Best Japan Brands: Country Overview
By Atsushi Iwashita
As the yen reached historic highs in the wake of the Great East Japan Earthquake in 2011 and territorial issues led to a deterioration of relations with neighboring countries that put the brakes on Asian expansion, 2012 continued to present Japanese companies with a challenging economic environment. The nation’s aging population also presents challenges, and even opportunities, for brands. As noted in Interbrand’s 2013 Best Retail Brands report, consumer product giant Unicharm’s domestic sales of adult diapers exceeded those for babies for the first time last year.
However, even a rapidly aging population, multiple natural disasters, slowing global growth, and yen appreciation have not been enough to stall Japan’s growth. The country has rebounded from the earthquake and even found ways to benefit from its impact, including increased automobile production and reconstruction demand. The country’s abundance of seniors has led, interestingly, to a flurry of meaningful (and profitable) innovations designed to support them.
As a result of Japan’s ability to adapt and respond quickly to both sudden and gradual (but no less dramatic) changes, the country’s economy saw 1.5 percent growth in 2012, quarter over quarter—the first growth since the third quarter of 2010. Amid the triple hardships of the high yen, low stock prices, and deflation, leading brands experienced contrasting outcomes in 2012. But overall, the total value of Japan’s top 30 global brands rose slightly (.7 percent) over 2011.
While outsiders speculated over the question of whether Japan could rebuild its economy in the post-quake period, the stoic “island nation” has quietly shown that crisis can bring out the inherent ingenuity of a people and drive business development in creative, practical, and unexpected ways.
"Even a rapidly aging population, multiple natural disasters, slowing global growth, and yen appreciation have not been enough to stall Japan’s growth."
Leveraging a history of quality and innovation
What distinguishes Japan’s best-performing brands—and allows them to prosper even under the toughest conditions—is an extraordinary commitment to quality and value, a willingness to experiment with the bold and untested, and a visionary leadership that embodies the culture’s highest ideals. From its code of conduct and guiding principles, to its production system, products, and services, Toyota, the most valuable brand on the Best Japan Brands list, exemplifies the very best that Japan has to offer the world.
With 4.1 vehicles sold in the first seven months of 2012, 30 percent market share in Japan, top scores in the 2012 Consumer Reports survey on brand reliability, and the number-one spot on Interbrand’s Best Global Green Brands 2012 ranking, it’s no surprise that Toyota is Japan’s number-one brand. But why does Toyota perform so well, so consistently? The global financial crisis has affected how consumers view auto brands, and Toyota’s priorities are in close alignment with consumer concerns. Erratic gasoline prices, tough economic times, and increased awareness of issues like climate change have pushed consumers all over the world to prize low operating costs, energy efficiency, and reliability. Toyota’s emphasis—and ability to consistently deliver—on value, quality, performance, efficiency, and sustainability is what keeps the brand on top.
For similar reasons, Nissan also performed well in 2012, increasing its brand value by at least 30 percent for the second consecutive year and coming in at number seven on the Best Japan Brands list. Nissan pursued aggressive expansion in emerging nations and saw strong sales, particularly in China and the United States. With big increases in brand value that trailed only Nissan, Bridgestone, the world’s largest tire and rubber company, benefitted from pouring its energies into strategic products like concept tires that enhance fuel efficiency and safety. Meanwhile, Subaru, which has worked on improving safety and fuel economy in many of its vehicles, debuted on the Best Japan Brands list last year and reported record unit sales in its highest priority market—the United States —for the third consecutive year.
A weakening yen has boosted Japan’s auto industry in recent months. Picking up speed since Prime Minister Abe took office in November 2012, the new government pressured the Bank of Japan to fight deflation more aggressively by easing monetary policy. As a result, stock prices increased by 60 percent and the yen depreciated by 30 percent (from 77 yen to 100 yen) against the US dollar, giving Japanese automakers a financial gain on every car sold. According to a recent analysis by Deutsche Bank, Toyota has the most to gain from a weaker yen due to improved profits on exports. Though estimates vary in terms of how much operating profits have lifted per car, the currency assist could lift the Japanese automobile industry’s profit by US$1 billion overall. While the long-term ramifications of the currency shift are unclear, dramatically increased profits signal a comeback for exporting brands that were impacted by the earthquake as well as, in Toyota’s case, global recalls.
