For my job I write a lot...

...but I realise I don't always keep copies of what I write. So I'm going to put some articles here for my own future reference. But who knows, maybe some of you will find some things of interest here.

American Airlines is the world's largest airline. It is also an airline that has had to fundamentally rethink its business model following a difficult merger with TWA in 2001 and the Sept. 11, 2001, terrorist attacks on the United States, which brought it to the brink of bankruptcy.

The key to American Airlines' recovery has been its Turnaround Plan, which it began in 2003, and an important focus of the plan has been the expansion of the airline's Pacific routes from its hub in Dallas into East Asia.

The managing director of AA's Pacific operations, Theo Panagiotoulias--36, but with 13 years experience in the Asia Pacific region--recently spoke to The Daily Yomiuri about AA's Turnaround Plan, the importance of East Asia to AA, and his approach to running AA in this part of the world.

American Airlines Flights 11 and 77, were hijacked for two of the 9/11 attacks on New York, Virginia and Pennsylvania, so the scars of the United States' worst terrorist attack run deep at AA. It is not surprising then that Panagiotoulias spoke of the importance of safety as being of paramount importance. "Our number one priority will always be safety and security," Panagiotoulias said. "There will always be threats out there, but we run a very safe and very secure airline before anything else, and that will continue to be our ongoing priority."

Panagiotoulias is adamant AA survived the lean years that came in the wake of 9/11 because it took tough choices other airlines were unwilling to take. "There were a lot of very difficult decisions to be made," Panagiotoulias said. "But we chose to make them collaboratively--with our employees--and to be very honest and open with them. We said, 'Here's what we need to do. Let's work together to come up with a long-term successful formula.'"

The decision to engage with workers--what became known as the Working Together initiative--saw the corporate culture of AA change across the board.

This culture of cooperation between management and staff is one Panagiotoulias actively promotes, in fact it is a key part of his style. "I'm of Greek background, I get quite passionate about things," he said. "So I say to my managers and my other employees 'Don't tell me what you think I want to hear, tell me what the facts are, so we can discuss them and debate them' because healthy debate is good."

"Our employees are the ones who know exactly what's going on. I listen to the feedback from them, and get their perspectives. Ultimately, if you can get everyone engaged on one common goal there's no stronger formula for being successful in business," Panagiotoulias added.

With its employees, AA drew up the plan, which comprises four major tenets--the first being lowering costs. "Lowering costs was critical," Panagiotoulias said. "Post-Sept. 11, we were in a different environment, and we had to lower costs to remain viable."

The second tenet involved gaining a better understanding of who the American Airline's customer is and what he or she wants. As Panagiotoulias said, "That goes from hard product to customer service, to interaction with your customer--making sure we clearly understand what our customers value." The third is ensuring an ongoing engagement with AA's employees, and the fourth, to build a financial foundation for the future.

"Sept. 11 had a very big impact on this industry financially," Panagiotoulias said. "It created a lot of debt, so there is a very high priority placed on ensuring we can create a foundation that allows us to stabilize and, as we move forward, to create an environment of growth and investment in our own airline."

The decision to put in place a plan that builds a foundation for the future saw AA emerge from the post 9/11 years in good shape--the airline has been back in the black since the quarter ending July, 2005--and able to face further contingencies, including the oil-price hike that has occurred in the past few years.

"The oil price is a major challenge for all carriers, and we're no exception to that," Panagiotoulias said. "In 2002, about 12 percent of our overall costs were fuel. We're now up to about 31 percent. So we've had to focus on minimizing our exposure there."

Once again, AA has turned to its staff working at the coal face for fuel-saving ideas. "We've been very successful in working with our employees to identify ways of minimizing the fuel-cost impact. Some examples of fuel-efficiency ideas that came from our employees: One was, that as you taxi out from the gate to the runway, instead of taxiing with two engines running, taxi out with one. Or, another idea, when we're parked at the gate, instead of having the engines driving the power onboard the aircraft we use the ground auxiliary systems, to provide the power for air-conditioning and lighting. Our frontline employees have contributed to over 100 million dollars in cost savings just in fuel."

