Why did Keynesian fail in saving Japan's economy?

    Frank  Dec. 4, 2014, in Waterloo, On. Ca. Updated in April 7 2015

    The great economists, and, as well as the entrepreneurs, philosophers are mostly profound insight into human nature. For example:

    Noted economist Adam Smith, his own favorite book was The Theory of Moral Sentiments, while theKeynes, his The end of laissez-faire, I think, was in the analysis of the impact of human nature to social progress. Noted entrepreneur the steel magnate Andrew Carnegie who wrote the Human weakness. human nature and the advantages of communication arts. And the noted Scottish philosopher, David Hume wroteA Treatise of Human Nature, by which Hume strove to create a total naturalistic "science of man" that examined the psychological basis of human nature.

    For the governance of a nation, that well understands human nature or the quality of the nationals is equally important.

    The failure of the Abenomics, I think that, in a great extent, is due to that Shinzo Abe has been over pursuing the means of state intervention in the economy of Keynesian, such as, the fiscal deficit, various government-sponsored fiscal and economic stimulus measures, including trillions of yen in failed public works projects, with ignored that the foundation of the national economy is the quality of the national, which is the initiative industrious spirit of the nationals - hard work ethic, constantly strive to improve productivity, constantly strive to inventions....., which were the high-quality of Japanese people after World War II and once helped that Made in Japan swept the world market for decades.

   From various reports, these noble qualities of Japanese people appear to be fading. The Bubble Economy 1980s provided opportunity for easy gaining excessive profit from speculative activities has fueled Japanese speculative mentality with unearned ideological, which have rewritten the code of the DNA of the quality of Japanese people, from enthusiastic in hard working into enamoring in greedy profit speculating.

   In essence, the national is the decisive factor for a nation's economy. A nation's economic decline is mainly due to the decline of the quality of its national.

                  ---  Frank   March 16, 2015, in Waterloo, On. Ca. 

         Contents

     1. The motivation of the topic

     2. The Rational Macroeconomic Policy of Germany 

     3. Fiscal Deficit has acted as economic heroin

     4. The wrong is not Keynesian but the dogmatic policy makers

     5. Japan exhausted all means of Keynesian but useless for reviving economy

     6. Digging the nature of Japan's economic downturn

         Bubble Economy deteriorated the quality of Japanese people

         6.1. The incredible lazy of Japan’s employees
         6.2. The Japanese disease ruins Sharp & Sony
            6.2.1. The decline of Sharp Corporation 
            6.2.2. The decline of Sony Corporation

     7. Some reports about degradation of the economic entities - Japanese corporations

     8. High-quality of Japanese people before Bubble Economy 1980s

   1. The motivation of the topic 

     Dec. 4, 2014, I read article Can Japan Reboot? The writer is Kenneth Rogoff who is the Professor of Economics and Public Policy at Harvard University and the chief economist of the International Monetary Fund from 2001 to 2003.

     In the article, the Professor provides some suggestions for rebooting Japan's economy due to that Abenomics seems not work after has made a wide variety of stimulus dramatically.

     Since that Abenomics is mainly based on Keynesian theory, so the failure of the Abenomics, is the failure of Keynesian theory, at least in some extent.

     Is Keynesian theory wrong? Or someone else is wrong?

     Aug. 28, 2014, in the article of Michael Sandel, the Sober in the Chaotic World, I once said with that: For hundreds of years, the world economy has been mainly driven by two hands, one is invisible hand of Adam Smith, stressed that the Government give up on market regulation in his book The Wealth of Nations 1776. The other one is visible hand of John Maynard Keynes, which stressing that the government intervenes in the market in his book The General Theory of Employment, Interest and Money 1936.

    Talking about Keynes, most people respect The General Theory of Employment, Interest and Money1936, but, I prefer The end of laissez-faire 1926, by which Keynes tries to reverse the ideological confusion on the laissez-faire of the over play of Invisible Hand.  

    I think of my Feb. 16, 2014 article that Why German Economy Can Fly Against Economic Recession, in which, my comments may provide a rough answer. I excerpt some section as follow:   

    2. The Rational Macroeconomic Policy of Germany  

     In the last century, after the U.S. President Roosevelt successfully saved the Great Depression by the means of the government intervene in the economy, the most of countries take Keynesian theory, such as,Fiscal Deficit, as the magic to sitimulate their economy. Now, most of them are debt-ridden, and some of them become losers with bared buttocks and broken spine.

      However, at that time, rational Germans did not silly go with the flow. May be that they have foreseen that Keynesian Fiscal Deficit is the economic heroin with instant excitement, but long-term fatal. So, they adopts own Freiburg School neoliberal theory that can sustain for long-term stable development. 

      Now, nearly 80 years practice have shown that the choice of Germans is smart prescient.

