Bank of Japan Meeting: Updated April 24, 2024

 

BOJ members more positive about policy normalization at Jan. meeting

Article Source:  https://mainichi.jp/english/articles/20240131/p2g/00m/0bu/029000c

Ideas:

Just what does normalizing its monetary policy mean exactly, other than maybe adjusting the policy as needed to meet the needs of the Japanese economic, with key interest rate increases or decreases, depending on the current state of the economy.

There are always going to be situations, both major and minor, that might cause some twerks in the monetary policy, such as the earthquake that hit central Japan recently,

Wage growth or wage increases might be the key to the Japanese economy moving out of its stagnation situation and moving out of its so-called deflation situation too.

Wage growth might allow Japanese households to be able to get past the household energy situation and they might feel good enough to begin to spend more and more consumer demand will be part of the Japanese economy again, 

But, as mentioned before, all companies, large, midsize, and small need to participate in wage increases for all in the economy to feel good about what is happening, and if not, then, again, there will an unbalance economy of haves and have nots.

The ultra-loose policy might change but don't expect major wholesale changes and the Bank of Japan is going to move very slowly, to make sure what they do doesn't cause any harm in the Japanese economy.

For example the key interest rate, while at zero or a negative rate, might go to a positive rate of 1, which is still way below the US rate of 5.3 points, but don't expect much more than this for awhile.

At the same time because the US rate and the Japanese rate are still too far apart the Japanese yen, will most likely remain weak, for the time, being, which will be good for foreign tourists who travel to Japan.

The 2 percent price stability target was/is always a goal, that hasn't been met in ten years, but the Bank of Japan keeps trying. The inflation target of 2 percent was always focused on consumer demand and consumer spending and not inflation related to companies passing-on their energy and materials costs to the next in the supply chain.

But most likely there is always going to be cost-push inflation and companies will always be passing-on their costs to the next in the supply chain including the final customer.

The key is to improve consumer demand and consumer spending in the Japanese economy, to where consumer spending it the key driver of economic growth.

There are both positives and negatives to the rates, as they are, but maybe the positive side of the rates, has run its course, and now the Japanese economy needs to see some higher rate to get the economy moving again, including more inflation, which in itself is not a bad thing.

Increased inflation, up to a point, is a good indicator or good economic activity, just like less inflation, such as at 1 percent or below it a good indicator of not so good economic activity, as maybe an economy is depressed or not operating at its normal level.

A 2 percent inflation rate, based on consumer demand and consumer spending, for the Japanese economy, is very good, and sometimes consumer demand and consumer spending is not where it should be.

Its important that all Japanese companies participate in increase wages for all in the Japanese economy, as some 70 percent of wage earners in Japan don't work for large Japanese companies, but work for small and midsize companies.

And while wage increases are important, for wage earners to feel good about their wages and, then maybe they will begin to spend more in the Japanese economy, which will increase consumer demand and consumer spending and then, companies might be able to naturally increase prices.

For the past few years,  maybe consumer demand and consumer spending has not been where it should have been in the Japanese economy along with Japanese companies passing-on their costs even though consumer demand and consumer spending was not where it should have been, as it made an un-natural situation of increased costs and not so good consumer demand in the Japanese economy.

Have a nice day and be safe!

Japan Consumer Confidence: Updated March 28, 2024.

 

Japan's January consumer confidence rises to highest level in 2 years

Article Source:  https://mainichi.jp/english/articles/20240131/p2g/00m/0bu/046000c

Ideas:

Consumer confidence in any economy is very important and maybe even more important in Japan as consumer spending is always not what it should be. 

As consumer prices continue to ease, but not fall significantly it might take some time for the full effect of consumer confidence to be manifested in the Japanese economy.

For example a index number of 38.0 is not that great but it could increase with the continued decrease consumer prices and as consumers begin to feel more confident, creating a synergistic affect in the economy.

The challenges with the Japanese economy, for the most part, is Japanese consumers are not big spenders like US consumers, as Japanese are more savers, or used to be, and the US consumer is more spenders, or used to be.

