Today is another busy day for us. Our first stop is the US embassy to discuss trade and other commercial issues with the diplomats here. We will be leaving a little early to have breakfast with Dr. Stapp’s friend.

There were a quite a few police along the streets leading up to the embassy. Dr. Stapp was even stopped by a Japanese police officer as we walked up the main gate of the embassy. Fortunately, Skip was able to get the guards attention and get us through.

Then we began our security check as we entered the main embassy building. We had to walk through a metal detector and our cameras, cell phones or Palm Pilots had to be checked in to avoid bomb threats. Japan’s elections won’t be held for some time so I didn’t worry too much about terrorist threats at this time.

Breakfast was a pleasant surprise. It was mostly your standard American fare, bacon, eggs, hash browns, toast, etc. and we could get our eggs well done. It was, however, staffed by some of the surliest polite people in Japan. “You want bacon with that? Sure, I’ll get your bacon, sir.”

The first meeting of the morning was with Joel Fishel. He gave us a little information on his background and his current position. His undergraduate degree was political science but he also has an MBA. Before his posting to Japan, he spent three years in Beijing and four in Hong Kong. The last two years have been in Japan. Although, he is paid a lower salary than some of his contemporaries back in the US he has some pretty good perks that make up for it. He is required to take a 6 week long vacation in the US so he doesn’t go native. Most of his local expenses are taken care of and he gets COLA for the host country which in the case of Japan is quite large.

Mr. Fishel is a member of the Foreign Commercial Service which is a part of the Department of Commerce and not the Department of State like regular diplomats are. He is responsible for helping American companies operate smoothly in Japan. He is not a trade representative who are sometimes considered the bad guys since he does not have to fight local battles against Japanese government and business interests.

He next gave us a breakdown of who works at the embassy. 35-40% of that embassy staff are diplomats while the rest are becoming increasing more law enforcement oriented. Common concerns are drugs, smuggling, terrorism, and counterfeiting. Of the approximately 600 people who work for the US government in only 60 perform commercial work.

Then he began to talk about why Japan is still a very important player in the world economy in spite of the growth of China. There is still lot of wealth in this country and will be for a long time. Currently, Japan is 2nd globally in terms of total wealth. The second reason is that it is much easier to do business in Japan now than 20 years ago. Most tariffs and have gone down but there are still non-tariff barriers such as the various kierestsu and cultural characteristics such as xenophobia and a highly perfectionist attitude that keep foreign competition out.

Revolution/evolution going on in the retail sector was the final thing that Mr. Fishel mentioned. In Japan everybody takes a piece of the profits at every level of the supply chain passing a higher cost to the consumer. The relationships between the members at step of the chain are more important than ultimate price. However, Fishel believes that Japan will look more and more like the West as price becomes more important not only in Japan but globally.

We left Joel to head to the agriculture briefing. We met Clay Hamilton who explained the job of the Agricultural Department in Japan. They are primarily involved in export to Japan issues but they also collect data on trade policy and sanitary issues such as pesticides, BSE (bovine spongiform encephalopathy or mad cow disease), etc.

