How COVID-19 is altering consumer behavior in Japan

Like millions of other Tokyoites enduring month after month of “soft lockdown,” Megumi Takesawa has been stocking up on non-perishables such as canned tuna, tomatoes, and corned beef as well as boil-in-the-bag curry. She also stores a wider selection of alcohol in her pantry now, from bottles of wine and sake to cases of beer, as dining out and gathering with colleagues after work for drinks have become a rarity.

Meanwhile, the 39-year-old office worker says she’s spending less on tickets for live concerts, movies, and theater performances, and has substantially cut down on vacation expenses, as long-distance travel is frowned upon. She also tries to buy books from local bookstores so the smaller shops won’t go out of business, and, in order to stay fit while working remotely, she’s taken up jogging.

Some hygiene practices that have become commonplace over the past year to curb the risk of contagion will likely stick, Takesawa says.

“I think I’ll be carrying around disinfectant sprays and wet wipes regularly even after the pandemic,” she says.

COVID-19 is upending Japanese shopping habits like never before. Stay-at-home requests, social distancing measures, and the surge in remote work have seen consumers reprioritizing what is essential.

Healthy dietary and lifestyle choices, as well as demand for home cooking and baking, have seen products such as protein powder and flour fly off the shelves while the ubiquitous use of face masks has hammered cosmetics sales. And with physical contact being largely avoided, more people are swapping supermarkets for online shops.

A Mitsukoshi department store in Tokyo’s Nihombashi neighborhood is closed during the state of emergency in April 2020. | KYODO

For corporations buoyed or burdened by the phenomenon, the big question they are asking themselves is whether these trends are temporary or here to stay.

“I’ve never seen anything like this,” says Toshimitsu Kiji, a data analyst at market research firm Intage Inc. The company collects weekly sales data from approximately 4,000 retail outlets nationwide, including supermarkets, convenience stores, and drug stores, to assess consumer trends.

According to figures it compiled for the whole of 2020, sales of face masks, disinfectants, and thermometers jumped by 380%, 296%, and 255% year on year, respectively. While that may be unsurprising considering the ongoing pandemic, more unexpected products also made its top-30 list of highest-selling goods last year.

At the sixth place on its list is “malt beverages,” which grew by 173%. Behind the spike was a social media-backed campaign purporting the health benefits of Milo, the malt-based chocolate drink produced by Nestle. Its sudden popularity saw the powdered product disappear from supermarkets, with opportunists selling them at a premium on resale sites.

“Snacks produced by toymakers” come in at No. 7, with sales climbing 154% compared to 2019. Kiji says the phenomenon was partially the result of people flocking to snacks that come with stickers and other toys that feature characters from “Demon Slayer,” the manga and anime series that was the basis for a film released last year became the biggest-ever box-office hit in Japanese history.

Protein powder follows in eighth place with a 141% surge.

“From around June last year, young women began buying soy protein powders in order to stay in shape during the pandemic,” Kiji explains. “Maintaining a healthy lifestyle while remote working has been a big topic affecting shopping trends.

“Others on the list include non-perishables such as frozen seafood as well as whipping cream and baking mix for home cooking purposes. With people spending more time at home, we saw sales of detergent, deodorants, and dehumidifiers grow,” he says. “And with restaurants facing closures and asked to curtail business hours during a state of emergencies, alcohol sales have been robust.”

Sales of face masks in Japan rose 380% in the 2020 year on year, according to figures compiled by market research firm Intage Inc. | REUTERS

Meanwhile, cosmetics took a hit in 2020, with lipstick faring the worst with sales down by more than half at 42% compared to the previous year. Sales of face blushes, foundations and makeup bases also plunged to 63%, 68%, and 72% year on year, respectively, with fewer opportunities to go out and people encouraged to work from home. Drugs for motion sickness fell out of demand as trips became less frequent, while better hygiene over virus fears put a damper on common cold medicine.

“Sales of chewing gum and candies — things often purchased by office workers to stay alert during the day — have also fallen,” Kiji says.

