Japan Market Update - March 2007 Edition

Hi,

I've just returned from Tokyo, where more than 30,000 people from around the world ran through the streets of Shinjuku, Ginza, Asakusa in pouring rain and chilly temperatures in the Tokyo Marathon. More than 10,000 volunteers helped with the event that was hosted by the Tokyo metropolitan government as Japan promotes itself as a candidate for the 2016 Summer Olympics. While the sports media covered the marathon, they are focused primarily on baseball and Daisuke Matsuzaka, the Japanese star signed this season to the Boston Red Sox for 51 million dollars. (See below for more on this big sports story.)

On the business front, Bank of Japan raised interest rates last week and aims to gradually increase them--a potential boon to U.S. auto makers and those in U.S. retail, travel, and hospitality industries who would benefit from a stronger yen. Following the news, the Nikkei stock market rose to over 18,000 for the first time in six years and the broader Topix Exchange closed at its highest level since November 1991. However, this week's stock market fluctuations might have temporarily weakened the boost in investor confidence in Japan. We'll monitor response in Japan to market conditions and keep you apprised.

My trip also included a stop in Guam, where the real estate market is "hot." Housing and condo prices have been on the rise for the past 18 months in anticipation of U.S. military buildup there. On the commercial side, major hotels (Nikko Hotel Guam, Hyatt Regency Guam, PIC Guam, Palace Hotel Guam, and Santa Fe Hotel) and retail centers, such as Tumon Sands Plaza and Guam Premier Outlets, changed hands recently. These transactions, renovations, more active marketing, and the entry of new restaurants, including Hooters, Chili's, and possibly Bubba Gump, are proof that investors and developers are bullish on Guam.

The Pacific Rim is an exciting place to be doing business, especially as activities and opportunities between Japan, Guam, Hawaii, and the U.S. Mainland heat up. Let us know if we can help with any market intelligence, research, marketing, or business development activities in these areas.

Warmest regards,
Dave Erdman
derdman@pacrimmarketing.com

*Japan Market News
-----Travel: JAL to reduce fuel charge
-----Travel: Guam aims for 1 million Japan arrivals
-----Business: Video banking takes off
-----Business: Grand finale planned for late noodle king
-----Society: Japan's fertility rate inches up
-----Society: Parenting mags for dads on the rise
-----Fashion: Uniqlo leads fashion recycling effort
-----Fashion: Sales double for spring coats
-----Sports: "Dice K" Matsuzaka generates media fever
-----Technology: MySpace and Mixi weigh in
*Culture Corner
*Media of the Month
*Upcoming Magazine Deadlines
*Important Dates

TRAVEL: JAL TO REDUCE FUEL CHARGE

Oil market shift results in "slight reduction" for rapidly rising airfares
Japan Airlines will lower the fuel surcharge on a one-way Guam route from 5,400 yen (approx. $45) to 5,200 yen ($43) this April, in time to slightly offset a 7 percent rise in international airfares due to begin the same period. The surcharge on Hawaii routes will fall from 8,900 yen ($74) to 8,700 yen ($72) each way. ANA had announced last year that it would match JAL's fare hike, and is considering to also decrease fuel charges. Continental Airlines said it will reduce its fuel charges on Hawaii routes to 6,700 yen ($56) and Guam/Micronesia routes to 4,000 yen ($33).
(Sources: J-Wing Travel 2/19/07; JAL Press Release 2/13/07; The Honolulu Advertiser 12/27/06)
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TRAVEL: GUAM AIMS FOR 1 MILLION JAPAN ARRIVALS

Bookings and surveys indicate million-mark may be more attainable in 2007
The final tally for Japanese arrivals to Guam in 2006 stood at 952,687, down slightly - just 0.3 percent - from the year prior, but significantly lower than the Guam Visitor Bureau's initial year-wide goal of 1.05 million. The good news is that the Japan Association of Travel Agents reported a bookings surge for February, fueled by student travelers who are graduating in early spring. JATA also said strong demand from Japan's middle-aged and senior markets will likely result in solid bookings for the first quarter. Additionally, the GVB reported a favorable change in travel pattern among Japanese visitors; those who stayed four nights or more rose by 44 percent from 2006, whereas Guam has long been a popular destination for one- to three-day stays.
(Source: GVB Report 12/06; Travel Vision News 2/4/07)
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BUSINESS: VIDEO BANKING TAKES OFF

Unmanned bank branches yields immediate, cost-effective service
From asset management to securing a home loan, banking services that usually require lengthy phone calls, or a scheduled appointment with a consultant, are now available via videophones. A few of Japan's top lender banks, such as Sumitomo Mitsui Banking Corp., have opened unmanned facilities equipped with real-time, video-enabled "Bank TV" consultants, which connect consumers with the bank's call center through a video screen. Bank TVs have proven especially useful at model home showrooms, where potential home buyers can immediately know whether they qualify for a loan. Participating banks, in turn, can reach potential customers while the interest is still hot. Sumitomo also gives home-loan consultation via video over home computers, targeting a younger, tech-savvy population more likely in the market for a first home loan.
(Source: Asahi Shimbun 2/23/07)
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BUSINESS: GRAND FINALE PLANNED FOR LATE NOODLE KING

