Archive for the ‘Travel & Transportation’ Category

Consumption tax hike projected to increase appeal of electronic money

Monday, March 24th, 2014

The ones: You'll be seeing more of these guys in the near future

The ones: You’ll be seeing more of these guys in the near future

Last month the national mint intensified production of ¥1 coins in anticipation of the consumption tax hike on April 1. The Ministry of Finance wants 26 million of them manufactured by the end of March, and then another 160 million after the start of the new fiscal year. Once the consumption tax goes up from 5 to 8 percent, retailers will need more small change. With a 5 percent tax, it’s relatively easy for stores to limit their use of coins since they can set prices based on multiples of 5. Maybe it’s possible to do that with multiples of 8, too, but not right away, and many fear they will not have enough ¥1 coins on hand when the tax hike goes into effect. An employee of the nationwide ¥100 shop CanDo told Asahi Shimbun, “Altough we sometimes receive ¥1 coins in payment from customers, we don’t recycle them as change to other customers, but now we’re trying to hoard as many as possible.”

If the consumption tax increase is an inconvenience to retailers, it’s even more of a pain in the neck for the government, since it costs between ¥2 and ¥3 to make a ¥1 coin, which is 100 percent aluminum. It’s the first time the mint has produced ¥1 coins on anything approaching this scale in four years. It will also produce an extra 100 million ¥5 coins, just to be safe. The government doesn’t want to relive the small change panic that happened in 1989, when the 3 percent consumption tax was first introduced. Tokyo Shimbun reports that it took the finance ministry three years to put into circulation the extra 7.5 billion ¥1 coins necessary to make the new tax workable. Then, when the consumption tax went up to 5 percent in 1997 the demand for ¥1 coins decreased. At present there are 39 billion ¥1 coins in circulation, which is 3 billion less than the peak number in circulation in 2002.

But the development that really started making small change obsolete was the introduction of electronic money in 2001 with the emergence of the Edy card system, which is now owned by the Internet mall Rakuten. According to the Bank of Japan, in 2012 electronic money was used for ¥2.5 trillion in transactions, which is three times the amount used in 2008. Understandably, the electronic money industry thinks the consumption tax hike will increase usage even more. Edy, which is accepted at 370,000 retailers and vending machines nationwide, told Asahi that it is using the opportunity of the hike to increase consumer awareness for their system, and will offer bonus points for new users who sign up. NTT DoCoMo, which offers the iD electronic money system through wallet functions in mobile phones, now accepted at 514,000 points-of-sale (POS), says it is contracting with even more retailers to install electronic readers, as well as with parking lots and restaurants.

The biggest beneficiary may be EM systems run by transportation entities. Suica and Pasmo cards, each of which are usable at 240,000 POS, offer commuters and travelers a discount. People who buy tickets for train and bus rides will pay more since transport companies will round up fares to the nearest multiple of ¥10 after April 1, while EM users will pay the exact fare. For instance, a JR fare that now costs ¥450 will increase to ¥464 with the tax hike, and that is what EM users will pay. Ticket-buyers, however, will have to pay ¥470.

The mint isn’t the only institution working overtime to compensate for the tax hike. Japan Post is rushing to print ¥2 stamps to augment ¥50 postcards and ¥80 letter stamps. For the past 20 years, all postage has been in multiples of ¥10, so there was never a need for post offices to stock ¥1 coins.

But all this printing and minting will be short-lived if the consumption tax is hiked again, to 10 percent, in the fall of 2015, which is what the government is planning to do. In that case, the tax will actually be a multiple of 10, thus making it easy for everyone, especially cashiers who now dread all those elderly people wasting their time as they dig through their purses and pockets for exact change.

Special K: Mini-cars come of age in a maxi-world

Sunday, January 26th, 2014

Thinking inside the box: Honda's N-WGN

Thinking inside the box: Honda’s N-WGN

The nationwide used car dealer, Gulliver, recently set up a new venture called Gulliver Minicle, which deals only in kei-jidosha, often referred to as minicars in English, though here we like to call them K-cars, which make up a separate class of automobile. The engine displacement can’t be more than 660cc, and they were developed in the ’60s and ’70s for people with limited incomes.

When K-cars first appeared the engines were as small as 360cc, and have always been a point of contention for the U.S. automobile industry, which describes them as a “non-tariff trade barrier” because taxes for K-cars have been much less than they are for regular cars and thus are deemed as being unfair competition for infamously larger American cars — though it should be noted that U.S. automakers have tried to sell compacts in Japan.

