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July
2008
British Units Of JT To Pay
93mn Pounds Fine Over Tobacco Pricing
Japan Tobacco Inc. said Saturday its British subsidiaries have agreed with
the local fair trade watchdog to pay about 93 million pounds in fines for
anticompetitive business practices. Gallaher Group Ltd. and Gallaher Ltd.
agreed with the Office of Fair Trading to pay the fine after the British
authorities concluded in April that the subsidiaries manipulated the
retail pricing of tobacco products from 2000 to 2003. The JT group decided
to accept the allegation and pay the fine in the belief that doing so
''best serves the interests of all parties involved,'' the Japanese parent
said in a statement. The Office of Fair Trading launched a probe into the
case in 2003. JT made Gallaher Group Plc, the predecessor of Gallaher
Group, a wholly owned unit for 2.25 trillion yen in 2007. JT, the world's
third-largest cigarette manufacturer, said it will continue to enhance
efforts to ensure compliance of the whole group of companies. The payment
of the fine to the British authorities will not affect the group's
business performance as it has already booked sufficient loss reserves to
cover the payment, it said. (Kyodo News; Saturday, July 12, 2008)
Kobe Steel To Sell U.S. Steel Powder Business To Swedish Firm
Kobe Steel Ltd. said Thursday that it will shut its U.S. steel powder
operations by selling Kobelco Metal Powder of America Inc. to Sweden's
Hoganas AB. Kobelco Metal Powder's sales come to roughly 4 billion yen a
year. The Big Three U.S. automakers and other automobile-related companies
make up about 90% of its customers as steel powder is used to manufacture
gears and other autoparts. The company has been operating at a loss due to
weak sales and high fuel and materials prices. With car demand in the U.S.
plunging due to surging gasoline prices, Kobe Steel concluded that it
would be difficult to execute a turnaround of its U.S. steel powder unit.
The monetary value of the deal with Hoganas has not been disclosed. The
Swedish steel powder maker is to ask Kobelco Metal Powder customers to
switch to its steel powder products. The Kobe Steel unit will wind up
operations by next spring. Annual sales at Kobe Steel's steel powder
division stand at around 15 billion yen. Controlling 35% of the Japanese
market, the company is one of the nation's biggest steel powder producers.
It aims to improve its steel powder business by bolstering high-function
products and focusing on Japan and other Asian countries, where demand for
steel powder remains strong. (The Nikkei; Thursday, July 10, 2008)
EU Unveils Extra €1bn Farm Fund
For Developing Countries
The European Union on Monday announced a fresh
package worth 1 billion euro, or $1.5 billion, in aid to developing
countries to make fertilizers and seeds available to poor farmers there.
''I am announcing today our intention to propose a new 1 billion euro
facility to support agriculture in developing countries,'' European
Commission President Jose Manuel Barroso said in unveiling the initiative
at a news conference in Toyako, Hokkaido, where he is attending the Group
of Eight summit. Along with 800 million euro already raised, the European
Union will funnel a total of 1.8 billion euro into the new fund for 2008
and 2009, an EU official said. Leaders of Britain, Canada, France,
Germany, Italy, Japan, Russia and the United States began the three-day
summit Monday, focusing on African development and the global challenges
of climate change, food security and fuel price surges. The 27-nation
European Union also takes part in the G-8 process. (Kyodo News; July 7,
2008)
Japan Volleyball Maker To Play
Big Role At Olympics
Japanese volleyball fans are keenly waiting for the Beijing Olympics to
start because this is the first time in 16 years that the country's men's
and women's national teams have both qualified for the Summer Games. But a
rubber products maker in Hiroshima Prefecture has also played a
significant role in making the sport more entertaining this year. Several
years ago, Taketoshi Saeki, president of Mikasa Corp., received a request
from the Federation Internationale de Volleyball (FIVB) to design a ball
that would help make rallies last longer. Mikasa, which had been the only
supplier of the federation's official volleyballs for the seven previous
Olympics, started developing the new type of ball in 2005 jointly with
chemicals manufacturer Kuraray Co. The new ball was designed not to bounce
too much. The companies used a double layer of synthetic leather instead
of a single one to make the surface softer. If a ball bounces too much,
attacks and serves become more powerful, making it easier to score points.
