Kill Bill sneakers turn Japan soft power into hard profits
Onitsuka Tiger, the fashion brand reborn when Uma Thurman's The Bride wore its sneakers in Quentin Tarantino's 2003 movie, is enjoying record sales. Asics discontinued the brand for decades until the early 2000s, but post-Covid visitors can't get enough of the comfy, timeless trainers.
Revenue in Japan has doubled in a year, with tourists accounting for almost all the surge. Onitsuka is by far Asics's highest-margin segment, with a new flagship store on the Champs-Elysees in Paris and plans for shops in the US. Shares are up eightfold in the past five years, helping its market capitalisation to recently pass US$20 billion.
It is also more evidence that visitors to Japan are a growth driver. Complaints about overtourism get the headlines; online grumbles surround the 'shadow economy' of Asian travellers, said to extract more than they spend.
But the evidence is there for all to see in the 8.1 trillion yen (S$70.7 billion) of foreign spending last year – and increasingly in profits at firms like Asics. It's far from alone.
The focus of the most recent earnings season might have been the impact of US tariffs, but a more interesting narrative is a surge in authentically Japanese brands reaching tourists or expanding abroad.
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The weak yen is, of course, a factor. But more important is the strategy of creating fans of the country, who connect with a part of the culture and want to spend on it at home. And from Muji to Mario and Hello Kitty to Uniqlo, these firms are having record quarters, helping propel the Nikkei 225 to a series of record highs.
Consider Kitty's maker, Sanrio. While it still generates its largest chunk of revenue domestically, tourists now account for around 40 per cent of its product sales here (the data is trackable thanks to Japan's sales-tax exemption scheme). Shares are up more than 10 times from the 2019 level.
Or Food & Life, the owner of conveyor-belt sushi leader Sushiro. Its restaurants in Tokyo and other city centres are thronged with travellers, and it has been expanding abroad. The company aims to have 320 stores overseas by fiscal 2026, from just 38 stores five years ago. The first Sushiro in mainland China opened last year, with reports of customers queuing for 10 hours for some chutoro.
Ryohin Keikaku, meanwhile, now has more Muji locations outside Japan than at home, selling minimalist notebooks and no-brand cosmetics.
Without simplifying Japan into ikigai and other reductive nonsense, these firms do have a common link. It's some combination of affordability, high quality and an aesthetic minimalism that taps into feelings consumers have long associated with 'Japan-ness.' (The same can be said about foreign brands that try to ape this look, such as the Chinese retailer Miniso).
Companies that can take this and tap into newfound customers at home or overseas have significant upside, as the country seeks to attract 60 million tourists spending an annual US$100 billion by the end of the decade.
The exemplar of this transformation is Fast Retailing, the operator of Uniqlo. It was once the poster child for how a deflation-beset country was turning to cheap fast fashion. 'Basic chic from Japan. But will it sell?' asked a New York Times headline in 2006, when Uniqlo opened its flagship outlet in the city; back in those days, 90 per cent of sales were in its home market.
Since then, it has transformed itself into a minimalist yet iconic fashion brand, and overseas turnover overtook domestic in 2022.
Of course, not every successful company needs to be minimalist. At the other end of the spectrum is retailer Pan Pacific International. Its Don Quijote stores are an assault on the senses, but it is a brand that tourists associate with the country – and in turn can generate higher margins than most discount retailers. It is expanding in Japan with even more shops to cater to visitors, with plans to more than double those sales to US$2.7 billion by 2035.
That is before we even get into more iconic names such as Nintendo and the gaming and comic giants that benefit from the recent infatuation with Japan's soft power.
If a traveller carries an Onitsuka Tiger bag, odds are the other hand holds one from Nintendo, Capcom or Sega Sammy's merchandise stores. More brands can tap into this, too: A recent collaboration between Sega's Sonic the Hedgehog and VF's Timberland shoes sold out in minutes.
