Price of cheese in Japan to rise 30% if politicians don't clean up their act

Yes it is getting to the stage where I am very tempted to run to my local supermarket and start buying cheese in bulk to get me through the rest of 2009! Why? Because if the parliament doesn’t get in order, focus its intended agenda for March, then it is highly likely that the tariffs on 415 different imported goods could go up by as much as 50%!

How could that be if there has been no debate in the cabinet about raising tariffs. That’s a pretty good point. The culprit is not in new legislation set to be passed, it is in old legislation that is about to end. Remember the fiasco surrounding petrol prices this time last year when the opposition party refused to let the LDP force through a renewal of their ‘temporary’ tax cut on oil imports? Well this is a similar situation. It seems that the Japanese government – in all their wisdom – designed their tariffs law (called kanzeiteiritsuho, 関税定率法) so that any reductions that Japan had agreed to under WTO would only have a shelf life of 12 months and that if the government didn’t approve the existing tariff cuts every 12 months then they would automatically shoot back to the higher levels that they had before Japan signed onto WTO tariff cuts. What ridiculous logic. Can anyone tell me how that came about?

Even though it doesn’t feel like it when you go shopping at your local Seijo Ishii (成城石井), right now cheese imports have no tariffs on them at all in Japan. However, if the government is too busy with Ozawa’s illegal slush funds from construction companies then from April 1 Cheese could all of a sudden be slapped with a fixed 30% tariff. That is a lot if you eat real cheese (not that torokeru (melty?) stuff they put on pizzas here).

Some other key items on the list of 415 imports include beef, malt, tobacco and alcohol. How many other vices could they be targeting? Remember, it is a recession. And where would you be in a recession without vices? So maybe it makes sense to stock up on a few steaks, fags, beer, and a lot of whiskey – not to mention the cheese!

Yuri Fujikawa's Sexy Photo Book Cover - 藤川ゆり写真集

In America, former movie stars make good Presidents. In the East, it seems, it works the other way: it takes a politician to become a popular porn star. If you’re lucky enough, you might have seen some photos of the hottest property in Japanese politics, Yuri Fujikawa (藤川ゆり) showing off her cleavage at a beach in her hometown of Hachinohe, 八戸 (not to be confused with the real porn star, of the same name! Warning – NSFW link).

For those that are not up on their Aomori geography, Hachinohe is a smallish town in the east coast of Aomori prefecture at the tip of Honshu. It’s biggest year round tourist attraction is its rather dull fish market (Hasshoku Centre, 八食センター), usually full of local elderly folks, and US Marines from the nearby Misawa Airforce Base (presumably because there is nothing else for them to do in their time off). Anyway, I digress – the point is, that Hachinohe is an extremely quiet, down-to-earth, and above all conservative community. Throw into that mix a young (hot) representative who just released a gravure DVD and a sexy photo shoot book, and you have some fiery topics of conversation for the population of sleepy old Hachinohe (and far beyond!).

Anyway, before we go on any further, here is the first part of Yuri Fujikawa’s DVD (You can watch the full DVD at the bottom of this article!):

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I was mentally preparing to write an editorial piece complaining about the new lows that Japanese politics has stopped to, but maybe it’s not quite as bad as it appears. After all, she does have a bit in common with the likes of Arnold Schwarzenegger and even Ronald Regan.

Yuri Fujikawa in the Hachinohe Parliament

What is more important to a politician than grass roots support? As even a joshikosei (女子高生) can see with the current nejire kokkai (hung parliament, ねじれ国会) it is very clear that a political party can’t instigate real change without a firm majority. Likewise for individual candidates. Without a solid margin between you and your closest competitor, politicians are forced to parade populist policies to the electorate in order to win votes. What we really need are politicians who have the balls to announce controversial, ground breaking policies and they can’t do that if they’re constantly worried about the next election. When Fujikawa was elected to the local parliament in Hachinohe (八戸) she won double the votes of her nearest rival in the Komeito (6962 vs 3665) and drew the biggest voting turnout (56%) in the town for 12 years despite it being a rainy day. That is what I call a mandate. How is that any different to our old friends, Ronnie or Shuwa-chan (シュワちゃん, what the Japanese call Arnie)? Let’s take this and run with it for a moment (and please don’t bring any parallels with Sarah Palin and her beauty contest).