That would make matches more exciting for spectators, but contests would
finish quickly, perhaps leaving fans dissatisfied. The ball also has a
dimpled surface to increase the ability to grip it because rallies last
longer if players can control the ball better while passing it or setting
up a teammate for a spike. In addition, the number of leather panels was
reduced to eight from 18. The larger panels reduce shock, making forearm
passes hurt less. The total length of the seam between panels was cut to
2.8 meters from 4 meters, lowering the ball's internal pressure and
contributing to making rallies longer. Cutting and assembling the panels
into a ball is done by hand by Mikasa's craftsmen. "It is more
difficult to make two balls that are exactly the same than to get to the
moon," said Saeki. A total of 730 Mikasa balls will be used at the
Beijing Olympics, all of which weigh 265-273 grams, well within FIVB
requirements that balls weigh 260-280 grams. Because even a slight defect
in a ball can affect a match, Mikasa conducts stringent quality control,
which has resulted in as many as 600 "imperfect" balls being
left behind at its headquarters. That is why Mikasa's volleyballs have won
the trust of players. With demand for volleyballs unlikely to grow in the
domestic market, Mikasa intends to expand sales in countries like Russia
and Thailand, where the sport is beginning to catch on. The Olympic Games
in August will likely give a further boost to the firm, which already
earns about half of its sales outside Japan. (The Nikkei Business Daily;
Tuesday, July 1, 2008)
June
2008
METI: Plan Subsidy Or Tax
Break To Boost Solar Cell Use
The Ministry of Economy, Trade and Industry plans to offer subsidies or
tax breaks to promote the use of solar energy, a METI official said
Tuesday. Earlier in the day, a ministry advisory committee recommended
that the government offer "drastic support measures" to
encourage more households to install solar cells. "We are going to
make initiatives based on this (recommendation), and then ask for a
budget" from the Ministry of Finance, said Shoji Watanabe, the head
of METI's new energy policy team. Japan was the world leader in solar cell
use by capacity for years through the fiscal year ended March 2006 thanks
to subsidies. But since the subsidies ended, the country has been
overtaken by Germany, where state governments provide solar cell users
financial support. The new initiatives, which would also apply to
companies, will most likely start from the next fiscal year, said
Watanabe. (Dow Jones; Tuesday, June 24, 2008)
Teijin Seeks To Make Biofuel
From Algae
Teijin Ltd. will collaborate with a Dutch bioventure to develop a
technology for making biofuel from microalgae. Teijin will provide the
Dutch firm with 100 million yen over the course of one year to develop
highly efficient ways of culturing the microalgae in fresh water, then
extracting the large amounts of triglycerides produced during the course
of photosynthesis. These triglycerides can be decomposed to yield fatty
acids for synthesizing into high-quality biofuels. In exchange for the
R&D support, Teijin will hold the patents to any results of the
research. Teijin hopes to have the production technologies established
after 12 months, at which point it will use them to commercialize
biodiesel for trucks and biokerosene for use as a jet fuel. The company
will also consider ways of using the cultivated algae for functional
foods. (The Nikkei Business Daily; Tuesday, June 24, 2008)
G-8 Vows To Fight Against
Price Hikes To Secure Stable Growth
Finance ministers from the Group of Eight major countries vowed Saturday
to stay vigilant against surging commodity prices and implement
appropriate steps to secure stable global economic growth, as they wound
up a two-day meeting in Osaka. In a joint statement issued after the
gathering in the western Japanese city, the ministers said the world
economy now faces ''headwinds'' with surges in energy and food prices,
which can stoke inflationary pressure, and a slowdown linked to the U.S.
subprime woes. ''Elevated commodities prices, especially of oil and food,
pose a serious challenge to stable growth worldwide, have serious
implications for the most vulnerable, and may increase global inflationary
pressure,'' the G-8 financial chiefs said. ''These conditions make our
policy choices more complicated. We will remain vigilant and will continue
to take appropriate actions, individually and collectively, in order to
secure stability and growth in our economies and globally,'' they said.
