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August 02, 2006

Terrie's Take 385 -- Loan sharks, ebiz news from Japan

General Edition Sunday, July  30, 2006 Issue No. 385

+++ INDEX
- What's new
- Services lineup
- News
- Candidate roundup
- Upcoming events
- News credits

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+++ WHAT'S NEW

In summer of 2003, a 61-year old cleaner, his 69-year old wife and her 81-year old brother jumped in front of a train in Yao, ending their lives together. While this is not an uncommon way to escape ones problems, the woman left behind a heart-rending letter detailing the reasons for the suicide. She laid the blame squarely at the feet of a pair of local loan sharks, who had lent her JPY70,000 between April and June 2003 and had subsequently made their lives a misery with threats and public disgrace. All up, the loan sharks managed to collect JPY300,000 in "interest" before the family decided to end it all.

Then in 2004, a group of 4 teenagers and one adult were charged with the murder and incineration of a 16-year old bar hostess married to the adult perpetrator. It turned out he had deliberately married the girl so that he could take on her name so as to get more loans after being cut off for being a deadbeat. She discovered the real reason for the marriage and threatened to leave him.

Both of these events are but punctuation marks in human history, but they were certainly the type of news that finally prompted calls for the government to start cracking down on money lenders. Probably the precipitating event was when the founder and head of Takefuji, Japan's largest consumer finance company, was found to have ordered the wiretapping of a journalist doing an expose on the company.
Takefuji became personified in the media as arrogant and being all that was wrong with the consumer lending industry. This opinion was reinforced when it emerged that a Takefuji salesperson had called one borrower and told him to sell a kidney or an eye, so he could repay his debt.

In the resulting scandal, not only did the old man have to retire, his family sold out control of the business to mainly foreign investment funds, and a raft of new legislation was introduced in parliament in 2004 to outlaw unregistered money lenders and regulate the majors.

Now, 3 years later, there is a new even more drastic law before parliament which may pass in August. This law will lower the ceiling on interest rates being charged by consumer finance companies from 29.2%, currently allowed under the Investment Deposit and Interest Rate Law, down to just 15%-20%, which is defined already in the Interest Rate Restriction Law, or less. The two conflicting laws have for some years created a "grey zone" in interest rates, which is being taken advantage of by most consumer finance firms, and the new legislation will clarify the lower cap.

Major US consumer credit firms active in Japan have responded by saying that limiting the rates to 15%-20% is going overboard and that a rate cut to anything less than 23% would deny about 9m of Japan's 20m consumer finance borrowers a source of loans, since they are too risky at the lower rate. We think this comment is disingenuous, because desperate borrowers will always find a way. The workarounds range from simply taking out multiple loans from as many as 5 companies at once, as 2.3m people with debts of more than JPY2m (considered heavy debt) are doing already, through to getting adopted or marrying to change one's name. In our opinion, for Japan's credit junkies, no interest rate cap is high enough, so 15%-20% is at least a good starting point.

As government and legal pressure has been stepped up, the consumer finance firms are feeling the pinch. On the legal side, a Supreme Court decision back in January found that a claimant did not have to pay the contracted penalty interest of 29.2% for a missed payment, and that the company had to return payments in excess of 20%. This ruling has set a precedent and now all the finance firms are being hit with claims for compensation for such excess interest payments. As a result, all four largest players reported drastically reduced profits caused by the high level of refunds. They paid out JPY40bn (US$34.8m), or an increase of 390%, in refunds over the same period last year and Takefuji's profit alone dropped 77%.

It's hard to feel sorry for those companies which have been profiting from other people's misery. So we believe it is a good thing that gradually the worst offenders are being either forced out of business or are being merged with more respectable companies that will ensure proper corporate governance. Proposed new legislation includes making moneylender staff sit a licencing exam, having moneylenders join a credit monitoring agency, and introducing more industry self regulation. There are currently 16,000 registered money lenders in Japan, but less than half are actually member of regulatory associations.

The industry is going through a remarkable transformation as a result of the crackdown, and most of the majors have seen control of their businesses transfer to more respectable companies or foreign funds. For example, Takefuji now has a significant number of foreign shareholders, Promise has Sumitomo Mitsui Financial as a major shareholder, Acom has Mitsubishi Tokyo Financial Group, Orient has Mizuho, and Nippon Shimpan has UFJ (now also Mitsubishi).

Still, while in Japan everyone is upset that the loan sharks are charging 29.2% a year on loans, they should think themselves lucky. In the USA, loan sharks companies regularly target military personnel with 400% p.a. "payday"
loans and low-income families with 300%
automobile-collateral loans. In the US, some states still allow rates of more than 200% per annum, and in those that do have a lending rates cap, 36% per annum is normal. It is estimated that the average US savings rate is minus 0.5%, the lowest since the 1930's, and that just under 10% of american adults have used or are using consumer finance companies.

...The Information Janitors/
 

+++ SERVICES LINE-UP

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+++ NEWS

- Fuji Film restructures
- Oracle doing great
- Japanese moon base planned
- Sensor mat detects pedestrian age and sex
- Advertising billings are up