    3. Fiscal Deficit has acted as economic heroin  

     Feb. 9, 2014, in the article The Fed's waning magic in the age of Yellen, the writer Edward Luce said that: "Every chairman of the US Federal Reserve seems to get hit by a crisis in their first year. Whatever might blindside Janet Yellen, she starts off with a problem that affected none of her predecessors: the Fed has run out of ammunition. Moreover the one remaining weapon the Fed thinks it has – the hocus-pocus of 'forward guidance' – is a gun that fires blanks."

     Many facts show that Fiscal Deficit is not only has lost its positive effect, but also has become economic heroin, and the addiction is quick growing in most of countries. Great many countries have become drug addicts, if, stop using drugs, they certainly can not stand. However, if, continue in drug use, destined to premature death. Now Fiscal Deficit has become unbearable economic nuisance.   

     4. The wrong is not Keynesian but the dogmatic policy makers 

     However, those are not the fault of the great  Keynes, but the fault of the dogmatists of the policy makers, and the ignorance of the governors. They can only draw a tiger by copying home-cat, but they never have ability to independent think according to the actual objective situation that is in changing constantly.

     As my view, one kind of medicine corresponds to one kind of disease, the disease has changed, and the good old medicine may become deadly poison.

     Nowadays, compared with that of formation period of Keynesian theory in before and after 1930s, the over triple times increase in the population, the big changes in the economic structure, the large increase in the economic capacity, and over-excess production capacity, especially, the mad plunder of over-developed Financial Economy to the Real Economy with rapid free flow of the large amount of international hot money that large enough to destroy the economy of a nation, and the access is as easy as that of just a finger click. 

    International situation has undergone earth-shaking changes; however, the governments worldwide are still dogmatically continuing Keynesian economic theory that developed under old situation and certainly is not suitable for new problems.

    In the article The Precious Legacy that Keynes Left to Us, I said that:  

    "In my view, the greatest contribution of Keynes was not the The General Theory of Employment, Interest and Money but The end of laissez-faire." "The way of his bold but sensible questioning about orthodoxy with advancing ideological could help us to advance the way of our thinking, and avoid to fall into the trap of dogmatism, it is the prerequisite to do any thing correctly."

    "The world is in constantly developing, the objective conditions are constantly to be changed, and the nature of the problems will be changed, too. Only boldly breaking the restraints of old ideological frame, the horizons of vision is able to be expanded, the new innovative ideas can be find, the innovation is able coming true. So that, when facing particular new problems, we can quickly identify specific new solutions."

     "This the Precious Legacy that John Maynard Keynes Left to Us."  

    5. Japan used all means of Keynesian but useless for reviving economy
    June 4, 2012, in the article Japan’s Bubble Economy of the 1980s, the economic analyst and Forbes columnist Jesse Colombo who wrote with that: "By 2004, residential real estate in Tokyo was only worth of 10% of its late 1980s peak, while the most expensive land in Tokyo’s Ginza business district had fallen back to just 1% of its 1989 level in the same year (Barsky, 2009)."

    "Similarly, the Nikkei stock index is now trading around 10,000, just little over a quarter of its all-time high."

    "It has been over two decades since the popping of Japan’s economic bubble and the country is still actively battling with deflationary forces that are so powerful that near-zero interest rates, repeated bouts of quantitative easing (some call it “money printing”) and constant Yen-weakening currency interventions have barely made a dent."    

    Jan 6, 2009, on Japan Times, the report Lessons from when the bubble burst said with that: after the crash in late 1990, economic growth stalled various government-sponsored fiscal and economic stimulus measures, including trillions of yen in failed public works projects, did nothing to revive the economy. This was started roughly in 1991, when the effects of the stock market crash became clear.

    Mar 09, 2014, Japan's deficit hits record as economic growth slows.

    Mar 31, 2014, Japan factory output contracts, dims growth outlook as tax hike looms.

    Apr. 28, 2014, IMF says Shinzo Abe’s economic policy is losing momentum and warns growth could stall unless structural changes to the economy are made.

    Jun. 19, 2014, Abenomics Fails to Shake Japanese Firms' Addiction to Cash

    Jul. 24, 2014, Japan's record trade deficit raises fresh doubts about Abenomics

    Aug. 27, 2014, Abenomics' arrows fail to hit their mark 

    Nov. 28, 2014, As Japanese Bankruptcies Soar, Goldman Warns "Further Yen Depreciation Could Be A Net Burden"

    Sept. 15, 2014, Keynes was a failure in Japan - No need to embrace him in Europe

    Nov. 25, 2914, Soaring prices caused by the depreciation of the Japanese yen worry off the New Year - Chinese International - China Daily

    April 7, 2015, Bank of Japan meets as weak spending clouds second anniversary of massive stimulus

    Nov. 28, 2014, As Japanese Bankruptcies Soar, Goldman Warns "Further Yen Depreciation Could Be A Net Burden" said with that:"Surprisingly, the number of bankruptcies since 2013 due to yen depreciation far surpasses the number of bankruptcies in 2009-2011 due to yen appreciation. Presumably, in many cases in 2009-2011 the strong yen was not cited as the direct cause of bankruptcy because there were numerous other factors at work also, beginning with the sharp slowdown in the global economy and financing difficulties. Nevertheless, the 353 bankruptcies since  2013 attributed to the weak yen are 2.2 times greater than the 157 bankruptcies from 2009 to 2011 attributed to the strong yen (see Exhibit 3)."   

