According to The Nikkei Asian Review, Chinese tourists have been a key driver of growth in Japan's tourism industry, with their bakugai, or "explosive buying," in recent years boosting Japan's consumption figures. But as their spending has slowed, some Europeans are overtaking them.
According to a Japan Tourism Agency survey, the British were the most free-spending foreign tourists in Japan from April to June. They spent an average of about 250,000 yen ($US 2,270) per visit, followed by the Italians, who spent about 230,000 yen.
The Chinese still ranked third, with per capita spending totaling some 220,000 yen, but they were closely followed by the French and Spanish, who shelled out from 200,000 yen to more than 210,000 yen per visit.
In contrast to Chinese visitors, who tend to focus on shopping, Europeans are most often interested in experiences. The survey shows British respondents spent 72% of their travel budget on lodging, food and drink and entertainment, compared with 35% for Chinese. While 13% of British travel budgets went to shopping, Chinese spent about 60% on shopping, although that is down from 2015, when the bakugai phenomenon peaked.
Tokyo's Tsukiji fish market is one of the city's tourist magnets where Westerners are often seen. A pair of 30-something Italians were there recently, eating kaisendon -- rice bowls topped with raw fish -- at a restaurant inside the market.
The men, who said they came to Japan to sample Japanese cuisine such as sushi and ramen, were in the country for a monthlong visit, starting in mid-July. They planned to spend 8,000 yen each a day on lodging and food.
European tourists typically do not make big purchases on single items or experiences. Many slurp down cheap ramen noodles. Instead they open their wallets to travel farther afield to see the sights -- hot springs or museums, for example.
European tourists who come to Japan like to stay awhile. The average length of stay for sightseeing in April to June was 14.5 days for British tourists, rising from 12.3 days for the same period in 2015. The figure for Italians also grew to 12 days from 11.5 days over the same period.
The figures for Germans and French tourists declined over the same period, but they are still averaged 14 days and 12.9 days, respectively, both more than twice as long as the Chinese average of 5.9 days.
Total spending by foreign tourists in Japan reached a record 2.04 trillion yen in the first half of this year. Mizuho Research Institute estimates the amount of added value created by tourist spending will reach 4 trillion yen if spending maintains its current pace in the second half of this year. That translates to an additional 0.8% in nominal gross domestic product.
The Japanese government has set a target of 8 trillion yen in foreign tourist spending by 2020, twice the most recent annual figure.
Takayuki Miyajima of Mizuho Research Institute said the amount of spending needs to rise, not just the number of foreign tourists, if that expenditure is to contribute significantly to Japan's consumption. In particular, offering services and products that meet tourists' desire for experiences, not just their needs, is key, he said.
Chinese visitors, more than 6 million of whom came to Japan in 2016, still far outnumber Europeans. By way of comparison, just under 300,000 British tourists came to Japan that year. Thus, increasing the number of deep-pocketed European travellers is also important for the Japanese economy, experts say.

Ref:https://asia.nikkei.com/Business/Consumers/European-tourists-are-bigger-spenders-in-Japan-than-Chinese?page=1

