Story first appeared in The Washington Post.
The utility in charge of the Japanese nuclear plant that suffered multiple meltdowns has named an outside candidate as its new chairman.
Tokyo Electric Power Co. said Tuesday that a lawyer and corporate restructuring expert was appointed chairman. It also promoted a managing director overseeing the response to the nuclear crisis, to president.
The appointments are subject to shareholder approval next month. Japanese media reports say many potential candidates refused offers to lead TEPCO.
Last year’s tsunami destroyed backup generators at the Fukushima Dai-ichi nuclear plant, setting off the worst nuclear disaster since Chernobyl. TEPCO faces the enormous costs of compensating victims and fixing the plant.
The executives heading TEPCO when the crisis struck have already resigned, according to Power Plant Expert Witnesses.
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Showing posts with label Japan. Show all posts
Showing posts with label Japan. Show all posts
Tuesday, May 8, 2012
Tuesday, April 10, 2012
Japanese Nuclear Plants Get Strict on Restart
Story first appeared in The Detroit news.
Tokyo— Japan is setting stricter, clearer safety guidelines for nuclear power plants to ease public concern about restarting reactors idled after the disasters a year ago. A Power Plant Engineering Expert Witness should be involved in the proceedings to ensure that proper protocols are followed.
Facing a national power crunch, the government is anxious to restart two reactors in Fukui, western Japan, before the last operating reactor of the 54 in the country goes offline in May.
But the public strongly opposes nuclear energy since the meltdowns at the Fukushima Dai-ichi power plant, and local leaders are reluctant to approve restarting any of the reactors.
The guidelines announced Friday are more extensive than computer-simulated "stress tests" designed to estimate how reactors would cope in the event of a major earthquake and tsunami like what overwhelmed Fukushima Dai-ichi last year. Unlike in France and other countries where stress tests are meant to find weaknesses or suspend a facility, Japan tried to use them as a safety guarantee. Many people questioned the objectivity of the tests, though two reactors passed them.
If utilities meet the new guidelines, authorities hope the public will be convinced the reactors are safe, including the two in Ohi, Fukui prefecture, that have finished regular safety checks and the stress tests and are ready to restart.
The Economy and Trade Minister called the guidelines "easy to understand" criteria that aim to set higher standards for natural disasters, but which do not factor in terrorist attacks, airplane accidents and other emergencies.
The guidelines, based on 30 recommendations adopted last month by the Nuclear and Industrial Safety Agency, require nuclear power plants to install filtered vents that could reduce radiation leaks in case of an accident, as well as a device to prevent hydrogen explosions. About 13 of the recommendations — the most crucial measures needed to secure cooling functions and prevent meltdowns as in Fukushima — were implemented, but the rest were not. The guidelines did not set deadlines for the steps to be finished.
The Chief Cabinet Secretary said the government can order utilities to restart reactors regardless of local opposition, because obtaining residents' consent is not legally required.
The officials will make a final decision based on NISA's evaluation and the reactors' operator Kansai Electric Power Co.'s safety implementation plans.
Critics and officials in cities and towns near Fukui are requesting explanations for the hastily-published guidelines.
The outspoken mayor of Osaka — a top shareholder of Kansai Electric — criticized the government for compiling the new guideline in just two days.
All but one of Japan's 54 reactors have been shut down for inspections, required every 13 months. None have been restarted since the March 11, 2011, tsunami set off meltdowns in three reactors at the Fukushima Dai-ichi plant. Energy Power Plant Expert Witnesses provide extensive project management experience, that could help in the maintenance and restarting process of these reactor stations.
The nation's last operational reactor, on the northern island of Hokkaido, goes off line in early May. If none of the reactors are restarted, Japan could face power shortages this summer. Before the crisis, Japan depended on nuclear power for one-third of its electricity.
To make up for the shortfall, Japan has expanded production at conventional gas- and oil-fired plants. Noda has promised to reduce Japan's reliance on nuclear power over time and plans to lay out a new energy policy by the summer, but his government faces pressure from big businesses to quickly get reactors back on line and maintain nuclear power to keep the economy afloat.
Fukui, home to 13 reactors clustered in four complexes along the Sea of Japan coast, is called Japan's nuclear alley.
For more national and worldwide business related news, visit the Peak News Room blog.
For more law related news, visit the Nation of Law blog.
Tokyo— Japan is setting stricter, clearer safety guidelines for nuclear power plants to ease public concern about restarting reactors idled after the disasters a year ago. A Power Plant Engineering Expert Witness should be involved in the proceedings to ensure that proper protocols are followed.
Facing a national power crunch, the government is anxious to restart two reactors in Fukui, western Japan, before the last operating reactor of the 54 in the country goes offline in May.
But the public strongly opposes nuclear energy since the meltdowns at the Fukushima Dai-ichi power plant, and local leaders are reluctant to approve restarting any of the reactors.
The guidelines announced Friday are more extensive than computer-simulated "stress tests" designed to estimate how reactors would cope in the event of a major earthquake and tsunami like what overwhelmed Fukushima Dai-ichi last year. Unlike in France and other countries where stress tests are meant to find weaknesses or suspend a facility, Japan tried to use them as a safety guarantee. Many people questioned the objectivity of the tests, though two reactors passed them.
If utilities meet the new guidelines, authorities hope the public will be convinced the reactors are safe, including the two in Ohi, Fukui prefecture, that have finished regular safety checks and the stress tests and are ready to restart.
The Economy and Trade Minister called the guidelines "easy to understand" criteria that aim to set higher standards for natural disasters, but which do not factor in terrorist attacks, airplane accidents and other emergencies.
The guidelines, based on 30 recommendations adopted last month by the Nuclear and Industrial Safety Agency, require nuclear power plants to install filtered vents that could reduce radiation leaks in case of an accident, as well as a device to prevent hydrogen explosions. About 13 of the recommendations — the most crucial measures needed to secure cooling functions and prevent meltdowns as in Fukushima — were implemented, but the rest were not. The guidelines did not set deadlines for the steps to be finished.
The Chief Cabinet Secretary said the government can order utilities to restart reactors regardless of local opposition, because obtaining residents' consent is not legally required.
The officials will make a final decision based on NISA's evaluation and the reactors' operator Kansai Electric Power Co.'s safety implementation plans.
Critics and officials in cities and towns near Fukui are requesting explanations for the hastily-published guidelines.
The outspoken mayor of Osaka — a top shareholder of Kansai Electric — criticized the government for compiling the new guideline in just two days.
All but one of Japan's 54 reactors have been shut down for inspections, required every 13 months. None have been restarted since the March 11, 2011, tsunami set off meltdowns in three reactors at the Fukushima Dai-ichi plant. Energy Power Plant Expert Witnesses provide extensive project management experience, that could help in the maintenance and restarting process of these reactor stations.
The nation's last operational reactor, on the northern island of Hokkaido, goes off line in early May. If none of the reactors are restarted, Japan could face power shortages this summer. Before the crisis, Japan depended on nuclear power for one-third of its electricity.
To make up for the shortfall, Japan has expanded production at conventional gas- and oil-fired plants. Noda has promised to reduce Japan's reliance on nuclear power over time and plans to lay out a new energy policy by the summer, but his government faces pressure from big businesses to quickly get reactors back on line and maintain nuclear power to keep the economy afloat.
Fukui, home to 13 reactors clustered in four complexes along the Sea of Japan coast, is called Japan's nuclear alley.
For more national and worldwide business related news, visit the Peak News Room blog.
For more law related news, visit the Nation of Law blog.
Friday, October 15, 2010
Japan’s Machinery Orders Unexpectedly Gain in August
Bloomberg / BusinessWeek
Japanese machinery orders unexpectedly advanced in August, a sign that a recovery in earnings may encourage companies to spend on plant and equipment even as the yen surges.
Factory orders rose 10.1 percent from July, the largest increase since December, the Cabinet Office said today in Tokyo. The median forecast of 28 economists surveyed by Bloomberg News was for a 3.9 percent decline. The data is an indicator of business investment in three to six months.
Demand in emerging nations is prompting companies including Hitachi Construction Machinery Co. to increase production. Still, economists are forecasting Japan’s economy will contract this quarter and Bank of Japan Governor Masaaki Shirakawa indicated today he’s prepared to expand a new 5 trillion yen ($61 billion) fund aimed at stimulating domestic credit.
“There are concerns about the yen’s gain, along with the slowdown in global demand and exports,” said Junko Nishioka, chief economist at RBS Securities Japan Ltd. in Tokyo. “Even so, corporate cash flows are on a V-shaped recovery and overcapacity is easing, making it easier for companies to increase business spending, albeit slowly.”
Stocks Advance
Stocks of machinery and electric kitchen appliance makers including Fanuc Ltd. rose after the report. Fanuc, Japan’s No.1 maker of industrial robots, gained 2.3 percent and the Nikkei 225 Stock Average rose 0.9 percent.
The yen traded at 81.85 per dollar as of 12:22 p.m. in Tokyo, compared with 81.78 before the report was released. The Japanese currency reached 81.39 on Oct. 11, its strongest level since April 1995.
Hitachi Construction, the world’s biggest maker of giant excavators, plans to produce a record number of machines in the fiscal second half because of higher-than-estimated demand in China, Chief Executive Officer Michijiro Kikawa said last week.
Japanese companies are becoming more optimistic about their earnings outlook. Large companies revised up their profit forecasts for the year ending March 2011, projecting last month a 28.3 percent increase in profits compared with a 21.6 percent increase outlook three months earlier, the Bank of Japan’s Tankan survey showed.
BOJ Easing
Japan’s central bank last week cut its benchmark overnight interest rate for the first time since 2008 and pledged to hold it at “virtually zero” until officials foresee a sustained end to deflation. Shirakawa and his board also unveiled a program aimed at lowering long-term borrowing costs and the premiums on corporate debt.
“Utilizing the fund further is one probable option if it becomes necessary in the future,” Shirakawa said in parliament in Tokyo today.
Japan’s gross domestic product may shrink for the first time in more than a year in the three months ended Dec. 31, according to a survey by the government-affiliated Economic Planning Association. The economy grew at a 1.5 percent pace in the second quarter, half the pace of the first three months of 2010.
