Okamoto Industries, one of Japan’s leading condom manufacturers, has been hit by an unexpected “buying explosion” that has resulted in an unprecedented 22-year high share price and a reinvigorated marketing plan to boot.
As reported by CNBC, in only the last eight weeks, Okamoto has very quickly become one of the key buzz-names for investors: “Shares in the Tokyo-based company, Japan’s market-dominant producer of condoms, have broken out of a trading band they occupied for more than a decade and risen by more than 120 per cent. Few companies have benefited so spectacularly, it acknowledges, from having ‘Made in Japan’ stamped on products.”
It seems that inbound tourism is responsible for this unexpected surge in popularity. Chinese tourists, to be precise. According to the Japan National Tourism Organization there have already been just under 2.8 million Chinese visitors to Japan so far this year, and many of these tourists have a (not so) hidden agenda for their visits – shopping. In fact, the amount of money being spent by Chinese tourists in Japan has reached such extremes that a new term has been coined to describe the phenomenon: bakugai, or “buying explosion”.
As reported by The Japan Times, “Japan is increasingly China’s favored shopping destination. In 2014, spending by Chinese tourists was up 10.3 percent over the previous year – amounting to almost $2,000 per visitor.” Chinese trust in many of their own domestically manufactured products can be low due to “frequent product safety scandals and the rampant forgeries of designer goods” (The Japan Times).
Chinese forgeries, however, are not restricted to designer goods. Foreign condom brands (among which Okamoto is most popular) are also “faked” and sold throughout China on a huge scale. For Chinese tourists, buying the renowned Okamoto 0.03mm condoms (apparently the thinnest in the world) in Japan is the only true way of ensuring they are getting what they pay for – quality.
Okamoto’s president, Yoshiyuki Okamoto, was obviously caught off-guard, saying “It was totally unexpected… The best I can say is that we are looking at the situation calmly.”
His surprise is completely understandable considering that, until July, Okamoto was slogging it out in an overcrowded and shrinking domestic market, not helped at all by reports that suggest that Japan is one of the least sexually active nations in the world. One upshot of this situation is that, as reported by CNBC, “for a decade, drug stores across Japan have been reducing the shelf-space devoted to condoms at a rate of 5 per cent every year.”
The recent sales performance of his products has been a dream come true for Okamoto as it has served as a beacon of hope after battling the proliferation of inferior fake imitations for years and a lengthy conflict with a Chinese company that registered the Okamoto business name before the Japanese company was able to. It definitely hasn’t always been smooth sailing for the now famous condom company, but now riding the wave of the recent upturn, they are holding hope that Chinese tourists adding the product to their shopping lists will keep them ahead of the pack.
In an effort to capitalize on the Chinese obsession with Okamoto condoms, the company has now readied a factory in China’s Guangdong province to meet the rising demand, without having to compromise on quality or their competitive price point. The thing that has Okamoto most worried about this move is whether or not the “Made in China” status of the products will thwart their allure.
Okamoto says, “I am quite worried about that … But I’m also not sure how long this Chinese tourism spending boom is going to last.”