Archive for the ‘Products’ Category

Will rice cookers save the Japanese home electronics industry?

Monday, July 14th, 2014

Pricey rice: High function rice cookers on display at a discount electronics store

Pricey rice: High function rice cookers on display at a discount electronics store

It’s been well documented that the Chinese are considered the saviors of the Japanese tourist trade, but there’s more to the story than just tour numbers and hotel bookings. An article in the July 10 Asahi Shimbun described an odd and recurring dilemma at Kansai International Airport. Chinese tourists are buying Japanese-made rice cookers at the airport’s souvenir shops in large numbers. Since the purchases are made after the travelers have gone through immigration processing, they don’t have to pay duty, but at that point they’ve already checked their luggage, and the rice cookers in their boxes won’t fit into overhead bins in airplane cabins.

Some of the rice cookers will fit if they’re removed from the boxes, but people on these flights are buying more and more of the home appliances so in some cases there is no room for any of them, which means flight attendants have to assist in having these patrons check the items so that they can put them in the cargo hold, and as a result more and more flights back to China are being delayed.

Rice cookers became a very popular item among Chinese tourists in 2010, when visa rules were relaxed to allow travelers who weren’t members of organized tours to come to Japan freely. One of the clerks in the Osaka airport souvenir store told Asahi that he once saw a Chinese tourist buy six of the devices at one time. One Chinese businessman who comes to Japan on a regular basis says he’s always getting requests from acquaintances to buy rice cookers for them. This souvenir store, in fact, sells an average of 10 cookers a day, most of them high-end models, which can cost as much as ¥90,000.

Last April, during cherry blossom viewing season, the store sold an average of 20 a day. A representative of Yodobashi Camera Multimedia Umeda in Osaka told the paper that whenever Chinese tour groups visit the discount electronics store they usually buy more rice cookers than they have members. Yodobashi has a duty-free system for tourists, but actually most Chinese prefer buying their rice cookers in the airport, since the price isn’t any different and they don’t have to lug the things around with them prior to departure. But there is the problem of carry-on.

Why rice cookers? There are few appliances that reflect Japan’s so-called Galapagos design mindset as thoroughly as rice cookers. They basically do one thing: Cook Japanese rice in a way that only Japanese people prefer. The rest of the world doesn’t eat much sticky, white, short-grained rice unless it’s combined with sauce or other prepared foods, and that includes the rest of Asia. Even China, from which Japan first imported rice-growing techniques, isn’t big on rice as a separate dish. It prefers long-grain rice, which is always prepared with something else in mind, and while it is considered a staple, at mealtime it isn’t as important as other dishes. In the northern part of China, many people don’t eat rice at all, since they grow more wheat there due to the colder climate.

But as more and more Chinese tourists have come to Japan, they have discovered the unique joys of sticky white rice.  As incomes rise in China, people are broadening their food choices, and one of those choices is short-grain rice. If it’s Japanese grown, it’s even better, despite the high price. And the best way to prepare it is with a Japanese-made rice cooker.

According to the Japan Electrical Manufacturers Association, more rice cookers are manufactured in China than in any other country in the world, but the vast majority are inexpensive models with few features. The first Japanese rice cooker was made by Toshiba in the mid-1950s, and since then they have become extremely sophisticated. Some even include porcelain containers and functions that allow the user to make rice that tasted as if it were made the old-fashioned way, in a kamado, the traditional, charcoal burning Japanese stove. Now, apparently, Japanese manufacturers are incorporating functions that will appeal to Chinese users, such as the ability to cook long-grain rice and different kinds of porridge.

In its own peculiar way, the Japanese rice cooker has done more to extend a specific Japanese sensibility than any electronic device since the Walkman. As any Japanese person over a certain age will tell you, the preparation of rice is the most important culinary consideration with regard to the Japanese menu. Cooking rice the proper way is difficult and time-consuming. You have to wash the rice throroughly until the runoff water is utterly transparent. Then the rice has to sit in that water for a certain length of time. The pot used for cooking rice, a kama, is only used for rice. First the rice in the water is boiled and the flame reduced — which, before gas stoves, meant removing pieces of charcoal from the kamado. And the person doing the cooking has to stay and monitor the flame for at least 15 minutes.

Consequently, the rice cooker was a huge boon for housewives. It not only freed up their time so that they could cook other dishes simultaneously, it freed up cooking space. Most Japanese kitchens with natural gas have only two burners. When makers added timing devices, rice cooking became exponentially easier because it cut the time needed for preparation, especially in the morning when housewives had to prepare breakfast and lunchboxes. Reheated cold rice is normally not acceptable. That’s why the next development was the “jar,” a special device for storing already made rice to keep it warm for later in the day without drying out. When the rice cookers themselves incorporated jar functions, the appliance had become perfect.

