SEOUL (Nikkei)--South Korea's free trade agreement with the European Union, which will take effect Friday, may accelerate the rise of the country's automakers and other manufacturers in the region, stoking fear at Japan Inc.
The FTA will remove tariffs on more than 99% of products traded between South Korea and Europe. Having yet to strike a similar pact with the EU and already lagging behind in the free-trade race, Japan worries that its Asian rival's lead may widen.
The EU accounts for 11.5% of South Korea's exports, second
to China. Expected to see the bulk of the benefit, the country's auto industry is particularly exultant. "About 70% of our customers are converts from other automakers," says an official at a Hyundai Motor Co. dealership in Frankfurt.
In the 27-member EU, where passenger-vehicle sales fell 6% in 2010, Hyundai and subsidiary Kia Motors Corp. managed to push up sales 4% in volume terms, beating Toyota Motor Corp. (7203). The trade pact will just add to their momentum. Hyundai is preparing to introduce its Genesis large passenger car and its Equus luxury vehicle to Europe in a bid to raise its brand power. Because these vehicles are not mass-produced, they are not suitable for local production. But the FTA deal will eliminate 10% tariffs on midsize and large passenger vehicles within three years, enabling the automakers to export the cars and still offer competitive prices.
Local production of South Korean small cars will also benefit from the removal of 4.5% tariffs on autoparts. Even without the trade pact, South Korean cars undercut their Japanese counterparts on price. In Germany, Hyundai's i20 is cheaper than Toyota's Yaris by 175 euro, or about 20,000 yen. The FTA will further strengthen the cost competitiveness of South Korean autos produced in Europe. In addition, 14% tariffs on color televisions will be lifted within five years.
The South Korean government estimates the FTA with the EU will boost gross domestic product by as much as 5.6% in the long run. "Japanese firms are focused on what South Korean firms are up to in Europe," says an official at the Japan External Trade Organization. A seminar held last week in Tokyo by JETRO, as the group is known, drew 100 participants, with many inquiring about the business plans of Samsung Electronics Co. and LG Electronics Inc.
According to an estimate from the Institute of Developing Economies, the EU-South Korea pact will cut into Japanese companies' European exports, mainly autos, by 766 million dollars to 1.18 billion dollars in the first year after taking effect. Japanese exports of machinery, electronics and chemicals to South Korea will also take a 1.77 billion dollar hit, the estimate shows.
Source:The Nikkei July 1,2011
NIIGATA (Nikkei)--A new law that partially took effect last year will, starting July 1, require food and beverage makers to provide consumers with information on where rice used as an ingredient comes from, prompting some of them to tout their use of domestic grain.
The rice traceability law was introduced after a 2008 scandal involving trade in tainted rice. Starting Friday, makers of certain foods and drinks -- rice crackers and sake, for example -- will be required to provide information on the country of origin for rice used in the products. When rice comes from more than one source, at least the top two countries of origin must be listed in order: "Japan, U.S., other," for example.
It took Gekkeikan Sake Co. about a year to change the labels on all of its several hundred products. Because the brewer only uses domestic rice for its sake, the labels now say "rice (Japan), rice koji (Japanese rice)," instead of "rice, rice koji," as before. "Koji," which is made from rice and mold spores, is a key ingredient in sake brewing, and in certain other foods and beverages. No place like home
S&B Foods Inc. (2805) in February began providing country-of-origin information on its Web site for ingredients in 54 of its products, including millet and other grains, although it is not required by the new law. The legal change has spurred some cracker makers to change their production methods. Iwatsuka Confectionery Co. (2221), Japan's third-largest maker of rice crackers, has switched to domestic rice for its 32 main products.
"We will step up our marketing efforts from early July, publicizing the fact that they are made from 100% domestic rice," said a company official. Industry leader Kameda Seika Co. (2220) also plans to raise the proportion of domestic rice used in its main cracker products. The firm will use more domestic rice so it can put "Japan" first on its labels.
"People's resistance toward food from foreign countries is weakening," said a Kameda Seika official. Still, the company, as well as Iwatsuka Confectionery, believes using domestic ingredients will appeal to consumers. Sanko Seika Co., the No. 2 player in the industry, is taking a different path. The company, which uses rice from Japan and many other countries, intends to stick with its traditional recipes to maintain the flavor and quality of its rice crackers.