Fuel-cost savings have not been enough to prevent the loss of some routes, however, including Nagoya to Chicago and Tokyo to San Jose, Calif. "When fuel hits a certain price, it makes it very difficult to make specific routes viable," Panagiotoulias said. "Fuel has been a major contributing factor to the cancellation of routes, but you've got to make these decisions to ensure the long-term prosperity and viability of the airline. If we see a change in fuel prices we'll reevaluate our routes."

Panagiotoulias pointed out that AA's strong relationship with Japan Airlines, with which AA is both a frequent flier and code-share partner, means customer choice has been maintained. "Right now, for example, AA offers flights from Chicago to Shanghai, but for customers based on the West Coast [of the United States] it can be more convenient to fly AA to Tokyo and then Tokyo to Beijing or Shanghai." And, in January, the option of swapping to a JAL flight will become far more convenient because AA will move into Narita's Terminal 2, right next to JAL.

As well as making it easier for passengers to swap to flights that go deeper into Asia, AA has been battling other U.S. airlines for a bigger slice of the Chinese market and is currently bidding for a new direct, once-a-day route to Beijing--a route every major U.S. airline sees as vital as the Beijing Olympics draws near and Beijing establishes itself as one of the world's major business capitals. "China is an emerging, fast-growing market and our customers expect us to have a presence there," Panagiotoulias said.

"We started Chicago to Shanghai flights this year, and we've been lobbying to fly [more routes] into China for over 10 years. Unfortunately U.S.-Chinese bilateral restrictions have restricted us there," he said

Convenience has also been identified as important to AA's new breed of flier. While business travelers still dominate the Japanese market, the baby boomer generation is starting to retire, which means more and more people are flying for pleasure. They book online more than ever before (AA recently finished a revamp of its Web site to make it easily navigable even for unseasoned travelers) and they are seeking out new destinations.

"The Japanese market is changing quite a bit," Panagiotoulias noted. "In the past three to five years we've seen some major changes. We're seeing a trend in terms of retired baby boomers who are willing to pay for business class. So there's a growing segment of leisure business in a market place that, historically, was entirely corporate driven."

While traditional favorites like New York still attract most travelers, Panagiotoulias has seen a sharp increase in demand for the sandy beaches of Cancun in Mexico and desert sands of Las Vegas.

Japanese business fliers are also branching out. "Latin America is growing popular as a corporate destination as more and more trade links emerge," Panagiotoulias noted. "There has also been growth of manufacturing plants in a lot of Latin American countries linked to Japanese corporations."

Of course, Panagiotoulias cannot spend all of his time looking after other travelers, so The Daily Yomiuri asked him what he does to relax. Tokyo's great restaurants are the Melbournian's great passion alongside a devotion to Australian Rules football. But his favorite way of getting away from it all? "I like traveling," he said. Which makes sense really.

(Oct. 30, 2006)

London Noir

Edited by Cathi Unsworth

Akashic Books, 288 pp, 14.95 dollars


The temptation to treat London as a Cockney Hollywood set was obviously a strong one for Cathi Unsworth, editor of the crime fiction anthology London Noir. This will appeal to many readers more than it did to me, but I was gratified that she also found room for some true-to-life storytelling starting at the halfway point of this book. If your tastes run to realism, start at Page 157 for some of the best modern short story writing to have come out of the Big Smoke in recent years.

Desmond Barry's "Backgammon" kicks off the first half of this book. (Let's call it the Lock, Stock and Two Smoking Barrels half.) It represents the type of story that lives up to every old chestnut about London. Yes, there are sad 50-year-old men drifting in and out of jail, running sex shops in Soho and frequenting clubs in Mayfair where they snort coke in the bathroom three times a day, but these men and these places no longer define London. The days of Reggie and Ronny Kray--legendary East End gangsters who loved their Mum and only did bad things to bad people--are gone.

