QF26 Haneda -> Sydney. 6am. Portside sunrise.
QF26 Haneda -> Sydney. 6am. Portside sunrise.
Ducati Panigale V4S
The absolute star of the 2018 Tokyo Motorcycle Show was the Ducati Panigale V4S. 214hp, 174kg. It not only raises the game but doubles down. Completely customizable bike which has basically bombed the goalposts of what is technically possible. It is a Ferrari La Ferrari on two wheels.
KTM 790 Adventure
Austrian makes KTM has effectively made a Paris-Dakar bike with a bigger motor and light weight. It should totally devour trails versus the competition.
Both Vitpilen and Svartpilen models should sell like well in Japan. Compact size, well appointed and funky Swedish design even though it is built in Austria.
BMW 850GS Adventure
BMW has a problem in Japan. It has seen some of its older riders find that the R1200GS is too much to handle as they age so some switching to the 310GS. This should be a good half way house. Lighter and more powerful with well appointed LCD screen.
Triumph has really got its act together. Properly decent bike range with unique product which Harley should be copying. Harley has been struggling in Japan because it I s stuck in the 70s when it should be going back to the 1930s-40s like the Bobber.
Harley FatBob 114
Almost 2000cc gives ridiculous torque. A sensible departure from the current range which suffers from the divine franchise. It looks like it is a decent replacement for the V-Rod but they neeed a proper Bobber bike. The Japanese don’t seem to like it.
Actually this is the #1 selling big-bore bike in Japan. It harks back to the 1970s when the Z-1000 was king. A modern day interpretation of a classic. Sold out in Japan til next year. Amazing to see how many custom shops were playing with this bike. Best of the Japanese.
Honda finally showing it has a pulse. It may make 18 million bikes a year but it has a deadly dull product range. The CB has modernized a classic. Not quite a Kawasaki Z900 but it is something that should sell equally well. I’ve never wanted a Honda but this is something worth considering. 140hp motor.
Essentiallyba quirky 3-wheeler with a bomb in it. It won’t be for purists but it takes the maker down a unique path. Yamaha will sell a lot of these to bikers who are coming back to it now the kids have left home. It’s a safe alternative.
Two bikes that should be built:
BMW R-32 Heritage
Two years ago CM told BMW Motorrad management that the K1600 Bagger was a waste of time. If people want a cruiser they’ll opt for a Harley, Indian or Honda Gold Wing
It was an excuse to find a chassis for the 6-cylinder motor. Nothing else. That’s never a good reason. It is a technical tour de force with a million buttons which press none where it matters. However the success they’ve had with the RNineT is admirable Still a modern day version of the R-32 is what it must produce for the purists. It would be special. Does it have the guts? The K1600 should be made into an S with 200hp+
Suzuki invented the racer replica market in 1987. A mint 30yr old GSX-R750 sells at a premium to a brand new one today. The current GSX-R gets rave reviews but it has no unique qualities that sets it apart from its competition. CM’s suggestion is to encase it like above. The people in their 40s who can afford it would fall over backwards to buy the poster on they once had on their wall as a teen. CM did. Suzuki toyed with the concept in 2015 with the GSX 1200 but it was a half-baked job with a pokey 100hp. A retro GSX-R1000 will crush it and revive a brand that has seen its sales halve inside a decade.
Trust and Japan used to go hand in hand. It was a hard earned reputation. A mining executive once told me that “when you sign a contract with the Japanese, that is the contract. When you sign a contract with the Chinese that is the beginning of the negotiations.” Hardly a subtle difference. Yet here we are in the last few years where a plethora of scandals from Japanese companies have come to light. Houeshold names too – Olympus, Toshiba, Kobe Steel, Subaru, Toray, Nissan, Mitsubishi Motors, Takata, Mitsubishi Materials, Asahi Kasei, Obayashi, JR Central, Nomura etc etc. It is almost as if there is a coming-out of sorts so the crimes are somewhat diluted in the midst of others. Syndicated scandals? Expect more to come out. Perhaps the worst part about it is the limp wristed approach by the regulators. ‘Sontaku’ (忖度) in Japanese is a word meaning ‘glossing over’ which is exactly what the regulator is doing over scandals involving household names. Hear no evil, see no evil, speak no evil.
In October I was invited to give a lecture to 70 bureaucrats at the Ministry of Finance’s attack dogs – the Financial Services Agency (FSA) and the Securities and Exchange Surveillance Commission (SESC) on foreign perceptions of Japan’s handling of corporate crime. In the interests of objectivity the first slide pointed to how no corporate governance system is perfect citing the minefield of foreign corporations caught up in bad behaviour – VW, Petrobras, Parmalat, HealthSouth, Lehman Brothers etc etc. I also highlighted the sentencing of executives who commit crimes – many received lengthy jail sentences, personal fines while the corporates faced eye-watering penalties.
Ironically much of the crime committed by corporates here is at a relatively pithy level. Instead of billions being massaged into or from the books, Japanese corporates tend to commit the equivalent of falsely submitting a $20 taxi receipt to your boss as a business related expense. One almost could conjure up a scenario that if Toshiba was ever able to make back the money to cover the accounting fraud they’d have broken into corporate HQ in the dead of night to put it back in the safe.