To tell you the truth, I was just starting to find Japanese politics interesting again. The big thanks go to our current charismatic PM, Taro Aso. First they portrayed him as uneducated when he misread some Kanji (hell, I do that all the time). Then they portrayed him as being insensitive as he publicly trashed both the medical community and pensioners which I might point out happen to be two key sources of votes for the LDP (yeah!).

Fujikawa on the campaign trail

Bet lets put aside the face value of his comments (although I must say I tend to agree with some of them) and focus on what was going on inside his brain. This is a man who is being honest with the public. Making controversial statements is a helluva lot better than consistently lying to voters with unrealistic promises around election time. Remember this is also a politician who openly admitted he was a Manga Otaku. Sure, I think that’s a little weird but who cares. He’s not hiding anything in the closet.

The kind of politician who is willing to speak out against large groups of his own supporters, is the same kind who will have the balls to announce an unpopular policy for the good of the nation (like raising the consumption tax in three years time). Aso’s problem though is that he doesn’t have enough support. He’s missing the Fujikawa mandate. Unfortunately that is going to rob us (Japan) of a politician willing to make tough decisions. In fact it has already started. The moment that Aso’s popularity fell below 40%, his mandate disappeared. The Dons of the LDP started rebuffing – one by one, each of Aso’s decent proposals – the consumption tax, tobacco tax, etc etc. Oh, and you guessed it, the only thing they let him hang on to was the evil ばらまき (baramaki, blatant handing out of cash to electorates in order to win votes) in a desperate attempt to try and win votes when the parliament is dissolved early next year. Japan can’t afford to rob the the 埋蔵金 (maizokin, the reserves previous governments had made in order to repay government debt as it reaches maturity in the future) grave. Stand up, Aso. Put on your bikini! And film a sexy DVD in the beaches of Aomori… for the people of Japan!

Yuri Fujikawa In front of Hachinohe Shiyakusho

For those of you who haven’t been keeping up with the chatter on 2-channel, Yuri Fujikawa (official homepage, official blog) is a 28 year old female member of the Hachinohe (八戸) local government. She’s officially an independent but is a member of the Liberal Democratic Club (自由民主クラブ, jiyuminshukurabu) and officially campaigned with Abe in the upper house election in 2007 so it’s fair to say has a reasonable amount of LDP in her blood. In Japan’s true “tall poppy syndrome” style, she’s been criticized as being “too pretty” to be a politician. Who cares? No-one said that about Koizumi when his good looks attracted a lot of young female voters to vote for the first time. Fujikawa alienated the local pollies who had supported her Dad when she suddenly released a gravure DVD and photo book (写真集) to promote the town. Come on! The town is filled with conservative old fogies and colloquially referred to as a bee’s fart (蜂の屁, hachinohe) – it needs a bit of publicity – Good on her!

The key point here is whether or not Fujikawa is contributing to her local electorate or not. And I don’t mean by cheering up recently risutora-ed (リストラ, fired) local salary-men with shots of her cleavage (although undoubtedly a welcome side effect). As far as I can tell, she’s using her new found popularity to raise citizens’ awareness of local issues and push through policies to turn Hachinohe into on of Japan’s most environmentally forward thinking towns. Other issues that Fujikawa is pushing include as local health care, aged care and disaster prevention. No qualms there from me. She’s also been quite outspoken on the issue of the expected negative economic impact of extending then Shinkansen past Hachinohe.

While it is a little less obvious, she seems to have taken an interest in food and recently appeared at a cooking demonstration for the local consumer group, Tampoponokai (dandelion club, たんぽぽの会). Contrary to rumor, I believe that she was wearing clothes beneath the apron at the time.

