A Typical Japanese Marketing Example from1300th Anniversary of Nara

The year 2010 marks the 1,300th anniversary of the establishment of Japan's old capital, Nara Heijo-kyo and therefore Nara is celebrating 1300th anniversary this year. On October 10 the author visited Nara, utilizing a one-day ticket issued as a campaign to promote the anniversary. Having thoroughly enjoyed the day she realized there are some factors that, to her, are “very Japanese” about the campaign/promotion, which could be shared as a best practice example worldwide.




1. What are the anniversary and the campaign?



1) The anniversary



Although Kyoto had long been the Capital of Japan and now Tokyo is, Nara, with many historic temples and national treasures of Zen culture, was the Capital of Japan 710 – 794, i.e. it became the capital of Japan 1300 years ago. In contrast “Heian-Kyo”, a word used to describe Kyoto being the capital, “Heijo-Kyo” is used to describe Nara being the capital (Kyo = capital). The anniversary is named “Heijyo-Sento” 1300th anniversary (sento = capital relocation) http://www.1300.jp, and is celebrated throughout 2010.



2) The campaign

As part of the celebrations, a special device has been exhibited at the Heijo Palace site, the main venue for the anniversary events in Yamato-Saidaij in Nara. Variety of events and exhibitions are held for visitors to enjoy and learn histories and experience the facts and lives of people 1300 year ago.



All the campaign is planned, executed and promoted by Nara City, with supports from 498 companies/organizations and 69 individuals (as of August 31), with the objective of attracting tourists/visitors nationwide and abroad. For this reason, 1-1/2 (fee = 300 yen) or 2-1/2 (fee = 500 yen) hour guided tour in Japanese is available (fee necessary), and 1 hour guided tour in English, Chinese and Korean is also available (free of charge). Checking out of self guide system is also available in Japanese, English, Chinese, Korean and French (fee = 500 yen).



2. How is the campaign promoted and in what is it unique and Japanese?






1) An image character called “Sento-kun”



An image character called “Sento-kun” was created, that symbolizes the anniversary. The name “Sento-kun” comes from “Heijyo-Sento” 1300th anniversary (sento = capital relocation) http://www.1300.jp mentioned earlier in the article, and “kun” is the word added at the end of a name “usually of boys” in Japanese. The idea of creating such a character is a typical marketing methodology in Japan, and the naming is very Japanese.

Parts constituting Sent-kun are all related to symbols of Nara. The total figure is of Buddhist monk including the monk featured in “Monkey Magic” who travelled Silk Road to bring back Buddhist scriptures in Nara period. Horns on the head symbolize deer, many of which are found in Nara Park, a historic spot of Nara. And, the total touch is made cute, more of an animation character, which are common and popular in Japan.



Sento-kun is used in all advertising and promotions (TV, magazine, online, prints and collaterals including catalogues and flyers etc.). There was also a doll of Sento-kun shown in the photo, which is about 1 meter high in the station near the house of the author, which is about 1 hour ride on the train, and the pamphlet/flyer holder of the campaign was next to Sento-kun doll. The author had seen advertising in the trains about the campaign but it was with the doll that she found the pamphlet with more details.



2) Sento-kun Heijo-kyo one-day train ticket



14 public and private railway companies and a nearby bus company collaborated to develop one-day train ticket called “Sento-kun Heijo-kyo” to help visitors from Kansai/Kinki area to travel to the place. The fee is fixed according to from which line the visitor travels from.



With this pass, visitors can travel from the station of his/her residence to the transfer station to change to Kintetsu Line and then to the nearest station of the event venue and go back the same route. He/she can also ride on a shuttle bus to and from the nearest station to the event venue or Nara station to the event venue.



Moreover, he/she can also ride as many times as possible the specified zone of Kintetsu Line including the nearest station to the event venue and of some others with good access to historic sightseeing spots including national treasure temples and Nara Park. The author utilized the pass to visit 2 national treasure temples called Yakushiji Temple http://www/nara-yakushiji.com and Toshodaiji Temple http://www.toshodaiji.jp near Nishino-kyo station after the event. (She could have visited Todaiji Temple famous for the Big Buddha and Nara Park near Nara Station but she had been there a few times and wanted to visit somewhere she had not yet visited).



