By Keith Fitz-Gerald
Investment Director
Money Morning/The Money Map Report

Japanese companies and local governments must now measure the waistlines of all employees and family members over the age of 40.

According to this new health-care initiative – which started this week – men whose girth exceeds 33.5 inches and women whose waistlines exceed 35.5 inches are considered overweight.

The new guidelines affect nearly 56 million people, or roughly 44% of Japan’s total population. They’re based on studies done by the International Diabetes Federation in 2005, which looked at size and weight thresholds and used them to identify health risks.

Individuals who fail to meet these standards won’t be penalized or have to pay up personally. But their employers will – in the form of penalty payments and higher health-care premiums for every additional inch – thanks to this new waistline law that’s aimed at slimming down this island superpower.

As reported on CNN, NEC Corp. alone faces $19 million in such penalties. Other companies find themselves in a similar spot and could potentially owe hundreds of millions of dollars in punitive health-care fines.

Naturally, the law is controversial, with many believing that it’s at the very least unnecessary – and perhaps even represents an intrusion on a person’s individual liberties. However, others think it’s a very timely initiative, as well as one that’s badly needed.

Either way, the Ministry of Health aims to achieve its goal of reducing the Japanese overweight population by 10% in the next four years and an enviable 25% during the next seven years. It also intends to dramatically reduce national health-care costs at the same time.

The reason?

"Big" people have never populated the nation – but the people are getting bigger.

Since World War II, the average Japanese citizen has gained between three and six inches in height, 20 pounds in weight and, evidently, a bit too much around the waist. While the root causes are subject to debate, much of it comes down to more advanced medicine, changes in lifestyle and, to be perfectly blunt, and the introduction of Western foods including – you guessed it – fast food.

For years in Japan’s company cafeterias – long the domain of harried salary men eating quickly in order to get back their desks – a typical Japanese meal consisted of fish, pickles, some rice, and perhaps green tea, a accounts for between 600 and 800 calories. But Western alternatives – a McDonald’s Corp. (MCD) hamburger meal, for example – can tip the scale at nearly 1,400 calories.

My personal favorites includes the Godzilla-sized "Mega Macs," which weigh in at 754 calories and contain a staggering 45.9 grams of fat, and the "Mega Teriyaki" which, thanks to its sweet lemon sauce and sugary teriyaki sauce, muscles up at 903 calories and 64.3 grams of fat all by itself!

(And I’m being sincere in labeling these as "personal favorites" – because they’re really tasty – even though I can practically feel my arteries clogging up as I eat them.)

While I’m not a social scientist, nor do I pretend to have any special analytical powers, I have spent long stretches in this region during each of the past 20 years, meaning I’ve got plenty of anecdotal evidence that seems to support the data.

For instance, many younger Japanese are taller than they were in the past. When I first started going there in the late 1980s, I towered over most of my Japanese counterparts. Now we stand eyeball to eyeball. My wife, who at 5′6" was regarded as tall when she was growing up, is now average height.

In general, Japanese kids are also bigger, which is painfully evident – literally – as modern-day children try to cram themselves into school desks designed and installed in schools across that nation generations ago. Many actually have to duck when entering and exiting buildings with ceilings and doorways that are now too "low." Still others can’t sleep comfortably on traditional tatami mats, which were the measuring standard for hundreds of years, because the mats are now too short.

With change, however, comes opportunity.

Companies that design, manufacture and sell comprehensive obesity-management programs – not just games, or such one-off items as pedometers, scales and the like -stand to make out big.

One such firm is Konami Corp. (ADR: KNM), which we twice rode to profits (once 49.91% and then 39.31%) earlier this year in our sister publication, The Money Map Report. While most people know Konami as a video-game maker, the company actually operates a string of health-care clubs and is at the center of Japan’s new "healthy" movement.

Showing some real forward thinking, Konami has been able to market some of its leading games, like Dance Dance Revolution, as physical-education programs and medical devices. And those products are now being adopted worldwide by frazzled physical education teachers who find themselves faced with unmotivated, overweight kids. The problem is particularly acute here in America, where as many as 17% of our children are now obese, according to various studies.

Not only do such games offer an alternative to traditional exercises, but they’re also approved medical devices. And that means that school systems can introduce them – and count on insurance companies footing some, or all, of the bill.

Nintendo Co. Ltd.’s (OTC ADR: NTDOY) Wii is taking the same approach. With its Wii Fit programs, the company appears ready to duke it out in what may well be a newly emerging class of entertainment – video-weight-management programs.

