The Tokyo Olympics are down—but don’t count them out

In May, I predicted Japan would barrel ahead with the Tokyo Olympic Games heedless of surging COVID-19 cases and mounting public opposition.

And here we are.

Daily new cases of the virus in Tokyo hit a six-month high of 1,800 on Wednesday, forcing the government to declare a fourth state of national emergency that will extend social distancing restrictions until late August. Opinion polls show that the share of Japanese who think the Games should be postponed or canceled now tops 80%.

But never mind: the opening ceremony commences as scheduled on Friday at 8:00 p.m. Tokyo time.

The Games will proceed despite a cavalcade of other calamities, including an outbreak of new infections in the Olympic Village, the arrest of Olympic contractors from the U.S. and Britain on drug charges, an alleged rape, and an absconding Ugandan weightlifter.

And there’s more. On Monday, Keigo Oyamada, a composer whose music was to be central to the opening ceremony, resigned in the wake of social media furor over a 1994 interview in which he boasted of bullying disabled students as a kid. On Thursday, the Tokyo Olympic organizing committee sacked Kentaro Kobayashi, the director of the opening ceremony, for jokes he’d made about the Holocaust in a 1998 comedy sketch.

Meanwhile, an infestation of rogue oysters—14 metric tons of them—has disrupted the Tokyo Bay waterway constructed to host the canoeing and rowing events. And on Wednesday, police in Fukushima confirmed that they were on the alert for a large Asian black bear seen prowling the venue for the Tokyo Games’ first event, a softball match pitting Japan against Australia.

As I noted in May, the 2020 Olympics were supposed to be a national celebration for Japan. The idea was to show the world that Japan had bounced back from three decades of economic stagnation and the devastating “triple tragedies” of 2011, when an earthquake off Japan’s northern Pacific coast unleashed a devastating tsunami that triggered a nuclear catastrophe.

Instead, the Tokyo Games look to be a subdued and stilted affair. Athletes will be confined to an Olympic bubble, and subject to quarantine or disqualification if they fail a daily COVID test. Japan has banned foreign tourists and local spectators. Foreign reporters will be largely restricted to their hotels and Olympic sites, with their movements carefully monitored by special minders.

Those precautions notwithstanding, about 75 people linked to the Olympics have tested positive for COVID-19 so far, including two South African soccer players, a beach volleyball player from the Czech Republic, a Dutch skateboarder, and an alternate on the U.S. women’s gymnastics team.

On Monday, Toyota Motor Corp., global sponsor of the games, announced that it is pulling Olympic-themed television advertisements from airwaves in Japan, although the campaign will run in other markets. The company also said chief executive Akio Toyota will not attend the opening ceremony. “Various aspects of this Olympics aren’t accepted by the public,” Toyota spokesman Jun Nagata told the Yomiuri Shimbun.

As Nikkei Asia columnist William Pesek points out, “Toyota’s volte-face is catching on.” Tire-maker Bridgestone Corp. is also canceling Olympic ads. Senior executives from Asahi Breweries, Fujitsu, NEC Corp., Nippon Life Insurance, Nippon Telegraph & Telephone Corp., and Sumitomo Mitsui Financial Group will skip the opening ceremony, according to Bloomberg.

The Games’ travails are a public relations nightmare for Asics, the Kobe-based sportswear maker that paid a reported $135 million to be an Olympics gold partner. The company had hoped Olympic sponsorship would help it raise brand awareness and recover market share lost to rivals Nike and Adidas; that now seems a distant prospect. Earnings of Dentsu, the Japanese marketing colossus that played a key role in Tokyo’s Olympic bid and was named the Games’ exclusive advertising partner, are also expected to take a beating.

Toshiro Muto, the chief of the Tokyo 2020 Olympic organizing committee, made headlines Tuesday by hinting the Games could still be canceled if COVID cases spike. But the odds of that seem vanishingly remote. International Olympic Committee President Thomas Bach, who has insisted all along that cancellation was never an option, remains steadfast in his conviction that the Games will be “safe and secure.” Japanese Prime Minister Yoshihide Suga, who faces a general election in October, seems equally resolute. Suga’s public approval rating has slipped perilously close to 30%, the threshold below which several previous premiers have quit or been forced out. But he’s betting that successful completion of the games will help him win back the hearts and minds of enough voters to carry the day.

That bet may yet come right. The great Robert Whiting, a prolific American journalist who’s covered Japan’s sports scene for six decades, has penned a vivid, lyrical essay for Nikkei Asia contrasting the 2020 Olympics with the Tokyo Olympics of 1964. “If Japanese today are shedding tears at the Opening Ceremony it is only because they have lost faith in their government which has insisted on going forward with the Games in the face of the pandemic,” he concedes.

But Whiting’s essay ends on an upbeat note. After all, he argues, remember the Rio Games, where everything went wrong—and yet more people than ever watched and cheered. For all the hiccups, headaches and hassles, Whiting suggests, there is something transformative about the power of sport, and something magical that happens when the world comes together to watch great athletes push themselves to new limits.

Let the Games begin!

Tomorrow, July 23rd, I’ll be hosting another great Fortune virtual conversation. This one is entitled “Fostering the Next Generation of Unicorns” and will focus on the burgeoning startup scene in Southeast Asia. We’ll convene a stellar panel, including Edwin Chow, assistant CEO at Enterprise Singapore; Ee Ling Lim, head of Asia Pacific business development for 500 Startups; Leo Jiang, chief digital officer for Asia Pacific at Huawei Cloud and AI; and Moses Lo, CEO and co-founder of Xendit. Register here.

More Eastworld news below.

