… this year, the ministry plans to map out a strategy for oil field development in the Arctic region, ways to take part in oil exploration off Greenland and secure energy sources in China, Poland, Indonesia and South Africa.

and

In April, the Korea National Oil Corp. and Australia’s Woodside Petroleum are set to begin a deep-sea drilling project in the East Sea to find a gas field.

South Korea Map

They follow in the footsteps of their neighbour Japan which this year has begun drilling for Methane Hydrate (or Ten’nen gasu or Fire Ice) in Aichi Prefecture. In the map below you can see the deposits of Methane Hydrate in and around Japan. Interestingly enough, Methane Hydrate is the resource being drilled in the new Korean drama Peninsula (Hanbando).

Methane Hydrate around Japan

With the screws being tightened and Japan and South Korea both being pressured to not use Iranian Oil, it is somewhat inevitable that a self-sufficient energy supply will become more dominant. Furthermore, with the Middle East becoming increasingly a no-go zone for most things both Western and Eastern countries are reassessing their geo-political risk exposure.

Truth be told, this is certainly a concern for all OPEC members. As this graph shows for Iran, the major importers are not European, they are Asian. The same is true in large part for other OPEC members. If Asia develops more effective and more importantly, more geopolitically stable mineral extraction supply chains then the Middle East will have to scramble very quickly to develop a diversified economy. At present, excluding, oil, Lebanon and Israel, the entire GDP of the Middle East is less than that of Finland.

Imports and Exports of Crude in Iran - The major trading partners

Responses to Survery of Working Baby Boomers

Even more interesting was this graph

Baby Boomer Responses to number of friends they have

On average 14.5% of respondents said they had “no friends” with the highest number being amongst 62 years old. The article states that as these people are recent retirees they have not yet settled into a post-company lifestyle. Interestingly enough this is the exact same age bracket where the divorce rate explodes because men are at home all the time, the opposite of what it was originally.

Older men were more likely to have more friends with 29.6% stating they had 10 or more friends.  Furthermore 81% had or were using mobile phones (35%), had a computer and did email (29.6%) or used email on their mobiles (16.4%). I somehow doubt that anywhere in Western Europe or North America where computer and email usage is so high. Barely 1% of Senior Citizens in the UK even use the internet.

Comment: This to a certain extent mirrors what we are witnessing in the greying western societies. Men and increasingly, women are becoming wrapped up in their employment. Due to the requirements of their job, overtime notwithstanding, their non-work social life quality has deteriorates drastically from what it was. Upon completion of work they are “spent” and are of no use to their firm or colleagues, leaving them with a void. With 17% of 62 year olds surveyed stating they had no friends, this does not bode well for a inclusive society.

Is Japan a no social country for Old Men?

What do you think?

The article sheds an interesting light on those who voluntarily maintain North Korean citizenship despite history. The article states that they feel indebted to the DPRK for their support during the harder years.  It is interesting to note that 100 DPRK affiliated schools are in existence as well as 3 Kindergardens. What the article doesn’t really explain is why the Japanese government continues to a) fund these schools and b) reconciles this with the fact that the DPRK is actively hostile towards Japan because of its colonialist past.

Kim Jong-Un touring Naval facility

In other news

Meanwhile the DPRK has done the inevitable and officially opposed the South Korean/American War Games. Whether this contributed to  Daewoo Shipping  not investing in the Hwanggumphyong SEZ as was rumoured is unlikely. Keeping the pace the DPRK has now reformed investment laws to make it easier for foreign companies to come into the country, although doubtless this is more to encourage Chinese companies to come to the DPRK rather than anyone else. Indeed as Daily NK puts it:

The amendments appear aimed at assuaging the fears of Chinese enterprises over issues such as the threat of expropriation. Indeed, China is said to have last month rejected initial laws governing the management of special economic zones at Hwanggeumpyeong and Wihwa Island nr. Shinuiju for a variety of reasons.

Comment: As Kim Jong-Un seals his power in PyongYang I suspect the regime regime is being gently nudged by Beijing  to instigate more economic reform if only for the sake of maintaining some form of existence. If the bolts are too tightly fastened then internal pressure will really blow up in everyone’s face. Then China, whatever is left of the DPRK, South Korea, the US and Japan will have no choice but to clean it up.  At least by encouraging exchanges and development the regime maintains some way of breathing. The problem is, will it convince Chinese businesses? I can see the State Owned Enterprises being ordered into it but I can’t see other firms being all too keen.  Expect more amenable noises and fireworks at the same time.

***
Well seeing as it’s the DPRK here is the Accordion Ensemble with Take Me On.

You may also notice that I am also on Twitter @Echizen01. I am trying to write mostly in Japanese, linking to Japanese articles for the most part on varying topics, mostly related in part to what is written here. Comments, questions and suggestions are always welcome. Either that or please Contact me via the Contact page.

