Monday, January 9, 2017

Used Kimono and the Absence of Babies

Third-generation heir to kimono business finds success in recycling traditional garb
The Japan Times  by Mai Iida  Kyodo  Jan 8, 2017 

Kenichi Nakamura, president of Tokyo Yamaki Co., which runs Tansuya, Japan's largest used kimono chain, holds one of the garments at the company's Tokyo headquarters on Dec. 14. | KYODO 

For Kenichi Nakamura, the third-generation heir of a nearly century-old kimono business, the market for the traditional Japanese garment, currently a sixth of its peak, is full of hidden potential.

The 62-year-old president of Tokyo Yamaki Co. believes recycling is key to turning around the declining market, with the rapid growth of his Tansuya secondhand kimono chain, which opened in 1999 and is now the largest of its kind, serving as proof.

Success has not dulled his ambition. Nakamura said the company is aiming to become the industry leader in meeting the increasing demand among foreigners amid Japan’s tourism boom and is expanding its storage business to eventually start kimono-sharing.

“My ideas often draw criticism from people in the kimono industry. They say that since I do that kind of thing, kimono are left unsold. But I don’t think so,” Nakamura said in a recent interview.

He said closets in Japan are full of old kimono and obi, and recycling them enables people to buy used ones inexpensively, sustaining interest and encouraging sales of new garments.

Kimono used to be everyday wear for most Japanese women until Western clothing became popular in the postwar period. They are now reserved mostly for special occasions such as weddings, tea ceremonies and summer festivals.

Japan’s retail market for kimono declined to about ¥289 billion ($2.5 billion) in the year to March 2016, compared with ¥1.8 trillion at its peak in 1980, according to Kimono to Hoshokusha, an industry magazine publisher that compiles market data.

The Tansuya chain operated by Tokyo Yamaki is the largest in the used kimono market in terms of sales and number of shops, with a big lead over its nearest rival, according to the data.

In 1979, Nakamura joined Tokyo Yamaki, which took over his grandfather Kiyozo Nakamura’s kimono wholesaling business in Kyoto.

The younger Nakamura opened a factory in China and boosted kimono and obi production there after assuming the presidency of the company in 1993, with the bursting of Japan’s asset-inflated bubble economy making it difficult to sell expensive kimono such as those made with the Yuzen style of dyed hand-drawn patterns.

He made another bold decision to turn the wholesaler with a factory overseas into a retailer of secondhand kimono, opening the first Tansuya shop in Funabashi, Chiba Prefecture, in 1999.

“The kimono market was in decline and I thought conventional business methods would not be accepted by consumers,” he said. “I wanted to tap the latent demand for kimono by directly approaching consumers.”

Nakamura said he decided to focus all of the company’s management resources on the used kimono business within a week of opening the Tansuya shop as it proved to be a huge success.

Given its robust sales, he opened another 25 shops over the next 12 months and the company’s franchise chain had expanded to 123 outlets nationwide as of December. The chain racked up total sales of ¥5 billion in the last business year that ended in May, compared with the company’s sales of ¥2.6 billion in the year to May 1999, before the first Tansuya shop.

Many of the kimono in the shops are priced at less than a tenth of new ones of the same type. All of the garments are cleaned at the company’s Refine facility in Tokamachi, Niigata Prefecture.

Nakamura said he wanted to change the image of traditional used kimono stores as dark and smelly.

To cover the cost of the cleaning process, the company only buys kimono that will fetch ¥3,000 or more, he said. Still, many people who bring their rarely worn kimono to Tansuya shops leave the garments for nothing to free up closet space, he added.

“Our policy is to give 70 percent of our consideration to the customers who buy used kimono and 30 percent to the people who let their kimono go,” he said.

The company’s used kimono have begun attracting tourists, with sales to foreign nations at the stores accounting for 8 percent of the total, prompting the company to make a quarter of its outlets tax-free.
On a weekend afternoon in December, Albert Larsen from Denmark, who came to Japan to learn the language on a two-month program, purchased a men’s kimono at a Tansuya outlet in Tokyo’s Asakusa district. The 19-year-old said he became interested in Japanese culture and kimono after reading historical manga in which characters wear the clothing.

“It’s a beautiful outfit,” he said of his kimono. “I really like the history behind it. Traditions are connected to kimono.”

Katherine Castaneda, 20, from the Philippines was looking for a souvenir haori jacket, sold from around ¥2,000.

“New kimonos are expensive and old ones are cheaper and same thing for me,” she said. “I was amazed that some of them are 50 years old. It’s beautiful and I think it has meaning.”

According to a report compiled by a government panel tasked with promoting traditional Japanese clothing, about 80 percent of women in their 20s and 30s who have worn kimono say they want to wear them again, and 40 percent of those who have yet to wear the garments say they want to try them someday.

The 2015 report said women were discouraged from wearing kimono due to the cost and a lack of knowledge regarding how to don and keep the garments.

“Every time we solve such inconveniences associated with kimono, we can bring latent demand to the surface,” Nakamura said.

His company is now cooperating with schools to teach children how to wear kimono, renting the garments at lower prices. It also offers a service to store kimono for ¥100 per month to prevent them becoming moth-eaten.

“When our storage volume reaches a certain level, for instance 1,000 furisode (kimono with long sleeves) and tomesode (formal kimono), my inclination would be to start sharing them,” he said.