Consumers do not necessarily favor foods made from domestically produced ingredients. According to a distributor based in Niigata Prefecture, some people prefer items made from imported rice when weighing various factors such as price. Although imported rice is generally cheaper, cost is not the only reason why some distillers of "shochu" spirits continue to favor imports. According to an official with a shochu distillers association in Kyushu, "Some producers that have been using Thai rice to make koji don't want to switch to domestic rice because they are worried that could change the taste of their shochu."
Takara Shuzo Co., which distills shochu using koji made from Thai rice, has no plans to change ingredients. "Consumers nowadays are less resistant toward imported rice than before," said a company official. Food and beverage makers will pay close attention to how and whether the new labeling rules affect consumers' purchasing decisions.
Source:The Nikkei June 29, 2011
TOKYO (Nikkei)--The operator of the Denny's family restaurant chain will launch Vietnamese noodle shops through a partnership with Vietnam's Nam An group, with the first location opening in Tokyo on Friday.
The PHO24 restaurant in the Ichigaya district will have 68 sq. meters of floor space and be capable of seating 30 customers. Chicken pho, as the Vietnamese noodle soup is called, will be priced at 630 yen while the beef version will cost 730 yen. The shop will also serve summer rolls and banh mi sandwiches. The annual sales target for this location is 40 million yen.
Seven & i Food Systems Co. plans to sign a franchise contract with the Nam An group by February after a trial run of three PHO24 noodle shops. The Seven & i Holdings Co. (3382) unit sees growth in pho because the dish has fewer calories than Japanese ramen noodles. A slump in its core family restaurant business has prompted the firm to branch out.
The Nam An group currently runs about 50 PHO24 restaurants in Vietnam, in addition to some 20 franchise locations in five other markets, such as Indonesia, Hong Kong and the Philippines. It operates a variety of restaurants, including cafes and classy establishments.
Source:The Nikkei June 28, 2011
TOKYO (Nikkei)--Japan's leading venture capital firms are increasingly looking overseas as the domestic market stagnates, with foreign start-ups attracting more investment than their Japanese counterparts in fiscal 2010.
Total venture capital provided by 20 key firms in fiscal 2010 grew 33% to 87.7 billion yen, according to a Nikkei Inc. survey. Investment in foreign companies surged 74% to 45.2 billion yen, while investment in domestic businesses rose just 7% to 42.5 billion yen. And as the number of foreign firms receiving money jumped 48% to 188, the figure fell 14% to 401 for Japanese companies.
The biggest venture capital firm in the group, SBI Holdings Inc. (8473), cut domestic investment by 21% while boosting overseas investment about 140%. Amid the growing motorization of China, the firm invested roughly 4 billion yen in a casualty insurance company there.
The slump in initial public offerings in Japan is one reason that venture capital firms are looking elsewhere. IPOs increased by four to 23 last fiscal year but remain well below the 100-plus annual tallies marked from the first half of the 2000s to around the middle of that decade. In a growing number of cases, a newly listing company's initial stock price has been below the offering price.
For venture capital firms, a sluggish IPO market means that the chances of recouping investments by taking firms public is low. This has prompted them to invest aggressively in countries with active IPO markets, such as China.
The dearth of venture capital staying in Japan results in fewer domestic start-ups going public, and a weak IPO market leads venture capital firms to cut their domestic investment further, creating a vicious cycle.
Source:The Nikkei June 28, 2011
TOKYO (Nikkei)--Even before the earthquake, the restaurant industry had been in a funk for years, with earnings being squeezed by a shrinking market and ruthless price competition. But since March 11, things have gone from bad to worse. Forced to deal with looming power shortages due to the nuclear accident at the Fukushima Daiichi nuclear plant and fears of radiation contamination, restaurants are being saddled with unexpected costs that they can hardly afford.
"Green curtains"
To save on air-conditioning expenses, Skylark Co., a major family restaurant operator, has begun growing "goya" bitter melon plants for use as "green curtains" at its eateries. The idea is that the plants will help shut out the sun and thereby hold down temperatures this summer, when the power outages may occur.
Skylark plans to use this approach at 350 outlets in areas that receive power from Tokyo Electric Power Co. (9501), operator of the damaged nuclear plant. The company has already purchased 10,000 goya seedlings.
