Entries from October 2011 ↓

During my recent travels in China the main topic among people on the street and in the media was the tragic case of Yue Yue, the toddler that died after being run over twice after being ignored by passersby.  The level of angst and controversy over the incident is high, with many wondering if Chinese society has lost its moral bearing.  James Fallows has discussed the matter in recent posts which feature observations from many of his readers.  And then this item via a Taiwan source about another video purporting to show Shanghainese coming to the rescue of a pregnant lady.  Was the Shanghai incident staged to counter the bad feelings over little Yue Yue’s death – or is it genuine?

Sorry for the gap in postings.  I’ve been traveling in parts of China where Internet access is hard to come by.  Returning to Internetland tomorrow.

Interesting that the policy chief of the ruling Democratic Party of Japan (DJP) is in Seoul pushing for resumption of talks on a Free Trade Agreement between Japan and Korea while Tokyo is afraid to move forward on TPP talks.  South Korea is leaning toward participating in TPP and many observers think the only way to get Japan off the fence over TPP is to get their competitors in Korea to move forward on TPP.  Japan increasing finds itself outflanked by South Korea as it has moved rapidly to conclude Free Trade Agreements with a number of countries and regions.   What does the DPJ hope to accomplish by focusing narrowly on FTAs with Korea and even China?

This past weekend I was enjoying nan and dhal in my favorite cheap Indian eatery in Shibuya when a young Japanese man sat down at the table next to me, ordered, and lit a cigarette.  I felt like sticking my finger in his eye to let him know how much I appreciated him ruining my lunch but what he was doing was the norm in Japan.  Many if not most restaurants have no restrictions on smoking.  All I could do was give him the evil eye and mutter curses between gasps.

Many Westerners that visit Japan are surprised to find smoking is still permitted in most inside venues and smokers still think nothing of fouling the air for others.  It used to be much worse.  Fifteen years ago 70% of Japanese men smoked but now it’s down to 43%.  Still, as this article in the current Metropolis magazine points out, the Japanese tobacco industry successfully fights off most efforts to discourage smoking.

Why would the tobacco industry in Japan be so powerful?  Because it is owned in large part by the Japanese Government.  As the Metropolis piece points out there are four keys to why progress has been so slow in Japan:

1. The industry delivers enormous profits to the government.  The powerful Japanese Ministry of Finance owns over 50% of Japan Tobacco Inc. which controls 66% of the Japanese tobacco market and is expanding internationally through acquisitions.
2. Japan Tobacco has lobbied vigorously against limiting smoking in restaurants and pubs and other indoor venues.
3. Efforts to move control of tobacco regulations from the Ministry of Finance to the Ministry of Health, Labor and Welfare have been fought hard by Finance.
4. Both the ruling Democratic Party of Japan (DPJ) and the Liberal Democratic Party (LDP) have connections to the tobacco industry.

Tobacco and government as one and the same is common throughout East Asia.  Tobacco began as government monopolies in Japan, China, Taiwan and South Korea.  As the New York Times pointed out last year, tobacco remains completely state-owned in China.

Tourism to the U.S. is up this year and tourists from Asia account for a big chunk of the increase. You don’t hear this economic indicator reported by media very often but foreign tourists bring NEW money into the U.S. economy every year and create millions of jobs. 6.6 million international visitors traveled to the United States in July 2011, a six percent increase over July 2010. For the first seven months of 2011, visitation (35.2 million) was up five percent compared to the same period in 2010. Among the top ten sources of travelers to the U.S. were South Korea (+7% YTD 2011 vs 2010) and the P.R.C. (+38%). Japan, although in the top ten, was down 7% over 2010.

This article in the Memphis Commercial Appeal gives a rare glimpse into the world of U.S. diplomatic efforts to assist U.S. companies win bids and export American products.  Many people, mostly businesspeople and diplomats, know this is how big international trade deals often get done.  Ho hum.  But your average American citizen doesn’t know this realm and, judging from some of the reactions in the blogosphere , are surprised or even upset at what they perceive as collusion between big business and government.

The fact is, every nation’s diplomatic corps does this if they can, and should.  What’s known as commercial diplomacy protects jobs in the home country and improves the economy by promoting exports.  The job of diplomats is to promote the interests of their country and what better way is there than to help grow the economy?

