Japan Market Update - October 2006 Edition

Hi ,

September's highlight in Japan was the election of Shinzo Abe to Prime Minister, following the popular and sometime controversial PM, Junichiro Koizumi.

The Koizumi reign will be remembered as one that helped the economy by focusing on reforms and restructuring of the economy, government, and the business community. He left office with the "Tankan Survey" indicating continued positive optimism from the business sector over the past three months. Gradual price increases over the last three months also point potentially to an end of deflation. The yen hovered at 117-118, but is expected to strengthen toward the end of the year, possibly in the 111 range. Privatization of the postal system is still in question, but overall, Koizumi's reforms received high marks from groups like the Keidanren, the Japanese Business Federation.

Koizumi also will be remembered as the Prime Minister who continued to disrupt relations with China and Korea by visiting Yasakuni Shrine, where war "heros" are buried.

In a quick move, new Prime Minister Abe will travel to China this Sunday for talks with Chinese President Hu Jintao in Beijing, and then travel to Korea for meetings with South Korean President Roh Moo Hyun. One of Abe's key goals and strategies is to mend relations with neighbors and set the country on a path of better ties and regional peace.

Abe's inaugural speech stressed his goal to make Japan a "Beautiful Country," which will respect Japan's traditional history, while continuing to foster growth. He encouraged Japanese to be proud of their country and its accomplishments. We look forward to more details on his plan, and will keep you posted.

For now, the outlook and mood in Japan are positive, providing an opportunity to take advantage of expanded marketing approaches to grow our businesses. Understanding the socio-economic changes in Japan and their impact, which includes an increasingly savvy consumer, will be crucial for any market entry program or for continued marketing success in Japan. Let us know if we can assist you in your market research or marketing efforts.

Warmest regards,
Dave Erdman
derdman@pacrimmarketing.com

*Japan Market News
-----Travel: JAL surcharges to rise again
-----Business: Wal-Mart needs help in Japan
-----Business: Livedoor's ex-CFO points finger at Horie
-----Business: Mitsubishi unveils the world's only Hello Kitty vehicle
-----Politics: Japan elects new premier
-----Society: Japanese women work to support their family and lifestyle
-----Society: It pays to have kids
-----Technology: Mixi proves Internet networking a true fad
-----Technology: Japanese Blackberry will debut in 2007
-----Fashion: Straw bags go upscale
*Culture Corner
*Media of the Month
*Upcoming Magazine Deadlines
*Important Dates

TRAVEL: JAL SURCHARGES TO RISE AGAIN

Diversifying target markets and tour offerings key to attracting Japanese travelers
Japan Airlines is "reluctantly obliged" to ask its international passengers to bear part of the burden of rising fuel costs, to be reflected in airfares beginning October 1. The airline blamed continued, rapid rises in fuel prices for the 25 percent fare increase, scheduled at $20,000 (approx. $175) per round trip. JAL hopes to counter future increases with fuel consumption reductions and the introduction of more fuel-efficient small and medium-sized aircraft to its fleet. It also said surcharges will be reduced as soon as Singapore kerosene prices stabilize below the benchmark of $80 per barrel. The higher rates, however, does not bode well for Hawaii tourism, which is seeing a 9 percent decrease in Japanese arrivals compared to last year. Higher room rates and fewer room availability exacerbate the problem, which is more reason for the industry to market features that will continue to attract Japan's baby boomers and hobby-oriented women in the 30s to 40s age groups - segments considered less likely to ditch Hawaii even if prices go up, as long as the right activities and services are offered. Yuko Ishikawa, marketing planner at Dentsu Inc.'s Center for Consumer Studies say these groups of Japanese travelers want high-quality experiences that are unique to the destination, which in Hawaii's case would include local music, sports, and dancing workshops and courses. Hawaii can also capture this segment of Japanese who enjoy physical and emotional well-being, by highlighting premium services such as spas.
(Sources: honoluluadvertiser.com 9/13/06; JAL press release 8/17/06)
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BUSINESS: WAL-MART NEEDS HELP IN JAPAN

