If I use the same brand of bag

Something happened when I was out shopping.  I came upon a group of what I thought were Chinese tourists at a clothing store I often visit.  Since the outbreak of the island dispute, the number of tourists from China has dramatically decreased, however there was no indication of that at this shop.

They cheerfully examined each and every item and purchased one item after another.    I was interested in these girls, but they also seemed to be interested in me, a local, as they picked up the same clothing and accessories that I was looking at.  They chose some of them and of course there were some they did not select.

Because I was in the same area as these girls for a fairly long time, one of them asked me, “Do you like this brand?” but they only spoke Chinese and weren’t able to have a conversation.  Afterwards, one of the shop staff told me that this same brand was nearly three times as expensive in China and that there were many customers who came to Japan and purchased large quantities of the goods.  Also, many of these girls liked new items and it seemed that they tended to purchase the latest products.  They were purchasing 2 or 3 of the same item to give to friends and family as presents.

As I was looking at a bag, a Chinese person in the back of the shop told me in a loud voice, (what I think was) “That’s in fashion.”  According to the shop people, they were looking at tortoise shell and dragon and snake scales, items seen as good luck.  I’ve been using the same brand of bag for many years, but I’ve never thought about that at all.

The shop people were told that if you buy something, silver is a good color.  When asked, “What about gold?” the shop people were told, “Right now, silver is popular with young Chinese people.”  After this, someone asked me with a wry smile, “Excuse me, but you are Japanese, aren’t you?”  I gave the same forced smile back.

The group of tourists left the store first.  Apparently, they were off to the same brand’s next store.  Although the same store, it seems that this was so they could buy 2 or 3 items.

I’ve been buying this same brand for over 10 years and have never had this kind of experience.  The reasons why it’s loved are different, but it is strange that there is a mutual feeling for the same brand.  I was reminded that an unintentionally created new meaning for the brand is an essential part of creating the story.

The thing that was the most interesting was that even for a short time, the power of the Chinese tourists seemed to turn the shop into China.  Because I was the only Japanese in the shop, maybe I was pulled into this “quantity.”

Business domain not needed in a brand name?! A Starbucks story

The new Starbucks brand logo was a hot topic in the news last week.  The simple design eliminates the name “STARBUCKS COFFEE” and keeps only one part of the symbol, the siren (mermaid).  You can listen to Starbucks CEO Howard Schultz talk about the logo design transition online at   http://www.starbucks.com/preview

In the past, Apple Computer became Apple and now product brands such as iPod and iPhone, as well as Byte and Bite, have been developed with only the “apple” mark.  When it comes to famous brands (because of large amounts of communications such as advertising), many create environments that can communicate with only symbols, however Starbucks seems to be a little different. 

Starbucks had been doing poorly in the US, however the company seems to be improving.  According to published articles, its largest market outside the US is China, followed by Canada.  As of last December, the company had 406 stores in China and plans to increase this number to 1500 by 2015.  As part of the company’s 2011 business strategy, Starbucks is focusing on 53 markets outside the US with plans to open 300 stores around the world.  If we know its future China plans, most of these are likely Chinese stores.  

Starbucks is apparently focusing on continuing to develop Starbucks VIA  (Starbucks instant coffee developed two years ago), as well as creating more variations of products such as the Frappuccino for each local market. 

Recently, Howard Schultz made some interesting comments in the Wall Street Journal.  Sales apparently do well in China mainly from afternoon to night.  That’s why from now Starbucks wants to enhance morning and morning coffee.  I heard before that for Chinese who live in cities, breakfast is a light meal and they eat something between morning and noon.  Whether or not this remains a custom is unknown, however they have time to relax and take a breather.  This time is not long and therefore there has to be a store nearby.  This means that opening new stores and continuing to develop VIA instant coffee are probably vital to Starbucks. 

Back to the new Starbucks logo.  The reason for deleting COFFEE is that the company sells other items besides coffee and from now on will continue to focus on developing areas other than coffee.  In addition, for the company’s 40^th anniversary the logo is being “rejuvenated.”  The point that feels a little different is that it is disconnected from its hometown or origin (Seattle).  Not only coffee, but also “STARBUCKS” has disappeared from the symbol itself.  “STARBUCKS” naming is derived from its hometown.  Perhaps they are putting effort into making strengthening markets outside the US part of the brand strategy.