So which products are going to maintain their edge when the pandemic subsides?

“It essentially comes down to goods that consumers feel are useful,” Kiji says. “For example, recent data suggests hair treatment products are gaining popularity. If people feel they can take care of their hair by themselves rather than frequently visiting beauty salons, that could become a lasting trend. The same goes for bath additives. If consumers feel they’re effective in relaxing and rejuvenating, they will continue using them even when they can freely go out without the worry of contagion.”

A report on the impact COVID-19 is having on Japanese consumer behavior compiled by Nomura Research Institute (NRI) says stockpiling of non-perishables will likely decelerate as the pandemic subsides, but home cooking will still be popular and interest in healthy eating is expected to continue growing. Sales of large television sets and other home entertainment audio-visual systems are expected to remain strong, while the outdoor activities boom may see demand for SUVs rise.

The outbreak is understandably accelerating spending on online services as well — not only shopping for daily necessities, but also for games and video-on-demand streaming and rental services.

Hiroyuki Hayashi, a consultant at NRI and an expert on consumer trends, says the ratio of those surveyed by the think tank who are subscribers to Amazon Prime, for example, jumped by 6 percentage points from 16% to 22% in the two months from March to May last year.

“Prior to that, it took two years for the ratio of subscribers to grow 3 percentage points, so this was quite a surprise,” he says. “It shows how the first state of emergency issued last April turbocharged digitalization in Japan.”

Online shopping, banking, and free video-streaming services such as YouTube have all seen strong demand, Hayashi says, although there’s a catch.

“Online shopping activity remains strong amid the pandemic, but the number of money users spends per transaction has decreased,” he says. “Whereas people used to buy in bulk when shopping online, they are now buying more frequently in smaller quantities.”

Surveys conducted by NRI in December 2018 and December 2020 showed that the number of times respondents said they shopped online annually grew from 33.8 to 37.4. In terms of the amount spent per transaction, however, the figure dropped to ¥2,136 from ¥2,484.

“When analyzing the number of transactions and payment amounts, we notice purchasing activity is most robust among youths,” Hayashi says. “Those in their teens, for example, spend roughly ¥600 on average per transaction, while those in their 20s typically spend around ¥1,000.”

China leads the pack with one of the most sophisticated digital ecosystems in the world. According to Mckinsey & Company’s China consumer report 2021, the nation has more than 850 million internet users, with mobile payment penetration triple that of the United States. It also boasts the world’s largest e-commerce market, accounting for about 45% of global retail e-commerce transaction value in 2018.

The report says around 55% of Chinese consumers are likely to continue buying more groceries online after the peak of the crisis. The consulting giant said that, according to its mobile survey, 74% of Chinese citizens increased their online grocery visit frequency during the pandemic, and 15% said they will increase visits after its peak has passed.

Japan, in the meantime, has been a slow starter when it comes to digital payments. Cash remains king, and contactless transactions including credit cards and smartphone apps account for only 20% of personal spending, according to 2016 data from the Ministry of Economy, Trade, and Industry. That’s compared to over 95% in South Korea and nearly 70% in the United Kingdom.

Hayashi of NRI says surveys show that even during the pandemic, the Japanese have been relatively hesitant compared to other developed nations in using services such as online learning, telemedicine, and smart speakers. But when users were asked whether they plan on utilizing these services after the pandemic, a large portion was optimistic.

“Digitalization will be here to stay,” he says. “Japanese tend to be reluctant to spend money on new services, but once they do and realize the benefits they can enjoy, they tend to become loyal customers.

“Internet shopping will also take a stronghold, especially when movement has been restricted for so long,” he says.

“There’s no comparable event in modern history that has impacted consumer behavior at this scale,” Hayashi adds, expressing concern that a growing digital divide and financial hardships endured by many during the crisis could exacerbate economic inequality.

“I fear the economic fallout from the pandemic will widen the wealth gap.”

The outbreak is already taking a severe toll. According to the health ministry, as of early April, more than 100,000 people have been dismissed or seen their employment contracts terminated without renewal.