Wal-Mart's Japan business under scrutiny as retailer bails from Germany and S. Korea
Bentonville's Wal-Mart announced it will sell 85 of its German stores to rival METRO Group, taking a $1 billion hit. The company had sold off its S. Korea operations two months ago, and now the retail sector is wondering how the U.S. retail giant will survive in Japan. Wal-Mart took a stake in Japanese department store chain Seiyu in 2002, but has lost over $1 billion over the last four years, begging to question whether non-U.S. consumers are buying the Wal-Mart slogan of "Everyday Low Prices" at all. Although the companies involved are staying mum, Wal-Mart may be positioning itself for another merger, this time with no.2 supermarket chain Daiei Inc. (the same Daiei that recently sold its four Oahu outlets to Tokyo-based Don Quijote Co. Ltd.). A Daiei-Wal-Mart merger would give the U.S. retailer over 10 percent of Japan's $150 billion supermarket sector, not to mention enough floor space to beat Japan's two market leaders, Ito-Yokado Co. and Aeon Co., which owns or franchises about 4,000 stores worldwide, including JUSCO, Ministop, The Body Shop, and Laura Ashley. However, Wal-Mart's biggest rival in the bidding war for Daiei is said to be - none other than -- Aeon.
(Sources: Business Week 9/14/06; Yahoo Finance)
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BUSINESS: LIVEDOOR'S EX-CFO POINTS FINGER AT HORIE

Former "right-hand man" says Horie approved illegal book-keeping
It turns out former Livedoor CEO and Internet media tycoon Takafumi Horie does not have a friend in the business. Ryoji Miyauchi, among the four former Livedoor executives accused of manipulating financial figures, testified at his own trial saying, "I was told (by Horie) to do anything to attain the profit target and I couldn't refuse�c Horie made the final decision." Horie's defense lawyers are denying the claims, stating Horie was on "equal footing" with the CFO. Miyauchi is expected to testify against Horie as a key witness for the prosecution at Horie's trial on September 29. Horie, who founded Internet portal Livedoor in 1996, is accused of conspiring with executives to inflate profit by as much as 5.3 billion yen (approx. $45.3 million).
(Sources: Mainichi Shimbun 9/15/06; Bloomberg.com 9/14/06)
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BUSINESS: MITSUBISHI UNVEILS THE WORLD'S ONLY HELLO KITTY VEHICLE

Kitty-adorned, pink compact car available for sale to one lucky winner
Hello Kitty fans, brace yourselves. For 2.1 million yen (approx. $18,000), a pearly pink Kitty-mobile could have been yours. If you'd won the drawing, that is. The Mitsukoshi department store flagship in Nihonbashi displayed an exclusive Hello Kitty compact car created by Mitsubishi Motors, which became available for sale to one lucky raffle winner during a promotion in July (winner not published). A premium version of Mitsubishi's popular "i" compact car series, the "Princess Kitty i" features the famous feline on the door panels, rear window, and side-view mirrors. The roof is adorned with Kitty's trademark puffy ribbon, and the car interior is decked in Kitty design, including an arm rest in the shape of Kitty's face. Mitsubishi produced two Kitty cars, but only was sold to the public. About 200,000 yen ($18,500) of the sale proceeds will be donated to the UNICEF foundation. Click here for a picture of the Princess Kitty i.
(Sources: Sanrio press release 7/17/06; Tokyo Shimbun Shopper 7/21/06)
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POLITICS: JAPAN ELECTS NEW PREMIER

Young conservative Shinzo Abe wins prime pinister seat in landslide victory
Hailing from a pedigree family of political leaders, 52-year-old Shinzo Abe was elected prime minister in a two-thirds majority parliamentary vote, becoming the nation's youngest leader since World War II. The enigmatic Prime Minister Junichiro Koizumi stepped down after his five-year presidency of the LDP expired, leaving behind a legacy of reforms and economic recovery, as well as a burden of soured ties with China and S. Korea. A soft-spoken, popular lawmaker whose grandfather was also a premier, and his father a foreign minister, Abe has pledged to rewrite Japan's pacifist constitution, boost Tokyo's say in global affairs, and revive respect for traditional values and nationalism. Abe chose many of his close allies and supporters in the LDP, all of whom support his conservative platform. Abe is also aiming to establish a U.S.-style National Security Council in Japan, strengthening the function of the existing Security Council of Japan to push forward security and diplomatic policies. Abe has been keen on strengthening ties with the U.S., while improving relations with neighboring China and S. Korea.
(Sources: Daily Yomiuri 9/26/06; Japan Today 9/26/06; Reuters Japan 9/25/06)
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SOCIETY: JAPANESE WOMEN WORK TO SUPPORT THEIR FAMILY AND LIFESTYLE

