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Not so long ago, Japanese manufacturers were interested in the lowest possible price, because in this way they could sell cars and equipment abroad cheaper, getting a higher profit after receiving revenue...
... but it looks like the era of the cheap yen is coming to an end.
According to company representatives and economists, after many years of strengthening foreign production and supply chains, Japanese manufacturers are ready to abandon the weak currency.
In fact, the economic damage from the cheap yen has now become much more noticeable, since the recent sale of the national currency sharply raised the cost of goods, which hit the expenses of Japanese households. Among other things, we see how the steady transition to foreign production is slowly changing the dynamics of the third largest economy in the world.
According to the latest data from the Ministry of Commerce, almost a quarter of the products of Japanese manufacturers are sold abroad. This compares with about 17% a decade ago and less than 15% two decades ago.
According to the Japan Automobile Manufacturers Association, about two-thirds of the cars that arrive annually on behalf of the land of the rising sun are currently manufactured abroad.
Two decades ago, cars made abroad accounted for less than 40% of sales.
Companies are also moving away from the old model of manufacturing and exporting as technology has changed their business. Hitachi Ltd, for example, is becoming more customer-oriented, leaving technology behind.
The weakness of the Japanese currency has already led to an increase in the cost of fuel and other goods for domestic producers.
Crucially, it also hits household spending and consumer confidence in the domestic market, which exacerbates losses for the stalled economy.
Nevertheless, a December survey of almost 7,000 companies conducted by Tokyo Shoko Research showed that almost 30% of companies said that a weak yen is a negative factor for their business, and only 5% called it a positive factor. The remaining 65% said that the exchange rate itself had no significant impact - neither negative nor positive.
Those who said that the weak yen was negative on average called the preferred rate around 107 yen per dollar - a level significantly stronger than the 125.75 achieved in the current trading session.
It should be borne in mind that a weak yen increases the cost of acquiring businesses and any assets abroad, although this may not bother many wealthy Japanese firms. At the same time, a weak yen makes Japanese companies a cheaper target for foreign buyers, and this is what manufacturers have been striving for so far.
Many manufacturers, including the automotive industry, say that one of the advantages of increasing production in local markets is less sensitivity to currency fluctuations.
Even though there may be concerns about the stability of operations in certain markets, such as China, it is unlikely that the trend to locate factories abroad will change in the near future.
So, Toyota Motor Corp is working to reduce the impact of the yen exchange rate on its revenues, the representative said, without going into details. A company spokesman said that a weak yen is not necessarily seen as an advantage, adding that one disadvantage is the higher cost of raw materials.
But for retailers, the weak yen was painful, as it increases spending, including on energy and food. Budget clothing retailer Shimamura Co Ltd recently announced that it would have to raise the prices of some of its products by an unprecedented (for Japanese) 3-4%.
Bank of Japan Governor Haruhiko Kuroda has repeatedly stated that while a weak currency may put pressure on households and retail, the benefits to the economy outweigh the disadvantages.
But his view looks increasingly lonely this year as government officials have stepped up their warnings against excessive yen declines.
Some of Kuroda's former colleagues at the Treasury now see the weak yen as a sign of Japan's waning economic power.
Earlier this month, the governor said that the yen's recent movements were "somewhat rapid," which is his strongest warning about currency movements, although he then stressed the benefits of a weaker yen.
So the government keeps its finger on the pulse, but so far, it seems, without a definite opinion on the possible strengthening. Most likely, politicians will act on the situation. And the crisis in developing countries may well become a catalyst for change.
So far, this can only be guessed. The yen's rapid fall - it fell more than 5% against the dollar last month, its biggest monthly drop since November 2016 - caught some market participants by surprise.
A former senior Japanese currency diplomat, Eisuke Sakakibara, said in an interview a month ago that the government should intervene in the currency or raise interest rates to protect it if it weakens above 130 points per dollar.
Weakening above 130 "could cause problems," said Sakakibara, known as "Mr. Yen" for orchestrating several currency interventions to soften the yen in the 1990s.
This seems like a logical step. Therefore, when the exchange rate approaches this mark, it makes sense to expect decisive steps by the government, including in the field of monetary policy. Probably, at this key level, we should expect tougher rhetoric and more active actions. Although so far this does not seem to be a very likely scenario.
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