Under the circumstances, job insecurity is likely to remain high especially among workers in the manufacturing, retail, and restaurant industries that have been hardest hit by the pandemic. That, in turn, is impacting consumer behavior.

In order to understand how the pandemic is changing consumer psychology, online market researcher Macromill Inc. launched its own consumer segment — the With COVID-19 Segment — in December. It features six segments based on analyzing the company’s 1.3 million consumer panel.

These include average consumers (33%) who are adapting to the new lifestyle yet feeling stressed and inconvenienced, as well as those who are “home nesting” to avoid virus risks but are struggling with their social lives (14%) and feeling financially pinched (14%). The latter two segments are mostly women in their 40s and below.

Then there are the digital natives in higher income brackets who have quickly adapted to the “new normal” (15%) and those who have taken the pandemic in stride (11%) without letting the crisis get in the way of their personal lives and hobbies. The latter segment is led by men in their 40s to 60s.

Finally, there’s the segment composed mainly of men in their 30s and younger who are feeling inconvenienced by virus-induced restrictions but nevertheless continue to go out and meet with like-minded people (13%).

Tomoyuki Shibuya, a senior consultant at Macromill, says half of the six segments representing roughly a third of all consumers surveyed are enduring a lower quality of life amid the outbreak compared to the rest that is typified by older men and high-income white-collar types.

“Those feeling financially strained are most often members of small to midsize businesses that are facing the wrath of the pandemic,” he says. “This divide will likely remain after the crisis. Japan has long been described as a middle-class society, but that may no longer be the case.”

Source: Japan Times

Market Trends: Selling Fashion and Beauty in Japan

Consumers in Japan are some of the most sophisticated and hard-to-please in the world, yet with open wallets for products, they trust.

Here are some facets of Japan’s rag trade, beauty trends, and beyond—including makeup, youth, and senior fashion—that marketers in Japan or those that plan a market entry into Japan should know, as well as how shopping for all this stuff is changing.

The major key is self-expression for those times when not in harness in the working world.

Exhibitor feedback from the autumn Fashion World Tokyo Show reveals that Japan’s consumers have some particular tastes. Accessories and bags with a low bling factor, for one. They also prefer clothes that don’t wrinkle or fade, which makes clothing produced using completely natural materials and dyes less attractive. In footwear, they favor more comfortable, less formal styles.

The skincare game and other altered states

Bihaku – white skin as the epitome of beauty

Bihaku is an integral element of a sophisticated skincare regimen, encompassing makeup removal, cleansing, lotion, serums and moisturizers, exfoliators, and more. That self-care actually extends to what’s eaten and drunk—collagen-rich and fermented foods, seaweed and oily fish, for example, and green tea—as well as onsen bathing.

The mochi skin phenomenon

There’s a definite desire among Japanese women to attain what’s known as “mochi skin”—essentially a complexion that mimics the soft, smooth texture of mochi rice cake desserts.

In vivid contrast to that flawless skin, Japan’s young fashionistas are applying colored eyeliner (yellow, green, pink, and more), or maybe under-eye blush or glossy, glittery eye shadow.

There’s a vibrant gloss for the lips, too, in fruity shades. Younger Japanese women also go in for colorful nail art, including what are known as “nuance nails,” with each nail covered in different colors, designs, and decorations.

Cutting edge contact lenses and hair care

Colored and patterned contact lenses—the latter known as “circle lenses”—hold a particular appeal in the land of manga, anime and cosplay.

Important to know for overseas marketers is the fact that while some circle lenses are nearsighted,
farsighted or astigmatic folks, most are pure fashion statements.

Japanese manufacturers have also devised some radically new tech for hair care. Louvredo’s Fukugen hair dryer uses a special far-infrared wavelength of 6 ~ 20 μm and negative ionization to shake the moisture out of the hair, eliminating the usual damage to hair proteins that hot air causes. Lumielina’s Bio programming range of care and styling products use a new type of ceramic that not only shields hair from heat but also actually improves its smoothness, moisture balance, and gloss.

