JIN-445 -- McJapan

[jin at mailman.japaninc.com]

The 'JIN' Japan Inc Newsletter
A weekly opinion piece on social, economic and political trends
in Japan.
Issue No. 445 Wednesday, December 19, 2007, Tokyo

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McJapan

The Mega Tomato and the Mega Tamago—Big Macs with a big tomato
and a large egg respectively—are bursting out of advertising
posters all over Japan. As McDonald's sporadically tries to
upgrade its image into a healthier more responsible brand, deep
down in the organization, nobody is fooled about the fact that
Mega Macs equal Mega McSales. This March, when the Mega Mac was
re-introduced, McDonald's Japan broke sales records reaching
43.05 billion yen for the month  (http://tinyurl.com/36ha45).
This November the company declared a 9-month net profit of 6.54
billion yen, and group sales increased by 12% compared with
last year. The company has roughly 3,800 outlets in Japan and
in Tokyo's Shibuya there are six restaurants within a 200 square
meter area—claimed to be the densest concentration of
McDonald's in the world.

On Friday, the group expanded its Japanese frontiers by opening
its first outlet on Ishigaki island, its most southernmost
outpost so far—and it's not really possible to get much further.
The store opening was a big event on the small island of 40,000
people and apparently cars have been queuing up for the
drive-through ever since (see
http://ishigaki.keizai.biz/headline/176/index.html).
Interestingly, Ronald, lurking in the back of the photo of the
opening, puts paid to the rumor spread a couple of years that
Japan was dumping the clown in favor of a sexier female version
(http://tinyurl.com/c9q2v).

However, there has also been recent trouble for McDonald's Japan
after it found that some its franchises had been selling food
passed its sell-by-date. This is something that the fickle
Japanese media has been raging about over the last few weeks
with other food outlets, such as the convenience store Lawsons,
getting into trouble for the same offence. This scandal has
negatively affected McDonald's performance on the JASDAQ since
it broke, but it seems unlikely that this dent will be
significant as Japan's appetite for junk food seems to go larger
and larger—Burger King returned to Japan this summer and
smaller, admittedly more gourmet chains such as the TK Hamburger
Inn, are breaking into the market as well (also see
http://www.japaninc.com/mgz_sep-oct_2007_issue_burger-boom).

For those who fear the Japanese market and worry whether their
products can succeed in it, the story of McDonald's Japan is an
inspirational one. When Den Fujita set up the Japan side of
McDonald's in 1971, there can have been few people as optimistic
about the potential of the brand in Japan as the man himself.
Indeed for Fujita, the introduction of fast food into Japan went
beyond business and arguably became a cultural mission although
his tongue was probably placed firm in his cheek when he
proclaimed: "the reason Japanese people are so short and have
yellow skins is because they have eaten nothing but fish and
rice for two thousand years... if we eat McDonald's hamburgers
and potatoes for a thousand years we will become taller, our
skin become white and our hair blonde." In reality, McDonald's'
success in Japan has come from its ability to maximize its
strengths (cuteness, convenience, cheapness) as well as adapting
to local sensitivities (the teriyaki burger, and so on). The
McDonald's in Kyoto even blends in by having brown background
signs instead of red ones (http://tinyurl.com/2bymct).

More recently, McDonald's in Japan has adapted to the specifics
of the market in more modern ways. Nutritional information has
become readable on cell phones via a QR (Quick Response) code
and, in Shinjuku, plans are afoot to open Studio M, a testing
site for new products and for the training of staff. The company
also manifested some marketing wizardry when it recruited the
celebrity model Ebi-chan to promote its new shrimp ('ebi')
burger.

Outside of burgers and fries, the parent company, Fujita & Co
is an interesting market player with a mixed record of success
apart from McDonald's. It took a stake in Toys R Us in Japan
which has done relatively well but it also partnered with the
sandwich company 'Pret-A-Manger' which crashed and burned rather
quickly, largely the result of high prices that couldn't compete
 in the good value lunchtime market. This year, in a more overt
tie-up, McDonald's partnered with NTT DoCoMo to distribute
coupons electronically and take payments via cell phones.

Back in 2002 McDonald's struggled in Japan, as it did in other
markets due to bad publicity and a downturn in consumer
confidence resulting from the BSE scare. It is possible to say
the business has now turned a corner and will carry on growing
in the near term, despite the Christmas rush to KFC.

By Peter Harris
Editor-in-Chief

++SPECIAL NOTICE - IMMIGRATION PROCEDURES
WILL YOU BE LEAVING JAPAN OVER THE HOLIDAYS?
If so, you may be interested in finding out how to register for
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foreigners to be finger-printed. Download the information from:
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++FEEDBACK
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++EVENTS
---------------- ICA Event - Jan 16 -----------------------

Event: New Year Mixer Party-Joint event with
the American Chamber (ACCJ)

Overview: An evening of fun, games, salsa dancers, dancing,
prizes, drinks, and delicious food
Details: Complete event details at http://www.icajapan.jp/
(RSVP Required)

Date: Wednesday, January 16, 2008
Time: 7:30-9:30, includes open bar, finger food.
Open ended nijikai at same location
Cost: 6,000 yen (members), 6,500 yen (non-members)
Open to all-venue is 57 - Roppongi 4-2-35, Tel. 03-5775-7857

http://www.fiftyseven.co.jp/

-----------------------------------------------------------

Marcus Evans Events - Supported by J at pan Inc
Date :22nd-23rd January, 2008 Venue: Hilton Tokyo Hotel

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The event features case studies and expert presentations by
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'J at pan Inc readers are entitled to a 10% discount upon
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For further details and brochures, please contact:
Ms. Esther Wong
Tel No: +603 2723 6736
Fax No: +603 2723 6699
Email add: estherw at marcusevanskl.com

*************************************************
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