But only perfect to Japanese people. Most everyone else in the world didn’t eat rice this way, but apparently the Chinese are catching on. It’s too much to hope that their sudden affection for Japanese style rice will single-handedly save Japan’s home electronics industry — not to mention Japanese agriculture — but you never know. Look what the Walkman wrought.

Japan home electronics makers plays dumb on smart TVs

Sunday, May 18th, 2014

Smart enough? The latest model LG net TV at Yamada Electronics

Smart enough? The latest model LG net TV at Yamada Electronics

Last year Panasonic ran up against a wall when it came out with its first dedicated “net TV set” for the domestic market. Though TVs had entered the Internet age years before, this new “smart” model in the home electronics giant’s Viera line was an all-in-one device. It hooked up to the Internet directly and basically acted as a computer monitor, so users could stream movies from on-demand services, watch YouTube videos, mirror their PCs and tablets, whatever, while also enjoying the usual offerings of terrestrial and satellite broadcasting.

Smart TVs were already available overseas, so in a sense Panasonic was playing catch-up, but it ran into opposition from the broadcast industry, which, perhaps justifiably, believed smart TVs bypassed advertisers, so at least one station refused to run commercials for the new Viera model, thinking the ads would make other advertisers uncomfortable. Eventually, the station changed its mind and started accepting the CMs, but the resistance is indicative of not only the media’s mindset, but that of the home electronics industry in general.

Some might call it a sympton of Galapagos syndrome, but the fact is Japanese manufacturers are in the smart TV race overseas. Panasonic and Sony both make smart TVs for the American and European markets, and they are available in Japan but are barely promoted. Given that Japan’s reputation as the world standard for television sets and home electronics in general has suffered in the last decade, it’s surprising that this sort of vanguard technology is being overlooked on the domestic front, but maybe it’s simply a matter of perception. According to an article published last summer in the New York Times, smart TVs are popular among younger consumers in Japan, but the TVs they are buying are not made by Panasonic or Sony. They’re made by LG, a South Korean company.

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Tax structure encourages getting wasted

Monday, March 3rd, 2014

Zero's not in it: Selection of Suntory chuhai at discount store

Zero’s not in it: Selection of Suntory chuhai at discount store

There’s no end to speculation as to how the consumption tax increase in April will affect the country, socially as well as economically. Last week, Tokyo Shimbun published a conversation between a college professor and one of its reporters about the effect on beer prices and, in turn, beer consumption, which last year declined for the ninth year in a row.

When the reporter asks the professor about this effect the professor feigns amazement that the reporter, who specializes in tax matters, didn’t know that “42 percent of the price you pay for your beer is already tax.” He goes on to explain that the beer tax is a holdover from the 19th century, when beer was considered a luxury item. Since then it’s become much more the drink of common people thanks to improved and cheaper refrigeration, but the government liked the revenues too much and maintained the tax structure for beer. To the professor’s thinking, the tax should be pegged to alcoholic content, and since beer’s is relatively low the tax should also be lower than it is for other alcoholic beverages.

It’s easy to get people to pay the tax since it isn’t indicated on the package or even at the place of sale, unlike the consumption tax. For the sake of reference, when you buy a 350-ml can of beer you pay ¥77 in tax. If you bought the same volume of whiskey you’d pay ¥129 in tax; shochu ¥70, nihonshu ¥42 and wine ¥28.

Basically, that means the consumption tax is levied on a tax, since the consumption tax is determined by the price that the wholesaler and retailer pays for the product, which, by the time they receive it, already includes the alcohol tax that is levied at the manufacturing stage. “When the government said they’d increase the consumption tax, people got angry,” says the professor. “But no one says anything about the alcohol tax, because people don’t notice it.” The reporter thinks that a “tax on a tax” violates the principle of taxation. The professor doesn’t disagree, and adds that beer accounts for half the revenues brought in by the alcohol tax. Because beer makers are large companies with responsible accounting practices, it’s easy for the Finance Ministry to collect the tax. The reporter says, “Why don’t manufacturers get angry?”

Actually, that’s why they started making the “beer-like” happoshu in the late ’90s. Because the ingredients used in happoshu are different from those that define beer for tax purposes, the beer tax doesn’t apply, and so makers could sell it at a much lower price. The government, of course, didn’t like that and eventually raised the tax rate for happoshu, too, though not as high as it is for beer (¥46 for a 350-ml can). Makers came back again with dai-san (third type) beverages, which use fermented soybeans for flavor instead of hops, and that got around the happoshu tax (¥28 for 350-ml). But while these new, cheaper brews outsold “real” beer handily, sales for all three beverages have still decreased over time, due to the shrinking population and a younger generation of consumers who don’t drink as much as their parents did.

