Casino Gambling in Japan
It's no secret that gambling is enormously popular in Asia. Macao is booming, Singapore plans two complexes, and both Taiwan and Thailand may relax its gaming laws.

Thus it's no surprise that a recent report by Merrill Lynch, stating that the possibility of lifting restrictions on casino gambling in Japan is high, is attracting a good deal of attention. Japanese politicians figure that the super Las-Vegas-style casinos will boost regional economies and increase tax revenues. They also likely hope the new gaming facilities, which may include a complex in Okinawa as early as 2012, will attract more tourists to Japan. But with so much competition, it's questionable how successful Japan will be in that objective.

On the other hand, the casinos are likely to have an enthusiastic domestic audience. The Japanese share their neighbors' love of gambling. According to the London Times, Japan's 15,000 pachinko parlors see some 30 trillion yen in action from 17 million players each year. But the parlors are losing some of their luster. Stronger regulations will limit the size of jackpots, which will hurt an industry that increasingly relies on heavy gamblers. A migration to other gambling avenues would appear to be in the offing if the Diet passes appropriate legislation, perhaps as early as 2008.

There are several plays on the casino theme. Konami (9766) manufactures gaming machines and its units are in locations throughout the US and Australia. According to TodayOnline.com, it could team up with an American gaming giant like Las Vegas Sands and Harrah's Entertainment to build casino complexes. Sega Sammy (6460) is similarly positioned.

Aruze (6425) is an interesting story. Because it depends heavily on its pachinko machine business, it stands to lose from gaming operations that draw away customers. At the same time, the company holds a 24.5% stake in the US gaming giant Wynn and thus will benefit from an expanding casino market in Asia.

Citigroup Completes Takeover of Nikko
Citigroup has gained control of Nikko Cordial. Nikko's shareholders tendered some 541 million shares, giving Citigroup 61% control of the scandal-plagued company. The $7.7 billion deal is the biggest foreign buyout of a Japanese company. The Nikko takeover is part of Citigroup's strategy to have 60% of its revenue come from non-US sources; the current figure is 45%. The acquisition will give Citigroup a total of 109 branches in Japan.

Several firms with large stakes in Nikko were unhappy with the terms of the offer, and they could still cause trouble for Citigroup as minority shareholders. Thus the bank may try to acquire additional shares to assure a dominant two-thirds ownership share, enabling it to merge or sell units without the consent of other shareholders. Bloomberg, Forbes, IHT

Japan's Labor Productivity only 70% of the US
According to the Asahi Shimbun, Japan's labor productivity in 2005 was only 70% of that in the US. In technology areas like computer services, productivity was about even, but nonmanufacturing and distribution brought Japan's average down. The numbers demonstrate the potential for improving efficiency through rationalization of the lagging sectors.

Will Japanese Consumer Spending Increase?
An article by Bloomberg forecasts higher consumer spending by Japanese, but the initial evidence offered isn't convincing. The author cites higher interest on savings accounts; but this will only put an additional $13 billion at consumers' disposal, hardly a big amount in a $5 trillion economy. He also mentions a World Bank estimate that consumer spending will help boost Japan's GDP growth to 2.3% this year from 2.2% in 2006, which is not all that notable.

The more convincing argument he offers is the coming spurt of retirements: "The Japanese workers reaching retirement age over the next three years represent 5.4 percent of the population, and have assets totaling ¥130 trillion, almost 10 percent of all personal financial holdings, according to Dai-ichi Life Research Institute." Whether the demographic blip that will boost retirements -- and spending -- for the shorter term can be sustained is open to question; but at least for now it should help prop up consumer spending and the economy.

New Labor Law for Part-Timers

The Japan Times has a long, interesting article on the proposed revisions to the Part-Time Work Law. It discusses the status of part-time workers in Japan and why the new law is unlikely to do them much good (as few as 4% or 5% of part-time workers may benefit).

Accurate statistics about the level of part-time work in a particular economy are naturally hard to come by, but it seems the level of about 20% for Japan is not much different than that in the US. The proportion of part-time workers in Japan appears to have risen four percentage points or so in the past 10 years (or to put it in terms that show a substantial increase, the percentage itself has risen about 20%). Over the same period, the US level appears to have been relatively stable.





As shown in the chart above, the decline the permanent full-time workforce has been significant over the past ten years. I think the decline in full-time work is one reason that Japanese consumers remain tentative about spending despite the apparent business recovery.

As the JT article points out, the disparity in wages among those doing the same sorts of work simply on the basis of whether they are classified as part-time or full-time can be enormous. As in the US, this situation causes resentment among part-timers and, while the article does not say so, anger among full-time workers who fear part-timers will take away their jobs.

The beneficiaries, of course, are the employers, who no doubt face tough competition and need to reduce costs. Still, the situation makes one nostalgic for the Henry Ford philosophy of paying workers high wages so they'll have the money to buy your products.

Latest Tankan Survey Indicates Slight Decline in Confidence

The latest Tankan survey showed a slight decline in business sentiment among leading manufacturers from 25 in December to 23 in March, a bit below expectations of a 24 reading. Commentators ascribed the decline mainly to a less stable US economy. Although the decline was the first in four quarters, the decrease did not represent a signficiant shift in sentiment.

McDonalds Posts Best Monthly Results in 36-Year History

We've written before about the comeback of McDonald's in Japan. March results provide more confirmation of the success McDonald's is enjoying. Sales were over Y43 billion, the highest in the Company's 36-year history; on a same-store basis, they were up 8.4%. A new regular menu, limited-season dishes, and round-the-clock services all contributed to the better performance.