One-day (or few days) pass of trains including Shinkansen bullet train is a popular marketing and promotion methodology in Japan because train is a popular transportation for many Japanese. What is unique about the Sento-kun Heijyo-kyo one-day train ticket is the fact that so many companies collaborated. The many other one-day ticket/pass are of one railway companies.



3) Complimentary ticket, a tie-up promotion of the one-day train ticket



Complimentary ticket, a series of coupons that can be used in specified restaurants and cafes (about 30 altogether) near Nishino-kyo and Nara, was included in the one-day train ticket. With the complimentary ticket valid for one day, the author benefited 10% discount for her lunch and 50 yen discount for her coffee.



Coupons are probably popular in many countries but this kind of coupon system developed with collaboration with many shops might not be so popular. This tie-up campaign turned out to generate synergy, and is extremely effective in Japan.

Japan Corporate Tax Reduction to Attract Foreign Investment

Osaka – Saturday, October 23, 2010




Nikkei, Japanese leading newspaper specialized in business and economy reported on October 21 that the Japanese government started to study corporate tax reduction for foreign capitals entering Japanese market. Effective tax ratio which is currently 40% including local tax is being studied to be lowered by 10 – 15 % exclusively for the first 5 years.



The ruling party has already started studying to cut by 5% to activate businesses in Japan, and this will be the additional measure targeting foreign capitals as incentive to attract their investment in Japan. The government is shortly to develop action plan, targeting to implement from 2011.



1. What is the background of corporate tax reduction of new foreign capitals?



It is the fact that the government had stated that “promoting foreign capitals doing business in Japan” in the new growth strategy developed in June this year. Based on this policy, discussion on how to promote investment in Japan among government, public and private sectors (chairperson = Economy, Trade and Industry Minister) has been ongoing and comprehensive “Programme to promote investment in Japan” will be announced in the middle of November. The pillar of the programme is to be preferential treatment of corporate tax.



2. What is the detail of the preferential treatment of corporate tax?



Effective corporate tax rate for foreign capitals that newly establish Asia Pacific headquarter and R&D site will be reduced to 25 – 30 %, which would be on par with those of China, Korea and other Asian countries for the first 5 years in operation. The Japanese government has already started studying cutting corporate tax by 5%, but aims to implement additional preferential treatment to decrease burden of foreign investment in Japan.



Details such as what kind of preferential treatment is to be applied in a M&A case in which a foreign capital has acquired a Japanese company will be discussed and decided.



3. What other incentives are being studied?

1) Give subsidy for a plant construction

Subsidy is to be given to assist environment-related investment in constructing a plant/factory.



2) Promote mobility of human resources



Procedure of executives and engineers with high level skills obtaining visa is to be simplified. Also, requirement of accepting domestic servants will be made less strict.



3) Give subsidy to development sites for overhaul



Subsidy is to be given to large scale equipment overhaul involving mock-ups and mass production trials.



4) Simplify administrative procedure



Speed-up audits of new medicine and medical devices.



4. What kind of companies does the Japanese government want to attract?



The government would like to attract companies with high level technologies and skills in high tech, healthcare and bio that wants to enter Japan market for the first time or to transfer site(s) from abroad to Japan.



5. How are Asian counterparts?



Other countries have been competing to attract foreign capitals to their country. Korea exempts income tax of non-Korean engineers. China has established an exclusive preferential taxation system to manufactures with high level technologies.

Message to Japan from the Two Japanese Nobel Prize Winners

Osaka – Monday, October 11, 2010




Many Japanese media have been reporting the great news that two Japanese scientists, Dr Eiichi Negishi, a professor with authority of Purdue University in the U.S. and Dr Akira Suzuki, professor emeritus of Hokkaido University in Japan, were awarded Nobel Prize in Chemistry for their development of cross-coupling reaction technology since the announcement of the winners by the committee on September 6. Their research led to Japanese companies such as Chisso Corporation and Tosoh Corporation immediately putting the technology into practical use. The technology is now applied in wide a range of fields such as pharmaceuticals, electronics materials, reagents, agricultural chemicals and solar batteries.