Japanese Finance Minister Fukushiro Nukaga, who chaired the Osaka
conference, said at a post-meeting press conference, ''We managed to
formulate a common understanding which will be important for us to achieve
a stable growth of the world economy.'' He said the shared views among the
finance ministers will lay the groundwork for discussions on global
macroeconomic conditions at the July 7-9 G-8 summit to be held at the Lake
Toya resort area of Hokkaido, northern Japan. The ministers from Britain,
Canada, France, Germany, Italy, Japan, Russia and the United States
discussed how best to prevent a steep rise in commodity prices from
devastating the world economy, after crude oil prices hit an all-time high
of just below $140 per barrel and skyrocketing food prices caused riots in
poor nations. On the state of the global economy, the G-8 ministers said,
''For a long time, the world economy enjoyed a combination of robust
growth and low inflation, but it now faces headwinds.'' To wrestle with
global inflationary pressure led by spikes in oil and food prices, the G-8
ministers agreed on the need to boost investment in oil production
facilities, enhance the transparency of the oil market and raise farm
productivity. Nukaga said the G-8 ministers agreed that various elements,
including geopolitical concerns and financial factors, have played a role
in pushing up oil prices to record-high levels. The G-8 urged the
International Monetary Fund and the International Energy Agency to further
analyze real and financial factors behind the recent surge in oil and
commodity prices and report their findings at the IMF's annual meeting in
October in Washington. The ministers also said financial market conditions
''have improved somewhat in the past few months,'' but ''strains remain,
especially in money and credit markets.'' At the meeting, the G-8
ministers received a report from Mario Draghi, chairman of the Financial
Stability Forum, that efforts have been made smoothly to boost global
market resilience since the U.S. subprime crisis last summer, Nukaga said.
The FSF consists of financial authorities of major economies and experts
from international organizations. The eight major nations also adopted
separate action plans on ways to combat climate change and support African
development, which will be high on the agenda at the Hokkaido G-8 summit.
Although the statement contained no references to currency markets, market
players watched closely for any remarks about foreign exchange movements
from the meeting participants. According to Nukaga, the latest G-8
meeting, which was not attended by central bankers, did not directly take
up currency in the discussions nor reached any consensus on the matter.
The Japanese minister said he personally believes that major economies
have not changed their stance on foreign exchange from the view included
in the statement at the previous Group of Seven meeting in April in
Washington. In April, the G-7 expressed concerns about ''sharp
fluctuations in major currencies,'' referring to the dollar's steep
decline against other major currencies at that time. They also pledged to
''monitor exchange markets closely and cooperate as appropriate.'' The G-7
economies consist of the G-8 members minus Russia. The currency market
came under the spotlight as speculation grew that G-8 discussions could
touch on the U.S. dollar's recent weakness after U.S. Treasury Secretary
Henry Paulson unusually suggested earlier this week that Washington could
step into the currency markets to shore up the dollar. Analysts say the
depreciation of the U.S. dollar has contributed to recent hikes in oil and
food prices, with more speculative money funneled into the commodity
markets.(Kyodo; Saturday, June 14, 2008)
U.S. Continues To Back
Japan's Entry Into UN Security Council
The United States continues to back Japan's bid to obtain a permanent seat
on the U.N. Security Council, a senior U.S. government official said
Thursday. ''We continue...to support Japan's efforts to become a permanent
member of the U.N. Security Council,'' Alexander Arvizu, deputy assistant
secretary of state for East Asia and the Pacific, said during a
congressional hearing. Since the inception of the United Nations in 1945,
the 15-member Security Council has been dominated by five veto-bearing
permanent members -- Britain, China, France, Russia and the United States.
