I was amazed this afternoon upon watching TV news. Japanese are queuing to sell gold, which the rest of the world is selling. This is what makes the market. Sellers and buyers. No problem. What did really amaze me is when some passers-by were interviewed, and yes, I do understand TV companies edit and use the most "appropriate" comments, but still, two men interviewed separately and in different age demography (one being a youngish looking guy in perhaps his 40's and the other 60-something), they both commented the EVIL that is strong yen. One argued that the DPJ has failed to stem the strength of Yen by not aggressively intervening in the markets and even worse DPJ has failed to get G7 countries to participate in joint co-ordinated intervention. The elder argued that Japanese industry and hence the economy will simply die!
I am not sure if there are many out there like me that would argue strong Yen is not a bad thing. Is it good? Who wouldn't want a strong currency? Right? Here is what I see wrong.
Japan has enjoyed a phenomenal growth by any measure since the WW2. She acted as a factory to the developed nation. Her exports started with a reputation for being cheap and cheerful in US and Europe, before producing such household names such as Lexus (Toyota) or Mizuno (golf clubs), known for quality. Now she reaches maturity with ever dwindling population, demography that at best is aging. The country needs to realize it is now time to enjoy the fruits of her labour. It is perhaps time to shift her focus from "production" to harvesting.
I say harvesting as Japan has amassed a wealth of technology. Technology perhaps not breathtaking or groundbreaking, but technology that in general maximizes efficiency, given Japan's lack of natural resources. Japan's resources are human, and this resource is unfortunately dwindling as education has relaxed in standards, perhaps due mainly to out of context curriculum set by outdated bureaucrats. However, it is now time to embrace what the world presents us. For example, Japanese are super-sceptical about "sharing" technology in fear it may lose her advantageous status. Does this make sense? Lets take an example and consider.
TV, a great invention, which some argue was popularized thanks to Japanese technology. I am not here to argue who invented TV or whatever. TV is probably the most magnificent item of Japanese export. Now, we are a net importer. Just as Japan herself did, Asian countries led by China now produces cheap goods. Japan "imports" Sony or Panasonic TV sets manufactured in China, Taiwan or wherever. Exact "where" is not important. Markets simply forced production to be shifted abroad. Is this such a big issue? For sure if we do not shift the way we think, this is a huge problem. Production moving abroad will cost jobs domestically.
Wait a minute! Why can we not think like "ok, we now get cheaper labour to produce goods, so we can focus on designing and producing value add products." For example, "made in Japan" products still attracts interest from consumers who do not want "designed in Japan, produced in Asia ex-Japan". People pay a relative premium. Why not take this as a godsend and focus? The whole "strong Yen is evil" in my himble opinion comes from the fact this country refuses to morph with time. It is a little like a rabbit caught in the headlight.
Now, I think we have plenty of smart people in the country going about business. Someone in Japan has to be smiling at the prospect of so called "irrationally strong Yen". Importers or whatever but whoever can shift their thinking and start behaving like a mature service led economy should prosper. Japan can provide a service and charge a top fee for it for the very basics Japanese take for granted.
On the items that Japan could make money providing services to other countries, I will touch on the next time.
B
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