Nakamura said his company will aim to broker sharing deals between owners who entrust their kimono to his company and want to rent them to earn extra money and those who want to borrow them for special occasions, such as coming-of-age ceremonies. His company plans to take on the risk of damage to a rented kimono while receiving a commission.

“What’s in my mind is ‘re’ businesses, like reuse, repair, rental,” Nakamura said.

“We live in a society of mass production and mass consumption,” he said. “But it’s important to use things for their entire effective lifetimes because I believe the tendency to waste things affects people’s minds.”
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Japan’s zero growth nightmare

The Japan Times  by   Barron's Asia
It’s the rare economic tale that involves suicides, robots and arms dealers. Welcome to Japan, where science fiction may begin to trump economic fact in ways the global audience has yet to realize.

That’s not what the financial headlines suggest. As the press put 2016 to bed, the narrative was of fresh vigor: a weaker yen boosting exports, the Bank of Japan upgrading growth prospects, Nikkei stocks on a tear, Prime Minister Shinzo Abe friending Donald Trump. There’s one problem with this plot and it’s called a calculator.

From his perch in New York, Richard Katz finds something isn’t computing: how a shrinking, aging, baby-starved and highly indebted nation generates 0.5 percent growth on a sustainable basis. Japan surely can if, and only if, it drastically raises productivity. If it can’t, Katz argues, the No. 3 economy will have zero per capita gross domestic product growth for another 45 years, or so.

That’s not a typo. Current trends suggest that between now and the early 2060s, Japan’s 126 million population will shrink 31 percent, while working-age ranks drop 42 percent. Each worker will share the fruits of his or her labor with the ever-increasing ranks of retirees. Without strong productivity, and soon, Katz estimates GDP will fall 28 percent by around 2060.

“Zero per capita growth is bad enough, but it’s just an average, and for millions of people, life will get much worse,” says Katz, publisher of The Oriental Economist. That could fuel the kinds of social strains Japan has long struggled to avoid. “If the total pie isn’t growing,” Katz says, “there’s no way to give one group of people a bigger slice without taking it away from another group.” That, he adds, means epic “intergenerational rivalry: social security vs. education” that necessitates increased public borrowing.

The good news: Tokyo can change this dystopian trajectory by creating a more meritocratic system, scrapping seniority-based promotions, replacing rote education with curriculums championing critical thinking and creativity, increasing research and development, encouraging a startup boom, cutting bureaucracy, increasing gender diversity, importing ample foreign talent and mandating reduced work hours.

The bad: Abenomics has fallen short on all fronts these last four years. So far, Abe has shied away from disruptive changes that would anger his party’s business base, instead favoring increased labor participation among women and the elderly and lots of liquidity.

Abenomics was meant to fire three “arrows” at deflation: monetary easing, fiscal loosening and supply-side reforms. Rather than risk creative destruction, Abe focused on money. His yen devaluation policy aims to increase profits in hopes higher investment and wages followed. But there’s a diminishing returns quandary. Giving 100 farmers 10 tractors boosts output, Katz says. Giving them 50 hobbles efficiency — they merely get in each other’s way.

The BOJ’s problem isn’t a lack of yen in the system, but uses for them. Likewise, Sony’s failing isn’t too little R&D spending, but squandering resources on the crowded TV market when consumers want revolutionary advances in smartphones, tablets and virtual reality.

Sharp, Toshiba and Cannon face similar innovative droughts that show why Abe’s obsession with cutting corporate taxes is the wrong one. No matter how low taxes go and how accommodative interests rates are, investors will shun those making yesterday’s products.

That gets us back to the suicides mentioned above. A major scandal du jour is a 24-year-old advertising woman who jumped off a roof. Before leaping, she posted on social media horror stories of working 100 hours of overtime per month and exhaustion. It was a stinging embarrassment for one of Japan Inc.’s proudest names, 115-year-old Dentsu, and rekindled debate about the nation’s death-by-overwork crisis. Greater productivity might have saved Matsuri Takahashi’s life, and myriad others.

Robots, meanwhile, are among Abe’s favored remedies for a shrinking workforce (see my Sept. 27 column on the topic). His team is reading more Arthur C. Clarke than Adam Smith if it thinks the social earthquake caused by displacing many current workers will go smoothly. Rather than tilt the economy toward a more horizontal and nimble structure, Abe is betting big on machines sure to require gazillions in capital investments. It’d be faster and cheaper to deregulate.

The arms dealer part of this tale could dovetail nicely with U.S. President-elect Donald Trump’s bluster. Tokyo recently lifted bans on overseas weapons sales. As Trump trolls China, Iran and North Korea, Japanese manufacturers like Hitachi, Kawasaki, Mitsubishi, Toshiba and others view ship-mounted radar systems, laser technology, amphibious search and rescue aircraft and quiet running submarines as the next boom industry — Abe’s “fourth arrow.”

Abe claims 2017 will be a year of bold reform. Let’s hope so. Japan may indeed enjoy some growth as the U.S. recovers and China stimulates anew. But none of Tokyo’s policy weapons will boost GDP on a sustainable basis without a productivity surge. Absent one, Japan is looking at a dehumanizing, unpleasant and downright dystopian 45 years.

Based in Tokyo, William Pesek is executive editor of Barron’s Asia and writes on Asian economies, markets and politics.

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