Archive for the ‘Consumer tips’ Category

Deflation watch: Kabocha

Monday, July 1st, 2013

Japanese pumpkin, raw and prepared

Japanese pumpkin, raw and prepared

The main story at the heart of Abenomics as far as the Japanese media is concerned is that Japanese exporters are making more money since the Liberal Democratic Party regained power. Secondarily, energy costs are rising thanks to a related increase in the dollar against the yen, not to mention imported wheat prices, which affect all sorts of processed foods in Japan. Many food-related manufacturers started raising prices on July 1 as a result.

So far, the price of imported fresh produce hasn’t been affected that much. Last year we reported on the very low price of bananas due to specific circumstances, and since then the price has gone up quite a bit owing to a typhoon that destroyed much of the Philippines’ crop. However, the prices of other fruits and vegetables that tend to be imported in large amounts haven’t changed significantly. If anything, some local produce may have come down in price and thus become more competitive, notably kabocha, the Japanese style of pumpkin, often called buttercup squash in English.

Kabocha is grown in Japan but is mainly available in the fall and early winter. During the rest of the year it is imported mainly Mexico and New Zealand, but also from New Caledonia and South Korea. Demand is so strong that Japanese companies have been running farms in these countries for almost 20 years to grow kabocha exclusively. New Zealand first started exporting the vegetable to Japan in 1988. Actually, China, India and Russia produce much more pumpkin and other types of squash but the kind they grow is not necessarily popular here. (Also, there seems to be some issue with China’s use of agrichemicals.) Japanese prefer a strain referred to as kuri-kabocha, which is drier.

Normally, the price of Japanese kabocha is two to three times that of the imported kind. In April at the Tokyo Central Produce Market, domestic kabocha was going for ¥356 per kg, while foreign kabocha was only about ¥97. However, lately the price of Japanese kabocha has come down to almost even with foreign kabocha, which is a remarkable drop. Last week at our local supermarket kabocha from Mexico was only a little less expensive than kabocha grown in Ibaraki Prefecture. It’s not clear if this is due to higher import prices because of the rising dollar or just that the domestic product is suddenly cheaper. It’s probably both, since Japanese farmers have to contend with Mexican kabocha almost year-round now that there are two growing seasons for kabocha in Mexico.

Also, kabocha, once a standard item in the Japanese diet, lost popularity some years ago and seems to be making a big comeback now among health-conscious families — kabocha contains more calcium than milk does — so farmers are producing as much as they can, thus bringing the price down.

With refrigerators, bigger is better in more ways than you think

Wednesday, June 19th, 2013

High end: a 603-liter refrigerator with a five-star rating and 244 percent energy efficiency that uses ¥5,500 of electricity a year

High end: a 603-liter refrigerator with a five-star rating and 244 percent energy efficiency that uses ¥5,500 of electricity a year

Over the past decade or so our diet has changed slightly. We almost never eat meat at home and have gradually eliminated most dairy products. Consequently, the volume of food in our refrigerator has decreased over time, and since we bought it in 2002 it is already considered obsolete, inefficient even. Refrigeration technology has improved markedly in the past 10 years to the point that devices made now use as little as one-fourth the amount of energy used by an equivalent sized refrigerator made in the ’80s or ’90s. And since we are contemplating moving sometime in the future we decided it might be a good idea to buy a new, smaller model when we do in order to take advantage of this greater efficiency.

So we went to our local discount electronics store and looked at all the models. Of course, smaller refrigerators cost less than larger ones, but when we looked at the energy consumption specifications we became confused. The bigger the volume of the refrigerator, the less energy it used. In some comparisons the difference was startling. If you look on the inside of the main compartment door of a refrigerator there is a sticker with the pertinent specifications, one of which is the average amount of kilowatts the appliance uses in a given year when operating continuously. We saw one 500-liter model that used only 40 percent of the energy that a 350-liter model used. The manufacturers make the comparison even easier by printing the average amount of money you will pay in electricity for a year on the outside of a given model. Moreover, there are star ratings, from one to five, that indicate energy efficiency in relative terms, with five stars indicating the most efficient.

We asked a salesman if there was a smaller refrigerator that was as efficient as a large one and he quickly said there wasn’t. The difference he said was that larger refrigerators used inverters to control the operation of the compressors in a smoother fashion, while smaller refrigerators used conventional compressors that simply went on and off to control interior temperatures. The inverter, however, also makes the refrigerator itself more expensive. When we said our present refrigerator was 415 liters and that we wanted something smaller, he said rather presumptuously, “I can tell you which size you need.”