Souvenirs of a trip can be quickly discarded. But these brands are positioned to better stand the test of time – and turn Japan's soft power into hard profits. BLOOMBERG
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Business Times
7 hours ago
- Business Times
Kill Bill sneakers turn Japan soft power into hard profits
THE unlikely must-have item for tourists in Japan is the footwear of choice of Kill Bill's protagonist. Onitsuka Tiger, the fashion brand reborn when Uma Thurman's The Bride wore its sneakers in Quentin Tarantino's 2003 movie, is enjoying record sales. Asics discontinued the brand for decades until the early 2000s, but post-Covid visitors can't get enough of the comfy, timeless trainers. Revenue in Japan has doubled in a year, with tourists accounting for almost all the surge. Onitsuka is by far Asics's highest-margin segment, with a new flagship store on the Champs-Elysees in Paris and plans for shops in the US. Shares are up eightfold in the past five years, helping its market capitalisation to recently pass US$20 billion. It is also more evidence that visitors to Japan are a growth driver. Complaints about overtourism get the headlines; online grumbles surround the 'shadow economy' of Asian travellers, said to extract more than they spend. But the evidence is there for all to see in the 8.1 trillion yen (S$70.7 billion) of foreign spending last year – and increasingly in profits at firms like Asics. It's far from alone. The focus of the most recent earnings season might have been the impact of US tariffs, but a more interesting narrative is a surge in authentically Japanese brands reaching tourists or expanding abroad. BT in your inbox Start and end each day with the latest news stories and analyses delivered straight to your inbox. Sign Up Sign Up The weak yen is, of course, a factor. But more important is the strategy of creating fans of the country, who connect with a part of the culture and want to spend on it at home. And from Muji to Mario and Hello Kitty to Uniqlo, these firms are having record quarters, helping propel the Nikkei 225 to a series of record highs. Consider Kitty's maker, Sanrio. While it still generates its largest chunk of revenue domestically, tourists now account for around 40 per cent of its product sales here (the data is trackable thanks to Japan's sales-tax exemption scheme). Shares are up more than 10 times from the 2019 level. Or Food & Life, the owner of conveyor-belt sushi leader Sushiro. Its restaurants in Tokyo and other city centres are thronged with travellers, and it has been expanding abroad. The company aims to have 320 stores overseas by fiscal 2026, from just 38 stores five years ago. The first Sushiro in mainland China opened last year, with reports of customers queuing for 10 hours for some chutoro. Ryohin Keikaku, meanwhile, now has more Muji locations outside Japan than at home, selling minimalist notebooks and no-brand cosmetics. Without simplifying Japan into ikigai and other reductive nonsense, these firms do have a common link. It's some combination of affordability, high quality and an aesthetic minimalism that taps into feelings consumers have long associated with 'Japan-ness.' (The same can be said about foreign brands that try to ape this look, such as the Chinese retailer Miniso). Companies that can take this and tap into newfound customers at home or overseas have significant upside, as the country seeks to attract 60 million tourists spending an annual US$100 billion by the end of the decade. The exemplar of this transformation is Fast Retailing, the operator of Uniqlo. It was once the poster child for how a deflation-beset country was turning to cheap fast fashion. 'Basic chic from Japan. But will it sell?' asked a New York Times headline in 2006, when Uniqlo opened its flagship outlet in the city; back in those days, 90 per cent of sales were in its home market. Since then, it has transformed itself into a minimalist yet iconic fashion brand, and overseas turnover overtook domestic in 2022. Of course, not every successful company needs to be minimalist. At the other end of the spectrum is retailer Pan Pacific International. Its Don Quijote stores are an assault on the senses, but it is a brand that tourists associate with the country – and in turn can generate higher margins than most discount retailers. It is expanding in Japan with even more shops to cater to visitors, with plans to more than double those sales to US$2.7 billion by 2035. That is before we even get into more iconic names such as Nintendo and the gaming and comic giants that benefit from the recent infatuation with Japan's soft power. If a traveller carries an Onitsuka Tiger bag, odds are the other hand holds one from Nintendo, Capcom or Sega Sammy's merchandise stores. More brands can tap into this, too: A recent collaboration between Sega's Sonic the Hedgehog and VF's Timberland shoes sold out in minutes. Souvenirs of a trip can be quickly discarded. But these brands are positioned to better stand the test of time – and turn Japan's soft power into hard profits. BLOOMBERG
