SoftBank’s Son to exit Alibaba board

BLOOMBERG

SoftBank Group Corp. founder Masayoshi Son ended his company’s annual share-holder meeting with a surprise Thursday by announcing he’s stepping down from the board of Chinese e-commerce titan Alibaba Group Holding Ltd.

The billionaire said his departure shouldn’t be interpreted as signifying any disagreements, even though Alibaba co-founder Jack Ma is quitting SoftBank’s board at the same time. Ma and Son have maintained a close friend-ship since the Japanese entrepreneur was an early investor in Alibaba and helped it along to its current value of roughly $600 billion, call-ing it the crown jewel of SoftBank’s portfolio.

“It’s not like we had a fight,” Son said dur-ing the virtual shareholder meeting. “This was perfectly amicable.”

While the mutual departures are unlikely to have an immediate impact on either company, they mark the end of an era. The two men are among the most successful entrepreneurs of their generation and have been able to rely on each other’s advice for decades. Son was on Alibaba’s board as it went public in 2014 in the largest initial public offering in history. When SoftBank ran into trouble with investment losses this year, Son was able to use his Alibaba stake to raise much-needed capital.

“The joint board membership was a big positive for both companies because it gave them a way to benchmark their respective business models,” said Michiaki Tanaka, a professor of business administration at Rik-kyo University in Tokyo.

Alibaba remains Son’s most success-ful investment by far and SoftBank’s most valuable asset. In early 2000, Son invested $20 million into the then-unknown web portal connecting Chinese manufacturers with overseas buyers, a stake that is now worth more than $150 billion. That spec-tacular return cemented his reputation as

an investor and later helped him raise the $100 billion Vision Fund.

Son has previously spoken highly of Ma.“He had no business plan, zero revenue,”

Son said about Ma on The David Rubenstein Show. “But his eyes were very strong. I could tell from the way he talked, he has charisma, he has leadership.”

Son is known for anointing the entrepre-neurs he finds particularly promising as “the next Jack Ma,” and Alibaba has long served as the standard against which he has judged SoftBank’s other startup investments. But his recent track record has been spotty. Starting with WeWork’s failed initial public offering last year, Son has suffered a string of setbacks at portfolio companies including Wag Labs, Zume Pizza and Brandless Inc. SoftBank lost almost $18 billion writing down the value of its startup companies in the last fiscal year.

Still, Son struck an optimistic note at the shareholder meeting Thursday. He began the presentation to investors in typical fashion, reaffirming his conviction that a global digi-tal transformation and the advent of artificial intelligence will help his investments.

‘Perfectly amicable’ exit marks end of an era of close collaboration

KYODO, JIJI, REUTERS

Japan has scrapped a plan to deploy Aegis Ashore, a land-based missile defense system that was touted for the protection it would provide from the North Korean nuclear weapon and missile threat, Defense Minis-ter Taro Kono confirmed Thursday.

“After deliberations at the (National Secu-rity Council), we have come to the decision to cancel the deployments in Yamaguchi and Akita prefectures,” Kono told a gathering of Liberal Democratic Party lawmakers.

The decision followed Kono’s abrupt announcement on June 15 that Japan had halted preparations to deploy two U.S.-made batteries of the missile system, citing tech-nical problems and increasing costs amid strong local opposition.

At the LDP meeting, part of which was open to the media, Kono also said the Defense Ministry had found it difficult to select alternate sites.

In 2017, Japan decided to deploy the Aegis Ashore batteries to boost the coun-try’s defenses against North Korea’s nuclear weapon and missile programs.

While the nation will continue to defend itself via existing Maritime Self-Defense Force Aegis-equipped destroyers, Kono said it was a bad idea to rely solely on the ship-based system.

Bearing in mind Beijing and Pyongyang’s development of new ballistic missiles that are difficult to intercept, Kono said Japan must “consider what we will do (to respond to such threats) over the medium to long term.”

Kono also said the existing MSDF destroyers and land-based Patriot Advanced Capability-3 system — designed to shoot down missiles that evaded interceptors fired from the ships — would protect the nation “for the time being.”

The Aegis Ashore units were intended to supplement the MSDF destroyers, with one candidate site in Akita Prefecture and the other in Yamaguchi Prefecture, both near the Sea of Japan coast.

“I’m relieved that anxiety among local resi-dents has faded,” Akita Gov. Norihisa Satake told reporters, adding that Kono told him by telephone in the morning that the central government would not deploy Aegis Ashore units in the nation hereafter.

“But I wonder what this two and a half years (since the Cabinet approval to deploy the batteries) were for,” Satake said.

Yamaguchi Gov. Tsugumasa Muraoka told reporters he was “grateful” for the govern-ment’s “quick decision.”

Later in the day, Kono told reporters the government would continue to discuss defense needs with ruling parties and the United States, in addition to talks at the NSC.

Kono said acquiring weapons that would let Japan strike enemy missile bases was an option the government will consider as a way to bolster its missile defences.