Since we aren’t newlyweds and found his manner condescending we decided to look into the matter ourselves. The star system is administered by the Energy Conservation Center of Japan, a government organ, and is based on the energy savings achievement rate (sho-ene taseiritsu) established by the 2006 Energy Conservation Law. The unit used for comparison’s sake is Annual Performance Factor, a means of measuring energy efficiency. In order to come up with an efficiency rating, the ECCJ currently uses “the most efficient product” on the market in terms of energy consumption in 2010. The efficiency percentages on the store sticker are based on APF and thus only indicate relative values. For instance, an energy efficiency finding of 110 percent means that the model is 10 percent more efficient than the 2010 model chosen by the ECCJ as the standard, and which is not publicly disclosed. The stars are more or less a means of making these comparisons even easier. However, comparing refrigerator prices against money saved on electricity bills may require a certain algebraic capability that most consumers don’t possess or, if they do, probably don’t want to bother with.

Conventional compressors, which use electricity and chemicals to cool the interior of the refrigerator, turn off when the desired temperature is reached and then turn on again when the temperature rises above that level. It takes a lot of energy to turn a compressor on. The inverter works on a kind of fuzzy logic principle. It keeps the compressor working all the time but at variable levels, using less energy in the process. It also produces much less noise since conventional compressors tend to get loud when they start up again. That’s why an older refrigerator, or a smaller new one, suddenly kicks into high gear whenever you open the door. An inverter will add at least ¥20,000 to the price of a refrigerator, and according to one website we saw electronics manufacturers don’t think people will buy smaller refrigerators if the price is above a certain threshold, so they don’t bother putting inverters in them.

Of course, some people simply think that the small-big energy-saving paradox is a scheme by these manufacturers to compel consumers to buy refrigerators that may be too big for their homes or their needs, since profit margins rise almost exponentially with the price of the unit. If that’s the case then it seems to be working. Last year, the only household appliances whose recycling rates increased were air conditioners (up 0.8 percent) and refrigerators (2.7 percent).

Lottery operators still looking for last year’s winners

Thursday, May 30th, 2013

Where am I? Lottery booths in Tokyo

Where am I? Lottery booths in Tokyo

According to the Mainichi Shimbun, as of May 13, the holders of seven winning ¥100 million lottery tickets that were sold last year for the Dream Jumbo Takarakuji have yet to claim their prizes, and if they don’t claim them by June 17 the tickets will become void. The media is cooperating by actually printing the names of the locations where the seven tickets were purchased in an effort to jog the memories of people who may have bought them but for reasons unknown have forgotten all about it. Being a responsible social medium, we here reprint these locations in the unlikely event that one or more of our readers happens to belong to this select group: The Koriyama branch of Mizuho Bank in Fukushima Prefecture; the TFC Kita Asaka TK Shop in Saitama City; the Nishi Ginza Chance Center and the Yotsuya Dream Center in Tokyo; the Hiratsuka branch of Mizuho Bank and the Yokohama Porta Chance Center in Kanagawa Prefecture; and the Tenmonkan Chance Center in Kagoshima Prefecture. To check the details and the winning numbers (in Japanese only), go here. The site also includes information about unclaimed prizes from more recent lotteries.

This is not, apparently, an unusual development. Since 2009, ¥20.1 billion worth of winning lottery tickets have become void because their holders did not redeem them by the deadline, which is one calendar year after the winning numbers are selected by computer. Included in this loot are 25 tickets that were worth at least ¥100 million. Since Takarakuji lotteries do not carry over, the money becomes the property of whichever local government presides over the place where the winning ticket was sold, so it’s not as if the money becames a complete waste. The free media publicity may have another purpose. Sales of Takarakuji have been dropping steadily for the last few years and the operators want to keep awareness of the lottery alive. In fact, the failure of some lottery buyers to check their tickets for winning numbers could be considered a symptom of the game’s loss of cultural topicality. As with the squirrel that works hard to hoard nuts for the winter and then forgets where it hid them, all the excitement is in the acquisition.

As land lines go the way of the dodo, what is a subscription right worth?

