January 8th, 2009
08:42 AM GMT
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TOKYO, Japan - "Mon dieu!" The French woman put down the package of six tomatoes, stared at her husband and shook her head. A few minutes later, another couple wheeled down the produce aisle, said some phrase in a language I didn't quite understand, and walked away from the cilantro. I was in my own sort of dilemma: what eloquent phrase to accurately express my sticker shock at the price of an avocado.

The faces are from around the world at my neighborhood grocery store - Korean, Chinese, European, Canadian and American. These expatriates are paid in their nation's home currency and shop here, at this grocery store. It's a rare jewel in Tokyo, where expatriates can have a slice of home when you're tired of eating sushi. And in this small store, you get a local taste of the global pain being felt by Japan's most powerful multi-national corporations: trying to compete in a world where the Japanese yen is stronger than virtually every other currency in the world.

You hear two primary reasons why Japan's exporters are getting hammered in the global economic slowdown: weakening demand by the world consumer and the strong yen. The yen is so strong that analysts say when it ticks up just one level, Toyota loses US$350 million. A year ago, the yen was trading at 120. After October, when the yen surged and every currency plummeted, to see the yen now hover at 85 is no longer a big surprise. But for the company trying to staunch the red ink amid a recession, the strong yen is landing a double-whammy body blow to corporate bottom lines. The currency problem is making it even tougher for them to look toward recovery and tougher to compete in the current global economy.

Back at my little grocery store, you also see far fewer Chinese faces. Last summer, Japan bet that the newly rich Chinese tourists would make up a majority of the tourists into Japan, even setting up a new tourist bureau. But the currency has changed that prognosis, as tourism plunged. The price of food, the price of a hotel stay, the price of virtually everything is higher if you're paid in a different currency, even if the yen price appears unchanged.

"It could all be worse," said an expat I recently met who hails from Peoria, Illinois, USA. "You could be going home like me." He works for a company based in Illinois, and has been told to pack his bags and head back to the Midwest. This move was something he hoped to avoid because despite its tremendous cost, Japan offers a fascinating overseas experience. But that cost is making it no longer attractive for his employer to keep him overseas. Companies based in Japan, such as Toyota, Honda and Nissan, don't have that option. They just hope the monetary policy will change in Japan and something will help bring the yen somewhat in balance with the other world currencies.

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Filed under: BusinessFinancial marketsJapan

soundoff (5 Responses)
  1. Paul Harris

    Wouldn't this be the perfect time for America to ship all their unsold 'American' cars to Japan. Make driving an American car the new fashion trend in Tokyo!! Don't forget that's how Japan dominated the American market. What about 'Apple' etc., etc., come on America move it!

    January 8, 2009 at 6:10 pm |
  2. earle,florida

    This really baffles me how a country with so many superior products,quality control,fanastic management/with humble compensation,be taken to the back of the barn for a lashing! The best of the best has to lower it's standards,is unexceptible, but a painful reality for their future,..they can't even win by losing!

    January 8, 2009 at 6:45 pm |
  3. sandra

    China is were it is at. Even in this tough world economy China still anticipates an economic growth of 8% to 9% in 2009. The trick is understanding the nuances of Chinese business culture, making the difference between success and failure. I highly recommend On the Frontlines: Doing Business in China DVD series – http://www.chinadoingbusiness.com to gain insightful access to business leaders and politicians working and living in China.

    January 8, 2009 at 7:43 pm |
  4. lauro silva Brazil

    Really that economic situation in Japan makes it quite difficult to imagine any way out of the current crisis taking into account the very strong yen along with a plunging tourism activity. On top of that it gets worse when you have too many people living in a so small area. In case this international crisis goes much further, economy in Japan will have to adopt an opposite economic procedure to that one ocurred in the poor european countries when euro came to stay.That means all properties,such as cash, stock,real estate that may cover the liability of Japan have to suffer gradual devaluation aiming at a balance in currency with other countries. The present difficult economic situation in Japan is a  consequence of a pure generalized speculation over the last 20 years Otherwise dear Kyung Lah you will continue hearing not only ´´Mon dieu´´but also ´´Goddamn that´s extremely expensive!- Mein Gott, das ist zu teuer!- Dio mio che caro è questo!- Caramba que caro!-! Dios que caro es eso! Τι ακριβό είναι αυτό! etc etc.

    January 8, 2009 at 10:14 pm |
  5. CJ from Guam

    Unfortunately this is going to be the sign of the times really for the time being. The Japanese have impacted Guam also by not coming to holiday in the tropical paradise, even though the Yen is strong. It goes to the sentiment of the Japanese people who, I beleive, think that even with a bargain vacation on Guam, they think that their situation is going to get far worse real soon. That is the real scary part!

    January 9, 2009 at 5:36 am |

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