Japan Market Update - February 2006 Edition

Hi ,

The big news in Japan starting off the year is media tycoon Takafumi Horie's arrest on suspicion that his Internet start-up, Livedoor, and its subsidiaries used buyout deals to sell shares at high prices. The Tokyo stock market lost almost $400 billion in value in three days following this debacle, causing consumer panic and insecurity in a market that has already been seeing corporate restructuring and a tight job market. See more below - it's like a movie unfolding.

The Japanese government is now examining the need for its own version of the U.S. SEC (Securities and Exchange Commission), especially to guide and monitor recent trends in aggressive mergers and acquisitions and rapid turnover and IPOs among Japanese corporations.

But despite all this, the benchmark Nikkei stock exchange has seemingly recovered, even posting a five-year high on January 31 at 16,649 yen, its highest since September 2000. The yen weakened somewhat against the dollar to 117 yen -- a disadvantage to Japanese travelers -- but indicates Japan's economy is still thriving.

How does this affect marketing efforts to Japan's consumers? The yen may be teetering on the verge of undervalue (against the dollar) for travelers, but an otherwise growing economy and rising corporate bonuses keep the Japanese as interested in travel as ever before -- especially honeymooners, wedding couples, families, and now the increasingly youthful, "freshly retired" baby boomers. In Hawaii, a room inventory crunch and fully booked flights, due largely to cancelled routes to other destinations, have made planning trips more difficult for Japanese consumers. Other Pacific destinations are facing some of these challenges.

That said, your appeal to Japanese consumers needs to remain strong, and marketing efforts should support that goal. Let us know if you see "gaps" in your marketing and communications programs and need some help getting your marketing engine into full force as we begin 2006.

Warmest regards,
Dave Erdman
derdman@pacrimmarketing.com

*Japan Market News
-----Travel: Key markets are growing despite softer Japan arrivals
-----Travel: Guam reached 2005 Japanese visitors goal
-----Travel: JAL changes Guam flight schedule
-----Travel: Travel industry cautioned on bird flu outbreak
-----Business: "Livedoor shock" and scandal grip Japan
-----Business: Beer-like bubbly on the rise
-----Business: Japan reimposes U.S. beef ban amid new fears of mad cow disease
-----Technology: Staying in touch in cyberspace
-----Fashion: "Furoshiki" cloths, a shopping bag alternative
-----Fashion: Kids' schoolbags fetch big bucks
*Culture Corner
*Media of the Month
*Upcoming Magazine Deadlines
*Important Dates

TRAVEL: KEY MARKETS ARE GROWING DESPITE SOFTER JAPAN ARRIVALS

Continued growth in honeymoon, weddings, and incentive travel markets may buoy 2006 travel climate
Japanese arrivals were down 8.6 percent as of the last week of January compared to 2005, but last year's figures showed critical markets grew year-to-year: Japanese honeymoon traffic grew 18 percent to nearly 208,000 visitors, wedding arrivals grew 20 percent to an estimated 54,000, and the incentive tour business -- trips awarded to employees as incentives -- increased 62 percent, bringing in over 41,000 visitors in 2005. "We are confident that this growth will continue in 2006," said Hawaii Tourism Japan Executive Director Takashi Ichikura. Working to put a damper on last year's travel boom are the strengthening dollar, which can give travelers the impression that Hawaii is expensive, and a tight airlift capacity in the aftermath of suspended Hawaii-bound flights.
(Sources: Pacific Business News 1/21/06)
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TRAVEL: GUAM REACHED 2005 JAPANESE VISITORS GOAL

Strong arrivals revived Guam tourism throughout the year
Guam ended 2005 with roughly 1.21 million visitors, short of its cumulative goal of 1.25 million. However, strong Japanese arrivals helped surpass the 950,000 target for the first time since 1999, up 5.5 percent from last year to 955,154. Arrivals surpassed previous year levels during all months except August, although August saw the fourth largest visitor numbers of 2005. January marked the biggest jump in arrivals with 88,977, up 11.7 percent. Industry experts anticipate an equally successful year in 2006, banking on the success of newly opened or renovated Guam hotels, as well as the trend in rising seasonal bonuses in Japan. Furthermore, the Guam Visitors Bureau plans to shift its marketing focus from young families and OLs (office ladies) to the higher-spending senior market, with an emphasis on promoting a more upscale image of Guam. As of 2005, JCB credit card holders spent an average $1,633 during their trip, and stayed an average of 3.8 days in Guam.
(Sources: J-Wing Travel 1/16/06; Guam Pacific Daily News 12/27/05; TJI Online 1/25/06)
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TRAVEL: JAL CHANGES GUAM FLIGHT SCHEDULE