Unsworth's own contribution to this collection also comes in the first half of the book. But as I read her description of her character Dougie, I heard myself putting on a London cabbie accent. Try reading "the Adidas bag he gripped in his hand carried at least 20 grand in cash" or "he was a thug, but a charming one" without putting on a ridiculous gangster voice.

Ken Bruen's "Loaded" is another sex, money, gangsters and (gothic) molls tale. "Under the floorboards is my stash: coke, fifteen large, and a Glock. The baseball bat I keep under my bed." I could hear myself talking with a husky voice again. Time to turn to Page 157.

The new London represented in the second half of the book is far more desperate and is all the better for it. This is the London populated by snotty-nosed 12-year-olds pushing drugs in Camden Town; it's West Africans selling bush meat in the Dalston market; it's nationalist skinheads campaigning for council seats in Dagenham. It allowed me to see parts of London I've never been able to get close to.

The standout story in this collection is Jerry Sykes' "Penguin Island." A tale as realistic as it is sad, about an old man forced to abandon his faith in human nature as he comes to terms with the reality of modern-day London--a city in which the bonds of friendship are easily broken, where there are no nice thugs and where Thomas Hobbes' "nasty, brutish and short" description applies to not only life on its cheap streets but also the peach-fuzz-faced, tracksuit-wearing teens who rule them.

Bleeding-heart liberalism gets in the way of some of the stories. Martyn Waites' story, "Love," is well told, but his depiction of skinheads is cartoonish. The central character, Jez, lives up to chattering class preconceptions of skinheads as good people who are just a little confused about who they really are. But in setting "Love" in Dagenham, Waites transports the reader to a part of the city many writers don't know exists. (The first half of this collection doesn't set foot outside of London's five inner boroughs, the equivalent of defining Tokyo as being bordered by the JR Yamanote line.)

Mark Pilkington's "She'll Ride a White Horse" and Joe McNally's "South" are also great pieces of fiction. Many crime writers turn to the police for tips on how to write novels, but Pilkington has written something so insightful I get the feeling the police might be knocking on his door sometime soon. McNally's meander through London's ghastly Elephant and Castle area perfectly expresses the confusion and concerns felt by anyone unfortunate enough to find themselves traveling through its rat-run tunnels and streets.

So, a book of two halves, literally. One bad, in my view, and one good. As a further criticism, at least 16 of the 17 contributors to this book are white. Thirty percent of Londoners aren't white. I would have thought at least five of them would have a story to tell, and maybe they would have made this a great book from cover to cover.

(Nov. 4, 2006)

Economist ed: Abe must mend ties with China
The Daily Yomiuri

John Micklethwait, editor in chief of The Economist magazine, has called on new Prime Minister Shinzo Abe to address Japan's strained relationship with China.

The current Japan-China relationship is often described as "diplomatically cool, economically hot." But Micklethwait believes that if Japan fails to make a concerted effort to mend ties with China, the two nations' economic ties could also be damaged in the long run.

"On the economic side, [China] has been opening up, and you see huge numbers of Japanese companies having a large presence there," he explained in a recent exclusive interview with The Daily Yomiuri. "The problem is, if you do that on one hand, and you stir up Japanaphobic political undercurrents on the other, I think at some time these things will clash."

British-born Micklethwait, 43, assumed his post in March, succeeding Bill Emmott, who headed the magazine for 13 years.

Back in the mid-1990s Micklethwait coauthored "The Witch Doctors," with his colleague Adrian Wooldridge. In the book, published in 1996, Micklethwait wrote, "Japan's overregulated economy discourages innovation and imposes high costs on businesses." But he said things have drastically changed in the past decade.

In his view, many of the favorable changes can be attributed to policies pursued by Junichiro Koizumi, who has just stepped down after 5-1/2 years as prime minister.

"The resurgence of Japanese companies, and also the data, the stock market, these are all generally telling a story that is a credit to Koizumi," Micklethwait said, praising the structural reforms carried out by the last administration.

