Japanese Consumer Behaviour

From Worker Bees to Wary Shoppers

John McCreery

• Publisher: Routledge
• Year: 2014
• Print ISBN:
  9780700713585
• eBook ISBN:
  9781136831249
• Topic: Business
• Subtopic: Ethnic Studies
• Index: Business

What role does consumption play in Japanese lives that are more than study, work and shopping? How have those lives changed since World War II as Japan has wrestled with the meaning of white-collar careers, women spreading their wings, changing family values, a shrinking birth rate, an aging population? This book explores Japan through the eyes of Japanese researchers and discovers patterns of change that are both uniquely Japanese and shared by consumers in other advanced industrial nations.

1

MATERIAL CONDITIONS

On January 1, 1997, the Nihon Keizai Shimbun (the Nikkei), Japan’s equivalent of the Wall Street Journal, began publishing a front-page series grimly entitled ‘Warning Bell from the Year 2020: Part 1, Japan disappears’ (2020 Nen Kara no Keishō: Nihon ga Kieru). A year and a half later, on Friday, June 12, 1998, Japan’s Economic Planning Agency announced that the nation’s economy, stagnant since the 1991 collapse of the Bubble economy of the late 1980s, had slipped into recession. The 0.7 per cent decline in real GNP was greater than the 0.5 per cent decline in 1973, the year of the first Oil Shock. Domestic demand was down 2.2 per cent and housing starts down 21.1 per cent. Both, said the Nikkei, were the sharpest declines since the end of World War II.

For the first time since the end of the war, personal consumption had also declined, by 1.2 per cent. Public works spending, historically the government’s preferred form of economic stimulus, was down by 7.2 per cent. A weak rise in consumer demand had been squashed by the April 1, 1997, rise in the consumption tax from 3 per cent to 5 per cent. Japan’s financial system was tottering under a massive burden of bad debt resulting from excessive lending to real estate and stock speculators during the Bubble. Stories of graft and corruption involving officials of major banks and brokerages and officials of the Ministry of Finance filled the pages of daily papers and weekly magazines.

The events described above might be a shock to those whose image of Japan was formed in the high-growth period of the sixties and seventies when, roaring past its European rivals, Japan became the world’s second largest economy. They must also be upsetting to those whose image was formed in the eighties, when Japan seemed destined to dominate global markets, Japanese shoppers were portrayed as the world’s most avid consumers of local and global brands, and scholars saw Japanese culture becoming the very epitome of postmodern pastiche. They should be especially disturbing to those who have looked to traditional social systems and values to explain Japan’s economic success.

How changed is Japan? HILL research provides some answers. To understand those answers, however, we need to know some history. Three key elements stand out.

The first is the story of Japan’s recovery from World War II. The account offered here draws heavily on the work of economists Nakamura Takafusa (1995) and Tsuru Shigeto (1994). The periods into which they divide the history of Japan’s economic development constitute a framework shared by a broad range of analysts, critics, and commentators – including HILL researchers. They are part of the shared memory by which Japanese interpret their nation’s history since 1945.

The second is the changing composition of Japan’s population. In Japan, the Baby Boom was brief. It lasted only from 1947 to 1949. Japan’s birth rate has declined ever since. The falling birth rate, combined with what is now the world’s longest average life span, makes Japan one of the world’s most rapidly aging societies.

The third is the rapid concentration of Japan’s population in cities, especially in Tokyo, where real estate prices in the central city drove people to live elsewhere and a well-organized mass transit system made commuting by train and subway a way of life. While rail and subway stations have become the cores of shopping, entertainment, and office districts, a house in the suburbs has become the middle-class dream.

Having laid out this basic framework, I will end this chapter by examining some recent attempts to explain the changes that have taken place in Japan’s political economy since World War II. First is the thesis that the core institutions of Japanese government, finance, and industry were created during the 1930s and 1940s as Japan mobilized for war (Johnson 1995; Nakamura 1995; Noguchi 1995). This ‘1940s system’ was, in effect, the continuation of efforts to achieve the Meiji ideal of rich country, strong army (fukoku kyōhei). While defeat in World War II removed a strong military from the nation’s list of priorities, a core of centralized institutions continued to work to make Japan rich. Guided by these institutions, Japan rose from the ashes of defeat to become the world’s second largest economy.

Next is the proposition that what Japan became during the 1950s and 1960s is the world’s most perfect modern industrial society: a society superbly organized to maximize the output of factory assembly lines controlled by large, bureaucratic organizations. It is thus doomed, without radical change, to increasing impotence in global markets, says Sakaiya Taichi (1997, 1998) the author and critic appointed to head the Economic Planning Agency in the cabinet of Prime Minister Obuchi Keizō. Japan has become, in the words of Richard Katz (1998:3–26), an example of ‘Mainframe Economics in a PC world’.

