Tokyo to use reserves to help exporters
By Hiroko Tabuchi
Tuesday, March 3, 2009
TOKYO: Japan will dip into its $1 trillion in foreign currency reserves to lend dollars to the country's exporters, the government said Tuesday, a move that could help companies like Toyota Motor and Sony cope with sharply higher fund-raising costs overseas.
About $5 billion from Japan's ample reserves - the second-largest in the world, after China's - will be used to fund a government-backed bank charged with making dollar-denominated loans.
"We expect difficulties in corporate financing in Japan, as well as overseas, to reach their peak soon as economic difficulties deepen," said the Japanese finance minister, Kaoru Yosano.
Japan will also expand an emergency loan facility for cash-strapped domestic companies to ¥1.5 trillion, or $15.4 billion, from ¥1 trillion, Yosano said.
Toyota's auto-loan arm could become one of the first beneficiaries of the new lending facility. A financing subsidiary is in talks with the government-backed Japan Bank for International Cooperation for an emergency loan, the automaker said.
Toyota's request for state financing signals growing troubles at the manufacturer as demand for its vehicles evaporates worldwide.
It also underscores the way the credit crisis has started to affect even the biggest businesses in Japan.
Though many Japanese companies are cash-rich, they have found it increasingly hard to borrow in recent months as the troubled Japanese banks shy away from lending and credit tightens overseas.
Toyota said its wholly owned subsidiary, Toyota Financial Services, was requesting funds that would help it make more loans to customers in the United States.
According to the public broadcaster NHK, the loan subsidiary, which has assets of ¥14.3 trillion, could receive about ¥200 billion in state-backed loans.
A spokeswoman at Toyota Financial Services, Mio Sugito, said the size and timing of the loan were undecided and refused to give details. The Japan Bank for International Cooperation said it could not confirm negotiations with individual companies.
Toyota called the move a sound strategy that would ease pressure on the company from the global credit squeeze. The carmaker had already entered discussions about using public financing at other subsidiaries, it said.
"We are in no way uncomfortable or concerned over the loan discussions," a Toyota spokesman, Paul Nolasco, said in Tokyo.
Japan's car exports have slowed drastically in the worldwide economic slump, causing losses for most Japanese automakers and leading them to idle plants and lay off workers.
Deteriorating earnings in turn hurts companies' creditworthiness and makes borrowing more expensive.
In February, Toyota lost top credit ratings with cuts from both Moody's and Standard & Poor's. Moody's lowered its rating to Aa1 from a gilt-edged Aaa, and S&P cut its rating to AA+ from a top grade of AAA.
A wider slump in exports has helped bring on Japan's deepest recession in decades, with its economy shrinking at an annualized rate of 12.7 percent in the last quarter of 2008.
Toyota expects a ¥350 billion loss for the fiscal year through March 31, a sharp contrast from the record ¥1.72 trillion profit it booked the previous year. A rival, Nissan Motor, which is allied with Renault of France, has also said it is considering applying for government aid.
After 24 years, one of the most famous blunders in marketing history is quietly coming to an end.
Coca-Cola is dropping the "Classic" from its red labels in some southeast regions of the United States, and the word will be gone from the name on all of its packaging by the summer, the company said Friday.
The "Classic" designation - which appears under the "Coca-Cola" script on labels - was added to the packaging in 1985, to distinguish the original formula from a sweeter, wildly unpopular new version of Coke.
New Coke has long since disappeared from shelves, making the "Classic" qualification unnecessary. The font size of the "Classic" has been shrinking in the past decade, and the company removed it from labels in Canada in 2007.
"When people think Coke, they think classic, so more than two decades after introducing the word classic, the reason for being - quote unquote - for that word as a descriptor has disappeared," said Scott Williamson, a Coca-Cola spokesman.
With the introduction of a new global advertising campaign, called "Open Happiness," Coca-Cola decided it was time to make its American product match what it was called elsewhere. (The language on the side of the label where it now says "Coke original formula" will change to say "Coke Classic original formula.")
"Every place else in the world it is called Coca-Cola, except for in North America," Williamson said.
The introduction of the new Coke was one of the more noteworthy debacles in marketing history. Coca-Cola had concocted a sweeter formula for its soft drink, and it replaced the original formula in April 1985.
It had spent four years testing the new recipe and conducting taste tests with more than 190,000 people. Coca-Cola found people chose the new formula 55 percent of the time, and the original one 45 percent of the time.
But Coca-Cola forgot to ask how people would feel about losing the traditional soda.
"It's been, probably, one of the most talked-about case studies ever," said Paul Worthington, the head of strategy for the branding company Wolff Olins. "They failed to understand the emotional significance to people that messing with Coke would have, and that's gone down in history."
As soon as new Coke was introduced, Coca-Cola began getting hammered. Employees had to work overtime on its complaints hotline, where it was receiving an average of 1,500 calls a day. People started hoarding containers of the classic formula, formed groups like the Old Cola Drinkers of America, and even boycotted the company in protest.
Ten weeks after introducing the new Coke, and after publicly vowing that the original formula was gone for good, company executives brought it back.
They added a "Classic" underneath the script Coca-Cola lettering to distinguish it from the new formula. Coca-Cola Classic began to outsell new Coke almost immediately, and revived the company's sales.
It was "a humbling experiment," Donald Keough, Coca-Cola's president, said at the time. "Some cynics say we planned the whole thing. The truth is, we're not that dumb, and we're not that smart."
Par PFB,
Tuesday 23 December 2008 à 11:23 ::General
It's now time to wish you all a Merry Christmas and a Happy New Year.
Don't forget, between two dozens of oysters, some foie gras and a truck load of truffles, that some assignments have to be given back early January. Just in case you forgot, as I did...
Par PFB,
Saturday 1 November 2008 à 14:21 ::General
Marc Faber comment on US economy.
Investment analyst and entrepreneur Dr. Marc Faber concluded his monthly bulletin (June 2008) with the Following:
''The federal government is sending each of us a $600 rebate. If we spend that money at Wal-Mart, the money goes to China . If we spend it on gasoline it goes to the Arabs. If we buy a computer it will go to India . If we purchase fruit and vegetables it will go to Mexico , Honduras and Guatemala . If we purchase a good car it will go to Germany . If we purchase useless crap it will go to Taiwan and none of it will help the American economy. The only way to keep that money here at home is to spend it on prostitutes and beer, since these are the only products still produced in US. I've been doing my part.'
Well, there is those who did it and those who don't. For the latter, no prob, there are still our friends, although they'll have to make it up in Vegas...
Anyway, the International Macroeconomics elective in Oslo was a good experience, with the following conclusions:
- all Norwegian females are blond and cute...
- ... but the lecturer who's brunette and cute.
- our Norwegian colleagues are just GREAT people. Thanks to them.
- Fjords water is not *that* cold.
For those who don't know Oslo, this is a great destination. I strongly advise a visit...
Well, done !
Apart from the fact the exam was about Thursday evening's course, it's been a please to finish it up.
Just 2 case studies remaining and a big part of the MBA will be gone. Crazy, ain't it ?