Japan Market Update - September 2006 Edition

Hi ,

Yesterday's birth of a boy to Japan's Princess Kiko and Prince Akishino, was welcome news for Japan, and temporarily eased the succession crisis and debate on whether to allow a woman to the throne. The long-awaited birth of a boy to Japan's Imperial Family after 41 years may boost the nation's falling marriage rates and the economy--to the tune of 150 billion yen--a private think tank said yesterday.

In Japan, some are predicting that the birth to Princess Kiko, age 39, who already has two daughters (ages 14 and 11), may encourage Japanese women to have more children, which could counter falling birth rates and create new business opportunities. In the months preceding the birth, share prices in baby products and related items increased dramatically. Yesterday, retailers at major department stores rejoiced at the news of the birth and succession to the Chrysanthemum Throne and put up displays to celebrate.

Keep your eye on the yen over the next several months--the yen climbed to nearly 115 to the U.S. dollar this week based on speculation that the Bank of Japan will raise interest rates after an upcoming policy meeting. If Governor Fukui indicates that "capital spending is over-heating," the yen could depreciate to 119 by the end of the year, notes Barclay's Capital in Tokyo. Daiwa Institute of Research, on the other hand, suggests the yen rate could rise to 105 by year-end, as the Japanese economy remains firm, exemplified by strong capital spending. A stronger yen would be a blessing to retailers and travel destinations relying on business from Japan.

PacRim Marketing Group, Inc. will keep you posted on Japanese trends and the economy. In the meantime, let us know if we can provide you with any additional business information about Japan or support your marketing efforts for 2007.

Warmest regards,
Dave Erdman
derdman@pacrimmarketing.com

*Japan Market News
-----Travel: Summer travelers like it "cheap, near, short"
-----Travel: Boeing scraps unprofitable Internet service
-----Business: Japan defeating deflation
-----Business: Vinegar bars on the rise
-----Business: Store makes way for specialty chopsticks
-----Society: News in the hands of the citizens
-----Technology: High-definition DVD war begins
-----Fashion: Polos back again, with a feminine twist
-----Fashion: Male boomers get fashionable
-----Beauty: Shiseido realigns low-end cosmetics
*Culture Corner
*Media of the Month
*Upcoming Magazine Deadlines
*Important Dates

TRAVEL: SUMMER TRAVELERS LIKE IT "CHEAP, NEAR, SHORT"

Many travelers keep things short and close-to-home during the summer months
Summer may signal opportunities for leisurely family vacations - especially for those with kids on summer break - but for the rest, apart from the Bon festival week in mid-August, the hot months don't lend much in terms of holidays that afford a good deal of travel time. In that light, an Internet survey by Tokyo-based goo Research (a division of popular Japanese Web portal "goo," run by telecom NTT) revealed their respondents preferred inexpensive tours, destinations close to home, and short-haul visits. Here are some notable findings:
- 70% have desires to travel during the summer
- 78% selected domestic destinations ("homecoming" is common during Bon season, much like Thanksgiving or Christmas in the U.S.).
- Average number of travel days: "under 3 days" and "4 to 6 days" dominated poll (over 80 percent)
- Travel budget: "under 50,000 yen" (approx. $427) (40+%) "50,000 to 100,000 yen" ($427-$854) (30%+)
- 90% use the Internet to decide on a destination, gain knowledge of the destination, get tour details, and compare prices
- Over 30% booked their travel online
- Top 5 overseas destinations during the summer:
1. Asia 9.5%
2. Europe 4.6%
3. U.S. Mainland, Canada 2.8%
4. Hawaii, Saipan, Guam 2.7%
5. Australia, New Zealand 0.9%
Yet in a separate survey of preferred beach destinations by Internet marketing firm Info-Plant Inc., Hawaii ranked first with a 74.8 percent share, followed by Guam (65 percent), and Bali (54.8 percent). The poll of 400 Internet users also showed that 70.3 percent desired to visit a beach resort with their family.
(Sources: Travel Journal International 8/9/06, 8/02/06; goo Research 7/31/06)
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TRAVEL: BOEING SCRAPS UNPROFITABLE INTERNET SERVICE

