 Okay, we're back. We're live. I'm Jake Fidel. This is Think Tech on a given Monday. It's the one o'clock block We're looking from the east and we're looking to Steve Zercher and he is in Kobe, Japan at Kansai Gaidai University Teaching entrepreneurship and business and doing a lot of administration these days because it has to be done And we're gonna talk about that we're gonna talk about a life in Kobe life in Japan and life with the virus Right now with Steve Zercher. Hi Steve. Welcome back to the show Thank you so much. It's good to join you as usual Jay. I appreciate it Be nice of who was under better circumstances, but we're doing the best we can Well, I think it's important that we talk to you We've been talking to people really hither and yon and we want to you know, may I say take take your temperature in Kobe And see what's happening So far so good Okay, we want to Education in Kansai Gaidai and Gaidai and Let me first kind of just catch up everybody on the situation in Japan Which is not good unfortunately So I checked this morning outside of the Diamond Princess, which is its own separate category If you look at the list of infections Japan's now gone over 500 we're at 530 cases and every day it's increasing So despite the efforts of the Prime Minister and the Ministry of Health To try and reduce the number of infections The increase is still continuing here and there's a sense that it's going to go How many people have you lost nine people have died? So mostly older people So the death rate is not as high as like the United States the US I noticed this morning the US actually has more Infections now than Japan that was not the case last week, but US is moving up rapidly But the mortality rate infections are directly proportionate the amount of testing going on So in the US we probably not testing enough because we don't have the test kits So you have that understated number of cases and the deaths Well, you know that they are what they are so that our rate may be higher as against the known cases The known cases may be less than the real cases. So what about you? Are you testing is Japan testing? No, no, we're in the same boat as the United States There's a sense that there are many many more people that are infected because the testing Policy the number of kits that's been distributed is quite low This is a major criticism of the Japanese government right now that they've totally mishandled The testing aspect of the coronavirus and infections So I think the general opinion is that these numbers the ones that I just gave you 530 are Woefully under reported and that the number of people who have infections is much much higher so one other thing to report is that Today the diet, which is the Congress equivalent is going to pass legislation allowing the prime minister Abe to declare a state of emergency So he would be able to shut down businesses order events to be closed About two weeks ago. He recommended that schools close and about half of them have But with this state of emergency legislation being passed He may begin to order schools to be closed and they'll have to do it. So that's a situation Right now. So we're I'm kind of expecting that with this legislation being passed That the minister the prime minister Abe who's been criticized for doing too little in the first five or six weeks Of the coronavirus arriving especially with the diamond princess. That was a disaster just the government mishandled that Terribly, I think I told you two weeks ago that they actually allowed people to go off the boat directly into the public They were getting on trains and taxis and going home You know when the US was taking people off that boat They put them automatically into a 14-day quarantine at the Air Force bases and so forth But the Japanese government said yeah, just go home. It's okay And now the infection rate is being linked back to those people who came off the boat who were not showing symptoms at the time When they were leaving but are showing symptoms now or are actually sick now So what what is the government doing in terms of containment right now aside from this closing the schools? They're also People from China and Korea South Korea are no longer allowed in the country that just went down yesterday So previously people who were coming from those countries were being recommended to go into self-quarantine for 14 days But now they're getting much stricter about that so that Three million visas have been cancelled now mostly Chinese tourists that were planning to come Over the next month or so. I think it goes through for the next month that Visas from those two countries are now invalidated so getting stricter when it comes to Allowing people from level three countries like South Korea and China Korea has retaliated and is not allowing any Japanese citizens to go to Korea now as well Actually, Japan's the number of countries That no longer allow Japanese people to visit. It's in the mid-20s Like Israel is one example. No Japanese people can go there So some kind of tip About the health system in general is the is the Japanese health system Adequate to handle these 530 cases and and more as they as they appear That's also a major worry that If this the infection rate really takes off like it has in Korea or In Germany or France or other countries or the United States frankly for that matter the numbers really increase There's a sense that the Japanese health system although we have socialized medicine here and everyone is eligible. We don't have that problem that We have in the United States There's not a sense of confidence that the health system here will be able to handle the number of people potentially that could become infected over the next couple of months So there's worries about that as well. How about the availability of masks? Masks and and sanitizing lotion and all that is that is that easily easily obtainable? No, there it's it's totally sold out now. So I Was in Costco just about a week or so ago and they were giving one box per customer So it's under quote a Costco had some supply by the way I don't know if this is happening in Hawaii, but every single person going into Costco that day was buying toilet paper I've never seen anything like that in my life before I There was an executive who was there at that store and I started talking to him I said what's going