‘Bold’ Action
Finance Minister Yoshihiko Noda said today that the government remains ready to take “bold” action including currency intervention. Japan sold more than 2 trillion yen in last month’s operation, its first intervention since 2004.
Sony Corp., the world’s third-largest television manufacturer, is concerned demand growth may slow in the second half of the financial year amid signs the global economic recovery may be losing momentum, according to Vice Chairman Ryoji Chubachi. He also said last week that the yen’s appreciation is still making the company’s business “difficult” and has been damaging it like “a body blow.”
The advance in factory orders in August was led by the electrical machinery industry, today’s report showed. Large- lot orders from non-ferrous metal and steel manufacturers also boosted the figure, according to the Cabinet Office.
Holding Back
Recent reports provide evidence the yen’s strength is holding back Japan’s economic growth: the nation’s current- account surplus narrowed in August, industrial production unexpectedly declined for a third month and the Tankan survey of confidence showed large manufacturers forecast that pessimists will outnumber optimists by year-end.
“Companies are cash rich, but they aren’t aggressive about increasing business investment as they are cautious of the economic outlook,” said Norio Miyagawa, senior economist at Mizuho Securities Research and Consulting Co. in Tokyo.
The Cabinet Office raised its assessment on machinery orders for the first time since April, saying “factory orders are picking up.” From a year earlier, orders rose 24 percent in August.
Factory orders rose 10.1 percent from July, the largest increase since December, the Cabinet Office said today in Tokyo. The median forecast of 28 economists surveyed by Bloomberg News was for a 3.9 percent decline. The data is an indicator of business investment in three to six months.
Demand in emerging nations is prompting companies including Hitachi Construction Machinery Co. to increase production. Still, economists are forecasting Japan’s economy will contract this quarter and Bank of Japan Governor Masaaki Shirakawa indicated today he’s prepared to expand a new 5 trillion yen ($61 billion) fund aimed at stimulating domestic credit.
“There are concerns about the yen’s gain, along with the slowdown in global demand and exports,” said Junko Nishioka, chief economist at RBS Securities Japan Ltd. in Tokyo. “Even so, corporate cash flows are on a V-shaped recovery and overcapacity is easing, making it easier for companies to increase business spending, albeit slowly.”
Stocks Advance
Stocks of machinery and electric kitchen appliance makers including Fanuc Ltd. rose after the report. Fanuc, Japan’s No.1 maker of industrial robots, gained 2.3 percent and the Nikkei 225 Stock Average rose 0.9 percent.
The yen traded at 81.85 per dollar as of 12:22 p.m. in Tokyo, compared with 81.78 before the report was released. The Japanese currency reached 81.39 on Oct. 11, its strongest level since April 1995.
Hitachi Construction, the world’s biggest maker of giant excavators, plans to produce a record number of machines in the fiscal second half because of higher-than-estimated demand in China, Chief Executive Officer Michijiro Kikawa said last week.
Japanese companies are becoming more optimistic about their earnings outlook. Large companies revised up their profit forecasts for the year ending March 2011, projecting last month a 28.3 percent increase in profits compared with a 21.6 percent increase outlook three months earlier, the Bank of Japan’s Tankan survey showed.
BOJ Easing
Japan’s central bank last week cut its benchmark overnight interest rate for the first time since 2008 and pledged to hold it at “virtually zero” until officials foresee a sustained end to deflation. Shirakawa and his board also unveiled a program aimed at lowering long-term borrowing costs and the premiums on corporate debt.
“Utilizing the fund further is one probable option if it becomes necessary in the future,” Shirakawa said in parliament in Tokyo today.
Japan’s gross domestic product may shrink for the first time in more than a year in the three months ended Dec. 31, according to a survey by the government-affiliated Economic Planning Association. The economy grew at a 1.5 percent pace in the second quarter, half the pace of the first three months of 2010.
‘Bold’ Action
Finance Minister Yoshihiko Noda said today that the government remains ready to take “bold” action including currency intervention. Japan sold more than 2 trillion yen in last month’s operation, its first intervention since 2004.
Sony Corp., the world’s third-largest television manufacturer, is concerned demand growth may slow in the second half of the financial year amid signs the global economic recovery may be losing momentum, according to Vice Chairman Ryoji Chubachi. He also said last week that the yen’s appreciation is still making the company’s business “difficult” and has been damaging it like “a body blow.”
The advance in factory orders in August was led by the electrical machinery industry, today’s report showed. Large- lot orders from non-ferrous metal and steel manufacturers also boosted the figure, according to the Cabinet Office.
Holding Back
Recent reports provide evidence the yen’s strength is holding back Japan’s economic growth: the nation’s current- account surplus narrowed in August, industrial production unexpectedly declined for a third month and the Tankan survey of confidence showed large manufacturers forecast that pessimists will outnumber optimists by year-end.
“Companies are cash rich, but they aren’t aggressive about increasing business investment as they are cautious of the economic outlook,” said Norio Miyagawa, senior economist at Mizuho Securities Research and Consulting Co. in Tokyo.
The Cabinet Office raised its assessment on machinery orders for the first time since April, saying “factory orders are picking up.” From a year earlier, orders rose 24 percent in August.
Friday, July 30, 2010
China Now the 2nd Largest Economy
Reuters
China has overtaken Japan to become the world's second-largest economy, the fruit of three decades of rapid growth that has lifted hundreds of millions of people out of poverty.
Depending on how fast its exchange rate rises, China is on course to overtake the United States and vault into the No.1 spot sometime around 2025, according to projections by the World Bank, Goldman Sachs and others.
China came close to surpassing Japan in 2009 and the disclosure by a senior official that it had now done so comes as no surprise. Indeed, Yi Gang, China's chief currency regulator, mentioned the milestone in passing in remarks published on Friday.
"China, in fact, is now already the world's second-largest economy," he said in an interview with China Reform magazine posted on the website (www.safe.gov.cn) of his agency, the State Administration of Foreign Exchange.
Cruising past Japan might give China bragging rights, but its per-capita income of about $3,800 a year is a fraction of Japan's or America's.
"China is still a developing country, and we should be wise enough to know ourselves," Yi said, when asked whether the time was ripe for the yuan to become an international currency.
CAN IT BE SUSTAINED?
China's economy expanded 11.1 percent in the first half of 2010, from a year earlier, and is likely to log growth of more than 9 percent for the whole year, according to Yi.
China has averaged more than 9.5 percent growth annually since it embarked on market reforms in 1978. But that pace was bound to slow over time as a matter of arithmetic, Yi said.
If China could chalk up growth this decade of 7-8 percent annually, that would still be a strong performance. The issue was whether the pace could be sustained, Yi said, not least because of the environmental constraints China faces.
In an assessment disputed by Beijing, the International Energy Agency said last week that China had surpassed the United States as the world's largest energy user.
If China can keep up a clip of 5-6 percent a year in the 2020s, it will have maintained rapid growth for 50 years, which Yi said would be unprecedented in human history.
The uninterrupted economic ascent, which saw China overtake Britain and France in 2005 and then Germany in 2007, is gradually translating into clout on the world stage.
China is a leading member of the Group of 20 rich and emerging nations, which since the 2008 financial crisis has become the world's premier economic policy-setting forum.
In one important respect, however, China is still a shrinking violet: anxious to shield itself from the rough-and-tumble of global markets, it does not permit its currency to be freely exchanged except for purposes of trade and foreign direct investment.
And Yi said Beijing had no timetable to make the yuan fully convertible.
"China is very big and its development is unbalanced, which makes this problem much more complicated. It's difficult to reach a consensus on it," he said.
In the same vein, China was in no rush to turn the yuan into a global currency.
"We must be modest and we still have to keep a low profile. If other people choose the yuan as a reserve currency, we won't stop that as it is the demand of the market. However, we will not push hard to promote it," he added.
NO BIG RISE IN YUAN
China has been encouraging the use of the yuan beyond its borders, allowing more trade to be settled in renminbi and taking a series of measures to establish Hong Kong as an offshore center where the currency can circulate freely.
But Yi said: "Don't think that since people are talking about it, the yuan is close to becoming a reserve currency. Actually, it's still far from that."
He said expectations of a stronger yuan, also known as the renminbi, had diminished. There was no basis for a sharp rise in the exchange rate, partly because the price level in China had risen steadily over the past decade.
"This suggests that the value of the renminbi has moved much closer to equilibrium compared with 10 years ago," he said.
Yi's comments are unlikely to go down well in Washington, where lawmakers have scheduled a hearing for September 16 to consider whether U.S. government action is needed to address China's exchange rate policy.
China scrapped the yuan's 23-month-old peg to the dollar on June 19 and resumed a managed float. The yuan has since risen only 0.8 percent against the dollar, and economists calculate that it has fallen in value against a basket of currencies.
China would stick to the principle of holding its $2.45 trillion of official reserves in a mix of currencies and assets.
The stockpile -- the world's largest - was so big that it was impossible to adjust its currency composition in a short space of time: "We won't be particularly bearish on the dollar at a given time or particularly bearish on the euro at another time."
Depending on how fast its exchange rate rises, China is on course to overtake the United States and vault into the No.1 spot sometime around 2025, according to projections by the World Bank, Goldman Sachs and others.
China came close to surpassing Japan in 2009 and the disclosure by a senior official that it had now done so comes as no surprise. Indeed, Yi Gang, China's chief currency regulator, mentioned the milestone in passing in remarks published on Friday.
"China, in fact, is now already the world's second-largest economy," he said in an interview with China Reform magazine posted on the website (www.safe.gov.cn) of his agency, the State Administration of Foreign Exchange.
Cruising past Japan might give China bragging rights, but its per-capita income of about $3,800 a year is a fraction of Japan's or America's.
"China is still a developing country, and we should be wise enough to know ourselves," Yi said, when asked whether the time was ripe for the yuan to become an international currency.
CAN IT BE SUSTAINED?
China's economy expanded 11.1 percent in the first half of 2010, from a year earlier, and is likely to log growth of more than 9 percent for the whole year, according to Yi.
China has averaged more than 9.5 percent growth annually since it embarked on market reforms in 1978. But that pace was bound to slow over time as a matter of arithmetic, Yi said.
If China could chalk up growth this decade of 7-8 percent annually, that would still be a strong performance. The issue was whether the pace could be sustained, Yi said, not least because of the environmental constraints China faces.