Online fashion buying habits of the Japanese

Buying fashion and beauty products remotely has always been a bit tricky unless you know exactly what you’re getting, especially when it comes to fit/drape and shade. That doesn’t stop many, though. You see ladies avidly scrolling through clothes and accessories online. On a train or in a coffee shop, for example, they may be hunting for bargains on name-brand goods at a flash sale site.

Smartphone apps are changing the game as well. One called Bodygram uses AI deep-learning and machine-learning algorithms based on just a front and profile photo to the size you perfectly, like a master tailor. Augmented reality (AR) makeup mirrors from app developer Perfect Corp. are helping Estée
Lauder, L’Oréal, and Amway give shoppers the chance to virtually apply products via smartphone
as well. New Balance has set up machines in major Japanese department stores
and elsewhere to do 3D scans of your foot for an exact fit.

The customer is not king, but god in Japan. Anything you can offer them to enhance their shopping experience might get you into their good graces – and purchasing decision.

The Japanese senior fashion market: A graceful transition into maturity

Older women in Japan are increasingly opting for mature styles in both hair and what they wear, not seeking to duplicate the fashions their daughters and granddaughters pursue. That includes a more natural, personal look and going gracefully gray up top. All featured older women rocking distinctive styles and dos.

That’s one powerful indication that designing for and selling to the senior market is worthwhile.

Functional fashion is not a niche, but mainstream in Japan

For marketers, some other pivots include temperature—such as wide-legged pants to stay cool in Japan’s
steamy summertime, and Uniqlo’s “heat-tech” garments for keeping warm in the winter. Other upcoming segments include fashion and beauty addressing environmental, ethical, and sustainability issues, like e.g. anti-pollution skincare products.

Planning to sell Fashion and Beauty Product In Japan?

Having local help onboard is essential in order to be successful in Japan Market Entry. Don’t know where to start? We can help!

COVUE is a trustworthy Japanese company that has import licenses for many product categories. Let COVUE’s regulatory experts help you to speed up the market entry process so can that you can focus on your business. We’re here to help! It’s what we do best!

Japan Luxury

Understanding New Trends and Opportunities in Japan’s Luxury Industry

Japan is the second-largest luxury market in the world – behind the United States and ahead of mainland China – with 3.6 trillion yen (about US$33 billion) spent each year in luxury goods.

  • Luxury labels, built on exclusivity, used to mean that having an online presence was not necessary; not the case anymore
  • digital channels must used by companies to get leverage in the market (search engines, social media, email, websites and mobile apps etc.)

Japan’s luxury industry:

  • GFC then disasters in Tōhoku and Fukushima, luxury spending in Japan shrank by over 1 trillion yen ($10.6 billion) by 2012
  • report by McKinsey & Company: Japanese luxury market… to maintain positive growth
  • 82% of luxury executives surveyed responded that their sales outlook for 2017 is significantly better than 2016.
  • by 2020, it is anticipated that the market will grow by a moderate rate of 3% to 4% per year
  • Japanese department stores are still the main venue of purchase for Japanese luxury consumers
  • 70% of people polled buy in Department store representing 50% overall revenue
  • Younger generation is buying brands like Céline, Balenciaga, and Gucci
  • Older generation are purchasing from brands like Hermès and Chanel, which are perceived as “very reliable” and “have a heritage.”

