DAILY SUMMARY OF JAPANESE PRESS 06/04/09

UNCLAS SECTION 01 OF 11 TOKYO 001252 SIPDIS DEPT FOR E, P, EB, EAP/J, EAP/P, EAP/PD, PA; WHITE HOUSE/NSC/NEC; JUSTICE FOR STU CHEMTOB IN ANTI-TRUST DIVISION; TREASURY/OASIA/IMI/JAPAN; DEPT PASS USTR/PUBLIC AFFAIRS OFFICE; SECDEF FOR JCS-J-5/JAPAN, DASD/ISA/EAPR/JAPAN; DEPT PASS ELECTRONICALLY TO USDA FAS/ITP FOR SCHROETER; PACOM HONOLULU FOR PUBLIC DIPLOMACY ADVISOR; CINCPAC FLT/PA/ COMNAVFORJAPAN/PA. E.O. 12958: N/A TAGS: OIIP KMDR KPAO PGOV PINR ECON ELAB JA SUBJECT: DAILY SUMMARY OF JAPANESE PRESS 06/04/09 INDEX: (1) U.S. focusing on period following determination of Kim Jong Il's successor; Plans to maintain pressure approach to prevent the North's provocative acts (Nikkei) (2) Dangers of advocating a capability to attack enemy bases, using DPRK's outrageous behavior as excuse: Evil cycle of countering military force with military force (Akahata) (3) LDP Lower House member Taku Yamamoto: "Quite a number of signatures collected" for campaign to advance presidential election (Sankei) (4) LDP's Nikai faction received 30 million yen when it was formed from political organization made up of ocean construction firms (Akahata) (5) Debate on fiscal reconstruction starts between ruling, opposition parties (Asahi) (6) Amended Antimonopoly Law with broader fines enacted in response to changes in industrial structure (Nikkei) (7) Japanese companies rely on Asian markets for record 36 PERCENT of fiscal 2008 operational profits (Nikkei) ARTICLES: (1) U.S. focusing on period following determination of Kim Jong Il's successor; Plans to maintain pressure approach to prevent the North's provocative acts NIKKEI (Page 6) (Abridged slightly) June 4, 2009 Masanori Yamaguchi, Seoul The United States has begun making moves to work in close cooperation with countries concerned, based on the view that North Korea's saber-rattling, such as its nuclear tests and missile launches, is designed to solidify the country's internal system that is linked to accelerated developments in determining the successor to General Secretary Kim Jong Il. The U.S. strategy is to focus its attention on the North after it has obtained prospects for its post-Kim Jong Il system without rushing to resume dialogue. At the same time, the United States intends to apply pressure by using such means as UN Security Council discussions on possible sanctions to prevent the North from taking reckless actions. Long-term strategy "No matter what action North Korea takes, we will look for effective means to have that country abandon its nuclear programs in close cooperation with countries concerned." U.S. Deputy Secretary of State James Steinberg, now on an Asian tour, held talks in Seoul on June 3 with Foreign Affairs and Trade Minister Yu Myung Hwan and other South Korean leaders. While playing up the United States' plan to work closely with Japan, China, and South Korea, Steinberg explained, "In talks this time around, we are focused on a long-term strategy." TOKYO 00001252 002 OF 011 North Korea's series of reckless actions, such as the missile launches and nuclear tests, had been regarded as intended to push Washington to engage in direct dialogue with Pyongyang, but the situation has taken a new turn recently. Rekindled rumors of the deterioration of Kim Jong Il's health condition and reports on the North Korean leadership rushing to build a post-Kim Jong Il system have resulted in a widespread view that the recent acts reflect the North's own circumstances. Pyongyang's intention is to flaunt its nuclear and missile technologies to avoid a decline in Kim Jong Il's grip on power and to tighten the reins on the inner circle. Making hasty compromises not an option A senior U.S. official said on June 2, "Once a system for the succession (of General Secretary Kim) is established, North Korea will return to the negotiating table," indicating that the United States has no intention of making hasty compromises just to engage in dialogue with the North. The judgment is that the North will return to the dialogue once it has concluded that it would be able to control the turmoil with an eye on the succession structure. Conveying to its Asian partners the U.S. administration's stance of not seeking an early resumption of dialogue is the objective of Steinberg's Asian tour, according to a source connected with the Six-Party Talks. At the same time, the United States is urging the UN Security Council to adopt a strong resolution, including cargo inspections and financial sanctions. Washington is set to continue applying pressure on any move