An Unhappy, Aggressive Japan?
The LAT has a rather depressing take on Japan's current climate. Michael Zielenziger discusses the usual phenomena -- aging population, record suicides, youth underemployment --associated with Japanese angst. He then goes on to ominously predict the possible impact that a Shinzo Abe government will have, asking "Is it so far-fetched to imagine a day when a re-armed, angry and nuclear-potent Japan cuts its ties with Washington in order to reassert a more independent foreign policy?"

I think it is. Falling birth rates may worry demographers and children's wear executives, but it's unlikely that it upsets the average Japanese very much. In fact, the birth rate has turned up, albeit marginally, which seems to indicate that some more good economic news will help matters further. Anyway, if Japan is in danger of dying out, so are Italy Spain, the U.K., and, masked by the overall (and relatively high) US birth rate, upper middle-class New Yorkers.

Moreover, while nationalism may be on the rise among some (a few?) of the young, Japan remains deeply committed to pacifism. Indeed, the key symbol of Japan's imperial state, the Emperor, is an institution that receives little attention among Japanese youth. The Japanese remain reluctant to assert themselves overseas. If there has been an uptick in the willingness of Japanese to consider nuclear weaponry, well, maybe a few North Korean missiles flying over Japan has something to do with it.

Few people would argue that Japan is a cheery nation filled with happy-go-lucky people. But it would be worthwhile to wait a couple of years to see if the exit from economic malaise might stem the negative trends and outcomes Zielenziger describes.

Business Confidence Improves for First Time in 3 Periods
The level of business confidence at large Japanese companies is up -- and up substantially -- for the first time in three quarters. The index of business conditions for the July-September period for companies capitalized at over Y1 billion yen rose to 10.5 from 1.8 in the April-June period; for large manufacturers, the index rose to 12.7 from 1.4. The index is expected to be 10.7 for the October-December quarter and 7.9 for the January-March period. For midsize companies capitalized at 100 million yen or more but less than 1 billion yen, the index rose to 3.2 from minus 1.5 in the previous quarter. 日経, Kyodo

Abe to be Next Prime Minister
As widely anticipated, Shinzo Abe will be Japan's next prime minister (PM). He received 66% of the vote to be president of the Liberal Democratic Party, which holds a majority in the Japanese Diet. Thus his elevation to PM at a September 26 vote of the country's legislature is assured. Soon to be 52, Abe will be Japan's youngest PM. Supporters are optimistic he will continue the popular policies of outgoing PM Koizumi, while detractors believe his conservative beliefs will rattle relations with China and other Asian neighbors.

The general outlook on his pending accession can be found at Bloomberg, while this Mainichi piece focuses more on his political pedigree (his father was a foreign minister; his grandfather, a PM). The AP report focuses on the opposition forming to his conservative policies, which include an emphasis on patriotism in Japan's public schools. The FT editorial is balanced and thoughtful.

Slow Car Sales in Japan -- Why?
A little while back Business Week ran a piece on how car sales in Japan have been lackluster. Given the improved Japanese economy, sluggish auto sales are indeed a surprising phenomenon.

According to the Japan Automobile Dealers Assn., total passenger car sales fell 1%, to 3.07 million units during the first six months of 2006. Strip out mini-vehicles—low margin, tiny cars limited to 660cc engines—and the figures are worse: down 3.8%, falling below 2 million units for the first time in 23 years.

The article says no one seems to have a clear idea of why sales are so dim.

Why anyone would want to own a car in Japan -- at least in the major metropolitan areas -- has always been puzzling for foreigners. Roads are jammed, gas is expensive, and public transportation takes you most anywhere you want to go comfortably and reliably.

The article touches on several possible reasons for the decline -- a decreased emphasis on market share by Japan's carmakers, a lower birth rate, a changing income distribution. Discussing the phenomenon with friends in Japan, I have heard related or different social/cultural reasons for low car volume:

• The social norm of the Japanese nuclear family is changing, with many men and women not marrying until well into their 30s or not at all, and women pursuing careers more actively. With fewer traditional families, the need for Dad to buy a car to maintain the status of the family (and his own) has been diminished.
• The percentage of the workforce that are "freeters" -- temporary employees -- has grown enormously, accounting for 20% or more of staff at large Japanmese companies. These workers do not have the job security that would allow them to purchase an auto.
• Video games and other consumer electronics sompete with autos more vigorously for the attention of young Japanese guys. They may be more interested in the latest video game than the latest car model, thus making a lifelong love affair with autos that supports new car sales less likely.

