Japan Market Update - January 2007 Edition

Happy New Year ,

PacRim Marketing Group, Inc. and our affiliated technology and systems development company, PRTech(http://www.prtech.com), are excited about business opportunities in Japan and the Pacific Rim area this year.

This holiday season, I spent a week in Japan on business and a few days there to enjoy the Japanese New Year celebrations. As I returned to Narita Airport yesterday Japanese travelers packed the airport and boarded international flights, taking advantage of a positive line-up of Japanese holidays. While some return to work on January 3, others return on the Tuesday, January 9th, following the Coming of Age Day, a national holiday in Japan.

2007 looks promising in Japan. Technical innovations continue in all industries, especially in the travel and tourism related industries. The mass media business is evolving, with new entrants and online platforms becoming more powerful and effective. There is optimism for the Japanese stock market, as some predict there will be a rise in consumer spending. Profits for Japanese companies should continue to grow, and continued positive performance could encourage companies to raise wages, giving workers more spending power.

One of the biggest factors in 2007 is the Baby Boomer generation. A large portion of Japan's Boomers will reach age 60 and retire this year, many receiving large lump-sum payments from the pension system. While much of that is expected to go into investments and bank accounts, consumer sales could surge according to some analysts. These Baby Boomers--of which more than 8 million will retire over the next three years--are important prospects for overseas travel vacations and long-stay holidays and will be a key target for those marketing to the Japanese from this year forward.

In the Year of the Boar, abundance and good fortune in business are predicted. New marketing approaches and greater understanding of customers and better communications with them will help this prediction come true.

The PacRim and PRTech teams in our Honolulu Headquarters, as well as in our Tokyo office, are ready to assist you in developing plans and pro-active programs to develop your business in Japan and the Pacific Rim area. Let us know how we can work with you in 2007.

Warmest regards,
Dave Erdman
derdman@pacrimmarketing.com

P.S. Check out our website at http://www.pacrimmarketing.com to see some of PacRim's 2006 company highlights and accomplishments that might interest you. We have also published all of 2006's Japan Market Updates in our newsletter archive.

*Japan Market News
-----Travel
-----Politics and Society
-----Business & Economy
-----Society
-----Fashion & Beauty
*Culture Corner
*Media of the Month
*Upcoming Magazine Deadlines
*Important Dates

TRAVEL

Japanese arrivals to Hawaii are expected to fall short of 2005 numbers by about 9 percent this year, despite a near-record year in terms of total visitor count and expenditure. Final numbers have yet to be announced, but Japanese arrivals will most likely reach about 1.38 million, compared to last year's 1.52 million. And while fuel charges, room crunches, and competition from other destinations in Asia and Europe have been repeatedly indicated in the decline this year, Japanese travelers continue to be the largest and highest-spending group of all international visitors to Hawaii. Put into perspective, about 40 to 50 percent more Japanese travelers visit Hawaii than all other international visitors combined (including those from Canada). Again this year, Japanese runners dominated the Honolulu Marathon, with nearly 18,000 runners making up 62 percent of the race. Additionally, 80 percent of the 4,888 Race-Day walkers hailed from Japan, suggesting that despite a decrease in overall numbers, major Hawaii events such as the marathon remain a great pull for Japanese visitors. In more good news, Hawaii is projecting air capacity from Japan will increase by about 5 percent for the months between December and February. Guam ended the year with a total count of 9xx,000 Japanese visitors this year, short of the Guam Visitor Bureau's 2006 goal of 1.03 million. Come April, Hawaii and Guam tourism will face challenges as Japan Airlines and ANA announced plans to raise domestic and international airfares yet again, this time by 7 percent. In efforts to retain Japan's savvy travelers, tourism authorities have been drawing up plans to promote Hawaii in both emerging and traditional sectors: baby boomers and seniors; hula and Hawaiian culture; fly & drive; and multi-generational family travel. Hawaii's inter-island cruises, time shares, and condominiums are also niche markets on a continuous rise.
(Sources: Hawaii Pacific Business News 12/26/06; DBEDT; honolulumarathon.org; jwing.com 1/30/06)
Back to top