on and he said we have no idea, but we sold a hundred and seventy five thousand dollars of toilet paper in the last two days That's so irrational. It's just I know but it's there's panic. It just shows that the Worry that's out there right now. I don't know why it's fixating on toilet paper because there's no shortage whatsoever I think it happened here. It is happening here in the same way and and the hoarding notion and Here in Hawaii. I recall that in the late 40s there were shipping strikes stock strikes and People you know couldn't get toilet paper for one reason. So they began hoarding it and ever since then it has been a cultural phenomenon Here in Hawaii and maybe it's spread from here to Japan, you know, there's no good reason so There's no good reason, but there you go. Yeah, if you're familiar with the Costco toilet packages They're huge. It's like 30 rolls and some some Women there they had four of those That's enough toilet paper for a year. Yeah, it was just remarkable to observe that our people hoarding other things So they are they bringing food? I think I'll be going to Costco today at least I'm hoping to But when I was there about a week and a half ago was also rice and some food staples But mostly was toilet paper. That was clear. I mean it was incredible Well, it's so the mask here in Honolulu had a had a line last time I knew a few days ago The line was half a mile long. Nobody could get in to the parking lot to go shopping. Yeah Right, I've experienced that once in Hawaii when a hurricane was coming in during one of the summers I was teaching there But yeah, it's it's quite warm. I'm sure it'll be very crowded when I go there today The other thing to Jay. I wanted to talk about is what I'm doing at school a concept guide I as you know, I'm the dean there So, congratulations. It's been a very good way. I'd like to thank you And I understand word has it here in Hawaii that you were also awarded The best teacher of the year award in addition to that. Oh You have very good sources. I don't know how you found that out. That's that's correct. And thank you very much If we do have an entrance ceremony, I'll be standing up there with my plaque and you know It's fun of the thousands of new students. So It's the first time a foreigner has received that award Yeah, so We've we have about 15 or 20 students that have already returned now again I'm the dean of the international exchange program. So we have 300 or we had 300 students who Were visiting Japan from various universities all over the world the majority from the United States So we've had infections in the local city where our school is located There is this edict or order that has come down from the Prime Minister that schools should close I'm looking at the flights being restricted. I'm looking at self-imposed Quarantines for People arriving in America arriving in various countries. So I set up a committee and we decided and we announced yesterday That we are highly recommending that our students return to their home Institutions so back to America back to Europe Back to other parts of Asia and also all of our classes in terms of classroom activity are as ended We're going to continue to teach online because our students need these credits in order to be on a graduation path So we're doing the very best we can to teach Indirectly or online for the remainder of the semester, but this is a huge disruption and It's a great burden. I'm placing on the professors because online education in Japan really doesn't exist It's not as popular as it is in the United States or other locations And of course the students They love everybody loves Japan, right? You know the cherry blossoms are beginning to come out now It's we're going into a really beautiful time here and they they don't want to leave So I'm sure when they get the message today. We'll send the message out to the students this morning They're not going to be they're going to be disappointed as well So it's they go back to their homes. Let's say they go back to the United States Hopefully they won't have any issue getting back. That may not be as easy as it sounds Can they continue to take the classes by remote online? Yes, that's our plan. So I Actually shut down classroom activity as of last week, although the students were all still local We hadn't made the announcement that we wanted them to return home So we began to teach indirectly using zoom or other technology or some professors were Uploading their slides and creating podcasts. It's it's actually been gratifying to see how innovative and creative the professors have been Given this sudden announcement that we're no longer teaching in the classroom, which you know, many of them have been doing for 30 years So for the duration of the semester if at all possible there may be some courses that cannot be continued like maybe there's a studio art course or some kind of Communication class which is very dependent on team activity and presentations those courses may have to be cancelled in which case we'll Give the students a withdrawal and try and provide credit for them is what we're thinking But we're hoping the majority of the courses will be continued to be taught But indirectly so we bought a bunch of zoom licenses Yesterday and we're going to do some training with the professors to try and bring them up to speed on that technology It's not as slick as what we're using right now J but You know, hopefully they'll come up to speed on it quickly and be able to Not do a hundred percent of what they would be able to do in the classroom But do enough so that they feel Confident that they can issue a grade and give credit for the course for the students who are now teaching indirectly or who are now receiving The courses indirectly very good and zoom is a good program for sure though. That was a good So but my question is this so okay So you've you've made a policy and a procedure and you will shortly articulate it to everybody For this semester, that's this semester. I assume this semester ends at the end of May early, June And the end of May. Yes, and and you may have some summer programs or if you don't you'll certainly have another Semester start and we have timber Yeah, we have 19 students registered for a summer program now But weren't many of them are from Hong Kong. So I'm not quite sure if Japan will accept people from