     Above reprots reveal the terrible consequences of Japan's bubble economy, Prime Minister Shinzo Abe economics seems not work but with a side effect to press Japanese economy continuously toward deterioration.  

    6. Digging the nature of Japan's economic downturn 

    Why that various government-sponsored fiscal and economic stimulus measures, including trillions of yen in failed public works projects, did nothing to revive the economy?

     Aug. 24, 2014, in the article that Over-heated real estate market is ruining Canadian economy from Japan mirroring Canada, through translation of some articles that wrote by Japanese scholar, and the people from China who are studying or working in Japan, by their personal experiences and investigation to reveal  the reality of the period of Japan's bubble economy 1980s, and after the economic bubble burst, I have discussed the cause of Japan's economy decline. I excerpt some as follow: 

    Bubble Economy degenerated the quality of Japanese 

    When talking about the main cause of Japan’s declining from the economic powerhouse? Most people would blame the Plaza Accord that forced appreciation of the Yen to cause Japanese products losing competitiveness and the Bubble Economy 1980s. But, that can not explain why that various government-sponsored fiscal and economic stimulus measures, including trillions of yen in failed public works projects, did nothing to revive the economy?

    The reason, as my view, all of those stimulus measures are from the macro elements of the economy, with ignoring the most basic micro elements - the driving force for the economic development - enterprising spirit and hard-working spirit of the social members and the businesses of main economic bodies. Or, we may say, that are the quality of the people, the work-ethic of the labor, the efficiency of the production and the capacity of the innovation.

    The Bubble Economy has rewritten the code of the DNA of the quality of Japanese people, from enthusiastic in hard working into enamoring in greedy speculating, thus, further affected the social moral and national’s spiritual, thereby cause the decay of whole society of Japan.  

    The easy gaining excessive profit from speculative activities have fueled Japanese speculative mentality with unearned ideological. It entices people keen to make living by speculating instead of hard working and less concerning on the interest of own company and most of Japanese people have lost the entrepreneurial spirit, hard-working spirit, and the rational sense of social responsibility and enterprises have deteriorated as lack of enterprising spirit and innovation dynamicI, such negative impact is more terrible, even fatal. 

    In essence, the national is the decisive factor for a nation’s economic development; a nation's economic decline is the decline of the quality of its national.

    Whether it is a business or a country, if its member is full of concerning for the self interest, without or lack of concerning for the public interest, it will doom to be extinction.

    So, I firmly believed that the impact of the Bubble Economy on the economy is just a curable social flu, but, the impact on the national’s spiritual is incurable social cancer.

    The fact of the Japanese companies loses competitiveness and falling into declining are the vivid proof. The shortsightedness and lack of entrepreneurial spirit of the management team, the lack of work enthusiasm of the employees is the main reason, and also it caused Japan's economy can not recover as expected.    

    6.1. The incredible lazy of Japan’s employees 

    An engineer of China who works for a German company in taking charge of the branches in South Korea, China and Japan, after working a while in Japan, he was shocked by the lazy of Japanese employees, and completely lost the good impression for them.

    Then he wrote an article post on the website and to be widely reproduced on the internet. I excerpt and translate some as follow. For facilitating narrative, here, I name the writer as Jim.

    The Japanese employees are working overtime almost every day, but, only for getting overtime pay rather than for the need of production.

    Jim arranged a simple task to a Japanese technician who dragged two days to finish. The same work, if, in China, a new graduated young man can finish just in half an hour.

     In a break time, Jim complains the matter with German colleagues, one German said, this guy is a good one, since he did not drag for a month as that of others. Another German even suspected that Japanese employee was dozing when working.

    Japanese employee did not like to take responsibility, when encountering some work trouble, usually; they will look for helping with endless complaining.

    German company plans to open new production lines in Japan, so, sent Japanese staff to Germany for training. The same project in China, within a year, production lines was already operating at full capacity in three shifts for 24 hours a day. But in Japan, it took two years still in the state of machine commissioning.

    The workers of China have mastered all the skills within the three months training in Germany. The German teacher said: you have learnt every thing on the training plan, you may go back to China now, and we have nothing for teaching any more.

    Japanese spent six months in Germany, but, after went back to Japan; they could not work properly, and complaining that Germans did not teach them well. Germans angered with that: in Germany, we were teaching you hands by hands, and you also said that you have mastered every thing already. The Japanese fought back immediately: Sorry, we forgot, our memory is too bad to remember that.