He had a Power Point presentation ready for us that outlined what the Agricultural Department did and some information about food and Japan. Some of the interesting bullet points about Japan are:
Japan has had some bad food safety scandals which make consumers very concerned about where their food comes from. People like to see their food being made in restaurants and will pay 20-30% if safety can be guaranteed. Store generics are used not as a lower price alternative as they are in the US but as a safer alternative than branded products. The generics have picture and background of the farmers who produced the product to reinforce this image.
Bar scanning of beef in stores and you can find out where it came from and who the parents are. Theoretically one can trace beef back many generations
However, this system only traces the safest beef. These kiosks are in many grocery stores but hardly anybody uses the system
Japan imports 60% of its calories.
Farmers in Japan are aging, less than 2% are under the age of 30.
Japan has half the people but spends almost as much as the US does on food.
Changing demographics are starting to catch up with Japan. They have had to close schools because there are no children to fill them. This is hard to believe from my travels in Japan. I see tons of school groups and lots of pregnant women on the train.
Trying to reduce rice production.
Japanese consumers are very convenience oriented with several chains set up to cater to this. There is a Family Mart, Lawsons, am pm, etc. on every corner, sometimes literally. On one block I saw an am pm convenience store on three of the corners.
Convenience stores are becoming more flexible as well. 7-11, for example, has a truck that comes by to change out its freezer cabinets from breakfast to lunch to dinner foods everyday.
Japan doesn’t allow GMOs (genetically modified organisms). Japanese consumers don’t like GMOs and the laws allows no more that 5% of a food to be genetically modified. This is unlikely to change since retailer’s profit margins are small and can’t risk any losses by introducing new biotech foods.
Chicken is hard to compete against other Asian countries
More health , conscious, more vegetables, yogurt, addition benefits added, etc.
Japanese consumers are demanding more more style in their food. Water bars serving dozens of different brands of water are popping up and groceries are concentrating on making things look better.
Demand for ethnic food is growing, particularly in Asian cuisine and fusion foods where a Japanese twist is added to ethnic foods. An amusing example of this is how Starbucks is replacing many of its coffee based items with green tea. For example, you can get green tea cappucino at Starbucks. Bagels are also another up and coming food.
More value and more choices are appearing. High end/low end stores are appearing within the same company.
Gender roles are changing, more men are cooking.

One of the big topics facing the Agricultural Department is the importation of American beef by Japan since the discovery of BSE. Since that time, Japan has imported its beef from Australia and New Zealand. However, there are working groups between the US and Japan should allow the importation of American beef again by late summer.

Next we had an economics briefing by John Wecker, First Secretary of the Economics Section and Daniel Chen, an intern on his first day. Wecker’s belief is that the Japanese economy picking up after 12 or so years of downswing but he’s not sure if its permanent. As an officer of the US government he wants to encourage Japanese economic growth because Japan is an economic driver for Asia and the world and the US and Japan have shared values such as democracy, Iraqi reconstruction, and regional stability.

Mr. Wecker named three groups that provide suggestions for the various players in the commerce between the US and Japan. They consist of the Economic Partnership for Growth, where sub-cabinet members of both governments discuss common issues, Private Sector Government Committee-non-governmental, creates issues for the Economic Partnership for Growth to discuss and the Regional Reform and Competition Equipment group.

After Mr. Wecker’s overview he answered some questions. Here are a few of the things he discussed:

NTT (Nippon Telegraph and Telephone) the national phone company is still 40% owned by government, which discourages private growth. Since NTT has been deregulated, broadband rate cheapest and fastest in the world. $40/month for 40 Mbps. Yes, 40 Mbps is the number he gave. Wireless expected to grow just as broadband has in the past year or so.

Free Trade
The US wants Japan to get involved with Doha development accord in WTO. They are also working on free trade treaties with Singapore and Mexico, however, they do exclude products they don’t want in their country.

Japan and China and US
US deficit is greater with China now, not with Japan. The pressure has now been turned away from Japan and put on China

IT outsourcing hasn’t occurred yet in Japan because there isn’t a large pool of Japanese speakers overseas.

Japanese Banking System
Japanese banks have been having problems with bad loans. US thinks Japan should restructure the banking system to discourage bad loans. The Oversights Financial Services Agency (FSA) is the regulatory agency that oversees the banks. It has been pressuring banks to stop giving new loans. However, there has been private/public inbreeding of positions of power. It is common for someone working on the FSA to retire and go to work for a private corporation.
Japan also has unusual reporting rules for its financial statements. No one can understand how footnotes in reports work and this hinders foreign investment.

At lunch, Skip gave us a military briefing. Japan buys a lot of top military hardware from US. It has some of the most advanced aircraft hardware outside of the US. Japan is unusual in that the carrier Kitty Hawk has its base here. The Kitty Hawk is an older carrier with a conventional power plant but the US Navy wants to replace it with a nuclear carrier. Japan is resisting this since it is leery of nuclear power.

