Let's Make It a Good Year!

Happy New Year!

2009 starts out in the middle of an unprecedented worldwide depression. On the day when I wrote this column, the United States for the first time ever adopted a zero rate policy, effective immediately. At the same time, the Federal Reserve Bank (FRB) announced that it was considering purchasing long-term national bonds and implementing other "quantitative easing" measures to increase the amount of capital available to the market. The FRB made it clear that it would use all possible measures to put a stop to the economic slide, to try and turn the situation around and stabilize prices.

In response to this, the Japanese interest rates did an about-face, and the yen exchange rate versus the U.S. dollar rapidly went to 88.63 and crossed the 87 yen line at about 4 a.m. on December 18, Japan time. According to the news, a rate of 86 yen on the New York market also was within view.

The Obama government which will be inaugurated in January is preparing large-scale economic recovery measures on the order of several hundred billion dollars. Under the banner of these financial measures, it is hoped that initiatives for stimulating demand, strengthening the financial institutions, and shoring up the housing market will gain traction. The question of when the U.S. economy will rise out of this deep trough has a direct bearing on the economic situation of the world at large. Intensified international cooperation is urgently needed to lift the market and head towards a speedy recovery.

In any case, the U.S. has taken the first steps to provide an economic boost. Once these manifest themselves in increased consumer demand, the effect will be felt in Japan as a major exporting economy as well. However, the rapid rise in the value of the yen is bound to put a damper on things, which is why a complete economic recovery in Japan may not happen before the year 2011 and beyond.

It is clear that 2009 will present a difficult challenge. The three-year stretch from now until 2011 will be the “positive” period. Under these demanding conditions, an aggressive management approach is the only way to survive. It is indeed the time for an “animal” approach to business.

Even export-oriented businesses must look towards strengthening internal demand these days. To boost domestic marketing, that is the order of the day. The consumers still have the money. But their concern with security and reassurance naturally tends to curb spending, and it also makes people choose their purchase patterns more carefully. As a result, people will of course only want to buy things that they consider really necessary and good for themselves. The absolute turnover volume will decrease, and statistic indicators therefore will show an overall drop in consumption. But these figures also comprise macro factors that do not necessarily represent the latent desire in consumers to make their life more enjoyable. Spending money for aims such as strengthening family bonds and increasing contentment on a personal scale very likely is still considered special.

More and more people will opt to give up an overseas holiday in favor of things such as enjoying Blu-ray movies at home with the family. As more time is being spent in the home, home entertainment becomes increasingly important, and home theater is a case in point. The idea of the "two-way theater" is most viable in this regard. However, as fewer people tend to come to the stores on their own volition these days, the vendors must take the animal approach. This means that they must go and actively seek out the customers, or they must organize events that are attractive enough to bring the customers to them and create the right opportunity to close a sale.

In this economic climate, it is vital for businesses to know the situation of their customers in detail. Rather than merely exchanging new year greetings, the industry as a whole must actively get involved in actually making it a good year.