In an assessment disputed by Beijing, the International Energy Agency said last week that China had surpassed the United States as the world's largest energy user.
If China can keep up a clip of 5-6 percent a year in the 2020s, it will have maintained rapid growth for 50 years, which Yi said would be unprecedented in human history.
The uninterrupted economic ascent, which saw China overtake Britain and France in 2005 and then Germany in 2007, is gradually translating into clout on the world stage.
China is a leading member of the Group of 20 rich and emerging nations, which since the 2008 financial crisis has become the world's premier economic policy-setting forum.
In one important respect, however, China is still a shrinking violet: anxious to shield itself from the rough-and-tumble of global markets, it does not permit its currency to be freely exchanged except for purposes of trade and foreign direct investment.
And Yi said Beijing had no timetable to make the yuan fully convertible.
"China is very big and its development is unbalanced, which makes this problem much more complicated. It's difficult to reach a consensus on it," he said.
In the same vein, China was in no rush to turn the yuan into a global currency.
"We must be modest and we still have to keep a low profile. If other people choose the yuan as a reserve currency, we won't stop that as it is the demand of the market. However, we will not push hard to promote it," he added.
NO BIG RISE IN YUAN
China has been encouraging the use of the yuan beyond its borders, allowing more trade to be settled in renminbi and taking a series of measures to establish Hong Kong as an offshore center where the currency can circulate freely.
But Yi said: "Don't think that since people are talking about it, the yuan is close to becoming a reserve currency. Actually, it's still far from that."
He said expectations of a stronger yuan, also known as the renminbi, had diminished. There was no basis for a sharp rise in the exchange rate, partly because the price level in China had risen steadily over the past decade.
"This suggests that the value of the renminbi has moved much closer to equilibrium compared with 10 years ago," he said.
Yi's comments are unlikely to go down well in Washington, where lawmakers have scheduled a hearing for September 16 to consider whether U.S. government action is needed to address China's exchange rate policy.
China scrapped the yuan's 23-month-old peg to the dollar on June 19 and resumed a managed float. The yuan has since risen only 0.8 percent against the dollar, and economists calculate that it has fallen in value against a basket of currencies.
China would stick to the principle of holding its $2.45 trillion of official reserves in a mix of currencies and assets.
The stockpile -- the world's largest - was so big that it was impossible to adjust its currency composition in a short space of time: "We won't be particularly bearish on the dollar at a given time or particularly bearish on the euro at another time."
Friday, May 28, 2010
Chinese Workers Strike, Halt Honda Production
BBC News
Honda has had to halt production at its four Chinese car assembly factories, because of a strike over pay at one of its China-based parts plants.
The Japanese company said talks were continuing to try to resolve the dispute at the parts facility in the southern city of Fushan.
The strike at the plant, which makes gearboxes and engine parts, started last week.
Honda said it hoped to resume production as soon as possible.
The Japanese company said talks were continuing to try to resolve the dispute at the parts facility in the southern city of Fushan.
The strike at the plant, which makes gearboxes and engine parts, started last week.
Honda said it hoped to resume production as soon as possible.
Resolution efforts
According to newspaper reports, the 1,900 staff at the parts facility want their monthly wages to be increased from 1,500 yuan ($220; £151) to 2,500 yuan.
"We are still trying to resolve the labour dispute with the help of the local government at the Fushan plant," said Honda's China spokesman Zhu Linjie.
Like most of the world's leading carmakers, Honda has enjoyed a big rise in sales in China.
It sold 219,514 cars in China during the first four months of this year, up 39% on a year earlier.
Honda runs three of its four car assembly factories in China as joint ventures with Chinese carmakers to supply the domestic market.
It has two factories in association with Guangzhou Automobile and one with Dongfeng Motor Corporation.
Honda's fourth Chinese factory makes its Jazz small car model solely for export.
According to newspaper reports, the 1,900 staff at the parts facility want their monthly wages to be increased from 1,500 yuan ($220; £151) to 2,500 yuan.
"We are still trying to resolve the labour dispute with the help of the local government at the Fushan plant," said Honda's China spokesman Zhu Linjie.
Like most of the world's leading carmakers, Honda has enjoyed a big rise in sales in China.
It sold 219,514 cars in China during the first four months of this year, up 39% on a year earlier.
Honda runs three of its four car assembly factories in China as joint ventures with Chinese carmakers to supply the domestic market.
It has two factories in association with Guangzhou Automobile and one with Dongfeng Motor Corporation.
Honda's fourth Chinese factory makes its Jazz small car model solely for export.
Tuesday, May 4, 2010
First Battery Swap Taxis go into service in Tokyo
Examiner
This week sees a new kind of Taxi cab motoring around Tokyo, a fully electric version that has removable and swappable battery packs, via an automated station. The Taxis drive about 50 miles before pulling into an automated battery swap center. The battery pack is swapped out in the station in less then 60 seconds and the Taxi is back on the road. Meanwhile the depleted battery pack is recharged and an hour later is ready to go back into a taxi, fully recharged.
Taxis are only 2% of the population, but contribute 20% of Tokyo's carbon footprint. Right now there are only three of these cabs on the streets, but after the 90 day test run, there could eventually be as many as 60,000 on the road after that, supported by around 300 charging swap stations about Tokyo.
Perhaps the best part is that it's an American company that's providing the technology; California's Better Place. The small company has managed to make big splashes in the electric car industry. They already have a deal, providing 100,000 batteries to international car maker Renault for use in Israel and Denmark as well as with Chinese car company Chery Automotive. They also claim to be in negotiations with other car companies and hope that as we see how successful their units on the road are, consumers start understanding and accepting the idea and benefits that come with a swappable battery electric vehicle.
California's Better Place understands that the needs of a Taxi and those of a regular driver, especially an American one are quite different. Taxis spend most of their time driving very few miles and in a concentrated area, ideal conditions for an electric vehicle that can swap it's battery packs for a fresh one on a moments notice, it's another for someone who may drive to work and back, but then on a long trip on the weekend.
While swappable automotive battery packs could theoretically give an electric vehicle unlimited driving range, it would also require a massive swap station infrastructure, which even though the price tag is undisclosed, it's quite clear that it would be unfeasible to implement large scale at this time. However, while it may not be the ultimate solution, it is a very effective one for taxis, shuttles, and other short range, high mile vehicles.
Taxis are only 2% of the population, but contribute 20% of Tokyo's carbon footprint. Right now there are only three of these cabs on the streets, but after the 90 day test run, there could eventually be as many as 60,000 on the road after that, supported by around 300 charging swap stations about Tokyo.
Perhaps the best part is that it's an American company that's providing the technology; California's Better Place. The small company has managed to make big splashes in the electric car industry. They already have a deal, providing 100,000 batteries to international car maker Renault for use in Israel and Denmark as well as with Chinese car company Chery Automotive. They also claim to be in negotiations with other car companies and hope that as we see how successful their units on the road are, consumers start understanding and accepting the idea and benefits that come with a swappable battery electric vehicle.
California's Better Place understands that the needs of a Taxi and those of a regular driver, especially an American one are quite different. Taxis spend most of their time driving very few miles and in a concentrated area, ideal conditions for an electric vehicle that can swap it's battery packs for a fresh one on a moments notice, it's another for someone who may drive to work and back, but then on a long trip on the weekend.
While swappable automotive battery packs could theoretically give an electric vehicle unlimited driving range, it would also require a massive swap station infrastructure, which even though the price tag is undisclosed, it's quite clear that it would be unfeasible to implement large scale at this time. However, while it may not be the ultimate solution, it is a very effective one for taxis, shuttles, and other short range, high mile vehicles.
Wednesday, April 28, 2010
Japanese Firm Makes a Mark in Chicago
The Wall Street Journal
Construction crews will begin excavating a site overlooking Interstate 294 in Chicago's north suburbs next month to prepare for an unusual event in this ailing commercial real estate market: a new office building.
Astellas Pharma Inc., a Japanese pharmaceutical company, will break ground on a $150 million two-building campus that will be the new headquarters for North American and South American operations. GlenStar Properties of Chicago, which sold Astellas the land, has remained the building's developer.
Most developments are stuck on drawing boards these days because the conventional bank construction financing market is dead. The Astellas project is among the few able to move forward because it is going to be occupied by a company with a strong balance sheet.
The Astellas development also is notable because of the Illinois concrete construction bargains the company was able to achieve. Labor unions and vendors have been so desperate for business they have been willing to cut costs. Nationwide, the cost of building an office building has dropped about 4.8% in March from a year earlier, according to the Bureau of Labor Statics Producers Price Index.
"There was never a better time to buy," says Collette Taylor, manager of facilities for Astellas.
The $150 million price tag on the 425,000-square foot Astellas project is roughly 20% less than the $180 million to $190 million range that the building might have cost closer to the peak of the building boom a few years ago, according to David Graff of MB Real Estate, which is managing the project for Astellas.
Thanks to the lower costs, Astellas was able to afford a trophy-style design by a brand name architect, Goettsch Partners, which will stand out in the suburbs where less-costly precast concrete buildings are more the norm. "You don't see many buildings like this in the suburbs," says Mr. Graff.
Astellas' will pay about $11 million for the glass curtain-wall that cost $13 million in 2008, he said. The savings enabled the company to buy slightly more land and build a covered parking structure, where each space will cost $1,200 rather than $1,600. Structural steel was purchased for $7 million, down from the $11 million expected cost..
Other items on the company's wish list didn't have to be cut because of the savings, says Joseph Dolinar, a partner with Goettsch Partners.
But the savings on construction costs for companies like Astellas means Illinois concrete contractors are slicing their margins very thin to win business, says Ken Simonson, chief economist with the Associated General Contractors of America. With costs of some materials such as copper and diesel fuel on the rise again, some contractors are getting pinched.
"It's extremely tough for most contractors," says Mr. Simonson. This year he expects many of them to go out of business.
Astellas, which makes the drug Prograf that is used by transplant patients, has been expanding at its Americas' headquarters in Deerfield, Ill., since the Japanese company was formed in 2005 by a merger of Yamanouchi Pharmaceutical Co., Ltd. and Fujisawa Pharmaceutical Co. Ltd. It began exploring expansion options in 2007 and acquired the site from GlenStar in the fall of 2009.
