Ever wonder why in New York, there are lines of Japanese tourists at Saks and Fifth Avenue? Or why wherever there are designer outlets, there are small middle-aged Asian women teeter-tottering from the weight of their designer haul?
The answer? Japan’s premium pricing.
When foreign goods enter Japan’s market, they become, by default, a ‘premium good’. This is the consequence of Japan’s government policy where protection tariffs increase the cost of foreign goods and informal cartels keep the pricing high. A $298 designer bag in the U.S. has a market price of $711 in Japan. However, with the advent of online auction sites and mid-street level brands like Uniqlo (which has their production site in China), Japanese consumers are becoming more and more disillusioned and dissatisfied with the high costs they price for designer goods. What will be interesting to see is if government policy will actually change or if Japanese consumers will continue to embark on ‘shopping trips’ to the U.S. and Europe for their fill of premium goods at Western market value.