running counter to the denuclearization goal. Steinberg has in fact confirmed a policy course with Japan and other countries to increase pressure on the North. China shares U.S. view China shares the U.S. view that North Korea's hard-line stance originates from its own circumstances rather than from its diplomatic strategy. China, which has close ties with North Korea, is set to take harsh measures, as seen in its intention to effectively call off a program of reciprocal visits by their high-level officials this year as part of events to mark the 60th anniversary of diplomatic ties. Beijing, however, is cautious about the UNSC adopting additional sanctions for fear that they might result in turmoil and more provocative acts. Striking a balance is essential when applying pressure. The United States understands China's standpoint. In their telephone conversation on June 3, President Barack Obama and his Chinese counterpart, Hu Jintao, are believed to have confirmed their policy direction and future plans for cooperation. U.S. fine-tuned its North Korea policy Hiroshi Maruya During a Japan-U.S.-ROK defense ministerial held earlier in Singapore, U.S. Secretary of Defense Robert Gates underlined the need to employ both pressure and dialogue. His speech was viewed as reflecting the Obama administration's basic stance toward North Korea. "The secretary's speech was carefully worked out by the White House, the Pentagon, and the State Department," a senior U.S. official noted. TOKYO 00001252 003 OF 011 The U.S. government, which thinks Pyongyang might launch more missiles to raise tensions to solidify its internal system, believes talks are the only option available for the North. The United States, which puts top priority on nuclear nonproliferation, firmly believes that the Six-Party Talks are the best framework. The U.S. also believes there will be a chance to make progress with the North Korean nuclear issue after a cooling-off period. (2) Dangers of advocating a capability to attack enemy bases, using DPRK's outrageous behavior as excuse: Evil cycle of countering military force with military force AKAHATA (Page 3) (Full) June 4, 2009 Takeshi Takeshita Using North Korea's repeated nuclear tests and missile launches as an excuse, the National Defense Division of the Liberal Democratic Party (LDP) drew up a final draft of its recommendation on "possessing the capability to attack enemy bases" on June 3. Meanwhile, there have also been statements from the Democratic Party of Japan (DPJ) regarding the possession of such a capability as a matter of course. Following the firing of a rocket in April and its nuclear test in May, North Korea continues with its abnormal behavior of preparing to even fire mid-range ballistic missiles. The international community has criticized North Korea's actions harshly, and the UN Security Council is discussing a sanctions resolution. At the same time, the United States has sent a delegation consisting of its deputy secretary of state and other officials to Japan, China, the ROK, and Russia to roll out its diplomatic efforts. It is important that the international community makes a unified response. A different government position In response, the moves of the LDP and the DPJ have become highly noticeable. Former Prime Minister SHINZO ABE has stated repeatedly: "There is a discussion of whether we should possess the capability to attack enemy bases. I think of course, we should" (speech in Tokyo on May 15). DPJ member of the House of Councillors Keiichiro Asao (defense minister in the "Next Cabinet") has also said: "If North Korea comes to possess nuclear weapons or Nodong (mid-range ballistic missiles),the argument will come out for Japan to also possess the capability to attack enemy bases'" (May 27 issue of Asahi Shimbun). In its proposal on June 3, the LDP clearly calls for the "possession of the capability to attack the operational base (enemy bases) under the Japan-US cooperative arrangements." It is poised to demand the inclusion of this in the new National Defense Program Guidelines (NDPG) that the government will adopt in late 2009. "Attack on enemy bases" refers to attacking with cruise missiles and such other weapons the bases of another country that is about to attack Japan with ballistic missiles and other weapons. The government's position so far has been that such an attack is TOKYO 00001252 004 OF 011 "legally possible" but the actual possession of the capability to attack enemy bases "runs counter to the spirit of the Constitution." U.S. Forces as the "spear," SDF as the "shield" At