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Japanese Business Confidence Improves - 2002-12-13


The Bank of Japan's quarterly Tankan survey, released Friday, shows a slight improvement in Japanese business sentiment, but the overall picture remains gloomy as exports falter and production slows.

The survey's "business diffusion" index for large manufacturers, its most closely watched measure, stands this month at minus nine. That is the third straight rise and a slight improvement over the minus 14 of the previous survey in September.

The index measures the percentage of companies saying business conditions are good, minus the percentage saying they are bad. December's negative reading means pessimists continue to outnumber optimists,a situation that has existed since March 2001.

Many economists say the economic outlook remains poor due to the fragile stock market and weak overseas demand.

Japanese Prime Minister Junichiro Koizumi is attempting to boost the flagging economy. He has approved additional government spending of $36 billion for this fiscal year. The government will compile its supplementary budget later this month, with the goals of boosting public-works spending, and lowering unemployment.

Wal-Mart of the United States, the world's biggest retailer, is the first foreign company to buy a controlling share in a major Japanese retailer.

The U.S. giant is raising its stake in Japanese supermarket chain Seiyu from six percent to 34 percent. It will pay more than $420 million to become Seiyu's largest shareholder. Under Japanese rules, Wal-Mart does not need to own a majority of shares to hold control.

John Menzer, president and chief executive of Wal-Mart International, says "Japan is a very important market for Wal-Mart international in our growth plan. Seiyu is a good fit for our business model. It is a sound foundation to build on, there are many synergies within the two companies."

The move comes as other foreign retailers struggle to succeed in Japan's tough retail climate. Supermarket group Carrefour of France opened in Japan two years ago and has had problems, while drug store chain Boots of Britain shut all of its Japan stores last year.