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Thread: Trusts, oligopolies and price-fixing the norm in Japan

  1. #1
    Twirling dragon Maciamo's Avatar
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    Post Trusts, oligopolies and price-fixing the norm in Japan

    After reading the very interesting book Japan as anything but Number One, I found out that the Japanese economy has been relying on practices that have been illegal for over a century in the USA. It mainly had to do with anti-trust laws which apparently don't exist in Japan.

    Price fixing is obvious to anyone who has ever been to Japan, for such things as food and drinks and transports (shinkansen and domestic flight fares being fixed on highway fees between cities). As a result, all cinemas (=movie theaters) nationwide charge a fixed 1800yen, and a domestic flight anywhere inside Japan cost more than a flight from Tokyo to Los Angeles or even sometimes London or Paris. There are also very few discounts on public transports compared to Western countries. "Under 26" youth discount, over 18 student discounts, group pass, or such are mostly unheard of in Japan, both for trains, cinemas and museums.

    Tying is more widespread in Japan than in any other country I know. This is common-practice with computers. For example :
    - Almost all big electronic shops (BicCamera, Sakuraya...) sell only brand PC's (Fujitsu, Sony, NEC, IBM...) with lots of mostly useless pre-installed programmes for 2 or 3x the price of an ordinary PC.
    - Departments stores sell "New Year packages" that aren't much cheaper than individual pieces to get rid of the unsold products.

    An startling share of the Japanese industries, such as transport, beverage, banking, media and telecommunication, would certainly be accused of Oligopoly in many EU countries.
    - ANA and JAL famously fix their prices on each other and try all they can to make smaller airlines go bankrupt by cutting their prices to seriously unprofitable levels on the few routes where small airlines operates, then take them over once they are in financial difficulty.
    - Japan may have hundreds of brands of drinks (included imported ones like Evian, Vittel or Nescafe), but they must all pass through one of the 5 major distributors : Suntory, Asahi, Kirin, Sapporo and Coca Cola Japan. The first four each have their own beer, coffee and (usually French) mineral water. About 90% of the vending machines in Japan belong to one of these companies, each distributing drinks from dozens of other companies and makng large profit from the oligopoly.
    - The Japanese banking industry has undergone tremendous changes in the last few years. All the 10 major banks have merged within 5 years, leaving only 3 megabanks on the market (Mitsubishi-UFJ, Mizuho and Mitsui-Sumitomo), plus dozens of tiny regional banks that often do not have branches outside their prefecture.
    - Commercial Japanese medias are doing all they can to converge into a tight oligopoly of five players. TV and Newspapers companies have all merged with each others, forming 5 duets controlling over 80% of the market (all the free TV market, were it not for NHK). These are Yomiuri Shimbun/NihonTV, Asahi Shimbun/AsahiTV, FujiTV/Sankei Shimbun and Mainichi/TBS and Nikkei/TokyoTV.
    - The telecom market is still mostly controlled by NTT (and NTTDocomo), with only moderate competition from KDDI and Vodafone on the mobile market.

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  2. #2
    Regular Member Timsan's Avatar
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    Interesting.

    I have heard of the rediculous cinema prices, its amazing anyone would still go :s, and I go to matinees so that I only have to pay $5 as apposed to $9
    "A single death is a tradgedy, a million deaths is a statistic." - Stalin

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    Price fixing is obvious to anyone who has ever been to Japan

    a domestic flight anywhere inside Japan cost more than a flight from Tokyo to Los Angeles or even sometimes London or Paris.
    the reason is planes are very expensive to maintain and airports need very much space. japan's area is very limited, especially areas suitable for airports.

    There are also very few discounts on public transports compared to Western countries. "Under 26" youth discount, over 18 student discounts, group pass, or such are mostly unheard of in Japan, both for trains, cinemas and museums.
    student discounts are my personal pet hate! i have never seen a student showing his student pass and getting these ten percent. for example i know an internet cafe: membership=€6 for one month-> prices=50 percent. student discount=10 percent, can NOT be combined with membership.