Skip finally warned us about the Roppangi are where we’ve been staying. Several bar clients have been slipped mickeys and have been robbed. You have been warned.

After the embassy, we had the rest of the day free so we returned to the hotel to change. After changing we headed out to the next stop of the Akihabara. In one of the subway interchanges, I see a guy in blue came out of the corner of my eye and put his hand on Nhan’s shoulder. It was one of a pair of police officers who had stopped Nhan and had began to ask him questions. All of us almost at once wailed “Alisa!” who had gotten a little ahead of us. She came back and talked with the police to find out what was going on. There was no specific charge, I guess Nhan just looked like a criminal. After showing the police our train passes they let us go. I think the fact that Alisa can speak fluent Japanese really helped us out.

Now for the main event of the day, maybe even the trip, Akihabara. Probably the best way I can describe it is nothing but one long street of BestBuys, CompUSAs, and Circuit Citys interspersed with comic book and fightin’ robot toy stores with the occasional video game arcade thrown in. It was a real gadget geek’s dream.

There, you could find almost any tech you want, cameras, phones, MP3 players, computer components everything. I think we saw some of the smallest computers I have ever seen. I wish I could have picked one of them up since it would have made my travel burden lighter. Everything we saw was slightly ahead of the US but costs 30-40% more than in the States. Since I don’t have a job yet I figured I could wait for a while before I bought something cool.

The first stop we made was at a store called Gamers. It is one of a chain of stores with lots and lots of manga and anime. There were 6 levels of stuff. It started off with a couple of levels of comic books, then a couple of levels of DVDs and video games, and then a couple of levels of toys and card games. None of it made much sense to me since I don’t follow manga but I wished I knew how to read Japanese so I could make sense of it.

The final stop we made was at a local arcade. I guess I’m too used to playing PC games. I just can’t play something that doesn’t have a mouse and a keyboard. I got killed at all the games we played. I wound up playing a few of the older games but at a ¥100 a pop where I didn’t get killed in the first five seconds.

That being said there were some cool games being played there. There was a giant fighting robot game where you sit in the cockpit of one of these machines and fight it out. Several large screens let everybody watch to see what you were doing. I thought about playing this game but I didn’t bring enough money to climb the learning curve and to endure the embarrassment of getting killed repeatedly in front of everyone in the arcade.

After spending a few hours we went to Shibuya (which I pronounced Shi-BOO-YAA! Which made it sound more fun.) I think all of Tokyo was there since it was amazingly crowded. I still don’t understand how I wasn’t knocked down by someone. Shibuya reminded me of Piccadilly Circus with the large TV screens mounted on the sides of buildings. There was even a huge advertisement for the upcoming Harry Potter movie, all in Japanese of course.

We were supposed to meet another group who had mentioned they had gone to see the Japanese Chippendales (a group that will remain nameless for a price) at a well known landmark but the other group couldn’t find it (or couldn’t they?). So we wandered up and down the streets of Shibuya.

Shibuya seemed to be a prime shopping and entertainment district with tons of shops and a few movie theaters. They also had some restaurants and including a doner kebab (Turkish gyros) stand. Since I hadn’t had one of these since Vienna I jumped at the chance to order one. Tim also joined me for one as well. Usually, doner kebabs come with a yogurt based sauce that I don’t usually like. This stand offered a couple of other sauces that I had not seen before such as a hot and chili sauce. I had a ketchup based sauce on my doner kebab and thought it was fabulous.

Since I had gotten so little sleep in the past couple of nights I returned home around 8 PM to catch up on my journal and to try to get to bed early. I also wanted to find the wireless hot spot that my classmates said they could get in their rooms. After about an 45 minutes walking around the hotel with NetStumbler I noticed that there was a hot spot apparently coming from outside of my window. The signal was such that I had to put it on top of my TV and stand up to actually get a usable signal. It was a 802.11b connection but it was free so I uploaded a ton of pictures to my site and made a few posts on my blog. I also got to IM Kathleen which was a pleasant surprise.

Tomorrow, Wal-Mart/Seiyu and the Kodo drum company.