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Corporate Japan Comes Under Attack

June 25, 2009

Background: The business news today is full of negative headlines for corporations, such as: the necessity to let people go, the difficulty of being in the red, fear of bankruptcy, sales at record lows, etc. Reading the American news it feels as if America is the country being most affected by the Recession. After all, the credit crisis developed from bad sub prime loans mainly being held by U.S. banks, insurance companies, and other unfortunate entities.

Reading the headlines from Corporate Japan today, however, the dismal economic world seems like a small one. Each newspaper reported a different aspect of Corporate Japan that was getting embattled by the current economic crisis.

Yomiuri “Japan Made 40% Less Cars” The white night of Corporate Japan, the carmakers, released their production output for the month of May today. Compared with the previous May of last year, Japanese carmakers made a staggering 40% less cars than they did a year ago.

The percentage at which carmakers are getting rid of their inventory, however, is actually improving. Combined with decreases in production and incentives from the government to buy new cars, Toyota and Nissan are actually moving cars off their lots at a better percentage rate. Carmakers like Honda and Suzuki are falling behind, partially due to the fact that their sales numbers haven’t been so negative, so they haven’t really cut back on their inventory.

Nikkei “The FSA: Mitsubishi UFJ Must Refine Its Business Practices” What every securities company fears came true for Mitsubishi UFJ Securities today. The FSA in Japan, the regulator equivalent to the SEC in the US, cited Mitsubishi UFJ for leaking sensitive client information to the public. They claimed their internal auditing functions are insufficient, and warned they need to correct their practices in order to be more in line with the personal information protection law.

For a securities company, any sort of citation by the authorities means clients might get scared and leave, and worst case scenario securities companies are banned from doing business for a specified period of time. This has the potential to hurt sales significantly in times of economic boom, let alone times of recession.

AsahiBusiness Headlines: Stock Market Goes Up! Yen Weakens!” Despite all the bad news being echoed across Corporate Japan, the Asahi reported that the stock market is actually doing good. From yesterday, the Nikkei Index actually went up 200 points, or 2.15%. The Yen went from a strong peak of 95 to the dollar to 96 to the dollar, reflecting that the market is keen on buying dollars again. For a country that’s so focused on exports, the weakening yen or “en yasu” in Japanese is always a sign of good news.

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