I touched on Kobe Steel which conveniently broke the news that it had falsified the true contents of its products to customers. While pointing out such behaviour was regrettable a chart which showed a heavy shorting of the stock on the day it announced it to its duped clients displayed the bigger problem. A question was asked directly to the regulator – “do you intend to investigate the heavy short selling of Kobe Steel stock 3 weeks before the company announced this to market?” No answer. The following slide showed that a person that was able to short the stock 3 weeks before the announcement would have cleaned up a tidy 60% profit. Again no plans to investigate the insider trading. Why bother having the FSA if it is a toothless tiger?
The following slide showed the types of fines dealt to both the broker (Nomura was a regular feature in the leaks) and the investor (at the time Chuo Mitsui Asset). The fines were the equivalent of $500 and no suspension of license was pursued by the regulator, When the following slide that compared it to the types of fines meted out to foreign banks – lengthy jail terms, lifetime suspensions and monster fines in the the millions and billions jaws didn’t so much drop but celebrate the idea “thank God we live in Japan”. Truth be told the FSA did punish one dying asset manager $150mn but that is an exception. That is the problem. It is too conditional where convenient.
Rolling onto the next slide the discussion looked at how ‘sontaku’ was a problem. Whereas the FSA & SESC heavily pushed for license revocation of foreign investment companies that it found to break rules, it let off all the domestic companies that had ‘brand names’ to protect. What message is the regulator sending if local corporations know they can pretty much get away with anything. In what way is that a fair system? If foreigners will be turfed on a whim then why do the locals get special protection?
When looking at agency funding, the FSA was put up against the US SEC and Australia’s ASIC equivalents. The US was there for illustrative purposes. Yet Australia was the market that made the point clearest. Despite having a total market cap 5x the size of Australia and 30% more listed companies, Japan spends 20% less than the antoipodeans. Even worse it had fewer numbers of staff and its budget was shrinking.
When analyzing market surveillance, in 2014 the Aussie market issued 36,000 speeding tickets (alerts to potentially suspicious trading). The sophisticated systems are designed to catch any wrong doing. The Japanese issued around 180 speeding tickets. I suggested the FSA go cap in hand to ASIC and the ASX and ask if they can buy the software off the shelf. Safe markets attract capital because all actors feel adequate protections are in place to prevent crime. Higher liquidity attracts more liquidity. It is a win win.
Several years ago the fanfare of the Corporate Governance Code was thrust into the faces of the intenational investment community that Japan Inc was changing. After visiting multiple staff inside the FSA and the TSE there is absolutely no pulse of proactively to be seen anywhere. Even my slight nudge to get the FSA to tap the shoulder of the TSE to suggest listed corporates provide English language materials to encourage more transparency for foreign investment met with the response, “it might help if you spoke directly to the Deputy PM & Minister of Finance Taro Aso.”Not a word of a lie.
How can the Japanese authorities look to appropriately handle a slew of corporate scandals if the encouragement of English language documents requires someone (a gaijin no less) outside the agency to ask the Deputy PM to suggest it back down to them. It is an embarrassment.
In closing perhaps we can look to these corporate scandals breaking out as endemic of a greater underlying problem. While the knowledge that the regulator is likely to do next to nothing provides mild comfort, the reality is that Japanese companies have been strangling themselves for decades. The corporate fabric is fraying. The world is far more competitive than it was. For Japan to assert its ‘quality and/or engineering gap’ dominance now means profits likely suffer. In order to get around that hurdle it seems that to maintain profit margins, corporates now lie about specifications hoping a history of ‘trust’ and ‘time honoured’ traditions can keep the bluff going. As mentioned earlier the scale of the ‘cheating’ is pitiful yet the shame it brings is multiples larger.
Japan’s cultural rigidities are on full display. Unfortunately they couldn’t arrive at a worse time. Clumps of companies confessing crimes to soften the collective blow is only the start of many more. I suggested in my speech that the authorities introduce a 3 month amnesty period for companies to fess up to any wrong doing. That way they can clear the decks and make it clear that any wrong doing after that date will be met with harsh repercussions. Of course it won’t happen but expect the list of companies above to have many join them at the table of shame.
Nagatoro in Saitama Prefecture. During Autumn, the rapids make for a tranquil setting. You can ride a boat down stream and catch a bus back to the starting point. Located at the far end of Saitama, a car is most convenient but public transport connects it all. Other sights ainclude the Hodoya Shrine and the Funadama festival, dedicated to the God of Water as a prayer for the safety of boatmen on water going downstream the Arakawa river is held on August 15th. Nagatoro is doable in a day but worth setting off from Tokyo early to get the best out of a day.
Can anyone recognize the person in this picture?
