Archive for January, 2012

Higher electric bills on horizon to pay for solar

Friday, January 27th, 2012

The government’s plan to develop solar energy as an integral part of Japan’s electric power system is starting with power companies buying surplus energy from people who have installed solar collection systems in their homes. To promote solar energy, the companies are required to pay a certain price for the power, and they pass this added cost on to all their customers as a surcharge. On your bill it is designated as taiyoko sokushin fukakin (solar energy promotion supplement) and varies in amount depending on where you live. In regions where solar energy collectors are more prevalent, the surcharge will be larger, since the utilities in those areas pay more money for solar energy. As can be expected, sunnier regions tend to have more solar collectors.

Pittance: the surcharge for solar energy promotion on this December bill from Tepco is ¥6

Right now 3.3 percent of homes in Japan have solar systems, which means Japan has a long way to go before it reaches former Prime Minister Naoto Kan’s target of 10 million homes with solar systems, which would mean about 40 percent. In Kyushu, which tends to have more days of sunshine than other regions, the portion is 6.4 percent. In Hokkaido, it’s only 0.8 percent, which means the average surcharge for Kyushu residents is much higher than it is for Hokkaido residents.

Another factor that determines how widespread solar systems are in a given area is the amount of subsidies local governments offer to residents who install them. In 2010, Aichi Prefecture was No. 1, with 16,000 applications for subsidies, followed by Saitama and Tokyo. Home ownership rates in Aichi and Saitama are very high.

The Nihon Keizai Shimbun has reported that on Jan. 24 Japan’s 10 regional power companies announced that the surcharge would increase in 2012. Currently, the surcharge ranges from ¥2 to ¥21 per month. It will increase, depending on the place, by ¥3 to ¥24 per month. (For Tokyoites, it will average about ¥17 a month.) These 10 companies bought 2.15 billion kilowatt/hours worth of energy from home solar systems in 2011, which is equivalent to 30-40 percent of the output of a nuclear reactor during the course of a single year. For this, they paid ¥95.6 billion, a 53 percent increase over what they paid for solar energy in 2010.

In July, the power companies will start another phase of the energy scheme when they begin buying electricity from wind power generators and other renewable energy sources, though it isn’t clear right now what sort of surcharge will be added to energy bills as a result.

Can financial incentives put a brake on senior driving?

Tuesday, January 24th, 2012

Two weeks ago a lawyer in Chiba was cited for leaving the scene of an accident. He had hit a pedestrian with his car but later told police he didn’t notice anything odd at the time the accident occurred. The police believe him because he’s 81. The victim was also “over 60.” This may be a pattern we have to get used to. According to the transport ministry, more than 6,000 traffic accidents a year involve a driver confusing the brake for the accelerator. Though the ministry doesn’t break this particular statistic down into age groups, it does report that in 2010 there were 0.5 traffic accidents per 10,000 drivers between the ages of 25 and 54, and 3.3 accidents per 10,000 drivers over the age of 75. In the same year 106,000 of the 724,000 traffic accidents were caused by drivers over 65, while 50.4 percent of the people who died in traffic accidents were over 65, both new records.

Caution, geezer on board: ochiba (fallen leaf) car decal identifying elderly driver, now replaced with a more ambiguous design

Consequently, a number of local governments have been trying to convince elderly residents to surrender their drivers licenses, and have turned to financial incentives to do so. Ichihara city in Chiba Prefecture will launch a program in February wherein “old people” (no actual age is designated) who voluntarily give up their licenses will receive in return an identification card that allows them a 10 percent discount with 17 taxi companies operating in the city. Normally, municipalities offer discounts for bus rides, which may not sound like much of a trade-in considering that, traditionally, many local governments actually subsidized public transportation for elderly riders, in many cases giving then free passes. That time-honored practice started disappearing as the percentage of elderly, especially in rural areas, steeply increased over the past two decades. Local governments just couldn’t afford to pay for all those fares.