The news is an extremely welcome incident; however, some comments by the two winners imply that Japan cannot simply be happy about it. There are warning signs that cannot be missed if Japan is to continue being leader in science, technology and economy.



1. What are warning that Japan cannot miss?






1) Japan may not be a leader in science in the near future.



This has been pointed out by experts from while ago because less and less students study sciences in university, described as “rika-banare” in Japanese. This is critical because it is scientists/engineers that perform research and development and create technologies for innovation that often determines global competitiveness. Possible factors leading to this include the following:-



(1) Education without cramming degraded quantity and quality of education especially in sciences and mathematics



With fewer hours for education especially mathematics and sciences in elementary schools and junior high schools with implementation of education without cramming, many items including basics were excluded in the new curriculum. As a result, knowledge in mathematics and sciences acquired by Japanese students degraded overall, as pointed out with warning by professors at universities and people in companies.



(2) Systems and environment in Japan do not let scientists devote themselves in research



As Dr Suzuki mentioned, universities in Japan are short of capital for sound management and research, especially after national universities were privatized a few year ago.



In such a situation, employment and making a living is a critical issue for scientists at universities thus they cannot devote themselves in their research. Moreover, as pointed out in a TV programme that featured the two Nobel Prize winners, under the current systems, scientists in Japanese universities will not sufficiently be able to drive academic results and be promoted to create a successful career. This is a big negative factor in attracting talents majoring sciences for universities in Japan.



(3) Fewer Japanese students studying sciences in world top class universities



Fewer Japanese students study in world top class universities and students from other countries such as China, India and other Asian countries have been replacing Japanese students. Dr Negishi, who been teaching in Purdue University in the U.S. for many years, insists that he used to teach many Japanese students but not lately. He says that he teaches 6 students and there are no Japanese, and 3 or more are from other Asian countries. This indicates the shift of world class brain in sciences.



2) Japan’s weak growth in economy drives weakening position as leader in sciences and technologies



There are correlation between “impetus of a country” and number of Nobel Prize winners in sciences of that particular country, which can be paraphrased as technological innovations. This implies that Japan’s weak economic growth and stagnation may well drive its weakening position as a leader in sciences and technologies.



This was explained in a recent TV programme with a chart that showed that Japan created many technological innovations and breakthroughs that led to winning Nobel Prizes when it was enjoying economic growth until 1990 when the bubble economy collapsed. It is difficult to say which come first, economic growth or technological innovations, but it cannot be denied that Japan’s weak economy (impetus of a country) since 1990 would be a negative factor for technological innovations and breakthroughs including financial support to R&D.



2. What are possible challenges for Japan?






1) Review educational systems to develop and attract talent



This includes reviewing education without cramming to upgrade quantity and quality of the curriculum of elementary and high schools. This would up-level knowledge of majority of Japanese students and make more students interested in sciences to decide to study in university.



Another issue is to review systems in universities so that scientists who have studied abroad are warmly welcomed and accepted, and can continue their research to drive results and create successful career in Japan. In fact, media have reported Dr Negishi’s message encouraging Japanese young people to study/work abroad. This is all about globalization and D&I (Diversity & Inclusion) of Japan.



2) Give necessary and sufficient support from the government to academia



This includes financial and other support, both long-term and short-term. ROI (return on investment) is critical but scientific research requires time; both winners mentioned above say that the award they won is of culmination of their 50 year study.



Also, possibilities of “seeds” in scientific research that bears fruit so that the technology will be developed to commercialized are extremely low (e.g. only 1 in 10000 organic compound developed in the initial stage of R&D is said to be commercialized into innovative pharmaceuticals) and slashing the investment would reduce the number of researches at an early stage which may well mean slashing possibilities of innovation. The author strongly feels that this is the essence of Dr Suzuki’s comment that was reported widely by media: “question of ‘Does it really must be first? Is second no good at all?’ in last year’s screening process to reduce the national budget is of someone ignorant of science”.

“Made in Japan” Products Coming Back to Japanese Retailers

Osaka – Sunday, October 3, 2010




Nikkei, Japanese leading newspaper specialized in business and economy, reported on September 2 that Japanese retailers trading clothes and sundries are expanding their made in Japan product line-up. Such retailers are promoting this with the objective of appealing ”obsessiveness to manufacturing” to grow business in high price range products with value added to consumers, instead of focusing their business on low price range products. Background of such of their change in strategy includes cost increase of China, one of major production site country, which means it is now easier for them to utilize production sites in Japan.