the same time, Japanese administrations over the years have promoted Japan-U.S. military integration and the reinforcement of U.S. military bases on the pretext that the U.S. Forces serve as the "spear" (offensive capability) and the Self-Defense Forces (SDF) serve as the "shield" (defensive capability) under the Japan-U.S. security arrangements. In this context, (then) Defense Agency Director General Shigeru Ishiba (incumbent minister of agriculture, forestry and fisheries) stated for the first time at the House of Representatives Committee on Security on March 27, 2003 that "(the possession of enemy base attack capability) should be discussed." This created a great stir. At that time, former DPJ president Seiji Maehara questioned him repeatedly about: "Will the possession of the capability to attack (enemy bases) not undermine the relationship of trust with the United States?" and "Tell us if this should be discussed in the future." Reservations even in the government While the call for "attacking enemy bases" keeps surfacing every time North Korea conducts a nuclear test or fires a missile, actually, there are also strong reservations in the government. At his news conference on April 10, Defense Minister Yasukazu Hamada commented on the "capability to attack enemy bases": "I am very doubtful about writing this into the NDPG or the Mid-Term Defense Buildup Program." A senior government official also said: "Attacking (North Korea's) nuclear or missile experiment facilities does not make any sense. This will only aggravate tension not only with North Korea but also with China and South Korea, giving them an excuse to build up arms." Professor Satoshi Morimoto of Takushoku University also pointed out during a NHK TV program on May 31: "If you give no thought to the scenario after (attacking the enemy bases) and merely talk about destroying the enemy's facilities, what will happen?" He expressed doubts about such a line of thinking. Moreover, a senior government official has said: "In the first place, there is no way the U.S. will allow it." For those who regard the Japan-U.S. alliance as sacred, this will mean a drastic review of the division of labor between Japan and the U.S. as "spear and shield," and they fear that this may create rifts in the alliance under certain conditions. For this reason, the LDP proposal also includes a passage on "the need to build an even stronger Japan-U.S. cooperation system in conjunction with the U.S. Forces' intelligence and offensive capabilities." Strictly banned under UN Charter In any case, at a time when the international community needs to TOKYO 00001252 005 OF 011 cooperate in responding to the North Korea issue, being taken in by North Korea's provocation and prioritizing a military response is the worst possible course of action, since this may start a dangerous evil cycle of "countering military force with military force." Above all, "This is an attempt to embark on using North Korea's nuclear test to advocate a preemptive attack, which is strictly prohibited by the UN Charter and is, needless to say, a violation of the Constitution" (Japanese Communist Party Chairman Kazuo Shii). (3) LDP Lower House member Taku Yamamoto: "Quite a number of signatures collected" for campaign to advance presidential election SANKEI ONLINE (Full) 13:19, June 4, 2009 House of Representatives member Taku Yamamoto, who has initiated a signature campaign in the Liberal Democratic Party (LDP) to demand that the party's presidential election - currently scheduled for September -- be held before the next Lower House election, told reporters at a hotel in Tokyo at midday on June 4 that, "Quite a number of signatures have been collected." However, he would not reveal how many people are supporting his campaign, saying: "If something like this is reported, this will cause problems for the cabinet." The group "association for advancing the presidential election" led by Yamamoto sent a fax on June 2 to all LDP Diet members, including Prime Minister Taro Aso, to ask for their signature in support of the proposal. Since Yamamoto belongs to the Machimura faction, which supports the Aso administration, senior faction officials were furious and have moved to apply pressure on faction members not to sign the document. A senior faction official strongly suspects that "former secretary general Hidenao Nakagawa and others are behind Yamamoto," but Nakagawa denies the allegation. LDP Secretary General Hiroyuki Hosoda has stated at a meeting with senior ruling party officials on the morning of June 3 that "he (Yamamoto) seems to be acting alone," indicating that he thinks the signature campaign will not go very far. (4) LDP's Nikai faction received 30 million yen when it was formed from political organization made up of ocean construction firms AKAHATA (Page 1) (Full) June 4, 2009 Akahata learned on June 3 that Atarashii Nami (New Wave),a fund management organization headed by Economy, Trade, and Industry Minister Toshihiro Nikai, had received 30 million yen in donations from a political organization, which was a dummy entity set up by those who were related to ocean construction companies. This occurred when Nikai's fund-raising organization was established in ¶2003. Sources related to the dummy entity have admitted that the Nikai faction demanded donations. Suspicion has now surfaced that the money from the dummy political organization was used for the formation of the Nikai faction. The dummy entity called "Koeikai" changed the name to "Sansoukai" in ¶2006. Sansoukai has been headed by executives of Toa Corporation (Chiyoda Ward, Tokyo) and Penta-Ocean Construction (Bunkyo Ward, Tokyo) and by advisers to the two construction companies. TOKYO 00001252 006 OF 011 According to Nikai's fund management organization's political funds report for fiscal 2003, the New Wave received 30 million yen on Aug. 29 from Koeikai. The address of Koeikai at that time was its treasurer's home address in Chiba City. Koeikai was headed by a Penta-Ocean Construction executive. Nikai rejoined the ruling Liberal Democratic Party (LDP) in 2003 from the now defunct New Conservative Party (NCP). Nikai changed the NCP's fund management organization's name from the NCP Association to the New Wave in November 2003 and he became its chairman. This means that he started operations of the New Wave as an LDP faction after receiving the money from Koeikai. A person connected with Sansoukai admitted that the Nikai side had requested the donations. The person said: "We contributed the money because we were asked. It is hardly possible that we told them to take the money because we had a lot of money." The person said: "The (30 million yen) was actually contributed by several ocean construction companies and we made the donation with the hope of the money leading to harbor constructions. Donations from one company cannot be competed with those from a major general construction firm." The Political Funds Control Law allows only the political parties' headquarters and their regional chapters to receive corporate donations. The law prohibits such political organizations as the New Wave from taking corporate donations. However, Sansoukai has made a large amount of contributions to the fund management organizations of LDP lawmakers with close ties to land, infrastructure and transport affairs, under the pretext of a real political organization. There is a possibility that if Nikai's fund management organization received the money with the knowledge that it came from ocean construction firms, it means that the Nikai side violated the Political Funds Control Law. The New Wave's told Akahata: "We do not answer to questions by the political party's organ newspaper." (5) Debate on fiscal reconstruction starts between ruling, opposition parties ASAHI (Page 2) (Excerpts) June 4, 2009 A discussion on how to put the nation's public finances on a sound footing has started in the Diet. The Liberal Democratic Party (LDP) and the New Komeito are willing to reflect a consumption tax-hike scenario in their policy manifestos as "responsible parties." They set economic upturn as the precondition for the scenario. Meanwhile, the Democratic Party of Japan (DPJ) has already sealed off a discussion on tax increases. The main opposition party instead has insisted on the need for eliminating the waste of taxpayers' money. The two parties might stop short of presenting any specific roadmap on fiscal reconstruction in their policy manifestos for the next general election, although the voters will select in the election one of these parties as the next political party in power. LDP wants to demonstrate "responsibility" by presenting consumption tax-hike scenario, but unlikely to specify timing in 2009 TOKYO 00001252 007 OF 011 guidelines In a meeting yesterday of the Council on Economic and Fiscal Policy to work out the government's annual economic and fiscal policy guidelines for 2009, Prime Minister Taro Aso said: "Putting up a new goal (for fiscal reconstruction),the government needs to show its willingness to make fiscal reconstruction efforts." The government set forth the policy goal of