Consumer confidence is a psychological situation and there can be many unknown variables to what consumers think, What is happening in an economy might have nothing to do with what consumers think or feel and it could be personal or family situations affecting consumer buying situations.

Expectations about the future, such as an increase in wages can improve the mood of Japanese workers and maybe they can expect a wage increase in April and they might spend a little more in the months leading to the April wage increase.

Lately the happiness index of Japan society has not been on the positive side and there seems to be more pessimists that optimists. 

But it wasn't always that way, or maybe it was/is, as Japanese society, for the most part, has been described and positive society, despite typhoons, earthquakes, the lost decade and so on.

Its natural, that after a devastating earthquake a region might be less optimistic and say a region that hasn't seen such destruction.

It might have take the Tohoku region, related to the 9/11 earthquake and tsunami to regain its optimism, and maybe even today, 12 years later the region might not be back to some kind of normal.

But again, consumer confidence, overall, has not been that great since the lost decade period of the 1990's and maybe won't change until real wage increases are part of the entire economy, and not just big company wage increases.

Until that time, consumer confidence is always going to be suspect as part of the the workers in the Japanese economy got wage increases and others didn't.

The buying of durable goods is usually not a daily purchase, or weekly purchase, or even a monthly purchase as maybe households plan when to buy or when they have to related to replacing older durable goods.

The increase in livelihoods most likely is related to an increase in wages, which many Japanese workers haven't seen for a very long time.

Single-member households are becoming more common in many countries and they are beginning a major consumer buying group and companies need to be aware that single-member households are gaining more economic power too.

The days of a husband, wife, and 2 children, unfortunately, might be a thing of the past, and even in so-called traditional Japan, as singles are becoming more of an economic force in all economies globally.

Have a nice day and be safe!

Japan Industrial Output: Updated April 16, 2024.

 

Japan's 2023 industrial output falls 1.1%, down for 2nd year

Article Source:  https://mainichi.jp/english/articles/20240131/p2g/00m/0bu/013000c

Ideas:

A decrease of 1.1 percent is not much, but of course, for investors who are obsessed over every percentage point it might be important.

Demand for semiconductors are both a positive and negative, as the semiconductor industry has been going through periods of logistics and supply shocks the last few years.

The Chinese economy is a different situation, as it seems to be going through a transition or restructuring period, and it will take some time for it to solve.

Japan seems to place a lot of emphasis on industrial output as its related to Japanese export companies, and if industrial output is down, exports might be down too.

In a market economy, not all sectors or industries are going to be positive and there are gong to be some positive sectors/industries and some negative sectors/industries. 

The Japanese car market as been up and down the last few years due to the logistics and chip shortage. For example, in 2002, it was noted that it was taking up to six months to get a new car in Japan, once ordered.

Chips are used by everything electronic now days and maybe chip manufacturers were caught off guard about the increase in demand for chips needed for many different products.

The semiconductor market is very diverse and almost every kind of electronic device uses chips today.

The US and Chinese economies, at the present time, seem to be headed in different directions. The US economy seems to be headed in the right direction, with inflation either staying the same or decreasing. 

The Chinese economy, again, seems to be in a restructuring period after decades of positive growth. The Chinese economy is expected to increase but not at the same level as before.

The Toyota group was hit by some challenges related to Daihatsu, which produces some small cars and some regular Toyota cars too.

It just goes to show, that even a name brand such as Toyota can have some serious challenges if not looked at carefully, as maybe someone in the quality control area, in Daihatsu or Toyota was more concerned with production schedules and not so much concerned with quality control issues.

The area that was hit by the earthquake, while not limiting the human suffering, is not a significant area for economic activity in Japan.

If the earthquake had hit Osaka, Nagoya, or some other major metropolitan area in Japan, it might have been even more devastating.

The decrease of industrial shipments at 0.5 percent, again, is not that significant, as it could be in the margin of error of + or 1 0.5 percent.

