Now that the initial burst of enthusiasm following the announcement that Tokyo had been awarded the 2020 Olympics has started to wane, it’s time for Japan to consider how it can capitalise on this golden opportunity.
Outsiders may have a knee-jerk response to the news, viewing the stimulus that Tokyo will receive from the Olympics as a short-lived “sugar rush”, especially given the experience of other cities that have hosted the Games.
However, we believe the underlying economic dynamics in Japan, especially those related to demographics, will support a sustainable boost (not least a psychological one) from hosting the Olympics.
It goes against conventional thinking to view Japan’s rapidly ageing society as a positive force.
Such is the weight of so-called common sense, which deems ageing as something to be feared, only to be treated as an economic or social problem.
But it is an oft-overlooked fact that people raise their consumption levels considerably from their mid-fifties, and continue spending at much higher levels throughout retirement.
The number of Japanese aged over 50 is approximately 58mn. This figure includes people already 65 or older (30mn), the dankai generation (born during Japan’s first baby boom, from 1947 to 1949, and totalling 7mn), those in their early 60s (5mn) and people in their 50s (16mn).
According to some estimates, current spending in Japan by people aged over 60 surpasses ¥100trn, accounting for 45% of total personal consumption. Given the sheer size of Japan’s economy, that’s a huge slice of global consumption and is being driven by consumers with special needs.
It is certain that the rapidly ageing population will result in a stable and continuous stream of yen flowing into the consumer marketplace over the long term.
Moreover, it’s lucrative consumer territory for companies who know how best to respond.
Domestic businesses and the government must adapt to the opportunities that ageing presents. If they don’t, foreign firms—helped by the renewed openness to trade and investment by the administration of Prime Minister Shinzo Abe—will surely prove their worth in terms of the innovations they will throw into the economic mix.
Clearly some significant adjustments in business models and attitudes to work and life are required, but we believe Japanese society is more than up to the task.
It has been fascinating to observe the social development of Japan and its consumers since the champagne-infused “bubble days” of the late 1980s.
Throughout the 1990s and on to the partial, yet tentative, economic recovery in the 2000s, Japanese consumers have been forced to adapt to a new reality that involves far fewer safety nets.
Through it all, one of the most notable developments is the very different type of Japanese psyche that came to the fore—namely, one that is more accountable, independent and individual.
These updated psychographic perspectives feed into more innovation and a fledgling entrepreneurial spirit that will be necessary to prosper in the new silver reality that now depicts Japan.
In addition to the underlying consumer opportunities that an ageing population presents, there is also the huge boost to the tourism industry that the Olympics will facilitate. Tourism is already the world’s largest industry, but it is one that is relatively underdeveloped in Japan, especially as it relates to foreign visitors.
Japan may be at the end stages of a long-term off shoring of its industries, but tourism is one obvious candidate to take up some of the slack from such sunset industries.
Worth remembering are the sheer grittiness and ingenuity of Japan’s populace in getting through whatever challenges have been put to it—from some 13-plus years of economic stagnation following the burst of the bubble to the Lehman Shock and the March 11, 2011, disasters (not to mention 18 or so prime ministers during this period).
People just seem to get on with it, and they do so with a modicum of style.
It would not be unfair to say Japan has lacked solid political leadership in the recent past, but the new and improved Abe seems to have all the ingredients to point Japan towards an inspiring future. And let’s not forget that inspiration is what sports and the Olympics are all about!
So with the Olympics once again placing Japan in the spotlight and offering the nation a chance to show the world just how advanced it really is, we are all counting on a gold medal performance.
Debbie Howard is Chairman of CarterJMRN KK, and President Emeritus of the American Chamber of Commerce in Japan.