Wastewater

In Japan (other countries may also be used as reference) it’s said that wastewater from households is the cause of 70 percent of water pollution.  According to documents from the Ministry of the Environment, wastewater refers to drainage water from everyday life such as kitchens, toilets, baths, laundry, etc.  The amount of water used by a single person each day has reached 250 liters.  Wastewater can be broken down into miscellaneous household drainage (kitchens, baths, laundry) and human waste (toilet), with the former accounting for 70 percent.  Of this, the largest is wastewater from kitchens, with miscellaneous household drainage making up 40 percent. 

One indicator of the degree of water contamination is BOD (Biochemical Oxygen Demand).  BOD is the amount of oxygen used when microorganisms in the water breakdown wastewater.  Put simply, high BOD means we must be mindful of flushing water that is not dirty. 

For BOD value, the value where oxygen still exists of 10mg O2/L has been adopted as the minimum environmental standard.  In Japan, thanks to vault toilets, separate sewage treatment tanks, public sewage systems, rural community sewage, community plants, and individual sewage treatment tanks, one public body of water, a major river’s BOD value (from the Ministry of the Environment’s collection of environmental statistics) is continuing to decrease when compared to the previous year’s study.    Although the data is old, the numbers for the Tone River in Japan were 1.9mg in 1985, 1.7mg in 2000, and 1.5mg in 2002.  Even non-major rivers are showing improvement (reference: the Ministry of the Environment, public water quality measurements).

In recent news, Chinese investment firms and investors are said to be eyeing Japan’s water sources and purchasing or considering purchase.  Population growth is one reason, but the number one reason is apparently water contamination.  The main contaminants in Chinese rivers are organic materials and ammonium-nitrogen, as well as phenol and cyanogen, which are causing the pollution to progress.  These come mainly from industrial wastewater and miscellaneous household drainage, with the former slightly under 40 percent and most of the latter being released into the environment without being treated.  One of the six large rivers in China, the Yangtze and its tributaries, has relatively good water quality, however it is degrading and worsening (reference: the Ministry of the Environment website.)  Even though the maintenance and installation of public sewage and septic tanks is rapidly taking place, water quality improvement is likely to take a long time.  
Water contamination is undoubtedly a large problem for not only China, but also other emerging nations.    

As we are not researchers we don’t know if Japan is a good example, however if water quality has improved as the data shows, then as a country we should proactively carry out technical collaborations such as sewage treatment and septic tanks.  Recently, we often see the phrase “water business” so we think that perhaps actions are being taken.  However, wastewater improvements are not just talk about technical capacities, but also have a big influence on the country and the culture, as well as the way of living.  The topic is likely much larger than we can possibly imagine.

Healthcare-branding: World AIDS Day

December 1^st was World AIDS Day.  Although the red ribbon symbol is widely known, there are probably few people who remember the exact month and day that it takes place.  World AIDS Day was first observed in 1988 and was directed by the Joint United Nations Programme on HIV/AIDS (below UNAIDS) until 2005 when it was changed to The World AIDS Campaign.    

As a side note, the red ribbon wasn’t something decided on by UNAIDS alone.  A short while before World AIDS Day was established, an American Christian group made the red ribbon a symbol to eliminate the prejudice and discrimination against AIDS patients. 

AIDS, or Acquired Immune Deficiency Syndrome, is a symptom induced by HIV infection, but the term doesn’t refer to the HIV infection itself.  According to the UNAIDS AIDS Epidemic Update 2009, the number of deaths around the world due to AIDS was 2 million, including both adults and children.  The number of people infected with HIV (officially HIV-positive people) is said to be 33.4 million. 