Hong Kong at that time You know, there's just so many variables here and the sense is that things aren't going to get worse before they get better That we haven't Japan hasn't hit the peak yet So what's what's the plan? And then yeah, what so what's the plan? I mean you have summer you have the fall you have next spring I mean, there's really nothing on the horizon that says Steve You don't have to worry after August 1st. You know, there's nothing coming down the pipe that says that That is not going to happen so in the communication I said to the partners. This is maybe my Mean overly optimistic. I said we are planning for the fall semester to be normal and we'll conduct classroom activity I'm trying to let them know that that's what our expectation is But you're absolutely right Jay. I have no idea the problem for us and for all the schools This is worldwide now. Not just Kansai guide. I students are making up their mind right now About going abroad the application period is now and given how bad the news is right now We expect our applications are just going to dramatically shrink So it could be that I'll be kind of lonely and maybe I'll have five students in my class as opposed to 33 that I have right now. This is not good for the The finances of the university or any university in Japan and I want to I want to take you want a little, you know vision of Christmas future here for a moment from your point of view as a One who teaches business and entrepreneurial activity This is this is all going to filter out into the community. So you have you know, what we know so far is Schools are closing. We know that oil prices are down We know the stock market is you know in the tank and and not likely to bounce right back up either The question I put to you though is how is this gonna? How is these phenomena going to filter out into other parts of the economy? It's a hard question Where will we see things happen next and and what will be the result? Yeah, Japan was already vulnerable to Economic downturn actually in Q4 the numbers were just revised yesterday the economy shrink 7.1% Wow in Q4 of 2019 and that's mostly because in October The Abe government raised sales tax just 2% but it was had a significant effect on Investment decisions and on consumer buying activities. So coming out of Q4 before all of this Coronavirus issue started the Japan economy was already sliding at a pretty significant rate and It's only going to get worse. So this quarter will definitely be negative growth. It could be You know, I can just off the top of my head. We could have 10 or 12 percent Negative growth which would put Japan technically into a recession So that's what the economists are expecting. So the number three economy in the world will begin to shrink quite significantly The hardest hit industries, of course are tourism the airline industry The Chinese and Koreans make up 50% of our foreign tourists that is now gone right, so Just at a at a personal level when I go around town when I Am on the trains and when I'm going to Kyoto and other it just feels eerily empty It's it's so different from what it was just a few months ago So there's you can see it with your eyes and you can feel it the economic activity is Shrinking significantly Well, but that doesn't have a vacuum either. I mean I'm two two questions pop out of that I wanted to ask you number one is Certainly Japan does not live in a vacuum. It's a number three economy It's going to have an effect globally What's the Christmas future for that and you know, they sort of the interaction between these big economies? How does that play out? The second thing is not the same question, but I still like to know How is it going to affect the the man in the street? How are the women in the street? How is it going to affect jobs? How is it going to affect disposable income? How is it going to affect the acquisition of consumer goods? How is it going to affect the quality of life? And the disparity of income Well, I think to your first question I Definitely this will have a chilling effect on international trade You know, we talked a couple weeks ago to Jay about the virus's effect on actual products You know, I I don't know if we have clarity on that or not, but it may Result in people being a little bit reluctant to buy goods from China or from Korea or now maybe even from Japan for those of World-wide consumers that are looking at Japanese products So I think there's a direct impact that the economies are shrinking consumer activity is going down Japanese people when they face these types of Crises their amount of spending goes down dramatically. They go into savings mode This is just what happens time and time again after we have a major earthquake Consumer activity goes way down It takes about six months to 12 months to go back up to the pre earthquake or pre crisis pre disaster levels So that will have a profound effect. I think on worldwide economic activity. I mean basically Jay I think we're maybe we're heading in the direction anyway towards a worldwide recession, but this may push us Over the edge. I don't know. It may be quite significant at the street level though You can tell people are very concerned. Maybe like 70% of them are wearing masks The trains are not so crowded. Many people are beginning to work at home Even though that's not a part of Japanese business culture companies like people to be in their desks Yeah, they're not very productive, but they like them to be there so that they can be observed That's one of the major measurements of of success is how many hours you spend at your job Now, it's not how productive you are here. It's how many hours you spend, but that's changing a bit some of the companies, you know mirroring Microsoft and others in America are saying work at home or Maybe work on shifts so rather than crowd into the trains all at the same time Which is a normal pattern between 8 and 8 30 the trains are just jammed. So they're staggering entrance times So there's been some adaptation now occurring by businesses and by people To try and minimize the amount of risk, but I don't other than panic buying Like for toilet paper and things like that, which I've observed directly I think people here they're concerned, but they're not overly concerned. There's this a sense of that things you still see people not wearing masks, so There's