POLITICS AND SOCIETY

One of Japan's longest-serving and most popular prime ministers, Junichiro Koizumi, ended his five-year tenure without seeking re-election, and turned over power to his long-time spokesman, Shinzo Abe. The popular and media-friendly premier, Koizumi started off with record-high approval ratings of about 90 percent, vowing to overhaul the economy and the stagnant ruling party. Five years later, notably after sending Japanese troops to the Iraq War (who have since withdrawn), and discord with China and Korea, Koizumi's popularity dropped but stabilized at around 50 percent, still considered high for a Japanese premier. More importantly, Koizumi left a legacy of change and progressive thinking, such as the privatization of Japan's postal system, and the Cool Biz - Warm Biz movements - both of which place the responsibilities of economic and environmental reform into the hands of Japan's private sector and common citizens. Abe, on the other hand, is known as being considerably more right-wing than Koizumi. His critics have called him "dangerously nationalistic," a staunch supporter of the military, and a leader most likely to take Japan to war. Others consider him simply a strong leader driven to stabilize Japan's economy, and reinstituting values and "national consciousness" into Japanese society. Abe himself has expressed a general commitment to his predecessor's fiscal reforms, and seeks to achieve much of his budget balancing through spending cuts, as opposed to increasing taxes. He has generally taken a hard-line stance against North Korea, but recognizes the need for improved relations with China. Tension between Japan and North Korea mounted after North Korea launched a missile over the Sea of Japan in July last year, then conducted a nuclear test in October. The Japanese government imposed immediate, unilateral sanctions, including a total ban on imports, an exports embargo on luxury items, and freezing the assets of about a dozen North Korean supporters in Japan. At a global six-party meeting in Beijing last September (Japan was not a member), North Korea refused to discuss its nuclear testing, or its 2005 pledge it made to disarm, causing some lawmakers to believe North Korea might be preparing for another nuclear test. Japan's ruling party has proposed more sanctions, but some top government officials, including the foreign minister, maintain Japan should seek diplomacy with the cooperation of the United States and South Korea.
(Sources: washingtonpost.com 9/25/06; wikipedia; Kyodo News 12/24/06; The Japan Times 12/24/06)
Back to top

BUSINESS & ECONOMY

Despite strong corporate earnings signaling continued growth, weaker household spending forced the government to downgrade its evaluation of Japan's economic recovery for the first time in almost two years. As of November, consumption has declined 1.7 percent compared to the same period in 2005. However that's still an improvement compared to the 6 percent drop in September and 2.4 percent drop in October, with spending somewhat buoyed after news of higher winter bonuses this year. Wages, on the other hand, increased less than 10,000 yen (approx. $94) for the year, which economists say does not bode well for future spending. Prime Minister Shinzo Abe said companies should pass profits onto their employees by increasing wages. In corporate news, the fall of Livedoor became one of the biggest headlines of the year. Led by 31-year-old entrepreneur Takafumi Horie, the emerging media empire - worth about $6 billion at its peak - symbolized a new wave of aggressive business practices and hostile take-overs, including that of well-established media networks such as Fuji Television Network. However, Horie and his top executives were arrested on securities fraud charges stemming from "dummy" companies Livedoor had created in order to hide its losses and inflate the firm's earnings. As a result, Livedoor's share price plummeted, wiping out $4 billion of value, and caused a historic overload of the Tokyo stock market's computer systems as traders rushed to offload their shares. Despite fervent accusations from his former executives, and lawsuits by former shareholders, Horie maintains his innocence from behind bars.
(Sources: Bloomberg.com 12/04, 12/25; zdnet.co.uk 9/05/06; Kyodo News 4/22/06)
Back to top

SOCIETY

For the second year, environmental consciousness stood out as one the biggest social phenomena of 2006. While LOHAS (Lifestyle of Health and Sustainability) emerged as a lifestyle trend in 2005, concrete examples of "everyday" actions became apparent, especially after a stricter recycling law went into effect in June. Rechargeable batteries, water-conserving toilets, and energy-saving washer-dryer combos also became hit products, showing that mainstream Japan cared to conserve and reduce, regardless of cost. The new washer-dryer by home electronics company National, for instance, tops 200,000 yen (approx. $1,700), yet over 180,000 units sold between November 2005 and September 2006, making it a hit product. A movement to reduce plastic shopping bag usage unexpectedly popularized the "furoshiki," a traditional Japanese wrapping cloth. Furoshiki became a sudden retro chic, with both modern and traditional styles selling out at department stores. The furoshiki boom was also a part of another recurrent trend: Japanese pride. In past years, it was seen more in the renaissance of kimono fabrics and "wafu" Japanese art and design. But this year, the trend was apparent in the renewed interest of Edo history, including literature and art from the era. Even Japan's famously high-tech rice cookers took a back seat this year to the "donabe," an Edo period stone pot known to yield perfectly textured rice. Rice-cooker maker Tiger introduced an 80,000-yen (approx. $670) model that mimicked the stone pot cooking method, and quickly doubled in sales. And compared to years past, a more advanced sense of Japanese pride emerged from the ad world and media, apparent in Shiseido's bold marketing campaign of Tsubaki shampoo (with the catch phrase "Japanese women are beautiful,") as well as best-selling novel "Kokumin no Hinkaku" (Dignity of a Nation), which basically justified the Japanese way of thinking (as opposed to the western way). Another social phenomenon that became a media highlight, as well as the catalyst to a wave of new diet products, was the Health Ministry's warning of obesity and gout -- dubbed the "metabolic syndrome" -- on the rise among middle-aged Japanese men. While fat-burning drinks and calorie-counting diets have consistently been popular in Japan, beverage makers and pharmaceutical companies zoned in on the middle-age male, packaging products (some which became hit products, such as Suntory's black oolong tea and Otsuka Pharmaceutical's Nixytol supplements) to catch their attention. The Health Ministry emphasized the need for lifestyle changes - specifically diet and exercise - but it seems that this year, mainstream Japan reacted with a need for quick-fixes instead.
(Source: Trendy Magazine December 2006; field report)
Back to top