achieving a primary balance surplus in fiscal 2011 in its annual economic and fiscal policy guidelines for 2006 under the Koizumi administration. In the meeting yesterday, the panel decided to shift this goal into a target of curbing the ratio of public debt in the 2009 guidelines. With this, the targeted year for achieving fiscal rehabilitation has become ambiguous. Reallocation of fiscal revenues is vital in achieving fiscal soundness. In the meeting yesterday, a private-sector member presented a report including expressions that indicated a hike of the consumption tax, such as: "the stable securing of fiscal resources in the social security sector." Aso also emphasized in the meeting: "Premised that we make utmost efforts to put the economy back on its feet, we will steadily implement drastic reform of the tax system, including a hike of the consumption tax." With an eye on the next general election, Aso wants to build the image that the LDP does not side step tax increases as a responsible political party and wants to underscore a difference from the DPJ's stance of sealing off a discussion on the consumption tax. The prime minister apparently is aiming at placing the LDP to an advantage with this approach. In the debate between Aso and DPJ President Hatoyama on May 27, Aso apparently focused his attention on the ability to hold the reins of government, as shown in this remark: "We are facing a once-in-a-century economic crisis. The most important task for the government in these days is to map out measures in accordance with actual circumstances." In line with Aso's view, LDP members are eager to underline that the DPJ has no vision, as Deputy Secretary General Nobutaka Ishihara said: "(The DPJ's stance) is to avoid replying to a question about where the financial resources to fund the nursing, medical and pension programs will come from." In a discussion that is to start on the 10th, the LDP intends to reflect the measures in the 2009 guidelines in its policy manifesto and promise to raise the consumption tax in the future. But the mid-term program adopted late last year to show a roadmap for drastic tax reform cited fiscal 2011 as the targeted year for raising the consumption tax, with economic recovery as the major precondition. Although many members of the New Komeito and the LDP, eyeing the next general election, were negative about tax hikes, they stopped opposing the plan, because consensus was formed in the ruling coalition on the view that "the consumption tax will be raised if business perks up," as said by former Chief Cabinet Secretary Nobutaka Machimura, as a result of giving priority to measures to recover the economy for the time being. State Minister for Economic and Fiscal Policy Kaoru Yosano has announced a plan to change the mid-term program in the process of drawing up the 2009 guidelines, but the dominant view in the ruling camp is that a specific timing for a consumption tax hike should not TOKYO 00001252 008 OF 011 be mentioned. If the ruling parties, while stressing the need for a consumption tax hike, give no specific roadmap for fiscal reconstruction, leaving the timing and an increased rate vague, the catchphrase "responsible parties" might fizzle out. DPJ defers discussion on tax hikes to election after next, instead puts forth need to eliminate waste, but without presenting total sum The DPJ, which defines the Aso administration's economic stimulus measures as "pork-barrel," has yet to prepare its own policy vision. In the first meeting yesterday of the party's committee to study a manifesto for the next Lower House election, Policy Research council Chairman Masayuki Naoshima said: "We are calling for an early Lower House dissolution for a general election. There is no much time left. We might have to work hard up until late at night every day, but we would like to produce a fine manifesto and grab political power." The manifesto includes a number of costly policy measures, such as programs to offer 26,000 yen as a monthly allowance for child and family support and subsidies to individual farmers. But the party is unlikely to discuss a consumption tax hike. That is because President Yukio Hatoyama has taken over former president Ichiro Ozawa's policy of sealing off tax-hike debate. Hatoyama said: "(If the LDP and the New Komeito continue to take the helm of the nation,) the consumption tax will be surely raised in two years." Secretary General Katsuya Okada, who promised to boost the consumption tax by 3 percent to secure financial sources for the pension program when he was assuming