Business restructuring forces airline to cut flights, shift schedules, and raise fees
Japan Airlines announced it will suspend additional long-haul flights and adjust the scheduling of certain international routes as part of their business restructuring strategy. The measure will affect popular overseas destinations such as Guam, Las Vegas, Sydney, London, and Seoul. JAL's Kansai-Guam route will switch from daytime to evening flights, and seat capacity will be reduced from a 747 (418 seats) to a B767 with 270 seats. JAL suspended its Saipan routes, as well as Fukuoka-Honolulu and Nagoya-Guam flights last October. For the second time since July 2005, the airline also plans to raise fuel surcharges in an effort to ease the effect of rising fuel prices. Fees will increase 60 percent to 8,000 yen (approximately $70) one way, from 5,000 yen ($43). Asia and Micronesia routes will see fuel surcharge triple from 1,300 yen ($11) to 3,900 yen ($34) per way.
(Sources: J-Wing Travel 1/23/06; www.jal.co.jp)
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TRAVEL: TRAVEL INDUSTRY CAUTIONED ON BIRD FLU OUTBREAK

Educating travelers is critical, as bird-to-human infection possibility surfaces
As the bird flu spread across Asia with 160 confirmed cases, including 65 deaths, Japan's travel industry discussed countermeasures against infectious diseases, and ways to communicate risks to travelers in the occurrence of a flu pandemic. At a seminar sponsored by Japan Travel Bureau, overseas health and travel expert Atsuro Hamada warned that as many as 2 million Japanese travelers may be at risk of contracting the flu, and nearly 25 percent -- 50,000 -- could become infected, if the flu reaches pandemic levels. Travelers therefore should be warned against traveling to high-risk regions in Asia, and to avoid poultry farms or markets where poultry is sold. Until recently, the spread of the influenza in humans was thought to be caused only by close contact with infected poultry. However, after 15 cases of the avian flu were found across various regions of Turkey within a relatively short period of time, World Health Organization officials and scientists are considering the possibility that the influenza virus has mutated into a form that can be spread between humans.
(Sources: BBC News 1/12/06; World Health Organization 1/30/06; TJI Online 1/25/06)
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BUSINESS: "LIVEDOOR SHOCK" AND SCANDAL GRIPS JAPAN

Denials, arrests, and death surround media empire's fall from grace
Livedoor CEO and cultural icon, Takafumi Horie, and three other top brass members of his media conglomerate were arrested following allegations that the company participated in multiple illegal acquisitions over the last two years. The allegations stemmed from a 2004 takeover of publisher Money Life, in which Livedoor reportedly failed to reveal that its shares were held by an investment fund at the time the acquisition was announced. Livedoor is now under suspicion of spreading false information to investors, releasing shares of newly "acquired" companies that were in fact already under their control, then selling them on the market for a profit. The initial news drove the Tokyo Stock Exchange into a tailspin, forcing an early market closing after a flood of sell orders threatened to overwhelm the computer system. "Livedoor shock," as coined by the Japanese media, gripped the nation as news spread that the manager of one Livedoor subsidiary involved in the investigation committed suicide a day after his office and home were raided. Although Livedoor staunchly denied any wrongdoing, Horie and fellow executive, Livedoor Marketing President Fumito Okamoto, resigned from their positions shortly after their arrests. Some corporate insiders and Horie supporters have called the scandal a classic "muckraking" act by prosecutors. Meanwhile, corporate partners such as Nikkei Radio Broadcasting Corp., Fuji Television Network Inc., and Saikyo Bank, have announced they will cut ties with the company, either by dissolving joint ventures or selling shares, as a result of the investigation. The company replaced Horie with 28-year-old Fumito Kumagai as the most senior representative on the company's board, and stepped up 60-year-old Kozo Hiramatsu as the new company president. Hiramatsu announced his first goal is to quell the scandal, control the damage, and to set an agenda for future growth based on compliance and corporate governance. He also said Horie will not return to any Livedoor posts in the near future.
(Sources: Kyodo News 1/19/06, 2/1/06; Reuters Japan 1/19/06; Nihon Keizai Shimbun 1/17/06; Nikkei Net 1/24/06, 1/27/06, Bloomberg Japan 1/25/06; ASCII24.com 1/24/06)
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BUSINESS: BEER-LIKE BUBBLY ON THE RISE