Digital marketing in the luxury industry:

  • a renewed interest in Japan in the past year or so due to recent market growth
  • Japan accounts for 11% of global luxury spending
  • Luxe Digital recently published a report suggesting that digital influences at least 80% of all luxury sales

Digital marketing techniques that are currently trending in the luxury industry:

  • Content is King
    • Storytelling, being able to tell the story behind the brand, explaining the values that define it: Luxury goods as much about image, style, and intangibles than about the actual quality of the product
    • Create contents that are aspirational and appeal to the customer’s desire to display their status
    • A luxury brand gives their customers an opportunity to showcase a lifestyle and a value system
  • Successful digital marketing campaigns
    • Burberry: social media campaigns and creative videos that combine history, fashion, and the appeal of a glamorous lifestyle. YouTube – 99 million viewers, 317,000 subscribers. Recent ad received 12 million views within a month (holiday campaign tribute for the movie Billy Elliot – Celebrating 15 years of Billy Elliot).
  • Social Media Marketing
    • Visual social networks like Pinterest provide a huge opportunity for luxury brands
    • Photographs are one of the best media for marketing luxury products
    • Chanel: one of the most ‘pinned’ brands on Pinterest – over 1,244 pins of Chanel products pinned per day
  • Boost SEO
    • A well-executed SEO strategy is one of the most lucrative digital marketing investments that a luxury company can do.
    • Google is one of the most significant channels for luxury
    • A large proportion of luxury brands have begun investing in SEO strategies
    • Tiffany: bought into SEO, have firm, successful strategies which have led to them dominating the search results

Importing Luxury Goods In Japan? We got you!

Having local help onboard is essential in order to be successful in Japan Market Entry. Don’t know where to start? We can help!

COVUE is a trustworthy Japanese company that has import licenses for many product categories. Let COVUE’s regulatory experts help you to speed up the market entry process so can that you can focus on your business. We’re here to help! It’s what we do best!

How to Start Selling Your Consumer Product in Japan through ECommerce

Are you planning on selling your consumer product online in Japan? Do you know exactly what is necessary for a successful B2C e-commerce strategy in the Japanese market? Although there are some hurdles that overseas retailers need to overcome in order to trade in Japan, the obstacles are greatly diminished when selling online or on Japanese eCommerce marketplaces. Here we will introduce the easiest and fastest ways for you to start selling in Japan.

Top 3 easiest ways to sell your product in Japan

D2C via your eCommerce website:

This is probably the easiest way to start selling in Japan without having to set anything up in Japan physically. If you are already selling online via your website, you can easily create a localized version in Japanese. We do, however, recommend that you properly localize your entire website into native Japanese as English literacy is below 10% in Japan. Without a Japanese website, it will be difficult to win the trust of Japanese online shoppers and, as a result, your conversions will be low. In addition, as a newcomer to the Japanese marketplace, you will need to run brand awareness campaigns and promotions across all digital channels, utilizing search engine marketing and social media. Selling direct to customers on your own website will require some investment into online advertising, but you won’t have to open an office in Japan or hire anyone locally. 

B2C via eCommerce marketplaces:

If you’re an unknown brand in Japan, then utilizing one of Japan’s popular marketplaces would be a great way to get your foot in the door. The top marketplaces (or “EC Malls”) include Amazon Japan, Rakuten and Yahoo! Shopping, and what is great about these platforms is that millions of Japanese online shoppers are already using them. Japan’s most popular marketplace, Rakuten offers support to overseas sellers in English.  You can also leverage your visibility with marketplace PPC advertising. Furthermore, should you choose to sell on Amazon Japan, they offer Fulfillment By Amazon (FBA) in Japan, which means logistics is taken care of by Amazon. Moreover, if you use their Multi-Channel Fulfillment (MCF) service, they can fulfil orders that come from other channels – like Rakuten. 

Distributor partnerships and third-party agencies:

Traditionally, it has only been possible to successfully enter the Japanese market via multiple layers of intermediaries. Although the landscape has changed dramatically with eCommerce as mentioned above, distributor channels can prove successful depending on your desired distribution channels. Local distributors and agencies will have the market expertise and existing relationships you need to start selling in Japan. Organizations such as the Department for International Trade and Export to Japan can help you with such partnerships. As for selling on Japan-exclusive marketplaces such as PayPal Mall, we at DFMA have a new solution for overseas sellers interested in selling on the platform.

Enter Japanese Market with No Worries!

Having local help on board is essential in order to be successful in Japan Market Entry. Don’t know where to start? We can help!

