Japan Market Update - March 2004 Edition

Hi,

The recent release of strong economic data showed Japanese GDP had grown 7 percent in a quarter from a year ago--an impressive gain in comparison to growth figures even during the bubble economy. March 31 is the end of the fiscal year for Japanese companies, and this year many are expected to close their books on a more positive note than last year. Other positive indicators include the strengthening of the U.S. economy, increasing exports to China and sales of consumer goods. This is good news for Japanese companies, as well as for overall consumer confidence.

The first three months of 2004 were expected to be positive for Hawaii showing increased activity from Japan. However, indicators show that our Japanese visitor arrivals were actually down from last year. According to industry sources, the key factor contributing to reduced arrivals is the reduced number of airline seats between Hawaii and Japan.

However, even with reduced seats, many hotels, attractions, and retailers are seeing better business from their Japanese customers, in part due to the positive currency situation for Japanese travelers. Noted recently is the lack of calculators being used by visitors--a positive sign for the market and and indication of increased spending.

This winter season brought back many young adults to Hawaii--college seniors on graduation trips and young working women with their friends or partner. This past week's 10th Anniversary of the Honolulu Festival brought all market segments of travelers, including many 50+ mature travelers. Over 5,500 participants, family, and supporters came to attend the festival this year.

While Japanese arrivals are expected to remain sluggish in early spring, as we move into late spring, Golden Week, and the summer, the visitor numbers from Japan should dramatically increase. United Airlines and Northwest have announced they will add seats on the Japan-Hawaii route in the spring and summer, which should begin to boost arrival numbers from last year where we had the impact of War and SARS.

With regard to trends that impact consumer confidence and influence our visitor industry, technology is moving at a breathtaking pace in the Japanese market and in society. This month we will issue a SPECIAL JAPAN TECHNOLOGY UPDATE to highlight some of the technological trends. STAY TUNED!

Warmest Aloha,
Dave Erdman

*Japan Market News
-----Travel: Supplying the demand: United adds Narita-Honolulu flight
-----Hospitality: Warm winter for Hawaii hotels
-----Business: Improving Japanese economy boosts outlook for Hawaii
-----Business: Shouchu exceeds sake as drink of choice
-----Business: Goods and services to include consumption tax
-----Business: Happy 30th Birthday, Hello Kitty
-----Restaurants: Ginza Kimuraya bakery opens at Kahala Mall
-----Restaurants: Chanel restaurant planned for Ginza
-----Retail: Christian Dior opens flagship boutique and Maison Dior in Tokyo
-----Retail: Discount clothing giant cuts prices
-----Fashion: Dissecting the Japanese "metrosexual"
*Culture Corner
*Media of the Month
*Upcoming Magazine Deadlines
*Important Dates

TRAVEL: SUPPLYING THE DEMAND: UNITED ADDS NARITA-HONOLULU FLIGHT

United Airlines to fly twice daily from Narita to Honolulu, looks to servicing neighbor islands
Responding to near-capacity demand on Narita-Honolulu flights, United Airlines will add a flight to its daily service starting June 11th. The Boeing 777 will add 253 seats to the tight Hawaii-bound market. Governor Linda Lingle called United's decision "welcome news, and another sign of confidence airlines have in our state's strengthening visitor market." Yasuyuki Watanabe, Manager of Passenger Sales, said United is also expressing interest in direct flights from Tokyo to neighbor islands. Currently, United services four islands -- Oahu, Maui, Kauai, and Hawaii -- all from the mainland, and codeshares with Aloha Airlines to Lanai. (Sources: Travel Vision News 2/16/04; United Airlines Press Release 2/10/04) Back to top

HOSPITALITY: WARM WINTER FOR HAWAII HOTELS

Sports events, conventions, and Valentine's Day usher in record month for Hawaii hotels
Hotel occupancy statewide peaked on Valentine's Day at 93.2 percent, and the second half of February remained strong above 80 percent, according to reports released by the Hospitality Advisors LLC. At 91.5 percent, Oahu hotels averaged almost 12 points higher than Valentine's Day weekend last year. Room rates were also up, about 4.7 percent higher than the year prior. The hottest week in February started on February 8th with the Pro Bowl, which coincided with Cisco System's annual convention, followed by the Great Aloha Run held on Valentine's Day weekend. (Sources: Pacific Business News 2/27/04, 2/20/04, 2/13/04, 2/6/04) Back to top