On the technology front, Nikon maintained strong overseas sales and saw double-digit growth for the third consecutive year. This was no small achievement considering the stagnant market for compact digital cameras and the rapid proliferation of smartphones equipped with high-resolution cameras. However, years of investment in strategic branding have helped Nikon succeed in an increasingly harsh environment. With an image and promise that effectively communicates Nikon’s mission, aspirations, and commitment to the customer, the world knows that it can expect innovative technology, intuitive functionality, and unmatched quality from this iconic brand.
"Crisis can bring out the inherent ingenuity of a people and drive business development in creative, practical, and unexpected ways."
Having just begun to pick up after the 2011 Japan Earthquake, the nation’s economy found itself in a vicious cycle caused by a decline in demand in developed countries, deepening deflation, and falling incomes. Yet, against the odds, the total value of the top 30 domestic brands on the Best Japan Brands list increased by 6.7 percent over the previous year. Encouraged by the upturn, many retail brands are leaping forward in good faith and pursuing overseas expansion.
Asics, known for its durable, hi-tech running shoes, is steadily gaining popularity in Europe. Building on that success, Asics saw an increase in brand value after opening flagship stores in Amsterdam and London, and bolstering operations in India and Singapore. Unicharm, which ramped up its global footprint by expanding from Southeast Asia into India, South America, and Africa, also saw a significant lift in brand value.
Muji’s global expansion is gaining momentum, with more than 100 international stores opening and a flagship store in Ginza. Additionally, the brand is on track to open about 150 stores in Asia. In China alone, it plans to have a presence in 29 cities with 70 stores. A global “Muji to Go” campaign in 2012 supported its global growth, along with cross-department store promotions in Japan. It’s facing competition from another ambitious Japanese retail brand: Uniqlo, which is well on its way to becoming a global brand with a brand value of US$3.6 billion and swiftly closing in on Gap (US$3.7 billion).
Family Mart has fully integrated the am/pm store brand it acquired in December 2009, moving all am/pm stores under the Family Mart brand in just two years. As the company looks to maintain growth, overseas expansion is a central theme. The brand has opened its 1,000th store in China and is expanding in Indonesia and the Philippines to build on its presence in Taiwan, South Korea, Thailand, and Vietnam.
Turning problems into profitable solutions
Faced with an aging population, Japan’s convenience store operators are looking to better serve their older consumers. From small-portion fresh food to home delivery services, brands are investing in order to capitalize on the demographic shift underway. These stores already offer a wide range of services including banking, bill payments, and postal services. Open 24 hours a day, with a consistent, reassuring presence across Japan, they’re also aiming to become “community hotspots,” expanding on their popularity as refuges late at night or in the case of disaster. The fact that the segment is one of the few that has grown in 2012 suggests the repositioning is paying off.
Lawson is another example of a Japanese brand that is posting unusually high growth, and is anticipating a tenth straight year of operating income growth. This impressive track record is testament to the retailer’s continued innovation. The company is staying ahead of wider demographic trends with new formats such as Lawson Store 100 for fresh food, Natural Lawson for the more health-conscious consumer, Lawson Pharmacy bringing in more seniors, and Family Mart appealing to women. There’s even a flagship “otona store” (grown-up store) in a fashionable Tokyo suburb and premium confectionary line targeting wealthier customers. With competitors pursuing similar strategies, continued differentiation will be critical in a crowded market.
Just as Japan once rose from the devastation of World War II to economic prominence in the post-war decades, the country is again proving its resilience. While the earthquake created many challenges, the best Japanese brands continue to demonstrate a strong commitment to branding and an ability to modify their vision. This means a frank assessment of their strengths and weaknesses and the ability to identify opportunities in the face of evolving customer needs. They repeatedly demonstrate that living the essence of their brands, communicating their values to the world—and putting those values into practice every day—help to ensure steady performance in the best and worst of times.