While Koizumi's critics maintain that his policies are to blame for widening social inequality in Japan, Micklethwait shrugged off such concerns.

"We as a paper never opposed inequality," he said. "If the bottom people don't go up as much as the top, that is sad, but it is not as bad as the alternative, which is usually everybody staying down low."

Koizumi was merely "unleashing globalization, [and] blaming him too much, even in Japan, would be a mistake," Micklethwait said.

One of the few negatives of the Koizumi legacy that Micklethwait pointed to are the strained relationships with China and South Korea, due largely to Koizumi's repeated visits to Yasukuni Shrine in Tokyo, where Class-A war criminals are enshrined along with the nation's war dead.

Peter David, The Economist's foreign editor who was also present at the interview, echoed Micklethwait's view on the diplomatic situation. "If Mr. Abe were to make an early visit to China with a view to reconciliation, and stop visiting the shrine, then it is a very hopeful moment," he said.

Another troubling problem Abe inherited from his predecessor is the nation's mounting budget deficit, with combined long-term central and local government debt standing at 770 trillion yen.

Abe may therefore be forced to make the difficult decision to sacrifice a measure of popularity by raising the consumption tax rate some time during his term in office.

Though Abe hopes to achieve an increase in tax revenue simply by sustaining the current trend of economic growth, Micklethwait has doubts about the viability of this plan.

"In other countries, people who have tried to pull that off have found it very difficult...You usually can't do both," he said.

But as Micklethwait sees it, the odds are in favor of Abe being able to implement his own policies, while continuing the reforms that Koizumi--whom Micklethwait calls a "maverick"--started from scratch.

"A revolution is sometimes best pushed forward by someone who is seen to be wholly part of that system to begin with. Abe is closer to [the Liberal Democratic Party system] than Koizumi was," Micklethwait said.

While the new lineup of ministers chosen by Abe suggested he is "more appreciative of the factions [within the LDP]," Micklethwait said, "Abe could turn out to be someone, like [former Russian President Mikhail] Gorbachev, who comes from inside and changes things."

(Sep. 30, 2006)

Family mental health crises across cultures
The Daily Yomiuri
Families Coping With Mental Illness
By Yuko Kawanashi
Routledge, 230 pp, 44.95 dollars
We grow up believing that all good books should have a satisfying ending. But the life stories of the people Yuko Kawanashi interviewed for her well-written and compassionate study of how families cope with severely disabling mental illness are not like that.

Few of the caregivers Kawanashi talks to for Families Coping With Mental Illness know exactly how or when their loved one became ill but, over time, they all came to understand there was little chance the illness would go away.

Toru Yamaguchi, 72, who cares for his 42-year-old daughter Yuri, says in the book: "When I joined [a] family support group and learned from other parents they had been in the group for 10 or 15 years, and their children had been sick all this time, I wondered to myself 'Is my daughter going to be like this?' (pause) Well, as expected, it turned out that way."

Kawanashi's study is cross-cultural. She spoke to caregivers in Japan and the United States, and found some big variations between them, both in their experiences and the way they reacted to being asked about those experiences.

In the United States, patients are not routinely institutionalized. While many would say this is a good thing, Kawanashi points out flaws in the U.S. system. Deprived of adequate resources, many American caregivers struggle to find the time and money to provide adequate care.

In Japan, institutionalization or confinement in the family home is common. A sense of shame often prevents Japanese carers from turning to others for help--or speaking to a researcher about a mentally ill family member.

Yet the author--perhaps because of her overseas experience--has no difficulty in putting questions to her Japanese interviewees that seemed to make them recoil. To her credit, she elicited candid responses that made her prodding worthwhile.

The U.S. subjects, on the other hand, volunteered information willingly, but in a few cases the responses to the questions asked of them made me feel like a voyeur.

Kawanashi found that mental illness is often attributed to different factors depending on the country. She finds that in the United States, the use of recreational drugs among those who go on to develop mental illness is shown to be very high, while, in Japan, the onset of mental illness is often attributed to a stressful period in life, such as school exams.