The region with the highest number deaths from AIDS and people infected with HIV is sub-Saharan Africa.  In 2008, the number of AIDS-related deaths was approximately 1.4 million and 22.4 million people were infected with HIV.  In the same year, the HIV positive rate decreased compared to rates from 2001, the sole piece of good news.  Following Africa, the region with the next highest number is Asia, which had 300,000 AIDS-related deaths and 4.7 million HIV-infected people in 2008.  In 2001, with the former at 280,000 people and the latter at 4.7 million, the rate of infection appeared to be easing compared to the 1990s, however the fact is that it is increasing.

Although there are geographical differences, the main means of transmission is sexual intercourse.  UNAIDS is strongly appealing for the necessity of measures in each region.  While the details are not written about in a report, it seems that a country’s economic growth relieves the spread of infection.  However, it has also been pointed out that the disparity in income may lead to further expansion. 

Though the situation is not completely stable, the results from the 22 years of UNAIDS-led activities are promising signs.

Healthcare-branding: World Diabetes Day

The Tokyo Tower was lit up in blue on November 14, 2010. This was to commemorate World Diabetes Day, for which the global symbol is a blue circle.

Diabetes, properly called “diabetes mellitus,” is a group of metabolic diseases that cause a person to have high blood sugar, either because their body does not produce enough insulin, or because their cells do not respond to the insulin that is produced. According to Japan’s Ministry of Health, Labour, and Welfare, there are four types of diabetes:

Type 1 Diabetes:
The destruction of the pancreatic β-cells, which make insulin, causes the amount of insulin in the body to be depleted. This type of diabetes, which usually begins in childhood, is also known as insulin-dependent diabetes or juvenile diabetes.

Type 2 diabetes:
There are two kinds of Type 2 diabetes. In one, the body produces a small amount of insulin; in the second, insulin deficiency is caused by a lack of response to insulin in the liver and muscle cells. Type 2 diabetes is often related to lifestyle, such as diet (eating habits) and lack of exercise. About 95% of diabetes cases in Japan are of this type.

Diabetes caused by disease or genetic abnormalities
Infections and diseases of the liver and pancreas, reactions to medication, and genetic abnormalities can also cause diabetes.

Gestational diabetes
In gestational diabetes, pregnant women who have never had diabetes before develop high levels of blood glucose during pregnancy. This may be a precursor to the development of Type 2 diabetes.

Type 2 diabetes is on the rise globally. Five to six percent of the world’s adult population—246 million people—face diabetes. According to the International Diabetes Federation, it may be as high as 380 million by 2025. Increases are seen mostly in emerging economies in regions such as Asia, the Middle East, Africa, and South America. These areas are expecting the number of diabetes patients to double in the next 15 years.

Emerging economies are growing very fast compared to Japan’s own growth. Furthermore, Japan is an island nation, so its economic development is easy to track. Still, no matter how economic growth occurs, living in the same mass-consumption society will bring up common issues—including diabetes caused by changes in people’s lifestyles.

As Japan’s society is aging and its birthrate falling, people are becoming more sensitive and concerned about their own health. In response, many Japanese companies are producing “healthcare” related products. Through their advertisements and PR, they are also offering ideas about ways to combat or prevent diabetes. These include promotion of beverages such as low-malt beer and low-carbohydrate or carbohydrate-free sparkling beverages that taste like beer, and reducing the absorption of sugar with a meal by consuming fiber in the form of unique vegetable juices or recipes from the makers of brand-name seasonings. Companies have also been promoting exercise trends such as walking or jogging, and supplements and drinks that slow the absorption of sugar. They are sure to come up with even more ideas, since healthcare businesses and the healthcare market are growing more every year.

Japan, as an economically developed country, should take the lead in helping regions that are expecting the number of diabetes patients to double over the next 15 years. The country should go beyond the contributions of any individual company or academic study, and seriously consider how to take action for the future health of all of Asia.

B2B companies in emerging economies: SIEMENS in China

According to a recent study by the United Nations Conference on Trade and Development (Unctad), companies are shifting their foreign direct investment focus to emerging markets. The top three target countries until the end of 2012 are China, India and Brazil; the US, which was the number one target country for years, is now in fourth place. Russia and Mexico are in fifth and sixth place respectively, followed by Vietnam, Indonesia, Thailand, Poland and Malaysia.