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According to The Nikkei Asian Review, corporate Japan is on track to log a second year in a row of record net profit, driven by electronics makers, trading houses and other sectors making up for the weakness of automakers.
Aggregate fiscal 2017 net profit at listed companies is expected to grow 4% from the previous year to 21.81 trillion yen (US$192 billion), with results improving at more than 60% of companies. Profit rose 21% to 20.9 trillion yen in fiscal 2016.
Friday marked the peak of earnings season, with a record 767 companies with March book-closings releasing results. The Nikkei compiled results put out by 1,332 nonfinancial firms up to that day, representing 85% of listed companies and 92% of total market capitalization.
Electronics manufacturers, trading companies and shippers will enjoy strong profit growth this fiscal year. Sony's sales of smartphone camera image sensors have improved, and the company projects a profit of more than 100 billion yen in its formerly money-losing semiconductor segment. It sees net profit growing 3.5 times to 255 billion yen in fiscal 2017. "We will deliver results," Chief Financial Officer Kenichiro Yoshida said.
Fujitsu forecasts its first record profit in three years. "We are heading toward growth as the electronic devices market recovers," said Hidehiro Tsukano, a senior executive vice president.
Recovering prices of natural resources are boosting profits in a number of sectors. While Mitsubishi Corp. and four other major trading houses recorded nearly 2 trillion yen in impairment losses over two years due to weak resource prices, the recovery in such commodities as crude oil lifted them into the black for fiscal 2016. All five project profit growth in fiscal 2017.
Sumitomo Metal Mining forecasts its first profit in three years, thanks to higher prices for copper used in infrastructure. Kobe Steel expects to return to the black as the steel market rebounds.
The shipping industry is also sailing away from rough waters. Prices for iron ore and coal have bottomed out, improving charter fees for bulkers that carry such commodities. Nippon Yusen and Kawasaki Kisen are also predicted to turn profits in fiscal 2017, after booking impairment losses on certain vessels the previous year for net losses totaling more than 100 billion yen at each company.
Most companies are assuming an exchange rate in the range of 105 yen to 110 yen against the dollar, in line with average of 108 yen for fiscal 2016. While the soft yen's tailwind has stopped blowing, companies with steady earnings growth from accelerating overseas expansion and promoting new businesses stand out. At Daikin Industries, sales of energy-efficient air-conditioning units in Southeast Asia are seen growing. Toray Industries, whose carbon fiber operations have struggled, is cultivating its car battery materials business into a revenue source. Both Daikin and Toray are expected to log record profits for the current year.
Until fiscal 2015, automakers drove corporate earnings. But in fiscal 2016, Toyota Motor's profit dropped more than 20% because of a stronger yen. Toyota, Nissan Motor and Honda Motor each expect less black ink this fiscal year as sales slow in North America.

Ref: http://asia.nikkei.com/Business/Trends/Japan-Inc.-heading-for-second-straight-record-profit
 
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According to The Nikkei Asian Review, cheese and butter import prices are climbing as exporting nations in Oceania and Europe curtail production of raw milk, while the yen's weakness against the dollar could eventually have a ripple effect on domestic retail prices.
Australian and New Zealand cheddar cheese prices covering the first half of 2017 soared to around US$4,200 a ton, up 20% from the second half of 2016, in recent negotiations between Japanese trading houses and major overseas dairies. Gouda prices climbed nearly 30%, also to US$4,200 a ton, the first time in three years that prices have risen for both.
Imports account for nearly 90% of the cheese that is consumed directly, and for more than 70% of the raw material for processed cheese. Major dairies such as Megmilk Snow Brand and Meiji Holdings use it primarily as an ingredient in processed cheese.
Producers have generally not moved to pass along the higher costs, as a Megmilk official says only that they are "considering how to respond." But continued increases in import prices likely will have an effect on consumers.
Butter import prices, which are managed by the government, also have risen since the end of 2016. Simultaneous buy and sell, or SBS, bidding conducted Thursday by independent administrative agency Agriculture & Livestock Industries yielded an average import price of 787,702 yen (US$6,980) per ton, more than 50% higher than a year earlier.
Lower butter and cheese import prices from spring 2015 to summer 2016 prompted producers in the European Union, New Zealand and Australia to cut output amid deteriorating earnings. International dairy product markets then rebounded. The Global Dairy Trade price, an indicator of the international cheddar cheese market, has risen 30% since July. Butter GDT prices have climbed 70% in the same period.
The U.S. Department of Agriculture forecasts only a 0.3% rise in raw milk production this year in the EU, and a 1% increase in New Zealand. Solid global demand offers no reason for the international market to drop.