In that regard, beer makers don’t see much of an impact of the consumption tax hike on beer and beer-like beverage sales; or, at least, they don’t see any point in trying to offset the hike. But they are modifying their lines of canned drinks that contain shochu, colloquially called chuhai. As the price of chuhai goes up thanks to the consumption tax, they are increasing the alcohol content. In fact, many companies have already added more alcohol to their chuhai products.

Kirin Beer increased its Hyoketsu Strong from 8 percent to 9 percent alcohol, and in April it will boost its Hon-shibori Lime chuhai drink from 6 to 8 percent.

Asahi Beer is already advertising its new Karakuchi Shochu Highball, which is 8 percent, in a bid to persuade normal fans of high balls — whiskey and soda — to switch to shochu and soda. That’s a full 5 percentage points higher than Asahi’s other chuhai, Slat, and both beverages will be sold for the same price. (Note: Slat is aimed at young women and the word suggests slimness, though an English speaker may be forgiven for thinking the name an unfortunate choice for such a target group.)

Suntory’s chuhai product, -196 Degrees C Strong, which enjoyed a 22 percent share of the chuhai market in 2012 thanks to its already hefty alcohol content, will be strengthened from 8 to 9 percent. The company told Asahi Shimbun that it expects sales to grow by 8 percent.

The target is middle-aged and elderly men, the main demographic for alcoholic beverages anyway. Makers think they will be attracted to the cost effectiveness, according to the Asahi, which means they can “get drunk more easily” for the same amount of money. In many countries, tax on alcohol is referred to as a “sin tax,” since it has a double-edged purpose: raising revenues on a product or service that may be harmful to society, on the one hand, and on the other checking consumption of the harmful product or service by making it more expensive.

This latter purpose doesn’t seem to apply in Japan, where alcohol companies have figured out a way to use the tax structure to their advantage. There’s no sin in that.

Government wondering how to tap burgeoning ebook market

Saturday, October 12th, 2013

No waiting

No waiting

It’s official. The consumption tax goes up to 8 percent in April, and the government is anxious to plug any loopholes. The most bothersome one is for ebooks. Though domestically sold ebooks, meaning those distributed by Japanese vendors from physical addresses in Japan, are already taxed, those sold from overseas are not, and the tax bureau is wondering how to correct this problem, especially now that the price gap between an ebook purchased from a foreign-based agent and one purchased from a Japan-based seller will widen, thus setting up a disadvantage for the latter. Market research company Daiwa Soken reports that in 2012 the government missed out on ¥24.7 billion worth of tax revenues from the purchase of ebooks from abroad.

Legally, sales transactions that occur outside of Japan are not subject to consumption tax, and the place of the transaction is determined by the address of the seller. So if you go to Amazon.co.jp and look at various books, you’ll notice that those which are sold by Amazon Japan have consumption tax included in the price, while ebooks sold by Amazon Services International do not. What the government wants to do is change the law so that the place of the sales transaction is not the place of sale but rather the place of usage, a tactic that some American local governments have tried with regard to sales tax. But sales taxes are paid at the retail stage, while consumption taxes are incurred at every step of distribution, so a Japanese importer adds the tax after the item arrives in Japan.

If a customer in Japan buys the book directly from overseas, no tax is imposed, but when the law is changed customs could add it because the imposition location is the user’s address, not the seller’s. However, since ebooks, as well as music tracks and software, tend to be purchased over the net it’s more difficult to monitor, if not downright impossible.

According to Tokyo Shimbun, the Finance Ministry’s plan is to strike deals with tax agencies abroad so that the consumption tax is added on when sales are made. Overseas sales companies who do business in Japan would have to register with the Japanese tax bureau. For large-scale companies with widespread presence in Japan and sales units overseas, like Amazon and Rakuten, which in 2011 bought the Canadian ebook seller Kobo, that shouldn’t be a problem, but there are dozens if not hundreds of smaller content vendors who will fall through the cracks.

Already, some Japanese language ebook sellers and other net vendors have set up operations overseas to exploit this loophole, thus causing concern for domestic companies like Yahoo Japan, whose president compared such competition to a boxing match in which Japanese companies “have to fight opponents who are three weight classes above them.” Eight percent can make a big difference, especially since Japanese ebooks tend to be priced high anyway compared to ebooks in other countries.