Emperor Akihito arrives at Tokyo University (C) NHK

Akihito has been quite an astute player in monarchy as he married a commoner, well the daughter of a wealthy industrialist and has generally been mild mannered. When he succeeded his late father, the more controversial Hirohito (controversial not necessarily because of anything he did, but what he symbolised) monarchists hopes were dashed by his desire to continue the status quo rather than re-engage into the public life. He also acknowledged of the Imperial family’s Korean Ancestry as well as half-decent micro-biologist.

The question now as Bloomberg has highlighted is the issue of succession and the question of a male heir. This was an issue most directly attributed to former Prime Minister Koizumi but was scuppered when it emerged that the wife of one of the princes was pregnant. With their ever diminishing numbers and lack of (male) children the question is certainly becoming ever more pressing.

The rules sound simple but not at the same time. Princess Akiko of Mikasa (formerly of Oxford University) is/was dating a young Englishman. If she married him at present she would no longer be a royal. On the other hand even if it were acceptable would such a international marriage really work? It would go lengths and bounds to revive the dynamism of the Imperial family, even moving Japan up on the international stage as a new bastion of openness and liberalism. On the other hand I can just imagine the conservative establishment going nuts and the poor couple choosing to stay away from  Japan. That is excluding the Imperial Household Agency whose reputation, if anything is mixed. Legislation, its implementation and less self-regulation would add to Japan’s already growing arsenal of soft power tools. For that reason the debate should be seriously considered.

I would however, like to wish his highness a successful operation and a speedy recovery.

Wen Jiabao Speaks in Beijing over EFSF (c) BBC

He has stated that China would boost his support for the EU by not reducing any Chinese Funds in Europe (assuming of course that the Chinese funds in the Eurozone were not in the PIIGS in the first place). He also stated that:

“China is firm in supporting the EU side in dealing with the debt problems. We match our words with our actions,” he said.

“We are willing to conduct close communication and co-operation with the EU side.”

Yet, as noted by the BBC and I’m sure others the joint statement issued by the EU and China makes no mention of any specific amount of investment in the EFSF or any bailout fund.  It seems they agreed on many things; mutual trust, bilateral relations, the protection of human rights and law as well as commitments to further commercial and financial relationships.

In short my original point has been proven, the Chinese have not been persuaded to move or budge. Why would they? There is not a credible plan in the first place. So why the pleasant noises?

Perhaps the best interpretation comes from UBS’s Paul Donovan who wrote in his morning mailshot:

 ”The Chinese are coming” is now echoing around Euro markets. China has pledged to continue to hold Euro assets - a subtle reminder to the US that if America start imposing trade sanctions, China has an alternative to buying Treasuries.

Why be in the loving embrace of one bloc when you can play the two off against each other? This is a most excellent application of Game Theory. A slightly further hint in how diplomacy is conducted can be seen in the closing comments of this BBC article:

On Wednesday, he (Xi Jinping) is due to travel to Iowa to meet his hosts during his first visit to the US in 1985when he was a county official.Those who had hosted him in the small farming community in Muscatine, where he toured to learn about crop and livestock practices, said they were surprised he had fitted a visit there into his US trip.

In short, nice and friendly people receive a nice and friendly treatment in return. Hmm, almost logical. Perhaps this should be tried in more board rooms (and diplomatic circles). Good manners tend to go a lot further than we like to think.

that fiscal stimulus helps the economy add jobs, and that reducing the budget deficit lowers growth at least in the near term. And yet, this evidence does not seem to be getting through to the legislative process. That is unacceptable. We are never going to solve our problems if we can’t agree at least on the facts. Evidence-based policymaking is essential if we are ever going to triumph over this recession and deal with our long-run budget problems.

More on topic but  is the following quote from a analyst for Arcus Research in Tokyo in the FT:

How did it get from there to here? Not by lavish public spending, as is sometimes assumed. Japan’s experiment with Keynesian-style public works programmes ended in 1997. True, they had failed to trigger durable economic recovery. But the alternative hypothesis – that fiscal and monetary virtue would be enough – proved woefully mistaken.

Sound off:  As this is all to do with depravity in both cases, I felt Decadence by Heavenstamp was the best song of choice

It is nice to know that people are catching up with what I’ve said: in today’s Finance Asia Ferguson covers some of the latest M&A activity by Chinese firms in Germany.

The article: The article covers Sany Heavy Industry’s €500 million ($660 million) acquisition of Putzmeister, noting how the former has continued to rise beyond the latter to the point that it was able to purchase it this year. According to the article.