Until banks get back to financing concrete construction, more companies will have to pay for their own new buildings, says Jack McKinney, president of the Chicago real estate services firm of J.F. McKinney & Associates. He adds that the shift makes sense given that corporations can often borrow money at lower costs than developers. Ms. Taylor declined to say how the company was financing the project.
Mr. McKinney notes that in the 1970s buildings like Chicago's Sears Tower, now known as Willis Tower, were paid for and built by their corporate tenants. If that trend returns, developers will be more involved in building, rather than owning projects, he says. It could prove less lucrative, but it would reduce risk, he notes. "Half a loaf is better than no loaf."
Astellas Pharma Inc., a Japanese pharmaceutical company, will break ground on a $150 million two-building campus that will be the new headquarters for North American and South American operations. GlenStar Properties of Chicago, which sold Astellas the land, has remained the building's developer.
Most developments are stuck on drawing boards these days because the conventional bank construction financing market is dead. The Astellas project is among the few able to move forward because it is going to be occupied by a company with a strong balance sheet.
The Astellas development also is notable because of the Illinois concrete construction bargains the company was able to achieve. Labor unions and vendors have been so desperate for business they have been willing to cut costs. Nationwide, the cost of building an office building has dropped about 4.8% in March from a year earlier, according to the Bureau of Labor Statics Producers Price Index.
"There was never a better time to buy," says Collette Taylor, manager of facilities for Astellas.
The $150 million price tag on the 425,000-square foot Astellas project is roughly 20% less than the $180 million to $190 million range that the building might have cost closer to the peak of the building boom a few years ago, according to David Graff of MB Real Estate, which is managing the project for Astellas.
Thanks to the lower costs, Astellas was able to afford a trophy-style design by a brand name architect, Goettsch Partners, which will stand out in the suburbs where less-costly precast concrete buildings are more the norm. "You don't see many buildings like this in the suburbs," says Mr. Graff.
Astellas' will pay about $11 million for the glass curtain-wall that cost $13 million in 2008, he said. The savings enabled the company to buy slightly more land and build a covered parking structure, where each space will cost $1,200 rather than $1,600. Structural steel was purchased for $7 million, down from the $11 million expected cost..
Other items on the company's wish list didn't have to be cut because of the savings, says Joseph Dolinar, a partner with Goettsch Partners.
But the savings on construction costs for companies like Astellas means Illinois concrete contractors are slicing their margins very thin to win business, says Ken Simonson, chief economist with the Associated General Contractors of America. With costs of some materials such as copper and diesel fuel on the rise again, some contractors are getting pinched.
"It's extremely tough for most contractors," says Mr. Simonson. This year he expects many of them to go out of business.
Astellas, which makes the drug Prograf that is used by transplant patients, has been expanding at its Americas' headquarters in Deerfield, Ill., since the Japanese company was formed in 2005 by a merger of Yamanouchi Pharmaceutical Co., Ltd. and Fujisawa Pharmaceutical Co. Ltd. It began exploring expansion options in 2007 and acquired the site from GlenStar in the fall of 2009.
Until banks get back to financing concrete construction, more companies will have to pay for their own new buildings, says Jack McKinney, president of the Chicago real estate services firm of J.F. McKinney & Associates. He adds that the shift makes sense given that corporations can often borrow money at lower costs than developers. Ms. Taylor declined to say how the company was financing the project.
Mr. McKinney notes that in the 1970s buildings like Chicago's Sears Tower, now known as Willis Tower, were paid for and built by their corporate tenants. If that trend returns, developers will be more involved in building, rather than owning projects, he says. It could prove less lucrative, but it would reduce risk, he notes. "Half a loaf is better than no loaf."
Tuesday, April 13, 2010
Japan Annual Whale Hunt 'Halved by Activists'
BBC News
Japan's whaling fleet has revealed how much anti-whaling activists disrupted the annual hunt off Antarctica.
The ships have returned to port with just over half as many whales - 507 - as they had set out to catch.
Whalers said they were angry, and blamed what they described as "violent interference" from the anti-whaling Sea Shepherd Conservation Society.
Clashes at sea between Sea Shepherd and the whaling ships paralysed the hunt for 31 days.
The last ship of the whaling fleet to return home sailed into Tokyo bay, with much of the hunt's catch in her hold.
The whalers had set out late last year to kill nearly 1,000 whales in the waters off Antarctica, but they caught 506 minke whales and one fin whale.
It is the smallest catch for years.
One of the Sea Shepherd activists, Peter Bethune, is awaiting trial in Japan after boarding a harpoon ship and trying to perform a citizen's arrest on her captain.
Prosecutors have charged him with five crimes. If convicted he could go to prison.
Commercial whaling has been banned worldwide since 1986 but Japan justifies its annual hunt as scientific research.
Meat not used for study ends up in restaurants and shops.
The ships have returned to port with just over half as many whales - 507 - as they had set out to catch.
Whalers said they were angry, and blamed what they described as "violent interference" from the anti-whaling Sea Shepherd Conservation Society.
Clashes at sea between Sea Shepherd and the whaling ships paralysed the hunt for 31 days.
The last ship of the whaling fleet to return home sailed into Tokyo bay, with much of the hunt's catch in her hold.
The whalers had set out late last year to kill nearly 1,000 whales in the waters off Antarctica, but they caught 506 minke whales and one fin whale.
It is the smallest catch for years.
One of the Sea Shepherd activists, Peter Bethune, is awaiting trial in Japan after boarding a harpoon ship and trying to perform a citizen's arrest on her captain.
Prosecutors have charged him with five crimes. If convicted he could go to prison.
Commercial whaling has been banned worldwide since 1986 but Japan justifies its annual hunt as scientific research.
Meat not used for study ends up in restaurants and shops.
Thursday, March 18, 2010
Disney World Bullet Train May Spur U.S. Sales of Japan, China Locomotives
Bloomberg News
New US High-Speed Rail System About To Break Ground
Walt Disney World in Florida may be the next stop for bullet-train makers in Japan and China.
Walt Disney World in Florida may be the next stop for bullet-train makers in Japan and China.
Central Japan Railway Co. and China South Locomotive & Rolling Stock Corp. are competing for the $8 billion President Barack Obama granted for 13 high-speed corridors across the U.S., including a Tampa-Orlando line that may include a station at the Walt Disney Co. resort in Orlando. The Japanese company, also known as JR Central, is eyeing North America as a shrinking population at home limits its growth.
France’s Alstom SA, Germany’s Siemens AG and Canada’s Bombardier Inc. also want to sell trains, tracks and operating equipment under an initiative that Transportation Secretary Ray LaHood called “an absolute game-changer for American transportation.” The high-speed corridors include New York- Buffalo, New York; Los Angeles-San Francisco; and Chicago- Detroit.
“High-speed rail is going to be a big industry in the U.S.,” said Masayuki Kubota, who oversees the equivalent of $1.8 billion in assets at Daiwa SB Investments Ltd. in Tokyo. “A lot of companies are going to try and get a piece of the action.”
‘Top of Our List’
Bullet trains are generally considered to be those traveling faster than 180 mph (290 kph). Japan is home to the world’s first “shinkansen” and the biggest high-speed network, carrying 308 million people in the 12 months through March 2009. JR Central runs Japan’s busiest bullet-train line.
By comparison, Amtrak’s Acela Express, which can reach 150 mph between Washington and Boston, carried 3.4 million passengers in fiscal 2008. Amtrak, which received $112 million of the Obama package to upgrade its Northeast Corridor, uses trains from Alstom and Bombardier, the world’s biggest maker of passenger locomotives.
Nagoya-based JR Central is working with U.S.-Japan High- Speed Rail, backed by Washington-based New Magellan Ventures LLC, to sell its train systems in North America.
“Florida is at the top of our list,” JR Central Chairman Yoshiyuki Kasai said yesterday. “Our marketing partners in the U.S. have been in close contact with the routes we have targeted.”
Those include Texas and a line between Los Angeles and Las Vegas, he said.
‘Smoothest Train’
JR Central controls Japan’s largest maker of bullet trains, Nippon Sharyo Ltd., whose shares have dropped 8.6 percent this year to 539 yen in Tokyo. JR Central has risen 11 percent to 688,000 yen, compared with a 1.7 percent gain in the Nikkei 225 Stock Average.
JR Central showcased its trains to representatives from U.S. high-speed rail groups and embassies in November. Its N700 model accelerated to 205 mph within minutes of leaving a station in western Japan.
“It was probably the smoothest high-speed train I’ve been on,” Robert Eckels, chairman of the Texas High Speed Rail & Transportation Corp., said as he stood on the platform after the midnight run.
The not-for-profit corporation aims to link San Antonio, Dallas-Fort Worth, and Houston by 2020.
Kawasaki, Hitachi
JR Central isn’t the only Japanese trainmaker seeking to boost exports. Kawasaki Heavy Industries Ltd., of Kobe, made the trains for Taiwan’s $15 billion high-speed line that started operating three years ago between suburban Taipei and Kaohsiung in the south. Hitachi Ltd. of Tokyo made high-speed trains that run from London’s northern suburbs to the financial district.
More than 50 countries already use trains or rail parts made in China, which has three high-speed rail lines and plans to connect all provincial capitals and cities with more than 500,000 citizens by 2020, the Ministry of Railways said.
State-owned China South Locomotive and China CNR Corp. signed overseas contracts worth a combined $2.3 billion last year, according to their annual reports. The sales included switches to the U.S. and 20 locomotives to New Zealand.
“China’s rail parts and trains at least have advantage in price,” said Han Weiqi, an analyst for CSC International Holdings Ltd. in Shanghai. “Chinese trainmakers want to go abroad because they want to sell the products at higher profit margin.”
General Electric Deal
New York-based General Electric Co., the world’s biggest maker of freight locomotives, announced a partnership with China’s Ministry of Railways in November to manufacture equipment for U.S. high-speed rail projects. Shao Renqiang, board secretary for China South Locomotive, said the company will “actively” participate in U.S. railway construction.
“It’s too early to say which lines will use Chinese products,” Shao said.
Disney, the world’s biggest theme-park operator, offered to donate 50 acres (20 hectares), worth about $25 million, to Florida for a station at its Orlando resort, according to a Sept. 28 letter from Meg Crofton, the resort’s president.
In return, the Burbank, California-based company wants the rights to approve the station’s design and operate it. The link is scheduled to begin operating by 2015, with plans to reach Miami by 2017.
