January 8th, 2009
08:42 AM GMT
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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