German engineering conglomerate Siemens is part of this shift. For Siemens, growth in the Asia Pacific region, particularly Southeast Asia and emerging countries, is a primary strategy for the future. The company plans to continue to invest heavily in strengthening operations in key emerging markets, including India and China. Its investment into these countries will add hundreds of local personnel and allow the markets to be responsible for their own business and marketing, a strategy that differs from Siemens’ competitors.

Siemens has a long history of business with China, beginning in 1872 when it exported its proprietary pointer telegraphs to the nation. Today, China is the company’s third-largest market, behind Germany and the US. Siemens employs 43,000 Chinese in 90 joint ventures and has 61 regional offices. In the most recent quarter, Siemens reported a 35% increase in orders from China.

Siemens has continued to invest in China and has generated billions of euros’ worth of orders. The company announced that its environmental portfolio was expected to generate €4 billion in 2010, constituting 40 percent of the company’s China orders for the year. As of September 2009, revenues in China were €5.8 billion, representing 7% of Siemens’ global revenues; recent sales there have grown more than 14 percent.

Siemens China CEO Mei Wei Cheng recently said that the company’s strategy in China is focused on long-term development, and that the company must adapt to the changing market. The outlook for Siemens in China appears bright, as the company’s services can help China in such areas as urbanization, environmental protection, and demographic change. Siemens will focus on being more of a local company (Cheng was recently hired as the company’s first Chinese CEO in China) and on expanding its green technologies, which make up a significant part of its Chinese business today. Siemens also plans to develop its local R&D, as well as to invest in energy-saving and environmentally friendly technologies and solutions in China. Being more local allows the company to serve the entire Chinese market, including rural areas, in all sectors including healthcare. In addition, Siemens hopes that it can be seen as a local company rather than as an importer of high-end products.

China’s booming economy means more investments in infrastructure and an increased demand for green technologies. According to Peter Löscher, president and CEO of Siemens, “China has a very, very ambitious but very clear energy plan. We just deployed 1,400 kilometers [870 miles] of high-voltage direct current transmission line from Yunnan down to Guangdong, with an overall transmission loss of 5 percent. By 2050 the target of China is to have renewable energies be 25 percent of their energy mix. As they change their energy mix, we are able to help in all areas.” The company hopes to capitalize on the growing demands in the Chinese market. Some examples include:

-Helping China to create the world’s largest high-speed rail network. Last year, Siemens signed a $1 billion deal—one of its largest projects—with the Chinese Ministry of Railways to build the first 100 high-speed trains for the new network that will run between Beijing and Shanghai.

-Expanding global manufacturing for wind turbine plants in China. The plants produced will be used in China as well as exported. Siemens believes that China could become the world’s largest market for wind energy in the coming years.

-Preparing for the healthcare boom in China. The nation is planning to spend $125 billion upgrading its healthcare system, including building hospitals and clinics and expanding healthcare services to almost all citizens. Siemens is looking toward a rapid increase in its medical-imaging sales.  

For Siemens and other foreign industrial companies in China, there is growing concern over China’s handling of foreign investment, intellectual property, and technology transfers; as well as growing competition from domestic companies. However, with a renewed and strong focus on long-term development, local R&D and business, and green technologies, Siemens seems to be in China for the long run.

Brand marketing in emerging markets – China/Walmart

Since the fall of Lehman Brothers, there has often been talk about the fact that the retail industry has slowed.  However, despite this, the top company in 2010 for both the Fortune US 500 and Global is Walmart.  Although well known for its acquisition of Seiyu, Walmart is actually unfamiliar in Japan. 
The US recession helped boost the discount-specialist Walmart.  However, competitors have begun to do similar things and customers are apparently starting to leave Walmart.  In the slow US market, Walmart seems to be getting help from better conditions outside the country. 

There is an impression that Walmart has had some rough times outside of the US.  It pulled out of both Korea and Germany in 2006.   In Korea, it was sold to Shinseigae department store and in Germany to global competitor METRO Group. 
However, Walmart is doing well in Mexico, Canada, Brazil and China.  Over the past several years it has aimed at expanding business in Latin America and China.　Same-store sales increased 10.6 percent in China, 7.6 percent in Brazil and 4.4 percent in Mexico, giving Walmart plenty to smile about.  