Much to the chagrin of her denouncers, even if Fujikawa wasn’t contributing to policy, she’s still probably doing her electorate a favor. After all, look at the huge impact that Sonomanma Higashi (そのまんま東) has had on Miyazaki Prefecture’s economy. All he did was effectively use his popularity to appear on nationwide TV and publicize his hometown. It’s a shame that Japan still isn’t advanced enough to appreciate a female doing the same thing.

And to me, the biggest irony is that the DVD footage isn’t even that sexy. It’s clearly been a while between innings for the old fogies in Hachinohe if they think that it is erotically provocative. I doubt that many of the Chinese newspaper reporters that have been making a big fuss (here and here) have shelled out the 4,000 yen to see it either. There are rumors going around that she appeared on a TV Asahi show before she was elected where women fight Sumo battles in the snow in their bikinis (雪上ビキニ相撲). Now that would be provocative. Here are some screen grabs of her in the snow in her bikini, but if anyone has the footage please leave us a link below in the comments section – we’d love to see it.

So, what do you think of her? Here is the full footage of her DVD. Does it turn you on? Would you pay 4000 yen for it? Would you vote for her?

Yuri Fujikawa DVD – Part 2:

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Yuri Fujikawa DVD – Part 3:

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Yuri Fujikawa DVD – Part 4:

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Yuri Fujikawa DVD – Part 5:

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Yuri Fujikawa DVD – Part 6:

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Yuri Fujikawa DVD – Part 7:

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Yuri Fujikawa DVD – Part 8:

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Yuri Fujikawa DVD – Part 9:

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Yuri Fujikawa DVD – Part 10:

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Yuri Fujikawa DVD – Part 11:

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Yuri Fujikawa DVD – Part 12:

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Yuri Fujikawa DVD – Part 13:

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Yuri Fujikawa DVD – Part 14:

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Yuri Fujikawa DVD – Part 15:

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Yuri Fujikawa DVD – Part 16:

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Yuri Fujikawa DVD – Part 17:

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Yuri Fujikawa DVD – Part 18:

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Yuri Fujikawa DVD – Part 19:

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Yuri Fujikawa DVD – Part 20:

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Tasteful front door of a nurse flavored Fashion Health establishment in Akebonocho

But why the sudden boom now? Besides the substantial slow down in M&A in the rest of the market, it seems that demographics are the real catalyst for this boom. The shop owners in this industry are no exception to the aging of society that is troubling the Japan of the 21st century. As their owners slowly reach 70 years old, even owners of “Fashion Health” look forward to their own happy endings and think about retirement. I have a funny feeling that the shacho (社長, president) of such companies have a few more day to day “issues” to deal with in addition to keeping the accounts balanced and would enjoy the peace after retirement more than most. I really can’t imagine how an elderly man would keep his own against a dispute with his friendly neighborhood Yakuza.

Quite recently the owner of “A”, one of Kabukicho’s most famous fashion health establishments is said to have rode this wave of M&A and sold his business to a more energetic young entrepreneur. According to our sources, the greatest number of similar transactions have been in Shinjuku and Yokohama although due to the nature of the business, it is hard to get hard figures.

The beauty of the concept is simple. Unlike call girl services, the customer doesn’t have to pay for a hotel room. What you save him in hotel dollars, he can spend with you… being more of a frequent flier. Although as the shop operator you have to provide rooms, at an average take of about 8000 yen for 40 minutes, you hardly have to worry about capacity issues. Popular stores are said to turn over there rooms about 5 times a day. Even when you factor in that the shop splits the take 50:50 with the “companion” that still makes for 20,000 yen per room per day. It doesn’t take a nuclear physicist to work out that with a tiny 10 room building you are talking 200,000 yen a day or about 70 million yen a year. If you are willing to compromise on quality (and safety standards) then it’s unlikely that a building that size is going to cost you more than 150~200 million yen even in Tokyo/Yokohama. Needless to say this is a gross yield and so you have to subtract a bunch of other costs first but your ROI will still be quite respectable.  For the owners, it’s not a bad deal either – they’re willing to shift into a slower gear and they get a bit of a golden parachute to thank them for the efforts in building the business.