Perhaps what is most interesting about the findings of the study, however, is not the differences, but the shared experiences of the two groups.

After going through a period of difficulty accepting a loved one's diagnosis, most caregivers in both countries gradually came to accept their situation. However, many faced a lack of understanding from colleagues and friends.

In one moving passage, Kawanashi retells the story of Yoko Tomita, a 43-year-old city office worker from Tokyo. She writes: "At work, Yoko became increasingly isolated. The pressure at home intensified, making it difficult for her to care for her [mentally ill] husband and keep up with her work...She asked for a different job with fewer deadlines...Her stress brought her close to the edge. Losing control, she shouted in the busy office, 'I cannot quit working! Why can't you give me a job I can do?'"

Such commentaries bring home just how tough it is to be a caregiver.

If there are criticisms of this book, it is that Kawanashi's sample groups were drawn only from Southern California and Tokyo. I couldn't help wondering whether the similarities Kawanashi finds between her subjects are not down to the fact she based her research on the lives of urbanites who, for all the cultural differences between their respective nations, live similar lives.

A second criticism might be that the author never spoke to the mentally ill themselves. In her attempt to avoid theorizing madness away--a la Michel Foucault, Antonin Artaud or her particular bugbear Thomas Szasz (whom she quotes as declaring "mental illness does not exist")--Kawanashi appears to discredit, by their absence, the opinions of the mentally ill, despite many of her subjects having moments of lucidity.

But overall, these criticisms are small and the importance of this study is great. Kawanashi has written a book that will give carers much-needed answers and show them how to cope.

It is to be hoped that this book will also be read by social policymakers who might know the facts and figures surrounding mental illness, but are yet to enter the lives of people who would like to be shown a little more understanding.

(Apr. 16, 2006)

Carey's 'Theft' paints art world in harsh light
Daily Yomiuri

Theft, the latest novel by Peter Carey, is a riotous, gritty and acerbically
witty account of fraud in the art world and--coming as it does in the wake
of the writer's marital breakdown--the perils of falling in love.

Like most celebrated Australians, Carey doesn't live Down Under. Based in
New York, he teaches creative writing at New York University and is also a
Fellow of the American Academy of Arts and Sciences. He has won the Booker
Prize twice already and, come October, Theft may well win him a third. It's
that good.

Carey is also, of course, a teller of beautiful lies, an alchemist who has
combined fact and fiction to produce glittering falsehoods since the early
1970s. His latest fib is a fast-paced tale set in the 1980s that begins in
the Australian town of Bellingen (then bucolic, but since invaded by the
chattering classes, partly due to the success of Carey's 1988 novel Oscar
and Lucinda, which was also set there) before taking the reader to urban
Sydney and on to bubble-economy Tokyo with its "pink and green neon
advertising bars and go-go and Bang-kok massage." The presence of the Oedo
subway line is an oversight by Carey, because it was not yet running at the
time the book is set, but it does provide a contrast to the setting of the
book's climax in Ed Koch's New York, crisscrossed by "piss-stink" trains.

Equal parts love story and hardboiled detective thriller, Carey's central
characters, artist Michael Boone, aka Butcher Bones, and his mentally
challenged, 100-kilogram, farting brother Slow Bones, take turns narrating
the tale of how they were aided, or perhaps taken in, by Manolo Blahnik-shod
femme fatale Marlene, whom Butcher finds bogged down on his farm in her
rental car on a stormy, flooding night.

Marlene, it transpires, is searching for a painting by the famous artist
Jacques Leibovitz, a work she has traced to the house of Butcher's neighbor
Dozy Boylan. When the painting goes missing soon after Marlene arrives,
Butcher--now befriended by the chicly shod sheila--soon finds he has been
branded a suspect in the case.

