Home > updates > Research > The transformation of consumer patterns in Japanese society: Basic principles following changes in "people".

The transformation of consumer patterns in Japanese society: Basic principles following changes in "people".

Date: 2022-09-29Views:

Taking ancient lessons as a guide, we can understand the rise and fall. Our neighboring country, Japan, shares similarities with China in terms of income levels, population structure, and consumer choices. To some extent, we can draw on Japan's trends in consumption to anticipate opportunities in China's consumer market.

At Harvest Capital, we have observed that Japanese consumer brands, after going through several economic cycles, exhibit a notable resilience to economic downturns. What insights can this provide for Chinese consumer companies? In the upcoming series, we will share insights into the evolution of Japanese societal consumption and its implications for China.

We will be presenting the changing patterns in the Japanese consumer industry in four chapters:

Chapter 1: Patterns After Changes in "People"
Chapter 2: Patterns After Changes in "Places"
Chapter 3: Patterns After Changes in "Products"
Chapter 4: Implications of Japan's Consumer Evolution for China

In this edition, we will delve into the first chapter, exploring the patterns following changes in "people."

The patterns of change behind people's behaviors are discovered through a combination with the macro environment.

1. Japan rapidly achieved industrialization, and its development transitioned from fast to slow. In the early and middle stages, government industrial policies had a profound impact, while in the later stages, it was largely influenced by the industry and demographic structure.

2. During Japan's economic growth period, it highly coincided with the rapid growth period of the population.

Between the 1950s and 1970s, there were two peaks in childbirth. The early increase in population facilitated the absorption of the investment results of rapidly growing industrial enterprises. It also strongly supported the Japanese government's policy of expanding domestic demand, gradually forming an economic growth model dominated by consumption-driven factors.

Afterward, Japan's population stabilized at around 120-130 million, and the birth rate gradually declined. In the later period, with a decreasing birth rate, the phenomenon of population aging became more severe. Residents' willingness to consume decreased, leading to slow growth in the domestic economy.

3. Household consumption trends transition from basic needs to spiritual service demands, with overall demand slowing down in the later period.

In the final stages of rapid economic development (around 1975), household consumption expenditures surged, marking the beginning of the mass consumption era. During the period of slowing economic growth (1975-1990), various consumption demands rapidly expanded, with faster growth in expenditures on upgraded spiritual services. This reached its peak around the 1990s, followed by a slow decline in overall consumption expenditures until stabilization.

Aligned with the three major development phases of the Japanese economy and the cycles of changes in consumption expenditure amounts, the post-war Japanese societal consumption stages can be divided into three main phases:

1. The First Stage: The Era of Household Consumption (1945-1975)
2. The Second Stage: The Era of Individualized Consumption (1975-1990)
3. The Third Stage: The Post-Mass Consumption Era (1990s to present)

The Era of Household Consumption

1、industrial policy investments dominated Japan's industrialization from takeoff to maturity, with peak economic development at the beginning.

Due to early shortages of coal and electricity affecting production in Japan, the government led a 5-year plan for electricity and tilted the production method, leading to rapid growth in the manufacturing industry's output. For example, in 1973, three-quarters of Japan's energy demand was oil, with oil imports accounting for 99% of total demand. As the manufacturing industry's industrial output increased significantly, it needed to be absorbed by internal demand, prompting the government to issue a 10-year plan to double the national income. Subsequently, Japan completed the stages of industrialization from takeoff to maturity. In 1975, the per capita GDP was 1.98 million yen, 2.6 times that of 1960.

2. The Peak of Urbanization with Continuous Upsurge in the Real Estate Market

The continuous development of the steel industry and the improvement of industrial scale and intensive production capabilities have led to the rapid maturity of the construction industry.

Industrial clusters gradually formed, and the population density in areas around the industry increased, with industrialization promoting the increasingly perfect construction of supporting infrastructure for daily life.


