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Our mission is to unmask Japan to reveal the real consumer truths

Even on bad day, Japanese market continues to offer promise

standard of living

By: Debbie Howard

As we approach the end of the year with a frightening global financial mood and both Japan and U.S. officially “in recession,” it’s a good time to take a step back and recall just how strong a market opportunity Japan continues to offer.

Japan’s experience during its so-called lost decade gives it the chance to offer advice — and perhaps more importantly, cash infusions — since Japanese companies paid down debt during that time, and hence are ready to come to the aid of financially-troubled companies.

And Japanese consumers are still “cash rich” compared to consumers in other developed markets. Specifically, several factors contribute to the phenomenon of Japanese consumers being among the most — if not the most — affluent consumers in the entire world:

· Japanese households, on average, have relatively high average monthly disposable income at US$4,104, compared to US$3,344 for U.S. households.

· Japan is also typified by a high savings rate — 34% of GDP compared to 15% of GDP in the U.S. — and an accordingly high portion of household assets represented by non-risk assets such as savings and cash.

· Among Japan’s 47.5 million households, the average household income is approximately ¥5.63 million. Certain segments such as Japan’s Dankai generation are even higher — i.e., 7 million people aged 60–63 at ¥7.35 million. About 13% of Japanese households have annual household incomes above ¥10 million, while nearly 2% are above ¥20 million.

· Looking at those with financial assets of above US$1 million, Japan’s count is 1.51 million people, representing just over half of those with assets above US$1 million in the Asia region (for comparison’s sake, Chinese represent 15% of those in Asia with over US$1 million).

· Japan’s wealthy own combined financial assets of US$3.8 trillion (40.1% of total assets owned by Asia’s Fuyu-so).

Another view that shows Japan’s value is through the sheer scale of a variety of key sectors, such as insurance (valued at US$40 billion in 2006, and the world’s 2nd largest), medical (US$20 billion in 2006, again the world’s 2nd largest), pharmaceutical market (US$60 billion in 2006, again the world’s 2nd largest and environmental services (projected to reach US$754 by 2015 — double that of the U.S. market size).

Through yet another view, in addition to being the world’s second-largest economy, it is also interesting to look at the sheer population concentration and GDP value of key geographic areas in Japan. For example, Osaka, which is Japan’s 2nd largest industrial, financial and commercial area, has GDP valued greater than that of Brazil, India or Australia. Meanwhile, Japan’s 3rd largest metropolis, Nagoya, boasts GDP valued on par with that of India or Russia.

At a psychological level, Japanese consumers experienced much anxiety during the 15+ years from the early 90s to now — and these hard times forced both individuals and businesses to look at things in new and different ways, with a new wave of “self-responsibility,” independence and individualism emerging.

The inherent value of the Japanese market along with the more open-minded consumer mindset continues to create strong opportunities.

Debbie Howard is Chairman of CarterJMRN and President Emeritus of the American Chamber of Commerce in Japan.

Originally Published in Nikkei Weekly, 15th December 2008

CarterJMRN is a strategic market research agency that has been helping clients with consumers and businesses in Japan and beyond since 1989.

We believe that, although the terrain you face in building a successful marketing strategy and activation path sometimes seems obscure, the path to success is knowable and that the consumer is the guide who will show you the way.

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