A third, more political take on what is happening in Japan is that of T. J. Pempel (1998). Pempel argues that Japanese politics are undergoing a regime shift brought on by fissures in the broad coalition of large and small business and agricultural interests that kept the Liberal Democratic Party (LDP) in power for the four decades following its founding in November, 1955.

A fourth perspective is that of Harada Yutaka (1998). A career bureaucrat in the Economic Planning Agency headed by Sakaiya Taichi, Harada is another of Japan’s most prolific authors on the state of the Japanese economy. Born in 1950, Harada is fifteen years younger than Sakaiya and belongs to the nameless generation born just after the end of Japan’s Baby Boom in 1949. With Harada we come full circle from authors who stress Japan’s uniqueness and point to the 1940s system as a source of competitive strength in global markets, at least during the fifties and sixties. Harada argues that the 1940s system was not only a failure in wartime; it also had little to do with Japan’s postwar transformation into the world’s second largest economy. It was, instead, Harada argues, the postwar freeing of Japanese industry from wartime restrictions that unleashed a surge of economic energy that was only damped in the 1970s, when a people and politicians satisfied with the growth already achieved and fearful of further change opted instead for stability.

From Postwar Poverty to High Growth

It has become a cliché of Japanese writing on the postwar period to begin by describing a defeated Japan as devastated. This cliché is rooted in fact. Nearly three million Japanese died in the war. Material losses totaled ¥64.3 billion. National wealth had shrunk to ¥188.9 billion, about what it had been in 1935. Food and energy resources were both in short supply. One fear, however, the threat of massive unemployment, did not materialize. Nakamura Takafusa (1995: 23) explains why.

The conditions under which people lived left no leeway for such a thing as being unemployed. Unless they had sufficient savings to live on, the demobilized troops and those thrown out of work had to find some means or other of making a living. Even if they did this by setting up open-air stalls or by becoming petty black marketers or black market brokers, they were not ‘unemployed’.

Some of those left jobless returned to the countryside.

In 1947 rural communities also absorbed a labor force of 18 million, about 4 million more than before the war.

Thus, while official labor statistics did not show as many ‘unemployed’ as might have been expected, they concealed widespread underemployment.

The problem of the low-income ‘underemployed’ persisted long afterwards in the form of a ‘dual structure’ within the [Japanese] economy.

Japan’s future looked bleak, but the gloom concealed latent strengths. The chemical and heavy industries, which would lead Japan’s growth during the rapid-growth period from the mid-1950s to the early 1970s, had ended the war with far more equipment and plant capacity than they had started with. Wartime bombing had damaged factories, but the nation’s most valuable asset, the skills of its workers, remained intact. Machine gun factories turned to making sewing machines. Optical equipment manufacturers made cameras and binoculars for civilian markets. The steel and chemicals once required for weapons were in high demand in global as well as domestic markets. Shipbuilders deprived of a navy would build freighters and tankers instead.

To skills we should add motivation and discipline. Those who returned from the battlefield or grew up during the war and joined the labor force during the immediate postwar years were driven by the shame of defeat to overcome their enemies on other battlefields. Being used to military discipline made them an ideal workforce for heavy industrial companies organized along military lines.

Even so, Japan’s rise from postwar ashes to economic superpower would seem an ‘economic miracle’. From 1954 to 1958, Japan’s GNP grew at an average rate of 7.0 per cent per year. From 1959 to 1963, GNP growth accelerated to 10.8 per cent. From 1964 to 1968, the average was 10.9 per cent, and from 1969 to 1973 it was 9.6 per cent. Germans who lived in West Germany also had their miracle. It pales, however, by comparison with what the Japanese accomplished. In the first half of the 1950s, West Germany outpaced Japan, with GDP growing on average 9.3 per cent per year. Then, however, West Germany’s growth decelerated to 6.6 per cent for 1955–60, 5.0 per cent for 1960–65, and 4.7 per cent for 1965–70 – years in which the norm for Japan was double-digit growth.

How to explain Japan’s rapid growth is a problem much debated by economists and political scientists. We have already mentioned the skilled, motivated, and highly disciplined workforce that Japan had at the end of the war. Institutions created in the thirties and forties were also an important factor, providing a strong framework for national mobilization. A third critical element was a fast-growing global economy that created opportunities Japan was ready to seize.