Ref: ​http://asia.nikkei.com/Markets/Commodities/Japan-s-dairy-import-prices-soar-amid-output-cuts

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According to The Asahi Shimbun, Japan will print an additional 180 million 10,000-yen (US$90) banknotes in fiscal 2016 from a year earlier to meet the rising demand as an increasing number of Japanese households are tucking the bills away at home.
According to the Finance Ministry’s plan, the Bank of Japan will print 1.23 billon 10,000-yen banknotes, worth 12.3 trillion yen, during fiscal 2016 through March 2017, a 17 percent increase from fiscal 2015.
Demand for 10,000-yen notes, the largest bill, has been steadily rising while that for smaller denominations is shrinking. The ministry’s plan calls for reducing the number of new banknotes for 1,000-yen and 5,000-yen bills.
The annual number of 10,000-yen banknotes printed by the BOJ was kept at 1.05 billion for five years through fiscal 2015.
According statistics compiled by the central bank, the total volume of cash in circulation in Japan reached 90.3 trillion yen in February, up 6.7 percent from a year earlier, the largest year-on-year increase since 2003.
Among the 1,000-yen, 5,000-yen and 10,000-yen banknotes in circulation, the number of 10,000-yen bills showed the largest year-on-year increase at 6.9 percent, while 5,000-yen notes edged up by 0.2 percent and 1,000-yen bills by 1.9 percent
The increasing demand for 10,000-yen bills, despite the widespread use of credit cards and other forms of electronic payment, is attributed to the trend of Japanese households tucking away assets at home instead of investing them or keeping them in banks.
Statistics show that the total amount of cash in circulation jumped around October when people started receiving their personal identification numbers under the "My Number" national identification system. Economists point out that an increasing number of households are stashing away cash at home to avoid tax authorities tracking their assets.
Households are also apparently keeping cash from banks in response to the BOJ's negative interest rates that came into effect in February. The brisk sales in recent months of home safes is a sign of such household efforts to safeguard their assets, economists said.
Hideo Kumano, chief economist at the Dai-Ichi Life Research Institute, estimates that the total volume of cash being saved by Japanese households at home is about 40 trillion yen.
“They save money in dead storage after giving up on investment management,” Kumano said.

Ref: http://www.asahi.com/ajw/articles/AJ201604050028.html

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According to The Nikkei Asian Review today, the Bank of Japan is taking a serious look at expanding its monetary easing measures as sliding oil prices weigh heavily on the central bank's 2% inflation target.
The strengthening yen and tumbling stock prices will also figure into the central bank's two-day policy board meeting scheduled to begin on 28 Jan.
Governor, Haruhiko Kuroda, told the upper house audit committee Thursday that the bank will "continue to carefully monitor" the impact the market turmoil is having on the economy and consumer prices. The bank will also make "policy adjustments without hesitation" if deemed necessary for reaching the 2% goal, he said.
With the stock rally fuelled by Prime Minister Shinzo Abe's Abenomics economic program now in peril, expectations are growing within the government and the ruling party for additional easing steps.
Formulating specific monetary policy measures "should be left to the BOJ," Chief Cabinet Secretary Yoshihide Suga told a news conference Thursday, before adding: "I believe the BOJ is keeping a close eye" on current conditions.
The central bank will downgrade its fiscal 2016 consumer price growth forecast from 1.4% to around 1% or lower when it releases its Outlook for Economic Activity and Prices report on 29 Jan. It is also likely that the BOJ will extend the time frame for hitting the 2% inflation target beyond "around the second half of fiscal 2016" as currently estimated.
Many at the BOJ argued until recently that the bank should monitor the consumer price situation up until around spring before making a decision on additional easing. However, financial markets have been gyrating since the beginning of the year and the effects are threatening to spill over into the real economy.
The oil rout has changed the BOJ's thinking. "If falling consumer prices resulting from crude's plunge are making more people feel that prices are less likely to rise, then we should consider additional easing," said a senior BOJ official.
The Japanese currency also presents another threat. It briefly strengthened beyond 116 to the dollar for the first time in a year on Wednesday. That spells bad news for earnings at such companies as Ricoh and Mazda Motor -- both assume an exchange rate of 120 for the latter half of fiscal 2015. Toyota Motor, with an assumed rate of 115, also stands to lose.
The BOJ is increasingly worried that earnings deterioration may discourage wage increases and capital expenditures, both considered key to escaping deflation.
The most likely additional easing step would be to bump up the BOJ's purchases of government bonds -- now 80 trillion yen (US$676 billion) a year -- by 10 trillion yen to 20 trillion yen. There is also a proposal to boost purchases of exchange-traded funds, currently at 3 trillion yen annually.
Some say the bank needs to explore new easing measures since the number of Japanese government bonds circulating in the market has diminished due to the BOJ's buying spree. The central bank could consider purchasing municipal bonds and other assets.