Business Times
7 hours ago
- Business Times
OrangeTee ties up with Japanese real estate agency to give Singapore investors more access to Japan market
[SINGAPORE] Investors in Singapore will soon gain access to more Japanese real estate opportunities through OrangeTee's partnership with Tokyu Livable, one of Japan's largest real estate agencies. Through OrangeTee, the proptech and real estate agency arm of Realion Group, Singapore-based investors will be able to tap Tokyu Livable's exclusive portfolio of residential and investment-grade properties. These include 'premium' renovated apartments in city-fringe districts, such as Nakameguro and Kichijoji in Tokyo; newly built condominiums in sought-after districts, such as Shinjuku and Shibuya; and brand-new investment residences in high-demand areas such as Minato, Chiyoda and Tokyo Bay. While OrangeTee's current focus is primarily on residential and retail investors, it said on Thursday (Aug 21) that its partnership with Tokyu Livable will also support clients exploring other strategic asset classes, such as hospitality, boutique developments and commercial assets in major cities like Tokyo and Kyoto. This would apply particularly to institutional and business-to-business (B2B) clients in Singapore and the region, it added. OrangeTee will provide end-to-end support, including curated property tours, personalised consultations and regular market insights, to help clients navigate the Japanese real estate market. A NEWSLETTER FOR YOU Tuesday, 12 pm Property Insights Get an exclusive analysis of real estate and property news in Singapore and beyond. Sign Up Sign Up 'The curated property opportunities undergo strict due diligence and come with the option of in-person viewings prior to transaction,' it said. As at Thursday, there were four listings of residences in Japan on OrangeTee's website. This included freehold one-bedroom units spanning 576 square feet (sq ft) in Tokyo's Asakusa area from around 69.8 million yen (S$607,570), and freehold two-bedroom units sized 593 sq ft in Yokohama from around 83.8 million yen. Steven Tan, director of OrangeTee International, noted that Japanese real estate is compelling for investors, given its stable yields, accessible financing and the growing demand for quality homes. 'Importantly, by backing (investors' exclusive access to Tokyu Livable's portfolio) with personalised consultation, on-ground local insights and seamless transaction support, we are making property investment in Japan more accessible than ever,' he added. Japan has long been a favourite among Singapore-based property investors, who continue to plough money into the market despite falling global interest rates . Earlier in June, for instance, Frasers Hospitality launched Yotel Tokyo Ginza for business and leisure travellers. Real estate and private-equity firm Patience Capital Group also partnered with Hong Kong-based Gaw Capital to acquire Tokyu Plaza Ginza for more than US$1 billion in February. In the past decade, OrangeTee's B2B division in Japan has transacted more than 50 billion yen worth of assets across the residential sector, as well as in offices, hotels, assisted living, dormitories and land. Clients include large family offices and Singapore real estate investment trusts. 'We are now broadening this focus to include the retail residential market, thereby extending our footprint beyond institutional engagements,' said OrangeTee chief executive officer Justin Quek. Market observers attribute the strong interest to the country's relatively low borrowing costs and yields that have remained in the 3.5 to 4 per cent range. The yen's continued depreciation has made Japanese assets more affordable for Singapore investors too. Quek, who is also deputy group CEO of Realion Group, added that the latest move is part of the group's aim of building an integrated regional real estate services platform. 'Japan is a key market in our growth strategy and deepening ties with Tokyu Livable strengthens our capabilities to serve both institutional and retail clients across asset classes,' he said. An investor seminar will be held on Sunday to kick-start the launch, with a team of OrangeTee consultants sharing market insights and opportunities in Japan. Established in 1972, Tokyu Livable is one of Japan's largest real estate providers with 198 offices across the country. Currently, it has 228 locations in its domestic network, covering areas such as Tokyo, Kansai, Nagoya, Sapporo, Fukuoka and Tohoku. The company in 2014 acquired a 22.5 per cent stake in OrangeTee. Beyond Japan, OrangeTee offers listings in other international markets such as Australia, Dubai, Malaysia, New Zealand, Thailand and the United Kingdom.