To add muscle to its power-saving push, the company will start using energy-efficient LED lighting at its restaurants and will cover the windows of its outlets with heat-shielding coating. These energy-saving efforts will cost Skylark a total of 700 million yen. Even if the company is able to cover the costs through reduced electricity charges over the long term, "The need to make a sudden investment has placed a heavy burden on us," said a Skylark official. Radiation testing Concerns about radiation poisoning due to the nuclear crisis are also hitting the finances of restaurant chains.
Zensho Co. (7550), which runs the Sukiya chain of "gyudon" beef bowl restaurants, regularly has its food-safety headquarters test food products for the existence of residual agricultural chemicals or antibiotics. Now the staff at the headquarters' Central Analysis Center have an additional task: checking for radiation.
The workers spend four hours a day inspecting 10 different items, such as vegetables and eggs. Zensho's expenses have been pushed up because the company had to buy the radioactivity-testing devices and must pay the inspectors for the extra work.
Bone to pick
The nuclear accident has created a major headache for Green House Co., a large catering firm. Before the crisis, the company outsourced the work of removing bones from fish to Chinese firms. But due to worries about radioactive contamination, China stopped importing fish from Japan. In May, Beijing lifted the import ban for salmon caught in Hokkaido, but it still blocks the import of 10-20% of cuts of mackerel, saury and other fish caught off Iwate Prefecture's Sanriku coast.
Green House has begun looking into the possibility of asking Southeast Asian firms to handle the bone-removing process. However, "It might be hard to find firms that can match Chinese plants in terms of capacity, quality and cost," said Yoshihiko Yamazaki, an executive officer at the company. The firm is in a bind: Its processing costs are rising as a result of China's import rules, but intense competition with rival caterers means Green House cannot cover the increase by raising its prices. "We'll have to resign ourselves to accepting a worsening of our bottom line," Yamazaki said. Insult to injury
The restaurant industry has been on the decline since peaking in 1997. Analysts cite several reasons for this, including the falling birthrate, aging population and growing sales of prepared foods, such as box lunches and ready-to-eat meals.
And now the disaster is making life even harder for industry players by burdening them with extra costs. What's more, the quake has dampened people's appetite for dining out. Restaurant sales fell a record 10.3% on the year in March. Though the margin of decline narrowed to 0.2% in May, sales at "izakaya" Japanese-style pubs tumbled 4.6% that month, according to the Japan Foodservice Association.
Source:The Nikkei June 28, 2011
TOKYO (Nikkei)--Japanese restaurant operators are looking to find new avenues for growth through such means as procuring their own ingredients, selling takeaway food and overseas expansion.
AP Company, the operator of "Tsukada Nojo (Tsukada Farm)" and other izakaya pubs, will launch a fishing subsidiary in early July in Nobeoka, Miyazaki Prefecture. It will purchase a small fishing boat and hire local fishermen to catch squid and flying fish using a stationary net at depth of 20-30. The seafood will be shipped by truck and aircraft to Haneda Airport and served fresh at Tokyo restaurants on the day they are caught.
The company found many barriers to entry, with a local fishery cooperative holding an effective monopoly of fishing rights. But it managed to obtain fishing rights by hiring local fishermen. "This stable source means we can guarantee quality fish for our customers," said AP President Hisashi Yoneyama.
Yoneyama expects lower costs, including freight, because the firm can directly procure fish from its subsidiary without going through markets. Delivery times will also be shorter, which will ensure fish are served fresh. He is confident that the company's 15 million yen investment will pay dividends.
A reliable source
Restaurant operators are increasingly sourcing their own ingredients because it caters to their needs and allows them to procure food more cheaply. The business model is similar to that of Fast Retailing Co. (9983), operator of the Uniqlo clothing chain, and other firms that both make and sell clothes.
Subway Japan Inc., a sandwich store operator, is working with contract farms and research institutes to grow more nutritious and healthy vegetables. It will start out growing lettuce for sales and for sandwiches.
Restaurant operators are also looking closely at the nakashoku premade meal market, which was worth an estimated 6.2 trillion yen in 2010, according to the Foodservice Industry Survey and Research Center. Convenience stores have propped up growth in this sector by selling its own such meals, eating into the market share held by restaurants.
But restaurant operators are trying to turn this into an opportunity. Hanamaru Inc., an udon noodle shop operator, currently sells takeaway noodles at three outlets. It plans to increase the number, mainly in stores in the Tokyo metropolitan area.