Most foreigners won’t know her. Her name is Fusako Shigenobu. She looks harmless and sweet enough. The girl next door? She is actually the Japanese equivalent of Ulrike Meinhof. Shigenobu founded the Japanese Red Army (JRA) in 1971 at the tender age of 26. The JRA was responsible for a spate of hijackings, hostage takings, airport massacres and bombings in the 1970s and 1980s. It was closely aligned to the Popular Front for the Liberation of Palestine (PFLP). Although she claimed the group disbanded in 2011 it has since been renamed the Movement Rentai. Many are not aware another Japanese terrorist organisation bombed Mitsubishi Heavy Industries HQ in 1974. Aum Shinrikyo is perhaps the freshest in many memories for the 1995 sarin gas attacks on Tokyo’s subway. Japan is a safe country to be sure but that does not mean it is immune to future attacks.
Sadly Japan is suckling on the bosom of (a false sense) of security. The above link contains CM’s full study.
Once again, due to numerous requests see the above link for the full report and the summary below.
In our Crime in Japan series parts 1 & 2 we covered the jump in crime resulting from seniors breaking into prison and the rapid breakdown in the nuclear family leading to a surge in domestic violence and child abuse. In this report we cast our focus on the resources of the police and whether the change in crime is impacting their ability to hunt down Yakuza (gangsters), thwart drug use and possession, prevent murder and stop the leap in financial crime where insurance fraud alone is up 2,000% in 6 years and suspicious transactions breaking new records.
The Japanese National Police Agency (JNPA) has been the victim of budget cutbacks. Some 80% of the ¥3.2 trillion budget is spoken for by staff salaries. There are approximately 295,000 staff (including administration) but actual officer numbers have remained relatively stagnant at around 258,000. With an aging police force, retirees are putting pressure on hiring new recruits. Japan does have a low level of crime on a global basis and 197 police per 100,000 citizens reflects that.
Japan has budgeted approximately ¥232 billion to run its jails in 2016. The cost of incarceration runs to around ¥3.8mn per inmate which is around double what one could get through the welfare system. The theft of a ¥500 sandwich could lead to a ¥8mn tax bill to provide for a 2 year sentence. Courts are dealing out harsher sentences however drug related offences generally range inside 2 years behind bars. Many Japanese have been in the media crossfire for repeated drug offences and the courts have had no choice but to incarcerate them when ‘good behaviour’ probation periods have failed. Prison capacity has grown 50% in the last decade to meet the coming crime wave.
Drugs in Japan are an interesting topic. Meth was originally synthesised from ephedrine in 1893 by a Japanese chemist Dr. Nagayoshi Nagai. 26 years later, a pharmacologist by the name of Akira Ogata managed to turn it into crystalline form i.e. crystal meth.
When World War II got under way Japanese soldiers (especially kamikaze pilots) were given crystal meth (branded Hiropon) which not only kept them ‘wired’ but reduced hunger. As the war ended, Japan was left with excess supplies of Hiropon. Food supplies were few and returning soldiers added to the shortage. However little was known of the side effects and the government had an epidemic on its hands in the late 1940s. Luckily there is a solution being developed by the Japanese biotech company MediciNova (4875) which is in late stage trials in the US with a formula that weans drug users from their addiction.
One of the surprising statistics has been the trend in gangster (Yakuza) incarceration in Japan. While police have seen a surge in consultations (aka complaints) surrounding gangster activity, arrest rates have fallen by 30%. Is it because the police are so tied down by the surge in stalking, domestic violence, child abuse and larcenous geriatrics?
People with mental disabilities committing crime are also rising sharply, up 62% in the last decade. Apart from schizophrenia or medically diagnosed mental health issues, addiction to alcohol or substance abuse can also get an offender classified as mentally disable if they break the law.
Financial crime is becoming far more prevalent. From petty scams to sophisticated insurance and bank fraud, such offences are surging. Reported fraud related to bank transfers has doubled between 2010 and 2014 to 13,400 cases with the amount of money transacted surging 5-fold to ¥56.5bn.
Murder rates in Japan have remained relatively mute. The homicide rate in 2014 was 938 down from 1362 in 2006. As a ratio, Japan has 0.7 murders for 100,000 people versus 91 for Honduras (the highest) or 4.7 in the US. However Japan has not been immune to home grown massacres.
Foreigners as a percentage of crime in Japan continues its long downward march. Much of the crime is related to petty theft and visa overstays. Chinese, Vietnamese and Brazilians make up 60% of foreigner arrests in Japan. Foreigners as a percentage of inmates has also dropped sharply from 8% of the prison population to 5.5%. Chinese, Brazilians and Iranians make up half of gaijin inmates.
The incidence of crime continues to rise in Japan. As discussed in our previous reports we can see that crime rates (e.g. shoplifting, theft, child abuse, domestic violence, assault, stalking etc.), while small on a global scale, are rising at such a speed it seems to be taxing a police force struggling with worsening manpower issues. It would seem to make sense that despite growing reports of suspicious activity by organised crime, arrest rates are falling. Furthermore retiring demographics in the police force suggest that ‘street knowledge’ gained through decades of leads (e.g. informants) may not so easily be transferred to the new recruits. Throw financial fraud increasingly perpetrated by cyber criminals on top, perhaps the Police need to invest in sophisticated systems rather than just hire more cops on the beat? The face of crime has changed.