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EPTE Newsletter from Japan: Consumption Tax on the Rise

On April Fools' Day, the prime minister of Japan pulled a good one. Unfortunately, it was no joke. Effective on that day, the national sales tax for goods and services in Japan increased from 5% to 8%. Japan’s parliament enacted a budget for fiscal year 2014 that included the increase in the consumption tax. The decision was met with much controversy; however, Prime Minister Shinzo Abe sees this as a way to reduce Japan’s public debt. Abe further added the Japanese economy is showing continuous signs of growth and the additional 3% tax will not negatively impact the economy.

Has the economy been affected leading up to the tax increase? It sure has. Big ticket items have seen a flurry of activity over the last couple of months. Cars, homes, and jewelry sales enjoyed a spike in business as savvy consumers scooped up as much as they can afford to avoid the increase in taxes--some saved thousands. The high end department stores, house builders, and car manufacturers were not complaining.   

The trade channels that sold everyday items also had an increase in foot traffic during the last week in March. Grocery stores and discount stores had a tough time keeping the shelves stocked with tissue paper, drinking water, and other household essentials. Even the transportation industry sold more than usual last week. Workers and students who use public transportation lined up at ticket counters to pre-purchase long-term commuter tokens for trains and buses for travel after April 1. The savings equaled more than $50 spread over the next few months. The less fortunate, including myself ,did nothing because we have no extra money.

March looked like an economical rhapsody in Japan. Department stores posted record revenues, which increased by 25% compared to the same month last year. However, the music stopped suddenly on April 1. I visited a couple of stores and there were very few customers in checkout lines or walking around. Major department stores reported that sales in the first two weeks of April declined 10 to 30% compared with the same period of time last year. They are predicting that April’s revenue will be half of March’s.

The government said that the decline was expected and it will recover by summer. I think this is wishful thinking.

On another note, The Ministry of Economy, Trade, and Industry (METI) released February shipment data for the Japanese printed circuit industry. Total revenue declined again compared with January. I think we should have a tax increase for the PCB industry--maybe this will mirror the rest of the economy and we can post a profitable month!

Dominique K. Numakura, dnumakura@dknresearch.com DKN Research, www.dknresearchllc.com

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Headlines of the Week

(Please contact haverhill@dknreseach.com for further information on the news.)1. Daicel (Material supplier in Japan) 4/7The supplier has developed a new laser treatment process, “D LAMP,” to ensure reliable bonding between metals and thermo plastic resins.2. Tohoku University (Japan) 4/7The university has developed a new graphene compound with a 3D porous structure. It has high conductivity of 500cm2/Vs.3. Hamamatsu Photonics (Major photo device supplier in Japan) 4/8The supplier will commercialize a new low-cost pin hole detector for the thin plastic films and metal foils manufacturing process.4. Elna (Major component supplier in Japan) 4/9The supplier has invested 300 million yen for its plant in Thailand to expand the manufacturing capacity of large size aluminum capacitors for automobiles.5. Kyocera (Major electronics company in Japan) 4/10The company has begun supplying new smart phones in Thailand.6. Hitachi High Technologies (Device supplier in Japan) 4/10The supplier enter the business of brain science by utilizing photo-topography developed by Hitachi in 1995.7. Furukawa Electric (Major cable manufacturer in Japan) 4/11The manufacturer has rolled out an opto-powered camera with optical fiber cable for disaster areas.8. Alps Electric (Major device manufacturer in Japan) 4/11The manufacturer has unveiled new multiple sensor modules with Bluetooth for wearable healthcare devices.9. Sekisui Chemical (Major chemical company in Japan) 4/14The company has developed a new piezo-type flexible pressure sensor with a high sensitivity for wearable devices.

10.  Bando Chemical (Specialty chemical supplier in Japan) 4/14The supplier has developed new heat sink sheet materials for power devices with a heat conductivity of 150W/mK. Thickness: 0.15-10 mm.

11.  Schott (Glass material supplier in Germany) 4/15The supplier has rolled out a new thin, rolled, flexible glass sheet with 640 mm width for display applications. Thickness: 25-100 microns.

12.  Canatu (Material supplier in Finland) 4/16The supplier has unveiled a new flexible transparent conductive film, “CNB Flex,” for flexible touch devices. It is bendable with a 1-mm radius.

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