J- Links of Interest- Week 37, 2019

I Was Wrong. Startups Are Not the Future of Innovation in Japan by Tim Romero (Podcast)

We talk a lot about Japanese startups on this show and the role they will play in shaping Japan's economic future. Well, today we are going to look at this from a different angle; one that puts the hype aside and looks at some cold hard numbers. The result is sobering, surprising and,  believe it or not, kind of inspiring.

Personal Note: This is one of the best talks about Japan's corporate landscape I have come across so far. The talk is focussing on the highly innovative Japanese medium sized companies, being the main drivers of developing the competitive edge in products only Japan can supply. A must listen for anyone who is really interested in Japan's economic legacy and future potential.

Corporate governance is improving, but not by enough by Richard Solomon (The Japan Times)

Quick test: Two banks “A” and “B” offer interest rates of 2 percent and 5 percent on deposits, respectively. All else being equal, at which bank would a rational person prefer to deposit their savings? If you chose “B” (the correct answer) your financial acumen exceeds that of many Japan CEOs. 

Mondrian International Value Equity Fund Quarter 2, 2019  (PDF)

Today we believe the Japanese equity market looks among the cheapest developed markets globally on most historic metrics (see chart 2 below). The P/E discount, which is already meaningful, fails to capture the impact of Japan’s strong corporate balance sheets and is also somewhat distorted by Japanese GAAP deducting goodwill amortization from reported earnings, so on a comparable basis the valuation discount for Japan would be even larger.

Making JapanGreat Again Through Corporate Governance Reform - Dr Ryohei Yanagi (CFO Eisai) (Podcast)

Learn the story behind Japan's turn to corporate governance reform and how leaders like Dr Ryohei Yanagi are not only advocating for its wider adoption but also helping to define how we measure its success.

“Private Equity” Investing With Venture-Like Returns…In Japan by Will Shoeberlein (Medium.com)

There exists a highly compelling opportunity in Japan today for forward-thinking investors to back a small group of savvy global entrepreneurs focused on an overlooked “private equity” strategy that would allow them to achieve venture capital like returns (...)  acquiring proven, low-growth, stable & cash generative small businesses (“SMBs”) from the hundreds of thousands of retiring SMB owners around Japan.

The story of Muji: How minimalist ethos focused on quality and simplicity spawned a global lifestyle empire  by Julian Ryall (South China Morning Post)

·        Muji began life as a range of simple household products, sold in Japanese supermarkets, whose name meant ‘no-brand items of good value’.  It soon moved into clothing and today sells 7,000 products in nearly 1,000 stores; amid competition from Chinese copycat brands, it has begun opening hotels

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