In that regard, buyers of non-Japanese language books have an even greater advantage in Japan, since Japanese publishers still enjoy government-sanctioned fixed prices for all first-sale books and magazines, regardless of when they were printed. Japanese bookstores cannot set their own prices and industry distribution rules discourage remainders. With the rising popularity of ebooks in the West — 20 percent of all books now sold in the U.S. are electronic as opposed to 8 percent in Japan — print books have actually benefited since people can seek out remainders and used books through Internet sales agents, and usually they purchase them for less money than an ebook, even with shipping included. That’s not the case in Japan, except for used books. But if Japanese ebook sellers set up agencies abroad they can corner the market.

Roomba rules with working moms

Thursday, September 12th, 2013

There has recently been a discussion in the Japanese language media about an article that novelist and Nippon Foundation head Ayako Sono wrote for the magazine Shukan Gendai.

Roomba to move

Roomba to move

Sono, who will turn 82 next week, encouraged working women to quit their jobs after they gave birth, not so much because she believes a mother should devote all her attention to her children, but rather because it is “selfish” for working mothers to place such a burden on the companies they work for by demanding they hire them back at full pay after maternity leave. Women who make such a demand don’t understand reality, Sono says. She herself put up with being “poor” when she had her children, relying on her husband’s salary only, and thinks women today should do the same.

Regardless of Sono’s blinkered view of the reality of married life today, the amount of money that working mothers contribute to the Japanese economy is not chicken feed. It’s estimated to be about ¥6 trillion, according to a cover story in the business magazine Toyo Keizai. The Ministry of Internal Affairs and Communications reports that the average disposable income of a double income household is more than ¥4 million a year, while that of a single-income household with a full-time homemaker is about ¥3.6 million.

Moreover, a research laboratory, Dentsu Soken, says that the “direct economic impact” of women who go back to work after giving birth is ¥3 trillion, and the secondary effect of this spending, in terms of added jobs and investment, is worth something like ¥6.4 trillion.

If these women weren’t working they wouldn’t be making that money and thus wouldn’t be spending it, and much of what they spend it on has to do with saving time, because they are so busy with both their jobs and their kids. This waamama (working mother) boom has resulted in brisk sales for three home electronics products that were originally aimed at narrower, higher-income niche targets: washing machines with built-in dryers, dishwashers and robot vacuum cleaners.

It’s the last of these, spearheaded by the American-made Roomba, that has really taken off, and the appeal to working mothers is clear. They simply turn it on and the machine cleans the room by itself, while the mother does other things, like go shopping or play with her children.

The Roomba was originally promoted for seniors, and the price is pretty steep, about ¥80,000, though some discount retailers may sell it for ¥70,000 or even less. The subsequent Japanese copies, made by Toshiba and Sharp, start lower, at about ¥50,000, and are becoming popular, too, but Roomba dominates, with 73 percent of the robot vacuum cleaner market, according to Seed Planning Research. Of course, the household could probably save even more money if the husband chipped in with the housework, but since Sono didn’t talk about that we won’t either.

Kanebo recall illustrates built-in resilience of cosmetics industry

Monday, July 8th, 2013

White is might: The Sex and the City cast plug their second movie in Tokyo, 2010

White is might: The Sex and the City cast plug their second movie in Tokyo, 2010

Last week, cosmetics giant Kanebo, along with two subsidiaries, announced it was recalling 54 skincare products that are believed to cause unsightly blotches. The merchandise under scrutiny contains an active whitening ingredient called Rhododenol that the company first started marketing in 2008, and it estimates that some 250,000 women in Japan alone use it on a regular basis. Since 2008, 4.36 million units have been shipped and probably about 450,000 may still be in use, including in foreign countries like Thailand and Taiwan. The Philippines, in fact, reacted to the recall by banning all Kanebo products that contained Rhododenol.

On the surface, the size of the problem sounds formidable, since Kanebo will lose some ¥5 billion on account of the recall. Asahi Shimbun reports that the company has not released sales figures for the disputed line of products, but it is believed Kanebo’s annual revenues for skin whitening agents is around ¥190 billion. Consequently, the company is not losing that much, and if one wanted to make a gambling analogy, it obviously pays to market substances that aren’t guaranteed in the long run since so much money can be made in the short run. It all depends on what people want and how badly they want it.

Women’s cosmetics, and whitening products in particular, are no-lose propositions in Japan. The main market right now is middle aged consumers, who, according to a recent article in Aera, buy almost any anti-aging product that goes on the market. This practice is now called keshohin kurujingu, or “makeup cruising.” The article profiles several women, housewives and working women, all in their 40s and 50s, who spend an average of ¥50,000 a month on cosmetics.

Continue reading about the strength of the cosmetics industry →

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).

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