    Germans were angered and collectively applied for vacation to leave Japan as a protest. The German company had to allow them to China by the name of studying for appeasing their anger.

    Jim went back China with the German colleagues together. When they held a cup of coffee to watch Workshop through the window glass of the upstairs office, the production was in an orderly busy, workers were loading and unloading on the production line, the transportation-cars were running to and fro between the production sites and the storages.

    All of Germans was shocked and some even exclaimed with that: my God, here is simply a heaven. One of them said with that, they (Japanese) have been sleeping for 20 years, let them sleeping for another 20 years, then, Japan will decline as a developing country, and while, China will destine to be a developed country.

    Now, in many Japanese companies, employees are mostly 40-50 years old, rarely under 30. Many young Japanese are staying in unemployed. Besides the cause of the economic recession, the other cause is Japan's "special" corporate culture, which emphasizing work-qualifications and work-records, so that young Japanese have lesser work chance. Some girls have to do "compensated dating" for making money. Some boys also have to make money by doing “duck” - male prostitute. 

    6.2. The Japanese disease ruins Sharp & Sony 

     Mr. Kondo Daisuke, a scholar of Japan, who wrote many articles to criticize the Management Drawbacks in Japan's enterprises. He coined the term of "Japanese disease".

    The nature of the "Japanese disease" is the manner of "evading responsibility" that evolved rigid organizational structure and Inward Oriented Conservative of the Japanese Companies. The direct result of the "Illness" is that illed-companies will increasingly debilitate and ultimately collapse.

     Jul. 11, 2014, Japan's Sharp to post $141 million loss on Europe solar business.

     Sep. 17, 2014,  Sony predicts increased losses due to struggling mobile business.

    I excerpt some section from my article Over-heated real estate is ruining Canadian economy from Japan mirroring Canada – 2 as follow, to show the reason that Sharp and Sony declines. I hope that the lessons may play a role as a mirror to mirror the enterprises of Canada, to ask that Why? How?  

     6.2.1. The decline of Sharp Corporation  

    Sep. 11, 2012, Mr. Daisuke Kondo who published a Mandarin article <Angry Gou Tai-ming> onEconomic Observer Online of China, in which he criticized the “Japanese Disease” that harms Japanese companies. I excerpt and translate some as follow.

    A hundred years glorious Sharp Corporation has suffered "Japanese disease." It is not only the Sharp, but the Sony, Panasonic, NEC, Sanyo, Olympus, and great many Japanese companies are the serious patients in "Japanese disease".   

For example, a Japanese company planed to develop a new product. The product development department produced a "plan book", with depicting the grand blueprint of best market potential.

    However, when the "plan book" spreading in other departments of the company, this new product would face with dozens or even hundreds of blames, in the end, it did not get any support. The reason is simple: For the heads of departments, the most important thing is not how to bring new products to market, to improve the turnover, but, how to avoid the risk-taking of affecting own career in case of the sales of the new products is not good as expected.

    Because of the whole company have infected the disease of "evading responsibility", a lot of great new product plans have been put into the limbo. Meanwhile, in the process of this "bad model" iterative, the staff for new products’ R & D has gradually lost enthusiasm and morale, thus, resulting in the number of the plan for new products’ dropped. Nevertheless, the whole company still does not repent for that, keeping on its own way.

    Once cooperation with a Japanese business that suffers "Japanese disease", I believe, regardless, which leaders of China's company will be angry as same as that of Gou Tai-Ming.

   Assuming, a Chinese company raised an advantageous cooperation projects for both sides to a Japanese company, the local subsidiary of the Japanese company will immediately report to the International Department of the Japanese parent company. At this time, the International Department will require the local subsidiary to present a "plan book" as long as hundreds of pages. Just for completing this "plan book" will be going to spend a few months of time.

    Then, after the negotiations with various departments in the head office, which cost more than six months usually, luckily, the "plan book" may finally appear on the meeting of the Board of directors once a month in the head office. However, most probably it will suffer the fate of being sentenced to death, because of all the directors are not concerns the plan book from its feasible or not, but, from the "how to use the plan, for their personal interest, rather than the interest of the company.

    If, some directors believe that the implementation of the plan was no benefit for them selves, or own competitors in the company can get more benefits, they would oppose without hesitation and then put forward some reason to postpone the decision and ultimately to make the plan was dismissed or forced to ‘another day another meeting’, without the rational sense of caring about the interest of gaining or losing for the company." 

    6.2.2. The decline of Sony Corporation 

    Feb. 6, 2014, Japan’s scholar Daisuke Kondo published another Mandarin article The sundown of Sony:Doraemon or Crayon on a website of China, in which he criticized the ridiculous management that has been ruining Sony Corporation.