In China, where Yum! Brands Inc. (YUM) has more than 3,000 restaurants – and where its KFC outlets are the dining venue of choice for many middle class Chinese consumers – we expect a similar onset of obesity. In fact, during my most recent trip there, I observed bigger Chinese in general than I’ve ever seen before.

Weight management is clearly becoming an issue there, too. And mark my words: Obesity will be an ultra-sensitive topic for the Chinese, who have long regarded fatness as a sign of prosperity, wealth and good fortune.

But that neither diminishes its potential impact nor the opportunity when it comes to profiting from the fight against obesity.

While it’s too early to predict choices there, our best guess is that companies like online-game developer Perfect World Co. Ltd. (ADR: PWRD) will adapt the single-player concept to reflect the Chinese predisposition toward massive multiplayer online adaptations. As a result, it will introduce new games that haven’t even been contemplated, yet.

News and Related Story Links:

• Wikipedia:
  Dance Dance Revolution 

• Wikipedia:
  Wii Fit

• Money Morning:
  Chinese Name Changes Mean More Than Just Learning What’s for Dinner

By Keith Fitz-Gerald
Investment Director
Money Morning/The Money Map Report

From my vantage point on my recent visit to both China and Japan, the signs are clear.

China is coming. And Japan knows it.

Major department stores like Takashimaya Co. Ltd., Sogo Co. Ltd. and Mitsukoshi Ltd. are gearing up. In places like Tokyo, Osaka and Kyoto, they’re seeing a new wave of power shoppers at their counters – the Chinese.

A few short years ago, this was unthinkable.

Yet, as my wife and I strolled through downtown Kyoto, we saw it too. Most major department stores have added Chinese signage to the usual Japanese and English placards.

We heard it, as well, from Chinese shoppers who were tromping through the Shijo-Kawaramachi shopping district loaded down with bags sporting the latest designer logos. It’s much the same in Tokyo’s uber-rich Ginza district as well where Mitsukoshi has recently hired store-based interpreters fluent in Mandarin.

I can’t say I’m surprised.

According to the Japanese Department of Tourism, a record high of nearly a million Chinese tourists came to Japan last year. China’s Ministry of Public Security estimates that 34.5 million Chinese headed for foreign destinations in 2006 – up from a mere 4.5 million a year earlier. By 2011 that figure is expected to top 80 million with Hong Kong, Macau, Vietnam, South Korea and Japan predicted to account for 85% of all Chinese tourist destinations according to Euromonitor International.

And they’re spending big bucks, too.

CNN reporter, Kyung Lah, interviewed one group of mainland Chinese tourists recently that had spent $50,000 dollars on clothing and makeup alone on a 3-day trip. Not surprisingly, most of that was on designer brands from Prada Group, Gucci Group NV (PINK: GUCG), Christian Dior SA, and Shiseido Co. Ltd. (OTC: SSDOY).

Which jibes with my personal experience as indicated by Chinese and Japanese I’ve spoke with over the years. Whereas most of them used to only dream about traveling, an increasing number are actually doing it. My good friend Jun Hao and his wife have hit most of Europe’s major cities and a good deal of the United States, too.

Getting back to Japan, however, it may surprise you to learn that most Chinese feel very comfortable there. A fact that stands in stark contrast to how relations between the Japanese and Chinese are often portrayed in the Western media.

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It’s now a common sight in Tokyo to see Chinese who are shopped out make a beeline for Toyota Motor Corp.’s (ADR: TM) showrooms. Obviously, they’re not buying Toyota’s in Japan, but boy are they anxious to buy Toyota’s in China.

And a visit to the showroom is just what the doctor ordered for young, cosmopolitan Chinese yuppies… or “Chuppies” as they’re called.

Not only do they feel more international for having done so, but Chinese tourists tell me they find Japan quite welcoming. And warm, which is another one of those words than can be translated a variety of ways.

Not one citizen of China or Japan that I’ve recently spoken with believes that the political past between their respective countries would prevent an economic future.

Investors looking to capitalize on the blossoming relations between the two countries and the tourism trade specifically need to look no further than Japanese department stores, Chinese credit card companies and, ironically, Toyota to get in on the action.

Of course, there are obvious choices when it comes to computerized travel providers and airlines.

But the value there may be harder to extract given there’s not a clear value proposition and the industry remains largely fragmented… for now. And that’s part of what makes Money Morning’s growth “because” of China – and Japan – investing strategy the way to go for now.