The transaction must be structured carefully. Because the law states that the license for fashion health can only be continued for one generation, this loop hole only exists for owners who were smart enough to own their business and apply for their license through a corporate entity. That way, after any sale, the owner and operator of the business remains the same and it is only the shareholders of the business change (this is a trick that is often used in many countries to avoid real-estate transaction fees and taxes). All the new “owner” then has to do is change the management of his company and he has control of his newly purchased entity. Sounds a helluva lot easier than M&A for normal Japanese companies!

Unfortunately, there is a bit of competition out there. The main buyers so far have been owners of large-scale “health” shops in Susukino and Akebonocho who aren’t afraid of throwing their money where their pants are.  It’s also an attractive option for entrepreneurs in other sub-sectors of the industry, hoping to spread some of their risk.  The most recent transaction that I’ve heard about is for the lease hold of a small shop in Akebonocho (曙町), Yokohama with only 5 rooms that apparently changed hands for 30 million JPY. In that neck of the woods your going to struggle to get 500% occupancy like our previous example (damn that would mean a gross yield on investment of 100%!!!) but you’re still going to get your cash back in a very short time.  Part of me feels sorry for the shacho getting screwed out of the business he built his life on for such a low price, and the other part of me recalls the havoc that unexpected law changes have done to the consumer finance industry recently and I think that perhaps he’s just lucky to get anything for it.

What do you think? Are you interested?  I remember when love hotels were all the rage about 10 years ago.  A bunch of foreign investors came into the market and bought enough love hotels to make a private REIT style investment fund.  Annual yeilds were supposed to be north of 25%.   If anyone ever hears of an opportunity to invest in a Fashion Health REIT, please drop us a line!

If you haven’t already heard, news broke a week or two that a small firm based in Kawasaki, Teramento (テラメント) Corporation falsely reported to have acquired a 51% stake in six large (giant) Japanese companies: Sony Corporation; Toyota Motor Corporation; Nippon Telegraph & Telephone Corporation (NTT); Fuji Television Network Inc.; Mitsubishi Heavy Industries Ltd.; and, Astellas Pharma Inc. (ソニー、トヨタ、ＮＴＴ、フジテレビ、三菱重工、アステラス製薬). The reports were made through the Finance Service Agency’s online electronic database, EDINET, on January 25th, totaling a whopping 20 Trillion yen (20兆円, US$190 billion) of securities filings.

Between the falling Nikkei, rapidly fluctuating foreign exchange rates, French rogue traders, and not to mention the rest of the world suffering due to the subprime mortgage crisis, perhaps Teramento’s head and only employee, Shigeru Yamaguchi, thought no one would notice.　　Obviously the six companies who have apparently had their majority stake seized by some small, random company in Kawasaki were going to, and no doubt have been puzzled by Teramento’s filings. Teramoto it seemed grew an impressive portfolio overnight!

It has been reported that Yamaguchi executed the orders through Lehman Brothers Holdings Inc., though no one from Lehman’s has said to have received such instructions.

So, the question on everyone’s lips is, why? No matter which way you look at it, it appears to be an amateurish scheme to draw attention, and one cannot help but think that Yamaguchi will end up as nothing more than a laughing stock. The FSA (金融庁, “kinyucho”) ordered Teramento to submit correction reports by January 28th given that there is no evidence of share certificates issued of the alleged acquisitions, but still nothing has been given. Making false shareholding filings can bring a maximum 5-year prison sentence or fine of 5 million yen, perhaps a bit much for a company with capital of only 1000 yen, but then again, has apparently 100 trillion yen worth of “oil money” at their disposal. While the FSA has not decided whether to treat the incident as a criminal matter, given reports that Yamaguchi has apparently refused to submit corrected reports, the FSA may have no option to pursue such a course of action.