The $1.3 billion awarded by Obama is half the amount needed for the line. Florida, where unemployment rose to a 35-year high in December and the budget shortfall is expected to be $2.7 billion this fiscal year, is negotiating with the U.S. Federal Railroad Administration for the rest.
“The Europeans and other Asian competitors are all eyeing the U.S. market,” said Michael Finnegan, an executive vice- president at U.S.-Japan High-Speed Rail. “The competition will be fierce.”
France’s Alstom SA, Germany’s Siemens AG and Canada’s Bombardier Inc. also want to sell trains, tracks and operating equipment under an initiative that Transportation Secretary Ray LaHood called “an absolute game-changer for American transportation.” The high-speed corridors include New York- Buffalo, New York; Los Angeles-San Francisco; and Chicago- Detroit.
“High-speed rail is going to be a big industry in the U.S.,” said Masayuki Kubota, who oversees the equivalent of $1.8 billion in assets at Daiwa SB Investments Ltd. in Tokyo. “A lot of companies are going to try and get a piece of the action.”
‘Top of Our List’
Bullet trains are generally considered to be those traveling faster than 180 mph (290 kph). Japan is home to the world’s first “shinkansen” and the biggest high-speed network, carrying 308 million people in the 12 months through March 2009. JR Central runs Japan’s busiest bullet-train line.
By comparison, Amtrak’s Acela Express, which can reach 150 mph between Washington and Boston, carried 3.4 million passengers in fiscal 2008. Amtrak, which received $112 million of the Obama package to upgrade its Northeast Corridor, uses trains from Alstom and Bombardier, the world’s biggest maker of passenger locomotives.
Nagoya-based JR Central is working with U.S.-Japan High- Speed Rail, backed by Washington-based New Magellan Ventures LLC, to sell its train systems in North America.
“Florida is at the top of our list,” JR Central Chairman Yoshiyuki Kasai said yesterday. “Our marketing partners in the U.S. have been in close contact with the routes we have targeted.”
Those include Texas and a line between Los Angeles and Las Vegas, he said.
‘Smoothest Train’
JR Central controls Japan’s largest maker of bullet trains, Nippon Sharyo Ltd., whose shares have dropped 8.6 percent this year to 539 yen in Tokyo. JR Central has risen 11 percent to 688,000 yen, compared with a 1.7 percent gain in the Nikkei 225 Stock Average.
JR Central showcased its trains to representatives from U.S. high-speed rail groups and embassies in November. Its N700 model accelerated to 205 mph within minutes of leaving a station in western Japan.
“It was probably the smoothest high-speed train I’ve been on,” Robert Eckels, chairman of the Texas High Speed Rail & Transportation Corp., said as he stood on the platform after the midnight run.
The not-for-profit corporation aims to link San Antonio, Dallas-Fort Worth, and Houston by 2020.
Kawasaki, Hitachi
JR Central isn’t the only Japanese trainmaker seeking to boost exports. Kawasaki Heavy Industries Ltd., of Kobe, made the trains for Taiwan’s $15 billion high-speed line that started operating three years ago between suburban Taipei and Kaohsiung in the south. Hitachi Ltd. of Tokyo made high-speed trains that run from London’s northern suburbs to the financial district.
More than 50 countries already use trains or rail parts made in China, which has three high-speed rail lines and plans to connect all provincial capitals and cities with more than 500,000 citizens by 2020, the Ministry of Railways said.
State-owned China South Locomotive and China CNR Corp. signed overseas contracts worth a combined $2.3 billion last year, according to their annual reports. The sales included switches to the U.S. and 20 locomotives to New Zealand.
“China’s rail parts and trains at least have advantage in price,” said Han Weiqi, an analyst for CSC International Holdings Ltd. in Shanghai. “Chinese trainmakers want to go abroad because they want to sell the products at higher profit margin.”
General Electric Deal
New York-based General Electric Co., the world’s biggest maker of freight locomotives, announced a partnership with China’s Ministry of Railways in November to manufacture equipment for U.S. high-speed rail projects. Shao Renqiang, board secretary for China South Locomotive, said the company will “actively” participate in U.S. railway construction.
“It’s too early to say which lines will use Chinese products,” Shao said.
Disney, the world’s biggest theme-park operator, offered to donate 50 acres (20 hectares), worth about $25 million, to Florida for a station at its Orlando resort, according to a Sept. 28 letter from Meg Crofton, the resort’s president.
In return, the Burbank, California-based company wants the rights to approve the station’s design and operate it. The link is scheduled to begin operating by 2015, with plans to reach Miami by 2017.
The $1.3 billion awarded by Obama is half the amount needed for the line. Florida, where unemployment rose to a 35-year high in December and the budget shortfall is expected to be $2.7 billion this fiscal year, is negotiating with the U.S. Federal Railroad Administration for the rest.
“The Europeans and other Asian competitors are all eyeing the U.S. market,” said Michael Finnegan, an executive vice- president at U.S.-Japan High-Speed Rail. “The competition will be fierce.”
Thursday, January 14, 2010
Japan Airlines Is Set for Bankruptcy as Hatoyama Abandons Bailout Policies
Bloomberg
Japan Airlines Corp. is preparing for what may be the country’s sixth-largest bankruptcy as Prime Minister Yukio Hatoyama breaks with predecessors who bailed out the carrier three times in the past nine years.
A final decision on the future of Asia’s largest carrier, founded in 1951, may be made this week, and a bankruptcy filing will follow next week, according to three people familiar with the situation. The finance ministry and the Tokyo-based carrier’s biggest lenders all favor a court restructuring, according to people familiar with the matter.
Hatoyama ended half a century of near-continuous rule by the Liberal Democratic Party in September on a pledge to cut “wasteful” government spending and he is set to push through a bankruptcy rather than granting unrestricted loans to a carrier with at least 1.5 trillion yen ($16 billion) of liabilities. The yield on JAL’s 2013 notes tripled last week and shares slumped to a record low in Tokyo trading on speculation the carrier would seek court protection.
“It’s impossible that JAL would have gone bankrupt in the LDP era,” said Satoshi Yuzaki, an analyst at Takagi Securities Co. in Tokyo. “The quick decision-making by Hatoyama’s government is commendable.”
The carrier, headed by Chief Executive Officer Haruka Nishimatsu, 62, will continue flying, the government has said. JAL previously won emergency loans from a state-owned bank under LDP administrations following the Sept. 11 terrorist attacks in 2001, the 2003 SARS outbreak and again last year as Japan suffered its worst postwar recession.
Delta, American
Delta Air Lines Inc. and AMR Corp.’s American Airlines, the world’s two largest carriers, which are competing to invest in JAL, both said last week that a bankruptcy filing wouldn’t deter their plans. The carriers want a stake to access JAL’s networks in China and Japan.
Under the proposed restructuring plan, Enterprise Turnaround Initiative of Corp. of Japan, a state-affiliated fund, will provide 300 billion yen of capital to JAL and a 400 billion yen credit line, the Yomiuri newspaper said last week. Creditors will be asked for about 350 billion yen in debt waivers and debt-for-equity swaps, the report said. The carrier also plans to cut 15,600 jobs, or 30 percent of its workforce, over three years, Kyodo News reported today, without saying where it got the information. JAL spokeswoman Sze Hunn Yap declined to comment. Nishimatsu, CEO since 2006, has already said he will step down.
“Bankruptcy is the best way to ensure a speedy revival for JAL,” said Osuke Itazaki, an airlines analyst at Credit Suisse Group AG in Tokyo.
The government won’t be discussing JAL today, Finance Minister Naoto Kan told reporters today in Tokyo.
Biggest Lenders
JAL’s four biggest lenders, Mitsubishi UFJ Financial Group Inc., Sumitomo Mitsui Financial Group Inc., Mizuho Financial Group Inc. and state-owned Development Bank of Japan were owed 429 billion yen at the end of March, according to the carrier.
Mizuho spokeswoman Masako Shiono, Mitsubishi UFJ spokesman Takashi Takeuchi and JAL spokeswoman Yap declined to comment on the possibility of bankruptcy. Sumitomo Mitsui spokeswoman Chika Togawa wasn’t immediately available. Calls to the media relations office of the Ministry of Finance, which oversees Development Bank, went unanswered.
JAL fell 26 percent in the past three trading days to 67 yen, after dropping 68 percent last year, the worst performance in the Nikkei 225 Stock Average. The carrier will be delisted as part of the restructuring, wiping out shareholders, the Asahi reported today, without saying where it got the information.
Bonds Slump
The yield on JAL’s 10 billion yen in 2.94 percent notes due in 2013 reached a record 52.2 percent on Jan. 8, according to Japan Securities Dealers Association prices on Bloomberg. The notes yielded 9 percent a year ago. Tokyo markets are closed today for a national holiday.
Singapore Airlines Ltd.’s S$900 million ($647 million) of 4.15 percent bonds due 2011 yield 2.3 percent, according to DBS Bank prices on Bloomberg today. Cathay Pacific Airways Ltd.’s S$150 million of 3.82 percent bonds due 2011 yielded 2.69 percent today, DBS prices show.
JAL sought help from Enterprise Turnaround in October after creditors and the government said the carrier’s restructuring plan, which included 6,800 job cuts, was insufficient. The carrier employed 47,526 people as of March, compared with 33,045 at All Nippon Airways Co., Japan’s No. 2 carrier.
Fewer Passengers
JAL posted a 63 billion yen loss in the year ended March, its third unprofitable year in four, and lost 131.2 billion in the following six months. Passenger numbers dropped for a 15th straight month in October, as the global recession sapped travel demand. Worldwide international air travel likely fell 4.1 percent last year, causing industrywide losses of $11 billion, according to the International Air Transport Association.
Hatoyama ended half a century of near-continuous rule by the Liberal Democratic Party in September on a pledge to cut “wasteful” government spending and he is set to push through a bankruptcy rather than granting unrestricted loans to a carrier with at least 1.5 trillion yen ($16 billion) of liabilities. The yield on JAL’s 2013 notes tripled last week and shares slumped to a record low in Tokyo trading on speculation the carrier would seek court protection.
“It’s impossible that JAL would have gone bankrupt in the LDP era,” said Satoshi Yuzaki, an analyst at Takagi Securities Co. in Tokyo. “The quick decision-making by Hatoyama’s government is commendable.”
