pms on gift products

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Product Market Study 2007

Gift Products Market in Japan

MATRADE TOKYO

Introduction



Gift-giving is a tradition of great importance in Japanese culture, and exchangingpresents is a significant part of interpersonal and business relationships in Japan.Return gifts are often presented by the recipient to the original gift giver, similar to the thank you gifts given to guests by the married couple at a wedding, whichmakes the market even larger.

There are some unique customary rules in gift-giving practices in Japan. For

example, the number “four” in Japan is sometimes considered bad luck becauseof its pronunciation, “shi”, is the same as the word for “death" in Japanese.Therefore, gift items in increments of four or monetary amounts containing four (e.g., 4,000 yen) are considered improper. White is a funereal color in Japan,therefore all-white material gifts should be avoided. In addition, chrysanthemumsare usually reserved for funerals, and should not be included in non-bereavementbouquets.

Since old days, Japanese have had traditional customs of gift-giving, representedas such as seasonal gift-giving (midyear “Ochugen” gift and year-end “Oseibo”gift), to express appreciation for continued good relationship toward family

members, friends, supervisors at work, business clients, etc.

However, changing lifestyles and the long-term recession influenced the gift-giving practices and the market. Recent Japanese gift market have witnessed atrend away from former traditional/formal/ceremonial occasion gifts, and instead,shifted towards a more personal style gift-giving. Even in Ochugen and Oseibo,adding to the usual popular gifts, mostly food and beverage items, people tend toselect gifts with originality, and/or something that are for practical use. Althoughtypically, popular products in the ordinary market are also popular as gift items aswell, Malaysian manufacturers must take into account of the market trend andtechnical rules in developing products to be sold as gifts.

Market size and Occasion

Gift market is estimated to be around 17 trillion JPY, worth 140 billion USD. Asmentioned above, most of these are food and beverage (mainly alcoholic) items.The largest category among personal gift is occasional gifts, much of which isaccounted for by gifts given on traditional occasions that are relatively immune tothe ups and downs of the economy.

The category most strongly affected by the long recession is corporate gifts. Inparticular, the trend remains strong for companies to limit both the quantity and

the unit price of business gifts and seasonal gifts, which have a stronglyinterpersonal or social character, due to anemic business performance.However, Japanese economy has shown recovery, which is a positive factor for the recovery of this category.The situation differs with the category of Sales Promotion gifts. In April 1996, theLaw Against Unjustifiable Premiums and Misleading Representation wasamended in ways that facilitate larger promotional campaigns and allow moreexpensive SP gifts, such as raising the maximum value of non-exclusive prizesfrom 1 million JPY to 10 million JPY. As a result, the market size has shown alarge increase.



Table 1Classification and Market Value Estimation of the Gift Market

* billion yen

Classification Current Market Value*

I. PERSONAL GIFTS

Memorial Gifts 3,100New Year’s Gift 400

St. Valentine's Day (February 14) gift 150White Day (March 14) gift 110

Children's Day (May 5) gift 75

Mother's Day (second Sunday of May) gift 520

Father's Day (third Sunday of June) gift 210

Respect-for-the-Elder's Day (September 15) gift 60

Christmas gift 410

Birthday gift 810

Wedding Anniversary gift 55

Others 265

Seasonal Gifts 1,820

Ochugen (Mid-year gift) 770

Oseibo (Year-end gift) 1,050Occasional Gifts 4,556

Engagement gift 290Bridal gifts to newly-weds 190

Reciprocal gifts to bridal gift sender 390

Childbirth gift 340

Matriculation, Job employment gift 260

Get-well gift 245

Got-well gift (return gift to Get-well) 190

Travel souvenirs 510

Housewarming gift 26

Condolence thanks gift 680

Buddhist memorial service return gift 445

Others 990

SUBTOTAL (I. Personal Gifts) 9,476

II. BUSINESS GIFTSMemorial Gifts 273

Commemoration gift 161

Housewarming (office/building) gift 63

Buddhist memorial service return gift 487

Seasonal Gifts 650

Ochugen (Mid-year gift) 290

Oseibo (Year-end gift) 340

Others 605

SP (Sales Promotion) Gifts 6,230Premiums, Novelties gift 3,440

Incentives gift 2,790

SUBTOTAL (II. Business Gifts) 1,508

GRAND TOTAL ( I.+ II.) 17,215

Reference: Gift Market Estimate, Business Guide-sha

Most Malaysian products have potential to be selected in these categories,except meat products and some types of fresh tropical fruits that are currentlyprohibited to importation, and maybe alcoholic beverages that are not dealt



among bumiputra companies. However, in fact, these are some of the examplesof popular gift items, along with other food & beverage products such as cookingoil, chocolates, etc. Not only foods are selected as gift items, though. Dailyhousehold consumable such as soaps & detergents is the second largestcategory. Combination of textile goods such as floor mats, slippers and towels ina set, handkerchiefs, clocks, jewelry boxes, cosmetic cases, wine glasses,interior decorative items such as picture frames are some other examples thatare popular as gifts. These trends offer opportunities for Malaysian products to

enter the Japanese gift market.

