Japan’s top 100: Global brands muscle in on traditional names

JAPAN'S TOP 100 BRANDS: RANKING ANALYSIS

Japan is still Asia’s most established brand market, riding on its historic commercial and industrial strength. There are more Japanese brands among Asia’s Top 1000 brands than there are from any other market in the region. But as our survey has documented over recent years, that lead is shifting and facing challenges, much like Japan's economy itself.

Turning to the top 100 brands among respondents from Japan, 30 of the top 50 brands in Japan in our survey, including eight of the top 10, are still Japanese. These include well-established legacy names like Panasonic, Sony, Sharp, Hitachi, Meiji, Suntory and Morinaga. Also underlining this stability is the absence of any changes at all to Japan’s top six brands this year.  

Yet a closer look at those top 50 reveals clear changes afoot. The biggest top 10 gainer this year was Visa (+3) which entered at number nine. The biggest top 20 gainer was Google (+7), jumping to 14th. And among Japan’s top 50 brands, the majority of international brands rose higher this year, with strong gains from Mastercard (+5), Cartier (+14) and McDonald’s (+11). 

However, the vast majority of all Japanese brands fell in our ranking, with some of the larger drops hitting Honda (-7), ANA (-8), Muji (-7), jam maker Aohata (-12) and drug store Matsumoto Kiyoshi (-5). It’s a trend that’s most noticeably upending Japan’s food and beverage industry, as we’ve explored in a separate article (see "Global food and beverage giants nibble away at Japanese brands").   

So what’s behind the trend? Are Japanese consumers changing or are foreign brands better competitors? Those who pay close attention to Japanese consumer markets say it’s a bit of both, but much more than that.

Global brands are outspending their Japanese rivals and localising better

“Japanese brands are still strong, but what’s happened is they are losing their advertising budget,” says Reiko Ogata, general manager of the global branding department at Dentsu’s Solution Intelligence Center in Tokyo. “Most of their marketing and communications is becoming below-the-line or on the promotional side, so they really don't create the kind of buzz they used to in TV advertisements,” she says. 

Instead, paying top dollar for big media placements are multinationals like Coke, McDonald’s and Google (all big gainers in our survey) who are marketing more visibly, Ogata says, especially on TV. And they’re striking a chord. A Google Japan ad (above) with heavy play during the Covid outbreak stood out in a study by Unruly as the most emotionally engaging campaign in the world. Ogata points out how consumers are much more likely to recall actively mass-marketed brands, “so we’re really seeing share of media voice reflected in the rankings,” she says.

Another factor is that many of these global brands are no longer considered to be foreign to Japanese consumers, since so many have done a really good job at localising their products.

Tomo Murakami, director at UltraSuperNew in Tokyo, points out how Nestle has made KitKat somewhat of a Japanese cultural phenomenon with its multitude of popular flavours like apple, banana and wasabi, which are often found only in Japan. Likewise, he points out McDonald’s has largely localised its menu, as has Coca-Cola with its family of beverages. Coca-Cola’s biggest sellers in Japan are ready-to-drink beverages like Ayataka green tea, not carbonated beverages like elsewhere, Ogata also points out.   

The Japanese brand lead on quality is giving way as GenZ seeks simplicity

What has set Japanese brands apart from foreign rivals for many years has been a higher standard of product. Be it food, electronics or autos, Japanese brands looked better, tasted better, or operated better than foreign rivals.

“Japanese consumers are drawn to brands that deliver innovation, design, quality, and most importantly, better suit the unique Japanese lifestyle,” explains Yukiko Ochiai, president and CEO of Grey Tokyo. “I believe that foreign brands are getting better with understanding the Japanese lifestyle with greater emphasis on these attributes.” Japanese consumers, she says, are willing to pay premium pricing for this, if the product delivers. And brands like Dyson, Apple and Google are examples of those who have successfully done this.

Apple opened Marunouchi, Tokyo's 5th and largest store last year.

Markus Winter and Sven Palys, co-CEOs of cultural consultancy Yuzu Kyodai in Tokyo still give Japanese brands top marks for local customer service, but they’re also seeing two trends coming together that are challenging Japanese brand dominance.

“The belief in ‘Japanese quality’ is an easy default,” argues Palys.  But when you look at what a well-to-do Japanese consumer wants to buy, he continues, it’s a German car, a Miele kitchen and Italian or French furniture.  

“After a long string of corporate scandals and mishaps, the trust in the unassailable quality and integrity of Japanese makers has been shaken; whilst at the same time, particularly in younger generations, we see a convergence of preferences and tastes with their global peers,” says Winter. He points to internet portals, ecommerce and telecom services as examples where domestic Japanese companies are being pushed out by names like Google, with its reductionist interface, and the likes of Apple, Farfetch and even Amazon with the clearer design language compared to the cluttered pages of domestic peers.

Just as importantly, Palys says he’s noticed increasing frustration over the past decade in the country over a lack of action on social issues, which Japanese brands haven't yet fully addressed.

“Particularly younger people feel that traditional Japan is not doing enough to adapt to their needs for inclusion, acceptance, and work-life balance. Western brands, through their long history of championing causes, now offer these consumers a way to show their social beliefs without having to actively participate in the politics they feel they can’t affect. This is an interesting reversal as in the past, these foreign brands were seen as unnecessarily noisy,” Palys says.

Why Panasonic is still No. 1 in Japan

If a new generation of consumers in Japan is warming to foreign entrants offering stronger experiences, then why has that not yet led to change at the top, where 100-year old Panasonic, deemed a ‘dinosaur’ by some observers we spoke to, still leads the pack?

One factor, Ogata says, is that Panasonic’s messaging has shifted heavily to promoting environmental responsibility and how sustainable its products are alongside how useful they are. In March, it developed a new brand film outlining it environmental vision to 2050 (see below). This appeals to both younger Japanese looking to the future as well as older generations whose lives are made easier.

“Panasonic may not be the coolest or the most innovative brand, but it does fall in the category of ‘the brand that makes the average consumer’s life’ better,” says Ochiai at Grey Tokyo.  She notes superior quality and consistent positioning have built strong trust and loyalty over time as a moderniser of Japanese homes.

“Panasonic is particularly good in developing products that have just the right amount of innovation,” Ochiai adds, pointing to how their uncomplicated appliances have easily understood benefits for consumers. Winter from Yuzu Kyodai agrees, noting Panasonic’s impeccable customer care and continuous product pipeline uniquely attuned to Japanese needs, like mini-dishwashers and cubic washing machines to fit cramped Tokyo apartments.

“Also I think we shouldn’t underestimate how important the virtuous circle of being number one is,” adds Palys, noting it is a safe choice when buying for your partner at home or your boss in the office.  “You are not going to get in to trouble for choosing Panasonic.”

MESSAGING MOVERS By far the biggest gainers on Japan’s Top 100 came courtesy of a the new ‘messaging services’ category we added this year.  Twitter rose 69 spots to hit 19th overall while Line gained 102 places, finishing 25th overall.  Contributors to this article emphasized to  Campaign how quickly LINE is superseding competitors as Japan’s integrated super app, facilitating cashless payments for shopping, transport and entertainment while being one of most important sources for information. Twitter meanwhile, appeals in its simplicity and anonymity in being able create multiple accounts and switch between them.

Article contributors (L to R): Reiko Ogata, Tomo Murakami, Sven Palys, Yukiko Ochiai, Markus Winter