By: Debbie Howard
The anniversary of my arrival in Japan 25 years ago approaches, auspiciously this year on June 25th, and I can’t help but reflect on some of the key changes since 1985.
It has been fascinating to observe Japan and Japanese consumers since the champagne-infused “bubble days” days of the late 1980s. During this time, the yen’s value rose from its average of 239 yen to the US$1 to 128 yen in 1988, virtually doubling its value relative to the dollar. After several starts and stops in the early 90s, the yen hit a peak of under 80 yen per dollar in April 1995, temporarily making Japan’s economy nearly the size of the US, and resulting in the introduction of “currency exchange hedging” to the mainstream.
Of course, the bursting of the bubble in the early 90s, and the ensuing 13-plus years of economic stagnation also left its mark on the Japanese consumer psyche. Throughout the 90s and onward to partial yet tentative economic recovery in the 2000s, Japanese consumers have been forced to adapt to a new reality. For example, with the decline of lifetime employment — as well as a prolonged high unemployment rate and tenuous company pensions — many people have had to find new ways to make a living, including part-time jobs and entrepreneurial activity. And with the overall dramatic trend of the aging of Japan, many have begun to reexamine their attitudes toward not only health and wellbeing, but also toward savings, investment and retirement.
In fact, one of the most notable changes in the past quarter of a century is that a very different type of Japanese consumer is now emerging — one that is more self-responsible, more independent and even more individualistic. Long a challenge for Western marketers — Japanese consumers have begun to create new and different lifestyles for themselves, including having greater tolerance for nontraditional life paths. This is good news for foreign companies who bring new and different product and service solutions to the Japanese market, and who were previously somewhat blocked in the past by Japanese loyalty to traditional “Japanese” goods and service providers.
Similarly, another notable change is how much more open-minded Japanese companies have become to new ideas, including making alliances with foreign companies. Prior to the bursting of the bubble, it was extremely difficult for foreign companies to gain a foothold in the Japanese market, but with deregulatory efforts from the late 80s through the 90s, significant progress has been made. Nowadays, even small and medium-sized foreign businesses can find opportunities in Japan.
Finally, we are now seeing more and more small- and medium-sized Japanese companies begin to venture into overseas markets, previously the domain of only the largest companies. This is an important aspect of Japan’s moving forward, since in many ways, small and medium-sized businesses offer one of the best keys to encouraging growth going forward.
Many have commented on the slow pace of change in Japan, and indeed compared to some countries, change can seem glacial at times. However, I feel confident saying that Japan is quite a different place now than it was 25 years and 17 Prime Ministers ago.
Debbie Howard is Chairman of CarterJMRN and President Emeritus of the American Chamber of Commerce in Japan.
Originally Published in Nikkei Weekly, 14th June 2010
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