Archive for the ‘Products’ Category

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).

Diaper manufacturers get them coming and going

Tuesday, May 8th, 2012

Checking out the merchandise

Ever since Japan emerged as a manufacturing giant it has concentrated a great deal of sales efforts on exports, but in the past decade or so, as the country’s population has begun to contract, foreign markets have become even more important to sustain corporate growth. And nowhere is this dynamic felt more acutely than in the disposable diaper business. Japanese are having fewer babies. In 2011 the domestic market for disposable baby diapers was about ¥140 billion, but according to one major manufacturer, Unicharm, that market is shrinking at a rate of about 2 percent a year. However, in many other Asian countries,  population is increasing along with average living standards.

Whether it foresaw these changes or not, Unicharm entered the foreign market early and started selling diapers in Taiwan in 1984. It now has a presence in 80 countries and territories, in the form of factories or sales channels. This summer the company plans to open a plant in Egypt, its first on the African continent. Unicharm’s strategy is to adjust quality and price for specific local markets. For instance, it offers three price grades of diapers in Thailand and Malaysia, each price targeted at a specific income group; while in Indonesia it sells diapers individually rather than in packs since that is the way most retail sales work in the country.

Japanese disposable diapers are generally considered to be of high quality, and many manufacturers, such as Kao, which makes Merries, the best-selling diaper in Japan, simply target parents in foreign countries who can afford to pay a little more for diapers. Merries is quite popular among middle class parents in China, where they are 20 to 30 percent more expensive than “regular” disposable diapers. Meanwhile, Daio Paper, which is also considered high quality and sells 40 percent of its disposable diapers outside of Japan, seems to be particularly popular among the well-to-do in Shanghai.

But the real news in the diaper business is at the other demographic end. In 2011, for the first time, sales of adult diapers in Japan exceeded sales of baby diapers. According to Yano Research, sales of adult diapers in 2011 increased by more than 100 percent from 2010, with revenues topping ¥160 billion. Unicharm alone recorded sales of ¥60 billion. Growth in the adult diaper market is propelled by more than just the aging of the population. Purchases of adult diapers can be subsidized in part by the Long-term Nursing Care Insurance system (kaigo hoken), and while babies usually need diapers for three years, four at most, older people could conceivably need to use them longer. And as advertising becomes more widespread the hazukashii (embarrassment) factor will continue to abate.

Electric cars aren’t just for driving any more

Tuesday, March 13th, 2012

Nissan charged up about giving back to the community.

Late last month, Nissan announced that starting in April its new electric car, the Leaf, would be used as an emergency power supply for a new office-condominium high-rise in Shinjuku managed by Sumitomo Real Estate. In the event of a disaster that resulted in a power failure, Leaf cars could be connected to the building’s electrical system through outlets specially installed for recharging electric vehicles and then the cars’ stored power could be used to supply electricity to the building for up to 42 hours for emergency services such as recharging cell phones and illumination. As a side note, the building also has a special hall that can be converted into a shelter for people in Tokyo who cannot return home during a disaster.

Though this is just a corollary benefit of the Leaf, Nissan’s announcement stresses the idea that electric vehicles could offer a wider range of purposes than just mobility. A number of new housing communities that are being developed with “smart grid” technologies have homes with EV charging stations. As with the Sumitomo building, these stations not only provide electricity for charging the battery of an EV, they also accept electricity from an EV that can be used in the home.

Such news is being stressed as more carmakers enter the EV field. Mercedes Benz Japan said it will start selling its own electric car, Smart, as early as August due to consumer demand. It will be the first foreign EV sold in Japan. At the moment the price hasn’t been determined, but an executive with the company has said it will be competitive with domestic EVs. The Leaf’s sticker price is about ¥4 million, but with the restart of the government’s eco car subsidy, a consumer could take it home for about ¥3 million. The Mitsubishi EV, the MiEV, is even cheaper. After subtracting the subsidy it would cost a little less than ¥2 million.

In related news, Panasonic has said it will start selling a rechargeable storage battery system (chikuden) for the home starting next week. The battery specifically takes advantage of home solar systems, and is mainly being promoted as a stopgap measure for power outages. The problem with solar systems is that they only work when the sun is shining and without a storage device any excess power goes to waste if it isn’t fed back into the grid. This battery can store solar power for the night, for a rainy day, or for blackouts. The battery is a lithium ion type, measuring 45 cm by 15.6 cm by 60 cm. Its capacity is 4.65kW per hour. When fully charged it can supply a house of average size with normal power for two days. The main drawback is the cost, which is ¥2,110,500. It’s cheaper to buy a MiEV.

Automatic dishwashers: the square peg in the round hole of Japanese kitchens

Friday, February 10th, 2012

Redundant? Dish dryers that also disinfect

A Japanese non-profit organization called the Housekeeping Association recently conducted a survey of “married women” about the appliances they have purchased over the years. Among the association’s findings was a ranking of appliances in terms of effective usage. They asked the 3,900 respondents to rate appliances in terms of what they expected of them and then whether or not those expectations were met. The greatest degree of “disappointment” was registered for automatic dishwashers, followed by clothes dryers and bread-making machines.

One of the reasons dishwashing machines fared poorly in the survey is that dishwashing itself was deemed by 78.8 percent of the respondents to be one of the “most important housekeeping chores.” In addition, 75.4 percent of the women who owned dishwashers said they found it “stressful” when a load of dishes did not seem to be clean after using the appliance. Consequently, they would have to clean each dish, glass or piece of flatware by hand, rendering the appliance virtually useless. And since as an appliance the dishwasher also used lots of energy and water, it became even more of a wasteful piece of equipment. After all, the reason these women bought the dishwasher was to save time.