Smoother, cheaper alternative to beer uses legumes, not malt
"Daisan no Beeru" or the "Third Beer" is quickly catching on as the favorite alcoholic beverage among Japanese men and women in theirs 20s to 50s. Introduced in 2004 by brewer Sapporo, Japan's first non-malt beer consisted of proteins derived from peas. Suntory, Asahi, and Kirin jumped into the market with their own "third beers," utilizing either soy protein or soy peptide. Because they do not use malt as a raw ingredient, these drinks fall into a lower tax category, and therefore retail at a lower price than conventional beer or the wildly popular, low-malt beer (called "happoshu" in Japan ). While easier on the wallet, the selling point of "third beer" is the fact that it is less bitter, crisper, and lighter on the palette than most beers. A survey by Japanese advertising leader Dentsu Corp. also showed that the "third beer" is a bonafide boom, with 29.8 percent of consumers calling it their drink of choice at home, following closely behind beer and happoshu.
(Sources: Dentsu Online 1/17/06; Yomiuri Shimbun 5/29/05; Trends in Japan 7/15/05)
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BUSINESS: JAPAN REIMPOSES U.S. BEEF BAN AMID NEW FEARS OF MAD COW DISEASE

Meat import halts after human error causes tainted meat to arrive at Narita Airport
Merely weeks after the Japanese government lifted a two-year ban on U.S. beef, all American beef imports were stopped again after a recent shipment from New York was found to contain spinal material. The biggest importer of U.S. beef until a 2003 case of mad cow disease prompted the initial ban, Japan now prohibits cattle backbone in imported meat, as it is considered a disease risk. U.S. officials have launched an investigation into how inspectors could have bungled the shipment just two weeks after the establishment of new Japan import guidelines, while the NY meatpacker has called the error a "technical issue" unrelated to the actual safety of the meat. The news prompted Japanese businesses to pull U.S. beef off their shelves anyway, forcing fast-food chains such as Yoshinoya to cancel plans to reintroduce popular beef dishes. Meanwhile consumers are reportedly disappointed and shocked that the highly anticipated ban lift failed so quickly. Some media reports have shown Japanese consumers saying they will "stick to Australian and New Zealand beef" for the indefinite future.
(Sources: Reuters Japan 1/21/06; Nikkei Net 1/20/06)
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TECHNOLOGY: STAYING IN TOUCH IN CYBERSPACE

Japan's exclusive online network registers 2.5 million members
Cyber-networking is reaching new heights in 2006, as Japanese Web content provider eMercury, Inc. announced 2.5 million members and over 10,000 daily hits within 20 months of launching Mixi, an invitation-only community site. Unlike first-generation social networking services (SNS) like Friendster and MySpace in the U.S., where anyone can log into the community, Mixi operates by invitation only, meaning users can join in only by following a link provided by a current Mixi member. That level of "exclusiveness" and security has been pivotal for Mixi's popularity. Despite the closed circuit, membership has grown to more than double the number of bloggers registered with Japan's leading content provider, Livedoor. Mixi users are provided pages to post their personal profiles, blogs, and reviews, an "inbox" for sending and receiving messages, and a history list of users who have accessed their pages. Mixi users can also form communities -- multi-functional "bulletin boards" -- within the site; if there's an interest, there's most probably a community for it, whether it be a hobby, an interest, or a school. Another aspect that sets Mixi apart from other SNS, is its complete functionality via mobile phone; users can access messages, read and write blogs, view pictures, and conduct searches, all via the phone's key pad. Mixi is free, and like other SNS, eMercury stays in business the conventional way -- through banner ads.
(Source: mixi.jp)
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FASHION: "FUROSHIKI" CLOTHS, A SHOPPING BAG ALTERNATIVE

