Trends in Japan

U.S., European Manufacturers Find an Eager Market

AUGUST 2, 1996

(Photo: Kyodo)

Tie-ups with Domestic Companies
Sales of household electrical appliances made by American and European manufacturers, including refrigerators and washing machines, are growing in the Japanese market.

One Japanese volume retailer of electrical appliances tied up with a major U.S. manufacturer and began selling imported refrigerators and freezers a year ago. A large, 500-liter refrigerator costs 198,000 yen (1,800 dollars at 110 yen to the dollar), between half and a third the price of similar Japanese products. The firm reports that in one year it exceeded its projected 100,000-unit sales goal by 10,000 units. In May it also began selling washing machines, air conditioners, dehumidifiers, and other items.

Another volume retailer joined up with a U.S. appliance manufacturer and put a large refrigerator on the market in June. They plan to start marketing washing machines and cooking equipment next year, aiming for sales of 10 billion yen (90.9 million dollars) in three years.

European manufacturers are also enthusiastic about getting into the Japanese market. Last spring, a major appliance maker based in Sweden began selling a drum-type washer-dryer made to Japanese specifications that it developed jointly with a Japanese firm. The company reports that 33,000 units have been sold in 10 months, partly because the 200,000-yen price tag (1,800 dollars) is half that of earlier products. An influential Italian company has tied up with another Japanese manufacturer and put a rival product on the market. The market for drum-type washer-dryers is beginning to grow rapidly.

Consumers Focus on Usability
Household electrical appliances imported from the United States and Europe have been on the market for some time, but demand was limited because they were not considered suited to Japanese homes and lifestyles. Recently, though, Japanese houses have gotten larger, and it has become common to go to the supermarket and purchase several days' supply of food at one time. As lifestyles have changed, the convenience of imported appliances has caught the attention of a broad spectrum of consumers.

The capacity of most large Japanese refrigerators, for example, is on the 400-liter level, and they have four doors and small compartments. Many American and European models, however, can hold 500-700 liters, and most have inside compartments that are designed simply, making them convenient for storing large food purchases. Where kitchen space allows, a growing number of households have two refrigerators, a medium-sized Japanese model with lots of functions and a large imported model for storing bulky items.

Benefiting from Changing Lifestyles
With mass-production technology their forte, Japanese manufacturers are strongly competitive when it comes to products like videocassette recorders and audio equipment, for which common global specifications are easily made. But household appliances have been developed to closely reflect the customs and lifestyles of the countries where they are used, so Japanese manufacturers' share of the global market is small and manufacturers in other industrial countries are highly competitive.

The Japanese lifestyle has undergone a major change recently, and this seems to have created a receptive environment for larger appliances. The competitiveness of these products got a boost, moreover, with the yen's appreciation.

One volume retailer with ties to a U.S. manufacturer says that its U.S. partner is working hard because competing in Asia's largest market, where consumer demands are sophisticated, will improve the manufacturer's ability to develop products and lower costs.

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