Quality trumps nationality for Japanese consumers

Subtle changes near the top of this year’s ranking of Japan's top 100 brands reflect important changes in consumer dynamics.

For a third year running, Panasonic is the brand that Japanese consumers apparently hold in the highest regard, according to Campaign’s annual study into the top 1000 brands in Asia. Campaign conducts the study in partnership with Nielsen across 13 Asia-Pacific markets.

Although Panasonic is struggling to modernise and is weighed down by too many commoditised products, perception of quality and reliability goes a long way. The company is also working to become more flexible with schemes to promote open-source innovation.

Perhaps more interesting than Panasonic holding onto the top spot, however, is the fact that Apple is now just one step behind, having displaced Sony. No non-Japanese brand has yet topped the country’s ranking, but it now seems a distinct possibility.

“The days where people draw a deliberate distinction between international brands and domestic brands are over, with very few exceptions,” observes Chris Iki, COO of TBWA Hakuhodo, which works with Apple. All that really matters, he says, is that a product or service fulfills people’s needs and aligns with their personal values.

Still, eight out of the top 10 brands do happen to be Japanese, which is not surprising given their levels of quality, distribution and pricing. The biggest surprise was Visa, which rocketed to 9 from 33 last year, reflecting a continued rise in credit card use in a famously cash-based country. MasterCard also shot up from 126 to 23

Still struggling to diversify as smartphone cameras continue to improve, the beleaguered Canon and Nikon plummeted—Canon from 7 to 17 and Nikon from 70 to 105. But brands can come back. Sharp, which the consultancy Prophet defined as a “sunset brand” based on social media analytics last April following Foxconn’s acquisition of it, climbed back up from 16 to 10.

In the tech space, Google lost out to Yahoo, falling to 28. While Facebook remained stable, Twitter fell considerably, from 79 to 103. Japan is among its strongest markets, but there appears to be sense of urgency to attract new users: it launched its first ever branding campaign for Japan earlier this year.

Amazon retained its lead over Rakuten, although both fell slightly, to 26 and 49 respectively. Line remained steady, rising a few places to 160, while its Line Taxi sub-brand made an impressive debut at 32. Surprisingly, though barely operational in Japan due to legal restrictions, Uber entered the ranking at 29, underscoring the power of global publicity—apparently good or bad. Airbnb, which just received a green light from the authorities, has further to go to build its brand, although its position at 415 is respectable in a market that is only just coming to terms with the concept of home-sharing.

While domestic brands are ostensibly focused on global markets for growth, Japan still offers considerable opportunity for both established brands and players in entirely new sectors such as those within the sharing economy. Despite its top-heavy population, per capita spending remains extremely high relative to the rest of Asia, and foreign brands have been re-investing accordingly as other markets in the region slow down.

“There’s still market growth in Japan, it’s just not evenly spread,” says John Woodward, chief strategy officer of McCann Worldgroup Japan. “A slow growth economy doesn’t mean that no sectors of the economy have high growth…the market is so huge that even growing a few share points can affect the bottom line.” He points to credit cards, electronic payments, functional foods, ecommerce and pharmaceuticals as areas with big potential.

The key for any international brand looking to succeed in Japan is to be committed and to localise. “The best companies are investing in getting the basics right first,” Woodward says. “Spending money on things like real estate, buying out JVs or putting in place IT backbone so they have a competitive offer and a sustainable economic position. This isn’t a market where you can just swan in, try some ads and hope for a quick win. You have to be here for the long haul.”

In brief

• Japan prefers Amazon (26) to Rakuten (49)
• Apple (2) and Visa (9) the only two non-Japanese brands in the top 10
• Facebook (98) still Japan’s favourite social network
• Uber debuts at 29, just above Line Taxi (32)
• BMW (197) regains the lead on Mercedes (236) as Japan’s preferred international car brand