Japan needs an end to worrying and a start to spending



In the days after Japan's March 11 earthquake and tsunami, regular advertisements disappeared from television screens and were replaced with a repetitive cycle of messages urging the nation's citizens to show consideration to each other, hug their kids and refrain from buying stuff they didn't need, as the scale of the disaster became clear.

Paying for the ads was Japan's Advertising Council, a body funded by corporations, advertising agencies and broadcasters. At its head is Nobutada Saji, the patriarch of the family that owns the beverage maker Suntory.

Yet while being nice to your neighbour is sound advice, by urging consumers to forgo non-essentials or little luxuries, some of which the group's members make, the band of well-meaning businesses may have done more harm than good.

The estimated US$300 billion (Dh1.1 trillion) it will cost Japan to recover from the devastating tremor far exceeds that put aside after the 2003 South East Asian tsunami or what is being paid to fix the destruction in New Orleans and its suburbs by Hurricane Katrina two years later. And being a rich, developed nation means the Japanese are going to have to find nearly all the cash themselves.

Having a nation of vibrant shoppers would make that hunt an easier job than in an economy with people holed up at home, going out only to stock up on bread, rice and water.

In the month and a half since Japan's quake, a degree of normality has been restored. Store shelves are no longer half-empty, and in Tokyo people seem to be back in restaurants and bars.

Even the foreigners who fled as Tokyo Electric Power's crippled nuclear plant began spewing radiation are returning. The nuclear crisis may continue for many more months, but anxiety levels are easing. The chill on consumer spending, however, seems to have taken hold.

Hardest hit are the luxury shops struggling to lure consumers, who are preoccupied with searching out the basics.

J Front Retailing, the Japanese department store operator that operates Daimaru and Matsuzakaya outlets, told investors this month that it expected its operating profit to shrink by a third this business year. Its rival Takashimaya, popular among foreign tourists, predicted a 12 per cent contraction.

A recent series of retailer earnings reports have also highlighted a shift in consumer habits since the disaster last month, which has claimed up to 30,000 lives.

Recession-minded shoppers, it seems, are lowering their sights to cheaper wares, while stocking up on everyday basics continues. It means that the big general merchandisers, led by Seven & I Holdings, which operates some 13,000 7-Eleven convenience stores in Japan, are feeling the pain less.

The giant Japanese retailer expects its earnings to nudge up, albeit at a much slower pace than the previous year. One winner may be Fast Retailing, the owner of the Uniqlo chain, Japan's leading retailer of casual clothing, which is often likened to Gap of the US.

When recession hits Japan, which over the past two decades has been often, Fast Retailing does well. Its performance after the Lehman Brothers shock in 2008 made its founder, Tadashi Yanai, Japan's richest man for two years in 2009 and last year, according to Forbes magazine.

How long and deep Japan's post-quake recession will be is as yet unclear. But Bank of Japan officials fear the current quarter will herald a severe contraction in business, suggesting the country will be releasing some ugly economic data a few months from now. And because consumers account for about a half of GDP, their unwillingness to spend is likely to be a big factor behind that big squeeze.

It might please Mr Yanai, but it is bad news for a government already wallowing in the industrialised world's highest national debt, at about twice GDP.

Less revenue from a squeeze on sales at cash registers, lower household income and a drop in corporate tax means it will have to borrow even more to rebuild its north-east prefectures. In turn, that will make state finances even shakier and provide the seed of a financial meltdown that could a few years later rip through global money markets if Japan defaulted.

So the sooner companies stop fretting about the moral fibre of their battered nation and get back to enticing its citizens to spend their wages on the things they can do without, the better for Japan, its economy and the long road of reconstruction it has just embarked upon.

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The more serious side of specialty coffee

While the taste of beans and freshness of roast is paramount to the specialty coffee scene, so is sustainability and workers’ rights.

The bulk of genuine specialty coffee companies aim to improve on these elements in every stage of production via direct relationships with farmers. For instance, Mokha 1450 on Al Wasl Road strives to work predominantly with women-owned and -operated coffee organisations, including female farmers in the Sabree mountains of Yemen.

Because, as the boutique’s owner, Garfield Kerr, points out: “women represent over 90 per cent of the coffee value chain, but are woefully underrepresented in less than 10 per cent of ownership and management throughout the global coffee industry.”

One of the UAE’s largest suppliers of green (meaning not-yet-roasted) beans, Raw Coffee, is a founding member of the Partnership of Gender Equity, which aims to empower female coffee farmers and harvesters.

Also, globally, many companies have found the perfect way to recycle old coffee grounds: they create the perfect fertile soil in which to grow mushrooms.