News and Related Story Links:

• Money Morning:
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• Money Morning Investment Travelogue:
  The View From China: The Freedom to Change Also Means There’s a Freedom To Fail

• Money Morning:
  GM Tries to Reverse Course, but Can it Catch Toyota?

By Keith Fitz-Gerald
Investment Director
Money Morning/The Money Map Report

There’s an incredible story taking place in Asia.

Based on my 20 years of experience in the region and formal academic study, you can believe me when I say that this may well be the most pivotal event in 20 centuries of Sino-Japanese relations.

We’ve reported some of this to you already. But the mainstream Western press hasn’t latched on to it.

That’s not to say they haven’t reported what happened when Japanese Prime Minister Yauo Fukuda hosted Chinese President Hu Jintao during the historic summit the two held in Tokyo last month – the press reported everything that "happened," and did so exceptionally well.

However, like so many things in Asia, mainstream journalists completely missed the subtleties and, not surprisingly, that’s where the real story usually is.

But you’ve got to know how to read between the lines to get at the "real" meaning of what was said.

Here’s why.

When translating both Chinese and Japanese to English, there are both literal and figurative translations to consider. Frequently, inexperienced commentators (and even experienced ones) will provide one without the other.

And that’s too bad, because it’s the context that’s "everything" in Asia – and I mean that literally.

Unlike Western romance languages – which descended from the resconstructible Proto-Indo-European language family, and which are logically oriented – Chinese languages are commonly believed to have descended from the Proto-Sino-Tibetan family while Japanese is understood to have come from a context-driven lexical borrowing process in the region.

As a result, Western languages are frequently blunt and to the point, while both the Japanese and Chinese languages historically rely heavily on context and symbolism: In other words, the "real" meaning is not the words, but is instead found in the symbolism associated with those words.

And that’s not exactly something you can explain in a 10-second CNN sound bite, so most news stations don’t bother.

For instance, during their historic five-day Summit last month in Japan, Prime Minister Fukuda and China President Hu agreed to make 2008 a year for boosting their nation’s "mutually beneficial relationship."

I was sitting in Kyoto when I heard that, and I was stunned. I’ve spent two decades studying, living in and working in Asia, and in all that time I couldn’t recall any of the prior leaders of the two countries ever sharing a more-direct, more-powerful statement.  And neither could the Chinese and Japanese I spoke with that day because the words represents the single most important thaw yet verbalized in the decades old animosity dating back to World War II.

While most Westerners expected them to "settle affairs" by making some reference to historical events that have badly strained bi-lateral relations in recent years, both leaders deliberately avoided doing anything like that during their five-day meeting. And, by doing so, each side was able to state his case to the other’s countrymen without "losing face," which is pivotally important to both countries and cultures.

Similarly, President Hu’s remarks that he’s looking forward to a "warm spring" between the two countries were translated quite literally by the Western media, although the comment had an entirely different meaning to Asians. To Asians, the comment is symptomatic of far deeper, and more intimate, nationalist feelings on a variety of personal and state levels.

By stating his desire for a "warm spring," President Hu was making an allegorical reference to the importance of producing a bountiful rice harvest. And the reason why this makes sense to Asians is that rice has been pivotally important to both cultures for a millennium or more. That crop has enabled both cultures to make the transition from hunter-gathers to farmer, and it is also central to religious and social festivals in both countries, as it has been for thousands of years.

By referencing rice farming, President Hu was very deliberately reaching deep down into the core of both nations and sending an important message to millions of Japanese and Chinese citizens that China is ready to put the past to rest and look to the future.

In a more Western fashion, the two leaders also agreed that "long-term cooperation for peace and friendship" is the "only choice left" for both countries.  This, too, is full of hidden meaning: It’s an unprecedented signal that both nations are preparing to (finally) put the horrific events – and the long-lingering bad feelings – of WWII behind them.

By putting this rancor to rest, each country will now be free to make major investments in the other’s economy – much more so than they’re doing even now.

If history is any guide, then some of the most significant Sino-Japanese trends of the future are likely to begin at the intersections of companies just now starting to flourish.

Of course, there will be course corrections along the way, but that didn’t hurt relations 20 centuries ago when Japan and China were very close – and those corrections won’t hurt them, now.

The important thing is to embrace change as it occurs.

