It's Official: Myojo Evades Steel's Grip
Japanese noodle maker Myojo Foods announced that it had avoided the clutches of U.S. hedge fund manager Steel Partners by agreeing to a takeover by white knight Nissin Foods. By buying Myojo, Nissin stands to increase its share of the instant noodle market to 50% from 40%. Steel won't have to go away empty handed, however: the shares are up some 40% since Steel's initial bid, and the firm is Myojo's top shareholder with about 23% of the outstanding equity.

When Will Consumer Spending Rebound?
This article in Bloomberg reiterates some concerns often expressed about Japan's consumer spending. Base wages have declined over most of the past ten years and are now only slowly rising. Companies remain reluctant to hire full-time workers and part-time employment is expanding rapidly. With these conditions, consumer confidence is not high, even with the possibility of higher worker bonuses this winter.

Japanese Gain More Living Space
A recent article by the BBC had this interesting nugget of information: The average floor area of a typical Japanese home increased from 60 square meters in 1963 to 94 square meters in 2003. Such stats should always be taking with a grain of salt and surely encompass all kinds of variables. Nevertheless, it does indicate a trend toward larger Japanese quarters with more room for amenities, including upgraded kitchens that are apparently now a key factor in the purchase decision.

3rd Quarter GDP rises 0.5%, or 2% annually
In the July-September quarter, Japan recorded economic growth of 0.5%, or an annual rate of 2.0%. The increase in GDP exceeded analyst expectations. Although domestic consumption stalled, better-than-anticipated exports produced significant growth. One statistic that caught our eyes was that, while since the fourth quarter of 2005 total worker compensation has risen Y1,800 billion, total consumption was down Y900 billion. So perhaps the problems in private consumptionis are only partly structural in nature; they may also reflect a temporary unwillingness for Japanese to spend that will dissipate with greater consumer confidence.

A New Way of Thinking about Japan
Anatole Kaletsky's Why the sun is rising over Britain, not Japan - Comment - Times Online is a good antidote for a half hour spent with Lou Dobbs or Pat Buchanan. Kaletsky demonstrates why our traditional notions of a strong, solid economy -- high savings rates, high investment, current surpluses -- have become superannuated in a world where manufacturing gravitates to the lowest-cost producer.

Kaletsky discusses the emerging "platform company" that has worldwide name recognition but no factories at all. As production costs costs fall steadily downward, the key for mature economies like Japan is not to invest in manufacturing facilities but to make certain they are fully integrated into the world economy. In this environment, "...countries that embrace high levels of borrowing and financial sophistication, such as America, Britain and Spain, take advantage of excess savings in more conservative countries such as Japan and Germany."

Private Consumption Problems
Here's another article, this one from Business Week, that provides additional details on my earlier post about the export-driven nature of Japan's recovery, small wage hikes, and stagnant private consumption.

Is Globalization a Major Problem for Japan?
There's an interesting article in the India Times on the impact of globalization on Japan. The author notes that the Japanese stock market has had a lackluster performance this year, which he attributes to stagnant private consumption, which in turn reflects the globalization that puts a lid on wage increases. Business investment has been responsible for the growth in the Japanese economy, but the rise in private consumption that had been expected hasn't kicked in.

While Japan's kept its economic system protected from much of the impact of globalization in the 1990s, the rise of China has forced it to change course. Although the immediate impact has been positive in terms of rising GDP, much of the longer term effect will be negative for the Japanese worker. These arguments follow much of the reasoning of Morgan Stanley economist Steven Roach. What Japan needs, says the author, is greater productivity and increased entreprenenurship.

Myojo Foods Fights Takeover Bid
Noodle maker Myojo Foods has declared its opposition to a $194 million takeover bid by Steel Partners, a U.S. hedge fund, and said it had hired Mitsubishi-UFJ Securities to advise it on its strategy. Steel Partners wants to acquire the 77% of the company it doesn't already own. Steel had earlier proposed an MBO but Myojo's executives declined. Yahoo!ファイナンス