Here is the news clip trying to explain what happened. They interview the owner of Teramento and he denies that his report to the FSA is false. It is quite amusing, although doesn’t shed much light on his bizarre claim:
[MEDIA=2]

But will the FSA do so? In what appears to be a very obvious stunt, performed by a man who seems to be in need of mental therapy, it’s the FSA that may end up with more egg on their face than Yamaguchi.

It is Yamaguchi’s actions that have certainly brought forward the issue as to whether the self-reporting system could be used to manipulate the market. While in this instance, the filings appeared online after the market closed, one must wonder what could have happened had the filings been made public during market hours, considering that EDINET filings are scanned regularly for evidence that hedge funds or other buyers are targeting a company, and investors often trade off the information such filings contain.

Given the stigma associated with the aggressive nature of some foreign hedge funds and other private equity groups whom have up until now been foiled in their attempts to acquire large stakes in Japanese companies, it makes for a different perspective on what could happen to the market if local investors decided to go hostile.

The FSA now must go back to the drawing board and review their filing procedures, examining how to control and regulate the self-reporting system. Though in their own admission, they did not have the staff to check every report, which makes you wonder what could happen if companies and individuals wanted to willfully abuse the system, publishing false reports, even far less blatant than Teramento’s, to achieve their own ends.

So while we can all agree that Teramento, involved in the automobile industry, telecommunications, electronics, nuclear power, broadcasting, pharmaceuticals and aerospace, is just a smoldering pile of BS, they have at least taken the wind out of the FSA and their not-so-trusty self-reporting EDINET system. The effect has been somewhat similar to the effect of “Telament” (perhaps the source of inspiration for the company’s name???), a drug which helps prevent cramping in new born babies by breaking down bubbles and taking the wind out of them (a bit of advice for all those that are pregnant in Japan!

Walking through the main arcade from the west exit of Yokohama station in mid November, I chuckled to myself as I witnessed Don Quixote employees replacing the usual risqué コスプレ (cosplay) outfits from the store front displays and replacing them with Santa and reindeer outfits. As I looked to the other side of the street, Colonel Sanders had already donned his Santa clothes and above him read a banner that KFC were ready to take orders for Christmas Eve. Those reading this article from abroad might assume the sight of this may have shocked or horrified me, but, as is the case after living here for a while, I simply shrugged and moved on.

For those that have spent at least one Christmas here would know that a Japanese-style Christmas is more like an early Valentines Day, but instead of chocolates, couples are more inclined to hock into a Two-piece KFC Feed. Whilst back home the thought of pulling through the KFC drive-thru on Christmas Eve might almost seem sacrilegious, in Japan it has almost become tradition, and the Kentucky Fried marketing dept must be loving it!

KFC opened its first restaurant in Nagoya in 1970, one year earlier than McDonald’s entered the market. Soon after, KFC began an advertising campaign with the Colonel dressed up as Santa, and so began KFC’s monopoly over the festive season. Getting back to the point about Christmas being an early Valentines Day, families are also not forgotten with KFC bringing out family Christmas Packs, accommodating the nuclear Japanese family’s needs, i.e. just enough for mum, dad and their only child.

After living in Japan for a while, the convenience of having a takeaway Christmas dinner is quite tempting considering how difficult it is to have a proper Christmas roast without an oven. While we all might crave for a home cooked roast lamb, beef or turkey, a readily available roast chicken with the Colonel’s 12 secret herbs and spices is certainly more appealing than a trip out to CostCo.

Kentucky Fried Christmas is a fine example of commercialism at its best, and Japan’s hunger for it. As we see Christmas becoming more and more commercial back in our home countries, Japan manages to do one better and add fast food to the mix. Let’s hope Japan doesn’t discover Easter or else we’ll be inundated with another commercially drained holiday. Luckily that falls (usually) at a time of the year when people are still recovering from their hanami hangovers, while Christmas falls at that virtuous time between the compulsory Bonenkai (end-of-year party) and New Year’s.

Anyway, a Merry Christmas to you all from Stippy.com! If you haven’t already booked your KFC feast, better get down their quick or you’ll be forced to join the block long queue!