But driving could become even more dangerous as the baby boom generation enters its twilight years. Among previous generations, the driving population was mostly limited to men, but among boomers there are just as many women behind the wheel, which means there will soon be a sudden steep increase in the number of elderly drivers. In addition, insurance companies want to increase premiums for older drivers. Many of these people consider their drivers licenses more than a necessity, so local police departments issue unten keireki shomeisho, or “certificates of driving history,” a form of ID that looks just like a drivers license but isn’t. The psychological effectiveness is questionable, but in any case it is this card that can be used for discounts when using taxis or public transportation. To make the card more attractive, local merchants in Shizuoka Prefecture have agreed to offer discounts to anyone who produces one (rather than a bona fide drivers license). Last year in Kagawa Prefecture, 976 people gave up their licenses, a threefold increase over the previous year owning to a new discount service provided by the local taxi union and a special low-priced IC bus card especially for older patrons.

A university professor who specializes in “traffic sociology” told Nishi Nihon Shimbun that local government’s face a very real problem of guaranteeing old people mobility in the future. If public transportation isn’t available and affordable, then the elderly are going to drive as long as they possibly can, a possibility some carmakers are trying to take advantage of. It’s basically up to friends and relatives, and not just the local authorities, to convince them to give it up “without hurting their pride.” Economic incentives may be a good way to convince them, but first bus and train lines have to be substantialized and taxi service increased.

Bottoms up: Discount takeout sushi less than meets the eye

Thursday, January 19th, 2012

The other day we came across this blog post reporting on misleading marketing by an American company called Banzai with regard to the photographs it uses on its packaging. It’s a common complaint: Products always look larger — or, at least, better — in the promo materials than they do in reality.

Reality vs. fantasy

It struck a nerve since we had just taken advantage of a limited campaign for cut-price takeout sushi from a certain national chain. In the flyers for the campaign, which continues through Jan. 20, the food looks particularly inviting, and among the things we ordered was the ¥590 Hokkaido-style chirashi sushi, a tray divided into three sections, each of which contained a bed of rice covered with various toppings. In the store display case it seemed equal to the size indicated in the ads, which even included the exact width and length of the box in millimeters, but once we got it home and dug in we discovered that what looked OK in two dimensions was deficient in the third. The layer of rice in all three compartments was barely three grains thick. This is a marketing trick called soko-age, or “raising the bottom.”

Of course, we should have guessed that ¥590 was way too cheap for anything labeled “sushi,” especially since chain sushi restaurants have a reputation for skimping. The neta, or slice of flesh that goes on the top of the ball of rice, tends to be thinner than it appears to be in the display cases and advertisements, which are always careful to point out that the photos provided are only “images,” a vague enough word in English but when used in Japanese is usually closer in meaning to “imagination.”

We should point out that the quality of the ingredients is usually satisfactory. The whole point is that “bargain” mean you’re getting less than meets the eye, especially when it comes to chain restaurants and takeout businesses. The same goes for hotels. For years, any “limited time bargain” room we booked turned out to seem much more cramped than the room that the hotel used in its Internet advertisements, so we’ve come to understand that you do, in fact, get what you pay for. If you reserve a cheaper room, it will likely look cheap when you arrive, regardless of the visual representation. This should be obvious since such ads for bargain rate accommodations invariably state, in small type, that the guest will not be able to choose the room.

Whaling may be sunk by commercial reality

Monday, January 16th, 2012

Whale "bacon" in supermarket display case

Japan’s annual research whaling expedition is now being carried out in the Antarctic. As always, the controversy over whaling receives more coverage in the foreign press than it does in the Japanese media, which for all intents and purposes doesn’t normally pay attention unless arrests or violence is involved. However, Tokyo Shimbun last week reported on some of the commercial aspects of the issue.