    “I remember that of my college days, only the best students in science majors can enter Sony. When going out of Japan, regardless of which country, we were able to see "SONY" huge billboard and young people using "walkman". At that time, Sony is our Japanese pride, however, now?”

    "For this problem, one of my college classmates, now a Sony employee replied with that: "In the company, there one by one meetings are from morning to night, after the meetings, everyone must deal with at least 100 internal mails from the company. So, Sony is not an electronics manufacturer, but a downright bureaucracy! Only those people, who are the 'Mr. Nice Guy' without any faults, could be promoted. Such a Sony could not develop new products that can shine the world any more?”

    "Our company has a specialized team in charge of new product development against the rival of Apple of the United States. There was I admired executive who is in charge of the team. One day, his immediate leader of a director of Board even ordered him to stop the investment of 'no value' (ie, to give up the R & D) as soon as possible to vanquish to Apple. The executive retorted: Do you have self-esteem as a member of Sony? The Director even contemptuously asked: ‘your self-esteem can help company making money, right? Heard of the answer of a director of Board, the executive immediately decided to resign."

    "In recent years, the elite who left Sony were not only the executive alone. In 2006, the former managing director who was responsible for "AIBO" R & D of futuristic robots was demobilized; the reason was that there members of board were questioning that ‘How much economic benefit that the robot R & D can bring to Sony? In 2007, former chairman and CEO of the Sony Computer Entertainment Inc., Mr. Ken Kutarag who known as the "Father of the PS (PlayStation)" was also retired after the expiry of his Job tenure.”

    "In the booming period of before, Sony company once gathered a large number of ‘Doraemon’ talents - they can come up with all kinds of whimsy from their "Mind Treasure Bag", and then to materialize them into a variety of future products. But now, unfortunately, the Sony is filled with the people who work with lips only as that of the ‘Crayon’ ” 

    7. Some reports about degradation of the economic entities - Japanese corporations

    May 25, 2012, in the article The agony of Japan Inc. - Fortune, the writer Kevin Kelleher commented with that: Companies like Apple, IBM and Microsoft once stood in the shadow of much larger and more powerful Japanese electronics giants. Those days are long gone — and, lately, it looks like they may never come back.

    There are many reports about degradation of Japan's economic entities - the corporations.

    7.1. What has happened to once great Japanese companies like Panasonic, Sony, Sharp and Toshiba?

    7.2.  BBC News - What happened to Japan's electronic giants?

    7.3. The era of Japanese consumer electronics giants is dead 

    7.4. Why Are Japan's Electronics Giants Failing? | Daniel Burrus

    7.5. The Sad State of Japan's Consumer Electronics Giants

    7.6. What Ever Happened to Japanese Electronics? - Japan Focus

    8. High-quality of Japanese people before Bubble Economy 1980s 

    Now, I think of a story in Mandarin long time ago, the famous American marketing authority Philip Kotlerwho once said that: For Japan, what is the panacea to heal its wounds of the war, to stand up on the war-ruins, and to become the economic powerhouse? For achieving economic advantage, Japanese waged the war, but, failed. From the pain, they learnt that, the use of economic means can achieve more brilliant achievements than that of the use of the military. This means is the marketing.

    The economic miracle shows the high-quality of Japanese people. Following is a story about it.

    In morning August 19, 2013, I had a chat with the father of my new neighbor in Waterloo, Ontario. He said that his brother once was a top executive of a Canadian Steel Manufacturer and had twice visited Japan for learning the experience of the advanced corporate management in 40 years ago. His brother appreciates the good quality of Japanese people very much with a comparison between Japanese and Canadian in case of production accident.

    When facing production equipment fails, any Japanese operator would immediately stop the production, and then, all of the people gathered together to make diagnosis and treatment, after troubleshooting, everyone immediately went back own position to resume the production. But, the Canadian was just blindly standing, there no one was attempting for troubleshooting.

    Following are some memories about the industrious noble quality of Japanese people. I could not recall the source of them already, but the facts are true.

    When 1973 oil crisis, the plant of the Sony Corporation was shutdown and the workers were staying home waiting for notification of work. However, the workers went back to plant to do some thing available voluntarily with the hope that company could survive.

    Mr. Kazuo Inamori, the founder of Kyocera Corporation of Japan. In the newly established period of the company, a customer ordered special shape of water pipes, because there was no prior experience in the production of such pipes. In the process of heating and forming to required shape, the water pipes were burst. Then, Kazuo Inamori was holding the pipe when sleeping at night and slowly turning the pipe, so that pipes was heated evenly, and made it into required shape finally.

    Now, we have convinced that it was that industrious noble nature of Japanese people created Japan's postwar economic miracle.

    People may ignore an important fact that the birth of the Plaza Accord is also a proof that made in Japan was once invincible and swept global market, and also is the proof that the high quality of the employees and enterprises of Japan.

