However, as is often the case, there is more to the Japanese situation than first meets the eye. For example, some people question whether the fall in prices can be called deflationary in the usual sense, as much of it may be a result of deregulation and increased efficiency. Perhaps the most interesting development is the change in the attitude of some companies towards investors. Two years ago it was virtually impossible for foreign investment managers to meet with the management of Japanese companies. Now, however, some companies are welcoming analysts' interest and throwing open their doors, a clear sign that these companies are beginning to understand the concept of shareholder value.
Top management are stakeholder, rather than shareholder, driven and huge cross-holdings are common.
These companies also tend to have extensive divisions and subsidiaries. In contrast, New Japan companies are trying to conform to Western models, by restructuring, disposing of unprofitable businesses, retrenching staff, cutting debt - in short, they are focussing on getting return on equity and enhancing shareholder value. New Japan is emerging slowly but, at present, these companies are still heavily in the minority. As finding the right New Japan companies will be the key to success, good stock-picking skills are essential in order to get the best value out of the Japanese market in the near future. Those who buy the broad Japanese market may be in for another disappointing year.