-year net profit forecast by 40 per cent as the consumer electronics company fell back into the red for its second quarter.

Much rides on whether the group will make good on a promise that its Xperia smartphone range and PlayStation 4 game console, for which it has set an initial sales target of 5m, will help Sony return to profitability.


Sharp, which this time last year warned of doubt about its survival, is fighting back after two years of multibillion-dollar losses.

It is making a $1.4bn share offering and various equity agreements with manufacturers in Japan, focusing on restructuring rather than novelty. “The electronics industry is changing drastically and it has become vital to build systems to provide high value-added products as quickly and as efficiently as possible,” says Yoshihiro Nishida, a manager at Murata Manufacturing, a Kyoto-based supplier of components to Apple and Samsung.

The challenges of introducing structural reforms and fostering entrepreneurship remain.

One recent row is a case in point.


Last month Hiroshi Mikitani, the chief executive of Rakuten, Japan’s largest e-commerce company, who has the ear of the prime minister as a member of a council advising on legislation to boost Japan’s growth, threatened to quit after questioning the government’s commitment to reviving the economy through deregulation.

Mr Mikitani was acting in response to a draft pharmaceuticals bill, one of the first reforms promised by Mr Abe after his election late last year.

Bricks-and-mortar pharmacies oppose the bill’s removal of a ban on internet sales of non-prescription drugs.

Yet Mr Mikitani was dismayed to discover that the planned legislation contained caveats that would prolong pharmacies’ hold over more than two dozen popular medicines, in some cases permanently. If Mr Abe cannot decide on this, he cannot decide on anything,” he said.

Another eternal complaint about Japanese industry is that too many companies make the same things. Their executives complain of profit-squeezing competition yet are loathe to leave money-losing businesses or merge their companies with rivals.


There has been progress this year. Panasonic, for instance, has said it will abandon smartphones, while television makers across the board have trimmed production. But experts agree more consolidation is needed.

Part of the government’s grand plan to haul the economy out of more than a decade of low growth and 15 years of deflation is to encourage businesses to collaborate in the hope that reducing the number of players in a single sector will relieve downward pressure on profits, wages and prices.

Excess capacity plagues virtually every industry, particularly food, retail, chemicals and construction where the top five businesses have as little as a 30-40 per cent share between them.

Changing corporate law is one part of the solution. Mr Abe’s administration is pushing for tax breaks to reward companies that carve out overlapping operations and combine them in a new entity.
Some areas are already witnessing growing innovation.


Japanese engineers at Toyota and Tokyo university this year created a robot capable of holding a conversation about everyday events. Not an answer to mankind’s most pressing needs, perhaps, but certainly a useful addition to the International Space Station, where the robot, Kirobo, acts as a companion and instructor to a Japanese astronaut.

Other breakthroughs will reach wider audiences.

Japan’s prototype levitating train, in development for years, broke the 500kph barrier in testing this summer.

JR Central is aiming to start a Maglev service on a line between Tokyo and Nagoya in 2027. Some have called for construction plans to be speeded up so the service can start before the 2020 Tokyo Olympic Games.

On a smaller scale, one Japanese company is examining ways to reinvent that most basic and quintessential Japanese staple: rice.

Keiji Saikahas spent years perfecting alternative ways to polish the grains in order to remove the outer bran and leave a thin, nutritious membrane intact.

“I feel I have a duty to help protect Japan’s rice culture,” he says. After he worked on the idea for more than a decade, musenmaiwash-free rice – was launched.

By 2011 about 460,000 tonnes were being made, equal to 6 per cent of Japan’s total rice production.
Such ventures indicate that the particularities of Japan make the country a vital testing ground for new technology.

Some developments will potentially be slowed, at least in terms of their commercial availability, by regulation and the need to create the infrastructure in which they can operate, most notably in the case of self-driving cars.

But there are strong imperatives for many more businesses in Japan to work more closely together in order to combat rising energy costs, serve an ageing population and develop cutting-edge technologies.

The country also needs to foster an environment which enables entrepreneurs to keep trying even if a first venture fails.

Shuhei Morofuji’s first business did not survive but his second, operating web-based services to meet the needs of healthcare and medical services for elderly people, saw annual revenue surpass Y10bn ($98m) for the first time this year.

As a fellow Japanese entrepreneur describing the battle to adapt products and services to suit changing demographics puts it: “The person who figures out how to address [demographic-related business challenges] – and it’s going to be through ideas and technology – is going to do very well. That is going to be exportable to many countries very soon.”

As Japan has proved time and again, lessons learned by the Japanese will inevitably be transferred elsewhere.


Copyright The Financial Times Limited 2013.

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