Arvizu also said that if acceded to the body, Japan will have to cope with
''very, very difficult issues'' and at times have to make ''difficult
decisions,'' hinting that Tokyo's combat roles in U.N. peacekeeping
activities would be inevitable. Due to its war-renouncing Constitution,
Japan has always limited the overseas deployment of its Self-Defense
Forces to so-called non-combat zones, such as in its participation in
supporting the U.S.-led antiterrorism operations in Afghanistan and
reconstruction missions in Iraq. (Kyodo; Friday, June 13, 2008)
Yamazaki Mazak To Make More
Than 50% Of Machine Tools Abroad
Yamazaki Mazak Corp. plans to spend about 12 billion yen by the end of
fiscal 2009 to increase production at overseas plants by almost 20% as it
strives to meet growing demand in emerging nations for machine tools for
use in producing cars and autoparts. This would mark the first time that a
major machine tool maker's overseas production accounted for more than
half of its total output. Machine tool makers face foreign production
restrictions designed to prevent the use of their products in military
applications. Yamazaki Mazak plans to boost production capacity at
factories in China, Singapore, the U.K. and elsewhere. This would raise
its monthly overseas output capacity to 540 units, with the domestic
figure to remain unchanged at 460 units. Although more units would be
produced abroad, domestic production is expected to be higher in value
terms. Separately, Citizen Machinery Co. plans to start production within
the month at a new assembly plant being constructed in China's Shandong
Province. This would allow for products used in China to be made locally
instead of importing them from Thailand. Mori Seiki Co. plans to expand
the plant of the Swiss firm that it acquired to increase production of
machining centers. And Tsugami Corp. has signed a deal with a Swiss firm
to supply products made at its Chinese plant on an OEM basis. Domestic
demand for machine tools has always been stronger than foreign demand with
the exception of the end of the 1990s, when domestic demand shrank
rapidly. But in 2007, exports exceeded domestic demand. The market for
machine tools is shifting from Japan and the U.S. to Europe and emerging
nations such as China and India. (The Nikkei; Tuesday, June 10, 2008)
Mitsui To Join U.S. Oil Shale
Development Project
Mitsui & Co. plans to work with Brazil's Petroleo Brasileiro SA and an
American start-up on a U.S. project that aims to become the world's first
to produce oil from oil shale in large quantities, The Nikkei learned
Monday. The Japanese trading house and the Brazilian state-owned oil
company, also known as Petrobras, will participate in oil shale
development in the state of Utah at a mining site to which Oil Shale
Exploration Co. has acquired development rights from the U.S. government.
Deposits are estimated at the equivalent of 3-4 billion barrels of
recoverable oil, or roughly two to three years of Japan's overall annual
consumption. The three firms will take a year to conduct a feasibility
study on development and production. After confirming the project's
profitability, they plan to start commercial production of 5,000 to 10,000
barrels a day as early as 2013, with daily output to be raised to 50,000
barrels in stages. Mitsui has reached an agreement to take an interest of
10-20%, entitling it to receive up to 10,000 barrels a day. The overall
cost of the project is forecast to exceed 100 billion yen. Mitsui and
Petrobras are already partners in a project to produce bioethanol in
Brazil. Petrobras has proprietary technologies for processing oil shale
using heat and now produces a daily 5,000 barrels of oil this way on a
trial basis in that country. Development of non-conventional oil sources,
including oil shale and oil sands, had often been avoided in the past
because of their much higher costs compared with traditional oil
production. But developing oil shale is considered economical once crude
oil prices reach 70-80 dollars a barrel. With crude approaching 140
dollars a barrel, major U.S. and European oil companies are considering
such projects as well. (The Nikkei Tuesday morning edition)
