International environment

Today, I would like to start from the economic environment that our company is surrounded. IT industry, if we take what subsequently happened by the Lehman Brothers bankruptcy, is influenced few months later by the changes in global economy. That is, now politics and economy are connected, and then they react each other instantly.

1. Financial trouble of U.S.
Re-elected president Obama will aim toward “big government”, which is more like the Japanese-style social welfare. On the other hand in January, 2013, it is likely that there would be a crisis of “fiscal cliff” to force reduced budget due to a control in financial law. In U.S., there is a good side in its economy with energy revolution owing to the success in mining shale gas, but this will be canceled out. Since U.S is cutting the military budget, it cannot play a role of world’s police, which will cause the military conflicts all over the world.

2. An economic crisis in Europe
Except a sole winner, Germany, whole of EU is in an economic slump. Greece’s failure has effected on Spain, and consequently on Italy. Therefore, exports from Japan to EU will not do well. Although European countries are enforcing the policy of reduced budgets for trying to restore banks, a full of the unemployed appears if corporates go bankrupted. Now, there are lots of demonstrations by the unemployed in the Europe.

3. China’s collapse in future
Xi Jinping, who became the president in an administration change last month, has suppressed The People’s Liberation Army who was taking the military-first politics-Maoism, and decided to maintain Reform and Opening-up Policy founded by Deng Xiaoping. However, China has a hundred million unemployed out of the entire population of 1.3 billion, and the economy is in a disastrous state. Therefore, it intensifies anti-Japan movement and an expansionism policy to deceive Chinese people, while taking advantage of withdrawal of U.S.

Diverting its domestic contradictions to the outside, China already took over marine rights and interests of Spratly Islands of Vietnam and Paracel Islands of Philippines. China has been violating territorial waters of Senkaku islands since Prime Minister Kan’s administration. There won’t be recovering of reciprocity between China and Japan for a while. China is going to follow the footsteps toward collapse from 2014 if deprivation from the surrounding countries fails. It is said that a civil war of about 5 years will break out after the collapse in China.

4. War threat over the Korean peninsula
North Korea is getting ready to launch another missile in a few days, but it is the People’s Liberation Army based in Shenyang Military Region in China who is handling behind its back. The leader of this military region is following Maoism and making a pressure to the government in Beijing. Rare earth as well as mineral resources in North Korea are only dealt by trade companies under the control of this military region. Korean War begun in 1950 was a proxy war directed by the Chinese Communist Party, and it is in a state of suspension still now.

Since the army of North Korea says that they can make Seoul in a sea of fire in an hour, South Korea and Japan share the same threat. Unless Japan does not provide territories for U.S. military for building their base camps in Okinawa and the mainland, South Korea will vanish and Korean peninsula will be tributary state of China. Forgetting what Obuchi administration did to South Korea with saving their financial default by loaning 40 billion yen, they are not so foolish, I believe, as to put the issue of Takeshima Island ahead of national crisis.

5. Japan is not in a normal state
China set nuclear missiles to aim at Japan’s every major city. This is what is behind the statement made by Abe, a head of the Liberal Democratic, which was an approval of right to collective self-defense of Japan in future. If we abandon nuclear power plants, we will lose nuclear deterrent force, yield to a threat, and finally become a dependent country. Making a change in interpretation of article 9 of the constitution is only a regaining of our right to self-defense, this is a matter of course.

Japan’s self-sufficiency rate in energy is only 4%, while 45% of electric power in Germany comes from thermal power system with coal. There is a fundamental difference between the strategy by the chancellor Merkel and circumstance in Japan. If Senkaku islands are occupied by China, fuel for thermal power system is blocked at sea lanes, and then Japanese industries cannot work out.

Nuclear power plants in Fukushima did not collapse in the 3.11 earthquake -it was tsunami for main cause of the accident. A radiation accident was level 2, and mostly not necessary for decontamination. Unless we come up with the measurement against tsunami and restart the nuclear power plants, an electricity price will raise and manufacturers have to go abroad, resulting that domestic employment will be lost and days of great unemployment will come.

At this moment Japan has no economic policies, moreover the Bank of Japan is incompetent. Raising a consumption tax in deflation period will further push down the consumption, making economy slow down, a number of corporate bankruptcies will increase and a full of the unemployed will appear. We have to claim revaluation of yuan and won, regaining the level of balance of payments, otherwise economies of Japan, U.S and Europe will crash. Sinking of Japan means sinking of the world.

The media does not report the truth for fear that their branch offices in Beijing might be shut down. They only incite populism, I shall call them traitors. The government has responsibilities to secure the territory, its citizen’s life, safety, and their properties. If making fun of people, tax payment would be meaningless. We cannot do business without our country exercising national sovereignty. Therefore, Japan is in a difficult era.

6. Our correspondence as a company
In order to hedge the risk of worsening of world situation, our company takes two policies; we will prepare to protect our employees to a maximum extent with them. Risks come from the matter of national interests: they are both an international economic risk and a domestic depression risk due to a rise of consumption tax.

First of all, as a capital policy, by the end of this March we will reinforce our company’s capital to 125 million yen. Due to that, our Hermes Software laboratory would broke up and merge with Hermes Systems Inc., which will optimize a management. Since there is no deficit for that company, the merging shall allow at least 10 million yen for adding up to Hermes Systems Inc. as a capital.

Our scheme is, to enhance external credit drastically, reinforcing a company’s capital up to 100 million yen and a legal capital surplus up to 25 million yen, respectively. As a result, we can expect and try hard to acquire new transactions with big enterprises. I will make our company as steady as a rock against crash in a market, and maintain an internal reserve.

On the other hand, considering a high risk of staying in one industry, we are making a move to the new market. Today, Happy Cargo Inc. has been established “head office: Chuo Ward, Kodenmacho, president: Akitake Yamamoto”, for an international transport. We would like to develop each other as an affiliated company.

Although we will have a management separately, their target is Vietnam, Myanmar, and other countries that many of Japanese corporates are planning to move to after China. It is distribution business among such vital Asian countries. We can make a mutually beneficial relationship and also can get fresh information of these international situations through IT business.