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While innovation and specialisation may be driving Japan's lifestyle sector, the spectre of increased consumption tax still stalks the market

Opinions were divided at the 2013 IFFT/Interior Lifestyle Living Event in Tokyo. Was the country's economic recovery truly underway or was this just yet another false dawn for Japan in the run-up to 2014's consumption tax hikes?

Photo: The IFFT 2013: where Japan’s finest homeware products came to the table.
The IFFT 2013: where Japan's finest homeware products came to the table.

The sentiment at the 2013 IFFT/Interior Lifestyle Living event fair can best be summed up in one phrase: "When the going gets tough, the tough get going." Despite the continuing uncertainty over a range of economic factors and a domestic market that seems to be less than impressed by its government’s attempts to stimulate growth, many of the companies here were looking well beyond the current lacklustre financial situation.

Instead, many of the exhibitors at the fair – Tokyo's leading trade event in the furniture, home textiles, tableware and interior materials sector – were focussing on creating demand through innovative and attractive products. This created a positive mood that flew in the face of many of the looming negatives – with next year's hike in consumption tax the ever-lurking bogeyman.

It was, perhaps, a shame that Hong Kong companies seemed to lack this same positive spirit. Although the event enjoyed considerable international support – including the debut of a Thai pavilion – no Hong Kong companies made the trip to Tokyo this year.

What, then, did they miss? Well, two of the year's more prominent trends were a growing focus on adjustable furniture and an increasing fascination with home improvement. According to a number of attendees at the event, it is a change in residential patterns that is driving the growth of the latter.

The long-term slowdown in the housing market has seen many Japanese home owners resigned to staying longer in one place, rather than making the frequent moves common in the past. This has inevitably led to a growing culture of home improvement and refurbishment. A number of companies in the fabrics and woodwork sector have been quick to latch onto the potential of this expanding sector.

Alongside this austerity-born trend, however, there were also gratifying signs that a return to more luxurious living may be in the air. This has been fostered by a number of recent economic developments, with the booming stock market, for instance, clearly benefiting certain sectors of Japanese society.

One of the more impressive luxury items on display was a range of baths with a "Zen" vibe, all fashioned from slow-growing hinoki trees and on offer for around US$10,000. Similarly exquisite were a selection of beautifully coloured and translucent Mexican onyx lamps, on sale for between US$600-$2,500.

While undoubtedly impressive, this new generation of luxury goods was somewhat eclipsed by many of the new and more innovative ideas on show. It was here that the show came into its own, with many companies demonstrating their ability to inspire the markets with new ideas.

Tina Chang, an international sales rep for Tay Huah Furniture Corporation, a Taiwanese furniture maker, confessed herself impressed with the creativity on show at the 2013 event.

Reflecting on her experience, she said: "I've seen a host of new products at this exhibition. If you compare it with similar events in Malaysia or China, then this one clearly has something special going on, particularly with regard to its impressive range of middle to high-end products."

Among the many products that caught her eye this year, several truly stood out. Most notably, these included miniature furniture for children, a ceramic iPhone holder and amp, and a novel umbrella (the "Unbrella"), retailing for US$90. The Unbrella's particular selling points included a roof-mounted propelling and securing mechanism, allowing more space for the wielder to shelter below. For easy of storage, it is also self-standing once in the folded position.

Tay Huah, Chang's own company, had brought its range of self-adjusting chairs to the event, with each unit designed to automatically adjust to the weight and posture of any user. Even the company's entry-level stack chairs featured a unique sliding mechanism built into their base, designed to facilitate easy user customisation. Its upper range of swivel chairs sold for around US$600 and came complete with armrests and headrests that contoured in line with body shape, while providing sufficient resistance to maximise comfort and support.

As well as looking to promote its own brand, Tay Huah was also in Tokyo in the hope of securing OEM business. Overall, the company has a tendency only to attend trade shows when they have something particularly new to promote and, in fact, this was its first visit to Tokyo for three years.

Explaining its absence, Chang said: "We came in 2002, 2006, and 2010, but then stopped after the earthquake. If we have a good enough product, we come to Japan. We're not worried about people forgetting us in between fairs, though. That might be a concern for those companies that make very run-of-the-mill products, but we think we offer something special and that buyers will remember us."

According to Chang, the company works hard to maintain awareness among its clients, sending information and updates via email, as well as arranging visits by its reps. In its experience, however, the exact look and feel of a chair is hard to convey without giving buyers a chance to sample it for themselves – hence the company's longstanding commitment to trade shows.

