Asia is now the biggest market for Japan’s nonfinancial listed firms

December 15, 2009
By Ken Worsley

According to Tuesday morning’s Nikkei, Japan’s nonfinancial listed firms earned greater sales from Asian markets than from the US for the first time ever in the six months to September 30.

Let’s take a look at what they mean by “earnings growth.”

It’s helpful to look into the factors behind the Nikkei’s numbers. The Nikkei appears to be cheerleading for future sales to Asia by stating, “With Japan, the U.S. and Europe mired in a prolonged economic downturn, companies are likely to grow even more reliant on Asian markets for earnings growth.”

However, the Nikkei’s statistics include Oceania, and show that sales to the region actually declined 2% to 16.2 trillion yen compared to the previous six month period (ending March 31). On the other hand, sales to the US slid a whopping 7% to 15.8 trillion yen.

The Nikkei goes on to state that “[e]lectric machinery firms saw their Asian sales surge by 7% from the six-month period ended March 31 to 7.4 trillion yen…”

But wait! Why are they suddenly citing figures from the period ending March 31? The article goes on to tell us that the “Asian market also contributed to big profit improvements for Japanese firms in the first half…”

Again, what does this have to do with the headline?

The fact is that sales to the end of September declined in both regions. Sales to the US declined about 7%, but they still account for about 11% of operating profits for Japanese exporters. Sales in Europe fell about 10% in the six month period ending in September 30, while domestic sales fell by about the same percentage.

The truth here is that sales in Asia made a negative gain, i.e. they lost less. The big question is whether it makes sense to shift attention to a region that appears to be gaining by simply being less of a loss. If that’s a business plan, I’d hate to see the human resources projections.

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