K-cars have always had one glaring drawback. Because the engine is so small, they have to be light, and that means they are less safe. Consequently, families don’t buy them; or, at least, they didn’t until recently.

Gulliver’s launch of a retail entity that only sells used K-cars shows that there must be a viable market, since K-cars are already cheap and Japanese people aren’t big used car buyers. So far there is only one Minicle, in Morioka, and it has about 50 cars on display divided into three sizes: S, M and L, like apparel.

According to an article about the store in the Asahi Shimbun, there really isn’t much difference in the sizes, but the designations appeal to women, who are now the main target demographic for K-cars. There is even a play space in the store where kids can relax while mom is shopping for new wheels.

Gulliver is already planning Minicle stores in Hokkaido, Tohoku, Kyushu and the San’in region, and by 2018 expects to have about a dozen throughout Japan, mainly in the vicinity of regional capitals and not so much in the big three metropolitan areas.

In December, the Japan Light Motor Vehicle and Motorcycle Association estimated that 2.1 million K-cars would be sold in Japan during 2013, a new record. In contrast, sales of all other cars amounted to about 3 million. So while sales of minicars increased by 4.8 percent over 2012, sales of other cars decreased by 5.3 percent.

As a portion of all car sales, Ks increased by 2.4 points to 39.3 percent. The only other automotive sector that showed more growth was foreign (read: German) cars, whose sales increased by 9 percent, also a record. And in terms of production by Japanese automakers, 40 percent are now K-cars.

The obvious reason for the popularity of minicars is their price, but they’ve always been cheap. It’s their reason for existing in the first place. Some say that people bought them last year because the K-car tax is set to be eliminated sometime this year, but a more likely reason is increased safety and functionality.

More than a year ago, Daihatsu started selling a new version of its Move model that uses sensors to automatically reduce speed when it gets too close to the car in front of it. Though it’s offered as an option at ¥50,000, more than 80 percent of the buyers order it. In succession, similar options were added by Suzuki to its popular Wagon R model, for ¥42,000, and by Honda to its N-WGN model.

A Honda representative told Asahi that since 64 percent of K-car drivers are women, this option was incorporated specifically to attract them. A good portion of K-cars are bought as second cars, for shopping and shlepping the kids around. In the past, these women bought compact cars, but they’re switching over to Ks.

Nissan and Daihatsu have upped the ante by also offering windshields that cut ultraviolet rays, something else women demand. In addition, K-cars now have much roomier interiors than in the past and larger cargo areas. In truth, there isn’t much difference, performance-wise, between a K and a standard compact.

Which is why the U.S. is even angrier than before, because that makes the so-called trade barrier even higher to scale. Due to regulations and consumer sentiment, K cars aren’t marketable in America, and the Big 3 automakers aren’t going to manufacture them only for one market, but that could be changing. India seems ravenous for K-cars and Suzuki is quickly setting up factories and joint ventures on the sub-continent.

Some experts say that the U.S. Trade Representative’s gripe about Ks is actually a means of keeping pressure on other sectors, generating leverage to open Japan’s agriculture and insurance markets more, for example. Also, it gives the American government an excuse to maintain its own tariff to protect the U.S. truck market from low-priced Japanese imports.

Government tries to jolt EV sales with charging station subsidies

Wednesday, November 27th, 2013

Newspaper ad promoting installation of recharging stations for EVs

Newspaper ad promoting installation of recharging stations for EVs

Norway boasts the highest per capita ownership of electric cars in the world, for a number of interrelated reasons, it seems. The tax on purchases of new cars, all of which are imported, can be more than 100 percent, depending on weight and fuel efficiency, but it’s almost zero for electric cars. The annual automobile tax is about a seventh of the tax burden for a gas-powered vehicle. This savings is apparently enough to offset the higher sticker price of electric cars. According to a friend of ours who is Norwegian, the American Tesla sells for 580,000 kroner, or ¥9.6 million, and there is a six-month waiting list. We asked our friend if there were enough high-speed charging stations in Norway, and he said there are about 4,000, which is not considered enough but he says most people are “satisfied” with charging their EVs at home, where it takes about 8 hours to top them off.

In addition to offering tax breaks, the government promotes EVs by subsidizing the installation of charging stations. EVs do not have to pay road tolls, and they can use lanes that are normally limited to buses and taxis. More significantly, despite the fact that Norway’s wealth is derived from oil, its gas prices are among the highest in the world, twice as much as they are in Japan. So while EVs are very expensive to buy , in the long run they are much more economical thanks to the government.