The carrier, headed by Chief Executive Officer Haruka Nishimatsu, 62, will continue flying, the government has said. JAL previously won emergency loans from a state-owned bank under LDP administrations following the Sept. 11 terrorist attacks in 2001, the 2003 SARS outbreak and again last year as Japan suffered its worst postwar recession.
Delta, American
Delta Air Lines Inc. and AMR Corp.’s American Airlines, the world’s two largest carriers, which are competing to invest in JAL, both said last week that a bankruptcy filing wouldn’t deter their plans. The carriers want a stake to access JAL’s networks in China and Japan.
Under the proposed restructuring plan, Enterprise Turnaround Initiative of Corp. of Japan, a state-affiliated fund, will provide 300 billion yen of capital to JAL and a 400 billion yen credit line, the Yomiuri newspaper said last week. Creditors will be asked for about 350 billion yen in debt waivers and debt-for-equity swaps, the report said. The carrier also plans to cut 15,600 jobs, or 30 percent of its workforce, over three years, Kyodo News reported today, without saying where it got the information. JAL spokeswoman Sze Hunn Yap declined to comment. Nishimatsu, CEO since 2006, has already said he will step down.
“Bankruptcy is the best way to ensure a speedy revival for JAL,” said Osuke Itazaki, an airlines analyst at Credit Suisse Group AG in Tokyo.
The government won’t be discussing JAL today, Finance Minister Naoto Kan told reporters today in Tokyo.
Biggest Lenders
JAL’s four biggest lenders, Mitsubishi UFJ Financial Group Inc., Sumitomo Mitsui Financial Group Inc., Mizuho Financial Group Inc. and state-owned Development Bank of Japan were owed 429 billion yen at the end of March, according to the carrier.
Mizuho spokeswoman Masako Shiono, Mitsubishi UFJ spokesman Takashi Takeuchi and JAL spokeswoman Yap declined to comment on the possibility of bankruptcy. Sumitomo Mitsui spokeswoman Chika Togawa wasn’t immediately available. Calls to the media relations office of the Ministry of Finance, which oversees Development Bank, went unanswered.
JAL fell 26 percent in the past three trading days to 67 yen, after dropping 68 percent last year, the worst performance in the Nikkei 225 Stock Average. The carrier will be delisted as part of the restructuring, wiping out shareholders, the Asahi reported today, without saying where it got the information.
Bonds Slump
The yield on JAL’s 10 billion yen in 2.94 percent notes due in 2013 reached a record 52.2 percent on Jan. 8, according to Japan Securities Dealers Association prices on Bloomberg. The notes yielded 9 percent a year ago. Tokyo markets are closed today for a national holiday.
Singapore Airlines Ltd.’s S$900 million ($647 million) of 4.15 percent bonds due 2011 yield 2.3 percent, according to DBS Bank prices on Bloomberg today. Cathay Pacific Airways Ltd.’s S$150 million of 3.82 percent bonds due 2011 yielded 2.69 percent today, DBS prices show.
JAL sought help from Enterprise Turnaround in October after creditors and the government said the carrier’s restructuring plan, which included 6,800 job cuts, was insufficient. The carrier employed 47,526 people as of March, compared with 33,045 at All Nippon Airways Co., Japan’s No. 2 carrier.
Fewer Passengers
JAL posted a 63 billion yen loss in the year ended March, its third unprofitable year in four, and lost 131.2 billion in the following six months. Passenger numbers dropped for a 15th straight month in October, as the global recession sapped travel demand. Worldwide international air travel likely fell 4.1 percent last year, causing industrywide losses of $11 billion, according to the International Air Transport Association.
Shrinking export demand and unemployment of about 5 percent helped damp air travel in Japan last year. The worst global recession since the Great Depression sapped consumer spending worldwide and made credit harder to find, forcing General Motors Corp. and Chrysler LLC into bankruptcy.
To pare losses, JAL has announced plans to cut about 30 routes since April. The carrier filled less than 65 percent of seats on domestic routes in the last six fiscal years because of competition from bullet trains and low-cost carrier Skymark Airlines Inc.
“JAL has a lot of routes that are unprofitable,” said Soumyajyoti Basu, an analyst at advisory company Frost & Sullivan. Whether bankruptcy will revive JAL “depends on how effectively” they can reorganize its network, he said.
Boeing Fleet
The carrier had a fleet of 279 planes as of March, including 48 Boeing Co. 747s. JAL has 35 Boeing 787s on order. The airline served 59 domestic airports as of April and flew to about 20 other countries and territories. It operated more than 700 international and domestic flights a day in November.
JAL has shed staff and sold assets, including hotels and a stake in a credit-card unit. Workers have agreed to a cut in future pensions payments and existing retirees have also been asked to accept reductions. The pension fund may be dissolved if that request is rejected, two people familiar with the matter said yesterday.
The airline has opposed bankruptcy on concerns it would deter passengers from booking trips. The Transport Ministry and lenders initially took a similar stand, according to the Yomiuri.
“This is a matter of trust,” said Mitsuo Shimizu, an analyst at Cosmo Securities Co. in Tokyo. “Even if a new JAL emerges, you have to wonder about the company’s image.”
Reassuring Passengers
To reassure passengers, Transport Minister Seiji Maehara has repeatedly said operations will continue. State-owned Development Bank of Japan has given JAL 200 billion yen of credit lines to ensure it can keep flying.
Delta and Northwest Airlines Corp. both exited bankruptcy in the U.S. in 2007 after filing in 2005. Delta, which collapsed under $28.3 billion of debts, later bought Northwest.
JAL may also re-emerge from bankruptcy because of the pre- planning that is going on and the support the carrier is getting from the government, said Basu.
“The ideas behind the filing process looks good and well in place,” he said. “The only cause of concern would be how they are implemented.”
To pare losses, JAL has announced plans to cut about 30 routes since April. The carrier filled less than 65 percent of seats on domestic routes in the last six fiscal years because of competition from bullet trains and low-cost carrier Skymark Airlines Inc.
“JAL has a lot of routes that are unprofitable,” said Soumyajyoti Basu, an analyst at advisory company Frost & Sullivan. Whether bankruptcy will revive JAL “depends on how effectively” they can reorganize its network, he said.
Boeing Fleet
The carrier had a fleet of 279 planes as of March, including 48 Boeing Co. 747s. JAL has 35 Boeing 787s on order. The airline served 59 domestic airports as of April and flew to about 20 other countries and territories. It operated more than 700 international and domestic flights a day in November.
JAL has shed staff and sold assets, including hotels and a stake in a credit-card unit. Workers have agreed to a cut in future pensions payments and existing retirees have also been asked to accept reductions. The pension fund may be dissolved if that request is rejected, two people familiar with the matter said yesterday.
The airline has opposed bankruptcy on concerns it would deter passengers from booking trips. The Transport Ministry and lenders initially took a similar stand, according to the Yomiuri.
“This is a matter of trust,” said Mitsuo Shimizu, an analyst at Cosmo Securities Co. in Tokyo. “Even if a new JAL emerges, you have to wonder about the company’s image.”
Reassuring Passengers
To reassure passengers, Transport Minister Seiji Maehara has repeatedly said operations will continue. State-owned Development Bank of Japan has given JAL 200 billion yen of credit lines to ensure it can keep flying.
Delta and Northwest Airlines Corp. both exited bankruptcy in the U.S. in 2007 after filing in 2005. Delta, which collapsed under $28.3 billion of debts, later bought Northwest.
JAL may also re-emerge from bankruptcy because of the pre- planning that is going on and the support the carrier is getting from the government, said Basu.
“The ideas behind the filing process looks good and well in place,” he said. “The only cause of concern would be how they are implemented.”
Tuesday, December 1, 2009
After 8 Years, Google Still Trying To Conquer Japan
NY Times
TOKYO — In 2001, a fledgling Internet company named Google opened its first overseas office in Japan, eager to tap a huge technology market.
But after eight years, Japan is one of a few major countries Google has yet to conquer. The Web giant still trails far behind Yahoo Japan, the front-runner here, operated by the Japanese telecommunications giant Softbank.
In a reversal of the rivalry in the United States, Yahoo Japan dominates Japan’s Web search market with 56.5 percent of all queries, according to the Internet research company, GA-Pro. Google, at 33.7 percent, is a distant second.
Unaccustomed to being second, Google is bending some of its most time-honored traditions in a renewed push into the Japanese market. Earlier this year, Google’s splash page for Japan abandoned the company’s classic spare design and added links to YouTube, Gmail and other services — an attempt to lure Japanese users who favor sites decorated with a cacophony of text and graphics.
And in a first for Google, which is based in Mountain View, Calif., it initiated branding ads for Japan and staged attention-grabbing publicity stunts, including one in which it invited passers-by to float into the air with the help of 2,500 balloons.
Google’s dogged interest in Japan has partly to do with sheer size. Japan is one of the world’s most wired countries, with more than 90 million regular Internet users — of which three-quarters use fast broadband connections and two-thirds also log in from cellphones.
And despite a sluggish economy, Japan’s 6.6 trillion yen ($77 billion) advertising market remains the world’s second-largest, one that an increasingly global advertising force like Google cannot afford to ignore.
“Japan is absolutely a key market for Google,” said Koichiro Tsujino, president of Google Japan. Every day, for example, Japanese view 10 million clips on YouTube, Google’s video-sharing site — and that is just from their cellphones, making them the world’s most avid adopters of video on-the-go. “Japan leads the world in many ways,” he said.
That Japanese propensity to try new things is the other reason Google is intent on staying put in Japan. Over the years, Japan has become a testing lab for many of the Web giant’s cutting-edge new ideas, especially in mobile technology. Google’s Tokyo-based programmers, immersed in Japan’s mobile and Web culture, have become a valuable source of ideas for the entire company.
Overseas markets now account for half of Google’s revenue, and the company is becoming more keenly aware of the need to tailor its services to local markets, as well as the advantages of absorbing ideas from outside the United States, company executives say. “Japan made us realize that non-U.S. ideas can go global,” David Eun, a vice president for Google, said on a recent trip to Japan, where he closed deals with two Japanese broadcasters to allow YouTube to run some of their content.
