October 24th, 2008
09:43 AM GMT
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TOKYO, Japan - American apple pies, English breakfast tea ... these items instantly recall images of their countries of origin.

For Japan, it's electronics. More specifically, Sony Corp. has defined Japanese electronics ingenuity to the global marketplace for decades. So it only makes sense that the Nikkei plunged 9.6 percent on a profit warning from Sony: That it would see a 59 percent earnings drop, year to year, this quarter.

Sony cited poor sales and a strong yen. A double whammy, if you will. Not only is there falling demand from consumers, but the strength of the yen has made business for exporters even more expensive. And the yen was strong versus the U.S. dollar, which plunged in trading into the 94 yen territory.

Inside a major Japanese company today (I'll refrain from naming the company as its earnings report is not out yet,) workers told me something's got to be done. They hoped Japan's government would take a more active role in loosening credit with its allies' financial markets.

But the sense they have is: "We'll believe it when we see it." Until then, they're expecting the bad news to keep coming for Japan's biggest corporations.

A marquee company showing such steep profit losses only confirms to the market what investors had been fearing - that we are in the midst of a true global slowdown affecting the bottom line of major companies.

Next week, Honda will release its earnings report. Analysts widely expect the news will not be good, as automakers see a worldwide softening in demand. Japan is bracing for yet another possible beating for another company, but also to its overall business psyche.

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Filed under: BusinessJapan

October 20th, 2008
11:32 AM GMT
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OPPAMA, Japan – The town of Oppama is about as far away from Main Street, USA as you can get. Virtually nothing here resembles anything American, except for a lone McDonald's on the corner. But stop and talk to 78-year-old fish-shop owner Kohei Ishiwata and he'll wax poetic about the U.S. credit crunch.

Kohei Ishiwata waxes poetic about the U.S. credit crunch.
Kohei Ishiwata waxes poetic about the U.S. credit crunch.

"They made fake money out of thin air!" Ishiwata exclaims, inbetween slicing up thick chunks of fresh sushi.

Step next door to Yuji Fujita's vegetable shop and he'll teach you a thing or two about trickle down economics, Japan-style. "I hope the U.S. economy improves. They're a big influence for us," he says, his 20-month-old son sleeping in the corner of the grocery store that's been in the family for three generations.

The influence is everywhere on Oppama's main street, which relies on the robust appetite of Main Street, USA. Oppama is home to a major Nissan plant. It's the area's primary employer and every part of life here is connected to the automaker.

But automakers are taking a huge hit from the U.S. credit crunch and the global economic slowdown. U.S. consumers, the primary customers for Japan's auto industry, are buying fewer Japanese vehicles. Already inside the Nissan plant, workers tell us they're worried the ax could fall on their jobs at any moment.

But the Oppama businesses that live off the Nissan paychecks also worry about the secondary impact. Oppama fears it could pay in a general slowdown to its community's economy

The financial meltdown is undoubtedly a banking crisis and a market rollercoaster. But it's more than just tickers at the bottom of TV screens and money being moved around in central banks. It's a global problem being felt in neighborhoods around the world.

October 8th, 2008
11:27 AM GMT
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TOKYO, Japan - A businessman on his way home from work stopped dead in his tracks, staring in stunned silence at the closing number on the Nikkei.

The Nikkei Index suffered a horrid day.
The Nikkei Index suffered a horrid day.

It closed down more than nine percent, a percentage loss not seen since the days after Black Monday in 1987.

"It was just like somebody dropping dead and then everything just collapsed," said economist Jesper Koll of Tantallon Research Japan.

But what caught my eye is not just the investor and analyst reaction to the bleak day in Tokyo, but the kind of person stopping to gape at the closing numbers. It wasn't just the investor rubbernecking at the board; it was the small business owner and non-investor.

The global credit crunch has some confusing and unfamiliar words to the Japanese worker: AIG, Lehman, $700 billion bailout... just to name a few.