3、Dominance of Population with Production and Consumption Capabilities, Mainly Large Family Structures

Japan's urbanization level developed rapidly, with the urban population growing quickly before 1975. The urbanization rate had already exceeded 70%, and there was a strong demand for housing. The real estate industry entered a long period of prosperity, with the average real wage increasing by 83% from 1960 to 1970.

After two baby booms post-World War II, the second one occurring between 1971 and 1974, the descendants of the first baby boom entered the childbearing age. During this period, the Japanese government did not actively encourage childbirth and even implemented policies to restrict it. This was done to prevent sudden population increases leading to a rapid expansion of demand and subsequent inflation. With fewer people in each household, the living standards of individual residents could be higher.

Before 1975, Japan's population steadily increased, and there was an abundant labor force. Although the proportion of elderly people started to rise continuously, the presence of two periods of high birth rates meant that the dominant population had both production and consumption capabilities. The majority of families had more than three members, and large family structures were still prevalent. The growth rate of core family numbers was at its historical peak.

4. Entering the era of personalized consumption: Mass production, mass consumption, and homogeneous consumption.


The overlap of economic cycles, domestic industry structure, and demographic composition gives rise to the beginning of the era of personalized consumption.

Era of Individualized Consumption

1. The oil crisis compelled Japan to optimize its industrial structure and enhance operational efficiency with precision.

2. External constraints and serious errors in internal regulatory policies led to the bubble economy crisis.

3. The number and employment rate of female workers increased significantly, fostering a sense of independence and contributing to additional household income.

4. The trend towards smaller households and an increase in the unmarried rate positively influenced consumer spending power.

5. Entering the era of personalized consumption, there was a shift from quantity to quality, with a focus on brands and differentiation.

6. There is a growing confidence in local brand culture, with a pursuit of both foreign brands and luxury items, seeking the ultimate balance between quality and cost-effectiveness.

Post-Mass Consumption Era

1. Economic conditions experienced a downturn and recovery, with no significant change in residents' wage income.

After the economic bubble, the government set a total limit on real estate financing. The introduction of a land tax and increased interest rates led to bank defaults, business closures and liquidations, a significant decline in stock prices, shrinking demand, and numerous business closures. The frequency of mergers and acquisitions in the market was deeply affected by the economic bubble and tended to be conservative.

During this stage, Japan did not seize the opportunity to adopt new production methods, such as global opportunities in ICT, big data, and the Internet of Things. There was a shortage of talent in these industries.

Abenomics stimulated domestic demand, continuously increased public consumption investment, gradually relaxed constraints on social capital in research and education, and showed signs of economic recovery. However, overall wage levels did not increase.

2. Japan is experiencing super-aging, declining birth rates, and an increase in single-person households.

The aging process in Japan has been rapid, continuous, and profound. With an increase in life expectancy, urbanization, rapid industrialization, rising incomes, and the promotion of the tertiary sector, there has been significant progress in medical services. However, the cost of caring for the elderly has increased. The country is facing serious issues of unmarried individuals, declining birth rates, accelerated family downsizing, and a significant proportion of single-person households, reaching close to 35%.

3. Consumer Contributions to Economic Growth Remain Stable, with a Noticeable Decline in Consumption Motivation Among the Elderly

The main consumers of food products are household heads aged between 30 and 70 years, and the aging population shows a clear decline in consumption of processed and restaurant foods.

Households with heads aged below 50 contribute the most to restaurant consumption, especially those headed by individuals aged 30 to 39.

Households with heads aged 60 and above have the highest proportion of spending on food, mainly due to a decrease in non-essential expenditures and a significant increase in spending on fresh ingredients.

During economic downturns, there is a noticeable reduction in non-essential cultural and entertainment expenditures, coupled with a lack of consumption motivation among the elderly. As a result, the overall scale of private consumption as a percentage of GDP does not undergo substantial changes.

4、 Processed Food and Beverage Retail Exhibits Significant Countercyclicality