Satellite-based Connexion to be phased out from carriers such as JAL and ANA
After a six-year effort to make Connexion -- a satellite-based Internet service -- available on 156 commercial jets with 10 airlines, the Boeing Co. announced that it was shutting down the unprofitable business. Lufthansa, the first airline that signed on with Connexion, currently offers the service on more than 60 jets. Despite positive feedback by users, Boeing said actual usage per flight was sometimes as low as in the single digits. At $10 per hour or $27 per flight, low usage was the key to Connexion's demise. Connexion was said to be especially popular among Asian passengers, including those who perused the service -- available through a user-friendly Japanese interface -- on JAL's Narita-London route and ANA's Narita-Shanghai route. Travelers can expect to see an emergence of newer and cheaper Internet technology available for use on aircrafts, although unlike Boeing's Connexion, that technology still relies on ground-based cellular networks, and does not work over water.
(Source: seattlepi.com 8/18/06; internet.watch.impress.co.jp 8/18/06)
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BUSINESS: JAPAN DEFEATING DEFLATION

With consumer price index up, unemployment down, decade-long deflation may be at its end
Japan and banks worldwide are abuzz with news that the world's second-largest economy may soon declare that deflation is over. Although there are conflicting reports on whether the Cabinet will make the announcement in September - when second-quarter GDP reports are scheduled to be analyzed - financial institutions are bracing for Japan's first official departure from deflation in almost eight years. But there are already sure signs signaling the end of Japan's deflation; consumer prices climbed for an eighth month in June, helping central banks to raise interest rates from near-zero percent. The forecast of sustained growth and realistic expectations will allow companies to pass on rising energy and material costs to consumers, while economists expect companies to lift product prices at a gradual pace. Meanwhile the unemployment rate fell to 4.1 percent, and the number of available jobs outnumbered applicants by the biggest margin in 14 years, as businesses stepped up expansion and hiring. The "gray area" currently lies in Japan's household spending, which dropped 1.3 percent in July from a year earlier, despite a 5.9 percent rise -- to 613,269 yen (approx. $5.241) -- in average monthly income of salaried households. The numbers suggest consumer confidence has yet to catch up with the upswing of the economy. Household spending accounts for about 55 percent of Japan's GDP.
(Sources: Yomiuri Shimbun 8/29/06; Bloomberg News 7/27/06, 8/29/06; Kyodo News )
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BUSINESS: VINEGAR BARS ON THE RISE

Japanese combat heat and fatigue with vinegar shots on-the-go
Without a Jamba Juice in sight, where do the Japanese go for a heat-busting, thirst-quenching boost? Lately, it's at the "vinegar bar" and "vinegar cafŽs" that have shot up like wheatgrass at subway stations, such as The Kurozu Bar at Shinbashi station, where businessmen and women line up in quick-moving lines for vinegar-juice blends to go. The vinegar trend itself gained momentum in 2004, when kurozu, or black vinegar, became highly touted for lowering high blood pressure. The amino acid compound found in kurozu was also found to suppress the buildup of lactic acid, helping faster recovery from fatigue, and promoting digestive health. In a questionnaire by a Japanese food manufacturer, 60 percent said they have tried a vinegar drink, and 70 percent said they would like to try concocting their own recipe.
(Source: Trends in Japan 8/22/06)
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BUSINESS: STORE MAKES WAY FOR SPECIALTY CHOPSTICKS

Shiny decorations and noodle-specific styles up the ante for Japan's favorite eating utensil
The Takashimaya department store in Yokohama has added a special "chopsticks" section to their home accessories department, displaying about 200 varieties of hashi, including those specifically designed for consuming ramen noodles, soba, or udon. And in a country where quality chopsticks made from the finest word or bamboo are the mainstay of any dining table, it's hardly surprising that the Swarovski crystal-encrusted hashi, which retail from 2,100 yen to 10,500 yen (approx. $18 - $90), are one of Takashimaya's most popular gift items. But despite the population's hashi-using prowess, many adults habitually hold their chopsticks incorrectly, a source of chiding among family members and friends. It's no surprise, then, that according to the store, the quiet best-seller is the "training hashi" (1,575 yen; $13), with subtly carved molds that help adults position their fingers correctly along the chopsticks.
(Source: Tokyo Shimbun Shopper 8/11/06)
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SOCIETY: NEWS IN THE HANDS OF THE CITIZENS