Synthetic Fiber Makers
Relying More On Overseas Markets
With a shift in their focus to such foreign markets as Europe and China,
three major synthetic textile producers saw a higher percentage of group
operating profits earned abroad in fiscal 2007. Mitsubishi Rayon Co.'s
operating profit generated overseas accounted for 31% of the total, up 14
percentage points on the year. In addition to opening a new chemical
products plant in China, it enjoyed robust European sales of lucrative
carbon fibers for industrial applications and sporting goods. The company
plans to increase foreign sales from 47% of the total in fiscal 2007 to
about 60% by fiscal 2010. At Toray Industries Inc., the portion of
operating profit from abroad climbed 9 points to 30% for the year ended
March 31. Demand is growing in Europe for fibers for use in automobiles
and apparel. Stepped-up sales of lucrative fiber products in China also
helped. Teijin Ltd. is seeing European profit grow, thanks to rising sales
of highly profitable and competitive aramid and carbon fibers. It's ratio
of overseas operating profit to the total edged up 1 point to 42%. (The
Nikkei; Saturday, June 7, 2008)
Fukuda, Sarkozy Agree To
Fully Cooperate In Run-Up To G-8 Summit
Prime Minister Yasuo Fukuda and French President Nicolas Sarkozy agreed
Tuesday to cooperate in the run-up to next month's Group of Eight summit
to be hosted by Japan in Hokkaido, Japanese officials said. In their talks
in Rome on the sidelines of a U.N. conference on food security, Fukuda and
Sarkozy also discussed the world economy, African development and rising
food and oil prices as part of preparations for the July 7-9 summit of
industrialized nations. Sarkozy said he supports Japan's initiatives in
leading the G-8 summit process as chair this year and will fully support
the host country, noting that the event provides an opportunity not just
for talks but to achieve concrete results, the officials said. While the
French president noted the need for the G-8 framework to expand to deal
with changes in the international community, Fukuda emphasized the
importance of the small-sized group and mentioned that some emerging
economies have been invited to the summit's outreach programs, they said.
On climate change, Sarkozy said that it is necessary to create an
international framework for cutting greenhouse gas emissions with the
participation of all major emitters and that countries involved must halve
carbon dioxide emissions by 2050, the officials said. Fukuda said the G-8
leaders must be united in order to secure positive responses from major
emitters such as China and India, they said. The two leaders agreed to
deepen bilateral relations on the occasion of the 150th anniversary of the
opening of diplomatic relations between the two countries, according to
the officials. The meeting was part of Fukuda's preparations for Japan's
hosting of the G-8 summit, which will also involve Britain, Canada,
Germany, Italy, Russia and the United States. Sarkozy is the fifth G-8
counterpart that the Japanese leader has met since taking office in
September. Fukuda is in Rome on the last leg of a three-nation European
tour which also took him to Berlin and London for talks with German
Chancellor Angela Merkel and British Prime Minister Gordon Brown,
respectively. He agreed with Merkel and Brown to cooperate and coordinate
closely in the run-up to the G-8 summit to be held in the Lake Toya hot
spa resort of Japan's northernmost main island. While the Japanese prime
minister had held talks on the phone with both Merkel and Brown prior to
his meetings with them, his meeting with the French president was the
first ever contact between the two. Fukuda is also scheduled to meet later
Tuesday with Italian Prime Minister Silvio Berlusconi to discuss matters
centering on the G-8 summit, the officials said. On completing his
European tour, Fukuda will have met all of his counterparts from G-8
member countries except for Canada. He traveled to the United States in
November for talks with President George W. Bush and to Russia in April to
meet then President Vladimir Putin and his successor Dmitry Medvedev.