Import Trend

Any commodities have potential as gifts, and there are no statistics onbreakdown portion by regular/proper sales and gift sales. According to one of the buyer of gift general wholesalers, 70 – 80 % of gifts are domestic products,and 20 – 30 % are imported goods.

Some of the import statistics of major gift products are as follows:

Chocolate food ImportUSD Mil % Share % Chang

2004 2005 2006 2004 2005 2006 - 06/05

TOTAL 372 377 400 100 100 100 5

1 Singapore 70 85 106 18.9 22.6 26.7 25

2 Belgium 45 47 51 12.1 12.6 12.9 8

3 France 37 35 38 9.9 9.3 9.6 9

4 United States 42 34 34 11.3 9.1 8.5 -0

5 Australia 35 42 29 9.6 11.1 7.2 -30

9 China 15 13 13 4 3.6 3.4 -0

12 Malaysia 4 5 10 1.2 1.4 2.5 81.

Malaysia ranks 12th for chocolate food products, but is the largest exporter of cocoa butter, recording import market share of 40% in 2006. Currently,Malaysian chocolate products are more consumed as regular consumablesrather than as gifts.

Tea ImportUSD Mil % Share % Chan

2004 2005 2006 2004 2005 2006 - 06/05

TOTAL 193 181 179 100 100 100

1 China 108 99 87 56.22 54.6 48.8 -11

2 Sri Lanka 31 32 43 16.37 17.6 24.2 353 India 18 20 21 9.49 11.3 11.8 3

4 United Kingdom 11 10 8 6.03 5.6 4.8 -14

5 Taiwan 5 5 5 3.04 3 2.8 -5

15 Malaysia 0.057 0.051 0.13 0.03 0.03 0.07 153

Malaysia jumped its ranking from 21st to 15th in 2006, recording high growth,although it has much more to catch up with world leaders. One of the elementsfor the growth was the favorable sales of one of the Malaysian brand, alsoservicing the gift industry.



Soap ImportUSD Mil % Share % Change

2004 2005 2006 2004 2005 2006 - 06/05 -

TOTAL 138 140 151 100 100 100 7.2

1 Malaysia 33 32 33 23.7 23 22.3 3.82 United States 33 30 32 24.4 21.4 21.2 6.3

3 China 18 21 24 13.2 15.5 16 10.3

4 Thailand 5 9 12 4.1 7 8.2 25

5 France 8 9 10 5.8 7 7.2 10.2

Malaysia and the USA are the 2 major exporters of soap to Japan. Most of theproducts are imported under Japanese brand, and are also distributed in the giftmarket, especially in the Oseibo season.

Handkerchief ImportUSD Mil % Share % Chang

2004 2005 2006 2004 2005 2006 - 06/05

TOTAL 71 75 80 100 100 100 6

1 China 53 57 62 74.2 75.8 78.1 12 Germany 5 6 7 8.2 9.1 9.4 1

3 Malaysia 3 3 3 5.1 4.3 3.8 -5.4 Korea, South 4 3 2 6 4.4 3.3 -19

5 Italy 1 1 1 2.1 2.5 2.3 1

Handkerchief is one of the popular gift items as condolence thanks gift, given tofuneral attendants. This is a return gift for an obituary gift (incense money).

China, appearing at high rankings for all the above categories, is the largestsupplier of gifts. For Malaysia, it is important to maintain its high quality and

attractive designing for gift packaging, etc.

Marketing/Distribution Channels for Giftware Items

Gift general wholesalers represent the driving force behind both the corporateand personal gift markets. Gift general wholesalers choose from among manyproducts based on their dealings with many different manufacturers and producer region groups both inside and outside of Japan. They produce catalogues listingproducts developed especially for the gift market, and they also provide flyersand other forms of promotional materials planning. They operate mail order houses, group ordering clubs, and other types of new business ventures, in

addition to providing support for gift merchandise retailers.In addition to producing general catalogues and catalogues for the corporate andindividual gift market, gift general wholesalers also publish bridal gifts, funeralgifts, promotional gifts, luxury-grade gifts, imported gifts, and free-choicecatalogue gifts, with printing volumes and product categories changing anddiversifying more and more each year.

