Japan executives see risk, rewards as population greys

TOKYO (Reuters) - Japanese corporations, which have emerged leaner and more profitable thanks to lessons learned in the 1990s "lost decade" of economic stagnation, must now adapt to the country's ageing and declining population.

The challenges facing Japanese companies include a shortage of employees and a smaller pool of potential customers.

But there are also opportunities for companies that can adapt to the changing demographics, or are able to export their products to fast-growing economies abroad.

Following are comments from Japanese executives on how they view the risks and possible rewards of an ageing Japan.

KOJI SUZUKI, PRESIDENT, DEPARTMENT STORE TAKASHIMAYA

"In an ageing population, it's hard to imagine mass consumption. The pursuit of high-quality products in small quantities will likely be the consumer trend.

"During the post-war era of rapid economic growth, the population was increasing quickly and there were many child births. In those days, the trend was mass production and mass sales, which made it possible to reduce prices. And that was what consumers cared about.

"But as the elderly population increases, consumers are paying more attention to the quality of each product, caring about health for instance, whether it's food or clothing. The shift is to high quality in small quantities.

"The retail industry has to respond to this changing trend."

ATSUTOSHI NISHIDA, PRESIDENT, ELECTRONICS CONGLOMERATE

TOSHIBA CORP

"As the population ages and we face a labor shortage, we need to seriously think about how to effectively harness foreign talent. But the deciding factor that differentiates strong and weak companies is how well firms encourage women to stay in the workplace.

"Toshiba now has 156 women in managerial positions. If a man and a woman are equally qualified for a management position, we promote the woman.

"Companies have to prepare for the ageing society and a shortage of labor now. It's too late when there's a crisis.

"Another important issue is work-life balance for both men and women. Work-life balance is essential to sustain economic growth. It's also important for giving birth to innovation. Concentration falls off if you're just working from early morning to late at night. You get two to three hours of intense concentration, and then you need a short break. I want my people to work shorter hours, and truly concentrate while they're in the office."

KEIICHI ISHIZUKA, EXECUTIVE IN SONY CORP'S DIGITAL CAMERA

DIVISION

"Retired people account for a very big portion of the digital SLR (single-lens reflex) camera market. Camera makers are aware that these people are an important segment of their customer base.

HIROSHI KIMURA, CEO OF CIGARETTE MAKER JAPAN TOBACCO

"Although the market itself may be shrinking, the Japanese market remains one of the most profitable, and as such, competition domestically has been increasing with respect to branding, R&D, sales and sales channels.

"Under the current conditions, JT is aiming to expand its market share through the introduction of new products in growing segments, and the revamping and strengthening of existing brands. For example, JT has been investing in Mild Seven, one of its core brands, which is marking its 30th anniversary this year.

Kimura also noted the company's efforts to expand outside Japan, including its acquisition of RJR Nabisco's international business in 1999, and its $15 billion acquisition of Gallaher earlier this year.

"Today, JT's international tobacco business accounts for approximately 70 percent of its total sales volume for tobacco products, while the domestic tobacco business represents about 30 percent."

YOICHI WADA, PRESIDENT OF VIDEO GAME MAKER SQUARE ENIX "The potential (of the senior market) is substantial. Take a 60-year old person. Chances are this person has never played video games before, ever. So one senior person taking up video games means one net addition to the overall gaming population."

KIYOSHI SHIKANO, CORPORATE SENIOR VICE PRESIDENT OF SONY'S

MARKETING ARM

"Senior citizens today have a very acute sense of value. No matter how much money they have, they do not buy what does not meet their taste. On the other hand, they will buy what they really like even if it is a bit pricey.

"We are planning to build our marketing and communication strategy to appeal to the sensibilities of this generation."