Chinese companies are sometimes perceived in the West to be much of a muchness: either state-owned monoliths or low-cost manufacturers that specialise in cheap, low-quality products built by armies of underpaid workers.

But Simon draws a distinction between China’s industrial manufacturers and its consumer goods makers. Firms such as Haier in domestic appliances and TCL in consumer electronics certainly make inferior products to their global rivals, but Sany and its main domestic rival, Zoomlion, are successfully competing with the best manufacturers in the world.

It further highlights the bewilderment of some German Industrial analysts at the pace of which the Chinese have eclipsed (why?). It further highlights the decline of western industrial companies in parts of China due to the growing dominance of domestic companies.

Comment: Expect a lot more of this in the coming days and years. It will be a little while before the likes Shanghai Automotive and Huawei really begin to push properly into the consumer market. This does not however mean that there will not be any market share grabbing on the B2B front. Cement Mixers, construction companies, engineering firms, backbone communications providers from the Middle Kingdom will progressively creep into the western economies. In other words not so much Evernote as in NTT Communications (that provides the back-bone connection/servers for Evernote). Certainly no where near as visible but with a lot of money in it.

I suspect due to political reasons China will do more M&A in Europe than in the USA. Tie-ups with Turkish, German and British firms will be the most popular due to their (relative) openness. Nationalism maybe a dangerous limiting factor in the case of companies in Germany or realpolitik in the case of Turkey. The analysts sometimes smack of a fear of the ‘Wimbledon Effect” which has been the cause of many a socio-economic-political groups downfall. Embrace change or prepare for the death of 1000 Quarter profit cuts.

Sound off: What with the demise of another Champion of the world of music, Whitney Houston I felt it appropriate that, in the style of this blog a Far Eastern cover was in order. In the spirit of the student taking over from the teacher, I leave you with  Lin Yu Chun’s rendition of a Houston favourite.

Timeline:

29th June 1969: Born in Hatagaya in Shibuya Ward, Tokyo. The eldest son his youth his parents divorced, leaving him and his younger sister to be raised by his mother.

In his second year of Junior school, Hashimoto’s father died, leaving his mother as the sole financial supporter of the family. This resulted in moving to Osaka where he completed his education and excelled at Rugby.

March 1988: Wins the 67th National High School Rugby Championship

Among his peers were future NHK Announcer Fuji Ayako and Kawajo Shika, a former LDP House of Representatives member.

Upon Graduation from High School he took a year out to prepare to enter Waseda University, where he was accepted into the faculty of Politics and Economics. He lived in a 6 Tatami floored flat with no toilet (Ouch!). During his time at Univeristy he developed his interest in becoming a lawyer.

March 1994 Graduates from Waseda University

1994 Passes the Japanese Bar Exam.

1997 Qualifies as a Lawyer

April 1998. After practicing for a few years he establishes a Law Firm specialising in M&A, entertainment law, business, sports and corporate compliance.

April 2003 Begins appearing in a Nihon TV show with 3 other lawyers called Gyōretsu no Dekiru Hōritsu Sōdanjo (The Legal Advisory Office that People Queue Up For)

2008 Became Governor for Osaka Prefecture on the back of LDP support.

October 2011 Resigned as Governor

December 2011 Elected as Mayor of Osaka on the idea of turning Osaka’s official designation to that of the same as Tokyo, giving greater local government powers as well as status. He ran as an independent.

Certainly not a gentleman of high birth unlike some other politicians that come to mind.

Trivia: It was revealed that Hashimoto’s father and uncle were gangsters during the course of his bid to win the Mayoral election. Far from scuppering his campaign some analysts believe that it aided him:

“Osaka people want to cheer for people like Hideyoshi Toyotomi, people who rise from the bottom,” Kaku Kozo explains history writer, referring to the warrior and politician who rose from being a peasant in the sixteenth century. “The more disclosure about a past, the more sympathy from people will follow, and for Hashimoto it will be like a wind at his back.”

 

Here is a clip of Mr Hashimoto talking about the proposed TPP (Japanese, sorry no subs)

A bit of a modern chap, Hashimoto has his own Twitter Page

Comment: It is interesting how this little headline has escaped the English Language Press thus far. Granted it is not the first time it has been mentioned but considering that barely a year ago the idea of a tri-lateral FTA was mooted ‘somewhere down the line’ the fact that a) negotiations between two parties has already begun and b) the full talks will begin by the summer means that these three aren’t wasting anytime.

Should a successful FTA be negotiated, it wouldn’t take much to create one of the largest trading blocs on the planet. Together these three would have quite a sizeable bargaining chip to bring to the table at say, the IMF or the World Bank. What with their aversion to politics and interest in business this could indeed be a fruitful partnership indeed.

Whatever the outcome it certainly is unlikely to be as smooth as ‘The Oral Cigarettes’