On the American team we have the U.S. Commercial Service (CS), sometimes known by its full name of U.S. and Foreign Commercial Service.  CS is part of the U.S. Department of Commerce as well as the U.S. Foreign Service.  Its officers are diplomats working in U.S. embassies and consulates in 80 (soon to be 73) countries around the world.  Their job is to help U.S. companies, big and small, to successfully export American-made products to other countries.  They are the leading edge of America’s commercial diplomacy.   The U.S. State Department and its economic officers also play an important role in commercial diplomacy.  I’ll have more on how these players work in later posts.

In the FedEx case discussed in the Commercial Appeal article the American diplomats advise the FedEx executives on which ministries were important to their cause and which Argentine government officials had decision-making power.  Consultations and commercial diplomacy are services that are available not just to large American corporations like FedEx but to even the smallest American companies that ask for it.

We can also see in the article that American diplomats acted as promoters of Boeing airplane sales and “successfully killed” an Airbus deal.   There are two big civilian aircraft companies in the world; Boeing is based in America and Airbus is based in Europe.  When the two are fighting for a big airplane sale – and often the buyer is a foreign government – European and American diplomats line up on their respective company’s side and slug it out.  In each case one side wins and one side loses.  An engineer in Wichita gets a job or an engineer in Toulouse gets it.

As former Ambassador to China, James Sasser, points out in the article, U.S. diplomats don’t get involved when two American companies are fighting to win a bid overseas.  They only step into the ring when it comes down to whether these jobs are going to the U.S. or to China or France.

The revelation of the un-redacted classified diplomatic cables by Wikileaks is a profound disservice to the interests of the U.S. but a collateral benefit is their demonstration of how the world actually works and the important difference that American diplomats make.  The average worker at FedEx would never know that they have their job at least partially because of the work of American diplomats.  Chances are, their leadership would never tell them this.

Ironically, the slash and burn budget-cutting going on in Congress as I write this threatens the nation’s commercial diplomacy program.  The CS budget and footprint are being cut back for the tenth year in a row.  Posts in crucial markets are being closed and the program is in retreat at a time that America’s competitors are expanding their export programs.  Last year the Obama Administration asked for a $70 million increase in the export promotion and commercial diplomacy program.  Congress not only stripped that away but is continuing to slash the program by another 10%.  That’s not the way to create American jobs.

In an op-ed in the New York Times Paul Krugman argues that the U.S. trade deficit, especially with China, is causing long-term cumulative damage to the economy and requires action against China.  China threatens trade war if Senate currency bill succeeds.  Another Tibetan monk sacrifices himself in an attempt to be heard.  South Africa doesn’t want to hear from the Dalai Lama as China’s soft power in Africa is demonstrated.

On a less serious note: Arni Kristjansson, an Icelandic musician living in Tokyo, has a brilliant idea on a very Japanese way to let Japanese people know their staring is making you uncomfortable.

A piece that appeared in The Global Times last week has garnered a lot of attention in Southeast Asia in recent days over concerns that the opinion expressed may reflect the thinking of China’s leaders.  Long Tao,  a strategic analyst of the China Energy Fund Committee, warned countries surrounding the disputed South China Sea that China could strike out at smaller countries that claim parts of the Sea:

“The elephant should stay restrained if mosquitoes behave themselves well. But it seems like we have a completely different story now given the mosquitoes even invited an eagle to come to their ambitious party. I believe the constant military drill and infringement provide no better excuse for China to strike back.”

It doesn’t take much imagination to understand that the elephant is China, the U.S. is the eagle and the mosquitos are those annoying little countries such as Vietnam, Indonesia and the Philippines.  Writing from the standpoint of China, Long goes on to spell it out in case anyone didn’t catch the elephant – mosquito metaphor:

“We shouldn’t waste the opportunity to launch some tiny-scale battles that could deter provocateurs from going further.”

Readers of the piece in one of China’s officially sanctioned international newspapers are abuzz over the piece’s belligerent tone and open threats to those who don’t see eye-to-eye with China over Beijing’s claims to the entire South China Sea.