One of the reasons auto-related taxes are so high in Norway is that the country has no automotive industry to protect. Electric cars are manufactured in Japan and are relatively cheap, but much less popular. At last week’s Tokyo Motor Show, Carlos Ghosn, the CEO of Nissan, which makes the electric Leaf, admitted that EVs weren’t selling as well as expected and that the company’s sales goal of 1.5 million units by 2016 would not be reached.

According to Sankei Biz, EV sales in Japan have picked up slightly in recent months, and as of October 120,000 electric cars have been sold in Japan since they were introduced. About 87,000 of these were made by Nissan. Ghosn says the main reason the target won’t be met is “lack of infrastructure,” meaning lack of charging stations.

In August, Toyota, Nissan, Honda and Mitsubishi announced that they would jointly build more recharging stations throughout Japan to promote electric vehicle sales, with the help of government subsidies, and last week the four automakers agreed on the details of “specific financial assistance” to parties who install charging stations.

Tokyo Shimbun reports that at present there are 1,900 quick charging stations in Japan and about 3,500 normal charging stations. The government will provide subsidies of up to ¥1.7 million to businesses that install quick recharging stations on their properties and ¥400,000 to businesses that install normal recharging stations. The government’s aim is to increase the number of quick stations by 4,000 and normal stations by 8,000, though no timeline has been given.

These subsidies are being offered through both the central government and local governments. Maintenance of the stations will also be subsidized for a limited time. If the business is a convenience store, it has to have parking for at least ten cars, and if it’s a gas station it has to be open 24 hours. Applications for the subsidy, however, will only be taken until February of next year.

Blood on the tracks: Who pays for deadly railway accidents?

Friday, October 18th, 2013

Don't look now

Don’t look now

One of Japan’s enduring urban legends is that railway companies demand compensation from families of people who commit suicide by throwing themselves in front of trains. Because the media doesn’t report such matters it isn’t easy to verify, but according to the Chunichi Shimbun railways “in principle” send bills to families of people who die in railroad “accidents” if the railroad is not at fault and the accident causes a delay that costs the railway money. The articles don’t say anything specific about suicides, however.

The subject of the piece is a case that was recently decided in Nagoya District Court. JR Tokai sued the family of a 91-year-old man from Obu City, Aichi Prefecture, who was hit by a train and killed while walking along the tracks of the Tokaido line in December 2007. JR Tokai was demanding ¥7.2 million from the family for losses incurred due to delays caused by the accident, which affected 27,000 passengers and 34 trains, forcing the railroad to provide alternate transportation, such as buses, to inconvenienced customers.

In court, JR Tokai’s lawyers said the company sent a bill to the family of the man “as it usually does in such matters,” but the family never responded, so they filed a lawsuit and in the end the judge awarded JR the full amount it asked for. The family will appeal.

At issue was the responsibility of the family in the actions of the old man, who suffered from dementia. Six years ago local welfare officials determined that the man required 24-hour supervision. The family placed him in an institution several days a week, but on the remaining days he was at home with his 85-year-old wife, who can mostly fend for herself. In addition, the man’s eldest son, who lives in Yokohama, set up a care system for his father that included his wife regularly traveling to Obu to help out. On the day the accident happened he was alone with his wife, who dozed off, and he wandered out of the house and to the nearest station where he somehow ended up on the tracks.

Chunichi says there is no precedent for a railway company suing over an accident caused by a person with dementia, and the lawyer for the family said that the case could have serious repercussions for families with elderly members who have serious cognitive disabilities, since it means they could be liable for all sorts of incidents, and not just those involving trains.

In court the family said that JR Tokai should bear some of the responsibility since it didn’t prevent the man from getting on the tracks after he entered the station (presumably without a ticket, which raises another question). JR countered by saying it had “fulfilled all our legal obligations” with regard to track safety, and the judge agreed, adding that it was the responsibility of the family to monitor and supervise the actions of the old man.

But if families are monetarily liable for actions carried out by members who are senile, can they also be liable for members who are suicides? So far there doesn’t seem to be a court precedent for such a situation. It seems to depend on the circumstances, suicide or not.

For instance, recently a 40-year-old woman was killed trying to help an old man who stumbled trying to cross the tracks of the JR Yokohama Line. The old man survived, but there has been no report that JR East is demanding he pay up, maybe because the media reports on the heroism of the woman drowned it out or made the company think twice about possible negative publicity if it made such a demand in this case.