Business Times
7 hours ago
- Business Times
Fed's expansive experiment in strategy to get a reboot at Jackson Hole
[JACKSON, WYOMING] The US Federal Reserve's pivot towards the labour market in 2020 will get a reboot on Friday (Aug 22) when Fed chair Jerome Powell is expected to release a new framework for the central bank that accounts for a half-decade in which inflation surged, jobs were plentiful, and uncertainty became the watchword. The new document may not completely discard the language rolled out when the Fed, in the midst of the pandemic and a burgeoning social justice movement, pledged not to short-circuit labour market gains on the mere threat of inflation in hopes of achieving 'broad-based and inclusive' levels of employment. But Powell has flagged that a recalibration is coming, potentially emphasising stable inflation as a foundation for the best labour market results, and relegating some ideas to times when the economy is abnormally weak or inflation is abnormally low, as occurred in the decade before the pandemic. In those years, as the Fed organised a nationwide series of community listening tours, staffers would ask about inflation and 'people would look at us like we had two heads. It was not the topic' when employment and growth concerns were more paramount, said Duke University professor Ellen Meade, who helped organise the 2020 framework review as a top Fed adviser. 'The world looks very different today.' Powell has already acknowledged that the language adopted in 2020 had been overtaken by the surge of inflation during the Covid-19 pandemic and was likely on its way out. He is expected to detail the new strategy document when he addresses an annual Fed research conference on Friday. Minutes of the Fed's Jul 29-to-Jul 30 meeting released on Wednesday said the committee was close to finalising changes to its statement of principles and reiterated that it 'would be designed to be robust across a wide range of economic conditions.' BT in your inbox Start and end each day with the latest news stories and analyses delivered straight to your inbox. Sign Up Sign Up The current approach has been criticised for introducing complexities that may have slowed the Fed's response to emerging inflation in 2021 and proved irrelevant to how the economy evolved during the pandemic. Much of what was introduced in 2020, especially a controversial promise to allow periods of high inflation to offset low ones so it averages 2 per cent over time, grew out of the Fed's experience trying to lift interest rates from near-zero where they had been mired after the 2007-to-2009 recession. That approach may remain appropriate during prolonged economic weakness, said former Fed vice-chair Richard Clarida, who helped oversee the last framework revisions. But the approach for normal times may revert to the more straightforward inflation-targeting the Fed previously used. 'A verbatim reading of the 2020 statement holds up pretty well operating in the environment the Fed had been operating in for a dozen years. Inflation below target. Secular stagnation,' said Clarida, now global economic adviser for Pimco. But '2025 is not 2020. We have policy space.' The Fed's current benchmark rate is set between 4.25 per cent and 4.50 per cent, but had been a full percentage point higher last year, a level more in line with prior decades. From around March 2008 to September 2022 it was never above 2.5 per cent. Rethinking tradeoffs The challenge for Powell and the Fed now will be to avoid the appearance of giving up on the labour market in favour of an inflation-first approach. The job market recovered slowly from the 2007-to-2009 crisis, but the unemployment rate eventually fell well below the level Fed officials regard as consistent with stable inflation. Yet inflation remained tame, sparking a small revolution in thinking. Rather than seeing an inevitable tradeoff between inflation and jobs, policymakers decided they no longer needed to view a low unemployment rate as a sign of inflation to come. Job gains could continue until there were more obvious signs of rising prices. As the pandemic threw millions out of work, Powell at the Jackson Hole forum in 2020 spoke about the Fed's 'appreciation for the benefits of a strong labour market, particularly for many in low- and moderate-income communities,' and described a new strategy that 'reflects our view that a robust job market can be sustained without causing an outbreak of inflation.' The approach added to an emerging Republican critique of a 'woke' Fed that downgraded price control to address income inequality. But it also was true to what the data suggested in the 2010s, and again more recently when the unemployment rate fell to very low levels even as inflation declined, defying many mainstream economists' predictions that high unemployment would be needed to lower inflation from its peak in 2022. Though the Fed's two congressionally mandated goals of stable inflation and maximum employment are considered equally important, Powell has begun using a formulation in which stable inflation is described as necessary for the job market to reach its potential – an approach that would let the Fed justify steps to fight inflation as still consistent with its employment goals. 'Without price stability, we cannot achieve the long periods of strong labour market conditions that benefit all Americans,' Powell said at the press conference following the Fed's July meeting. Meade said that harkens back to an approach former Fed chair Alan Greenspan used to try to balance the two sometimes conflicting priorities, even if the understanding of how low unemployment does or does not influence inflation has changed. 'You achieve price stability and that lays the groundwork for maximum employment...I do think Powell found his way back to that framing,' Meade said. 'You have to get to price stability first and that is in the front part of their brains.' REUTERS