1. How have Japanese retailers training clothes and sundries expanding made in Japan product line up?



Major Japan domestic production expansion of clothes


(Source: Nikkei, translated and edited by the author)



Company Name / Products / Production Expansion Plan

Itoyokado / Shirts, bags, etc. / Develop products with leading production sites. Expand SKUs to 50 by next spring.

AOKI / Suits, shirts, shoes etc. / New made in Japan brand launch. Leverage high tech such as 3D sewing.

Sanyo Shokai / Coats / Obsessiveness to details by its own factory located in Aomori Prefecture.

UNIQLO / Jeans / High end product at 9,990 yen with obsessiveness in processing.

Right-on / Jeans / First made in Japan product launch with its unique brand this autumn.

Sanrio / Towels with character illustrations / Launch as souvenirs targeting travelers from abroad.

SRI Sports / Golf clubs / New product launch in November this year leveraging made in Japan shafts.



1) AOKI



AOKI, a leading retailer in Japan specialized in men’s suit, launched a new original brand of made in Japan products of suit, shirt and shoes and started selling them in their 85 stores (equivalent to approximately 20% of total stores) from October. Fabrics are not made in Japan but sewing is done in Japan leveraging Japan’s high technologies such as 3D sewing to enhance wear comfort. The price range of such suit is between 108,000 yen and 128,000 yen, which is high-end range of their product line up. They target sales of 5,000 suits as a start.



2) Aoyama Shouji



Aoyama Shouji, another leading retailer in Japan specialized in men’s suit, is also increasing stores trading made in Japan suits. It started pilot sales in 6 stores this spring and will increase to 10 to 15 stores from the end of October to November this year, to target selling 1,000 suits. Made in Japan suit is sell accepted to travelers from abroad so if their sales turns out to be strong they will study to further expand their business of made in Japan suit.



3) Sanyo Shokai



Sanyo Shokai,a leading retailer in Japan specialized in men’s coat, plans to launch this month a new brand for their main product of men’s coat planned and designed by a well known designer and sewn in its own factory located in Aomori Prefecture. The fact that such coats are made in Japan with much care from cutting of fabrics to sewing will be introduced by showing video at sales floor in order to appeal obsessiveness to details to consumers.



4) Itoyokado



Itoyokado, a leading retailer (super market) in Japan, is also strengthening their line up of clothes and sundries by joint-development with leading production sites in Japan, and appeal “made in Japan”. It launched 36 SKUs of polo shirts and bags etc. made in 10 prefectures in Japan in 160 stores. It targets to achieve sales of 10 billion yen in the first year and 15 billion yen in the second year.



2. Why are Japanese retailers expanding made in Japan product line up?



1) Meeting needs of Japanese consumers



Japanese consumers are not necessarily after low price products or rather some of them are getting tired of low price products so Japanese retailers need to take measures to meet such needs. Expanding and strengthening made in Japan high quality, line-up of high end products and appealing such line up with effective marketing is one effective strategy/option for Japanese retailers.



2) Counter measure to increase in production cost in China



According to the Ministry of Economy, Trade and Industry (METI), approximately 95% of clothes in Japan are imported from China due to low production cost in China; however, with increase in production costing China, it is quite natural for Japanese retailers to review their business strategy. One option for them is pursue possibilities of production in other countries which they already have started. And strengthening made in Japan products line up to grow high-end products is another option they started to pursue and implement, and this was the topic of this article.



In addition, some retailers started to establish their new factory in Japan. Maker’s Shirt, a Japanese retailer with main products of shirts made in Japan, plans to jointly establish a new factory in Japan with a company that they outsource their production.



3. What are possible upcoming challenges?



In order to leverage Japanese production sites, supports such as re-investment by companies with sufficient capital would be vital. This is because most factories in Japan that produces clothes are have not been invested for a long time because currently most clothes retailed in Japan are imported from countries with low production cost.