Noodles taste best freshly boiled because they get soggy over time. But Hanamura President Yasutaka Kawamura is confident that his firm's takeaway noodles taste better than those served in convenience stores. The company is working on a project to develop udon that can be cooked in microwaves.
McDonald's Holdings Co. (Japan) (2702) added new chicken dishes to its menu in February. The fast food giant is looking to win over younger consumers by pitching its offerings at prices lower than convenience stores FamilyMart Co. (8028) and Lawson Inc. (2651). "Restaurants must become as convenient as convenience stores," says McDonald's Chairman Eiko Harada.
Home and away
Restaurant operators are increasingly expanding overseas. Yoshinoya Holdings Co. (9861), operator of a beef bowl chain, plans to open a record high 90 stores in Asia in fiscal 2011. Colowide Co. (7616) has long focused on the domestic market, but will open its first overseas outlet in Hong Kong in July.
But overseas expansion does not necessarily bring success. Ringer Hut Co. (8200), a Nagasaki-style champon noodle store chain, made its second forage into California in March. It made its first entry in the 1990s, but pulled out because of poor management. Overseas markets are inundated with local restaurants and global food chain operators -- making it tougher to survive. Nonetheless, Japanese restaurant operators are keen to gain footholds abroad to make up for stagnant demand at home.
Source: The Nikkei , June 29, 2011
Many consumers who bought water, other items online after March 11 are still cyber-shopping
Soon after the Great East Japan Earthquake hit, consumers started running into "sold out" signs at supermarkets, convenience stores and vending machines. Mineral water, in particular, quickly vanished from store shelves. So what did beleaguered shoppers do? They turned to the Internet. Before the disaster, grocery shopping in cyberspace had largely revolved around specialty items. But that quickly changed - consumers began looking for everyday goods, such as water and plastic wrap. You could say online stores assumed the role of neighborhood supermarkets.
According to Yahoo Japan Corp., which runs a virtual mall, sales of mineral water in March rose eightfold on the year. Sales in April were robust, too, reaching triple the level seen a year earlier. One benefit of Net shopping is privacy - your neighbors cannot see what you are buying. Right after the temblor, consumers who snapped up emergency supplies were roundly criticized. So one of the factors behind the new online shopping boom seems to be that many people are afraid of being perceived as hoarders.
It's just easier
Yet even in May, when mineral water gradually began to show up in stores again, Yahoo's water sales were still 60% above the year-earlier figure. Privacy concerns do not seem to completely explain the phenomenon.
An index called repeat rates keeps track of the rate of repeat purchases made online over a period of several months. Mineral water is at the top, at 90%.
There may be an even simpler explanation for the persistent appeal of buying water online: Once one gets used to the convenience of having bulky and heavy water delivered, it becomes hard to break the habit.
Water is not the only item that Netizens are snapping up. Among the biggest changes in online sales trends is that consumers are starting to buy plastic wrap and other daily goods, like kitchen utensils. Yahoo said sales of kitchen and daily goods from March to May grew 30% on the year. Online sales of plastic wrap were up 60% in March and 70% in April.
So even for easy-to-carry products, the transition among shoppers from physical to virtual stores looks destined to accelerate. Items like detergent are also riding a similar wave, with a growing number of people buying in bulk, according to Yahoo.
One sales source said new online customers increased in line with water purchases following the quake. A 37-year-old Tokyo resident said she had bought water online for the first time, and now she buys a big box of vegetables online once a month. "I get to select the producing region of my choice," she said.
Some consumers have looked to the Net to avoid the uncertainty of shortages. A 32-year-old woman who buys disposable diapers, detergents and other daily necessities online said it was "stressful to see empty supermarket shelves."
The shift in online shopping behavior has not been the Net has become a popular place to buy all sorts of other lost on the retail industry. Seven & i Holdings Co., everyday products, too. which runs Ito-Yokado supermarkets and Seven-Eleven convenience stores, redirected mineral water it had procured to cover the March shortage to its virtual marketplace.
Sign of the times
The company anticipated a rush of shoppers to its Web site, so it held back on deliveries to its group bricks-and-mortar stores. "The Internet stores took longer to sell out than the physical ones," a Net sales source said. It is obvious times have changed when even a retail giant like Seven & i puts the online realm ahead of real-world outlets. For some time, of course, the Net has been playing a role once filled by department stores and specialty shops. Surfers have been picking up famous regional gourmet foods and sweets - things they would not normally come across on a daily basis.
