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Japan's just-in-time corporate overhaul

The completion of several high-profile corporate restructurings in Japan has convinced many investors that at long last the country is shaping up to come out of recession. Domestic value investors are driving change. Others fear that it's too little too late and that time is not on Japan's side. By 2007 public debt could be three.

THE IMMACULATELY MAINTAINED blue tents in Tokyo's Yoyogi Park are a sobering reminder of the social cost of Japan's lost decade of economic stagnation. Peopled mainly by mild-mannered middle-aged men, they are home for many of Japan Inc's salarymen, the career middle managers that joined the country's vast conglomerates, which once promised lifetime employment. It was a promise they could not keep.

Although they inspire pity in some, others point to these homeless middle managers as an indication of positive changes in Japan's battered economy.

"One thing that has changed is the job-for-life mentality," says Casper Lawson, partner at solicitors Linklaters in Tokyo. "That mentality has completely gone. It says a lot about the economy. It tells people all the time to take care: perhaps you should go and be an entrepreneur. That's a lesson that will never be forgotten."

Foreign capital has been prominent in driving home new lessons. Last year, Japan Telecom was acquired by US private-equity house Ripplewood in Asia's largest-ever leveraged buyout. In Japan's xenophobic corporate culture the deal stood out.

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