On Wednesday the government started to review its national security policy fol-lowing the decision to suspend the Aegis Ashore deployment plan. The focal point of the review is said to be the base strike capa-bility. Abe recently said he wants to consider such an option.

The review began at the day’s meeting between Abe as well as Kono and two other key Cabinet ministers who are members of the NSC. Kono reported on the suspension of the deployment plan for the missile intercep-tors, which was followed by discussions on how the nation should prepare for dealing with threats from ballistic missiles.

Initially, the government had considered formally deciding to cancel the Aegis Ashore plan at the day’s NSC meeting, but it put off the decision as talks on the matter with the U.S. were still underway.

The government will hold intensive dis-cussions through the summer, planning to consider the first revision of its strategy on national security that was compiled in 2013. The government also plans to modify its national defense guidelines and medium-term defense buildup program, both adopted in 2018.

Aegis Ashore formally called off, Kono says

Government to weigh new missile defense plans DECADES OF DIVISION

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Beijing-Washington tensions add to fears of conflict in the long run

C CommentaryMICHAEL MACARTHUR BOSACKPYEONGTAEK, SOUTH KOREA

Heading into 2020, Prime Minister Shinzo Abe seemed poised for a strong, stable year atop Japan’s government. Many observers were debating whether the Liberal Demo-cratic Party would change its rules to grant him a fourth term as party president, which on paper could have extended his run until 2024.

Nobody is debating that now. Instead, speculation is swirling that Abe is a lame duck and a snap election may be his only option to salvage what’s left of his prime ministership. Amid this speculation, there will be two questions in many minds: one, how long does Abe have left; and two, who might be poised to succeed him?

There is some merit to the arguments that Abe is on his way out. His approval rat-ings are hovering between 30 and 40 per-cent with disapproval ratings at nearly 60 percent depending on the polling source — the opposite from just six months ago. The primary driver for the drop has been the government’s response to the COVID-19 pandemic, now symbolized by the oft-mocked “Abenomask” policy. Compounding the downturn were two prominent scan-dals: the high prosecutor scandal and the arrests of Katsuyuki and Anri Kawai over vote-buying.

Further validating speculation is the fact that Abe’s rivals in the LDP are already mak-ing moves behind-the-scenes. Over the past few weeks, LDP Secretary-General Toshihiro Nikai has held private meetings with individ-ual factions to discuss post-Abe leadership — most notably with Shigeru Ishiba, Taro Aso and representatives from Hiroyuki Hosoda’s faction. The pieces are moving, though no one is yet revealing where and how.

Despite all this, Abe has a strong chance to hang on for the next year. While a fourth term as LDP president seems out of the question, Abe can breathe new life into his administration with a Cabinet reshuffle in a few months. If that fails, he always has the snap election option. Also, while there are some who would gladly succeed Abe, most would prefer to let his administration handle

The 2020 post-Abe leadership race begins

Continued on page 9 ->

China’s Taiwan flybys highlight risk of war

AAnalysisSAMSON ELLISTAIPEIBLOOMBERG

With U.S.-China tensions increasing on a number of fronts, the main issue that could spark a military conflict over the long term is still one that is fundamental to their rela-tionship: Taiwan.

Chinese fighter jets have entered Taiwan’s air defense identification zone seven times in the last two weeks, prompting the island to scramble warplanes to warn them off. While the total number of Chinese incursions this year is largely on pace with previous years, the outburst over the past few weeks is unusual and could augur a dramatic escala-tion if sustained.

The military maneuvering reflects the ever-

present potential for war over an island that Communist Party of China has threatened to take by force ever since the nationalist govern-ment of Chiang Kai-shek fled the mainland in 1949. For much of the time since, the possibil-ity of U.S. intervention has helped maintain the status quo — even after the Carter admin-istration switched formal diplomatic recogni-tion to Beijing from Taipei in 1979.

China views Taiwan as an inalienable part of its territory that must eventually be

brought back under Beijing’s control, by force if necessary. While it has long used economic incentives as a carrot to achieve those goals, it cut off all direct ties after the 2016 election of President Tsai Ing-wen, who views the island as a de facto independent nation in need of wider international recognition.

‘Pipe dream’ Her re-election in January by an even wider margin showed that the two governments are only shifting further apart. At the same time, Taiwan is boosting economic links with the U.S., where it’s increasingly being hailed as a model democracy by Trump administration officials who regularly slam China for increased authoritarianism.

“President Tsai’s re-election does not change much in cross-Strait relations, but it may have solidified the view in Beijing that peaceful, uncoerced unification is a pipe dream,” said Michael Mazza, a visiting fellow at the Wash-ington-based American Enterprise Institute, who analyzes U.S. defense policy in the Asia-Pacific. “We may well see a new crisis in the Taiwan Strait before the decade’s out.”

Taiwanese President Tsai Ing-Wen delivers a speech at a public test flight of the AIDC T-5 Brave Eagle, Taiwan’s first locally manufactured advanced jet trainer, in the city of Taic-hung on Monday. REUTERS Continued on page 5 ->

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