    Tying is more widespread in Japan than in any other country I know. This is common-practice with computers. For example :
    - Almost all big electronic shops (BicCamera, Sakuraya...) sell only brand PC's (Fujitsu, Sony, NEC, IBM...) with lots of mostly useless pre-installed programmes for 2 or 3x the price of an ordinary PC.
    is it really that much? i have seen pictures of stores who offer refurbished sega hardware, very priceworth.

    - Departments stores sell "New Year packages" that aren't much cheaper than individual pieces to get rid of the unsold products.
    a japanese would consider this as criticism. at least it is some 20 percent cheaper. here we have packages of adidas deodorant spray + shower gel, probably more expensive than the two products alone in an other shop. not to say adidas perfume is overpriced, but that's not true? people definetively need it.

    the new years wrapping is part of the increased price.

    happy new year, only 225 days until halloween.

    and what about the price for halloween supply in japan, like plastic spiders?

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    –é˜IŽ€‹ê! TwistedMac's Avatar
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    Quote Originally Posted by alexriversan
    student discounts are my personal pet hate! i have never seen a student showing his student pass and getting these ten percent. for example i know an internet cafe: membership=€6 for one month-> prices=50 percent. student discount=10 percent, can NOT be combined with membership.
    I love student discounts. In Sweden, students get discounts on many cool things thanks to the "central student board" or CSN. they're also the ones handling the lending of money to students.

    as long as youcarry their little card around you can get all sorts of good discounts. My favourites being 10% discount in Burger King and (you'll hardly believe this one) 10% discount on anything from Apple store. I got my iPod at 10% off.
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    –Ú˜^ Index's Avatar
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    Quote Originally Posted by Maciamo
    - Japan may have hundreds of brands of drinks (included imported ones like Evian, Vittel or Nescafe), but they must all pass through one of the 5 major distributors : Suntory, Asahi, Kirin, Sapporo and Coca Cola Japan. The first four each have their own beer, coffee and (usually French) mineral water. About 90% of the vending machines in Japan belong to one of these companies, each distributing drinks from dozens of other companies and makng large profit from the oligopoly.
    I'm no expert in economics so correct me if I'm wrong, but this particular aspect seems like a good idea insofar as it allows local companies to do well thereby maintaining more jobs for locals and putting money back into the local economy.

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    Twirling dragon Maciamo's Avatar
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    Quote Originally Posted by alexriversan
    the reason is planes are very expensive to maintain and airports need very much space. japan's area is very limited, especially areas suitable for airports.
    FYI, Japan's population density is lower than England's, England is 3x smaller, and England has many discount airlines (the most famous being EasyJet). Don't make me laugh abot Japan's lack of suitable areas for airports ! Almost every city, even small, has an airport in Japan. What's more land prices in Japan are also lower in average than in England, even Tokyo compared to London.

    a japanese would consider this as criticism. at least it is some 20 percent cheaper. here we have packages of adidas deodorant spray + shower gel, probably more expensive than the two products alone in an other shop. not to say adidas perfume is overpriced, but that's not true? people definetively need it.

    the new years wrapping is part of the increased price.
    I think you have no idea what I am talking about. First, you apparently have never been to Japan, and I haven't seen such New Year packages in Europe. I am not talking about wrapping, but a (normal plastic) bag filled with various unrelated products and sold together. The department stores staff tout them as "bargains" or "discounted goods", but in fact they aren't.

  7. #7
    Twirling dragon Maciamo's Avatar
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    Quote Originally Posted by Index
    I'm no expert in economics so correct me if I'm wrong, but this particular aspect seems like a good idea insofar as it allows local companies to do well thereby maintaining more jobs for locals and putting money back into the local economy.
    Of course it is good for the local (Japanese) companies ! This oligopoly on distribution allows a few companies to take a big share of the profit from imported products. That's the principle of such companies as Meiji-ya (sells almost only imported food) or Ajinomoto (eg. imports Kellog's, alcohol from around the world...), and just sell everything at a record high price (from 2 to 10x the price in Europe for European products), while keeping foreign companies outside Japan and thus minimising their profit. Very clever, but very protectionist too.