Thousands to gather for send-off of Japan's legendary fast-food innovator
Momofuku Ando, the inventor of the ubiquitous "Cup Noodle" and founder of Nissin Food Products Inc., will be mourned in an elaborate funeral at the Kyocera Dome in Osaka, which can hold as many as 55,000 people. Top business leaders and political figures are expected to attend the extravaganza, which will feature projections of images from space and chanting led by 34 monks. The space-theme funeral is befitting for Ando, who before his death at age 96, devoted his efforts to inventing "space noodles" that astronauts could slurp up even in a zero-gravity environment. Ando's multi-billion-dollar industry began in 1958, when he invented a dried noodle that reconstituted in hot water in three minutes. Ando said he was inspired to develop instant noodles when he saw a long line of people in war-ravaged Osaka waiting to buy noodle soup. Ando later famously said, "Peace prevails when food suffices." Today, Nissin sells over 10 billion servings of instant noodles annually worldwide.
(Source: Associated Foreign Press 2/23/07; Nikkei Business 1/15/07)
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SOCIETY: JAPAN'S FERTILITY RATE INCHES UP

Birth rates still low, but early reports show a ray of light
Japan's low birth rate, and in effect, the nation's dwindling child population, is one of its most pressing social problems today. The Ministry of Health, Labor, and Welfare, however announced a preliminary report indicating a possible rise in birth rates last year. Japan's total fertility rate may have gone up from 1.26 children per child-bearing woman, to 1.3 or higher, based on data that the number of births rose by about 32,000 from the previous year. That would put Japan's fertility rate just above South Korea, which stood at 1.27 last year according to a fertility rate report from Wikipedia, and further above Singapore at 1.06, and Hong Kong at 0.95. According to the same report, the fertility rate in the U.S. was 2.09 last year, and the highest rate was reported in Africa in Niger, at 7.46.
(Source: Kyodo News 2./21/07; wikipedia)
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SOCIETY: PARENTING MAGS FOR DADS ON THE RISE

Publishers target growing number of Gen-X dads who want to be involved
Breaking away from a long-instilled tradition of passive fathers, more young dads in Japan these days are becoming hands-on parents. It's a trend picked up by at least four new publications that have launched in just the last 18 months. "FQ Fathers Quarterly," the latest to hit newsstands last December, sold 50,000 copies of its premier issue. In keeping with FQ's "Be a Cool Dad" motto, its first cover featured Johnny Depp, accompanied by an in-depth article on the Hollywood icon's paternal experiences. Tomohiro Shimizu, editor-in-chief of FQ Quarterly, said he published the magazine because he wanted to help men take a more active role in parenting, as well as to help dads pursue more balance between work and family. It's a lofty goal, since according to the International Comparative Research on Home Education, the average Japanese father spends only three hours each weekday with his kids. But while "absent fathers" have been a sign of loyal businessmen, experts are beginning to argue for more father figures as role models, in order to curb some of Japan's most critical social problems such as bullying at school and domestic violence.
(Source: voanews.com 2/21/07)
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FASHION: UNIQLO LEADS FASHION RECYCLING EFFORT

An industry first, retail chain collects old clothes for charity and environmental causes
Shoppers at Japan's casual clothing chain Uniqlo - often compared to The Gap - are dropping off their old duds before browsing for new styles. Uniqlo began collecting used Uniqlo-brand garments at their 720 nationwide stores last fall, donating useable garments to refugee camps through non-governmental charities. Unusable clothes are recycled at alternative-energy processing plants. Uniqlo launched a fleece recycling program five years ago, which resulted in the return of 340,000 fleece garments from its customers. After the program met with success and positive customer feedback, Uniqlo expanded its recycling effort to over 500 of its fashion items, including accessories such as belts, sandals, and sunglasses. Uniqlo only asks that the recycled items be washed (or in otherwise "clean" condition), and that they be directly brought to the store. Department store chain Takashimaya, as well as U.S.-based outdoor clothing company Patagonia have since launched similar recycling programs.
(Source: Yomiuri Shimbun 12/13/06, 8/24/07; News On Japan 2/20/07)
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FASHION: SALES DOUBLE FOR SPRING COATS