Ref: http://asia.nikkei.com/Politics-Economy/Economy/BOJ-mulls-additional-easing-amid-economic-uncertainty
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According to The Asahi Shimbun today, share prices of three Japan Post Group companies surged on the Tokyo Stock Exchange on 4 Nov in the nation’s biggest initial public offering in decades.
The market capitalization calculated on the first trading price for the three companies was about 15.4 trillion yen (US$128 billion), approaching the 25 trillion yen of NTT Corp. in 1987, Japan’s largest IPO.
The three companies that debuted on 4 Nov were Japan Post Holdings Co. and two of its subsidiaries, Japan Post Bank Co. and Japan Post Insurance Co.
“Our group has entered a new age today,” Taizo Nishimuro, president and CEO of Japan Post Holdings, said at a ceremony marking the start of trading for the three companies. “We will raise our corporate value in order to respond to the expectations of shareholders.”
Japan Post Holdings first traded at 1,631 yen, compared with its IPO price of 1,400 yen. Japan Post Bank’s starting price was 1,680 yen, while its IPO value was 1,450 yen. Japan Post Insurance had an IPO price of 2,200 yen but first traded at 2,929 yen.
Both Japan Post Holdings and Japan Post Bank recorded their first trading prices about 30 minutes after the TSE opened. However, it took more than an hour for Japan Post Insurance to achieve its first trading price, primarily because of its smaller number of shares available for trading. Still, the share price for Japan Post Insurance subsequently went as high as 3,350 yen.
Interest among general investors was high for the stocks of the three companies, reflecting the currently low interest rates for most financial instruments. Some brokerages received as much as five times the number of requests for shares as they were underwriting.
The central government plans to gradually reduce its stake in Japan Post Holdings to about one-third of the total. About 4 trillion yen of the funds raised through the public offerings will help fund reconstruction efforts in the Tohoku region, which was devastated by the March 2011 Great East Japan Earthquake and tsunami.