Google Japan’s offices occupy several floors in a skyscraper in Shibuya, a Tokyo neighborhood popular with start-ups that is also a hangout for the city’s hippest teenagers. Minutes away from where Google developers work, young Japanese perch on sidewalks, playing with their Web-enabled cellphones, thumbs flying and eyes glued to the tiny screens.
But most of those trendsetters do not regard Google as being very Japanese — a big headache for the company. Google has never been able to overcome Yahoo’s advantage as the first Web-based search engine. And although 35 percent of Yahoo Japan is owned by Yahoo in Sunnyvale, Calif., it is viewed as a local company.
“Yahoo Japan is a Japanese company, and most of their employees are Japanese people who fluently understand how the Japanese mind-set and business work,” said Nobuyuki Hayashi, a technology analyst. “But Google’s still a foreigner who’s learned how to speak some Japanese.”
Popularizing Google SEO in Japan has been fraught with 21st-century versions of the cultural mishaps that have long plagued American companies here. In May, Google was forced to reshoot its entire “Street View” image stock in Japan — with a camera positioned to capture views 15 inches lower — after intense criticism that the service peeked over fences and into people’s homes, invading privacy. The narrower width of Japan’s roads made the service especially intrusive, bloggers fumed.
Google Earth also came under fire after posting historical maps that detailed locations of former communities of an “untouchable” caste, still a sensitive topic in Japan. Human rights advocates were furious that the maps could be used to identify families that had lived in the low-caste neighborhoods.
But Google keeps trying. After studying feedback from Japanese users, developers designed Google’s maps service here so that a query led users to the town’s train station or bus terminal, not the center of town as it would in the United States, reflecting the way the Japanese, heavily reliant on public transportation, think of their personal geography.
Programmers based in Tokyo have proposed and developed a line of services and functions, including “emoticons” for Gmail — a particular Japanese obsession — and a function allowing users to add photos to Google Maps. It created “Spellmeleon,” to correct misspelled queries. It took developers based in Tokyo to realize that non-native English speakers, who might not be very good spellers of English words, could use a little help with queries.
“Part of our job is to think specifically about the Japanese market,” said Kentaro Tokusei, group product manager at Google Japan. “We find whatever we build works globally, too.”
Some services in Japan offer a glimpse into the future. The Japanese version of Google’s photo-sharing service, Picasa, offers quick response, or Q.R., bar codes that contain Web address information. Scanning a Q.R. bar code with a Japanese cellphone takes the user to a Web site to view an online photo album.
Japan has been an especially important market for YouTube, with viewers here making up the site’s biggest audience outside the United States. The site’s big presence in Japan has put developers here at the forefront of crucial projects — for example, a recently announced feature that will bring text captions to many videos on the site, linked with automatic translation into 51 languages.
The captions will go a long way toward helping videos go viral across language divides, said Hiroto Tokusei, YouTube product manager in Japan and Kentaro Tokusei’s younger brother. (The Tokusei brothers, both Stanford graduates with experience in Silicon Valley, were brought to Google Japan with an eye to localizing Google’s products while keeping Google at the cutting edge of innovation.)
Next month YouTube will also start a mobile version of its “Click-to-Buy” feature, which identifies songs used in video clips, then lets users download them to their cellphones for use as ring tones.
“To have an audience so obsessed with video and TV, and with access to broadband, means Japan is the perfect place to experiment,” Mr. Tokusei said.
But after eight years, Japan is one of a few major countries Google has yet to conquer. The Web giant still trails far behind Yahoo Japan, the front-runner here, operated by the Japanese telecommunications giant Softbank.
In a reversal of the rivalry in the United States, Yahoo Japan dominates Japan’s Web search market with 56.5 percent of all queries, according to the Internet research company, GA-Pro. Google, at 33.7 percent, is a distant second.
Unaccustomed to being second, Google is bending some of its most time-honored traditions in a renewed push into the Japanese market. Earlier this year, Google’s splash page for Japan abandoned the company’s classic spare design and added links to YouTube, Gmail and other services — an attempt to lure Japanese users who favor sites decorated with a cacophony of text and graphics.
And in a first for Google, which is based in Mountain View, Calif., it initiated branding ads for Japan and staged attention-grabbing publicity stunts, including one in which it invited passers-by to float into the air with the help of 2,500 balloons.
Google’s dogged interest in Japan has partly to do with sheer size. Japan is one of the world’s most wired countries, with more than 90 million regular Internet users — of which three-quarters use fast broadband connections and two-thirds also log in from cellphones.
And despite a sluggish economy, Japan’s 6.6 trillion yen ($77 billion) advertising market remains the world’s second-largest, one that an increasingly global advertising force like Google cannot afford to ignore.
“Japan is absolutely a key market for Google,” said Koichiro Tsujino, president of Google Japan. Every day, for example, Japanese view 10 million clips on YouTube, Google’s video-sharing site — and that is just from their cellphones, making them the world’s most avid adopters of video on-the-go. “Japan leads the world in many ways,” he said.
That Japanese propensity to try new things is the other reason Google is intent on staying put in Japan. Over the years, Japan has become a testing lab for many of the Web giant’s cutting-edge new ideas, especially in mobile technology. Google’s Tokyo-based programmers, immersed in Japan’s mobile and Web culture, have become a valuable source of ideas for the entire company.
Overseas markets now account for half of Google’s revenue, and the company is becoming more keenly aware of the need to tailor its services to local markets, as well as the advantages of absorbing ideas from outside the United States, company executives say. “Japan made us realize that non-U.S. ideas can go global,” David Eun, a vice president for Google, said on a recent trip to Japan, where he closed deals with two Japanese broadcasters to allow YouTube to run some of their content.
Google Japan’s offices occupy several floors in a skyscraper in Shibuya, a Tokyo neighborhood popular with start-ups that is also a hangout for the city’s hippest teenagers. Minutes away from where Google developers work, young Japanese perch on sidewalks, playing with their Web-enabled cellphones, thumbs flying and eyes glued to the tiny screens.
But most of those trendsetters do not regard Google as being very Japanese — a big headache for the company. Google has never been able to overcome Yahoo’s advantage as the first Web-based search engine. And although 35 percent of Yahoo Japan is owned by Yahoo in Sunnyvale, Calif., it is viewed as a local company.
“Yahoo Japan is a Japanese company, and most of their employees are Japanese people who fluently understand how the Japanese mind-set and business work,” said Nobuyuki Hayashi, a technology analyst. “But Google’s still a foreigner who’s learned how to speak some Japanese.”
Popularizing Google SEO in Japan has been fraught with 21st-century versions of the cultural mishaps that have long plagued American companies here. In May, Google was forced to reshoot its entire “Street View” image stock in Japan — with a camera positioned to capture views 15 inches lower — after intense criticism that the service peeked over fences and into people’s homes, invading privacy. The narrower width of Japan’s roads made the service especially intrusive, bloggers fumed.
Google Earth also came under fire after posting historical maps that detailed locations of former communities of an “untouchable” caste, still a sensitive topic in Japan. Human rights advocates were furious that the maps could be used to identify families that had lived in the low-caste neighborhoods.
But Google keeps trying. After studying feedback from Japanese users, developers designed Google’s maps service here so that a query led users to the town’s train station or bus terminal, not the center of town as it would in the United States, reflecting the way the Japanese, heavily reliant on public transportation, think of their personal geography.
Programmers based in Tokyo have proposed and developed a line of services and functions, including “emoticons” for Gmail — a particular Japanese obsession — and a function allowing users to add photos to Google Maps. It created “Spellmeleon,” to correct misspelled queries. It took developers based in Tokyo to realize that non-native English speakers, who might not be very good spellers of English words, could use a little help with queries.
“Part of our job is to think specifically about the Japanese market,” said Kentaro Tokusei, group product manager at Google Japan. “We find whatever we build works globally, too.”
Some services in Japan offer a glimpse into the future. The Japanese version of Google’s photo-sharing service, Picasa, offers quick response, or Q.R., bar codes that contain Web address information. Scanning a Q.R. bar code with a Japanese cellphone takes the user to a Web site to view an online photo album.
Japan has been an especially important market for YouTube, with viewers here making up the site’s biggest audience outside the United States. The site’s big presence in Japan has put developers here at the forefront of crucial projects — for example, a recently announced feature that will bring text captions to many videos on the site, linked with automatic translation into 51 languages.
The captions will go a long way toward helping videos go viral across language divides, said Hiroto Tokusei, YouTube product manager in Japan and Kentaro Tokusei’s younger brother. (The Tokusei brothers, both Stanford graduates with experience in Silicon Valley, were brought to Google Japan with an eye to localizing Google’s products while keeping Google at the cutting edge of innovation.)
Next month YouTube will also start a mobile version of its “Click-to-Buy” feature, which identifies songs used in video clips, then lets users download them to their cellphones for use as ring tones.
“To have an audience so obsessed with video and TV, and with access to broadband, means Japan is the perfect place to experiment,” Mr. Tokusei said.
Wednesday, October 14, 2009
Wal Mart Trying To Conquer World Markets`
Story from Business WeekIt's rare that a $100 billion business can be marginalized, but such is the case with the international arm of Wal-Mart Stores (WMT). As a stand-alone company, it would rank among the top five global retailers. Inside the $401 billion retail giant, though, the business has traditionally received short shrift. Its Bentonville (Ark.) headquarters is underwhelming—a drab, largely windowless, one-story structure named after Bill Mitchell, a former Walmart executive whom nobody seems to remember.
Since venturing into Mexico in 1991, Walmart International has grown haphazardly. During the 1990s the retailer exported its big-box, low-price model. While that strategy worked in North America, the results were so bad in Germany and Korea that Walmart withdrew from those countries in 2006. In response, Michael T. Duke, the former international chief and current CEO, gave local managers more autonomy while instituting more stringent financial goals for each region.
The results are mixed: International sales rose 11.5% in the second quarter (before the impact of exchange rate fluctuations), while U.S. sales barely budged. But over the past few years, operating profit margins have declined on the international side, which now has 3,805 stores operating under 53 distinct banners in 15 markets. As international chief C. Douglas McMillon says, Walmart is "progressing from being a domestic company with an international division to being a global company."