Women in their 20s to 40s aim not only for sustenance "now", but joys for the future
According to research by Japanese advertising and marketing leader Dentsu Corp., the number of women in Japan's labor market has exceeded 22 million, about 40 percent of the country's working population. While caught in the controversies surrounding later marriages and fewer children, Japanese women in their 20s to 40s expressed their views on work and their careers in a recent Dentsu survey:
-Majority of women (56 -67 percent) in all age groups were satisfied with their current jobs, with women in their 40s expressing the most satisfaction. More women in their 20s expressed dissatisfaction (22 percent), explaining their tendencies to be consistently searching for new jobs.
-Most women (35 to 54 percent) in all age groups worked to support their family finances. Other reasons for working included (in order of prevalence): to increase savings; for personal satisfaction and career goals; for personal growth; for financial independence.
-Majority of women in their 20s and 30s (59 - 62 percent) are saving their money for future spending in leisure activities.
-Majority of women in their 40s (59 percent) are saving up for retirement. As for future spending, priorities are (in order of prevalence): travel (32 to 49 percent); home purchase (24 to 30 percent); and self-improvement, as in schooling and certification (19 to 30 percent).
-Majority of women (68.3 percent) in all age groups relied on the Internet as the primary source for gaining knowledge on their current career or desired career; followed by books, TV, newspaper, magazines, friends and family, seminars and conferences.
-Majority of women (64) percent in all age groups listed public speaking and conversation manners/skills as the most important asset to presenting themselves as successful, working woman; followed by physical mannerisms (44 percent), fashion (27.7 percent), skincare (24.7 percent), and hair style (22.7 percent).
-Majority of women (61.3 percent) in all age groups chose dining out and enjoying gourmet food as their primary choice for relaxation; followed by shopping (53.7 percent), traveling (47 percent), movies and music (44.3 percent), friendly conversation (41.3 percent), and spending time with family and loved ones (41 percent).
-As for their "ideal working woman," most respondents described a patient, work-savvy, positive-thinker, who is both feminine and strong, and can juggle their career with family, yet afford time to spend on themselves and hobbies. In other words, a "work-and-then-some" type of woman.
(Source: Dentsu Trend Box survey 8/06)
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SOCIETY: IT PAYS TO HAVE KIDS

The government offers financial incentives to bear more children
Although most Japanese families are in the know about money they can collect from the government upon having children, Japan's Ministry of Health, Labor, and Welfare officially posted a bilingual web site that detailed the payout. According to the site, not only can families receive 350,000 yen (approx. $3,000) after childbirth, but they are eligible for a monthly child allowance of 5,000 yen ($42) per child. As if to urge families to have more than two, the allowance doubles to 10,000 yen ($85) a month for a third child. All legal residents of Japan qualify for the monthly allowance (including foreign citizens), although the allowance only applies to children up to the sixth grade. There is an income ceiling threshold based on the number of dependents; for example, a two-parent family with two children must make less than 8.6 million yen ($73,000) annually to qualify. Japan has been struggling with a declining child population, with less than 1.4 children born to each family. Other advanced nations with similarly low fertility rates (1.4 or under) are S. Korea, Austria, Germany, France, and Italy. The U.S. fertility rate is currently at around 2.0 children per family.
(Sources: www.mmjp.or.jp; www.mhlw.go.jp; www.pregnantpause.org)
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TECHNOLOGY: MIXI PROVES INTERNET NETWORKING A TRUE FAD

Shares of Japan's largest online community shoot through the roof on IPO day
Investors bid 3.15 million yen (approx. $26,800) for each share of Mixi Inc., founded by 30-year-old Kenji Kasahara, double the initial offering price of 1.55 million yen ($13,000). Mixi is booming, and according to one Internet analyst, the online networking site similar to U.S.-based News Corp.'s explosive MySpace.com is adding more than 10,000 subscribers a day. The tally of registered user was 5 million as of July, up from 3.4 million in March. MySpace.com has more than 100 million member profiles. Like MySpace.com, Mixi's basic usage is free; the company makes 80 percent of its profit from advertising and the rest from other service fees. Boosted by pleasant aesthetics (a trademark tangerine orange), streamlined user interfaces and fast uploading capabilities, Mixi is dominating Japan's online networking industry, with almost half of the entire market share, according to a communications ministry study. Founder Kasahara predicted that sales at his site will more than double this fiscal year to 4.8 billion yen ($400 million).
(Source: Bloomberg.com 9/14/06)
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TECHNOLOGY: JAPANESE BLACKBERRY WILL DEBUT IN 2007