The inventory index is interesting, as a decrease or increase of inventories can be strong indicators or what going on in an economy.

If inventories start to trend upward, meaning for example many company's factories or warehouses are starting to have long periods of product not moving, that might be an indication the demand is slowing in an economy.

If the opposite is true and inventories are not sitting in warehouses for very long, can could be an indicators of demand in an economy is strong.

"Fluctuating indecisively" is most likely correct has there are going to be periods of ups and downs, and factories shutdown and or have material shortages and or repairs needed.

The fact that the industrial shipments increased is a good indication that maybe global demand for Japanese industrial products is strong.

And at the same time, the fact that inventories declined is a good indication that maybe demand for Japanese industrial products was strong and companies can't keep up demand.

Production is never linear, upward, as there are always stops and starts in manufacturing, due to material shortages, logistics challenges, downtime for repairs and so on.

The trick, of course, is for manufacturers to be able to plan as much as possible any downtime periods and factor them into the production schedules.

There are probably many different sectors related to production in Japan, and maybe many of them are export oriented, as Japanese manufacturers are noted for their attention to detail such as maybe German manufacturers. 

Even though the Japanese economy is the 4th largest economy in the world, with a population of 125 million, its focus seems to be exporting including the exporting of industrial products and not just Japanese cars or baseball players.

Have a nice day and be safe!

BOJ Kuroda: Updated April 23, 2024

 

BOJ chief Kuroda opposed watering down 2-yr inflation goal: minutes

Article Source:   https://mainichi.jp/english/articles/20240131/p2g/00m/0bu/012000c

Ideas:

The policy board members' median forecast for the core CPI was a 2.6 percent increase in fiscal 2015. Without the effects of consumption tax hikes, a 1.9 percent rise was forecast. In reality, it marked zero percent growth.

The BOJ releases fuller minutes of policy meetings a decade they are held.Ideas:

In this case, deflation might be a general slowing down of an economy, which describes the Japanese economy as being in a stagnation situation.

The idea of 2 percent inflation was a good goal, but even today, in 2024, the idea hasn't been reached except for cost-push inflation related to companies passing on their costs to the next in the supply chain.

Overall prices increases related to consumer demand and or consumer spending has not been reached just yet in Japan. Most likely, if the wage increases  become a reality then there might be some increased consumer spending especially during the May Golden Week period.

Its been almost ten years since the ultra-low policy when into affect, and Japan is not where it wants to be. That is not the fault of the Bank of Japan or the ultra-low policy, as an economy is very complex with many continuous moving parts, and as a central bank tries fix or manage one part, another part become a challenge too.

Most central banks prefer to have inflation between 2 and 4 percent as they feel that is a manageable level. The Bank of Japan prefers 2 percent, and maybe above the 2 percent level most groups in Japan society will become too stressed such as fixed income groups or low-income groups.

The idea of monetary easing is/was to put more money into the Japanese economy, which would make low cost loans more available for businesses and households as a way to spur spending or business investments in the Japanese economy.

No one can say whether the Bank of Japan failed in its goal of reaching the 2 percent level, as in 2024, they still haven't but that doesn't mean failure as the Japanese economy is very complex and many different situations have come or gone, including the global pandemic which slowed down the economy significantly.

It seems the Bank of Japan has been buying whatever since 2013, as a way to prop-up the Japanese economy and put more money and assets into the economy, as a way to lower costs and get businesses and households to spend and take out loans to use in the economy.

But again, not a failure, as an economy is very complex, many strategies that the Bank of Japan has tried has not really taken hold in the economy has expected. 

What has happened, it seems since the pandemic, is consumer prices in Japan has continued to increase and its not related to consumer spending or consumer demand but global prices and the weak Japanese yen, which has increase import prices in Japan.

The Bank of Japan wants to see more consumer spending and consumer demand, but at the same time, cost-push prices keep going up which causes a lot of stress for Japanese consumers and households, which actually reduces consumer spending and consumer demand in the Japanese economy.

