A bank teller counts 10,000 yen notes in Tokyo

In an unusual leak during a stump speech, Japanese Prime Minister Shinzo Abe recently revealed Apple’s plan to build its first technology centre in the country, touting it as a result of his weaker-yen policy.

Apple followed with a timely statement saying the new facility in Japan would create “dozens of new jobs”.

Days ahead of Sunday’s lower-house election, Mr Abe’s message could not be simpler. The cheaper yen, the result of his economic policies known as “Abenomics”, is good for Japan. The evidence is growing, Mr Abe says, that the yen’s fall — to a new seven-year low against the dollar to above Y121 — is bringing production back home and creating new jobs.

Toshiba, for example, plans to invest more than Y300bn ($2.5bn) in Japan while Canon is looking to raise its domestic production ratio to 50 per cent from 43 per cent last year. Nissan has decided to manufacture engines in Japan instead of moving to the US, preserving almost 600 jobs, according to Mr Abe.

“Even foreign companies are now starting to invest in Japan,” he said on Tuesday as he disclosed Apple’s plans. “A big change is happening.”

Looking more closely, though, expanded domestic spending is not always linked to more jobs. Canon has for years aimed to repatriate manufacturing by saving labour costs through automation and the use of robots. The company says it has no plans to change employment levels.

Toshiba is also ramping up investment at the Yokkaichi memory chip plant in central Japan but semiconductor facilities are largely automated and any employment impact is likely to be minimal. Nissan, meanwhile, says it has no plans to move its engine production to the US with or without the yen’s fall.

Despite the absence of powerful opposition parties, the weak yen debate has been divisive for Mr Abe, pitting the big companies enriched by the currency benefits against smaller firms and households struggling from rising prices of imported items ranging from toilet tissues and milk to beef bowls.

Mizuho Bank estimates that a Y10 fall against the dollar boosts the operating profit of listed companies by roughly Y1.7tn while it shaves about Y800bn from the operating profits of privately held businesses that mostly do not export their products.

Finance minister Taro Aso poured more fuel on the fire after reportedly telling voters that companies not profiting from the weaker yen are “either very unlucky or have incompetent managers”.

“I’m very upset with Mr Aso,” says Koichi Fujii, chief executive of Sanmaruko Foods, which makes frozen potato croquettes and spring rolls in Hokkaido, northern Japan. “We’re trying so hard to cope with the weaker yen, but he doesn’t seem to get it.”

According to Mr Fujii, the costs of materials including beef and flour have risen 5-8 per cent over the past year, while electricity prices have increased 30 per cent and transportation costs 10 per cent. Sanmaruko, a 35-year-old company with Y8.8bn in annual revenue and 500 employees, has cut costs and raised product prices to offset those costs. The company is making some profit, but not enough considering an 11 per cent rise in sales from April to November, he adds.


The ruling Liberal Democratic Party has promised economic packages to support smaller and medium-sized enterprises hurt by the weaker yen. But analysts say government aid should be aimed at making companies more competitive overseas.

Sanmaruko, for example, only exports 0.4 per cent of its products. The company wants to raise that ratio to 10 per cent, but with factories only located in Japan, Mr Fujii says the transport costs are too expensive.

“It’s just a dream for now,” he says.

For Mr Abe, analysts say one game changer that could actually spur more investment at home while mitigating the negative currency impact is cheaper oil, with the price of internationally traded crude falling below $65 for the first time in more than five years.

“The speed of the decline in oil prices has been faster than the yen’s fall,” says Kentaro Arita, manager at Mizuho Bank in charge of industry research. “If this trend continues, the merits of cheaper oil will be bigger than the negative impact from the weaker yen.”

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