Carey has been praised for inventing a new language in many of his books,
but at times Butcher and Slow's narration will only sound truly convincing
to readers who are unaware what an Australian really sounds like. Carey
occasionally resorts to fleshing out the vernacular of his characters with
the kind of idioms reserved for Australian Tourist Commission
advertisements. I half expected Slow to say he'd "throw another shrimp on
the barbie" or ask, "Where the bloody hell are you?" But Carey also captures
the real patter of Australia, and Slow's 1980s slang made me laugh out loud
on occasions--even as I rode the subway Oedo Line.

The only other two-time Booker winner, J.M. Coetzee, now lives in Adelaide,
so perhaps an even more authentic sound of Australia will emerge from the
pages of the transplanted South African. But that's being too harsh on
Carey. He has given voice to two very difficult characters, Butcher--venal,
rash and self-aggrandizing--and Slow--wandering, rude and dim, yet at times
sagacious--and made them speak to the reader in a believable, entertaining
and original way.

Carey has a difficult relationship with Australia, but in Theft he defends
his homeland against those who argue the only culture you will find there is
in its yogurt. While all the best lines are given to Slow (when he's not too
busy farting) it is Butcher, as erudite as he is pugnacious, whom Carey
presents as the embodiment of urbanity at the arse-end of the world. And it
is through Butcher that Carey tackles the question that defines the book:
How do we define worth? The writer of fabulous falsehoods seems to accept
that in the art world, just as in the real world, value, no matter how
arbitrarily fixed, is needed to make sense of the world and our lives. As
Butcher says in the book's closing line, "How do you know how much to pay if
you don't know what it's worth?"

(Jun. 24, 2006)

Kenedix boss unites U.S. know-how, Japanese spirit

The Daily Yomiuri

Kenedix Inc., one of Japan's leading property funds, marked its 10th year in this country in 2005. Originally a subsidiary of U.S. real estate powerhouse Kennedy-Wilson Inc., Kenedix, under President Ryosuke Homma, has struck out on its own and achieved remarkable results.

The Daily Yomiuri spoke recently to Homma, 60, about his innovative approaches to the real estate market and his background.

Operating primarily in the currently buoyant real estate investment trust (REIT) market, Kenedix posted strong results for fiscal 2005 and the first quarter of fiscal 2006. In the first quarter of this fiscal year, net profit was up 250 percent, year on year, to 2.72 billion yen, a result due to the recovery in Japan's economy--emerging from 15 years of recession or flat growth--overseas interest and, taking into consideration the fact that around half of Japan's REITs are not performing strongly, Homma's astute management skills.

Following the Bank of Japan's decision to end its ultra-easy monetary policy, Homma is concerned the business environment will soon change. "Sooner or later, the Bank of Japan will raise interest rates. Maybe this summer, the end of this year or the beginning of next year. But I'm wondering if they'll raise interest rates too much," Homma said. "We think the increase will not be too big, but we're still preparing for a large interest rate rise."

"We're seeking a capitalization rate of around 5 percent because, even if interest rates go up, after debt servicing we can still secure a good positive cash flow. Some competitors may decide to buy properties at higher prices, which [results in] a lower yield. That type of investment may be affected," he said. "Also, Japanese banks may evaluate the value of properties according to their own standards, which has nothing to do with the capitalization rate aggressive buyers may offer to buy at. This will result in a difference between loan-to-value and loan-to-purchase prices--so there could be financing problems [for aggressive buyers] coming up. That creates chances for us."

Homma is cautious about the Tokyo real estate market, describing it as too competitive. Speaking about Tokyo's shopping districts, such as Omotesando, he said: "We like to buy good properties in those areas, but the chances are slim. Prices are too high, returns too low. We like to stay with a 5 percent capitalization rate, so it's nearly impossible to buy in those areas."

So, while scouting Tokyo for increasingly rare worthwhile investments, Kenedix has also started to diversify and look for opportunities further afield. This has resulted in different property types being acquired, investment in properties in cities across Japan, important international tie-ups and, most importantly, a move away from profit from fee income toward profits from development transactions.