(Kyodo News; Tuesday, June 3, 2008)
Kubota Stepping Up Sales In
China, Eastern Europe
Kubota Corp. is expanding sales of small hydraulic shovels and other small
construction equipment in Eastern Europe and China to offset slower sales
in Japan and North America. In Eastern Europe, the company has sales
agents in 12 countries, including the Baltic states and the Czech
Republic, and will set up sales networks in two or three new countries by
the end of fiscal 2009. It is targeting sales of 500 units in Eastern
Europe as a whole in fiscal 2009. Kubota recently increased its sales
force in China to 35 people, three times as many as in fiscal 2005. It has
also added five more sales agents, bringing the total there to 17. In
fiscal 2008, it aims to boost sales by 70% from fiscal 2007 to more than
1,000 units. The firm added more sales and maintenance personnel in Italy
in fiscal 2008. In addition to six-ton construction equipment, it will
also increase sales of compact 1.5-ton machines in Italy. It aims to sell
2,700 units there in fiscal 2009, a 40% jump from fiscal 2007. The company
sold 2,600 construction machines in China, Eastern Europe and Italy in
fiscal 2007. By bolstering its sales structure in those regions, it plans
to sell more than 4,000 in fiscal 2009. (The Nikkei; Tuesday, June 3,
2008)
Fukuda Heads To Germany On
European Tour Ahead Of Hosting G-8 Summit
Prime Minister Yasuo Fukuda left for Germany on Sunday for talks with
Chancellor Angela Merkel at the start of a European tour aimed at
preparing for next month's Group of Eight summit in Hokkaido. The trip
will also take Fukuda to Britain, where he will meet with Prime Minister
Gordon Brown, and Italy, where he will take part in a U.N. conference on
addressing soaring food prices around the world and also hold several
bilateral meetings on the sidelines. ''I would like to frankly exchange
views on the economy, global warming and food security,'' Fukuda told
reporters prior to his departure. ''In particular, I hope I can set a
clear direction on how we could cooperate in addressing global warming.''
During his travels, Fukuda is expected to express his resolve to send out
a ''powerful message'' from G-8 leaders on tackling global issues,
including food security and climate change, which will be major topics at
the July summit, Foreign Ministry officials said. The Japanese leader
hopes to demonstrate his leadership as this year's chairman of the G-8
framework by tackling outstanding issues facing the international
community, particularly those adversely affecting developing countries. In
his talks with Merkel, Brown, Italian Prime Minister Silvio Berlusconi and
French President Nicolas Sarkozy, Fukuda will work on building personal
relationships with each and reaffirm their cooperation over the
approaching G-8 summit, which also involves Canada, Russia and the United
States. He is also likely to take up international issues such as global
warming and U.N. Security Council reforms as well as regional concerns
including the situation in Myanmar and Afghanistan, according to the
officials. At the Food and Agriculture Organization's three-day High-Level
Conference on World Food Security starting Tuesday in Rome, Fukuda will be
among dignitaries from about 190 countries to give speeches promoting
cooperation in addressing the food security issue. The prime minister
plans to emphasize the importance of expanding food production in both
advanced and developing countries based on the concept of attaining food
security through enhancing agricultural output, they said.In the Italian
capital, he is also set to meet separately with U.N. Secretary General Ban
Ki Moon to discuss Japan's ties with the world body and with Egyptian
President Mohamed Hosni Mubarak to talk about the Middle East peace
process and bilateral cooperation. After his European tour, Fukuda, who
took office last September, will have met all his counterparts from G-8
member countries except Canada. He traveled to the United States in
November for talks with President George W. Bush and to Russia in April to
meet then President Vladimir Putin and his successor Dmitry Medvedev.
Fukuda had considered traveling in early May to some of the G-8 member
states in Europe to prepare for the July summit, but had to give up the
idea due to parliamentary commitments at home. (Kyodo News; Sunday, June
1, 2008)
JFE Engineering Brings
Garbage Incinerator Ops To Europe
JFE Engineering Corp. has begun efforts to expand its garbage incinerator
business to Europe in order to compensate for shrinking sales at home. As
a first step, the JFE Holdings Inc. group member firm will license its
gasification technology for shaft furnaces to Italian waste processor
Sorain Cecchini, which plans to build three incinerators in Rome capable
of each handling 300 tons of garbage a day. JFE Engineering is now
finalizing details on the supply of basic designs and equipment for these
incinerators. Southern Italy has a shortage of garbage incinerators. JFE
Engineering has set up a special team for its broader expansion into
Europe, seeking revenues not only by licensing technologies but also by
participating in plant design and construction. By expanding its
operations overseas, the company hopes to boost sales in its environment
business beyond 100 billion yen a year. (The Nikkei Business Daily Monday
edition)
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