YouTube, OhMyNews join the cache of Japan's newest media revolution
The popularity of Web blogs and podcasts in Japan are paving the way for even more user-centric media, namely YouTube, the booming U.S.-based video-sharing site, and Korea's OhMyNews, a news portal that features citizen reporters. Msnbc.com reported that the number of Japanese visitors to YouTube quadrupled to 6.4 million from February, apparently sparked by TV clips about a celebrity scandal. The clip alone received 3 million hits in a matter of days. YouTube is troublesome for TV networks such as Japan's Fuji TV, which now employs specialists to scour the site for illegal copies, and email removal requests. YouTube currently doesn't sell ads to Japan, but the site remains obviously popular to Japanese viewers hungry for short, pointed, newsworthy video. Internet ventures such as Rakuten and the now-defunct Livedoor foresaw the Web media trend, and have attempted to buy TV stations for their content, but have been shunned by the network conglomerates for trying (for a recap on the Fuji-Livedoor blow-out, see our April 2005 issue). Meanwhile, Internet bigwig Softbank eyed up-and-coming media players instead, recently investing $10 million into OhMyNews Japan, an online news site generated by articles reported and written mainly by citizens. The Japanese version of Korea-based OhMyNews hired Shuntaro Torigoe, a renowned former editor of Mainichi Daily newspaper, as its chief editor, and plans to recruit 40,000 citizen reporters over the next two years.
(Sources: msnbc.com 9/4/06; ohmynews.com 8/28/06)
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TECHNOLOGY: HIGH-DEFINITION DVD WAR BEGINS

It's Sony vs. Toshiba in the battle for next-generation DVD format
Sony announced the release of Blu-Ray, a revolutionary high-definition DVD format, following the tail - and in direct competition with - Toshiba's HD DVD format. Both Sony's and Toshiba's DVD formats use a blue laser, which has a shorter wavelength and allows more information capacity than the standard infra-red CD or DVD. Blu-Ray's hardware is backed by industry names such as Sharp, Pioneer, Hitachi, Samsung, and Panasonic. The software is also endorsed by major picture companies such as Walt Disney, 20th Century Fox, Paramount Pictures, and Warner Bros. Warner showed solidarity to Sony's BR format with the planned re-release of four box-office hits in Blu-Ray DVDs this November, including "Full Metal Jacket," Harrison Ford's "Firewall," and Tim Burton's "Corpse Bride." Sony is also ready to release video cameras that support the format, as well as a BR-enabled PlayStation 3 due out in November. Toshiba's HD, on the other hand, is gaining strong support from Microsoft, which utilizes the format in its Windows Vista operating software. Microsoft's game console, the Xbox 360, also connects seamlessly to HD through an external drive. Industry experts are wary that the BR versus HD battle sounds eerily similar to the VHS-Betamax war of the 1980s. It may take a decade for a winner to emerge - or for the two formats to become compatible -- while in the meantime consumers will have to decide which format their next DVD player will support. Today, a stand-alone BR DVD player by Samsung costs about $1,000, and a Toshiba HD DVD player is about $500.
(Source: ITMedia News 8/11/06; 8/29/06)
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FASHION: POLOS BACK AGAIN, WITH A FEMININE TWIST

The basic polo revival signals a move back to fashion basics
The polo shirt is resurfacing on the streets of Tokyo, as the versatile cotton basic has morphed into elegant, casual, sexy, or edgy styles. This season, young OL-types have been donning slim-cut polos embellished with feminine touches such as frills around the bust, lace trim at the hemline, and puffy sleeves. Shirts in refined fabrics like silk or blended linen are also popular when paired with suits, giving working women an alternative to wearing blouses. The younger Shibuya gals in favor of showing more skin have been seen in cropped polos and military-inspired shirts with logos or crests. The hip Harajaku crowd is using the polo to layer with their favorite streetwear, such as vests and camisoles. Men have also rediscovered the polo shirt, with the younger, street crowd preferring oversized rugby shirts worn over stirrup pants or baggy jeans. But teens and older men alike have also reverted to the classic, solid-colored polo, especially with the renewed popularity of golf wear and long-standing polo brands such as Lacoste and Fred Perry. Fashion experts say that the current polo shirt revival is part of a craving for neat, refined style among those who have moved on from the eclectic and layered fashions of recent years.
(Source: field report; Trends in Japan 8/9/06)
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FASHION: MALE BOOMERS GET FASHIONABLE