To ensure higher margins, Homma has moved into new property sectors. "Diversification of product types is the way to go," Homma said. "We're teaming up with Mitsui & Co. to create a REIT focusing on industrial properties, such as warehouses."

Homma's forward-looking approach is matched by his attention to internal restructuring of Kenedix's profit bases to cope with the competitive situation that has arisen in Japan.

"In addition to the strategies of looking for investment opportunities in other areas of Japan and overseas, changing our product types, we're chasing development transactions. We've been depending on fee income for the last decade, and we're still relying on fee income, but in fiscal 2006, '07 and '08 we'll probably achieve better profit from development transactions," Homma said. "We've changed the nature of our business slightly--we've gone from 50 percent income from fees, 30 percent from development and capital gain and 20 percent from rental income to a figure of 42 percent fees, 43 percent development and capital gain and 15 percent rental income."

===

Time in Baghdad


Homma's resume is as maverick as his business decisions.

At 33, working for Mitsubishi Corp., he was posted to Baghdad, to help manage a project for the Iraqi Information Ministry. There, he oversaw the building of a radio and television station in Baghdad--"A radio and TV station for [former Iraqi President] Saddam Hussein," Homma said, adding, "It's since been bombed."

Having spent many years in Baghdad, Homma had no misapprehension about the likely outcome of the Iraq war. "I was thinking that after Saddam Hussein was removed there would be chaos among many interested parties," he said. "There is religious division there, and the culture is so diversified."

Following his stint in Baghdad, Homma headed to Los Angeles, where he headed Mitsubishi's foreign countries department under its engineering division before, in 1992, becoming director of the firm, followed by an appointment as the company head of MC Realty Inc.--Mitsubishi's real estate investment trust in the United States.

===

Quitting at the top


But, in 1996, at the age of 50, Homma made the unorthodox decision to leave Mitsubishi, while at the top, to head Kennedy-Wilson.

"In those days, when I was 50, only a few people decided to change jobs," Homma said. When asked why he moved, Homma's answer was remarkably candid: "It was a challenge. I'd been working for Mitsubishi for quite a long time, 30 years, and I'd got bored."

Homma said he learned many lessons in the United States he has applied since returning to Japan to head Kennedy-Wilson, now Kenedix. "When I started Kennedy Wilson Japan, as it used to be known 10 years ago, we imitated the way they do business in the United States, and we imported a lot of their financial techniques," Homma said.

However, Homma remains unconvinced that Japanese businesses should copy the U.S. model. "We can import techniques, but we should be Japanese. The Japanese spirit should remain. We need 'wakon yosai'--foreign technique and Japanese spirit," Homma said.

The blend of imported techniques and Japanese spirit has allowed Kenedix to become a global player on the REIT stage.

Homma's Japanese spirit comes through as he describes the type of shopping centers he is buying up. "Big developers are going to parts of Japan looking for places to build supermarkets or shopping malls. But this means the center of small cities would be a city of shutters--all closed. What we're trying to do is buy smaller, neighborhood shopping centers," Homma said. "We're aiming to accumulate the size of this type of asset to the extent of 40 billion yen or 50 billion yen in size. We'd like to make it a special REIT, either private or public."

Due to competition in the Tokyo market, Kenedix has found itself acting as a conduit for investors looking to escape Tokyo for parts of the country or the world that offer better investment opportunities. And Homma has already made important moves into Britain, the United States and, perhaps most importantly, China. "We recently established Kenedix Hong Kong, to find investment opportunities in China," Homma said. "I believe there'll be a Chinese REIT coming up in one or two years, so in order to prepare for such a time we need to invest in Chinese properties. Our investments there will be a pre-REIT investment fund."

"Sooner or later Japanese investors will be investing abroad," Homma said. "That's why we'd like to accumulate a track record in foreign investment--to prepare for this time."

Homma believes Kenedix is well placed to adapt to changes in the Tokyo market, and it seems wakon yosai will enable the company to meet the challenges in the global market.

(Jun. 19, 2006)