Why is Walmart doing so well particularly in China?  Before it became successful in China, Walmart didn’t just promote “buying American,” but put a lot of effort into localization.  An article written a while back by Gary Gereffi and Ryan Ong for the Harvard Asia Pacific Review said that in order to make sure items were “fresh” to the Chinese consumer, Walmart imported local fresh markets directly into their Walmart stores. 
For Chinese customers, “freshness” means being able to purchase freshly caught or picked items in a market, as opposed to a packaged item sold in a supermarket.  Over 95 percent of the items sold are supplied domestically in China.  Items produced in China are also imported into the US, which has created criticism over employment issues from the American public.  In addition, Walmart has made large donations to Chinese universities, as well as set up China’s first retail focused research facilities.

As its tagline, “Save Money. Live Better.”says, Walmart is famous for being a discount store.   In order to expand among and attract the middle-class Chinese consumers, Walmart is also putting efforts into making its stores feel “upscale.”  Although they don’t go as far as creating a “high-end” environment, they increase the quality of the displayed items.  This movement to focusing on the upmarket is something being talked about not only in China, but also in the US. 

Recently, Walmart has been increasing plans to open Sam’s Club stores in China.  The first store opened in 2002 in Shenzhen.  Currently there are 3 stores (Walmart China’s website says 3, the media says 4) and there are plans to open shops in Shanghai in December 2010 and Dalian in 2011.  Unlike with Japan or Korea, there seems to be more confidence in opening large size stores in China. 
According to Walmart China’s website, the number of stores including Sam’s Club has surpassed 189.  They site talks about the company’s contribution to China including giving employment opportunities to 50,000 people.  *Considering the employment problems in the US, it is something that can’t be helped even if criticized. 

Where does Walmart China go from here? Walmart is focusing not only on expansion, but also not forgetting to take actions to be “green” and eco-friendly.

From 2005 Walmart set some overall goals including the following:
1)     To be supplied 100 percent by renewable energy
2)     To create zero waste
3)     To sell products that sustain the world’s resources and environment
(Source: Walmart China Factsheet – Walmart China website)

Along with its top 200 suppliers, Walmart has made promises to make improvements in the energy efficiency of its factories.  Walmart has also promised to reduce its greenhouse gas emissions from its global supply chain by 20 million tons by the year 2015. 
Even in China, “green” activities are being promoted and there are goals to head toward building low-carbon supermarkets.  Although the content is a little unknown, there are promises to build new stores that use less energy and save more water.  Overall, by the year 2013 Walmart is aiming to reduce its greenhouse emissions by 20 percent of its 2005 levels.  By using LED lights and energy-saving refrigeration, there are apparently actual results.   

Besides these initiatives, Walmart has also created its Direct Farm Program and announced plans to sign contracts with 1 million farmers in China by the year 2011.  The same program is also being setup in Mexico and India. Green activities in a number of Walmart China stores are being promoted along with the Chinese government. 

Looking at Walmart China’s recent movements and trends, it seems as if the company is aiming to strengthen its global supply chain even further, however, as we touched upon in an earlier blog entry, it seems as if there is some relationship with the building of eco-cities. 

In 2008, Walmart revamped its logo design and changed its name from Wal-Mart to Walmart.   The day when “Walmart” becomes the pronoun for the next generation’s global supply chains and global retailing is likely not too far away.

Eco-branding: Eco-cities

What is an eco-city?

In 1987, Richard Register introduced the term “eco-city,” also known as sustainable city, in his book Ecocity Berkeley: Building Cities for a Healthy Future.  The basic premise of an eco-city is to create a place where people can live productive and healthy lives while having minimal impact on the environment.  In order to achieve this goal, eco-cities incorporate various technologies and practices to reduce or eliminate the environmental impacts and costs.  An eco-city is generally self-sufficient, providing its own power, water, etc. with renewable energy sources rather than relying on outside areas or resources.  Other practices common in eco-cities include composting, recycling or converting waste to energy; producing low amounts of pollution; using land efficiently; planting more trees and increasing green spaces; improving public transportation; or decreasing urban sprawl.   

