Shinzo Abe was sworn in as Japan's new prime minister – its seventh in six years – barely a week ago. To count him as the seventh PM is a bit disingenuous, in fact, since he was the prime minister in 2006 and 2007 but had to retire due to medical issues. His return came after a campaign that stressed repairing the nation's economic issues – a platform that should give you an idea of the issues Japan has had at the top step of its government. Chief among the nation's woes? An economy still suffering from two decades of deflation and, more recently, a yen that is gaining so bullishly that it's tearing up the china shop.

Yet even before he took office, Renault-Nissan CEO Carlos Ghosn had a message for prime minister Abe: "Please bring [the yen] back to the neutral territory so that we can do our job without a handicap." By "neutral," Ghosn was referring to an exchange rate of one dollar to 100 yen, by "our job" he meant Nissan's ability to build cars for export on the island nation even though Bloomberg posits that it already produces 75 percent of its units outside of Japan.

Above that neutral territory, production in Japan begins to get massively more expensive with every incremental rise in the yen; right now the 100 yen is about $1.15 – and that's after a ten-percent drop over the course of 2012 – and Bloomberg calculates that every single-digit increase in the yen's value against the dollar robs Nissan of $232 million in yearly operating profit. Just down the coast in Toyota City it's even worse – Bloomberg figures each single-digit increase in the yen costs Toyota $402 million every year.

Nissan is one among all the Japanese makers monitoring tensions in China, too. A territorial dispute last year caused Chinese buyers to shun Japanese cars to such an extent that overall car sales fell in China and Japanese automakers cut production and sales forecasts in the world's largest auto market. Ghosn was less pointed in his comments on the matter, saying only that if the antagonism keeps up then "obviously we will have to reflect it in our long-term plans." It was Akio Toyoda's comments, however, that were probably a good reflection of the private wishes of the new prime minister: "I want it to be a peaceful year where nothing goes wrong."


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  • 23 Comments
      • 1 Year Ago
      [blocked]
      Alfonso T. Alvarez
      • 1 Year Ago
      As noted above - Japan manipulated their currency for decades, while the lame US politicians stood by and watched our industries, one after another, falter and fail. Now, they no longer have the ability to do so and are crying that the Yen is too strong! Sorry, time to take your own medicine!
        Alfonso T. Alvarez
        • 1 Year Ago
        @Alfonso T. Alvarez
        Hilarious!! Some pathetic loser who has no clue about international trade and economics wants to dismiss my comments multiple times with multiple log-ins, yet has doesn't have the courage to try to dispute the facts I put forth above!
        BC
        • 1 Year Ago
        @Alfonso T. Alvarez
        Exactly, when you have a trade surplus with almost all of your trading partners, then you have to expect your currency to increase in value relative to theirs. Even China will not be immune indefinitely.
      GR
      • 1 Year Ago
      I think Ghosn is onto something. Criticize him all you want, but in Japan, he is seen as an automotive god. He basically turned Nissan around from near bankruptcy to making a profit and back on the automotive map. Compare pre-Ghosn Nissan to post-Ghosn Nissan and even an American would see his impact. Also, the yen is too strong. It's causing Japanese companies to hemorrhage money in the global market. It's one of the main reasons Suzuki did not import the Swift to the US and eventually pulled out of the US. They would simply be losing money on importing a Made in Japan product to a country with a weaker currency at the exchange rate. It's not only affecting the auto industry, but the other big one in Japan: electronics. I recently read an article on Hitachi and their huge losses until they shifted production and jobs to outside Japan. Unlike many US companies, the Japanese are more inclined to keep jobs in Japan until it gets too dire. It's at that point now. Ghosn is not only trying to be a capitalist, but trying to keep jobs and profitability in Japan. Also, he could not be more right about China. The Japanese gov't could not have done worse for Japan's commercial and industrial sector in China. The Chinese were so upset about the islands that they rioted and vandalized Japanese products, establishments, and factories as they boycotted Japanese products. Japanese cars in China were (and probably still are) targeted by vandals. It's even forced owners to hide a Japanese car emblem and tack on a VW, Hyundai, or a Chinese one to fool vandals. Sales figures among Toyota, Honda, etc. fell an astonishing 60% after the China-Japan fallout. This is a HUGE problem for Japanese companies trying to do business in Japan. Abe (pronounced Ah-beh) is a right-wing political conservative who is calling for more hawkish foreign policy. He has suggested revising the apology landmark in Japan which addressed the atrocities committed by the Japanese Imperial Army in Asia during WWII. He is also calling for more patriotism in the school curriculum. This is the very **** that pisses off the Chinese and Koreans who were subjected to genocide, slavery, forced prostitution, and other horrible atrocities by the Japanese gov't in the war. Japan also victimized many other countries in Asia during the war like the Philippines, Myanmar, and Taiwan to name a few. Abe is also advocating for greater defense spending... in a nation with no official military. Spending money on a military when the country is a financial mess is not really the work of brilliance especially when such a move would aggravate important trade partners like China. Now is the worst ******* time to have a jingoist running Japan. This is what Ghosn is trying to hint at. Japanese politicians have been utterly pathetic in the last decade as the article pointed out. Hell, if Ghosn could run, the Japanese would elect him as PM. He has done more for Japan than any of these clowns in politics.
        GR
        • 1 Year Ago
        @GR
        Typo: This is a HUGE problem for Japanese companies trying to do business in *China.
      • 1 Year Ago
      [blocked]
      Bruce Lee
      • 1 Year Ago
      Shinzo Abe is about as anti-China as Japanese Prime Ministers come so asking him to patch things up with China is just fairy tale wishing. He basically ran and won on being "tougher" on China so things are probably going to get worse, not better.
      Yoshi
      • 1 Year Ago
      Good luck with the whole Japan/China relationship... A LOT of history there...
      Lisa
      • 1 Year Ago
      I'd take Japan over China any day. China is still uncivilized, underdeveloped and non-democratic country. China continues to perform forced abortions on women, torture and detain Falun Gong members, and restrict media and internet access. China executes more of its citizens per capita than any other country, often for non-serious violent crimes such as theft. The government also harasses members of ethnic minorities like the Tibetans and Uighurs. People should not ignore China's ongoing awful human rights violations just because the country wields such economic power right now. On the foreign policy front, China continues to take a very aggressive policy towards other Asian countries on territorial disputes in the South China Sea (Vietnam, the Philippines, Taiwan, Malaysia, and Brunei) and the East China Sea (Japan). Moreover, China and India continue to take issue with each other over their contested claims to the Aksai Chin and Arunachal. China also maintains another dispute with South Korea over the maritime rights over Socotra rock. Most Asians countries are being perturbed by the aggressiveness of China.
      Drakkon
      • 1 Year Ago
      ...and I'm going to crush your heads with my bare hands like THIS!
      Evan Hayden
      • 1 Year Ago
      I'm moving to Japan in a couple weeks for a job, and will be sending a chunk of my paycheck to my US savings account each month, so, uhhhh... stay strong yen! I want the exchange rate to work in my favor for once! :-) ...just kidding, sort of. Okay, let's get the situation fixed so we're on an even keel.
      • 1 Year Ago
      [blocked]
      wonky donky.
      • 1 Year Ago
      quote:"Mah bawlz, each won ees ZEES BEEG!"
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