BUSINESS: IMPROVING JAPANESE ECONOMY BOOSTS OUTLOOK FOR HAWAII

Economy's fastest growth in 13 years signals recovery in Japan
Japanese government officials announced a 1.7 percent increase in the nation's GDP last quarter, the strongest growth since 1990. Analysts attribute the improvement to a combination of strong exports and rising stocks in the private sector. Consumer spending also rose by 0.8 percent from the year prior, suggesting that an active export market has favorably driven the domestic market. Hawaii economists should predict a ripple effect for the state, as Japan's economic indicators are major components of Hawaii's economy . Some Japanese analysts still caution against the currency, warning that a strengthening yen will cut exporters' profits by making products more expensive overseas. One analyst at Cigna International Investments Co. sees the exchange rate as low as 100 yen to the dollar, which may be desirable for tourists, but will be risky for the Japanese economy. (Sources: Pacific Business News 2/16/04; The Honolulu Advertiser 2/18/04) Back to top

BUSINESS: SHOUCHU EXCEEDS SAKE AS DRINK OF CHOICE

Shouchu fly off shelves as beer companies rush to manufacture more
Beer makers Kirin and Asahi both saw their bottom lines go up this past year, thanks to a recent shouchu boom that's stirring things up across the nation. In fact, Kirin reported shipping 80,000 more liters of shouchu than they did sake, a phenomenon unseen in previous years according to the company. A formerly unglamorous, potato-derived alcohol known best for adding zing to juice and soda, shouchu had long been a cheap "izakaya" (pub) favorite that never shared the status of the more refined, grain alcohol such as sake and whiskey. These days shouchu can be served straight-up at bars and clubs, or regional ones that hail from exclusive cellars might be swirled, sniffed, and sipped. The number of certified shouchu "sommeliers" rose by 400 percent, testimony to what beverage industry experts are calling a shouchu revolution. (Sources: Yahoo! News Japan 2/28/04; Minami Nippon Shimbun 2//27/04) Back to top

BUSINESS: GOODS AND SERVICES TO INCLUDE CONSUMPTION TAX

Citing consumer convenience, Japanese government imposes internal taxation law on merchants
Responding to public claims that unregulated price displays are confusing and deceptive -- whether the price is before or after tax is unclear -- the Japanese Ministry of Finance declared that all providers of goods and services in Japan will be required to display after-tax prices to consumers. The new regulation takes effect April 1st, and will affect all in-store services and merchandise, catalog and direct mail products, and both online and offline advertisements. The government has not set a deadline for businesses to update point-of-sale systems, but will require sales receipts to indicate the tax amount of each transaction. (Source: Ministry of Finance News Release) Back to top

BUSINESS: HAPPY 30TH BIRTHDAY, HELLO KITTY

Sanrio Co. plans many happy returns for Japan's most beloved cartoon cat
Hello Kitty, which debuted in 1974 as an anonymous mouthless cat printed on a vinyl handbag, celebrates her 30th anniversary this year. The iconic character made her first U.S. appearance in 1976, and now adorns over 50,000 merchandise in 60 countries. Kitty alone generates about $1 billion in annual sales, representing a third of Sanrio's sales through direct merchandising and licensing. The cat has been studied by cultural anthropologists, sparked feminist dialog as a sexually unexploited marketing role model, and even criticized for theories that her creation was based on the stereotype of subservient, voiceless Japanese women. But despite society's prodding, Kitty thrived and continues to be Sanrio's "spokeskitty." The company immortalized Kitty with a special-edition, diamond-studded platinum figurine, on sale for 3 million yen (approximately $28,000), as well as a pair of commemorative gold coins for 50,000 yen (approx. $4,700).
(Sources: http://www.asahi.com 2/21/04; Sanrio News Release 2/3/04; Hello Kitty -- The Remarkable Story of Sanrio and the Billion Dollar Feline Phenomenon) Back to top