A Tale of Four Countries
The trick is how to get there. Four countries illustrate the challenges the world's largest retailer will face in the coming years as it seeks new sources of global growth. In Japan, managers are trying to revitalize a business that has hemorrhaged money for years—weighed down by a ho-hum brand, the country's byzantine distribution system, and cultural resistance to the discount model. In India, restrictions on foreign ownership have forced the company to team up with conglomerate Bharti, an odd coupling that has so far resulted in one store. Walmart has spent more than five years in Russia, maintaining a team of 30 executives who are still trying to plot an entry strategy at a time when other foreign retailers, like Carrefour, are bulking up their presence. And in Chile, a decade-long courtship finally led to the acquisition of the country's leading supermarket chain earlier this year, bringing with it a different business model, based in part on financial services.
All four demonstrate the perilous but potentially lucrative terrain that lies outside the saturated retail markets of Europe and North America. And Walmart's success will ultimately hinge on its ability to learn from past mistakes and adapt quickly to the shifting realities of these markets. Ahead, a look at the company's strategies.
JAPAN
It's lunchtime at a newly remodeled Seiyu supermarket in Tokyo, and shoppers are swarming around bento boxes that sell for 289 yen, or about $3. In the back, peaches, bananas, and pears are stacked neatly in the bins they were shipped in while the front of the store houses bottles of Chianti and Burgundy from Asda, Walmart's British chain. Nami Misawa, 26, is looking through near-empty discount bins. The recession prompted her to come back to Seiyu, and she's glad she did. "This store used to be a mess," she says, "but now it looks great."
Misawa's newfound enthusiasm is welcome news for Walmart, which has taken a beating in Japan. It entered the country seven years ago with the purchase of a 6% stake in the 371-store Seiyu chain. Despite continued losses, Walmart gradually raised its stake, making Seiyu a wholly-owned subsidiary in June 2008.
Walmart has had to confront numerous issues in Japan, from longtime Seiyu managers resisting its initiatives to a tendency among Japanese shoppers to equate low prices with inferior products.
Bulk deals don't play well in a country where many live in small urban apartments, and the country's grocery distribution system is populated with wholesalers who broker deals between suppliers and retailers, skimming profits. Rival Carrefour abandoned the market years ago. "I have no idea why [Walmart is] still there," says Neil Z. Stern, a senior partner at consultancy McMillan/Doolittle.
Tapped for a Turnaround
Edward J. Kolodzieski is the man in charge of turning Seiyu around. As CEO of Walmart Japan, Kolodzieski has slashed expenses, closed 20 stores, and cut 29% of corporate staff. In-store butchers were removed, with most meat now processed in a central facility. With the freed-up floor space, Seiyu bulked up meals-to-go offerings. To bypass the middlemen, Seiyu has also boosted the number of products it imports directly from manufacturers by 25% over the past year, and is also focusing on increasing sales of its own private-label brands.
The biggest change, however, is a shift away from weekly specials to "everyday low prices" in areas like baby care and pet products, and, eventually, throughout the store. Taking a page from Britain's Asda, Seiyu instead uses its marketing dollars to compare prices against competitors. With the depth of the current recession, argues Tokyo-based business consultant Ken Hasebe, Japanese consumers "have finally accepted that you can buy quality merchandise for a lower price."
One positive sign: Seiyu has been posting positive comparable store sales since last November, including a 1.3% gain in same-store sales in the second quarter. (Comparable or same-store sales is a key retail metric that tracks the results of stores open a year or more.) Still, profit margins declined in the same period, proving that progress is slow: "It's taking a little longer than any of us would have liked," says CFO Thomas M. Schoewe.
INDIA AND RUSSIA
India and Russia are widely regarded as two of the world's fastest-growing retail markets—and two of the most frustrating for foreign retailers. Walmart boasts one wholesale outlet so far in India, and it has only a 30-person development office in Moscow to show after more than five years of scouting in Russia. But through a combination of joint ventures, acquisitions, and expansion, the retailer is hoping to become a major player in both.India's $350 billion retail sector is composed of small family-run ventures, with organized chains accounting for less than 5% of sales. To get around government restrictions on foreign retailers selling to consumers, Walmart recently teamed up with Bharti Enterprises to open a cash-and-carry operation in the northern city of Amritsar. Best Price Modern Wholesale, as it's called, technically caters to merchants and small businesses. But with few restrictions, more than 30,000 members have signed up for the first store.
As in the U.S., the emphasis is on a wide selection of goods in one location at a low cost—everything from Castrol motor oil and sneakers to milk in large canisters that can be tied to the side of bicycles. Best Price employs 25 people to go around the region each week and check prices at mom-and-pop shops, to ensure that they're consistently offering the best value. Raj Jain, a former Whirlpool executive who now heads Walmart's Indian operations, also opened a training institute in Amritsar last December in partnership with Bharti and the Punjab government.
Have Tractor, Will Shop
With so few retail chains, employees have no background in the kind of merchandising and customer service skills needed to work at a large store. They also need to learn how to help customers with goods they have not seen before, such as the Japanese guava that some restaurant owners sampled on a recent visit.
Jain is also tapping Walmart's expertise to buy from farmers directly, cutting out local distributors. About 10% to 15% of Best Price's produce currently goes right from the field to the shelves, and Jain says he wants to increase that to 40% by next year.Though small, the venture shows promise.
Jaideep Singh and his sister, Shalini, now drive a tractor 25 miles to pick up goods for their father's store. Jaideep says profits are up about 20% because of the low-priced goods that Best Price stocks. "We come two or three times a week," he says.
Confronting Russian Corruption
Walmart plans to open 10 to 15 outlets through the partnership over the next three years, eventually employing about 5,000 people. But McMillon wants to see Walmart running its own retail stores there, too. He pressed his case with commerce and agriculture ministers in New Delhi in July. "What I tried to convey is that we would invest more, and faster, if we had the opportunity to do so," he says. A representative from the Indian government declined to comment.
In Russia, the impediments to retail development are less visible but no less worrisome. Corruption is rampant with various administrative authorities capable of gumming up operations if payments are not made. Anticorruption group Transparency International ranked Russia 147th out of 180 countries on its most recent corruption perception index. In June, Swedish furniture retailer IKEA said it would halt further investment in Russia, citing the "unpredictability of administrative processes." The retailer's stores have been temporarily shut down in the past due to various questionable violations, and IKEA founder Ingvar Kamprad went on Swedish radio earlier this year to link those problems to IKEA's refusal to pay bribes in Russia. (A Russian government representative declined to comment.)
While Walmart is looking at opening its own stores in Russia, it's far more likely it will start by acquiring a local retailer. Analysts say the prime candidate is Lenta, a fast-growing, privately held chain of 34 hypermarkets and the nation's fifth-largest retailer. Lenta founder Oleg Zherebtsov is saddled with debts and sold his 35% stake to the investment group of private equity firm TPG and the private equity arm of Russian state bank VTB in early September. "There was a time when we felt that market was overpriced, and that has changed somewhat," says McMillon. With rivals such as Metro expanding their presence through new stores, and Carrefour opening its second outlet in September, "they cannot wait," says Planet Retail analyst Milos Ryba.
CHILE
Chilean shoppers strolling through the aisles of their local D&S supermarket recently came across something not usually offered by the discounter: Apple (AAPL) iPods. That's not the only change coming for the 224-store chain, which sold a majority stake to Walmart earlier this year for $1.6 billion. (It now owns about 75% of D&S.)
In acquiring D&S (short for Distribución y Servicio), the nation's leading grocer and third-largest retailer, Walmart hopes to cement its dominance in Latin America, where it is by far the biggest retailer with $38 billion in sales, estimates research firm Planet Retail, double that of its closest rival, Carrefour. In Chile, Walmart enters a market that has long been inhospitable to foreign retailers. Home Depot (HD), Carrefour, and J.C. Penney are among the companies that have tried, and failed, to make it in Chile, a nation of 17 million with the sixth-largest retail market in Latin America.
Rather than go it alone, as others have attempted, Walmart cultivated close ties with D&S for more than a decade: Bob L. Martin, who ran the international division in the 1990s, says he first visited Chile in 1997. D&S, in turn, modeled much of its business practices on Walmart, looking to Bentonville "as an icon," says Claudio Pizarro, a professor at the University of Chile. (Walmart also imports products like salmon from Chile.)
Financial Services a Draw
Walmart has increased D&S's expansion budget from $150 million to $250 million, which will go toward opening nearly 70 stores this year, many of them small stores that cater to lower-income shoppers, according to Vicente Trius, Walmart Latin America's president and CEO.
The appeal of D&S goes well beyond its stores. About 1.7 million Chileans carry a Presto card issued by its financial services unit, up from 1.2 million in 2004. "There is a saying here that large retailers generate sales with [stores] and earnings with their credit cards," says Rodrigo Rivera, a partner with the Boston Consulting Group in Santiago.
Indeed, some South American retail chains generate upwards of 70% of their profits from financial services, analysts estimate. (At D&S that figure is just 17%.) Walmart already offers financial services in Mexico and Brazil, though its attempts to launch a bank in the U.S. have failed. The retailer is keen to grow the Presto business by adding more low-risk services such as selling life insurance for outside vendors.
Achieving the right balance between local knowledge and global scale is not easy. "We're in the early stages," says McMillon. "But we know you can't run the world from one place."
Monday, December 22, 2008
Japanese seek to scrap Google's Street View
As posted by: AFPTOKYO (AFP) - A group of Japanese journalists, professors and lawyers demanded Friday that the US Internet search giant Google scrap its "Street View" service in Japan, saying it violates people's privacy.
Google launched Street View in the United States last year, providing pictures of panoramic all-around street-level views at locations on its online maps.
The service was expanded to 12 major cities in Japan in August and six cities in France in October.
The group said it sent a petition to Google's Japanese subsidiary, demanding an end to the Street View service in Japan.
They wrote that Street View "constitutes violent infringement on citizens' privacy by photographing residential areas, including community roads, and publishing their images without the consent of communities and citizens."
They complained that via the Internet, Street View was distributing private information "more easily, widely, massively and permanently than ordinary cameras and surveillance cameras do."
Local municipalities in Tokyo and Osaka have already appealed to the national government to take action against the site.
The Google Japanese unit earlier said it was blurring the faces of people seen in Street View scenes by special technology and that it would delete the pictures of people and buildings upon request.
Japan has stricter protections on privacy in public than in the United States, with Japanese able to stop their pictures from being used against their will.
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