Department store sales have continued to drop, and online stores have been outdoing the old retail mainstays. At Rakuten Inc., total sales from its Rakuten Ichiba virtual mall hit 950 billion yen ($11.87 billion) in the year ending December 2010, well above Takashimaya Co.'s 869 billion yen. Now, in the post-March 11 era, the Internet is beginning to function as a great big neighborhood supermarket as well.
Source:The Nikkei Weekly June 27,2011
Nonprescription skin-care medicines are becoming more widely available in response to growing demand from consumers who already conceal scars or skin inflammation with cosmetics but want to cure them.
Shiseido Co. rolled out Prescreed D on March 1 as the first item of its new medical brand Ihada. The 7,140 yen ($89) cream contains ufenamate, which helps reduce inflammation. Shiseido already sells Ferzea to treat dry skin and other medical products. A marketing official said that unlike these products, Ihada is something in between cosmetics and medicine.
As Japan's top cosmetics maker, Shiseido lavished much attention on giving the cream a smooth texture. Previous medical skin creams and ointments were thick, but Shiseido utilized its trademark emulsification technology to give the new cream almost the same texture as cosmetics items. Users can put on makeup after applying the cream. The company decided not to use steroids, which are a major ingredient in skin medications but can be harmful if used in large quantities.
The cream is categorized as a type two medicine, which does not require face-to-face sale. But Shiseido gives lectures to pharmacists and registered salespersons and urges them to sell after providing counseling to customers to make sure they apply the cream properly. Consumer response has been positive. More than 3,000 stores were selling the cream as of the end of April, but inquiries about where they could buy it keep coming in. Shiseido aims to expand the product lineup in the Ihada brand and achieve annual sales of several billion yen.
For scars
Kobayashi Pharmaceutical Co. released atnon in March. The 1,365 yen gel helps make scars or burn marks less visible. The product development began when a female employee was injured when she fell off her bicycle. Seeing that she was worried that her scar did not disappear quickly, the maker conducted a consumer survey. It found that 30% of the female respondents had suffered wounds over the previous three years and 97% of them wanted the scars to disappear. But 64% of those who wanted their scars to heal actually did nothing about it. The drugmaker believes that consumers do not know how to treat scars. When wounds fester or blood circulation around them falls, skin cells produce excessive collagen to repair them. That results in inflammation or elevation of scars. Kobayashi Pharmaceutical uses a substance similar to heparin, which promotes blood flow and reduces inflammation. The gel dries quickly on the skin and does not stick.
Just two months since the release, sales already have reached 350 million yen, more than half the maker's annual sales target of 650 million yen. Sales are expected to rise further in summer when people bare their arms and legs. The company plans to promote the gel via mobile phone Web sites and other means.
In February, Daiichi Sankyo Co. rereleased its whitening medicine Transino, first released in 2007. It alleviates melasma, dark spots caused by imbalance of female hormones or stress. Transino has to be administered three times a day, but the pills used to be in a glass bottle, which some users said was not suitable for carrying around.
So the company replaced the bottle with press-through package sheets. A box of 180 pills sells for 3,980 yen, much less than the 5,880 yen bottle. The firm hired actress Nene Otsuka for new TV spots that will, according to the company, make the drug more accessible.
The pharmaceutical affairs law revised in 2009 designates Transino as type one drug, which must be sold by pharmacists through face-to-face sale. To make it easier for customers to consult pharmacists about skin conditions, Daiichi Sankyo distributes self-analysis check sheets to enable women to see if they have melasma.
Research firm Fuji Keizai Co. says the domestic market of skin-care medicines for reducing blemishes or anti-aging treatment stands at around 200 billion yen and is expanding by about 3% a year. While the cosmetics market has been leveling off, the promising field draws attention from cosmetics makers and companies in other sectors.
Makers of skin-care drugs use reliable substances that have long been used for medicine and cause few side effects. But if trouble occurred, it would curb market expansion. Communication between manufacturers and retailers will be even more important to provide the products and explain their proper use to people who need them and expand the customer base.
Source:The Nikkei Weekly June 27,2011
The Office of Commercial Affairs, Royal Thai Embassy in Tokyo, Japan
Source : http://www.depthai.go.th