Then again, earlier this week a 47-year-old man was killed while crossing the tracks of the Tobu Tojo Line in Tokyo’s Itabashi Ward. Witnesses say he was walking and absorbed in his cell phone when he was hit and didn’t notice the train, though obviously he had enough presence of mind to go through the gates, which were down. Now that guy’s family will probably receive a bill.

The sky becomes less of a limit for cabin attendants (unless you’re a man)

Friday, August 23rd, 2013

Screen shot of ANA's new Airline School, which opens in October

Screen shot of ANA’s new Airline School, which opens in October

All Nippon Airways just announced a new hiring policy for cabin attendants (CA). Starting next year, new CAs will be full-time regular employees of the company. Since 1995, CAs at the company were hired as contract workers who could opt to become regular employees after three years. The reason for the change is tougher competition from low-cost carriers (LCCs). ANA says in order to ensure the best service for their patrons they want to offer flight attendants better employment security. Currently, ANA employs about 6,000 CAs, 1,600 of which are contract workers. Next year, if these 1,600 want to become regular employees they can. The company plans to hire 450 new CAs in 2014.

The contract system was adopted by both ANA and Japan Airlines (JAL) in the same year, when the bubble economy had ended and Japan was entering its long period of sluggish growth. The object was to keep personnel costs in check. JAL says it has no intention of abandoning its contract work system “for the time being.” Twenty percent of its 3,800 Japanese CAs are contract workers. LCCs Peach and Jetstar only hire CAs as contract workers, while Skymark offers its contract CAs regular employment after one year. Though ANA’s policy change means its personnel costs will rise, the company thinks it can offset these expenses with reduced training costs.

Presently, when an ANA CA’s contract expires, she is offered full-time employment, but she can also opt for another 3-year contract. Over the years, 80 percent of ANA’s CAs chose regular employment. Contract workers are paid by the hour, and during the initial training period the wage is less than ¥1,000. That goes up to about ¥1,200 an hour until the end of the contract. JAL pays even less, about ¥1,100. Typically, a cabin attendant earns about ¥2 million a year while she is a contract worker, which isn’t much but CAs, even contractors, have some perks, like access to inexpensive company housing. However, the difference between contract workers and regular workers is striking. In 2001, the average yearly pay for CAs in Japan was ¥6.79 million, reflecting the fact that their ranks were still dominated by full-time regular employees. By 2011 the average salary had dropped to ¥3.85 million, reflecting the dominance of contract workers and newer regular employees rather than veterans who make more due to seniority. Last year it was about ¥4.8 million.

Another factor that influences pay is employment longevity. On average, Japanese CAs remain in the business for 7.4 years, and their average age is 31.2. In the past, it was the most coveted job for women in Japan, though not necessarily for career reasons. It was considered a glamorous occupation during a time when Japan was still isolated from the world, and thus offered women the only chance for overseas travel. (It was also the best way to put one’s English language skills to use. At one time, all English conversation schools has special classes for aspiring flight attendants.) Also, it was considered the best way to find a good husband, since sutchi (stewardesses) were also coveted as wives by eligible bachelors.

It was something of a joke in the 60s and 70s that professional baseball players and sumo wrestlers married either TV announcers or JAL cabin attendants. That may explain why the average age remains low: few CAs continued to work after they married, and if they did they usually tried to get transferred to the position of “ground hostess,” which is even more glamorous since there are so few of them. Also, while both regular employees and contract workers can take maternity leave, only regular employees can ask for shorter hours after they return to work. Tokyo Shimbun says that 10 percent of contract workers quit before their option to become regular employees comes up and one of the main reasons is that they become pregnant.

There’s little doubt that management has a certain image of what CAs should be. Only 1 percent of CAs in Japanese airlines are men. Though it’s against the law to discriminate in terms of gender, it seems obvious that airlines hire women predominately, and Japanese men who want to become CAs know this. According to an article in Newsweek, European and Middle Eastern airlines actively recruit Japanese male cabin attendants. Of the Japanese CAs who work for European and Middle Eastern airlines, 10 percent are men. In Asia, the portion is the same as it is in Japan.

Build a multifunction restroom and they will come

Wednesday, August 14th, 2013

Room to move

Room to move

The big question for retailers and restaurants in Japan is how to attract seniors, regardless of what it is you sell or serve. One nonprofit Tokyo organization called Check is advising businesses to install so-called multifunction restrooms on their premises and then advertise the fact. Multifunction restrooms are larger than standard public restrooms and can accommodate wheelchairs, and the NPO’s research has found that older people are more likely to patronize a business that has one.