The 2 percent goal was always a challenge and there were many variables in the Japanese economy, which might have prevented desirable inflation reaching the 2 percent level.

In April 2024, wage growth might be the key ingredient that is needed get the Japanese economy moving again, along with increased consumer spending and consumer demand, a long with company investments overall.

Unfortunately some might think deflation is good and needed, but it tends to lower the overall growth of an economy with less spending, less demand, and less business investments and spending overall. 

What is needed, again, is solid wage growth from all companies, large, midsize, and small, which might turn into a multiplier effect, meaning as companies increase wages, workers feel better, and then more spending becomes reality in the Japanese economy, and then the cycle of continuous growth will continue for the present business cycle.

The ultra-low policy was always an experiment that many central banks were not willing to try, but give the Bank of Japan credit for trying, while other banks stuck to the traditional fundamentals of monetary policy.

Maybe it was futile attempt to pull the Japanese economy out of its deflation and stagnation situation, but again, its not a failure to try but failure would have been to do nothing and let the Japanese economy continue stagnate with more deflation.

The financial markets are always focused on the short-term and or what is good today, not what is good tomorrow or next week or next month or the next quarter. So there is always a sense of struggle between what the Bank of Japan thinking what is best for the Japanese economy and what the financial markets think what is best.

It was not too optimistic to set a 2 percent goal, but maybe it related to the time period for 2 years, as again, there were just too many variables, acting at the same time, which might have prevented the Bank of Japan reaching the 2 percent goal in 2 years or even 4 years and so on.

Again, financially markets are only in it for the short-term and not the long-term and anything more than 6 months is too much for them to think about.

All central banks have to be very careful about what they communicate to the public as the financial markets feed off of every word that a central bank or banks say.

One slip-up and markets can go into a tail spin and lose millions of yen in a day. For example if the US Federal Reserve says something that the US Wall Street doesn't agree with, millions can be lost and then it becomes a 24 hour cycle reaching every global financially market from every country in the world for 24 hours.

Central Bank board members don't always agree on what is happening in a economy and how to manage or fix a situation in an economy. But usually, you  don't hear about the difference of opinions and central bank board members need and want to have one voice as a way to calm the markets and not cause stress or chaos.

It seemed, from this article, that the Bank of Japan board members were not all on the same page regarding the 2 percent inflation target and how and when to achieve it.

Perhaps, at the time Kuroda was closely linked to Abe and what Abe was trying to do get the Japanese economy out of its stagnation and deflation situation.

Again, there might have been more than one dissenter on the board of the Bank of Japan, as maybe, they might have all agreed to get the Japanese economy moving, but the trick was what to do, seems to be what some dissenters were upset about.

And its not usual for central banks to communicate positive communications, as again, they don't want to sound too negative that might upset the financial markets.

There should always be balance in the communications that the central banks say, with not too much negative and or too much positive that undershoots the forecasts that are given. The key of course is trying to find the correct balance each time.

Whether good or not so good, holding onto policy meeting notes might have been good as if they are released immediately they might caused too much undue stress in the financial markets overall.

Zero percent growth, during the fiscal 2105 period was normal as that Japanese economy didn't really grow much even though there were many attempts by the Abe government to get the Japanese economy moving and many attempts by the Bank of Japan to do the same thing.

But that has been the state of the Japanese economy for many years, and some would say since the late 1980's or early 1990's when the asset bubble crash happens in Japan.

Have a nice day and be safe!

Japan Jobs Availability: Updated April 22, 2024.

 

Japan's job availability in 2023 improves for 2nd year

Article Source:  https://mainichi.jp/english/articles/20240130/p2g/00m/0bu/013000c

Ideas:

The hospitality sector was hit hard by the pandemic, with many workers either losing their jobs and or laid-off, with idea of being hired back later, but the problems is/was many of the hospitality sector workers might have found new jobs and didn't return to their old jobs.