COVUE is a trustworthy Japanese company that has import licenses for many product categories. Let COVUE’s regulatory experts help you to speed up the market entry process so can that you can focus on your business. We’re here to help! It’s what we do best!

Who are the biggest foreign companies in Japan?

The biggest foreign company in Japan is Toyo Keizai as of 2018.

Naganasu has not included minority foreign owned companies such as Nissan, who were top of the rankings last time. This means Accenture (headquartered in Ireland) has shot to the top, with a 70% increase in employee numbers from 7,600 in 2018 to 13,000 in 2020. 

Gibraltar Life Insurance,  a Japan only brand, formerly known as Kyoei, acquired by US company Prudential Holdings in 2001 is still at #2 with 12,731 employees.

Naganasu has also not included Sharp, 65% owned by Taiwanese Hon Hai, which was at #3 before.

The largest European-owned Japanese company is Bosch, at #6 with 5,333 employees.  VSN (a staffing company acquired by Swiss company Adecco in 2012) has risen to #10 from #31 with 4, 271 employees, a third larger than in 2018. IKEA has also grown in Japan, from 2,700 employees at #36 to #16.

As in 2018, there is a lack of British owned companies in the top 50.  The only one included by Naganasu is AstraZeneca at #19 with 3,000 employees. What happened to GSK, which was at #28 with 3,300 employees in 2018 is not clear. Perhaps they have shrunk to below 2,000 employees, so were not in the top 50. Alternatively, as we’ve often noticed with Toyo Keizai, if you don’t respond to their questionnaires, you don’t get included.

Other European companies in the 2020 top 50 are Adecco, L’Oreal, Bayer, Nestle, Philips, Valeo (French automotive supplier), Triumph (Swiss underwear company) and Autoliv (Swedish automotive company).

Market Entry in Japan

Having local help on board is essential in order to be successful in Japan Market Entry. Don’t know where to start? We can help!

COVUE is a trustworthy Japanese company that has import licenses for many product categories. Let COVUE’s regulatory experts help you to speed up the market entry process so can that you can focus on your business. We’re here to help! It’s what we do best!

Japan looks to ease virus state of emergency ahead of Olympics

Japan expects to ease a coronavirus state of emergency in Tokyo and most areas this weekend. New daily cases are falling just as the country begins making final preparations for the Olympics starting in just over a month.

Back in late March, Japan was struggling to slow down a wave of infections. New daily cases were soaring above 7000 at one point and seriously ill patients were filling up the hospitals in Tokyo, Osaka and other metropolitan areas.

Daily cases have since subsided significantly and Prime Minister Yoshihide Suga is expected to downgrade the state of emergency when it expires on Sunday to a less-stringent quasi-emergency for several weeks.

Despite concerns raised by medical experts and the public over the potential risks of holding the Olympics, Suga has said he is determined to hold a “safe and secure” games starting July 23.

Holding the Olympics before elections in the autumn is also a political gamble for Suga, whose support ratings have tumbled due to public dissatisfaction over his virus measures, a vaccination drive criticized as being too slow, and lack of a clear explanation of how he will ensure the virus doesn’t spread during the Olympics.

Government-appointed experts met Wednesday to analyze the situation ahead of Suga’s decision on the emergency measures and expressed concern about the potential for infections to climb again after measures are eased. Suga is expected to make a final decision Thursday after more meetings.

Suga placed Tokyo, Osaka and two other areas under a state of emergency in late April and has since expanded the area to 10 prefectures and extended the measures twice. Japan does not enforce hard lockdowns and the state of emergency allows prefectural leaders to order closures or shorter hours for non-essential business in return for compensation to those who comply and fines for violators. Stay-at-home and other measures for the general population are only requests and are increasingly ignored.

Ryuji Wakita, the director-general of the National Institute of Infectious Diseases who heads a government COVID-19 advisory board, said infections have decreased in many areas, but the slowing has bottomed out in the Tokyo region. He warned that infections could increase after an easing of the measures. He said signs of a rebound are already seen among younger people.