According to the Asahi Shimbun, only 26.9 percent of Japanese households have dishwashers, as opposed to about 62 percent of American households (as of 2007). The reason is mainly space, which Japanese kitchens have less of, but also the running expense, since, as implied by the responses to the above-mentioned survey, they require a lot of energy and water. This is also one of the reasons clothes dryers are not so common in Japanese homes — the electricity costs — but, of course, the main reason clothes dryers aren’t popular is that Japanese prefer hang drying clothes, as evidenced by the fact that almost every residence in Japan incorporates some sort of facility for a drying pole, such as a veranda. The belief is that sun drying disinfects clothing and heat drying does not.

Similarly, many Japanese belief that it is healthier to allow dishes to dry naturally, which is why in addition to table-top dishwashers there are also table-top dish-dryers, an appliance that Americans, at least, would probably find redundant. Many Japanese homemakers do not like to towel dry dishes, believing it to be unsanitary, so they either leave them out to dry naturally, or they dry them in dish-dryers.

Nevertheless, appliance makers, always on the lookout for something new to market, have made a concerted effort to sell electric dishwashers to the Japanese. In America, new homes come with dishwashers, usually as a standard built-in feature. Very few in Japan do, and in almost all cases they are an expensive option. Most dishwasher owners have the table-top type, which takes up a lot of room and requires unsightly hoses and electrical cables, which most likely compound the feeling of dissatisfaction.

Another aspect of Japanese living that makes dishwashers expensive is that, unlike in the U.S. where users do not run the dishwasher until it is full, Japanese homemakers prefer to clean up after every meal. That means the dishwasher could be used as much as twice or even three times a day.

Tobacco farmers lost but not forgotten in tax rumble

Monday, January 2nd, 2012

Smoke 'em if you got 'em: JT HQ in Toranomon, Tokyo

As every smoker in Japan knows, the cigarette tax was raised in the fall of 2010. With ¥3.5 added to each cigarette, it means a pack suddenly cost at least ¥70 more, and as a result sales have dropped by about 20 percent. So-called sin taxes are double-barrelled: They have a behavior modification purpose of discouraging users from over-indulging, and they’re an easy political sell since the consumers (and maker/providers) usually aren’t considered a sympathetic or powerful constituency by the general public. Consequently, the government is thinking of adding another ¥2 per cigarette tax levy to help pay for reconstruction.

The suggestion has been tabled for the time being, though it will likely be revived. The main reason for the postponement isn’t so much Japan Tobacco, which has a monopoly on tobacco sales in Japan, but rather the farmers who supply JT. There are approximately 10,000 households that make a living from growing tobacco, and about 40 percent have said that they plan to quit since they see no future in the crop. The presumed reason is the tax and the trend for quitting, but many farmers say they are getting out of tobacco because JT asked them to. Since JT is obliged to buy all their product, these farmers no longer have a guaranteed future, and with the Trans-Pacific Partnership possibly looming on the horizon, there’s even less of an incentive to stick it out.

Tobacco, like salt and rice, used to be a government monopoly. That changed in 1985 when the monopolies were abolished and Japan Tobacco was established. Despite the change in nomenclature, JT pretty much continued to operate as a monopoly, since it had to buy all the tobacco produced and controlled all sales of cigarettes. JT determined the price of tobacco before each growing season, meaning there was never a market for the crop. This worked fine while sales were strong, but after they peaked in the mid-90s revenues steadily decreased. Starting in 2004, JT solicited tobacco farmers to retire, and about 20 percent did exactly that. The amount of farmland dedicated to tobacco decreased by about 10 percent. Last year, JT asked more farmers to quit the game, and the decrease in farmland was 30 percent.

Continue reading about a possible hike in tobacco tax →

Convenience stores gear up for a brighter future

Thursday, December 29th, 2011

Ready when you are: 7-11 Premium prepared foods

The retail giant 7&i Holdings reported an 8 percent increase in sales for the first half of fiscal 2011 over the previous year. It was a new record and clearly driven by the company’s 7-11 convenience stores. They aren’t the only ones. The three other main CS chains — Family Mart, Lawson and Sunkus/Circle K — have also reported strong earnings, the result of what the Asahi Shimbun calls a “better opinion” of convenience stores in the wake of the March disaster.

Because there are so many convenience stores, they tend to be in closer proximity to people’s homes than larger retail operations, so during that anxious period when people did not want to stray too far from their homes and loved ones, CS became a sort of lifeline. As a result, demographics that previously didn’t patronize convenience stores, such as housewives and the elderly, came to rely on them more and more, and in the process also came to appreciate their distinctive merchandising schemes.

This success has given the industry a sense of purpose, and all four big CS chains have announced plans to open as many stores as possible over the next year or so. According to the Japan Franchise Association, as of March 2011 there were 45,769 convenience stores in Japan. The industry itself, according to the Asahi, believes that the “saturation point” for convenience stores in Japan is 50,000, though some analysts say that due to the rise in single-person households, which is exactly the sort of scenario that benefits CS, the market may be able to absorb even more.

7&i plans to open 1,350 stores in FY2012, while Family Mart, which over the past two years took over 800 former am/pm stores, plans to open another 800 brand new outlets. Lawson’s target for the same period is between 800 and 1,000, and the Sankus/Circle K juggernaut is aiming for 360.

Continue reading about the expansion of convenience store chains →

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