At the present time, there is a labor shortage in Japan, and maybe the hospitality sector, like other people oriented sectors are not able find the right of people to fill the jobs lost during the pandemic.

Its takes time to find the right people, and if many companies and or sectors are having challenges finding workers, it takes even more time needed.

But there are probably a lot of openings for jobs, but young workers, these days, seem to be more picky in choosing jobs, and they want certain work/life experience related to a job.

Just because there are 131 jobs for every job seeker doesn't mean all 100 jobs seekers for the 131 job openings likes those jobs or want those jobs. Young workers today, good or not so good, are looking for specific jobs and not just any job or any company,

There might have been caution in the construction and manufacturing sectors, but at the same time, add in the idea that construction and manufacturing, these days, might not be what young Japanese workers want. Of course rising costs might be slowing hiring, but these two sectors need to pay wages that can attract young workers or they will move to sectors that are more exciting and entertaining.

And not just manufacturing and construction, but all companies and all sectors, need to pay wages and offer good benefits, and good work/life experiences, that young workers want today, if a company wants to get the best talent available.

The unemployment rate has always been low in Japan compared to other advanced economies, but at the same time, there might be a large group of contract workers and or part-time workers employed in the Japanese economy, which might skew the employment numbers.

For example, as an indicator, consumer spending is never that high in Japan compared to the US and one reason might be that many contract and or part-time workers are holding onto their wages and not spending them, like regular wage earners.

But to be fair, to the Japanese society and companies, unemployment during the pandemic could have been much worse, but Japanese companies, while not paying the highest wages, don't layoff workers like in the US. 

What Japanese companies do, if needed, is lend workers to other companies if a company needs workers and or if a company is experiencing challenges they will agree with another company to move its workers to another company, for a short period of time, until business conditions improve, and that way no one gets laid of if Japan.

Layoffs do occur of course in the Japanese economy, as many Japanese companies have adopted western style business practices but many still don't layoff workers.

When there is a noticeable number of workers leaving their jobs, it might mean business conditions are improving and think they can easily find a new job. For example maybe during the pandemic people stayed in their jobs because the economy was not good and maybe there were not a lot of openings for new jobs.

The accommodation and restaurant sector was hit the hardest during the pandemic as sales and profits decreased to the point that many companies in that sector had to layoff workers and or put them on temporary leave until the pandemic had passed.

But now the sector might be having hiring challenges as many foreign tourists have entered the county and maybe the sector can't find enough workers to handle the increase number of guests.

The hospitality industry needs to increase wages, like other companies in order to get the best talent possible. if not, they are going to be left with not so good workers and or have to begin to hire foreign workers like the Japanese convenience stores have had to do. 

Foreign workers might actually be more productive than younger Japanese workers, as maybe they appreciate having a good job or part-time job in Japan compared to some younger Japanese workers who don't want to work the long hours needed in the hospitality industry.

For example, whenever I visit Japan, and go to convenience stores called conbinis in Japan, these days I only see foreign workers and not young Japanese workers. I might see an older worker but almost never an young Japanese worker. 

The same if I visit a fast food place such as Mos Burger, a popular Japanese hamburger place or visit McDonalds in the mornings, I only see older Japanese workers in the fast food places and not young Japanese workers.

A drop to 1.27 is not a big deal from 1.31 as that is less than one worker total. So its not significant. I doubt that workers have noticed a drop to 1.27 from 1.31. Only economists and statisticians obsess over such numbers.

December, because of the holiday period and the upcoming New Year period in Japan, companies might have reduced hiring until after the calendar New Year period begins after the week long New Year period is finished, and or many companies take a week long break at the end of December and beginning of January.

The same with many companies in December and January, as its the Xmas holiday period and the Japanese New Year period, maybe many companies delay any hiring during this time until the end of the Japanese New Year period, which runs through the first week of January.

Not all sectors or companies hire at the same time or same rate, and even in Japan, with many companies/some companies only hiring new graduates in April, many companies do have year-long hiring practices like western companies and they understand workers are available every month of the year and not just in April.

