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1. Enlightened optimism

With the dawn of the Reiwa era, and preparations for the Olympics underway, Japan is embarking on an exciting new chapter in its history. This chapter relies on the best of the country’s old traditions, while also embracing new thinking. The challenges that Japan faces are not new: an aging population, slower growth, issues of social isolation, and regional tensions, to name just a few. Optimism does not require being naïve or ignorant of these challenges – instead, it’s about believing that Japan’s strengths can be used to address its weaknesses, and that everyone (businesses and citizens alike) have a role to play in shaping a brighter future.

2. Not stagnant, but resilient

It’s become clear in the past decade that many of the major challenge faced by Japan aren’t unique to Japan’s situation alone. It’s only that Japan arrived at these challenges first, and now the rest of the world is catching up. The upside is that Japanese businesses have enjoyed a head start in developing the resilience needed to win the future. There is an opportunity for Japanese brands in all categories to serve as global examples for nimbleness, resilience, sustainability, and innovation. The time has come to reframe the story: Japan is not a cautionary tale of stagnation, but rather an example of how countries can resiliently adapt to age of uncertain growth.

3. A focus on Trust and Purpose

There’s more to building strong Japanese brands than cool technology and cute mascots. Functional excellence is no longer enough for brands to succeed in Japan, and neither is Brand Love. Instead, brands of all types need to create associations of Trust and Purpose in consumers’ minds. Japanese brands with high Trust scores are worth 55 percent more than brands with low Trust scores, while brands with high Purpose scores are worth 50 percent more than those with low Purpose scores. In a mature and crowded market like Japan, brands that reflect peoples’ higher values stand out for the better, while those mired in scandal face swift backlash on social media.

4. E-commerce matters

According to Kantar Worldpanel, Japanese e-commerce sales totaled $122.46 billion in 2018, a figure second only to China in the Asia-Pacific region. This is an impressive sum, but there is space to grow. In the Fast Moving Consumer Goods (FMCG) category, for instance, e-commerce purchases made up some 7.6 percent of all transactions by value – a greater proportion than in U.S. and Taiwan, but much less than e-commerce’s share in South Korea and Mainland China. Japan also lags behind China and South Korea in terms of e-commerce penetration and transaction frequency. Going forward, Japanese e-commerce will grow in two ways: On the platform level, brands like Rakuten and Zozotown will continue to improve their design and infrastructure. And on the product level, businesses will optimize their offerings with e-commerce in mind – as in the case of Shiseido’s 2017 launch of its online-only, Millennial-focused Recipist brand.

5. Accountability is in

Japanese brands and businesses are more scrutinized than ever, and need to take proactive steps to explain their intentions and guard their reputations. Corporate governance scandals are nothing new, of course. But social media has increased brands’ exposure to feedback from ordinary citizens. And an increasingly global economy has given activist investors, regulators, and the press more influence than ever on boardroom operations. In this environment, transparency should not be a last resort or a means of damage control, but a preferred way of doing business.

6. Collaboration amid competition

Japanese brands face more competition than ever at home and abroad. New entrants and disruptive technology are constantly changing the status quo, while some of the biggest business opportunities of the day – in areas like automation, green technology, and high-speed wireless networks – also require the some biggest capital expenditures. In response, Japanese businesses are forging alliances both intuitive and unexpected. For example, Toyota recently aligned with Subaru, Mazda, Suzuki, and Daihatsu to develop electronic vehicle platforms, and has also partnered with Honda and Softbank on autonomous driving research. Mitsubishi UFJ and SMBC have consolidated their ATM networks to save on costs. Panasonic is working with several convenience store brands to introduce automated teller technologies, while Line has partnered with a variety of financial institutions to expand its in-platform payment options. It turns out that the best way to compete may be to collaborate.