Today the eco-city concept is spreading around the world and becoming more and more popular.   Below are a few examples of some of the world’s eco-cities. 

Europe: Sweden

The Hammarby Sjostad eco-city, located just south of Stockholm, was originally supposed to be an Olympic village.  However, after Sweden lost its bid for the 2004 Olympics, the once polluted industrial area was developed into a successful eco-city.  There are strict environmental requirements for all buildings and infrastructure in the city.  It has also been designed to support public transportation including bicycles and carpools instead of cars.  Emissions in the city have been reduced by 30 to 40 percent and no harmful materials or chemical products are used in buildings.  Also, the city is said to produce half of its own energy through renewable fuels, reusing waste heat, biogas and energy efficiency.  Hammarby features ample parks and water to improve biodiversity and also the quality of life for residents.  What is unique about this eco-city is that the majority of the environmental goals are built-in, meaning that even if citizens are not eco-friendly in the beginning, they will become so just by living in the city. 

Middle East: UAE

Abu Dhabi is currently developing the world’s first zero-carbon city, Masdar City, located 17 kilometers outside of Abu Dhabi.  This eco-city will be constructed without using polluting technologies or fossil fuels.  Once completed, it will be home to 50,000 people, 1,000 businesses and a university.  It will also be powered by renewable energies such as solar and wind power.  Developers plan to use the desert heat to their advantage by using solar technology to power the entire city.  Despite its location in the middle of the desert, Masdar City will be cool.  Much like an ancient Arab city, a wall will surround Masdar and streets will be narrow so that buildings will shade each other.  There will be no tall buildings or skyscrapers and wind towers will create a breeze.  Within the city no cars will be allowed to reduce air pollution. Citizens will either walk or use an underground transportation system, the Personal Rapid Transit or “podcars,” which will drive using magnetic lanes to take passengers to any destination they wish.  Masdar City is being built by the Abu Dhabi Future Energy Company and is expected to cost between $15 and $30 billion dollars (paid for by the Abu Dhabi government).   

Asia: China

China is pushing to dominate the world in clean energy and the country is investing billions of dollars to become greener and more energy efficient.  Currently, there are around 30 eco-cities being developed around the country.  One example is the Tianjin Eco-City, located 150 kilometers east of Beijing.  A collaborative project between China and Singapore, Tianjin will serve as a model that can be reproduced in other areas of the country.  With an expected completion date of 2020, the city is expected to be a sustainable and resource efficient city for 350,000 Chinese to live and work.  The city will be eco-friendly with ample green space, wetlands and biodiversity.  Because there is little rain in the city’s location, Tianjin will get most of its water from sources like desalinated water.  The city will also focus on reducing and reusing waste and reducing carbon emissions.  Residents will move around using a new light-rail system as well as buses and trams.  Socially, the city will be designed so that people of different generations, income levels, etc. can easily live together and interact, another important aspect of an eco-city.  The project recently received a $6.16 million donation from the Global Environment Fund that will be used to help establish legislative, institutional, financial and monitoring systems, as well as green transportation and architecture.   

Future of eco-cities

According to UN Habitat, 70 percent of the world’s population will live in urban areas by the year 2050.  This means that building eco-cities will become more and more important not only in developed countries and cities, but also in less developed areas, especially emerging countries.  New and innovative technologies and strategies, as well as support and cooperation from businesses, governments and citizens will be essential in making these cities successful over time.

Real estate businesses in Japan by Asian countries

For Japanese companies, once known (and sometimes hated) for foreign takeovers and buying up foreign real estate, things have changed.  Today it’s foreign companies and individuals who are coming to Japan and purchasing Japanese real estate and businesses.  The struggling Japanese economy has taken a toll on the real estate market, which has seen prices fall up to 30 percent.  Japan is now considered a bargain for foreign investors.  In addition, it has become more and more difficult for even major Japanese companies to get long term financing from banks, which means many have turned to foreign investors to help them both at home and abroad.  All of these trends have made the Japanese market quite attractive to international buyers, especially those from China and other nations with money to spend.  While many Japanese are resistant or apprehensive to selling companies and real estate to foreigners, they realize that they must sell in order to survive and gain access into foreign markets. 