Japanese "salarymen" swap suits for garb with individuality and attitude
Scores of Japanese men in their 50s are switching from monochrome suits to more fashionable attire, ditching the drone-like "salaryman" image for today's "choiwaru oyaji" - or "middle-aged man with a bit of attitude." The choiwaru oyaji is the older, wiser, and richer "metrosexual," if you will, and judging from menswear sales climbing 5.5 percent on average each year at Japan's leading department-store chains, this social and fashion trend can hardly be dismissed as a temporary "mid-life crisis." In fact fashion sales are soaring, as about 3.5 million Boomer-generation men spend in anticipation of receiving 25 trillion yen ($214 billion) in pensions after they turn 60. The phenomenon, also fueled by Japan's economic recovery, has affected the cosmetics industry as well; sales of male skin-care products at Shiseido Co. rose 40 percent between 2004 and 2005.
(Source: www.bloomberg.com 8/20/06)
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BEAUTY: SHISEIDO REALIGNS LOW-END COSMETICS

Japan's top cosmetics manufacturer may dominate segment through consolidation and marketing
Shiseido Co. is probably better known as neighbors to upscale beauty brands such as Lanc™me and Dior. But Japan's leading cosmetics company plans to put some "oomph" back in its low-priced products by consolidating two lower-end makeup lines into a mega-brand called "Integrate." The new line includes lipsticks, mascaras and nail products, all priced at 2,000 yen (approx. $17) or less. Other major players in the low-price category include Kanebo Cosmetics Inc. - the current segment leader with signature brand "Kate" - as well as overseas brands such as Maybelline, Revlon, and Britain's Rimmel (distributed by Japan's Kose Corp.). Low-price makeup products are sold at drugstores and other retail outlets as self-serve cosmetics, and for companies like Shiseido, account for about 60 percent of their sales volume. Shiseido also said sales volume of low-price cosmetics increased 5 percent in the last four years, outpacing the 2 percent growth for the overall market. Shiseido plans to pump a large portion of its marketing budget into launching Integrate, and projects annual sales of abut 15 billion yen ($128 million).
(Source: Shiseido; www.asahi.com 8/15/06)
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HANAFUDA CARD GAME - PART II

Hanafuda can be played in many different ways with many different combinations of players. There are twelve suits in a deck, and four cards in each suit. Each suit has a designated flower (each flower represents a month), and each card has different values assigned to it. The point system depends on which style you play (Japanese or Hawaii style).

The game is played by placing some of the cards face up on the table, half of the remaining cards are dealt to each player, and the remainder is used as a draw pile that is placed in the center facing down. Each player takes turns matching a card in their hand with the corresponding card (matching plants) on the table. If there are no matching cards, then one card is discarded from the hand. A card is then drawn from the draw pile, and the player tries to match this card with a card on the table. If there is no match, the card is left on the table face up. The object of the game is to capture the cards with the most points. If one captures certain combinations of cards, they are able to earn bonuses.

You can find a more thorough description of the game rules on the internet. Have fun!
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Aloha Express Luxury Golf

With the success of Japan's golf phenom, Ai Miyazato, Japan's interest in golf is on the rise. Aloha Express Luxury Golf is the only lifestyle publication in Japan for those interested in golfing in Hawaii.

With features ranging from where to stay, what to eat, and what golfing gear is available to accessorize any lifestyle, to the intricacies of Hawaii's tee-time reservation system, Luxury Golf is not only for the seasoned golfer but also for the fashion-savvy traveler who is looking to experience a different facet of resort life.

Don't let this important opportunity pass you by. If you are interested in finding out more about advertising in this publication please contact Joy Ishiara at jishiara@pacrimmarketing.com

Click here for our Media Request Form or contact us.

Space Deadlines:

NOW! Aloha Express November Yearbook
NOW! Nouveau Tumon Sands Plaza
9NOW! JAL In-Flight Video
11/1 Aloha Express Hawaii Gokutabi (Freestyle Travel Hawaii)
11/1 Chikyu no Arukikata Excellent Hawaii Mook
11/1 Chikyu no Arukikata Barrier Free Hawaii

Material Deadlines:

NOW! Chikyu no Arukikata Guam Guidebook
NOW! Chikyu no Arukikata Hawaii with Kids
NOW! Chikyu no Arukikata Hawaii Mook
NOW! Aloha Express November Yearbook

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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Upcoming Holidays in Japan

09/18 Keirou no Hi - Respect for the Elderly Day
09/23 Shuubun no Hi - Autumnal Equinox Day
10/09 Taiiku no Hi - Sports Day
11/03 Bunka no Hi - Culture Day
11/23 Kinrou Kansha no Hi - Labor Day

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

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