Traditional yet trendy, old-fashioned cloths stir a quiet boom at department stores
A recent comeback of Japanese "furoshiki" -- oversized, square cloths widely used in the Edo period to wrap personal belongings -- can be attributed to the culmination of the nation's latest social trends: environmental friendliness, LOHAS, and a newly found appreciation of all things "wafu" (Japanese style). Takashimaya department store noticed it was onto something new, when a chance offering of these practical, yet beautiful cloths, turned into an unexpected top-seller. This winter, about 150 furoshikis have sold each month, and department stores representatives say they have seen customers wrap their purchases in the furoshikis, using them right out of the store. The versatile cloths come in varying sizes, from a single square-foot fit to wrap a wine bottle, to 6.5 sqft., traditionally used to transport kimonos. The best-selling 3 sqft. cotton furoshiki retails for 1,575 yen (approx. $14), although these cloths are also available in polyester, rayon, silk, and in literally hundreds of Japanese prints and patterns. Following the success of its "Furoshiki Collection" event in January, where 10,000 furoshikis were displayed for sale, Mitsukoshi department store plans to ride the trend by showcasing live demonstrations of artisanal furoshiki dying, furoshiki wrapping, and furoshiki fashion seminars.
(Sources: Tokyo Shimbun Shopper 1/5/06)
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FASHION: KIDS' SCHOOLBAGS FETCH BIG BUCKS

Adults splurge on high-end book bags for their kids and grandchildren
They're mandatory for most public and private elementary school students in Japan, and they only come in two colors, but that doesn't mean they're affordable. At department stores Sogo and Seibu, an average-priced book bag (42,050 yen or $374) has quadrupled in value since 1975, when it was about 10,000 yen ($88). But these "randoseru"-- boxy, leather back packs that originated in the Meiji era and derived from the Dutch "ransel" schoolbag -- now fetch as much as 75,000 yen ($614), and are selling out, thanks to a falling birth rate and a rise in single-child families. The bags are built to last for six years (elementary school), and are traditionally plain (red for girls and black for boys). The high-end versions, however, are now available with some embellishments such as plaid edging and colored rhinestones.
(Sources: www.asahi.com 1/30/06; www.randoseru.gr.jp)
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What's Your Blood Type - Last in a Series

In Japan, it is widely believed that one's blood type is an indicator of one's personality. This belief is said to have begun in 1916 when some doctors in Japan made a medical report stating that people with Type A blood were generally mild-tempered and intellectual, while people with Type B blood were just the opposite.

To this day, one's blood type continues to be used as a personality-type indicator. The majority of the Japanese population becomes aware of their own blood type upon entering the educational system, where they are required to submit to a physical examination. The results of this simple evaluation live with them for the rest of their lives, showing up as questions on school and job applications in the future.

The most common blood type in Japan is type A and in America, it is Type O. However, many Japanese are amazed to learn that a large number of Americans do not know their own blood types. What's yours?

Type AB
People with Type AB blood are said to have a delicate sensitivity. They are considerate of other people's feelings and deal with them with care and caution. On the other hand, they are strict with themselves and those close to them. They, therefore, seem to have two personalities: one for those "outside," and another for people on the "inside." They often become sentimental, and they tend to think too deeply about things. AB Types have a lot of friends, but they need time to be alone and think things through.

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4/20 JAL Hawaii Guide
5/1 Aloha Express Quarterly July 2006

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NOW! Chikyu no Arukikata Oahu Resort
NOW! Chikyu no Arukikata Saipan Guidebook
NOW! Chikyu no Arukikata Los Angeles Guidebook
NOW! Chikyu no Arukikata West Coast Guidebook
2/10 Aloha Express Quarterly April 2006
3/1 Chikyu no Arukikata Hawaii Guidebook I
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4/1 Chikyu no Arukikata Honolulu Mook
4/1 Chikyu no Arukikata America Guidebook

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Upcoming Holidays in Japan

2/11 Kenkoku Kinenbi -- National Foundation Day
3/21 Shunbun no Hi -- Vernal Equinox Day
4/29 Midori no Hi -- Green Day

Click here to see all Japanese holidays for 2006.
Click here to see all US holidays for 2006.

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