    Supposing that the employees and the enterprises of Japan still remained the spirit of entrepreneurial and responsibility, and still in hard working, today's economy of Japan will still be over that of Germany, and those made in Japan will be still invincible and sweeping global market.

    This is one of the main reasons that Japan’s economy has been long-term downturn. And it is why that the Three Magic Arrows of S hinzo Abe did not achieve the desired results.

    From above lessons, I firmly believed that, no doubt, such Japanese diseases of the employee lazy, the "evading responsibility", and more, is an objective results of the Japanese subjective selfish ideological, which was developed from the Holy Baptism by Japan’s Bubble Economy 1980s.

    The aftermath of the bubble economy is still hurting all aspects of Japanese society, from the social ideological to the personal spiritual, from the macro national economy to the micro family life, from the world class companies to the ordinary employees, and more.

    The sad facts of Japan made me firmly believed: it is that the quality of employees decides the fate of the enterprise. It is that the quality of the nationals decides the fate of the nation. And it is that social moral, social ideological impacts the quality of the national in a great extent.

    Japan, one misstep in opening real estate market, can not get rid of the nightmare of the bubble economy. 

                    --- Frank     Dec. 4, 2014, in Waterloo, On. Ca. 

        Japan logs record trade deficit in 2014 on weakening yen

        By ELAINE KURTENBACH January 25, 2015 11:29 PM

    TOKYO (AP) — Japan's trade deficit ballooned to a record 12.8 trillion yen ($109 billion) last year as a weakening yen pushed the cost of imports higher despite a moderate recovery in exports.

Preliminary data from the Finance Ministry released Monday showed Japan's exports rose 4.8 percent to 73.1 trillion yen ($620 billion) in 2014 while imports climbed 5.7 percent to 85.9 trillion yen ($763.7 billion). The trade deficit rose by 11.4 percent from the 11.5 trillion yen ($97.7 billion) gap in 2013.

The data show exports from the world's third-largest economy rising nearly twice as fast in the latter half of the year than in the first half, while the increase in imports fell sharply, suggesting the deficit will narrow in coming months.

The Japanese yen has weakened over the past year to about 117 yen to the dollar compared with about 100 yen in early 2014. That raises the value of Japan's exports in yen terms. But it also pushes up costs for imports of fuel and food.

Japan ran trade surpluses for decades until its nuclear reactors were idled following a disaster at the Fukushima Dai-Ichi power plant in March 2011. Imports of oil and gas rose to compensate for the lost nuclear power capacity.

The more than 60 percent plunge in oil prices is a boon to Japanese businesses that have been pinched by rising energy costs. But the impact was not fully reflected in the most recent data, said Marcel Thieliant of Capital Economics.

"Lower energy prices may briefly return the trade balance to surplus in coming months, before a weaker yen and a rebound in the oil price push it back into deficit," Thieliant said in a commentary.

But Thielient also said exports may slow in coming months.

Japan's exports of vehicles, a major component of its total overseas business, fell 1.4 percent in volume terms in 2014 from a year earlier, though the value rose nearly 5 percent to 10.9 trillion yen ($92.6 billion).

Electrical machinery exports rose 5 percent and exports of other machinery such as power generating equipment increased 6.4 percent, accounting for more than a quarter of total exports last year.

Exports to China rose 15 percent last year but are expected to slow as the economy of Japan's neighbor cools after three decades of torrid growth. 2014年日本对中国的出口额为13.4万亿日元(0.71万亿人民币)，涨幅6%；进口额为19.2万亿日元，涨幅高达8.6%。

Japan's exports to the United States, its biggest single export market, rose 5.6 percent last year to 13.6 trillion yen ($115.5 billion) while imports jumped nearly 11 percent to 7.5 trillion yen ($63.7 billion). The resulting trade surplus was nearly level with that of 2013, at 6.1 trillion yen ($51.8 billion).

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      William M. Tsutsui, professor of Department of History The University of Kansas

Can Japan Reboot?

Detlev had a 19-year career in international financial markets as a trader and portfolio manager, including stints at J. P. Morgan, Merrill Lynch, and Western Asset Management.

In 2011 he published his first book Paper Money Collapse – The Folly of Elastic Money (John Wiley & Sons), which won the get Abstract International Book Award in 2012, and which is now in its second edition.

Can Japan reboot its anti-innovation start-up culture?

By Michael Fitzpatrick 21 August 2013

http://www.bbc.com/future/story/20130820-plugging-japans-start-up-gap

    Japan has long been hailed as one of the world’s most developed nations. But when it comes to innovation, things are less rosy. Why is it stifling its start-ups?

    Sony, Panasonic, Sharp were once household names. Now those same companies are in deep trouble, losing billions of dollars a year. How have the mighty Japanese companies fallen so low?

    Japanese start-up entrepreneur Masayoshi Hashimoto believes he knows where the country’s IT industry is getting its guidance from; the Czech surrealist author and satirist Franz Kafka.