It could also be that many Japanese have finally realized that they don't really a need a car.

New Book Highlights Elders' Consumer Preferences
"Mirai-shijo Kanzen Koryaku Gaido" is a new book on the buying habits of Japan's elderly and not-so-elderly. As reported by Asahi, some of the findings are predictable, such as relatively few purchases of Western-style foods. But some of it is surprising, or at least interesting: while older people tend to avoid foods that hard to chew, they are still big fans of senbei, those hard rice crackers.

The book is based on stats from the Ministry of Internal Affairs and Communications' annual survey of household spending. Perhaps displaying self-interest or at least some wishful thinking, Asahi notes that the authors (23 students at the Shizuoka University of Art and Culture) believe the publishing industry should continue to do okay, since Japanese from 50 on up still spend considerable sums on newspaper and magazine subscriptions.

Quality of Japanese Products Deteriorating?
I'm not sure what to make of this New York Times article on the decline in the quality of Japanese goods. Often such pieces are written after two or three notable cases are suddenly labeled a trend by journalists eager (or desperate) to find something to write about. The article cites Toyota and Sony as major culprits in quality decline. But the former's reputation, at least in the US, does not appear to be suffering the least bit, and the latter has had business problems for some time.

During my time in Japan during the Eighties, Japanese would often tell me that their vaunted reputation for quality excellence applied only to goods destined for export, and that the product quality of items destined for domestic consumption wasn't that high. It may be that with globalization trends this distinction is now blurred, and that a laptop battery is not easily labeled as Japanese or foreign. It may also be that the Japanese now have higher standards for domestic companies and the goods they produce for their countrymen and women.

The article cites the nefarious effects of Western influences, both business and cultural, on Japanese society. But it may be that Sony, Toyota, and other big firms are intrinsically less purely Japanese companies, that both staffs and product components are more international than they once were, and that Japanese firms are more exposed to external influences than they were 20 years ago.

Forbes: Japan Is Back
Another article on Japan's comeback, this one from Forbes. The highlights:

• After an extended period of flat stock prices, "many say" it is only a matter of time before equities rise.
• Mentions four smaller Japanese companies that are doing excellent business: Fujimi, a maker of silicon wafer polishing materials; Strawberry Metals, a producer of high-function hinges for mobile phones; THK, a machinery maker; and Horiba, an engine-measuring equipment producer.
• Financial institutions, steelmakers, and trading houses have all undergone major renovation and are doing well.

Most interesting quote:

By migrating from mass-market production to high-tech and high-valued-added manufacturing where entry barriers are extremely high, Japan has enjoyed near monopoly in segments such as car parts, precision equipment, electronics components, fine chemicals and ceramics, as well as fine metals, all of which bolster economic growth.

Abe Would Reinforce Conservative Path
It appears likely that Shinzo Abe will be the next prime minister of Japan. This Asia Times article takes a detailed look of what his accession may mean for Japan's foreign policy and its relationship with the United States. One recent development the writer mentions, which is validated by my conversations with friends in Japan, is the rise of a new nationalism. The arrival of Abe will likely strengthen this trend.

It seems only natural that, 60 years after World War II, Japanese feel more confident about their country's role on the world stage and less guilty about its past atrocities. On the other hand, the level of hostility toward Japan still runs high in countries like Korea that experienced Japanese imperialism. The anger over visits to Yasukuni Shrine by leading Japanese politicians may seem overdone, but they remain a source of contention and resentment by Japan's neighbors.

Whether any of this will mean much for Japan's economy is open to question. Businesspeople of whatever nation want the highest quality goods and services at the lowest price, and political considerations are secondary at best. And as the article suggets, even Abe may may decide that such gestures as visiting Yasukuni Shrine may be more trouble than they are worth. Indeed, just as the Republican rank-and-file have generally acquiesced in spending by George Bush that they wouldn't have accepted from a Democratic president, the Japanese right-wing may feel relaxed about a prime minister Abe who foregoes visits to Yasukuni.