NTT DoCoMo slammed with orders for upcoming English-language Blackberry
Ontario-based Research In Motion Inc., makers of the popular Blackberry mobile device, announced plans to expand its product lineup next year, after it begins selling its first English-language model in Japan in September. RIM has partnered with Japan's biggest mobile phone operator, NTT DoCoMo Inc., which will sell the English-language Blackberry for 59,900 yen (approx. $514), in addition to 5,700 yen ($52) per month for wireless service. DoCoMo said it has received 1,400 orders for the new BlackBerry, mostly from foreign companies in Japan. The Japanese-enabled BlackBerry, scheduled for launch next year, will broaden the customer base to Japan's general public, as the device will be able to display Japanese characters. However, RIM is still working on a solution for Japanese character input, meaning Internet searches and emails can only be entered in English.
(Source: Reuters Japan 9/25/06)
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FASHION: STRAW BAGS GO UPSCALE

Summer's "it" bag still seen on streets in various shapes and styles
Scores of Japan's urban fashion elite have been spotted around town toting straw bags in place of the ubiquitous monogram brands. Though straw bags have been popular for years, their popularity this past summer has been unprecedented. This year, a growing number of shops specializing in imported and domestic designer brands have introduced a large number of high-quality straw bags decorated with leather, ribbons, and rhinestones, in a wide range of colors and shapes. Lower-end straw bags have been retailing at around 5,000 yen (approx. $43), while styles by designers such as Samantha Thavasa and Coach have ranged from 10,000 to 60,000 yen ($87 - $522). Straw bags have been a surprise hit among working women, who seem to prefer the larger, boxy bags that can hold Japan's standard A4-sized (approx. 8x10) documents. The cool and light appearance of straw bags explains part of the trend, seen paired with casual jeans, dark suits, and even with summer kimonos (yukata) at summer festivals. The longevity of the straw bag trend is yet to be seen, but its versatility and reasonable price have nonetheless kept it a hit among young women.
(Source: Trends in Japan 9/13/06)
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NINJAS -- Part I in a Series
With Halloween fast approaching, people all over the world are gearing up for the holiday by preparing their costumes. And with the West's growing fascination with Eastern culture, it can be assured that "ninjas" will be seen Trick-or-Treating on streets peppered with pirates, goblins and ghosts.

In Japan, ninja were agents of espionage, sabotage and assassination during the feudal era -- from the kamakura period to edo period -- which served feudal rulers (shogun and daimyo).

The word "ninja" means "a stealthy person."

Early in their history, ninja groups would have been small and structured around families and villages, later developing a more martial hierarchy that was able to mesh more closely with that of samurai and the daimyo. While ninja are usually depicted as male and nearly all military and related professions were often limited exclusively to males, females were ninja as well. A female ninja may be called "kunoichi."

Ninja used guerilla tactics against their better armed enemy, the samurai, whose fighting tactics were more accepted. Though ninja were eventually used as hired spies, they were not limited to espionage and undercover work.

Ninja are attributed with originating the style ninjutsu, which has similarities with jujutsu and kenjutsu. Ninjutsu (or Ninpo) closely resembles jujutsu, in that it uses the enemy's momentum and force against him, and in its usage of joint manipulation and leverages against the wrist, knee, shoulder and other parts of the body. There is very little blocking in most styles of ninjutsu, with the emphasis relying on evasionary movements. Such a technique might include simply dropping underneath a punch and striking the groin.

To learn more, check back next month for part II in this series, which will focus on ninja weapons.
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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 Luxury Golf Hawaii
NOW! Aloha Express Hawaii Gokutabi (Freestyle Travel Hawaii)
NOW! Chikyu no Arukikata Excellent Hawaii Mook
NOW! Chikyu no Arukikata Barrier Free Hawaii
12/1 Aloha Express Quarterly - February 2007 Issue
12/1 Nouveau - Tumon Sands Plaza
12/1 Chikyu no Arukikata Guam Resort

Material Deadlines:

NOW! Aloha Express November Yearbook
NOW! Aloha Express Luxury Golf Hawaii
NOW! Aloha Express Hawaii Gokutabi (Freestyle Travel Hawaii)
12/1 Chikyu no Arukikata Excellent Hawaii Mook
12/1 Chikyu no Arukikata Barrier Free Hawaii
12/10 Aloha Express Quarterly - February 2007 Issue
1/1 Nouveau - Tumon Sands Plaza
1/1 Chikyu no Arukikata Guam Resort

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

10/09 Taiiku no Hi - Sports Day
11/03 Bunka no Hi - Culture Day
11/23 Kinrou Kansha no Hi - Labor Day
12/23 Emperor's Birthday
12/24 Emperor's Birthday (Observed)

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

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