These catalogues usually do not list the name of the gift retailers. The retailersobtain copies of the catalogue and affix their own names before distributing themto consumers (both ordinary consumers and corporate users of promotiongoods), who then place orders with gift retailers.



Gift sales essentially involves offering customers copies of the catalogue,receiving orders from the customer, then placing orders with the wholesaler.Approaches to prospective large customers begin with the catalogue listings as astarting point, and after customer needs are identified, the catalogue can serveas a tool for proposing new product development. The larger the sales campaign becomes, the more essential it is to have a solid

product concept for the premium gift item and to do carefully targeted productdevelopment. Doing so requires both planning and proposal capabilities and, atthe same time, product procurement capabilities.

In a sense, the gift general wholesaler must assume the role of a maker without afactory, as is the case for other distributors. In order to meet the needs anddemands of the client, the general gift wholesaler must scout for products far andwide, and must be able to organize mass production of hundreds of thousands of units at low cost and in a very short time when needed. Moreover, since aproduct concept used in one industry cannot be used in another company’scampaign in the same industry, the general wholesaler has to have a vast

product line and must be able to come up with a proposal consistent with thecustomer’s corporate image.

Thus, the ability to plan, conceptualize, and collect information represents the lifeline of the gift general wholesaler. With product procurement becoming steadilymore global in scope, gift general wholesalers are eager to identify and importsuitable gift products from all around the world. Any product with design or functional features lacking in domestic products and that conveys as sense of theculture and way of life of the people in its land of origin is likely to attract attentionas a potential gift item.

Some gift general wholesalers specialize in corporate gifts, while othersspecialize in personal gifts. They have a variety of sales methods, includingcatalogue-based mail order, franchise chain stores, and company-ownedbranches and sales offices. The following companies are leading gift generalwholesalers.

Shaddy Company 4-20-12, Matsugaoka, Matsubara-city, OsakaTEL: +81-723-36-2216 FAX: +81-723-36-0716

Harika Corporation 1-44-10, Itabashi, Itabashi-ku, TokyoTEL: +81-3-3579-3112 FAX: +81-3-3579-1549

Sanki Company 1-9-16, Asakusabashi, Taito-ku, TokyoTEL: +81-3-5820-3435 FAX: +81-3-5820-3437Sabu Hiromori Inc., Supplier Division

3-5-12, Iwamoto-cho, Chiyoda-ku, TokyoTEL: +81-3-5821-3236 FAX: +81-3-5821-3235

Distribution systems in Japan are undergoing a phase of restructuring,characterized by disintermediation and steps to improve efficiency. Overseas



Table cloth4,900 JPY

Necklace1,900 JPY

Silk Sandal4,900 JPY

Cushion Cover 1,700 JPY

Coin case850 JPY

Photo stand800 JPY

Skirf 1,300 JPY

Source: local internet-sales agent

SEASONALITY

Manufacturers must take into account the most important factor of gifts which isseasonality, in other words, timing of delivery and sales. St. Valentine’s day(February 14) and White Day (March 14), for example:

The origin of these two days were strategically established by the confectionerymanufacturing industry, encouraging women to present men with chocolate astoken of love, and men to reciprocate for the chocolate they received a monthearlier with candies. Nowadays, women not only present chocolate to thebeloved, but to bosses and colleagues at work as “obligatory” gifts. However,

this leads to favorable relationship as business partner, and moreover, malebosses who receive 5 USD worth chocolates from his female staff are usuallyexpected to reciprocate with sweets that are of much higher value on White Day.

Roughly half of all chocolate sales for the entire year occur before and around St.Valentine’s Day. This indicates that importers will not aggressively purchasechocolates after March, in addition to the reason that chocolates do not sell wellduring hot summer season (July – September). This rule applies to other food &beverage products influenced by seasonal factors such as tea or ice cream.

Manufacturers must carefully plan production to be delivered by the requested

date, as it may sometimes create trouble between importers when shipment isdelayed.

PACKAGING

Although aforementioned that popular products in the ordinary market are alsopopular as gift items as well, in most cases, special packaging is requiredespecially for formal gift items, mainly food products.