According to a study reported in Tokyo Shimbun, the average family with at least one senior spends four hours and ¥10,000 when they go out shopping, but 20 percent also say they will likely stay out longer and spend more money if they know beforehand the location of multifunction restrooms. The study group extrapolated on its findings and speculated that in terms of time the family would stay out 30 to 120 minutes longer, and spend ¥606 more.

Check, which was founded in 2008, has made a list of some 50,000 multi-function rest rooms throughout Japan, which it provides on its website. The NPO thinks there are about 100,000, and it is providing this information to local governments so that they can use it to promote their areas to local seniors and older tourists.

However, it should be noted that toilets in general are becoming something of a sales promotional tool. The Tokyo Metro subway system actually has TV commercials aimed at women showing how modern and clean their public rest rooms are. Lawson was the first convenience store to declare that its restrooms could be used by the public without the obligation of buying something, since people were so grateful for the service they usually bought something anyway. Most convenience stores have followed suit. And many restaurants explain their rest room facilities on their home pages and Tabelog sites, since many women won’t patronize restaurants that don’t provide separate facilities for men and women.

Pity the driver: Cabbie salaries much lower than average

Friday, August 2nd, 2013

Hurry up and wait

Hurry up and wait

Though customers aren’t expected to tip here, Japanese taxis are among the most expensive in the world, and next year rides will probably cost even more since the transportation ministry is considering removing the cap on fares and allowing a 2.86 percent rise to help taxi companies adjust to the consumption tax increase. That would boost the base taxi fare to ¥730 in Tokyo.

Before you start complaining think about the drivers. In 1995 the average salary of a Japanese cabbie was ¥4.03 million. In 2005 it was ¥3 million. And since the recession started in 2008 salaries have hovered between ¥2 and ¥3 million. There are various reasons for this loss of income, the main one being deregulation.

In 2002, the administration of privatizing Prime Minister Junichiro Koizumi allowed taxi companies to increase their vehicle pools. Between 2001 and 2007, the number of taxis nationwide increased by 15,000, driving up competition and driving down the amount of revenue per cab. In 2009, the government re-regulated the industry in an attempt to cut the number of cabs in 156 cities where it was deemed there were too many. Since then salaries haven’t gone down but they haven’t gone up either. Now taxi drivers and taxi companies are afraid because one of the pillars of “Abenomics” is, again, deregulation.

Though cabbie salaries compare to those of entry level jobs, most of the drivers are not entry-level workers. The average age is 56.8, and many have families to support. Moreover, the average number of years worked is 9.3, which implies that many cabbies started driving later in life, after they worked somewhere else and lost their jobs. There are very few taxi drivers in their 30s, even less in their 20s. Some older cabbies drive to supplement their social security.

In the July 4 issue of the Asahi Shimbun there was a profile of one male cabbie, 44, who has been driving since 2009, when he was laid off by a small company. The taxi company he works for has a sales quota. Each driver has to bring in ¥480,000 in fares a month. If the driver makes more than that, he gets to keep 53 percent as his commission. If he makes less, he only keeps 40 percent. The driver says he needs ¥250,000 a month to survive so he figures he needs to bring in ¥40,000 per shift, and it’s difficult. Apparently, some drivers supplement their revenues with their own money if they don’t earn their quota because they think it’s worth it in the long run.

Another taxi driver interviewed by the Asahi is 60 and has been a driver in Tokyo all his life. He supports a wife and grown son on ¥4 million a year and used to make ¥6 million. His normal work day is from 8 in the morning until 4 the next morning. The competition in Tokyo is so fierce that it’s sometimes impossible to find a place to wait for fares since so many other cabs are waiting. He tells the newspaper that some companies reduce their fares to be more competitive, which is illegal. Another common employer practice that may not be illegal but certainly seems unfair is subtracting the 4.8 percent handling fee from a cabby’s salary whenever a customer uses a credit card.

According to the Japan Federation of Hire-Taxi Associations, as of March 2010 there were 371,000 taxi drivers in Japan working for companies and 46,000 private taxi drivers. Of the former, 7,700 were women. The average number of hours for a cabbie is 193 a month. The average for all jobs is 183 a month. Revenues in 2010 nationwide amounted to ¥1.78 trillion. According to the labor ministry the average annual salary for a driver in 2011 was ¥2.9 million. The average for all industries is ¥5.26 million.

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