Even as more people are vaccinated and most of the country’s 36 million senior citizens are expected to be fully inoculated by the end of July, younger people are largely unvaccinated and infections among them could quickly burden hospitals, Wakita said.

“In order to prevent another upsurge, it is crucial to prevent the people from roaming around during the Olympics and summer vacation,” he said. Experts say it is crucial to accelerate the vaccine rollout.

SoftBank-backed food delivery firm enters Japan!

A U.S. food delivery firm, DoorDash Inc, which is backed by SoftBank Group Corp announced Wednesday the launch of services in Japan. They are joining an increasingly crowded market that has grown during the COVID-19 pandemic.

Services will be available to the city Sendai in Miyagi prefecture. The delivery firm told the reporters that they plan on expanding to Canada and Australia as well.

“Our strategy has always been to empower local economies, especially in the suburban markets that are historically underserved, yet the appetite for connectivity between merchants and customers is high,” Chief Executive Tony Xu said in a statement.

SoftBank backs some of the largest delivery services in Japan such as Uber Eats from Uber Technologies Inc and Demae-can Co Ltd.

Last month, DoorDash raised its forecast for annual gross order value, as stimulus checks helped keep food delivery demand resilient in the first quarter, even as vaccinations and as easing of curbs encouraged dining-out again.

DoorDash reported a near three-fold jump in quarterly revenue to $1.08 billion. They have branched out into delivery from grocery and convenience stores last year.

The company saw a surge in order volumes during the pandemic as consumers were hesitant about stepping out of the comfort of their homes due to COVID-19.

Want to Enter Japan Market?

Having local help on board is essential in order to be successful in Japan Market Entry. Don’t know where to start? We can help!

COVUE is a trustworthy Japanese company that has import licenses for many product categories. Let COVUE’s regulatory experts help you to speed up the market entry process so can that you can focus on your business. We’re here to help! It’s what we do best!

Toyota and Honda suspend vehicle production in Malaysia due to lockdown

COVID-19 is now interfering with the production of vehicles. Toyota Motor Corp and Honda Motor Co have put a pause on producing vehicles at their plants in Malaysia the country began a two-week total lockdown to stem the spread of the coronavirus.

Due to the reduced workforce, both companies have decided it would not be enough to keep their factories running. Virus cases are rising in Malaysia as vaccination against COVID-19 lags. Japanese automakers and automotive parts makers also have plants in other countries in the region, such as Thailand and Indonesia, where cases are also increasing.

The companies could face production delays if infection rates worsen in those countries. In Malaysia, Toyota has two plants in Selangor State, while Honda has a motorcycle plant in Penang State and a car factory in Malacca State. The officials said that after-sales service for car owners will continue while new car sales are suspended.

Toyota produced about 50,000 passenger and commercial vehicles in Malaysia last. Honda says its motorcycle factory has the capacity to make 300,000 units annually with its car plant capable of producing 100,000 units.

What is Trade Compliance and Why Does it Matter?

In today’s global marketplace, companies do business both within and outside Japan. Your supply chain depends on following various trade agreements, international trade regulations, and tariff classification.

Yet, even with these specialties, many companies unintentionally receive import and export violations, and these violations lead to hefty penalties and fines for failure with trade compliance functions.

International business is more complex than ever before, and this is why you need a clear understanding of the rules of export control, customs authorities, and export laws. As a result, exporting and importing have become an essential part of day-to-day operations. Since your business relies on global trade, your company needs to ensure that your operations have solid global trade compliance.

To remain competitive, companies must have a comprehensive understanding of the laws and regulations which govern their imports and exports. Very simply, that’s what trade compliance is all about!

What is trade compliance?

Trade compliance means to comply with international export, trade, and financial laws.

Who is required to comply?

Businesses from across all industries are obligated to adhere to compliance requirements. It is not just a regulation for security-sensitive industries such as telecommunications, IT, research, aerospace, or financial institutions. The penalties for non-compliance can be severe.

Why does trade compliance matter?

