NAHA, Okinawa Pref. — Every third Monday, members of an underground community bank gather in a bar in downtown Naha.

For 20 years, owners of stores along Kokusai-dori, the main street and a popular tourist hangout, have met to pool their extra cash, which members then take turns borrowing. Sometimes, the funds are used to help renovate a store, to help cover losses from a burglary, or even to assemble 10,000 dancers to parade through downtown Naha in a bid to attract more tourists.

“I come here and recharge — there’s incredible support here, and a determination to keep the community intact,” says Tatsuya Inoue, who runs a restaurant that was passed down to him by his father.

Known as “moai,” these meetings are held throughout Okinawa and are evidence of the strong community backing that observers say continues to act as a cushion from market forces.

But increasing competition and the prolonged economic slump are now straining the community’s ability to take up the slack.

The number of individuals applying for court protection from creditors rose more than 20 percent in 2001 from a year earlier to a record 20,281, according to the Naha District Court.

At the same time, supermarket chains are pulling out, public works projects are being cut and 43.4 percent of new graduates from college or high school cannot find jobs.

“The number of companies on the brink of failure is extremely high,” said Hidenobu Kinjo, head of research at the Naha office of think tank Teikoku Databank. “So far, companies are still refraining from cutting staff, but we are looking at a potentially enormous rise in unemployment.”

Local firms are now struggling to come to terms with their obligations to the community and their sometimes conflicting business interests.

“To survive in the local industry, we need to expand sales in the rest of Japan,” said Yoshio Tomei, vice president of Orion Breweries, Ltd., maker of Okinawa’s best-selling local beer.

Orion antagonized many of its Okinawan shareholders when it announced last month it is tying up with giant Asahi Breweries, Ltd.

Under the partnership, Asahi Breweries will sell the Orion Draft brand through its sales network starting in November, in addition to providing technical, marketing and product development support. Orion hopes to expand sales outside Okinawa fivefold, from 60,000 cases (each case contains 20 633-ml cans) to 300,000 cases by March 2004.

Asahi Breweries meanwhile hopes to expand its 10 percent market share in Okinawa to 20 percent. This will be at the cost of Orion’s share, market-watchers predict.

“Orion Beer was always the local beer. There is a risk that the community will stop favoring it over national brands,” said Hiroiwa Miyagi, president of Okinawa Products Union Co.

But Orion had no choice, according to Moritake Tomikawa, a professor of regional development at Okinawa International University.

Since Okinawa’s reversion to Japan in 1972, beer companies based in Okinawa have enjoyed reduced alcohol taxes. The exemption, which currently stands at 20 percent, saved Orion 2 billion yen, or 1.6 percent of the company’s net profits in the 2001 business year.

This preferential treatment expires in May 2007, after being postponed for five years.

Even so, competition from the nation’s biggest brewers has eaten away at the local brand’s market share, which once stood at 90 percent.

Beaten down by big companies’ superior marketing resources and cheaper “happoshu” low malt beers, Orion’s share had dwindled to 60 percent as of last month, while Kirin Brewery Co. had a 25 percent.

Coupled with declining sales, the removal of the tax exemption threatens to turn Orion’s profits into losses.

Orion’s sales came to 20.4 billion yen in 2001, down 4.4 billion yen from their peak in 1997.

“Thirty years of preferential tax breaks may have made things too comfortable for Orion,” said a former top Okinawa official.

Meanwhile, the prefecture is seeing a number of major companies pull out as they strive to slim down from over-expansion during the bubble years of the late 1980s and early 1990s.

Accounting for about 1 percent of the nation’s population, Okinawa’s market is simply too small, said Kazuhiko Iwata, head of human resources at Daiei, Inc.

The supermarket chain closed its three Okinawa stores at the end of August and plans to close three Cocomart, Inc. subsidiary stores by the end of this month, potentially idling over 750 workers.

A big pullout like Daiei’s has larger repercussions.

Daiei was the flagship outlet in Itoman’s Nishizaki Shopping District in southern Okinawa, attracting customers from neighboring towns to the smaller mom-and-pop stores in the shopping area.

In addition, the shopping plaza’s operations are based on loans from Daiei. The plaza was meant to repay the debt using the rent it received from Daiei. The pullout has left the plaza 1 billion yen in debt and without the means to pay off the loan.

“We did everything we could to find another tenant,” said Asamori Yamasato, marketing director at the shopping plaza. “We had no choice but to ask the city of Itoman to purchase the lot.”

But despite all the bleak news, including high unemployment, young Okinawans can’t stay away.

According to the most recent analysis by the prefecture on its unemployment problems, there were 53,000 people out of work at the end of March, of which half were under 30 years old. The jobless rate for those between 18 and 30 stood at 17 percent — about twice the national average for that age group.

But the survey also showed that many of those who leave the prefecture seeking jobs and opportunities in other parts of Japan end up returning after a few years.

For example, according to the latest figures, 90 percent of those who left Okinawa in 1995 were by last March registered again as Okinawa residents. This trend worries policymakers, who note that to keep Okinawa’s current unemployment rate from growing, 9,000 new jobs must be generated every two years.

“Many people become homesick. They are not used to so much emphasis on results and performance that you see on the mainland,” said Yumi Isa, who runs the prefecture’s work assistance program at the Okinawa Industrial Support Center in Naha. “You don’t feel so lonely here and if you can find a 9-to-5 job, that will give you enough money to vacation at a nearby island.”

Complaints about working in Tokyo from Okinawans have ranged from “bureaucratic rules that infiltrate even the most minor aspects of work” to “a general sense of restriction and oppression,” “repetitive and stressful detail-oriented work” and “complexity of interaction with fellow workers.”

Isa also returned after spending a few years in Australia and another four years in Kyushu.

According to a government poll in 1997, about 80 percent of Okinawans said they were satisfied with their lifestyles, up from 70 percent in 1992.

“People don’t need to hold down a job to enjoy a satisfactory lifestyle,” Isa said.

The same government survey showed that 11.7 percent of Okinawans pointed to the prefecture’s low cost of living and high level of community support as contributing factors to its chronically high number of jobless people.

“For a place with such a high unemployment rate, the number of people who applied for jobs has been extremely low,” observed the president of a manufacturer that built a factory in Okinawa in June.

“Okinawans need to take more initiative in finding jobs outside Okinawa, succeeding on their terms, and bringing business back,” said Tomikawa of Okinawa International University. “But that doesn’t mean Okinawa should be a miniature Tokyo.

“Okinawa may be able to provide Japan with a new type of business model — of working hard and playing hard.”

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