It has been fascinating to observe Japan and Japanese consumers since the champagne-infused bubble days of the late 1980s. During this time, the yen’s value rose from its average of ￥239 to the dollar to ￥128 in 1988, virtually doubling its value relative to the greenback.
After several starts and stops in the early 1990s, the yen hit a peak of under ￥80 per dollar in April 1995, temporarily putting Japan’s economy nearly on a par with that of the U.S. and resulting in the introduction of “currency exchange hedging” to the mainstream.
Of course, the collapse of the bubble in the early 1990s, and the ensuing 13-plus years of economic stagnation, also left a significant mark on the Japanese consumer psyche. Throughout the 1990s and onward to a 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 dramatic aging trend in the Japanese population, many people have begun to re-examine their attitudes toward not only health and well-being but also savings, investment and retirement.
In fact, one of the most notable changes in the past quarter 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, which bring new and different product and service solutions to the Japanese market, and who were previously somewhat blocked 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 firms. Prior to the collapse 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 1980s through the 1990s, significant progress has been made. Now even small and midsize foreign businesses can find opportunities in Japan.
Finally, we are seeing more and more small and midsize Japanese companies beginning to venture into overseas markets – previously the domain of only the largest companies. This is an important aspect of Japan’s progress, since in many ways small and medium-size businesses represent one of the most important keys to encouraging growth.
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 President of Japan Market Resource Network and President Emeritus of the American Chamber of Commerce in Japan.
