A Year for Moving Forward

The year 2015, the final one in a three-year cycle that commenced in 2013, has got off to a start. It is not simply the beginning of another 12 months, though. The point is how we kicked off in 2013. We are at the beginning of a year in which we must steadily realize our medium-term plan, which comes to an end in 2015.

At the same time, the government launched its economic policy, dubbed “Abenomics,” in 2013 as well, and 2015 can be described as a watershed year for it. Before Abenomics, the yen appreciated to the ultra-high level of 72–73 yen to the dollar, and the average share price on the Tokyo Stock Exchange was around 8,900 yen.

It was in this situation that the administration of Prime Minister Shinzo Abe launched the policy of Abenomics with the goal of weakening the yen and boosting share prices. After receiving a vote of confidence in the general election held in December, the government is now moving to consolidate this policy.

The first so-called arrow of Abenomics consisted of creating demand through public works projects. Plenty of funds were required for this purpose, so the second arrow consisted of quantitative easing on an extraordinary scale. In order to continue purchasing lots of government bonds from city banks, which had been issued on a vast scale, the Bank of Japan under Governor Haruhiko Kuroda printed large amounts of money. As a result, the value of the yen went down at one point to over 120 yen to the dollar. In these circumstances, naturally enough there were high hopes that exports would expand and the economy would improve, so the average share price rose to more than 17,000 yen.

However, the excessive weakening of the yen directly hit small and medium-sized enterprises that depended on the import of parts and materials, as well as import agents and household accounts. When the government increased the consumption tax rate by three percentage points to 8%, the feeling spread among consumers that prices had actually gone up by 8%, and the slump in consumption was much greater than expected.

The Bank of Japan implemented more quantitative easing measures, but they have not yet had much effect, and the government was forced to put off a scheduled further two-percentage-point hike in the consumption tax. Clearly economic recovery is not going to be easy, even with Abenomics. Price increases are far outpacing wage increases. At the same time, Japan’s debt now amounts to 240% of its gross domestic product, making Japan the unrivalled debtor superpower of the world. The problem is that the third arrow of Abenomics is not functioning.

If the naïve administration of the Democratic Party of Japan had continued as it was, however, Japan would have fallen into ruin in a different sense, so we can only welcome the arrival of Abenomics. Now it is up to the government to overcome the irritating negative aspects and get the economy going again. 

Domestically our industry has been hard hit by the weak yen as well. Compared with the negative situation before Abenomics, though, we can hold high hopes for 2015. This year companies that formulated growth strategies in 2013 should move forward by adding strategies looking farther down the road. I believe this is our mission in 2015.

The other day I attended a gathering held by Sony, where journalists nodded in agreement when it was emphasized that Sony is doing well in Japan. I sensed the energy of the Norio Ohga years in the marketing of Sony Computer Entertainment Japan President Hiroshi Kono and the Sony engineering team, and I believe that with its audio strategy for the high-resonance age, 4K strategy, digital camera strategy, and so on, Sony is at last showing its true colors.

By coming together and striving to create an even larger market, our industry can consolidate success in 2015 and ensure that the sake we drink at the beginning of 2016 is very tasty indeed.