Datagate Research System

Small Japan firms dying out as aging owners struggle to find successors
By Datagate Research System

Japan's small firms, many of which are "mom-and-pop" operations, are dying out as their aging owners struggle to find successors, in another sign that the fast-ageing population is taking its toll on the world's third-largest economy.
Prime Minister Shinzo Abe has targeted more business start-ups as a crucial part of regenerating activity, but the impact has been minimal so far, with the number of small firms that are closing their doors at a near record high.
Takayasu Watanabe, 72, has closed a chalk-making business in Nagoya, central Japan, that his family had operated for more than 80 years. He sold technology, equipment and trademark rights to a South Korean company last year.
"My physical condition has been deteriorating. I was unable to find a successor and business performance was not good," Watanabe said, adding that none of his three daughters wanted to take over the firm.
The Bank of Japan's tankan business survey showed on Monday that small manufacturers remained pessimistic in September as the economy continues to flounder more than three years after the prime minister pledged to reboot it with reflationary policies which markets have dubbed "Abenomics".
Shutdowns among small firms that serve as subcontractors for big firms and employ seven out of 10 workers could pose the risk of a prolonged low growth, some analysts say.
The rate of startups among manufacturers has hovered well below shutdowns - at 3.4 percent versus 5.5 percent in 2014.
"Aging of business owners and difficulty in securing successors are becoming a serious problem for Japanese firms," said Yumi Tanaka of Teikoku Databank, a private corporate credit research firm.
"From cars to electronics, more and more companies may start seeking overseas subcontractors, which could accelerate industrial hollowing out and hamper technology transfer."

INCJ said to argue its ¥1 trillion bid for Sharp tops Foxconn’s

FEB 9, 2016

Innovation Network Corp. of Japan is making the case to Sharp Corp. that its rescue proposal for the electronics maker is worth more than an offer from Taiwan’s Hon Hai Precision Industry Co., a sign the government fund is determined to keep fighting for victory in the takeover battle.

The state-backed fund proposed a package of cash, asset sales and support from lenders that it says is worth ¥1 trillion, according to documents INCJ presented to Sharp and obtained by Bloomberg News. Hon Hai, also known as Foxconn Technology Group, is offering about ¥660 billion for the company, a person familiar with the matter has said.

INCJ’s proposal included a ¥300 billion cash infusion for Sharp as well as ¥350 billion in support from its lenders, according to the documents. The fund also proposed raising ¥150 billion from its stake in Sakai Display Products Corp. and ¥200 billion in financing.

“Money matters, but what’s important is the company’s long-term viability,” said Yasuaki Kogure, chief investment officer at SBI Asset Management Co. “Beyond the money amounts, the questions that need answering are about Sharp’s restructuring.”
Foxconn Chairman Terry Gou emerged from a nine-hour meeting with Sharp on Friday and said his company has become the preferred bidder, with a final agreement expected by the end of the month. About an hour later, the Osaka-based company contradicted his comments, saying that INCJ’s bid is still in play.
INCJ has not given up on the proposal and is not planning to raise its offer, the fund’s Chief Executive Officer Toshiyuki Shiga said in an interview with the Nikkei Shimbun newspaper on Monday. INCJ’s focus on restructuring rather than revival makes its plan fundamentally different from Foxconn’s, Shiga said in the report.
“There needs to be a board decision to give a preferred negotiating partner status,” Atsushi Yoshida, a spokesman for Sharp, said following Gou’s comment on Friday. “The board meeting yesterday didn’t yield such status and there was no meeting today. We plan to continue our talks with INCJ.”

Toyodo Uemura, a spokesman for Sharp, declined to comment, and negotiations with firm are continuing, a spokesman at INCJ said. Foxconn also declined to comment.

The lender support in INCJ’s proposal would include a ¥110 billion debt-for-equity swap, the documents show. Mitsubishi UFJ Financial Group Inc. and Mizuho Financial Group Inc. would also cancel ¥225 billion of preferred stock they hold in Sharp, shares Foxconn is offering to buy, according to INCJ’s plan.
INCJ proposed merging Sharp’s liquid crystal display operations with those of Japan Display Inc., where the fund is a major shareholder, according to the documents. The fund’s offer will reflect fair value of Sharp’s stock, preventing possible shareholder lawsuits and also involve bringing in new management, according to the documents.

Gou has pushed hard for a deal even as it looked unlikely he would win. Sharp had been inclined to take the bid from INCJ, people familiar with the matter said last month. But then Gou raised his bid from ¥600 billion to about ¥660 billion and flew to Japan to make a personal appeal to Sharp’s board, its banks and government officials, a person familiar with the matter has said.
Foxconn’s negotiations with Sharp are 90 percent complete, Gou told reporters on Friday outside Sharp headquarters. There will be no breakup of the company, he said, echoing comments from Sharp Chief Executive Officer Kozo Takahashi a day prior.
“The remaining 10 percent are legal matters and are not a big deal,” Gou said.

The rise of data in times of crisis.

The stakes don’t come much higher than those faced daily by the UN Office for the Coordination of Humanitarian Affairs. Its head of information, Mark Dalton, tells Jo Bowman how data is changing the way help reaches those most in need.
It only takes a glance at the newspapers to appreciate that the numbers of people affected by conflict in the world right now is beyond vast. Mark Dalton is at the coal face of these many crises and says the situation is unprecedented in recent times. He is Chief of the Information Services Branch of the United Nations Office for the Coordination of Humanitarian Affairs (OCHA), serving OCHA staff and humanitarian partners around the world.
“It all depends how you measure it, but in terms of numbers we’re seeing about 59 million people displaced last year, which is the highest since the Second World War. We are definitely seeing a huge demand for humanitarian support and assistance, and the official demand from the sector this year is between US$17 billion and $19.7 billion. To be honest it’s even greater than that, because that doesn’t take into account diaspora transfers that go from individuals to a crisis situation.”
Four complex and, to some extent, intertwined crises currently have the highest-level OCHA rating, which sets in motion a series of urgent and resource-intensive actions by UN agencies and their partners: Iraq, South Sudan, Yemen and Syria. But Dalton points out that the fact that strife-torn nations such as the Democratic Republic of Congo, Somalia and the Central African Republic do not make the highest rating, shows just on how many fronts humanitarian groups are working, and the intensity of so many people’s needs.
Crowded market
The process of providing humanitarian aid has changed significantly in the past two decades; the sector has professionalised, there are more skilled people involved, and there are even post-graduate university courses in humanitarian development. Dalton has spent more than 20 years working in humanitarian aid, including seven years with Médecins Sans Frontières, and co-founding the British relief agency Merlin. His work has taken him to the Balkans, the Caucuses, Kenya, Iran, Pakistan and Afghanistan.
While natural disasters, which are often seasonal, are becoming somewhat easier to manage thanks to planning by national and regional authorities and aid groups, the complexity of managing conflict-related crises is intensifying. Many more people and organisations are involved than before, which is a positive development but makes good coordination more important than ever, and this is where OCHA comes to the fore.