Japanese companies understand to get the best talent they can't wait until April to hire new workers or experienced workers as the competition for talented workers is intense and the need to be able to hire every month of the year, as needed.

Again, maybe only economists and statisticians obsess over 0.1 percent changes but I doubt the average Japanese workers even sees or thinks about the numbers. They are just looking for a job that might interest them and not the numbers.

There are both positives and negatives in people leaving their jobs and or for example decreased in the unemployed numbers. For example if more people left their jobs, that is a good sign that those people see good things in the economy and they are looking for a better job.

The unemployed numbers might have decreased as more people found jobs in the Japanese economy, as the Japan move farther away from the pandemic situation.

And yes, workers do get dismissed in the Japanese economy, as Japanese companies have adapted western style business practices, but the situation, usually is much less than in western countries.

The challenge in the coming months is wage increases. Are only large companies going to increase wages or are small and midsize companies too, going to get increase wages as up to 70 percent of all wage earners in Japan don't work for large companies but small and midsize companies.

Have a nice day and be safe!

Japan Foreign Worker Population: Updated April 18, 2024.

 

Japan's foreign worker population tops 2 million for first time

Article Source:  https://mainichi.jp/english/articles/20240126/p2g/00m/0na/068000c

Ideas:

Japan, for the most part is an attractive place to live and and work and hopefully will get more foreigner friendly in the future.

Of course Japan, again for the most part, has some strict immigration controls and might be challenging for some individuals to enter and work in Japan.

Japan might never be an open immigration society, like the US, but it can go long way to improve some things.

All countries want the perfect model educated type worker, but that is not reality, and the same in Japan, as are looking for specific workers, and unfortunately, not everyone.

Labor shortages in Japan seem to be a reality now, but the challenge is will companies actually use and hire foreign workers or will they be content with labor shortages due the fact that some companies just don't want to hire foreign workers.

Japan needs to expand its use of foreign workers into many different sectors and areas of the country. But there is certain element in Japan that really don't want too many foreigners.

Some have suggested, and it was from an article many years ago, that Japan, or some in Japan, is going to be content to be like Switzerland, which means a lower places in the global order and not worry about economic growth or its spot globally.

But it seems that reality has not taken place, as Japan is now trying to figure out how to fix is labor shortage and how to increase foreign workers in Japan.

Many of the jobs available to foreign workers, actually, jobs that many young Japanese workers have refused to take.

For example, many young Japanese workers, and understandably so, don't want to work construction jobs, and so workers from other countries, who are looking for a better way of life are willing to take construction jobs in Japan.

The same maybe with medical and the welfare sectors, which the jobs might be high stress and or low pay and again, foreign workers are willing to do the jobs that younger Japanese workers don't want to do.

The challenge will be, will Japan immigration, in the future allow these foreign workers to get permanent visas and stay in Japan or will they only be allowed to work in Japan for a few years only.

Some of these workers might be trying to improve their lives with better pay and better work conditions, and some might be wanting to actually live and work in Japan, as its close to their home country.

Despite all of these so-called workers, Japan might still be experiencing labor shortages, and some sectors might not want to decrease their labor shortage and maybe they might not want to deal with foreigners.

And maybe some province in Japan, just can't attract foreign workers such as rural areas, as maybe most foreign workers want to live and work in the major metropolitan areas of Japan.

Tokyo, Osaka, and other metro areas in Japan are always going to get more foreign workers, and the challenge is for companies in the rural areas or not in the metro areas, is to pay higher wages to attract foreign workers to come and work in rural areas in Japan.

But some companies maybe can't increase wages or increase wages enough to get some foreign workers to come to their rural company site.

Many rural areas are now dying out, losing a lot of young Japanese workers who want to live in the metro areas, and as such the rural areas of Japan in a few years or decades, are not going to have any young workers in them.

Have a nice day and be safe!

Editorial: Japan Wage Negotiations: Updated April 21, 2024.