RESTAURANTS: GINZA KIMURAYA BAKERY OPENS AT KAHALA MALL

One of the country's oldest bakeries fuels Hawaii's demand for Japanese pastries
What makes Japanese pastries so special? Ask the customers at any of Hawaii's nine Japanese pastry shops, and the answers ring similar: unbeatable flavor, an almost artisanal quality, and nostalgia. Tokyo's famous Ginza Kimuraya opened its flagship Hawaii store in February to great expectations, its cramped bakery filled with shoppers and lines more waiting outside. Business is thriving so far, although General Manager Yoshio "Roger" Tsubokawa is also wary of how long that trend will last. "Competition is already so tough," he said. Including Kimuraya, there are five bakeries within a one-mile radius of the store. But longevity is Kimuraya's business -- they've been around since 1869, during the early Meiji era -- and so is its products' quality and consistency, according to customers. Keiko Takayama, a frequent Kimuraya shopper and former Tokyo resident agrees. "Everything smells and tastes the same as [the store] back home," she said, "This is the taste of Japan." Back to top

RESTAURANTS: CHANEL RESTAURANT PLANNED FOR GINZA

World-renowned French chef Alain Ducasse and Chanel executives discuss joint venture in Tokyo
The plan is in its earliest stages yet, but luxury designer Chanel and three-star chef and restaurateur Alain Ducasse are meeting in Tokyo this month to introduce plans for a new restaurant to be built in Ginza. The restaurant will be Chanel's first project of its kind, although mum's the word on any details. The Ducasse camp, however vague, promises an establishment with "a unique concept," unlike his traditional high-end French cuisine. Ducasse, who operates three-star restaurants in Paris, Monaco, and New York City, was forced to close a restaurant he started in 2000 after it failed to catch on with consumers in the Tokyo suburbs. But despite such humble beginnings in Japan, there's hardly doubt that Ducasse and Chanel are planning a "French fashion meets French fare" extravaganza. (Sources: http://www.asahi.com 2/12/04; www.alainducasse.com) Back to top

RETAIL: CHRISTIAN DIOR OPENS FLAGSHIP BOUTIQUE AND MAISON DIOR IN TOKYO

Shoppers flock to two openings within two days for limited edition handbags and home accessories
Over 1,000 Dior fans braved the cold and formed long lines on opening day at couturier Christian Dior's flagship store in Tokyo's fashion district of Harajuku. Merely two days later to less fanfare, Maison Dior opened at Takashimaya's main branch, making it Japan's first showcase of Dior's home dŽcor accessories in addition to its most popular collection of clothing and bags. Shoppers browsed bed linens, tableware, and silver adornments, but mainly concentrated on snagging a limited-edition makeup bag donning the popular Hardcore "J'adore Dior" logo. Dior plans to open another boutique in the fall, positioning Japan as possibly its most lucrative high-fashion market. In 2002, Dior Japan raked in $598 million, nearly 20 percent of the company's global sales and third top-grossing country after the U.S. and France. In fact, Japanese business has doubled since 2001, and despite a 10 percent hike in handbag prices last year, sales have risen so consistently that Dior predicts Japan will dominate up to 30 percent of their overall sales by 2006.
(Sources: Sarawak Tribune 12/29/03; Tokyo Shimbun Shopper 12/01/03; The Sankei Shimbun 07/18/03; Dior Financial Report 5/15/03) Back to top

RETAIL: DISCOUNT CLOTHING GIANT CUTS PRICES

Popular clothing retailer Uniqlo lowers prices to accommodate new internal taxation law
Fast Retailing Co., parent company of Japanese apparel brand Uniqlo, plans to cut product prices by 0.3 percent to 4.8 percent starting this spring, in a commitment to maintain their discount clothing line's low prices. The price-cutting measure is a means to absorb an internal consumption tax imposed on retailers, starting April 1st. A Gap-like casual retailer for men, women, and children, Uniqlo's merchandise is made under stringent quality standards at company-owned factories in China, and is sold at 450 stores nationwide and in the UK. Company profits fluctuated since 2000 amidst economic downturns and public rejection for cheap clothes. However, sales are on the upswing again, and the company predicts a 40 percent increase in profits this fiscal year.(Sources: Uniqlo Press Release 2/20/04; Japan Today 2/21/04) Back to top

FASHION: DISSECTING THE JAPANESE "METROSEXUAL"

