Archive for the ‘Products’ Category

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 →

Solar soon to be heating up in Tokyo

Tuesday, November 29th, 2011

An old solar heating system collector

In the wake of the Fukushima nuclear accident solar energy as a concept has become more attractive to the average person, and the central government’s recent passage of a law to promote renewable energies should help make solar power more widespread. Of course, solar power isn’t perfect, but not so much for the reasons nuclear apologists put forth. For instance, those who say solar energy is basically inefficient point to the fact that the electricity generated by household solar collectors is the equivalent in power of only 10 percent of the energy collected. This is a specious argument since sunlight is, for the time being at least, free, so we’re talking 10 percent of something that is constant and endless and which, untapped, just vanishes into the ether. It’s not like wasting the potential energy derived from gas or oil, since those are by definition finite energy sources.

The problem with solar energy is mainly a political one. According to the renewable energy law, which was sent to the cabinet for approval a day before the earthquake of March 11, power companies are obliged to buy excess energy from home solar systems. Tokyo Electric Power Co. announced last spring that it would buy electricity derived from solar collectors from private homes at double its usual rate. What the utility didn’t say so openly was that this expense would be reflected in electricity bills for all TEPCO customers. One of the main selling points of home solar systems is that, over time, the sale of excess energy to power companies would pay for the systems themselves, which are very expensive, though prices are coming down. People of limited means, which probably describes most households these days, can’t enjoy such benefits because they can’t afford to install solar systems. In the end, they help pay for the systems of the more well-off through their electric bills, not to mention schemes like eco points, which use tax money. So while some may claim that the greater good — greater reliance on solar energy — is worth it, the policy as it’s now carried out is inherently unfair.

A more equitable idea at the household level is using sunlight for heating rather than generating electricity. Solar collectors for heating water have been commercially available for years, and in terms of efficiency — 40 percent — beat out solar collectors for electricity. Since 2009, the Tokyo metropolitan government has been planning to subsidize solar collectors for home heating purposes. They will give people up to ¥500,000 if they install a solar heater in a new house. Condominium builders will also receive some kind of incentive. Recently, Tokyo solicited solar heater manufacturers, 60 of whom applied for approval. Fifty-one were selected whose products will be eligible for the subsidies.

It is the first time a local government has encouraged through subsidies the installation of solar heaters, which have never been so popular even though they are relatively inexpensive and easy to install. The hot water that is produced can not only be used for baths, showers and washing, but also for room heating if the home has a radiant heating system installed in the baseboards or the floors. Such systems, of course, can help households save on energy bills and do not produce extra carbon dioxide, which is the main benefit for Tokyo since local governments have been charged by the government with reducing their carbon output. More important, these savings are not at the expense of other households who do not have the system installed. Solar heating is self-contained, and therefore self-reliant.

Are consumers being short-changed by the yen’s appreciation?

Thursday, October 20th, 2011

"Endaka" sale: Limited time only?

An ongoing matter of concern in the Japanese financial pages is the continued appreciation of the yen against almost every other currency. According to the overriding narrative attendant to this concern, Japanese exporters “enjoyed” a lower yen (en-yasu) until the middle of 2007, meaning that because the yen was valued low in relation to the currencies in the countries where these companies’ goods were sold, they made more money. That changed, and especially after the financial crisis of 2008, the yen shot up and continued to rise over the next three years, even after Japan’s economy was pummeled by the earthquake and tsunami last March. The yen is now up about 25 percent over what it was four years ago.

This is generally considered a bad thing since Japan’s economy depends on exports, but a lot of economists are saying the situation isn’t as dire as the media has portrayed it. Major exporters like Toyota and Sony have the ear of the mass media, so their troubles tend to represent all of Japanese industry in the financial press, but exports account for less than 20 percent of Japan’s economy. These companies threaten to move operations overseas if the yen isn’t brought down, but they’ve already moved a huge portion of their manufacturing overseas. In addition, they buy parts and materials from countries where their yen goes much further.

The economists who point this out also explain that the high yen can be considered a good thing for consumers, who should expect to “enjoy” substantially lower prices for imported products and Japanese products that use foreign ingredients. That should go without saying, and we’ve been waiting to see these savings at our local retailers. We’re still waiting. When we ask why the high yen isn’t reflected in prices we get answers like this: Though the yen is appreciating, commodity prices are increasing; many countries are experiencing inflation; since all imports have to be shipped, prices depend on the price of oil. In the end, these answers sound like excuses, because except for some isolated retail areas (Amazon; one particular brand of imported camembert, pictured), almost nothing sold in Japan from overseas has become noticeably cheaper in the last three years.

Continue reading about the high yen not translating to savings →

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