Monday, May 13th, 2013

Anyone who still owns, much less uses, a fax machine may be embarrassed by the fact. The rest of the developed world has abandoned the device, and it seems that only in Japan is its utility valued, if for no other reason that to send maps to people who still don’t know their way around Google. And the same march of technology that has rendered the fax obsolete is making land lines an unnecessary expense. Most young people who acquire their first apartments don’t bother applying for them. Their mobile phones are perfectly adequate.

What the hell is that?

What the hell is that?

So what about those of us who still have land lines? More specifically, is the kanyuken — the subscription right to the line — worth anything? Once upon a time it cost as much as ¥80,000 to have a telephone line set up in one’s name. That was the cost of the right to a subscription, a kind of investment in the country’s telecommunications infrastructure, and you carried it with you your whole life; unless you wanted to sell it, which you could do. In fact, there was a market, with agents willing to broker your kanyuken to others. Though no one ever made money off their subscription rights, some people used it as security for small loans or pawned them.

Japan started offering telephone service in 1890, but the kanyuken system didn’t begin until 1897, when it cost ¥15. However, households didn’t really start getting telephones on a major scale until after the war, and it wasn’t until the late 1960s that more than half of the country’s population had phones in their homes. Many, in fact, were party lines. By 1976, the kanyuken cost more than ¥75,000, and subscribers could pay in installments. The telephones themselves were rented not owned. NTT was privatized in 1985, at which point the price of a subscription right dropped to ¥72,000, not including tax. It’s been slowly decreasing ever since. Since 2005 it has cost ¥36,000, though you can buy it on the market for as little as ¥11,000. NTT does not and never has bought back such rights, so once you purchase it it’s yours forever unless you unload it on someone down the line, and that’s becoming increasingly difficult. Few businesses now trade in kanyuken, though we did find one on the Internet that was offering ¥1,500 for a subscription right.

Consequently, some people forget that they have kanyuken. They move house and instead of having the land line in their new abode turned on, they just use their cell. In such situations, however, you still have to tell your local NTT office that you want to keep the right to a land line. After you do that they will send you a riyo kyushi no shirase (notice to stop usage), which allows you to maintain your subscription right, but only for 10 years. If you don’t re-remind the phone company that you want to keep the right, then after 10 years it expires and the shisetsu setchi futankin (money to facilitate operations) becomes invalid. Of course, during that time if you decide to reactivate your land line then the right is automatically preserved. In fact, the phone company recommends on the notice that you contact them every five years to confirm your subscription right. You never know. Faxes may make a comeback.

Anticipation: How high will mortgage interest go?

Tuesday, May 7th, 2013

Of course, you can always pay cash

Of course, you can always pay cash

Just as deposit interest rates have remained near zero for the past 20 years in Japan, housing mortgage interest rates have been lower here than almost anywhere else in the world. The effect of the latter has been almost counter-intuitive. Low interest usually spurs investment in real estate and home sales but Japan’s economic situation, not to mention its housing environment, is so odd to begin with that this hasn’t proved to be the case. Younger people thinking about buying homes have lived with low interest rates for so long that they think it’s the norm.

Last week interest rates for housing loans increased by 0.05 percent, the first rise in three months. Interest rates for loans are based on 10-year-bond interest rates. The Bank of Japan, on behalf of the prime minister, is gunning for a two percent inflation rate, and in order to achieve that goal it announced plans to buy government bonds from banks. Anticipating the BOJ’s move, investors have started to sell their bonds. When the price of bonds goes down the interest they pay goes up. More people sold bonds than the BOJ projected, which may not make the government happy since in the long run it will have to pay that interest to bondholders. If consumer prices and, in turn, salaries go up, that won’t be a problem since the government can collect more taxes as a result, but if inflation doesn’t kick in then it just means even more government debt.

Consumers are more concerned with how the change in interest rates will affect them directly. A recent article in Aera profiled a working couple in their 30s who have decided to buy a condominium in Tokyo right away in anticipation of the consumption tax rise next year. Because they both want to be near their workplaces, they settled on an area where the price of a condo that fits their lifestyle is about ¥50 million. They only have ¥3 million for a down payment, and they chose a variable interest rate because it’s lower than a fixed rate right now. Aera asked a financial planner about their situation and the planner seemed dubious.

Continue reading rising interest rate →

Bargain sales aren’t always what they appear to be

Wednesday, May 1st, 2013

Half price today or twice as much tomorrow?

Half price today or twice as much tomorrow?

