Why Japanese people are getting wealthier and how businesses can leverage

There are now more rich people in Japan. JapanConsuming reported in March 2021, that the number of ultra-rich families increased by 3.6% in the past two years, but a huge 67% since 2005. More than 1.3 million households now have assets over ¥100 million, presenting an attractive market at the luxury end.

Art market boom and rise of the young rich Japanese

Toyo Keizai reports that investing in popular art pieces is booming amongst young entrepreneurs in their 30’s and 40’s as a result of their success in IT ventures. The SBI art auction reported in January 2021, that they have made 880 million yen in the midst of the COVID-19 pandemic. This was their second-biggest sale since they started the auctions in 2012. These kinds of new rich Japanese enjoy their wealth in a bold way and are keen to engage with new trends. 

Rich people in Japan in an equal society

Japan saw a sharp rise in high net worth individuals and ultra-high net worth individuals in recent reports by NRI. How about the lower-income households? A point often overlooked is that we’re living in a society where we don’t really have blue-collar or white-collar workers. In general, we don’t have a class system like in the UK and we’re often called a middle-class society. The latest unemployment rate ( February 2021) is 2.9%, far less than the rate of 5% in the UK. JapanConsuming notes that the average Japanese household overall had liquid assets of ¥28.8 million according to the same survey. As we’ve pointed out in the past, while this is far less than the richest households, it is still impressively equal compared to the situation in many countries – in the US, for example, many lower-income households have no savings at all. Together, Japan’s cultural background and these statistics indicate the degree of equality in society. Japan is not only one of the wealthiest nations in the world, but also one of the more equal. 

Ageing people and their substantial amount of assets

Japan’s ageing population is rising, but that doesn’t mean they’re tight with money. Over the course of their working age, most people save money for retirement. Especially for the Japanese, saving is a big topic and it is normal to have some kind of savings from a young age. In Japan, when you hear someone has no money, it doesn’t mean they have zero money in the bank. With this in mind, people can save a substantial amount of money by the age of their retirement. JapanConsuming reports, that a recent analysis by economist Jesper Koll notes that, for the baby-boom (Dankai-sedai) generation alone, over the next 10 years inheritance taxes could amount to ¥550 trillion, just about equivalent to Japan’s GDP. This indicates that this older HNWI market has more capacity to spend and the luxury brands and premium retailers can leverage this market to drive sales.  

Young rich Japanese people with part-time jobs

Are you curious about how students are using their pocket money? In general, university students in Japan work to earn money and some have pocket money from their parents. They usually work part-time and some can earn a substantial amount of money depending on the work/ profession they have. The survey carried out by SHIBUYA109 entertainment of 18-24 year-olds in March 2021, reported interesting results about how they use their pocket money. The most voted answer (23.5%) was entertainment and social expenses, the second voted answer (14.5%) was saving and the third (14.0%) was fashion & accessories. To summarize, young people carried on socialising, but less than usual. As a result, they have more money to save. Among those, 77.8% have savings and the average amount is 300,000 yen. Around 46% of them said the reason for saving more is to have more financial flexibility to purchase something. 29.3% of them are saving towards something in their mind and 23.5% enjoy saving money as it’s fun. In short, Japanese young people are yearning to spend their money. 

Career-focused rich single women

 In recent years, more and more women are advancing their career. Teikoku Data Bank reports that 31.3% of the companies that employ more than 301 people now have 30% or more women in a management position, the highest number since 2014. Around 40-60% of these women aren’t married nor have children. In terms of consumption, they often prefer quality over quantity. The survey conducted by My Navi women showed a change in spending behaviour for 20’s and 30’s working women during the pandemic. The most voted category for spending was food (32.3%). They said that they enjoy eating in general. Others said they are too busy cooking at home so they eat out often. Some also said they started using food delivery services and exploring more expensive fine food online. Interestingly, Ozmall found out that 57.7% of them said they will likely continue to explore and spend more money on food after the pandemic. Overall, spending on skincare products came third after saving. This presents an attractive market for food and skincare products companies. 

Understanding how consumer demand is shifting by income, age and geography will be important for decision-makers and entrepreneurs to succeed internationally.