For investors, one of the biggest profit opportunities will be with companies that are helping China build out its infrastructure and build up its consumer sector, which is why such companies as solar-ceramics maker Kyocera Corp. (ADR: KYO), and trading giant and independent power plant developer Mitsui & Co. Ltd. (ADR: MITSY), are logical choices.

In addition to seeing Japanese companies like these focusing their sights on the China market, we’re likely to see Chinese companies doing the same with Japan. While it’s not yet clear who those companies will be, it is clear to us that the initial entrée will likely be from one or more of China’s sovereign wealth funds.

Our best guess is that China investors will prefer key targets like those traded on the Tokyo Stock Exchange – especially companies that have an expertise in environmental protection and energy-saving technologies.

We also think China will make a run at construction companies with experience in large-scale infrastructure and national-building projects – all of which are in exceptionally high demand in China.

[Editor's Note: For additional China profit plays, check out this special Money Morning offer that includes a free copy of investing guru Jim Rogers' new bestseller, "A Bull in China." The book details Rogers' investment outlook for China plus his opinion on dozens of China-based public companies.]

News and Related Story Links:

• Money Morning Economic Analysis:
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• Wikipedia:
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• Wikipedia:
  Yauo Fukuda.

• All Academic Research:
  Lexical Borrowing in the Chinese Context: Examples from two English Newspapers in China.

• Money Morning Economic Commentary:
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• Shaolin Tiger:
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• Money Morning Economic Forecasting Series:
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By Keith Fitz-Gerald
Investment Director
Money Morning/The Money Map Report

KYOTO, JAPAN – On one of my first mornings at our home here, my family and I headed for the Fushimi Inari Taisha shrine. Built in the 8th century by the powerful Hata family, the shrine is best known for the four consecutive kilometers of orange Torii gates covering the mountain on which it was built.

My wife’s family has been coming here for centuries, making it a familiar and comfortable place that we enjoy very much.

It’s also a spot that tends to put things into perspective – like the Bank of Japan’s recent decision to keep its key interest rate at 0.5%.

So why is this move by Japan’s central bank important? That’s easy.

We’ve been hearing for years how the Japanese economy is poised for a recovery. And each New Year is supposed to be "the" year – yet it just somehow never seems to happen – at least according to folks who don’t spend as much time here as I do.

Sure Japan went to hell and back during the "Lost Decade" that stretched from 1990 – 2000, but this country’s economy is recovering – even if the securities markets don’t yet reflect this: They’re up only marginally so far this year.

But that speaks volumes about what investors should expect when thinking about Japan. For instance, the beautiful young elevator ladies who used to grace Japan’s top department stores have vanished. Yet, individual customer service remains better than ever.

Many of the so-called boutique shops have also faded into the sunset. But those shops have been replaced by multi-sale retailers and Internet shops, all of which are going great guns.

This suggests companies are becoming more cash sensitive even as they’re becoming more aggressive. So are Japanese consumers. It’s a trend that’s moving Japan along quietly, if steadily.

But what’s really interesting to me after having spent 20 years in and out of Japan is the number of students who now are studying Chinese, as well as English.

Like the Japanese companies and consumers that are driving the "stealth recovery" here, students who want to get ahead are doing all they can to learn more about their neighbor, including the language.

They understand that they have to look beyond the labels that say "Made in China," and consider the growing Chinese consumer class – especially China’s emerging middle class, which is already 325 million strong.

While some experts claim that the two nations, Japan and China, will never be friends because of World War II era animosity, those with a far longer perspective acknowledge that the two actually were very close – centuries ago. Much of Japan’s writing system, religious roots and even early architecture came directly from China’s royal courts more than 1000 years ago.

The two nations will be close again.

The best way investors can capitalize on this eventuality is not to buy the broader Japanese indices. Those will merely pick up the has-beens, wannabes and never-wases. It’s far better to concentrate on those companies that are already working closely with China.

The companies in this category firmly understand the regional dynamics at play today. But, more importantly, they understand just what the future is going to look like, and are already preparing for business dealings with China – and the Chinese consumer.

Some great choices if you want to cash in include solar-ceramics maker Kyocera Corp. (ADR: KYO), trading giant and independent power plant developer Mitsui & Co. Ltd. (ADR: MITSY), and even Toyota Motor Co. (ADR: TM), which is now the world’s No. 1 automaker, and (as Money Morning just reported) also has branched out into commercial jetliners.

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Since I’m scheduled to head back down the mountain shortly, I’m going to close this out (yes, for those of you who are wondering, I really am writing on my laptop thousands of feet above Kyoto) so that I can check in on the summit between Chinese President Hu Jintao and Japanese Prime Minister Yauo Fukuda.