 

Editorial: Japan's wage negotiations a chance to revitalize economy with pay raises

Article Source:  https://mainichi.jp/english/articles/20240125/p2a/00m/0op/008000c

Ideas:

Japanese trade unions might want higher pay raises companies might agree with higher pay raises but also maybe some companies are unable to meet the 5 percent pay raise and the 3% or more base pay.

Yes, this is a situation, maybe due to pressure on all sides companies are going to unleash their long-stored up bank accounts and give the needed pay raises.

There are also two other reasons for the increase in pay. One being its the right thing to do for the good of Japanese society and the Japanese economy, and it give Japanese companies some good public relations points.

The next reason is Japan is in a labor shortage now, and for companies to get the best talent possible they need to pay higher wages as a way to ensure to get what workers they need.

The pay raises eventually could be a multiplier effect, meaning as companies begin to see other companies giving pay raises they too will give pay raises, and then more and more companies will follow through too.

And yes, the key is going to be small and midsize companies, as 70 percent of the Japanese workforce doesn't work for the large Japanese companies.

And there are the non-regular workers and part-time workers who are a significant number or workers in the Japanese economy too.

Japanese companies need to see these workers as being significant stakeholders and not just insignificant numbers to be used and thrown out.

Wages or salaries in Japan are some of the lowest among OECD countries. If Japanese companies had not adopted western style cost cutting measures and given regular pay raises each year, maybe the Japanese economy might not have been in the situation its in today.

Unfortunately, they have prioritized stockholders over employees and employees have not been given the wages or salaries they deserve.

And the worst part is large companies taking advantage of smaller subcontractors by not giving the prices they want or need for their products.

Japan used to have a structure that benefited employees and subcontractors with respect but those days seem long gone as companies place profits and stockholders over the benefits of stakeholders, being employees and subcontractors too.

Expanding investment into people is now the future and the outdate style of business is not going to work with young workers today.

News spreads fast, both good and not so good and if young workers know a company is not offering good benefits or good salaries or a good work/life experience, others will know and not apply to that company.

All stakeholder, these days need to be considered and not just regular workers, but subcontractors too and they too can spread information both good and not so good.

Wage increases need to be permanent and continuous and not just a one-time situation and then the next year forgotten. If not the Japanese economy is going to be an economy of haves and have-not and the Japanese economy is going to be unbalanced and consumer spending will never reach its potential.

Have a nice day and be safe!  

Japan Cosmetic Sales in China: Updated April 10, 2024

 

SK-II skincare sales hurt by anti-Japan sentiment in China

Article Source:  https://www.bbc.com/news/business-68077984

Ideas:

Boycotts usually don't last long and consumers tend to forget what all the noise was about in the first place.

South Korea had its own not so good situation recently, when many Japanese products were boycotted and even Uniqlo was forced to close some of its stores.

But that was then as now South Korean tourists are heading to Japan in record numbers.

At the same time, there are Chinese tourists heading to Japan, even though there might be some media situations causing the not so good situation.

Again consumers, overall, tend to forget what all the noise is about and they get 

back to buying buying what they like despite all of the background noise.

Unfortunately, much of the noise is media related, such as the conservative or 

liberal media keeps up the noise and people see and hear what is going on 

everyday.

SK-!! is a good example of what companies need to do in jus wait out

the situation, keep promoting the products or brand and consumers eventually 

will come back.

Unfortunately, consumers in some countries tend to get carried away with

boycotts, but most people in a country are far too busy to think about boycotts 

everyday and they just want to go about their lives with not engaging in all the noise.

Most likely, because of past transgressions by Japan in the past, there might be 

situations which happen every now and then and its not easy to solve and the 

media has a role in making sure the situation doesn't continue to be a major 

situation.

Brands always bounce back and sales get back to normal after all of the noise is 

crowded out by consumers who just want to buy they like, despite all of the 

political noise surrounding a situation.

