Currency exchange rates
The currency exchange rate over the semester of the Japanese Yen to US dollars has not been a stable one at all. From the highest exchange rate of 91.7872 Yen for 1 US dollar on14th June 2009, it dropped to 80.382 yen/dollar on 1st November 2010.
The export and business phases being experienced in most East Asian countries is being caused by the yen to dollar fluctuations in exchange rate (kamakura, 2005). Moreover, the fluctuations are believed to have caused industrial shocks leading to instability in most sectors of the economy.
Balance of trade
International trade entails the exchange of goods and services across the borders of nations or states. In this regard, goods and services are either imported or exported among different countries. The total volume of exports and imports and difference between the two components obtained over a given period of time, it is referred to as the balance of trade.
Japan and United States have been close economic partners for a considerable length of time. Japan trades about 31.5 percent of its total exports to Unite States. On the other hand, 22.3 percent of its total volume of imports originates from United States. On the same note, Japan’s direct investment overseas mainly targets the US markets. For instance, in 1990, about 50 % of Japan’s direct investment overseas landed in the US markets. The total export value from Japan to United States in 2009 was $28,913,700,000.00 while the imports from United States totaled $12,547,100,000.00. This resulted in favorable balance of trade of about $16,366,600,000.00.
Trade restrictions imposed by Japan
Japan does not allow the importation of certain products. For instance, it prohibits the importation of harmful products such as narcotics, small weapons like firearms, and pornographic materials (Barnes/Richardson, Global Trade Law, 2010). Other restrictions on trade imposed by Japan include certain health products that may be harmful or unnecessary to its population, pharmaceuticals, food substances as well as some forms of chemical based products. One of the rationales of imposing restrictions on trade is that certain goods may hamper the growth of local industries by destabilizing the market through unfair competition (Barnes/Richardson, Global Trade Law, 2010). There are other goods which may not meet the set hygiene or health requirements. Among the restricted products include animal parts which may be facing extinction like ivory, meat and other agricultural related products, certain items that have been banned from trading by international treaties in addition to cosmetics and medical products that have been supplied for over two months (Barnes/Richardson, Global Trade Law, 2010).
One of the most important concerns while negotiating trade deal with other countries is the impact of the import-export trade on the economy of Japan. For example, Japan has of late requested some pertinent information concerning BSE. The two countries are currently negotiating on the possibility of resuming trade of beef products in spite of the fact that Japan lifted the ban on beef products from US sometimes back. Japan had restricted the importation of beef whose age had surpassed twenty months. However, the restriction is still in place until the ongoing talks between the two countries reach a common ground. The safety standards on the imported food products are an important consideration before any food product is permitted for importation.
Role of unions in Japanese workforce
The 1990s witnessed the unionization of about 33 % of workers in Japan. The umbrella union for the Japanese workforce, the Japanese Trade Union Confederation is the most outstanding labor union in Japan today. It has a membership base of about 7 million workers, one million less compared to the 90s (Gordon, 2000).
The main function of trade unions is to air the grivaces of workers to the respective employers. Since 1945, trade unions in Japan have operated on a free environment after they were legalised. The unions played an integral role of fighting for better wages salaries on behalf of workers. In addition, the unions have been onm the forefront to stress the need of job security for the Japanese workforce. This went along with the demand for fringe benefits especially on health. Soon after the unions were legalised, a series of workers’strikes followed.
Due to the role played by trade unions of negotiating for better working deals with employers on behalf of workers, strikes have reduced considerably (Gordon, 2000). Companies have developed a custom of negotiating wage levels and working conditions with labour unions before workers’grieances reach strike levels. The umbrella workers’ union (Rengo) often holds yearly talks with employing companies to settle at higher wages for its members
Current events
Most important news in Japan today
The military drill by United States and South Korea is a very important news to Japan after the Prime Minister Naoto Kan put his cabinet members on alert. The military drill has been [perceived by Japan as a risky affair owing to the fact that the South Korean island was bombarded by Pyongyang on Tuesday, 23rd November 2010 (Japan Times, 2010). All the members of the cabinet are expected to stay put in their offices until Wednesday, 1st December 2010 just in case there is a crisis to handle. The venue of the drill will be in Yellow Sea.
