Consumer Demand Declined With the Collapse of Japan's Bubble Economy

Rising Confidence Provides Further Evidence of an Economic Recovery in Japan

NEW YORK -- (BUSINESS WIRE) -- June 7, 2004

The Japan External Trade Organization New York (JETRO NY) released a newsletter today highlighting regional development in Japan. It can be viewed at:

http://www.jetro.go.jp/usa/newyork/focusnewsletter/focus34.html

Restructuring & Reform Helping to Improve Japanese Corporate Performance

Restructuring and reform initiatives have been helping to restore
efficiency and to improve the performance of Japanese firms. During the
first quarter of 2004, Japan's gross domestic product grew at an impressive
annual pace of 5.6 percent.

Corporate profitability is also on the rise. A rising stock market, export
growth and demand for digital appliances, have all helped net profits of
listed companies to rise to a record ¥3.26 trillion ($29.02 billion) for
the year ended March 31st. This is up 68% from fiscal 2002.

Regional economies are also showing signs of strength. Economic activity is
strengthening in the Tokai region, and industrial production indexes in
Aichi, Gifu and Mie prefectures rose to new highs for five straight months
through January 2004.
The Positive Outlook that is Emerging Does Not Eliminate the Need for
Caution

While the future looks far more promising for Japan than it has in over a
decade, the need to maintain a balanced perspective should not be
minimized. Important considerations include:

- Lack of Income Growth: The trend toward greater consumer consumption
is a positive sign, however, as in the U.S., this rise in spending is
being largely generated through savings rather than a rise in income.

- Rising Materials and Commodities Prices: While deflation remains a
concern, Japan's progress and a worldwide rise in commodities and raw
materials demand have now introduced price increases on the industrial
level.

- Export Dependency: Japan continues to be highly reliant on its export
sector. It therefore remains highly correlated to events in foreign
business and financial markets.

- Maintaining Restructuring and Reform: In a democratic nation, dramatic
change is generally only possible during times of duress when it is clear a
break with the past is both important and necessary. It can only be hoped
Japan will be able to persevere in its efforts to implement the
comprehensive reforms and corporate actions necessary to build upon the
changes that have been made.

Foreign Investors Have Begun to Realize Large Profits on Their Japanese
Holdings

During the late 1990s most internationally-focused investors were
enthralled by the U.S. dotcom and seeming productivity miracle. Few were
prepared to devote their energies and financial resources on an economy
that appeared to be in permanent decline. A few brave foreigners, however,
foresaw the opportunities and moved to realize the potential through new
allocations of capital and the introduction of more efficient management
styles and methods.

One recent success is the example of Ripplewood Holdings, which is
realizing a fourfold return on an investment in Japan Telecom in less than
a year. That's on top of an even bigger achievement last February, when
Ripplewood's four-year investment in the failed Long-Term Credit Bank of
Japan culminated in one of the most anticipated initial public offerings in
Japan in recent years.

While there has also been concern that demand for Japanese equities has
been largely driven by foreigners, one indicator of rising interest from
retail Japanese investors can be seen in new data from six major Japanese
securities firms that specialize in online trading. As of the end of the
first quarter of 2004, they collectively held 1.15 million brokerage
accounts -- an increase of 28% year on year. Additionally, during the
first week of April Japanese retail investors traded the largest portion of
stocks on the Tokyo exchange, at 32 percent, overtaking foreign investors,
who made 22 percent of the trades. The following week, their share grew to
37 percent, while foreigners traded only 19 percent of stocks.

For additional information, please contact Satoshi Miyamoto, Executive
Director of JETRO NY at Tel: 212-997-0416, Fax: 212-997-0464, E-mail:

Satoshi_Miyamoto@jetro.go.jp

Contact: Satoshi Miyamoto
Executive Director, JETRO NY
Tel: 212-997-0416
Fax: 212-997-0464
E-mail: Satoshi_Miyamoto@jetro.go.jp.