Risk Management and Interdependence in Today’s Global Economy

Osaka – Sunday, October 3, 2010




Various Japanese media such as The Japan Times have been reporting since September 29 that Japanese companies started to rethink their risk management strategy and take measure for dispersion of risk of importing rare earth elements, since the China government reportedly banned exporting them to Japan as part of its diplomatic spat with Japan over the disputed Senkaku Islands. (The U.S. recently insisted clearly that the islands were returned to Japan from the U.S. in 1972 together with Okinawa mainland, and that Japan’s recent actions have been appropriate and sufficient). Report also includes the fact that the U.S. started to take measures in its own ways with similar concept.



1. How Japan has been rethinking rare earth sourcing and its risk management strategy?






1) Companies (sourcing)



Japanese companies, who had already been concerned about rare earth shortages as early as July, when China cut its export quotas to bolster prices and ensure domestic supplies, immediately started to take concrete actions such as sourcing rare earth metals from other countries such as Kazakhstan to disperse risk. China produces and supplies over 90% of the world’s rare earth metals but their reserves is only around 30% of the world total. This means remaining 70% are available in other countries.



As reported by The Japan Times and other media, Sumitomo Corp. signed a deal with Kazakhstan's national nuclear power company Kazatomprom to establish a joint venture and produce rare earth metals in the country, including neodymium and dysprosium, which are crucial to building motors for electric vehicles. And, Toshiba Corp. said it signed up with the same Kazakhstan firm in June to establish a joint venture to produce rare earth metals coming out of uranium mines in which Toshiba has a financial interest. The electronics maker said it hopes to set up the venture by the end of the year and start producing rare earth elements used in motor magnets.



2) Companies (R&D and others)



Research of technologies to reduce use of rare earth elements has been in progress as reported in a recent Japanese TV news programme. Honda Motor Co. has been conducting research and development to find alternatives for the rare earths. Toyota Motor Corp., the world's largest maker of hybrid cars, has set up a task force on rare earths metals earlier this year to explore new sources for rare earth elements and ways to recycle used parts, the Nikkan Kogyo newspaper reported Wednesday, according to The Japan Times..





3) Government



It was reported in a recent Japanese TV news programme that the Japanese government signed a memorandum with Kazakhstan of supporting Kazakhstan extraction of rare earth metals.



2. How about the U.S.?



With sense of crisis, the U.S. also started to take measures for risk diversification such as restarting mining of rare earth metals in California. The U.S. used to mine and supply approximately 50% of worldwide rare earth metals but with emergence of cheap products from China, the U.S. lost their global competitiveness and its worldwide market share dropped dramatically. As a result, the U.S. rely their rare earth sourcing from China. Rare earth metals are used in their nation’s “critical” equipments and systems such as military communication systems. For this reason, the U.S. also started to rethink their rare earth sourcing strategy and take measures in earnest.



3. What is the final thought of the author?



Being a marketing versatilist with management literacy and not an expert in politics and diplomacy, the author has nothing to say about politics. To the author, it seems that what China has executed (i.e. banning rare earth metal export to Japan as a part of diplomatic spat) triggered Japan and the U.S. (at least) to rethink rare earth sourcing and risk management strategy and take concrete measures, to be less dependent on China, although risk diversification does take time. This means decrease in China’s rare earth business in the long run.



Nikkei, Japan’s leading newspaper specialized in business and economy, reported today that in an APEC meeting held on October 2 in Gifu Prefecture in Japan, Japan’s Minister of the Ministry of Economy, Trade and Industry (METI) requested to his China counterpart to proceed smoothly to re-start rare earth export to Japan, to which China answered “would like to make effort to solve the problem. Economic interaction with Japan is important also for China”. This is a step forward because China simply has been insisting that “the Chinese government have never banned exporting rare earth metal to Japan”.



It seems that this incident delivers a strong message that an economic sanction by a country as a part of diplomatic spat is never effective in a global economic world in which countries are interdependent. It would lead to negative effect to the country executing the sanction in the long run. After all, countries need to diversify their risk while be cooperative for sustainability and co-prosperity.





References:-

Hiroko, Nakata (2010), Firms Rethink Rare Earth Sourcing

http://search.japantimes.co.jp/cgi-bin/nb20101002a1.html