But what is known across the board is how important the US consumer is to Japan's top tier businesses. Japan is an export-driven economy and the US consumer is its number one customer. If Main Street USA doesn't buy the latest Wii or get a loan for the 2009 Camry, that affects the Japanese worker's job at Nintendo and Toyota.

Analysts over the past week have been saying the Nikkei is reacting now to the global slowdown, not just the action by the US Congress or Federal Reserve. It cares more about the real economy, not just the financial crisis. And that is a much bigger concern and a palpable concern for Japan's bottom line, and why it's no longer just the heavy investor stopping to watch the market drop.

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Filed under: Business

September 16th, 2008
05:51 AM GMT
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TOKYO, Japan - Japan's culture and language is nearly always restrained and polite. So when an economist today told me grimly, "This is very, very bad," I knew, indeed, this was a seismic shift in the entire global economy.

Markets across Asia have dropped all day and are still falling (we are still in the middle of the trading day as I blog). Two of Lehman Bros.' biggest creditors, based in Japan, led the steepest market decline by Japanese banks since 1987's Black Monday.

Yes, this was a very, very bad day in trading, but economists widely agree that Japan's banking system will ride out this storm and manage exposure to Lehman's bankruptcy.

What is the bigger concern in Tokyo's financial sector is what this meant to the companies you and I buy from: Toyota, Nintendo, and Sony, just to name a few. Japan and China are export-driven economies, feeding the consumer demand from the United States. If the financial sector continues to suffer, they reduce loans to consumers. Consumer confidence overall, as this bad news continues, plummets. The impact is that Bob and Betty Ruth in Atlanta, Georgia, pass on buying the new Wii and Prius, affecting the bottom line of Japan's leading companies and overall economy.

And economists say that impacts Japan's export driven economy far worse and for far longer than even the crippling of a 158 year old Wall Street institution.

A very, very bad day, indeed, but if US consumer spending erodes further, says many Japanese economists, the global economy could get even worse before it improves.

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Filed under: BusinessFinancial marketsJapan

July 11th, 2008
08:18 AM GMT
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TOKYO, Japan – The scene is uniquely Japan: Techno-freaks dressed up like cartoon characters, young women dressed like maids and superheroes, and even a dancing storm trooper.

Me interviewing our stormtrooper.
Me interviewing our stormtrooper.

They'd gathered early this Friday morning for the latest tech event: The release of the new Apple iPhone 3G in Japan.

Some 1,500 people camped out overnight through a hot and humid Tokyo summer, but that's hardly a sacrifice, to finally get their hands on the iPhone.

But here's what's unique about this latest tech gathering: The device is American. Made in Japan? Where did that familiar stamp on the back of your electronics go?

While these techies lost one night of sleep camping out for the device that promises portable device nirvana, Tokyo's corporate executives have been losing sleep for months wondering why they didn't invent it first.

In a recent lunch with the Ministry of Foreign Affairs, a good source moaned to me about the state of Japan's electronics market and how it was falling behind.

Why? Items like the iPhone represent, in many ways to the Japanese boardroom, the symbol of the new era of doing business.

Apple and Google are taking not small steps, but leaps and bounds in innovative technology. Japan, once the unchallenged ruler of the world's consumer electronics market, now watches as the Western world schools the East. Remember Sony's Walkman? Neither does anyone who wants an iPhone.

The debate is raging in Japan's government halls and in its corporate pikes. Bloggers are suggesting a coup of Tokyo's grey haired boardrooms so Japan can break from its rigid business rules. Others suggest that slow and steady, like Toyota's model of "kaizen," incremental improvements, wins the game.

There are no such debates on the streets outside of the virgin sales of the new iPhone in Tokyo.These weirdly dressed consumers are merely punching the air with joy, pronouncing a new digital era has finally arrived in their hands. The excitement here is being repeated all over the globe and celebrated in an American company. It's a party Japanese companies know all about. They're just not leading this one.

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