SK-!! tend to be higher priced brand but that doesn't stop consumers from buying 

the brand or product. And even prices increases might not affect the demand that 

much if the product or brand, such as Apple as a example are already higher 

priced and a price increase, for most consumers who like a product or brand 

don't even notice a price increase.

Have a nice day and be safe! 

Japan Annual Wage Negotiations: Updated April 20, 2024.

 

Japan annual wage negotiations begin as impetus for hikes grows

Article Source:  https://mainichi.jp/english/articles/20240124/p2g/00m/0bu/020000c

Ideas:

Many Japanese companies might be willing to offer pay increases but maybe some are unable to meet the 3.99+ wage increases that the union is asking for. 

Especially small and midsize companies who seem to have more profit margin challenges than large Japanese companies.

The Bank of Japan thinking might be that key interest rate changes and other policy strategies are only short-term fixes and the bulk of what is going to help the Japanese economy is wage increases where workers feel good about their wage increase and begin spend again in the Japanese economy.

Only time will tell if wage increases can really help, as always there is a lag effect, and maybe by May and Golden Week, the week long holiday each year in Japan, there might be some real changes and there will be more consumer spending in the Japanese economy.

Again, a  wage increase of 5 percent or higher would be good for Japanese workers, but will companies agree to that much. And again, can all companies, large, midsize, and small afford to give a 5 percent + wage increase.

As usual, unions always start out with a higher number when begin to negotiate, and knowing full well companies most likely will not agree with that number, and the real negotiations begin to find compromise in the negotiations.

If and when companies do agree on a number, then most likely they will begin to increase prices on their products, as they need to pay for the wage increases.

Most likely, many small companies will be watching to see what large companies are going to do, and then the small companies will decide to match, if they can, or give an amount that doesn't compromise their profit margins, as smaller companies have thinner profit margins then larger companies and have less room for negotiations.

Japan is has been at risk  of stagnation for a very long time. And some would say, they have been in a stagnation period for a very long time.

The challenge is consumer spending is not as much as it should be for the 4th largest economy in the world, as Japanese consumers, for the most part, are not big spenders like US consumers.

In a market economy, government support for businesses need to be measured, as a government can't do everything. But in this case, support for small companies is good and needed to help them increase wages. 

Many small Japanese companies have compromised profit margins which prevent them from giving wage increases. But with the help of the Japanese government with subsidies it might be enough for many small companies to give wage increases to their employees.

Again, the Japanese economy has been in a deflation mindset along with a stagnation situation for a very long time.

Some might say, Japanese households, with wages that haven't kept up with inflation, have been in a deflation situation, with decreased purchasing power cutting into their wages.

Rarely do you hear the phrase "social duty" as maybe in some other countries or economies that phrase is never mentioned in relation to companies helping society with wage increases.

But maybe that has always been the underlying theme of business in Japan and the Japanese economy, and not so much a "win at all costs" mentality like in the west.

Unfortunately, in a market economy, there are always going to be some who gain, and those who fall behind, and Japan is no different, and all households are not exactly the same with some doing better than others, and deflation will remain for some in Japan for sometime.

If all companies begin to increase wages, there could be a real multiplier effect in the Japanese economy, meaning there might be a real surge in consumer spending in the Japanese economy, as consumers begin to see and feel others are spending too.

Again, Golden Week in Japan will be a real key to see if Japanese consumers are going to spend or are they going to hold on their wages increases and not spend.

If consumers decide to wait and not spend that could be a good sign, that Japanese households are not convinced the Japanese economy is headed in the right direction, and inflation is still a major distraction for many Japanese households.

Its seems, again like a multiplier effect, once other companies begin to see and hear what other companies are going to do with wage increases other companies will begin to do the same thing.

For example, if convenience store operator Lawson is going to increase wages by more that 5 percent, then maybe 7 Eleven, Ministop and others will do the same as a way to make sure that new employees will want to work for them with wages that are the same or more than their competitors.

And the same with other companies in other sectors, such as restaurants, hotel operators and so on and not just big name brand large companies in Japan.

Have a nice day and be safe!