Clay Chandler
clay.chandler@fortune.com

This edition of Eastworld was curated and produced by Yvonne Lau. Reach her at yvonne.lau@fortune.com  

Eastworld News

Flood fatalities

Thirty-three people have died and tens of thousands are now being evacuated from central China’s Henan province as heavy rains and floods continue to hit the region. Henan’s weather bureau on Thursday flagged a red storm alert—the highest warning—for the four northern cities of Xiniang, Anyang, Hebi and Jiaozuo. The Foxconn factory in Zhengzhou—Apple’s largest iPhone manufacturing site in Henan's capital city—experienced a power outage as floodwater leaked into the factory. Reuters 

Southeast Asia surge

COVID-19 infection and death rates are surging again across Southeast Asia. The rapid spread of the Delta variant, low vaccination rates and lax precautionary measures are all contributing factors. Since late June, Indonesia, Malaysia and Myanmar have recorded sharp spikes in virus deaths; on Thursday, the countries' seven-day averages reached 4.17, 4.02 and 3.18 per million, respectively. Indonesia, Southeast Asia’s largest economy, marked a grim milestone on Wednesday with 1,383 deaths recorded—its highest death toll since the pandemic began. AP

Shocked and offended

Beijing is “extremely shocked” and offended by the World Health Organization’s plans to renew its investigation into the origins of COVID-19, said Zeng Yixin, vice minister of the Chinese National Health Commission on Thursday. The WHO proposal includes a re-examination of laboratories in Wuhan, the city in which the coronavirus first appeared. “We can’t possibly accept such a plan,” added Zeng. In March, a joint WHO-China probe found that it was “extremely unlikely” that the virus leaked from a Wuhan lab. But various countries have criticized the investigation as incomplete and lacking in transparency. New York Times

Hong Kong is guzzling Aussie wine  

Australian wine shipments to Hong Kong have skyrocketed 111% in the year ended June 30 to $136.7 million, moving up three spots to become the fourth-largest market for the country’s wine exports. Though mainland China remains the top market for wine from Down Under, exports dropped 45% in the same period after heightened Australia-China tensions led Beijing to slap massive tariffs on Aussie wine. The Chinese tariffs have hurt the Australian industry; total exports declined 10% this fiscal year with shipments to China falling 97% to $9.6 million in the first-half of 2021. Bloomberg

Sherman and Wang to meet 

U.S. deputy secretary of state Wendy Sherman is set to meet with Chinese officials next week at a time when U.S.-China tensions are escalating on several fronts. Sherman will travel to the northeastern port city of Tianjin and will meet with Chinese foreign minister Wang Yi and other officials, said the State Department on Wednesday. The State Department’s announcement comes a day after the U.S. publicly accused China of hacking Microsoft’s email servers and stealing trade secrets. The U.S. Justice Department charged four Chinese nationals from China’s Ministry of State Security, an intelligence agency, for hacking into the email networks of various institutions from universities to corporations to government entities. Fortune 

Markets and Movers

CloudWalk – A.I. technology CloudWalk is targeting to raise $574 million in an IPO on the Shanghai STAR Market, China’s version of the Nasdaq. Should the company successfully debut on the STAR, it will be the first of China’s four ‘AI dragons’ to go public. CloudWalk’s 2020 net loss equalled $111.3 million due to heavy R&D investments; the A.I. unicorn was valued at a little over $3 billion last year.

Bukalapak – Founded in 2010, Bukalapak was one of Indonesia’s first e-commerce start-ups. On Wednesday, Bukalapak raised $1.5 billion in its initial public offering in the country’s largest-ever IPO that values the firm at approximately $6 billion. The company, which is backed by Microsoft and Singapore’s sovereign wealth fund GIC, priced its IPO at the top end of its indicated range after seeing hot investor demand. Bukalapak is set to debut on the Indonesian Stock Exchange on Aug. 6.

Nidec – Japan’s Nidec, an electronic parts maker, announced a 60% profit jump to $406 million for the first quarter of 2021 as demand surged for electric vehicle motors and home appliances. Nidec also announced that it’s in discussion with Taiwan’s Hon Hai Technology to develop electric vehicles in a joint venture that would be set up in 2022. Best-known for manufacturing electric motors for smartphones and computer hard drives, Nidec is looking to capture more of the EV motor market share.

Rokt – E-commerce technology provider Rokt has become Australia’s latest unicorn. Its newfound valuation of $1 billion resulted from an investor's secondary share sale. Rokt offers B2B services for e-commerce providers, such as platforms to optimize marketing, brand engagement and partnerships. The company has already expanded into Singapore and the U.S. but is targeting a larger footprint in Asia-Pacific and Europe. It’s also preparing for a pre-IPO raise—and looking to go public in 2023 in Australia or the U.S.

Chinese tech – China’s tech giants are under fire again from the country’s top cyber watchdog, the Cyberspace Administration of China. The regulator said on Wednesday that it has fined four tech firms—e-commerce behemoth Alibaba, short-video app Kuaishou, fashion social platform Xiaohongshu, and Tencent, which operates blogging platform Sina Weibo and messaging app QQ—for spreading obscene content, including child-related explicit material. The agency ordered firms to “rectify and clean up” the illegal content. The amount of the fines was not specified.

Final figure

600

China has unveiled the world’s fastest train that can reach speeds of 600 kilometers per hour. On Wednesday, state company China Railway Rolling Stock Corporation debuted its ‘maglev’ (magnetic levitation) bullet train in coastal city Qingdao, in eastern Shandong province, where it was manufactured. On average, Chinese high-speed trains currently run at about 350 kph. The new maglev train could cut a 1,000-kilometer trip from Beijing to Shanghai for instance, down to 2.5 hours. A flight between those two cities is around 3 hours.