China

Having recently surpassed Japan as the world’s second largest economy, China and its citizens have the money to spend not only at home, but also abroad.  The number of Chinese visitors to Japan has skyrocketed in recent years as many cash-rich Chinese come to Japan to shop for not only electronics and cosmetics, but also Japanese companies and property.  As Japanese property prices have fallen, many Chinese have purchased homes and property in Japan, often paying cash.  Properties are also often purchased for cheap prices at court-ordered auctions following foreclosures. 

Real estate companies in Japan have noticed an increased interest in the Japanese market from Chinese buyers and some companies are holding seminars (attracting hundreds of participants) for wealthy Chinese.  These seminars explain more about Japanese real estate and show Chinese buyers that Japanese property is much cheaper than Shanghai or Beijing (where prices have skyrocketed), is of high quality, and that owners can make money by renting.  The low-interest rate and low financing costs in Japan, as well as increasingly overseas-buyer-friendly policies of Japanese banks, make the market extremely attractive.  In addition, according to an article in the China Daily, Japan’s developed infrastructure and legal system, along with its unrestrictive policies on foreign national property purchases and its pro-landlord environment in the rental market draw investors from overseas.

Wealthy Chinese have been buying real estate for personal use and for investment purposes not only in cities, but also the countryside of Japan.  Even in the northern island of Hokkaido, many Chinese have purchased vacation homes for prices around 30 million yen.  Chinese buyers are also purchasing upscale accommodations such as resorts or hotels because domestic demand for them has fallen in recent years.  Buyers are often interested in purchasing investment properties and then renting them out since Japanese rents have not fallen as much as property prices.  Chinese are also interested in purchasing, renovating, and then selling properties to other Chinese businesses. 

Singapore

Investments from Singapore into the Japanese real estate market have increased in recent years as well.  Many companies see the struggling Japanese market and low prices as a huge opportunity.  Furthermore, they are attracted to the built-to-suit logistics properties around the nation that can generate stable rent.  For foreign investors, Japanese logistics properties are attractive because of Japan’s advanced technology and manufacturing capabilities, as well as the growing demand for online services and shopping.    

Some examples: In 2008, a Japanese real estate fund sold the Tokyo Westin hotel to Singapore’s Government Fund.  The slowing Japanese economy means that consumers are spending less and the Japanese hospitality industry has suffered.   Other companies from Singapore have invested in residential as well as hospitality properties, including business hotels around the capital city of Tokyo.  Also, property developers from Singapore and Southeast Asia have expanded business in Japan over the past several years and now operate a variety of properties in Japan including shopping malls, rental apartments and other commercial investments.  Recently, Mapletree Investments, a Singaporean real estate firm, announced plans to launch an 80 billion yen Japanese property fund to expand in business-related properties including data centers, research and development facilities, and office buildings outside central Tokyo and major cities.

Asia’s low cost carriers take off

The low cost carrier (discount airline) industry has taken off in Asia and in a very big way.  Now the world’s largest aviation market, Asia is home to dozens of low cost carriers from domestic start-ups to regional arms of legacy carriers.  According to market analysts, low-cost carriers in Asia could grow 20 percent over the next year alone and profits by these airlines are expected to be the biggest of any region this year.

While many North American and European discount airlines, which have been around for years (Southwest Airlines began in the US almost 40 years ago and Ryanair in Europe in 1991), are hurting along with the large legacy carriers, the Asian discount airline market has grown by 50 percent during the global recession.

Two trends taking place in Asia are increased competition and innovation.  As these airlines become larger and more successful, Asia’s (and other regions) large airlines are losing market share and starting low-cost brands of their own.  These tie-ups have the advantage of larger networks, resources for innovation and promotion, newer facilities, and established brands (as well as images of safety, service, etc).  For new entrants, the uncertainty of whether low cost carriers, who focus on short-haul/low-fare flights, can successfully transition to long-haul/low-fare flights, is another advantage at this time.  Competition will continue to increase as ASEAN countries move toward Open Sky policies set for 2015.