some people who are not at that level and they're not You know protecting themselves I some people have map have two masks on and have plastic gloves on when they're on the trains I saw that yesterday for the first time, but there's a good percentage of people maybe about 30% that are still carrying on in a normal way I'm sure they are worried or aware of what's going on, but they it's not at the level where they're changing their behavior The Japanese Unlike the Americans do they have money in the bank or are they living paycheck to paycheck? Well Japan since the koi zumi administration have had this separation in income You know we have the the rich getting richer and the middle class slowly descending in you know into the lower levels the The average income for the middle class has actually been trending down But not as significantly as the United States and also Japanese savings rates historically have been much higher So especially the generation that built Japan, you know coming out of World War two The people in their 60s 70s 80s and so forth. They're they're quite well off. This is still a very rich country there's still Billions trillions of dollars in savings in various vehicles in Japan. So That I don't think is a major worry. I don't I've read in America 50% of Americans are living paycheck to paycheck I would suspect that that number in Japan is much much lower. Hmm interesting now What about investment? You know if you have You know a sort of the lack of confidence that comes with a Recession people don't you know necessarily you see a bright future and therefore they're less likely I say people I mean also Corporations and capital concentrations as well. They're less likely to invest in the future But for example if X car company would otherwise come out with a brand new exciting Automobile product they may say we want to put the kind of money in right now We can't sell it so quick. So we're going to slow down our investment into the future What you have concern about that? Yeah, that's been a problem before the the virus issue The Japanese corporations because of tax policies which mirror somewhat United States tax policies they have tremendous amounts of money that they're just sitting on and doing nothing I mean There's trillions of dollars out there and they had been reluctant to invest especially in Japan because Japan's in kind of a no growth Zone right now. It really hasn't grown economically over the last almost 30 years now So I think this will just make things worse It'll make companies and people even more hesitant to make those types of investments So that we could begin on this downward cycle. I mean we're somewhat in that cycle now in Japan, but it could accelerate with The COVID-19 health issues that we're facing right now Well, let me give you a hypothetical my hypothetical is okay time in July. Let's take July Somebody comes up, you know with some new technology that can figure out a more effective way to contain the disease quarantine Who knows what maybe peanut butter who knows? and Peanut butter. Oh, why did I have some of my refrigerator? So okay, so now it looks like we're gonna be able to beat this thing Hey, you mentioned before that, you know, when there's an eruption in Japan or an earthquake. What have you? Six months, you know, people have below standard confidence and consumer spending goes down How much time will it take for Japan to get to its normal balance? Whatever that is Once we discover a way to stop, you know, the incident of disease Yeah, I Would say if we April May, maybe we hit the peak in Japan if we follow other countries and then hopefully the policies or some kind of vaccine some kind of New discovery occurs and we get to into the summer months and there's a sense that okay We've gotten through the worst of this and we're on a recovery Given the fragility of the Japanese economy. It probably will take a year. So I would say probably Summer of 2021 things would return to normal It would take a while So what's your advice? What's your advice to an American student in Japan? What's your advice to the Japanese citizen a business person? What's your advice to the man on the street anywhere and everywhere and how to deal with this? Yeah Yeah, well for my students as I mentioned, I'm telling them these are the international students. I'm Strongly recommending that they go home You know, although I you know, we have Italian students So, you know, that's why I didn't make it mandatory. It may be safer for some of our students to stay in Japan Yes, Korean students. So that's why we left that open When we had the Tohoku disaster in spring 2011 a lot of foreign business people took off I mean that had nuclear Risk involved as you probably remember So I think many foreigners if this does really increase in terms of the number of Infections we may see people leaving For a short period of time and then some and in that instance didn't come back, you know I'm I'm rooted here. My family is here. There are many foreigners that have been here long-term So, you know, we're gonna have to just grin and bear it and make our way through this I think that's it. I think that's the advice that you would give Stay in place. Keep on doing the reasonable thing. Keep educating yourself following the action and grin and bear it That's I think that's what emerges as a way to deal with this. Don't panic Don't do anything remarkable. Just keep on trucking. Yeah Yeah, yeah, I have my students are asking me, you know, what what kind of investments can I make now? How can we, you know, every crisis is an opportunity certainly? Buying stock and zoom or these types of software products that allow indirect instruction. Yeah, I'm sure they're gonna be doing great My students asked me last week should we buy in the stock market now because we hit bottom and I said, I don't think so So I was right about that What would your answer to that question be today? I'm gonna ask you the same question in in two weeks Steve We're out of time here today, but we have to follow this conversation I'm so curious and empathetic about what's happening in Japan and we want to talk to you again and again about it and find out What's going on because we are in a transitional transformational time these days, I think Thank you so much Steve. Steve Zercher. My pleasure. Kansai Gada University, Aloha