    “Working for a Japanese web services firm, I couldn’t believe how badly things were done,” he says. “We had everyone managing projects using Excel. Excel, I ask you! It beggars belief. But managers here like the old ways.” When changes were suggested he was stonewalled.

Venting his irritation on Twitter led him to a conversation about the business practices afflicting Japan’s tech sector with a fellow malcontent. One face-to-face meeting later, he quit his job to form a company with his new comrade rebel with and created the website Paradiseware, which helps businesses manage projects more efficiently.

The result is typically Japanese; run on a shoestring without any of the benefits Silicon Valley start-ups might attract.

Japan has a real problem with innovation. It’s just not very Japanese. Nor, you might be surprised to read, is originality. It’s the kind of thing swaggering foreigners or suspect loners are thought to meddle in. So if you visit Japan and find ersatz statues of Liberty in tourist spots, or a very uncool bureaucratic drive to promote Japanese creativity and culture ripped off from Cool Britannia - you’ll begin to understand why.

Japan is "good at technology but poor in business" as one official puts it. “Its high levels of basic research and superior technology are hampered by too-strict regulations, and vertically integrated administration. The gap between researchers and manufacturers, in many cases, prevents brilliant R&D results from being put into practical use - the ‘Death Valley’ problem.” Japan leads in its high number of early adopters. Thanks to them, inventors can gain confidence and the initial momentum needed to push off a new idea. But it often doesn’t last long.

“Unfortunately this is accompanied by a very envious, critical and vocal audience. They underline every possible reason that the product will fail and keep doing so indefatigably. They attack the innovator on Twitter, Facebook, blogs, etc; and they keep doing so until the innovator raises a white flag.”

Add to this 20 year’s economic stagnation, zero appetite for risk and eroded confidence and Japan emerges as one the toughest environments on Earth to root new ideas. 

Struggling start-ups

There are backers in Japan, his partner Shuku Tanizaki explains, but most are interested only in no-risk ventures. Start-ups have to attract crowd-funding or, as is more usual, the personal savings of their creators. “There’s lots of venture capitalists here but they are only interested in games and new media,” says Hashimoto. Even renting conventional office space can be troublesome in Japan - landlords like to see two years’ profits before they open the door. Paradiseware operates out of cheap, shared office space in central Tokyo.

“I think starting a new business means also confronting the problems afflicting your society,” says Mr Hashimoto.

Despite being perceived as a big-hitting innovator, Japan has a tiny, struggling start-up landscape that has yet to make an impact abroad. “This is because this sector is the most under-supported in Japan,” says Terrie Lloyd, an Australian entrepreneur and commentator based in Tokyo.

As the global digital economy grows in importance, this puts Japan, the world’s third-biggest economy and one-time electronics giant, at a massive disadvantage. America and even tiny South Korea continue to come up with the gadgets and smartphone-based services that consumers want. Japan’s sluggish megacorporations such as Sony are unable to match the swift-footed foreign competition and fall further and further behind.

What strangles originality here, explains Tokyo-based technology consultant Nobuyuki Hayashi, is that Japanese innovation keeps to very rigid structures.

“Most of them went to the same university, studied the same subjects and never met people from outside the group. This is because of the Japanese educational system and how Japanese recruiting is done,” he says. “Japanese companies tend to hire graduates from the same school.”

This spectacular failure to respond to the internet age is slowly being challenged, however, both by the country’s new government and a few entrepreneurs. Copying ideas from Silicon Valley, top entrepreneurs and officials have tried for over a decade now to spark some life into Japan’s hi-tech sector by increasing incubation projects and the like. Japan now has over 400 business incubators up from 30 in 1999 some of which are focused on the hi-tech sector. Most offer funding, work space and mentoring.

And after being held back by the entropy of their elders for so long, Japan’s enterprising young are going it alone. An experienced user interface designer in Japan and abroad, 26-year-old Alexander Takahashi simply rents shared office space, and networks for Angel investors when he can, to develop a location-based service named Rooftops.

He understands the reservations. “Japanese businessmen tend not to trust the younger generation. No matter how well you present yourself - young equals bad,” says Takahashi.  “And honestly I can understand them. There are no really new start-ups with new ideas nowadays.”

Japanese young entrepreneurs are enthusiastic but lack crucial business know-how, says Lloyd. “They are totally unprepared for the business world, and this is why cloistered accelerators and incubators are so popular here,” he adds.

Hitoshi Masuda, who until recently headed up the government’s small-business think tank, disagrees. He says: “Japan is changing profoundly but dynamically in terms of who drives innovation and how innovation is being driven.”

Economic reforms under a new government - Abenomics, named for the PM Shinzo Abe - are having some positive effects. His party has also promised to fight the corner of all innovators, risk takers and creative types.