From mod to feminine, knee-length trench coats hit stores early this season
Due to an unexpected warm spell this winter season, Japanese department stores are offering spring coats earlier than usual. And since a warm winter usually means a "longer spring," female shoppers are looking to get more wear out of this year's trench coats. At Printemps department store in Ginza, sales of women's spring coats have doubled compared to the same period last year. The most popular coats fall under a celeb-inspired style called the "joyu (actress) trench" - a knee-length cotton poplin or nylon coat cinched at the waist with a wide belt, paired with leggings. The look is similar to a tailored shirt dress, an emerging fashion trend for the spring. But softer looks are also popular, such as the "one piece coat," which, when buttoned up, mimics an ultra-feminine, one-piece dress. Other popular trench coat variations are the three-quarter sleeve, lace and frill, and piping along the hems.
(Source: Tokyo Shimbun Shopper 2.16/07)
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"DICE K" MATSUZAKA GENERATES MEDIA FEVER

Red Sox rookie spurs media frenzy, as spring training begins in the U.S.
Japan's latest baseball phenom is heating things up for the Boston Red Sox, after signing a six-year contract worth $51 million. Daisuke Matsuzaka, formerly a pitcher for Seibu Lions, follows the heels of popular baseball stars Hideo Nomo, Ichiro Suzuki, and Hideki Matsui, as one of Japan's favorite exports. Both Japanese and U.S. media coverage of Matsuzaka gained steam in mid-February, as the Red Sox began their spring training in Fort Meyers, Fla. Back home, live footage of Matsuzaka's training aired on late night programs, while in the U.S., local media have given him the clever moniker "Dice K," making the expatriate's name a little easier to pronounce. The hottest baseball talk in Japan, however, is the anticipation of Matsuzaka facing Matsui in the coming season, as bitter rivals Red Sox and The Yankees will play 18 times in the regular season. The same can be said for the possibility of Matsuzaka playing against "one of the best hitters in all of baseball," Ichiro of the Seattle Mariners.
(Source: Japan Today 2/20/06; Trends in Japan 2/2/07)
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TECHNOLOGY: MYSPACE AND MIXI WEIGH IN

Japan's most talked-about networking services reflect cultural differences
When it comes to online networking, national characteristics really do matter, say the forces behind social networking sites Mixi and MySpace. Mixi is Japan's top SNS portal, and U.S.-based MySpace launched its Japanese version late last year. Mixi's site is visually organized, with prim columns and orderly thumbnail photos. Membership is still by invitation only, keeping Mixi a relatively secure circuit, and safeguarded from most spammers and scammers. But even Mixi founder Kenji Kasahara concedes that his new SNS rival-contender fulfills a niche: "I feel people speak their minds on MySpace," he said, though adding, "Japanese tend to like peaceful communication." And MySpace Japan Vice President Naoko Ando said MySpace isn't about to put Mixi out of business. MySpace shines as a venue to meet new people fast, whereas Mixi's in-group networking takes a while to spread the social networking circle. Another MySpace strength is the variety of musician and artists profiles, which draw high volumes of hits. And while Mixi is financially skyrocketing, projecting 4.8 billion yen (approx. $40 million) in sales mostly from ad revenue, MySpace is backed with big bucks, too; analysts say MySpace has a chance for success primarily because of its partnership with Internet empire Softbank Corp., which owns a part of Yahoo Japan and took over Vodafone's mobile business in Japan last year.
(Source: Associated Press 2/16/07)
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RYOKAN - The Japanese Inn


A ryokan is a type of traditional Japanese inn dating from the Edo Era (1603 - 1868), when they served travelers along Japan's highways. They typically feature tatami rooms, a communal bath, and other shared areas where visitors can wear yukata (cotton robes) and talk with the owner.

Ryokan are difficult to find in large cities such as Tokyo because many of them are expensive compared to Western-style hotels. Furthermore, the Japanese are increasingly more inclined toward Western-style hotels for urban tourism. There are a few in Tokyo and other major cities, however, most ryokan are located in scenic areas, often in the mountains.

Features
A typical ryokan might feature a relatively large entrance hall, with couches and chairs where guests can sit and talk, while a modernized ryokan would probably have a television in the hall as well. A room in a ryokan is constructed using traditional Japanese materials; the flooring is tatami and doors are sliding washi (rice-paper) doors. Even if a ryokan uses Western-style doors for security, they usually open into a small entrance-way where guests can take off their shoes before stepping onto the tatami floor, which would be separated by a sliding door. A room in a ryokan might also feature a porch or balcony, also set off with a sliding door.

A ryokan will usually also feature a common bathing area, often using hot spring water if in an onsen (natural hot spring) area. (Onsen areas tend to have large concentrations of ryokan.) Recently, high-end ryokan often provide private bathing facilities. Typically a ryokan will also provide guests with yukata to wear.

Sleeping arrangements are a futon on the tatami floor. When a guest first enters their room, there is usually a table and frequently some supplies for making tea. While the guests are out, staff (usually called "Nakai" in Japan) will come and move the table aside, and set out the futon.

Many ryokan offer dinner and breakfast as optional meals, and typically, most Japanese visitors will take the meals offered. Ryokans promote themselves within Japan on the quality of their food. The meals consist mostly of Japanese foods, although ryokan which are likely to serve Westerners may have a selection of Western dishes.
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