the presidency, also said: "We will not take the option of raising the consumption tax in the next four years." The drastic tax reform action program, compiled by the party's tax system research commission late last year, specified that the party will take up tax increases in general election campaigning. Given this, the party has decided to seek the voters' judgment for tax hikes in the general election after the next. How is the DPJ going to implement policies and restore fiscal soundness simultaneously without depending on tax hikes? In exchanging views with senior members of the Japan Business Federation on June 1, Hatoyama said: "We are having difficulty securing financial sources without relying on debt as much as possible." The main opposition party has called for eliminating the waste of taxpayers' money. As specific measures to that end, the party has started checking about 3,000 projects in the fiscal 2009 initial budget to judge which projects should be abolished and which should be entrusted to the private sector. In a meeting of the Fiscal and Financial Department yesterday, participants criticized expenses for housing for civil servants. The party has presented which projects are considered to be waste but has not given specific amounts. It seems difficult for the party to clarify how to secure funds for measures it has pledged to implement TOKYO 00001252 009 OF 011 if it takes over political power. The DPJ has also advocated the goal of a primary balance surplus by fiscal 2011, but Hatoyama recently indicated an intention to put the goal on hold, saying: "Under the current economic situation, it is considerably difficult to include the goal (in the manifesto)." The party has not promoted discussion on an alternative target, either. (6) Amended Antimonopoly Law with broader fines enacted in response to changes in industrial structure NIKKEI (Page 4) (Full) June 4, 2009 The amended Antimonopoly Law with a broader scope of fines was enacted on June 3. It will now be easier to apply the law widely to rampant price cutting competition in the retail industry. In light of the increasing weight of the service industry in the industrial structure, the antimonopoly authorities have made clear their intention to demand transparency in business practices not only in the major manufacturing and construction industries, but also in all businesses, regardless of size and line of business. Some people are concerned about the growing powers of the antimonopoly authorities. The amended law widens the scope for imposing fines, which have so far been virtually limited to cases of bid-rigging and cartels. Behind this are changes in the industrial structure, which have resulted in drastic changes in the types of illegal practices and the players involved. Unfair price cutting competition banking on the capacity of a business to endure unprofitability has recently been rampant due to the decline in personal consumption. The number of cases of price cutting aimed at the elimination of rivals - which could potentially lead to unfair price cutting - watched by the Fair Trade Commission (FTC) in FY08 rose rapidly to about six times that in FY05. Such cases became common in the sale of electric home appliances, alcoholic beverages, and gasoline. Local businesses demanded stiffer penalties in order to restrain such practices. The amended law imposes a fine on "unfair price cutting" equivalent to 3 PERCENT of the sales volume. The Zensekiren (National Federation of Oil Workers Unions) made up of gasoline retailers (chaired by Masao Seki) says: "This is expected to deter businesses from practicing unfair pricing." The new law imposes a fine equivalent to 1 PERCENT of the transaction volume between businesses for "abusing a position of advantage." In June last year, Yamada Denki (a major electric home appliance retail chain) was slapped with a cease-and-desist order for violating the Antimonopoly Law (provision on abusing position of advantage) for asking its suppliers to send employees to staff its stores. Major electric home appliance retail chains, which have often put pressure on their suppliers, are likely to be forced to review their practices. In the auto industry, parts makers dealing directly with car manufacturers preside over a hierarchy of sub-suppliers. In industries with a broad network of transactions, the major groups will have to take responsive measures for the group as a whole to prevent the bullying of subcontractors and other unfair practices. TOKYO 00001252 010 OF 011 During the process of legal amendment, a review