On April 25 the Consumer Affairs Agency sent notices (pdf) to 12 nationwide retailers regarding sales of frozen foods. The CAA thinks that the way these sales are advertised purposely misleads shoppers and thus violates the Price Indication Law. The cited stores, which include supermarkets, drug stores and discount chains not named in the media, have regular bargain sales on frozen foods at savings of 30 to 50 percent off “the manufacturers’ suggested retail prices,” but as the CAA points out there is no such thing as a price suggested by the manufacturer when it comes to food. In essence, the stores are “fabricating” discounts.

Frozen food bargain sales have been commonplace for more than decade. In fact, every supermarket and discount drug store has them. They take place on a weekly basis, usually Tuesdays or Wednesdays, and regular patrons thus come to expect them, which means they rarely buy frozen food the rest of the week.

What the CAA is pointing out is that these retailers have convinced shoppers that on those days when frozen foods are “half-price” or “one-third-price” they are cheaper than they “normally” are, but what is normal in this case? The CAA only seems to have cited retailers who use the phrase “suggested manufacturers’ retail price” (kibo kagaku or kori kagaku) in their ads, but even those stores that don’t use the phrase are being cagey with the semantics: Half of what price?

According to the business magazine Toyo Keizai, wholesale prices for merchandise sold in supermarkets and discount drug stores are determined through negotiations between individual retailers and their suppliers, and no retail reference prices are mentioned, must less “suggested,” by the respective manufacturers. Traditionally, bargain sales are carried out to clear excess inventory, but that’s not the case here.

For all intents and purposes the ostensible “sale” prices are the standard ones, since the bulk of a store’s frozen foods are sold on those specified sale days. It’s the other days, when the products cost twice as much, that are the exception. The reason this strategy is applied to frozen food is because consumers are more willing to buy frozen food in bulk since they can be kept for long periods of time in the freezer. So on sale days, shoppers buy more frozen food than they would if there were no bargain sales; it’s just that they do it only once a week.

Uniqlo has applied this same strategy to clothing. Last year the chain expanded its weekly bargain sales from two days to four. Previously, the weekly sales took place on Saturday and Sunday, but now sale periods also include Fridays and Mondays, which means there is a “bargain sale” four days a week. But if you look at the matter a different way, you could simply say that on those four days Uniqlo is selling merchandise at their normal price and on the other days it is selling it at “premium prices.” It’s all in the terminology, and the thinking.

Service contracts and the ‘mendokusai’ factor

Tuesday, April 23rd, 2013

"E" as in "exasperating"

“E” as in “exasperating”

Last week we received a monthly credit card statement that included the first payment for our emobile portable Wi-Fi service, which we signed up for at the end of February. The charge came to ¥4,642, which was higher than we expected. We had applied at a discount electronics store near our home. From the beginning we understood that the service costs ¥3,880 a month, and while that did not provide us with unlimited Wi-Fi access, the amount of access it did provide was more than enough for our needs.

We made this clear to the saleperson right from the beginning because there were other plans available at higher prices and we didn’t want to inadvertently sign up for one of those. He understood, but had to make his pitches.

The first had to do with the Wi-Fi device itself, which cost ¥33,600. Since the basic contract was for two years, that came to ¥1,400 a month, but because we were signing a two-year contract, the price of the device is waived, which means ¥1,400 would be deducted from the standard monthly fee. That doesn’t mean ¥1,400 is subtracted from the ¥3,880 emobile advertised as the basic monthly service fee. Apparently, ¥3,880 is the fee after the seemingly non-existent ¥1,400 device charge is subtracted.

If you break the contract before the two years are up or change to a different service/device, you have to pay a fee of ¥9,975. And if you don’t inform them that you don’t want to renew your contract at the end of two years, the company automatically renews it. This term has bothered a number of other subscribers, especially since there is only a one-month window at the end of a contract during which you can request that it not be renewed.

The second pitch had to do with options, none of which we took. One was insurance for both the device and the software, which costs ¥525 a month. The salesman didn’t try to push it, but he made a point of explaining that if we didn’t want it we had to “waive” it, meaning we had to actively decline the insurance. It wasn’t a matter of not taking it.

From our understanding, the insurance fee was automatically added to the service fee, which hardly made it an “option.” He said we would have to call the emobile customer support number to formally cancel it — for some reason we couldn’t do it through him — and that we should do it as soon as our Wi-Fi service went into effect, since we would be charged for the insurance almost as soon as we started using the device.

Continue reading about portable Wi-Fi contracts →

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