Cheap and Trendy Gains as Luxury Fades in Japan

TOKYO—As major luxury brands in Japan delay store openings or quietly slink away from what was once their largest single market, two recent foreign entrants on the other end of the spectrum are aggressively plotting their expansion: Hennes & Mauritz and Forever 21.

Both Forever 21 and H&M are purveyors of “fast fashion”—their shops feature cheap, trendy clothes, with new items hitting the shop floor on a daily basis. In brand-obsessed Japan, the success of both stores underlines a deep shift in consumers’ mentality, as shoppers put value ahead of logos.

Privately owned Forever 21, which entered the market in April with a shop in Harajuku, is aiming to open two to three more stores in Japan over the next nine to 12 months, said Larry Meyer, its chief financial officer.(By MARIKO SANCHANTA,Wall Street Journal, NOVEMBER 10, 2009)

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Chinese Small-Business Lending Getting Smaller

In a little-noticed statement last week, China’s central bank and banking regulator gave an update on how well the country’s small businesses are doing at getting loans from banks (original in English here). That’s become a crucial issue this year, with growing concerns among officials and scholars that China’s extraordinary credit boom is bypassing the very firms that account for most new job creation. Yet the latest numbers — like many Chinese statistics – confuse as much as they enlighten.

The regulators said small- and medium-sized enterprises, SMEs for short, accounted for 14.1 trillion yuan of outstanding bank loans at the end of September, up 28% from a year earlier. Overall bank lending, by contrast, was up 34.2% in September. According to our calculations, the figures would mean small-business loans account for 36% of China’s total lending and 45% of lending to corporations. (The 3.08 trillion yuan in new loans to SMEs is also 45% of this year’s new lending to corporations.) (By Andrew Baston, The Wall Street Journal, October 27, 2009)

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Replacing the U.S. Consumer: Is China Up To The Job?

China’s rapid growth is leading the recovery in the Asian and world economies, the International Monetary Fund says in its latest regional economic outlook. The fund now forecasts China will grow an outsize 8.5% in 2009 and 9% in 2010, driven by strong investment spending and surging loan growth. By contrast, Japan’s economy is expected to shrink 5.4% in 2009, and other Asian emerging markets are forecast to grow a combined 1.7%. But how much does China’s recovery help the rest of the world?

Some benefits from China’s boom have been spilling over into neighboring countries, the IMF argues: “A part of Asia’s export revival is due to the recovery of China’s domestic demand. …In particular, commodity exporters (such as Australia and Indonesia) and to a lesser extent capital goods exporters (Japan, Korea, and Taiwan Province of China) have benefited from the surge in China’s infrastructure investment.”(By Andrew Baston, The Wall Street Journal, October 29, 2009)

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U.S. and China Ease a Range of Trade Restrictions

HANGZHOU, China — The U.S. and China agreed to relax restrictions on agriculture, technology, travel and other trade restrictions ahead of President Barack Obama’s first visit to Beijing next month.

The two sides made “solid progress” that helps “both of our countries achieve balanced and sustainable growth,” U.S. Trade Representative Ron Kirk said Thursday at the end of a meeting of the U.S.-China Joint Commission on Commerce and Trade, or JCCT.

Chen Deming, China’s commerce minister, said the two sides will “jointly oppose trade and investment protectionism.”
(By JAMES T. AREDDY, The Wall Street Journal, OCTOBER 30, 2009)

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Yuan’s Fall Annoys the Neighbors

HONG KONG — As the dollar continues to weaken, concerns are mounting in much of Asia over another descending currency: the Chinese yuan.

For more than a year, China has kept the yuan largely unchanged against the dollar. So, like the dollar, the yuan has been falling steadily against the currencies of China’s neighbors, including the Malaysian ringgit, the Indonesian rupiah and the South Korean won. That makes goods produced in those countries more expensive compared with China’s.(By ALEX FRANGOS, The Wall Street Journal, OCTOBER 26, 2009)

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China Gains Confidence in Recovery

BEIJING—China’s recovery is becoming broader and potentially more sustainable, a shift that could provide better support for a still-fragile global economy. Reinforcing those signs is a change of tone from China’s cautious government, which is now becoming more confident in a solid rebound.

Economic data released Thursday showed China’s gross domestic product growing by 8.9% from a year earlier in the third quarter, following the 7.9% gain in the second quarter. The expansion in industrial output, the backbone of the manufacturing-heavy economy, accelerated further to 13.9% in September from 12.3% in August. (By ANDREW BATSON, The Wall Street Journal, 10/22/09)

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In China, Rx for Ailing Health System

As China continues riding a long wave of prosperity, its health-care woes are under a spotlight. Medical treatment has improved greatly for many Chinese in recent times of heady growth. But the system of near-universal but basic coverage offered in the years after the Communist revolution has frayed. Opinion polls rank medical care among citizens’ top concerns. Spiraling drug costs, inadequate insurance and big out-of-pocket expenses are all cause for public distress. In poor rural areas, many forgo treatment because they can’t afford it.

Now, as the Communist Party leadership this month celebrates its 60th year in power, it is moving away from a nearly single-minded focus on economic growth that shaped policy for much of the past three decades.(By GORDON FAIRCLOUGH, The Wall Street Journal, Thursday, Oct. 15th)

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RD International Trade Seminar Series Office of Economics

RD International Trade Seminar Series
11:30 AM – 1:00 PM
Location: 500 E Street, SW Washington, DC
Room : Conference Room – 615P

Metro Directions:
Take the orange, blue, yellow or green lines to the L’Enfant Plaza stop. Use the exit marked “7th & D Sts.” Exit through the construction, down the stairs. Turn right and walk east to the corner of 6th and D Sts. (half a block). Turn right and walk south on 6th St. (2 blocks) to the corner of 6th and E Sts. The USITC building is on the left (SW corner).

Check the Schedule of Seminars

A China-Charged Bull Market for IPOs in Hong Kong

The surging mainland economy and Beijing’s expansionary policies have China-focused companies eager to capitalize on the bright outlook (by F. Balfour and B. Einhorn, BusinessWeek, September 21, 2009).

After the collapse of Lehman Brothers a year ago, things were looking grim for American gambling tycoons Steve Wynn and Sheldon Adelson. The two had expanded into Macao, China’s gambling hub, just as the Chinese economy was slowing and Beijing was tightening rules on travel to Macao in a bid to fight money laundering. That meant fewer Chinese were able to gamble at casinos owned by Wynn Resorts (WYNN) and Adelson’s Las Vegas Sands (LVS).

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Recession Can’t Stop Japan’s Online Shoppers

A rise in the number of stay-at-home shoppers in Japan means the online shopping industry outstrips sales at department stores and convenience stores (by H. Tashiro, BusinessWeek).

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