However, the opposition party, Liberal Democratic Movement, has questioned the government’s ability to manage crisis especially in regard to western sea border which is under dispute In addition to the military drill, the Prime Minister has also reiterated that the Japan- China ties are crucial especially in the region covered by Asia-Pacific and the world at large (Japan Times, 2010). The international relations between Japan and China has been worsening, a situation that has been described as delicate and needs urgent redress.
Level of terrorism Japan faces
Japan is under serious threat of terrorism occasioned by extremists from the Islamic world. Besides, Japan has ever been labeled as a terrorist target, a statement that is perceived to have originated from Osama Bin Laden.
Japan was among the list of countries mentioned in 2003 as the next target of terrorist attack. Besides, an Arabic website later announced a rewarding scheme for any person who would be willing to the US soldiers and also persons from countries who are allies to the United States. Japan was also top in this list.
Another possibility of terrorist attack in Japan emanates from the fact that there are a myriad of facilities installed and being used by the United States which are equal targets of terrorist activities. This implies that Japan is living under the fear of being attacked at any time.
In addition, Japan is geographically close to Southeast Asia countries like Indonesia. The latter has been a victim of bomb attacks from terrorists and the nearness of Japan to this region means that it may also suffer the consequences of terrorism activities.
Current political climate & implications for Toyota
Toyota was bitterly criticized by its market rivals and local politicians in Japan when it announced that it was targeting a10 % dominance in the global auto industry (Fackler, 2010). This aggressive nature of the company was viewed as a potential source of political friction with US. Toyota was compelled to tone down its ambitions even though it achieved it later. The company is currently targeting a 15 % dominance of the world auto market.
Current economic climate & implications for Toyota
The global economic downturn has not favored Toyota especially in its bid to capture the 10 percent of the global auto market. The image of Toyota has further been battered by the outdated technologies in its industrial production (Fackler, 2010). The stagnation of Japan’s economy that began way back in the 1990s has worsened the economic forecasts and anticipation of Toyota. Although the recovery process is underway, it may take indefinitely long for full recovery.
The manufacturing sector is the major economic contributor in Japan. This includes the automobile industry with Toyota leading the tow. The weak Yen at the beginning of the new millennium did not favor the overall economic growth of Japan in spite of the boom in export volume.
Single most important reason for doing business in Japan
Japan is a well established economy and quite stable both politically and socially. Nonetheless, the single most important reason for doing business in Japan lies in the fact that it is a major trading partner with some of the leading world economies like United States, Canada and China. is has a favorable balance of trade with United States, being the fourth largest importer of goods and services from United States. In addition, the United States enjoys Japan’s direct foreign investment owing to the fact the latter is the second largest in terms of overseas investment in US (Gordon, 2000). The Japan’s GDP volume of 5 trillion dollars recorded in 2009 makes it to be the second well established economy in the world. This makes it possible to do business in Japan much easier than in other poorly performing economies.
References
Barnes/Richardson, Global Trade Law. (2010). Japan Considers Easing of Import Restrictions on U.S. Beef. Web.
CIA.gov-the World Factbook (2010). Japan. Web.
Fackler, M. (2010). In Toyota Mess, Lesson for Japan. Web.
Gordon, A. (2000). The Wages of Affluence: Labor and Management in Postwar Japan. New York: Harvard University Press.
Japan Times (2010). Cabinet put on alert over North Korea: LDP meanwhile keeps pressing administration. Web.
Kamakura, M. (2005). “Is the Yen/Dollar Exchange Rate Really Responsible for East Asia’s Export and Business Cycles?” The World Economy, 28(10): 1509–1537.
NationMaster.com (2010). Japan. Web.