-> Fuji Film restructures

It appears that Fuji Photo Film is staying the course in terms of restructuring. The company took a big hit on employment redundancy payments and related restructuring costs of JPY27.4bn (US$238m). In addition, of course, there have been the plummeting sales of color film and mini-labs.
These two ongoing factors sliced almost 70% off Q1 net profits, coming in at just JPY4.8bn (US$41.7m), down from JPY15.96bn (US$138.7m) last year. The company says that on the positive side, USA sales of its Finepix digital camera and sales of flat panel displays are doing well.  (Source:
TT commentary from forbes.com, Jul 28, 2006)

http://tinyurl.com/m9s99

->Oracle doing great

Oracle has announced that its Asia Pacific (including
Japan) revenues will hit US$2bn this fiscal year, up 18% over last year. Reflecting the upturn in many Asian economies and an accompanying refocus on structural investment, the company has seen orders increase in all product lines, but with particular emphasis on its middleware products, which jumped 57%. The Fusion Middleware product family helps developers create a platform on which to base their SOA applications. Of the US$2bn, about 40%, or JPY91.5bn (US$790m), came from Japan.
Japan profits were JPY32.1bn (US$279m). Not a bad effort!
(Source: TT commentary from sda-asia.com, Jul 27, 2006)

http://tinyurl.com/lkw4x

->Japanese moon base planned

A 20-year plan drawn up by the Japan Aerospace Exploration Agency (JAXA) has Japan building a moon base by 2025 and staffing it with robots. The agency plan envisages using humanoid robots to actually build and maintain the base, as well as building telescopes and prospecting and mining minerals. The plan was drawn up by a team working for Keiji Tachikawa, the former president of NTT DoCoMo. ***Ed:
Joining the dots, we wonder if the base will have a web cam feeding earth images back to DoCoMo G5 users by then?
JPY300,0000 per gigabyte anyone?** (Source: TT commentary from pcwelt.de, Jul 28, 2006)

http://www.pcwelt.de/news/englishnews/ConsumerElectronics/114047/

->Sensor mat detects pedestrian age and sex

A research team at the National Institute of Advanced Industrial Science and Technology (AIST) has developed a mat with sensors that that can detect a pedestrian's age and sex. The mat contains a layer of electrodes that output different levels of current as a person walks across it. By comparing outputs, the individual gait of a person can be identified. According to the AIST researchers, they can determine young walkers from those over 60 with 100% accuracy, while the accuracy level falls to 50% for age groups which are closer together. Gender detection is also high, at 70%, due to the fact that males and females have different centers of gravity. ***Ed: A small step for mankind... Studies in the USA have shown that humans have very individualized walking patterns and in fact recently a suspected bank robber was arrested on the basis of his gait recorded on a security camera.** (Source: TT commentary from nikkei.co.jp, Jul 25, 2006)

http://www.nni.nikkei.co.jp/AC/TNKS/Nni20060724D24JSN06.htm


-> Advertising billings are up


A rising economy floats all ships, including the sluggish ad market. A Nikkei ranking of the 5 major ad agencies has estimated the cumulative billings of the overall ad agency sector to be up by 1.8% over last fiscal year, to JPY5.96trn (US$51bn). The top 5 companies account for 49% of all billings. By company, Dentsu was top of the heap, with JPY155.6bn in billings, Hakuhodo second with JPY70.9bn, Asatsu-DK with JPY38.74bn, Daiko Advertising (now a subsidiary of Hakuhodo) with JPY14.3bn, and Tokyu Agency with JPY12.5bn. (Source: TT commentary from Jul 28, 2006)

http://www.nni.nikkei.co.jp/AC/TNKS/Nni20060728D28HH411.htm

NOTE: Broken links
Many online news sources are now removing their articles after just a few days of posting them, thus breaking our links -- we apologize for the inconvenience.

+++ CANDIDATE ROUND UP

DaiJob, Inc's executive placement team, Daijob Consulting
-----------------------------------------------------------------------------------------------
DaiJob has great candidates. Contact Andrew Peters at
[email protected], or Ph: 03-3499-3040 for details.

        -> System Consultant, Presales engineer
         Male, 30, business Japanese, English, fluent Mandarin

        Experience:

  • 7yrs working experience in Japan
  • Negotiated business between Japan and Shanghai during programming and coding phases
  • Responsible for writing detailed specifications for developers and managing progress of team

　　　Technologies:

  • Programming Languages: C, C++, Java, PLSQL, Perl, Javascript, VBA, etc.
  • High Proficiency in J2EE Construction
  • OS: Linux (Redhat, Turbo, Suse), Windows
  • DB: Oracle,?DB2
  • WebServer: Tomcat, Weblogic, Websphere

        *Looking for JPY7M. Available 1 month's notice.

        --------------------------------------------

        -> Systems Engineer, Consulting
        Male, 29, Native Japanese

  • Experience:

    • 8yrs system development of accounting, salary, inventory control and stock control systems      
    • 7yrs PL/SQL, Oracle, also confident in VB and Delphi
    • Project leader of 5 member team
    • Windows XP/2003Server,?SQLServer2000, Delphi, etc.

               * Looking for JPY7M. Available 1 month's notice.

    --------------------------------------------

    -> IT infrastructure manager
    Male, late 30's, native Japanese, business English

    Experience:

    • 9 years IT/System engineering and management
    • Expertise in IT network infrastructure, server set up and maintenance, IT helpdesk, and troubleshooting.    
    • Strong leader: motivating team, client management, and business managemenet.

             Technologies:

    • Windows Server (NT4, 2000, 2003) Linux (Red Hat, Turbo Linux), Windows XP, DOS, Windows3.1/95/98/2000   
    • DNS (Bind), Send mail, Apache, ftp, Samba
    • Active Directory, IIS, Exchange, Printer Server, DHCP, File-Server
    • Cisco 2900 series800, Hitachi IT-100A
    • Firewall Watch Guard Fire Box V60L/1000         

              * Looking for JPY7M. Available 1 month's notice.

              DaiJob has great candidates. Contact Andrew Peters at
              [email protected], or Ph: 03-3499-3040 for details.

    +++ UPCOMING EVENTS/ANNOUNCEMENTS

    No announcements this week.

    IT events announcements are priced at JPY50,000 per week.
    For more information, contact [email protected]

    >>>>--------------------------------------------------<

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11:13 AM |

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