According to UN statistics, from 1950 to the mid-1960s, global GDP expanded at a rate of around 5 per cent. This figure compared favorably with the 2.7 per cent growth rate of Europe and America from 1870 to 1913 and was much higher than the 1.3 per cent these regions posted between 1930 and 1950. World trade was increasing at an annual rate of 7.6 per cent. The time was right for an export-oriented economy with the capital, the labor, and the institutions to tap rising global demand.

Japan also enjoyed a special advantage. In 1949, the yen was pegged at ¥360 to the U.S. dollar, where it stayed until 1971. This was, says Tsuru Shigeto, like extending special treatment to a convalescent golfer until long after he is already well. ‘The dynamically yen-cheap exchange rate must have greatly helped the expansion of Japan’s exports’ (Tsuru 1994:78). One additional factor should also be noted. A nation’s investments in imported technology and raw materials are limited by the availability of foreign exchange. The Korean War required special procurements in Japan by the U.S. military that nearly doubled Japanese foreign currency reserves and provided a kick-start to an economy ready to take off (Nakamura 1995:60).

There is no denying, however, that, presented with these opportunities, Japan moved quickly and effectively to take advantage of them. Double-digit growth became a habit. The shocks of the early 1970s thus seemed all the more traumatic.

The Pivotal 1970s

The Tokyo Olympics in 1964 were heralded as Japan’s reentry into the community of nations. The Osaka Expo in 1970 marked Japan’s emergence as an economic great power. During the 1960s, the ambitious (some had said ‘over-ambitious’) ‘Income-Doubling’ plan announced by Prime Minister Ikeda Hayato as the decade began had, in fact, exceeded its targets.

Already, however, there were signs that all was not as well as GNP figures indicated. In 1968, students at Japanese universities had joined their peers in Europe and America in massive demonstrations against ‘the system’ that was blamed for the Vietnam War. The environmental impact of heavy and chemical industries had become so alarming that GNP could be read as ‘Gross National Pollution’ (Tsuru 1994:129). The year 1970 would be remembered as ‘Pollution, Year One’ (Kōgai Gannen).

In addition, the global economic environment so favorable to Japan’s growth would soon undergo radical change. The ‘Nixon shock’ of 1971 would end the pegging of the yen at ¥360 to the U.S. dollar. Then, in 1973, Japan faced ‘the first oil shock’. The fourfold increase in the price of oil between October 1973 and January 1974 was a harsh blow to a nation dependent on imports of fuels and raw materials. As panicked housewives scrambled to hoard toilet paper, they bought little else: consumer spending fell by 8.5 per cent. More ominously still, private investment in plant and equipment declined by 19.8 per cent.

Japan’s recovery from the first oil shock and the second in 1979 would become the stuff of economic legend. In the 1970s and 1980s, Japanese industry’s ability to reduce costs, lower energy and resource consumption, develop new products, and continue to expand exports in the face of a steadily strengthening yen would enhance the mystique of Japan Inc. By 1981, the year that HILL was founded, Japan was rich. Consumerism was flourishing. But a demographic clock was ticking – and serious problems remained to be addressed.

The Changing Structure of Japan’s Population

To marketers, the most elementary facts about a market are its demographics, the distribution of potential consumers by age, sex, marital status, occupation, and income. The reason is simple. At the end of the day, only three factors affect the income stream a market can generate:

Let N =	the number of consumers who purchase the product
Let U =	the number of product units consumed per consumer in the period for which the calculation is made, and
Let P =	the price at which each unit is purchased.
Then, income = N × U × P

Demographics determine the outer limit of N. No market can be bigger than the total population of potential consumers. When that number declines, the only way to increase sales is to sell more units per customer or increase the price per unit. The law of supply and demand suggests that one tends to offset the other.

Demographics also have other effects. They determine the size of the labor force and the relative size of the working versus the retired population. Average per capita income is GNP divided by total population, a demographic variable.

The cost of feeding, clothing, and educating children depends on the number of children per household. Combined with physical limitations on space, demographics determine whether housing and transportation are spacious or crowded. There is no aspect of the market that demographics do not affect.

Like the other nations involved in World War II, Japan experienced a baby boom once the war was over. But compared, for example, to the United States, where the upsurge in births lasted fro...

Table of contents

• Cover
• Half Title
• Title Page
• Copyright Page
• Table of Contents
• Acknowledgements
• Biographical Note
• Introduction
• 1 Material Conditions
• 2 Emotional Responses
• 3 That ‘Typical Japanese’, The Baby Boomer Salaryman
• 4 Women Spread Their Wings
• 5 Ideal Couples and Other Choices
• 6 What’s Happening to the Children?
• 7 Growing Old in an Aging Japan
• 8 Real Places, Imaginary Spaces
• 9 Putting Japan in Perspective
• References
• Index