FASHION & BEAUTY

If 2005 was the year of of the "detox" movement, this year the health and beauty market were all about "anti-aging." While antioxidants, Coenzyme Q10, and vitamin C remain highly recognized, none were as popular this year as the newest anti-aging supplements, collagen and hyaluronic acid. Human components that deteriorate with age, collagen and hyaluronic acid became highly popular in both topical and oral preparations, such as lotions, hair care products, and soaps, as well as in health drinks and candy. In the U.S., hyaluronic acid is essentially used by doctors to treat knee injures and other joint ailments, but its esthetic effects have not been widely publicized. Another widespread trend that took a jolt from last year was the "middle-aged metrosexual" boom. Thanks to a surge in affluent baby boomers, more middle-aged men ditched their monochrome suits for a more updated, fashionable look. The middle-aged metrosexual image not only helped a sharp rise in sales for men's fashion and skincare, but spurred the term "choiwaru oyaji," or "middle-aged man with a bit of attitude." Among young women, the term "mote," or "attractive," became the fashion and beauty catch phrase of the year, be it "mote-gao" (attractive face), "mote-bra," or "mote-gami" (attractive hair). "Mote" also applied to mannerisms and character, and became a recurrent theme in the media to describe the pursuit of ultimate "mote-do" - or level of attractiveness to the opposite sex, as well as "hi-mote" (unattractive) and "datsu-motenai" (escape from unattractiveness). Visually, the "mote" concept translated to well-groomed, well-dressed, men and women, although the media widely touted Shiseido covergirl Yuri Ebihara - including her personal style, look, fashion, and cutesy persona -- as the ultimate reflection of the "mote" female. "Mote" was Japan's mainstream look, but cutting-edge fashion in Japan's urban areas was more a throw-back to the '80s, with modern renditions of wide stripes, nautical (navy and white) colors, the layered look, leggings, over-sized bags, and this winter, tall boots and Uggs.
(Sources: field reports, Bloomberg.com 8/20/06)
Back to top

NENGAJYO - Japanese New Year's Day Postcards

The Japanese have a custom of sending New Year's Day postcards ("nengajyo") to their friends and relatives. Rather than sending Christmas cards, they send postcards that arrive on January 1. Now a widely-observed custom, the "nengajyo" originated from a way for people to give faraway friends and relatives tidings of themselves and their families.

It is customary not to send "nengajyo" when one has had a death in the family during the year. Instead, a simple postcard is sent to inform friends and relatives that they should not send joyful New Year's cards in order to show respect for the dead.

Most "nengajyo" have the Chinese zodiac sign of the New Year as their design. This has a cycle of 12 years with each year represented by an animal: mouse, ox, tiger, rabbit, dragon, snake, horse, sheep, monkey, rooster, dog, and boar. The year 2006 was the Year of the Dog and 2007 has welcomed the Year of the Boar.

"Nengajyo" often feature conventional greetings or the animal of the year (or sometimes both). For 2006, famous dogs like Snoopy and other cartoon characters were especially popular.

Even with the rise in popularity of email, the "nengajyo" still remains a very popular custom in Japan.

Typical "nengajyo" greetings include:

"Kotoshi mo yoroshiku o-negai-shimasu"
I hope for your favor in the coming year.

"Akemashite omedetou-gozaimasu "
New Year's congratulations.

"Kinga shinnen"
Happy New Year.

"Shoshun"
Literally -- "early spring."

Want to get the details on what the year of the Boar is all about? Visit: http://www.pacrimmarketing.com/2007/index.html.

Back to top