It’s the first visit by a Chinese head of state in a decade.

I’ll have more to say about that visit in the days to come. And I’ll be returning to the United States fairly soon, too. I’ll keep you posted.

News and Related Story Links:

• Wikipedia:
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• Bank of Japan:
  Home Page.

• Money Morning Special Report:
  Mitsubishi and Toyota to Lead Japanese Dream Team into a Global Dogfight for a New Regional Jetliner.

• Wikipedia:
  China President Hu Jintao.

• San Francisco Chronicle:
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By Keith Fitz-Gerald
Investment Director
Money Morning/The Money Map Report

From my vantage point on my recent visit to both China and Japan, the signs are clear.

China is coming. And Japan knows it.

Major department stores like Takashimaya Co. Ltd., Sogo Co. Ltd. and Mitsukoshi Ltd. are gearing up. In places like Tokyo, Osaka and Kyoto, they’re seeing a new wave of power shoppers at their counters – the Chinese.

A few short years ago, this was unthinkable.

Yet, as my wife and I strolled through downtown Kyoto, we saw it too. Most major department stores have added Chinese signage to the usual Japanese and English placards.

We heard it, as well, from Chinese shoppers who were tromping through the Shijo-Kawaramachi shopping district loaded down with bags sporting the latest designer logos. It’s much the same in Tokyo’s uber-rich Ginza district as well where Mitsukoshi has recently hired store-based interpreters fluent in Mandarin.

I can’t say I’m surprised.

According to the Japanese Department of Tourism, a record high of nearly a million Chinese tourists came to Japan last year. China’s Ministry of Public Security estimates that 34.5 million Chinese headed for foreign destinations in 2006 – up from a mere 4.5 million a year earlier. By 2011 that figure is expected to top 80 million with Hong Kong, Macau, Vietnam, South Korea and Japan predicted to account for 85% of all Chinese tourist destinations according to Euromonitor International.

And they’re spending big bucks, too.

CNN reporter, Kyung Lah, interviewed one group of mainland Chinese tourists recently that had spent $50,000 dollars on clothing and makeup alone on a 3-day trip. Not surprisingly, most of that was on designer brands from Prada Group, Gucci Group NV (PINK: GUCG), Christian Dior SA, and Shiseido Co. Ltd. (OTC: SSDOY).

Which jibes with my personal experience as indicated by Chinese and Japanese I’ve spoke with over the years. Whereas most of them used to only dream about traveling, an increasing number are actually doing it. My good friend Jun Hao and his wife have hit most of Europe’s major cities and a good deal of the United States, too.

Getting back to Japan, however, it may surprise you to learn that most Chinese feel very comfortable there. A fact that stands in stark contrast to how relations between the Japanese and Chinese are often portrayed in the Western media.

Story continues below…

Sign up right now, and we’ll send you an important new report for free: “The Three Best Investments in Asia.”

It’s now a common sight in Tokyo to see Chinese who are shopped out make a beeline for Toyota Motor Corp.’s (ADR: TM) showrooms. Obviously, they’re not buying Toyota’s in Japan, but boy are they anxious to buy Toyota’s in China.

And a visit to the showroom is just what the doctor ordered for young, cosmopolitan Chinese yuppies… or “Chuppies” as they’re called.

Not only do they feel more international for having done so, but Chinese tourists tell me they find Japan quite welcoming. And warm, which is another one of those words than can be translated a variety of ways.

Not one citizen of China or Japan that I’ve recently spoken with believes that the political past between their respective countries would prevent an economic future.

Investors looking to capitalize on the blossoming relations between the two countries and the tourism trade specifically need to look no further than Japanese department stores, Chinese credit card companies and, ironically, Toyota to get in on the action.

Of course, there are obvious choices when it comes to computerized travel providers and airlines.

But the value there may be harder to extract given there’s not a clear value proposition and the industry remains largely fragmented… for now. And that’s part of what makes Money Morning’s growth “because” of China – and Japan – investing strategy the way to go for now.

News and Related Story Links:

• Money Morning:
  Lost In Translation: The Subtle Dealings Between China and Japan Can Lead to Powerful Profits

• Money Morning Investment Travelogue:
  The View From China: The Freedom to Change Also Means There’s a Freedom To Fail

• Money Morning:
  GM Tries to Reverse Course, but Can it Catch Toyota?