As competition increases and passengers have more options, innovation becomes key.  In addition to new routes, new markets, and promotions, innovative ideas include:

-Tiger Airways is considering “standing-only” (a vertical seat) tickets as an even lower cost option for passengers.

-AirAsia X marked its entry into New Delhi with promotional fares as low as INR 1.  This route features its new “Premium flatbed seats” which are standard in its business class.

-AirAsia recently implemented a Royal Bank of Scotland foreign exchange solution for its online ticketing.  The system automatically sets prices in any one of five global currencies (Australian dollar, Hong Kong dollar, UK sterling, Singapore dollar, US dollar) giving customers certainty about credit card charges and making it easier for the airline to mind cash flow.

What about Japan?

Once a market leader in Asia, Japan’s airline industry is in turmoil.  According to the International Air Transport Association, Japan has fallen behind due to a failure to cut costs, liberalize or make other necessary reforms to keep competitive.  Also, because the nation’s two legacy carriers, JAL and ANA have tightly controlled the domestic market, there is little competition (low cost carriers or even low fares).  Japan needs to make changes fast and the country’s closeness to China and strategic location as an entry point into Asia are huge opportunities.

Some of Asia’s low cost carriers have started to enter the Japanese market as well.  AirAsia plans to launch flights by the end of the year that will fly between Kuala Lumpur and Tokyo’s Haneda Airport and China’s Spring Airlines will fly between Shanghai and Ibaraki.  Faced with this new competition, ANA recently announced plans to launch its own low-cost carrier within the next year.  The to-be-named airline is expected to offer competitively priced international flights within six hours of Japan.  Will this airline be able to compete and will it be innovative enough to survive?

A quick look at a few of Asia’s discount carriers:

AirAsia (Malaysia):  The region’s low-cost carrier pioneer.  Since beginning service in 2001, AirAsia has become the dominant carrier in Southeast Asia.  Flights are no frills–no free food or drinks, no tickets or seat assignments (first Asian airline to do this), no refunds, no business lounges, and no loyalty program.  Aircraft is utilized as much as possible with an extremely short turnaround time.  The airline only uses one type of aircraft, uses secondary airports single type of aircraft is used, uses secondary airports, point to point network and lean distribution system (mainly internet sales via credit card, few sales offices and avoiding travel agents as much as possible).  AirAsia X, the airline’s long-haul/low-fare arm affiliated with Virgin and Air Canada was launched in 2007.  The network covers destinations over four hours from Kuala Lumpur.  AirAsia has continued to expand its network recently set a world record by selling half a million seats on the first day of its “Mind Blowing Fare” campaign.

Tiger Airways (Singapore):  Singapore’s largest low-cost airline in terms of passengers carried.  Tiger Airways’ cost structure is modeled after Europe’s Ryanair and includes carefully examining every aspect of the business to remove non-essential costs.  The airline charges for products and services, which they call “Tiger Add-On(s)” and includes charging for luggage based on weight, fees for preferred seats, and convenience fees for reservations and changes.  Tiger Airways also flies a single type of aircraft, a narrow body aircraft, and turns planes around fast.  They don’t spend money on advertising or marketing more than necessary and offer very few special promotions.  In an alliance with Thai Airways, Tiger Airways plans to launch a new low-cost carrier, Thai Tiger Airways, which will begin service in Thailand in 2011.  The new airline targets the domestic market, which has a huge potential for growth–only six million out of 65 million Thais have ever been on an airplane.

Spring Airlines (China):  China’s first low cost airline and based in Shanghai.  The airline began service in 2005 and flies a single type of aircraft to routes within mainland China.  Spring Airlines only sells tickets online and offers no complimentary food onboard.  Its first international route will be to Ibaraki Airport in Japan, followed by new routes to Korea and other Southeast Asian countries.  Thanks to dramatic growth in China, Spring Airlines has been profitable for the past five years and is looking to expand its fleet.

The industry is growing at an incredible rate and changing not only the industry itself, but also the lives of the people and the countries they service.  How will this effect business in Asia’s developed and emerging nations as well as global marketing and branding?  This is something we will keep watching.