The look is neither too preppy nor too clean, but costly -- and matter of fact -- for the young Japanese male
Before "Queer Eye for the Straight Guy" unveiled the metrosexual phenomenon to America, many urban Japanese men have long been trimming their eyebrows. J@pan Inc. Magazine recently featured a 30-ish man who fit the dandyish profile: an impeccably groomed Tokyoite with strong aesthetic taste and a penchant for high fashion.
Casual Dress for a Japanese Metrosexual
Shampoo - Specially formulated (per bottle): 16,000 yen ($120)
Moisturizer - Clinique for Men: 16,000 yen ($120)
Leather ID badge strap - Armani: 10,000 yen ($93)
Watch - Rolex (he has another Rolex and an Omega at home): 380,000 yen ($3,550)
Shirt - Jil Sander: 28,000 yen ($260)
Pants - Prada: 46, 000 yen ($430)
Shoes - Prada (He has 21 more pairs of shoes and 12 pairs of sandals at home): 68,000 yen ($640)
Total: 564,000 yen ($5200)
Read the J@pan Inc. Magazine article in full, at http://www.japaninc.net/article.php?articleID=1173 (Sources: J@pan Inc. Magazine 9/03) Back to top

GOLDEN WEEK

Many of us know around what time Golden Week is -- the end of April through the first week of May and that many Japanese have time off to travel, but do we really know why? Golden Week is an unusual cluster of holidays that happen to fall around that period. The word "Golden Week" was invented by movie companies to take advantage of the "golden" opportunity to go and see a movie. The word caught on by others and was gradually termed to refer to the string of holidays. Golden Week starts on April 29th which used to be Emperor Hirohito's birthday until his death in 1989. Now it is known as Midori no hi, the celebration of Green Day - a day of nature appreciation. Then comes Kenpo Kinenbi - Constitution Day that is celebrated on May 3, which was put into effect on this day in 1947. Then Kokumin no kyujitsu which is a free National Holiday on May 4 because it falls between two holidays. Lastly, comes Kodomo no hi - Children's day which falls on May 5. This is a day to wish for the health and happiness of children. Although factories tend to shut down for the entire week, many offices are open on non-holiday days. However, many office workers will use their paid vacation to take an extended vacation thus allowing them to travel.

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NOUVEAU - ALA MOANA CENTER SELECTION

With over 230 shops and restaurants, Ala Moana Center is a shopping destination in Hawaii and Nouveau - Ala Moana Center Selection is the only exclusively Japanese publication devoted to Ala Moana Center. It is hand-delivered to JTB customers at the JTB check-in counter at Narita airport prior to departure, giving merchants a chance to reach a captive, Hawaii-bound audience during their long and leisurely flight. Editorial is guaranteed for all advertisers who; receive an editorial equal to the size of the ad purchased! The next issue will be released in June, just in time for peak summer travel.

Call Toby Tamaye now at 949-4592 ext. 814 and ask for more information! Or click here for a summary or here for pricing.

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Plan now for Summer 2004!! Click here for our Media Request Form or contact us.

Space Deadlines:

03/05/04 Chikyu no Arukikata - June Mook 2004 (STILL SPACE AVAILABLE)
04/10/04 Nouveau - Ala Moana Center Selection June 2004
03/19/04 Chikyu no Arukikata - Guam Mook 2004
04/15/04 Chikyu no Arukikata - Neighbor Island Guidebook 2004
05/01/04 Aloha Express - July 2004

Material Deadlines:

04/01/04 Chikyu no Arukikata - June Mook 2004
05/10/04 Nouveau - Ala Moana Center Selection June 2004
05/15/04 Chikyu no Arukikata - Neighbor Island Guidebook 2004
05/15/04 Chikyu no Arukikata - Guam Mook 2004
05/15/04 Aloha Express - July 2004

It is not too late to call us (808-949-4592 or Toll Free 1-800-338-4502) to find out more about these upcoming media releases as we strive to find the best media available for you.

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04/29/04 Green Day (Environmental Awareness Day)
04/29/04 Golden Week Begins (until May 5)
05/03/04 Kenpou Kinenbi -- Constitution Memorial Day
05/04/04 Kokumin no Kyujitsu -- National Holiday
05/05/04 Kodomo no Hi -- Children's Day/Boy's Day
05/09/04 Haha no Hi -- Mother's Day
06/20/04 Chichi no Hi -- Father's Day

Click here to see entire 2004 year.

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