During Oseibo and Ochugen period, goods are sold in form of multiples packedin a decorative box or combined with 2 or more related items, as shown below.

http://www.kcc.zaq.ne.jp/panpara/ml02.html









Farm Products Relaxation products

Juices and beers Home Cleaning products

Some Malaysian products, for example, tea, also comply with the requirement of the gift market by combining several flavors in one gift box, which is done by thelocal agent. Malaysian companies are advised to work closely with the Japanese

partner as there are unique customs and rules for gift-giving exercise in Japan,as mentioned in the introduction.

UNDERSTANDING JAPANESE HOUSING CONDITION

Since houses and offices are relatively small in Japan, it is difficult to decoratethem by hanging photographs or putting out large number of decorative items, asin the West. Therefore, products that are large in size are ill-suited to theJapanese market. To put it differently, though, once foreign manufacturersacknowledge these facts, they have the opportunity to propose and introduce giftitems that will sell well in Japan.

For interior goods to enhance room atmosphere, the Japanese expect hand-made, or items made of natural materials from ASEAN exporters includingMalaysia. Malaysian exporters should take note of this fact.

COLLABORATION WITH OTHER INDUSTRIES

Recent times have seen companies in different product categories or industriesforming alliances. In the gift market, this has manifested in the form of combination gift sets such as tea & teacup, rather than offering the same item inlarge quantities. This idea would offer wider opportunities for Malaysian

exporters, for example, combining leaf tea with pewter measure spoon, etc.APPENDIX 1 - International Exhibition/Show related to Gift

FOODEX URL: www.jma.or.jp/FOODEX/ The Tokyo International Gift Show URL: www.giftshow.co.jp/english

APPENDIX 2 - Companies specialized in decorative interior goods & tablewareCompany name BALS Corporation

Retail Shop name Franc franc

Address 1-19-4, Jinnan, Shibuya-ku, Tokyo 106-0031

URL www.francfranc.com

http://www.jma.or.jp/FOODEX/

http://www.giftshow.co.jp/english/58tigs/framepage1.htm

http://www.francfranc.com/

http://www.jma.or.jp/FOODEX/

http://www.giftshow.co.jp/english/58tigs/framepage1.htm

http://www.francfranc.com/



TEL 03-5459-7500

FAX 03-5459-7400

Reference 57 shops/Tablewares, Amenities, Interior goods, etc.

Company name Ryohin Keikaku Co., Ltd.

Retail Shop name MUJI

Address Nikko Ikebukuro Bldg., 4-26-3, Higashi-Ikebukuro, Toshima-ku,Tokyo 170-8424

URL http://ryohin-keikaku.jp/eng/

TEL 03-3989-4403

Reference 123 stores (Japan), 27 stores (overseas)/ <MUJI (No brand)> brand goods

Company name Sazaby Inc.

Retail Shop name Afternoon Tea

Address 2-11-1, Sendagaya, Shibuya-ku, Tokyo

URL www.afternoon-tea.net www.sazaby.co.jp

TEL 03-5412-1820

Reference Kitchen/tablewares, amenities, interior goods, etc.

Company name Asplund Co., Ltd.

Retail Shop name Timeless Comfort

Address Mita Hillside Bldg., 4-1-9, Mita, Minato-ku, Tokyo 108-0073URL www.timelesscomfort.com/top.html www.asplund.co.jp

TEL 03-3769-0788

FAX 03-3769-0668

E-mail [email protected]

Reference 23 shops/Kitchen/tablewares, amenities, interior goods,etc.

Company name Eishin K.K.

Retail Shop name Tapis Volant

Address 3-6-5, Morishita, Koto-ku, Tokyo 135-8330

URL www.eishin-kk.co.jp/tapisvolant/

TEL 03-3635-6719

FAX 03-3635-6718E-mail [email protected] [email protected]

Reference 6 stores / Asian furniture/interior goods/amenities

Company name SG Retailing

Retail Shop name Orange House

Address 6-2-11, Shimonagatani, Kouhoku-ku, Yokohama, Kanagawa 233-0016

URL www.orangehouse.net/

Reference 21 stores Table/kitchenwares, amenities

http://ryohin-keikaku.jp/eng/

mailto:[email protected]

http://www.eishin-kk.co.jp/tapisvolant/

http://www.orangehouse.net/

http://ryohin-keikaku.jp/eng/

mailto:[email protected]

http://www.eishin-kk.co.jp/tapisvolant/

http://www.orangehouse.net/

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