Their model is a bunch of maverick, by Japanese standards, entrepreneurs which include Japan’s third-richest man, Masayoshi Son, born to a Korean immigrant family, whose mobile phone empire Softbank is funding a brave attempt at commercialising home-grown green tech innovations. His outsider outlook was a huge benefit, he says.

“If you look at successful Japanese start-ups, they are mostly run by CEOs who have applied the ‘foreign connection’ in some way - be it education, money, technology, business deals, or talent,” says Lloyd. “In some cases, like Mr Son, he has managed to combine all five factors.”

Those factors seem to have inoculated such champions against fear of failure making them bold at the same time. They represent a new way of being Japanese – one the nation urgently needs to get to grips with.

What happened to Japan's electronic giants?

  Electronics giant Sharp has been losing money fast Continue reading the main story

 1 April 2013 Last updated at 23:06 ET

http://www.bbc.com/news/world-asia-21992700

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Japan's electronic giants once ruled the world. Sony, Panasonic, Sharp were household names. Now those same companies are in deep trouble, losing billions of dollars a year. How have the mighty Japanese companies fallen so low? The BBC's Rupert Wingfield-Hayes in Tokyo looks at what went wrong.

If you want to get an idea of what's gone wrong with Japan's electronics industry go for a ride on the Tokyo metro.

The Tokyo metro (or a lot of it) now has 3G mobile reception. But you're not allowed to talk on your mobile phone on public transport in Japan, so everyone in my carriage was busily texting away on their 3G devices.

And what particular device were they using? A quick survey of the carriage I was in found about 80% were holding an Apple iPhone.

That's admittedly not a scientific result - but the evidence is pretty stark. Where once everyone would have been listening to a Sony Walkman, today it is Apple and Samsung that dominate, even here on Sony's home ground.

The evidence can also been seen in their financial results. Japan's electronic giants are bleeding red ink.

Sony may make a small profit this year, its first since 2008. Panasonic (formerly Matsushita) is expected to post a $9bn (?6bn) loss this year. Sharp, which is much smaller, is losing money so fast it will not survive another year without a major infusion of cash.

So what went wrong?

Digital challenge

According to Tokyo-based economist Gerhard Fasol, the Japanese giants were overtaken by the digital revolution.

The Japanese giants, he says, actually built their empires on making complex electrical machines - colour televisions, radios, cassette players, refrigerators, washing machines.

Yes, they contained electronic components, but they were basically mechanical devices.

But then came the digital revolution, and the world changed.

"The Sony Walkman is a classic example," Gerhard Fasol says. "It has no software in it. It is purely mechanical. Today you need to have software business models that are completely different."

The digital revolution not only changed the way electronic devices work, they changed the way they are made.

The whole manufacturing model shifted as companies moved production to low-cost countries. That has put huge downward pressure on profit margins for Japanese manufacturers.

"Look at Apple," Mr Fasol says. "They make iPods and iPhones."

"Apple makes at least 50% profit margins on those. People say iPhones are made in China, but maybe only 3% of the value of an iPhone stays in China."

"So it's hard to become rich today on the scale of a Panasonic just by manufacturing - you have to do a lot more."

'Un-Japanese'

 Mr Nakanishi decided to drop many of Hitachi's consumer electronics divisions

Unfortunately neither Panasonic nor Sharp responded to our repeated requests for interviews, so instead I went to see the boss of another Japanese manufacturing giant.

Hiroaki Nakanishi is the 66-year-old English-speaking president of Hitachi Corporation.

When he took over the reins at the 100-year-old engineering giant in 2010 it too was bleeding red ink. Mr Nakanishi immediately decided to do something very un-Japanese. He closed or sold loss-making divisions, most of them in consumer electronics.

"Digital technology changed everything," he says.

"In the television industry it means that just one chip is now needed to produce a large and high quality TV picture. So now everybody can do it."

"That means the new players from Korea and China, they now have the advantage."

Hitachi had built its reputation on having the best technology. But now competition has switched to who has the best sales and marketing strategy, and the biggest advertising budgets. Mr Nakanishi says the Japanese companies just couldn't keep up.

"The structure of the industry had completely changed," he says. "We could not adjust to such an environment. So that is why I gave up those segments."

'Brain country'

Mr Nakanishi decided to return Hitachi to its core business: heavy engineering. Gas turbines, steam turbines, nuclear power plants, high-speed trains, these are the areas he believes Hitachi can still be a world beater, especially in the developing world.

"In developing countries they don't have specific planning and construction know-how [for big infrastructure projects], but we have," he says.

"It is not simply a case of selling machinery, but also the engineering, planning, even sometimes the financing of a project. That total process, that is our most important advantage."

Mr Nakanishi's strategy is working. Hitachi is back in profit. Hitachi trains are the front-runner in the competition to replace all of the UK's fleet of inter-city high-speed trains.

But it will not be as easy for the others.

专访丹羽宇一郎：日本制胜的关键在于高素质社会