According to the newspaper, in 2011 the amount of frozen whale in storage and designated for retail distribution exceeded 5,000 tons, which is almost three times the amount of frozen whale meat in storage 10 years ago. There are two sources of this meat: imports from other whale-catching countries, and the research whaling program carried out by Japan’s Institute of Cetacean Research and the company Kyodo Senpaku. The purpose of the research is to “determine growth by means of checking weight and body length” of whales that are caught and killed. Afterward, the whale meat is sold to help pay for the research, which costs about ¥6 billion a year. The Japanese government provides a subsidy of ¥1 billion, which means the meat sales have to cover the remaining ¥5 billion.

The increase in frozen inventory means that the costs aren’t being covered, and that the research project is operating in the red, though Tokyo Shimbun doesn’t say by how much. Until 2006, the amount of yearly stock kept increasing because the annual catch quota was also increasing, but ever since the Sea Shepherd Conservation Society started interfering with the Antarctic hunt the amounts caught have not increased. However, overall stocks have. At the end of 2010, they amounted to 5,300 tons, and though Kyodo Senpaku only brought back 18 percent of its planned catch last year after it cut short the hunt, as of last October stocks of whale meat had increased to 5,400 tons.

Continue reading about whaling surpluses →

Foreign carmakers don’t need a strong yen (but they’re happy to have it)

Tuesday, January 10th, 2012

Make mine Porsche

The European debt crisis has pushed the value of the yen up in relation to the euro in ways that are making a lot of Japanese exporters anxious. As one industrialist told NHK the other night, it isn’t the same as the yen’s rise against the dollar, a development they can counteract at least partially by increasing production in the U.S. There’s relatively little Japanese production capacity in Europe.

Tokyo Shimbun wonders why the drop in the euro hasn’t helped Japanese buyers of European cars. While some other European products have dropped in price over the last year due to the exchange rate, cars have stayed the same. The given reason is that manufacturers decide on prices only once a year, so short-term currency rate fluctuations aren’t necessarily reflected on sticker prices. However, another reason came from an anonymous industry insider who told the newspaper that makers of European automobiles “have a responsibility to maintain brand value” to customers who pay more under the assumption that when they trade in the car down the line they’ll get more money for it. Given that trade-in values of automobiles in Japan are quite low to begin with, this explanation sounds only half right.

To put things into perspective, the value of the euro against the yen has decreased 40 percent since 2007, when it was more than ¥160. During the 2011 calendar year it lost ¥8, which means a windfall of ¥370,000 to makers for a car priced at ¥5 million. And despite the ongoing recession, the number of imports sold in November was 30 percent higher than the number sold in November 2010. According to analysts interviewed by Tokyo Shimbun, Japanese car buyers preferred European cars for their “energy saving qualities and performance.” Certain models, in fact, are so popular they’re on back order. Consequently, there is absolutely no incentive to reduce prices, and Japanese customers don’t really expect it the way they expect Japanese makers to lower prices in order to be competitive.

The fact is, the high yen gets a lot of press in Japan because Japanese manufacturers count so much on overseas sales. Market share in the U.S. and other regions is extremely important. In contrast, the Japan market is a relatively small one for European carmakers. And since many of them have over the past decade bypassed local importers and set up their own dealerships, they can more or less do what they want, and that includes ignoring the social pressure of reflecting the high yen in their prices.

Yet another reason for good sales is the March disaster, which disrupted supply chains for Japanese cars. Foreign car supply was unaffected, resulting in a 7 percent increase in sales (95,452 total sold) for the first half of 2011 alone. BMW, which now sells the Mini, enjoyed an 8.7 percent increase. Interestingly enough, out of all the exporters Volkswagen sold the most and yet saw a decrease of 3.2 percent over the previous year.