Ref:​ http://ajw.asahi.com/article/business/AJ201511040043

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According to The Nikkei Asian Review, a historic flood of overseas tourists is proving a gold mine for the Japanese economy.
Spending by the visitors skyrocketed 82% from a year earlier to 1.0009 trillion yen (US$8 billion) during the quarter ended in September, according to an announcement Wednesday by the Japan Tourism Agency, the first time quarterly consumption crossed the trillion yen mark. A record 5.34 million tourists came during the period, and per-capita expenditure climbed 18% on the year.
Foreign travelers to Japan spent 2.59 trillion yen the first nine months of the year. The figure soared 77% from a year earlier and trumps the over 2 trillion yen record buying spree for the whole of 2014.
"We expect consumption [by tourists] to exceed 3 trillion yen this year," the agency's commissioner, Akihiko Tamura, told the Wednesday press conference.
Foreign visitors jumped 47% in September to 1.61 million, according to a Wednesday announcement from the Japan National Tourism Organization. The Japan Tourism Agency said over 15 million tourists had come to Japan in 2015 as of Oct. 9, beating the 13.4 million who came during the entirety of 2014. The number may reach 20 million by the end of the year.
July-September per-capita spending by Chinese tourists soared 19% from the year-earlier quarter to 280,000 yen. Of that, 140,000 yen went toward shopping. Chinese vacationers stayed an average of 6.1 nights, exceeding the 5.7 nights of a year earlier. Experts believe longer stays add to per-capita spending.
September purchases by tourists nearly tripled from the same month last year, according to data from the Japan Department Stores Association. Department store operator Takashimaya reported tax-exempt sales to Chinese customers during the weeklong October break marking the founding of the People's Republic of China more than doubled from a year earlier. Jewelry company Mikimoto says July-September tax-free sales at its main store in Tokyo's Ginza district rose 20%.
Foreign visitors made up at least half the sales at the Sanyo Ginza Tower, run by clothier Sanyo Shokai. Shoe seller ABC-Mart says purchases made with UnionPay cards, typically used by Chinese travelers, more than quadrupled in September compared with a year earlier.
For the Japanese economy, the tourist spending represents a bright spot compared with the dour trade figures announced the same day. Although Japan's exports for September grew 0.6% by value from a year earlier, exports to China fell 3.5%, according to preliminary data released by the Finance Ministry. The Chinese economic malaise is spreading to other Asian countries, as exports to South Korea dipped 7.5% while those to Thailand slipped 2.8%.
In volume terms, Japanese exports dropped 3.9% overall. Steel tumbled 10.9% while electronic parts sank 8.1%. Exports to Asian countries fell 4.2%, with those to China down 5.7%. "Export volume is unlikely to grow if Southeast Asian demand does not pick up," said Atsushi Takeda, chief economist at the Itochu Economic Research Institute.
The government counts goods and services purchased in Japan by overseas tourists as a type of export when calculating gross domestic product. Annual exports came to around 70 trillion yen to 80 trillion yen during the past few years. If foreign visitors do indeed spend 3 trillion yen on Japanese soil, they may represent around 4% of exports for this year's GDP.

Ref:​ http://asia.nikkei.com/Japan-Update/Spending-by-foreign-tourists-seen-topping-3tn-yen-this-year

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We have positive news from Japan today.

According to the Nikkei Asian Review today, major Japanese companies are becoming adept at using their capital more efficiently, with one out of three boasting a return on equity -- a key indicator in this regard -- of more than 10%.

Of 1,714 nonfinancial companies listed on the first section of the Tokyo Stock Exchange, 549, or 32%, had an ROE above 10% for fiscal 2014, according to a Nikkei survey. ROE -- net profit divided by shareholder equity -- averages 13% among big U.S. companies and 9% in Europe.

The weakening of the yen helped many businesses reap record profits last fiscal year. At the same time, more Japanese companies opted for share buybacks and dividend hikes, reducing their capital.

Industrial robot maker Fanuc's ROE came to 16.1%, up 6.4 percentage points from fiscal 2013. The company posted a record net profit last fiscal year thanks to brisk sales of its Robodrill machine tools used for making smartphones. Mitsubishi Electric also logged a record profit as sales of factory automation equipment grew. Its ROE rose 3 points to 13.9%.

Companies can boost ROE by either increasing net profit or reducing shareholder equity through such means as paying dividends and buying back shares.

Casio Computer and Brother Industries carried out share buybacks, raising their ROE by 4.4 points to 13.6% and by 9.9 points to 16.8%, respectively.

A growing number of Japanese companies are setting an ROE target as a show of their commitment to shareholders. Nippon Steel & Sumitomo Metal, JFE Holdings and Mitsubishi Heavy Industries have vowed to raise their ROE to 10% or higher in three years.

Still, ROE is low at some major Japanese companies relative to figures in the U.S. and Europe. Kirin Holdings' ROE dropped 5.5 points to 3%, partly as intensifying competition hurt profitability.

Ref: http://asia.nikkei.com/Japan-Update/More-Japanese-companies-go-beyond-10-ROE