of the "arbitration system" for companies to appeal the FTC's verdicts was also confirmed. With stricter penalties, there might be an increase in appeals by companies being penalized, but the arbitration system is run by the FTC. There has been a growing demand from businesses for "independent arbitration procedures" (Nippon Keidanren (Japan Business Federation)) How to deal with concerns about the growing powers of the FTC is also likely to become a point of contention in the future. (7) Japanese companies rely on Asian markets for record 36 PERCENT of fiscal 2008 operational profits NIKKEI (Top Play) June 4, 2009 Japanese companies are increasingly relying on Asia for their operating profits. Listed companies generated a record 36 PERCENT of their operating profits in Asia in the term that ended in March ¶2009. While their operating profits in Japan, the U.S. and Europe in the second half of fiscal 2008 (from October 2008 through March 2003) slipped into the red, those in Asia alone registered black ink figures. Demand in Asia was stable even amid the ongoing global recession. The profitability of operations in Asia has begun to influence growth of the corporations over the mid- to long-term, as well. Some companies are showing signs of intensively investing management resources in Asia. Asia will likely shore up Japanese companies in the second half of fiscal 2009, as well. Among listed companies that closed their business books in March (excluding the financial and three emerging markets),a Nikkei survey covered 432 companies that disclose group sales and operating profit figures for each region. Operating profits mean profits generated from companies' mainstay business. Such data are being watched with attention, because they can be used for comparison of profit-earning capacity according to business field or region. The companies reported 10 PERCENT -20 PERCENT declines in sales for all regions in the second half of fiscal 2008. Operating profits plunged 82 PERCENT to 2.31 trillion yen in Japan and to 135.2 billion yen in the Americas due to the financial crisis. They bled red ink in Europe with an operating loss of 199.7 billion yen. Meanwhile, operating profits in the Asia and Oceania region slipped just 28 PERCENT to 1.72 trillion yen. Due to improved efficiency in local production, the operating profit margin was 4.4 PERCENT for this region, compared with 1.1 PERCENT for the domestic market. The share of Japan in group operating profits dropped 48 PERCENT , down about 18 points, while that of Asia increased 24 points, narrowing the difference. Behind the increase in Asia's share is solid consumption. Suzuki Motor Corporation's operating profit in Asia outside Japan marked 35.3 billion yen, down 37 PERCENT , for the first time surpassing that in the domestic market -- 28.7 billion yen or a 66 PERCENT drop. Unicharm Corp's operating profit in Asia outside Japan increased 17 PERCENT on brisk sales of baby diapers and sanitary goods. TOKYO 00001252 011 OF 011 Economic stimulus measures appear to have contributed, too. Nippon Yusen K.K.'s operating profit in Asia increased 43 PERCENT to 13.9 billion yen due to increased transportation of iron ore from Australia to South Korea, reflecting the brisk Chinese market. In the second half of fiscal 2008, Japanese companies were in the red by 2.53 trillion yen in Japan, 62.9 billion yen in the Americas and 273.2 billion yen in Europe. Asia outside Japan was the only region in which they made profits, posting an operating profit of 470.4billion yen. Many companies take the view that Asia will remain strong. Komatsu Ltd. expects that global demand for its seven key construction machinery products, such as hydraulic shovels, will dip 26 PERCENT from the preceding term. China is expected to be the only market where demand will grow. China's share of the sales of construction machinery products by Komatsu will increase 15 PERCENT , up 5 points. The company plans to double the size of its plant in Changzhou, China at the beginning of 2010. Shiseido Co. plans to proactively increase personnel resources in China, projecting yuan-based sales in that market will continue to log double-digit gains. According to the global economic outlook issued by the International Monetary Fund (IMF),the global economy in real terms in 2009 will mark negative growth of 1.3 PERCENT , while emerging Asian nations, including China, will likely maintain 4.8 PERCENT growth. The potential to earn money in Asia will likely hold the key to Japanese companies regaining their operational profits. ZUMWALT