Saturday, February 13, 2010

Exploding the Myth of Expensive Japan

I find it odd that Japan is still thought of as a prohibitively expensive place. Sure, compared to other Asian countries like Korea or Thailand it is, but even compared to America right now it's not all that bad. Even though things are changing, why does this myth linger?

Japan's reputation as a pricey place started in the '70s when its miracle economy started to take off. I recently read Paul Theroux's The Great Train Bazaar, in which he takes trains all over Asia and Europe, and even then (early '70s) there were wild rumors of $40 cups of coffee in Japan. This persisted through the wild Bubble '80s, when Japan was one of the richest countries in the world and people ate gold just because they could.

I first went to Japan in 2004 and Tokyo at that time reminded me of San Francisco in terms of cost of living. Apartment rentals were high but similar to what I was used to at home in the Bay Area. Since then, rental prices have come down. It's possible to get a studio apartment (much like the picture to the right) in central Tokyo for around $600 a month now. Try getting that in SF.

But take a look at an apartment rental site like Apamanshop and you can see just how cheap it can get. Sapporo is one of Japan's largest city and there are literally thousands of vacant apartments, many for under $200 a month. And not all of these are of the rabbit hutch variety either. Some have full kitchens, or a second room. And the dreaded key money—two or three months rent as a move-in gift to the landlord—has been lowered to one month in many cases. And hey, if rent is only $200 a month, what's another two bills?

The Japanese fondness for expensive things ("If it costs more it must be better"), born in the boom of the '80s, is also changing. Today young people want "fast fashion," cheap chain outlets like Uniqlo and Forever 21. They're even famously buying jeans at the grocery store. With 15% of Japan's population under the poverty line this makes sense. If people don't have a lot of money they can't keep spending, so lower the cost of goods to match what people have in their wallets and keep the market moving.

However, Japan can still be expensive. The cost of food is really high. Japan spends more on food (and I don't mean eating out) than most other countries. And because of strict import rules, electronics are all made domesticly and sold at high prices regulated by the government. There's no cheap Chinese food processors or toaster ovens here. And of course the $6 orange juice and $8 cake set are standard prices in fancy cafes.

Almost 20 years of recession have changed Japan from rich to, well, not so rich. Japanese still like to spend money—it's a shopper's paradise—but the difference is now the things they're buying cost $10 rather than $100.

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