While Tay Huah's philosophy is that true quality will find a market no matter what the prevailing conditions, other companies were more inclined to tailor their wares to the current economic reality and the particular preference of the local market.

For Rida Srilomsak, the General Manager of Bangkok-based CTV Intertrade Co Ltd, a fabric, upholsteries, and bag specialist, the Tokyo show proved a lesson in the very real differences between Japanese and Chinese markets.

Summing up her findings, she said: "Here in Japan, I feel that everybody is saving money. In China, people buy everything. It's very different. The Chinese are open to everything and they like bright colours and decorations, but the Japanese like plain design, something softer and more ecological. Next time we will definitely bring more plain items."

While most exhibitors were apprehensive about the looming rise in consumption tax (increasing from 5% to 8% as of April 2014), a number of others took a more sanguine approach. Masanobu Yamashita, the Chief Executive of the Osaka-based Koyo Corporation, a maker of moving parts for adjustable furniture, actually went as far as to express approval.

He said: "Japan has the lowest consumption tax of all the developed countries. In fact, by global standards, Japan's tax regime is too low. After the April rise, consumption will slow down for a few months, but then it will pick up again. I think this will help stabilise the macroeconomic situation. I think it's a very necessary step for the Japanese economy."

For 2013, Koyo debuted three new items at the event – a micro pitch gear with 45 positions (for use in sofa back and head rests), a freelock gear (for reclining furniture), and an extendable table leg (for adjusting the height of desks). With 70% of the company's business now coming from overseas markets, Yamashita is well-placed to take an overview of current international trends. Perhaps with a touch of enlightened self-interest, he sees a particular rise in the demand for adjustable furniture.

He said: "In Germany and Italy, most of the new sofas come with adjustable functions. Japanese consumers have long had a preference for such flexibility and a number of the foreign markets are heading in the same direction."

Photo: Smart, functional and disposable: Japan’s latest furniture trend.
Smart, functional and disposable: Japan's latest furniture trend.

Unlike a number of more cynical observers, Yamashita did not see a definite link between the demand for adjustable furniture and certain less desirable consumer developments. Many others have seen this need for customisable furniture as a consequence of the older demographic and the higher levels of obesity in many developed countries.

Giving his take on the upturn in demand, Yamashita said: "I feel that the economy is getting better and better, with people starting to spend their money. It's clearly better than last year."

While the jury's still as to whether the market is actually improving, there is, at least, consensuses as to the fact it has changed dramatically. In recent years, two competing trends have rewritten the rules in the Japanese consumer market. On the one hand, articles long seen as disposable, suddenly aren't, while those once seen as transitory are now in it for the long-haul.

In the past, for instance, Japanese consumers used to typically invest in high-quality designer clothes, choosing items that would have a long wardrobe life. By comparison, far less was spent on furniture, with the preference being for low-quality, highly-replaceable items. That situation has now, almost entirely, flipped. The most popular clothes are now cheaper and far more disposable, while far more is invested in furniture. This is because many consumers are now opting to purchase multi-function, ornate furniture that is seen as a long term investment.

Overall, Koyo sees this changing consumer landscape as working to his benefit, believing that a higher quality threshold is more in line with his own company's philosophy and allows him to invest more in the manufacturing process.

He said: "For furniture makers, it's essential that they choose reliable fitting manufacturers and that costs money. If you make a good frame and use good fabric material, but your fittings are substandard, then all of your efforts have been wasted."

A wasted effort has also been the verdict, in the more cynical quarters at least, on the likely impact of Abenomics, Japan's relatively new fiscal regime. Many, though, are more open-minded, believing the full impact has yet to filter through to the Japanese consumer market. Mikihiro Oguri, the President of luxury bath maker Hinokisoken, believes, however that things are actually already on the up.

He said: "For us, sales are growing, albeit slowly. After the Lehman collapse and then the earthquake, business was down, but last year things were up, and the same is true this year."

Oguri's experience suggests a rise in disposal income – particularly on the part of those benefiting from the country's booming share market – may be starting to feed into the consumer sector. He did, however, concede that, as his company is selling into the luxury hotel sector, it could be benefiting from investment in the hospitality sector in the run-up to the 2020 Tokyo Olympics.

Photo: The Unbrella: providing shelter from looming tax hikes?
The Unbrella: providing shelter from looming tax hikes?

IFFT/Interior Lifestyle Living was held from 6 to 8 November 2013, and attracted 19,268 visitors, representing a slight increase on last year's figures.

Marius Gombrich, Special Correspondent, Tokyo

Content provided by Picture: HKTDC Research
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