    Btw, did you know that Japanese beers sell about the same price as imported European beers in Japan ? The worst of all is that imported beers cost about 5x more in Japan than in Europe (either in shops or pubs). That means that Japanese beer makers can make not just 5x more profit, but maybe 10 or 20x, once the cost of production is deducted.

    Let's take the example that the cost of production is 10yen, the cost of distribution is 5yen, the margin taken by the shop is 10yen (both in Europe and Japan, as salaries as about the same), the average shop price per can/bottle is 50yen in Europe and 250yen in Japan. It means that the beer maker's profit is 25yen in Europe and 225yen in Japan, which is 9x more ! As the price increase in the same proportion from shop to pubs/izakaya, the additional profit is mostly made by the beer maker or distributor (often the same for Japanese beer maker : Asahi, Suntory, Sapporo...).

    No wonder Japanese companies are so rich. They are squeezing the money out of the Japanese people. But the average Japanes people are so compliant and submissive that the companies can easily do whatever they want. If fact it is no wonder that if Japan ranks 7th in GNI/capita (4th if tiny Bermuda, Luxembourg and Lichstenstein are omitted) it only ranks 17th in GNI/capita at PPP (purchasing power parity). At equal salary, the Japanese can buy much less than their Western European or American counterparts. This is due to the system mentioned in this thread. (data from World Bank)

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    I think you have no idea what I am talking about.

    First, you apparently have never been to Japan, and I haven't seen such New Year packages in Europe. I am not talking about wrapping, but a (normal plastic) bag filled with various unrelated products and sold together. The department stores staff tout them as "bargains" or "discounted goods", but in fact they aren't.
    i have never been in japan, true.
    you mean false labelling, i understand you. we have such packages here, they are even more expensive. one does not have to buy disliked things?
    for example, i could write: we have stores for wine here, ways far too expensive, basically made from grapes, and drinking wine is a health risk (mental health)

    though not fully false, i would not make firends: it is called negative talking. let the vinos have their glass now and then, if you ever have seen a clochard (french word) with a bottle of cheap wine.

    second thing, if you read the MAD magazine, you can easily deduct (academic word?) that the japanese would have to build more, bigger airports if more people are travelling by plane. and "they" do not want that, i guess. even if there are areas suitable for new airports, there is no permission or whatever.
    Last edited by alexriversan; Mar 20, 2005 at 01:35.

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    I love student discounts.
    nothing against students.

    but that's false wrapping: companies offering generous student discounts have to charge others more, let's say their prices are 20 percent higher, with student discount only ten percent higher.

    using preowned mainboards people pay fifty percent.

    well it is your consume option to have an ipod if you like it.

    probably sweden is explicitly firendly to students.

    the internet cafe offer for students (10 percent off) is not student firendly, because it can not be combined with regular membership, and that's just €6/month. however, it is not japan but dublin, though the internet cafe is offering "bubble tea"- but it rather seems to be chinese.

    i do not have anything against students or universities

  10. #10
    Twirling dragon Maciamo's Avatar
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    Quote Originally Posted by alexriversan
    but that's false wrapping: companies offering generous student discounts have to charge others more, let's say their prices are 20 percent higher, with student discount only ten percent higher.
    Well, maybe that's the situation in Ireland, but not in many other EU countries.

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    things can be complicated

    Quote Originally Posted by maciamo
    Well, maybe that's the situation in Ireland, but not in many other EU countries.
    (in another european country) there is a copy shop on the university campus. students go there because it is the shortest way. in the supermarket, it is 30% price the cafeteria on the same campus is subventioned otherwise, however just offering coffe and snacks. if customers buy the mars candy in a supermarket, it is slighly more expensive to go to the university campus cafeteria.

    means if students goto supermarkets they can save a lot of money though there is often no student discount. small kiosks are putting up "student discount" sometimes, exploitating sympathy feelings for students.

    but this would not be the case in japan... instead of this, combined offers at new year labelled as discount offer.

    now i do not wonder if people say "i do not understand this". are not people study to understand more. i try to provide "better understanding". out of philantrophy reasons. (this is how japanese companies label volunteer work)

    i admit i get a lot of impressions from the MAD magazine (north america).

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