Trade compliance is vital for importing and exporting and is a responsibility for all businesses. The larger the business, the greater the compliance expectations. In order to be compliant, you must understand what rules and regulations applicable to your business. To be compliant means to meet the demands of customers and suppliers while supporting sustainability, long-term growth, and competitive advantages. These are key elements to a successful global supply chain.

Benefits of being trade compliant:

  • Corporate reputations and employees are protected by facilitating legal and responsible trading.
  • Exposure to fines and penalties are minimized.
  • Promotes customer satisfactions by avoiding shipment delays.
  • Saves money by avoiding delays, investigation and penalties.


Consequences of non-compliance:

  • Shipment delays
  • Financial penalties
  • Criminal sanctions

Key elements of trade compliance:

  • Tariff classification – The correct classification of goods using commodity and tariff codes is fundamental for customs compliance as well as establishing correct duty rates, the origin of goods, Intrastat, export control, and many other customs procedures.
  • Preferential origin is associated with a specific trade agreement between two countries or blocks of countries. If the goods you’re exporting have a preferential origin, they are likely to attract reduced or nil rates of duty when they enter your customer’s country.
  • Non-preferential origin is where it dictates the origin of the product being shipped. The rules associated with the identification of origin are specific to the rules of the importing country.
  • IncotermsIncoterms have globally recognized trade terms used to clearly define the responsibilities of the buyer and seller along the shipment lifecycle, they are integral to a contract so that both parties are clear on delivery, costs, risk, and responsibility.
  • Licenses & Permits – It is your responsibility to check if you require a permit or license when importing or exporting certain products. There are controls, for example, on military/paramilitary goods, technology, medicines, chemicals, artworks, plants, and animals.

Your goods will be confiscated and will be delayed if you are importing and exporting without the right license.

  • Exports controls – Certain products are subject to export control legislation as they could have harmful uses. it is your responsibility to classify all products against the appropriate legislation. This will ensure the correct license requirements can be established.
  • Customs Management – Have a clear plan of action if your business is subject to a customs investigation.
  • Screening – Screening customers, vendors, and transaction data against sanctioned, politically exposed persons and other risky entities will help ensure you are not inadvertently doing business with an undesirable person.
  • Valuation – Every shipment must have an appropriate valuation associated with it, which should be defendable if challenged. The valuation must comply with one of the six valuation methodologies approved by the World Trade Organization (WTO) and be declared on the Single Administrative Document (SAD or form C88).

Market Entry in Japan

Having local help on board is essential in order to be successful in Japan Market Entry. Don’t know where to start? We can help!

COVUE is a trustworthy Japanese company that has import licenses for many product categories. Let COVUE’s regulatory experts help you to speed up the market entry process so can that you can focus on your business. We’re here to help! It’s what we do best!

The Japanese Government about extending the state of emergency.

Japan will decide Friday on whether they will extend COVID-19 state of emergency. Tokyo, Osaka and seven other prefectures were set to be released from the state of emergency beginning of next week.

The infection numbers in Japan’s latest coronavirus wave have not lowered and are leaving the medical system under considerable strain. Many prefectures have requested for the government to extend the emergency. Health minister Norihisa Tamura said he will be making a decision based on expert’s evaluations. The current state of emergency is set to end Monday in 9 prefectures including Hyogo, Kyoto, Hokkaido, Fukuoka and Okayama.

The new end date for the state emergency might be June 20 now. Osaka Governor, Hirofumi Yoshimura said it is up to the central government to decide on the end date but that only extending the date for a short period of time would be insufficient.

The Osaka prefectural government is requesting the central government to extend state of emergency due to shortage of hospital beds. It will request together with neighboring Kyoto and Hyogo prefectures. Tokyo is also considering making the same request. Norihisa Tamura said new cases are declining in Japan overall, but worsening in specific areas.

Japan’s vaccine rollout has been slow compared to other developed nations. Only 2% of Japan’s population have received 2 doses of COVID-19 vaccine.

Source: Japan Today