Mahjong parlors go deeper underground to stay in business

Thursday, January 5th, 2012

As a disreputable pastime, mahjong doesn’t draw as much attention as racing sports or pachinko probably because as a game it’s relatively low key and whatever gambling goes on is between friends. In Japan, mahjong traditionally has been played by male college students and salarymen in smoke-filled “parlors” where participants rent tables by the hour and send out for food and alcohol. Like a lot of things that depend on disposable income, Japan’s mahjong industry has been hurting lately. Not only did the lingering recession eat away at the game’s clientele, but anyone with a mahjong jones can get their fix with computer and mobile phone applications. According to the National Mahjong Union, there were about 36,000 parlors nationwide in 1978, a number that remained fairly constant until the bubble burst at the end of the 1980s. By 2000, the number had dwindled to 20,000, and in 2010 there were only 12,700 mahjong parlors in Japan.

Against the wind: Entrance to mahjong parlor in Hama-cho, Tokyo

The Asahi Shimbun recently reported that many remaining parlors are desperately trying to attract new customers in order to stay in business and that some of these schemes have led to police crackdowns. The paper covered one struggling parlor in Osaka where it costs ¥1,800 to rent a four-person table for one hour, and most days the manager says they only manage to rent out about two tables. Another parlor in the vicinity has actually set up a no-smoking section behind glass in hopes that women and non-smokers will come. Still other parlors have set up bigger kitchens so as to offer a more diverse dining experience. There’s even a movement called “healthy mahjong” aimed at older and younger people that emphasizes daytime playing with no alcohol or betting, as well as the supposed brain-fortifying qualities of the game. Some parlors offer “classes” in how to play mahjong more enjoyably and effectively.

Traditional mahjong enthusiasts, however, will likely look askance at these developments, since without the drink and the smoke and the gambling mahjong holds little interest to them. The main problem is that a mahjong game requires four people, so some parlors have devised “free mahjong,” which means you can show up at a parlor by yourself and the manager will set you up in a game with employees. Instead of charging by the table and the hour, free mahjong parlors charge by the game., and since mahjong games can be relatively quick affairs, the profit rate is theoretically higher.

Continue reading about mahjong →

Tobacco farmers lost but not forgotten in tax rumble

Monday, January 2nd, 2012

Smoke 'em if you got 'em: JT HQ in Toranomon, Tokyo

As every smoker in Japan knows, the cigarette tax was raised in the fall of 2010. With ¥3.5 added to each cigarette, it means a pack suddenly cost at least ¥70 more, and as a result sales have dropped by about 20 percent. So-called sin taxes are double-barrelled: They have a behavior modification purpose of discouraging users from over-indulging, and they’re an easy political sell since the consumers (and maker/providers) usually aren’t considered a sympathetic or powerful constituency by the general public. Consequently, the government is thinking of adding another ¥2 per cigarette tax levy to help pay for reconstruction.

The suggestion has been tabled for the time being, though it will likely be revived. The main reason for the postponement isn’t so much Japan Tobacco, which has a monopoly on tobacco sales in Japan, but rather the farmers who supply JT. There are approximately 10,000 households that make a living from growing tobacco, and about 40 percent have said that they plan to quit since they see no future in the crop. The presumed reason is the tax and the trend for quitting, but many farmers say they are getting out of tobacco because JT asked them to. Since JT is obliged to buy all their product, these farmers no longer have a guaranteed future, and with the Trans-Pacific Partnership possibly looming on the horizon, there’s even less of an incentive to stick it out.

Tobacco, like salt and rice, used to be a government monopoly. That changed in 1985 when the monopolies were abolished and Japan Tobacco was established. Despite the change in nomenclature, JT pretty much continued to operate as a monopoly, since it had to buy all the tobacco produced and controlled all sales of cigarettes. JT determined the price of tobacco before each growing season, meaning there was never a market for the crop. This worked fine while sales were strong, but after they peaked in the mid-90s revenues steadily decreased. Starting in 2004, JT solicited tobacco farmers to retire, and about 20 percent did exactly that. The amount of farmland dedicated to tobacco decreased by about 10 percent. Last year, JT asked more farmers to quit the game, and the decrease in farmland was 30 percent.

Continue reading about a possible hike in tobacco tax →

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