The Beauty of Economic Growth
"The Beauty of Economic Growth" became a buzzword in the first half of the year, striking a chord with countless young people with its intense nostalgia for a vibrant past.
In Q1 2025, Japan's GDP experienced negative growth again, marking 35 years of economic stagnation since the collapse of its bubble economy in 1989. During this period, Japan's share of global GDP dropped from about 15.3% in 1989 to 4.18% in 2022. Its GDP ranking fell from second globally to fourth, overtaken by China in 2010 and Germany in 2023.
Interestingly, despite Japan's prolonged economic weakness, several emerging Chinese e-commerce platforms have begun targeting this "land of lost opportunities." On June 30, TikTok announced the launch of TikTok Shop in Japan, officially rolling out shopping features and allowing sellers to enter the world's third-largest e-commerce market (according to Statista Market Insights, Japan's e-commerce market is valued at $169 billion). Additionally, Temu, TAO (under Alibaba), and JD.com’s Japanese site entered Japan between 2023 and 2024, while SHEIN launched there in late 2020.
Image caption: Thanks to Tencent Yuanbao for collaboration.
If "the beauty of economic growth" represents a hopeful, forward-running aesthetic, then Japan's "lost 35 years" have seen its youth embrace lying flat, consumption downgrading, tiny living, and childlessness—a prolonged state of "hopeless gloom" devoid of beauty.
By 2025, Japan's economic stagnation has become even more pronounced. In the government’s draft "Basic Policy for Economic and Fiscal Management and Reform" for the year, the word "risk" appeared 18 times (including in the document’s table of contents), significantly more frequent than in previous years, reflecting growing concerns about the economic outlook.
So why are Chinese e-commerce platforms turning their attention to Japan now? Could its sluggish market present structural opportunities in e-commerce? Could Japan’s consumption downgrading open new possibilities for Chinese products?
Notably, Japan’s market is unique among East Asian societies. On one hand, the yen is the only non-Western sovereign currency among the world’s top three reserve currencies. At the same time, Japan is the only developed economy outside the U.S. with a population exceeding 100 million (123.44 million as of March 2025, per the Ministry of Foreign Affairs), making it a "quasi-great power" market.
Yet in this advanced economy, some habits remain outdated—cash is still the dominant payment method, and electric vehicle adoption is low. While Japan’s e-commerce sales are projected to grow at a 5.2% CAGR over four years (GlobalData), its e-commerce penetration remains below 10%, and offline retail retains incomparable advantages, starkly contrasting China’s e-commerce boom.
Image: Mount Fuji.
This is a complex and contradictory developed economy. The Chrysanthemum and the Sword once described Japan’s national character as "aesthetic yet militaristic, courteous yet combative, conservative yet novelty-seeking, submissive yet stubborn." This duality extends to consumption: Japanese consumers are notoriously meticulous and hard to please, often deemed "the most challenging market."
Yet in seemingly "slow" Japan, brands from its economic miracle era (1950s–late 1980s) earned global recognition for "perfectionism," "reliability," and "craftsmanship." In 1989, before the bubble burst, Japan’s outward FDI hit $67.5 billion, making it the world’s largest investor. Globalization? Japan practiced it 30 years ago.
This article uses the present as an anchor to observe Japan’s macroeconomic landscape and the opportunities it offers Chinese businesses. By examining historical shifts and market uniqueness, we glimpse the bigger picture. Navigating Japan’s "fast" and "slow," we find perhaps the best market embodiment of "slow is fast"—and the ideal home for patient capital.
01 After Tokyo’s Youth "Flee the City": How E-Commerce Can Inherit Japan’s Consumer Future
For Japanese, offline shopping is about connection.
Neighborhood grocers and greengrocers recommend seasonal ingredients and throw in free side dishes. At department stores like Takashimaya, clerks remember regulars’ preferences for personalized service. Holidays bring "lucky bag" cultures with handwritten cards. Small talk during shopping fulfills social needs, and the ritual of selection conveys emotions hard to replicate online.
To Japanese, shopping is social leisure.
Service is also legendary. Store assistants maintain perfect distance—greeting you with a soft "Irasshaimase" (Welcome), then stepping back unless needed. Even if you buy nothing, they bow and thank you sincerely. Purchases are wrapped meticulously, followed by a deep bow.
At Japan’s core is Omotenashi (hospitality spirit). Offline shopping offers warmth and connection beyond digital reach.
Surveys show touching goods and enjoying service are key reasons Japanese prefer physical stores.
Image.
Teikoku Databank reports ~45,000 century-old businesses in Japan as of September 2024 (No.1 globally), with 2,000 more expected this year. Historic retail has created near-perfect offline ecosystems. In Tokyo and Osaka, TOD (transit-oriented development) is perfected—e.g., Shibuya Station’s underground links multiple commercial zones and residences, enabling full living within 1 km.
Department store giants like Mitsukoshi (founded 1673) and Daimaru (1717) are over 300 years old. Tokyo Daimaru sees 80,000 daily visitors; its lucky bag economy hits ¥30 billion/year. Gift-wrapping at 10% of product prices remains oversubscribed. For VIPs, stores offer off-site "outside sales" services.
Offline’s vibrancy also ties to aging. In 2020, 29.3% of Japan was 65+ (36.25 million), a share still growing. Pre-"lost generation," the postwar Dankai cohort (Japan’s baby boomers) built corporate giants, holding wealth and influence.
Image. Data source: Jifeng Notes.
Additionally, Japan’s Nenkō Joretsu seniority system determines ~49% of pay by tenure/education and 47% by role. Longer tenure means higher base pay, bonuses, and stability (job-hopping resets seniority, slashing income—e.g., ¥1.5–2 million less at age 35). This locks >60% of Japan’s wealth with older generations.
A vivid example: Japan’s 55,950 convenience stores (peak 2021, 1 per 2,253 people) serve mobility-limited seniors. Within 500m, they offer 24/7 essentials, banking, tickets, and deliveries. Online shopping feels alien to this group—they fear mobile payments, preferring "face-to-face cash." Only 47.8% of Chinese over 60 use mobile pay (PBOC data); Japanese seniors’ adoption is <25% (LINE survey).
Trade follows spending power, making Japan’s offline retail dominance unsurprising.
The turning point came post-pandemic. Per GlobalData’s Ravi Sharma: "Japan’s e-commerce grew sustainably over five years thanks to high digital penetration and consumer preference. Even during COVID, e-commerce stayed positive." Mordor Intelligence predicts a 14.3% CAGR for 2025–2030.
Lockdowns boosted e-commerce, habituating some Japanese to online shopping. Post-pandemic, government pushes, infrastructure upgrades, and remote work sustained this habit, complementing offline’s legacy strength.
A key driver was youth "returning home." Post-COVID, young Japanese fled cities—especially in 2023–2024, when Tokyo saw net outflows led by 20–30-year-olds.
Scholar Akira Miura noted: "COVID accelerated moves to suburbs and rural areas. For 20 years, Tokyo grew via downtown condos attracting wealthy avoiding commutes. Now, remote work lets people ditch high rents. Tokyo’s allure doesn’t require living there—e-commerce suffices. Its ‘cultural dominance’ is savable in 3 monthly visits. Rural homes under ¥5 million (~¥313,000), with nature, suit families. More youth see no need to stay."
Japan’s society is also middle-class-heavy. In the 1970s–80s, ~90% self-identified as middle-class, with a Gini coefficient of 0.349 (1980). Over 30 years of growth, Japan unified urban-rural healthcare and pensions—standards are identical for PMs or farmers.
Image. Data source: "How Much Wealth to Join Japan’s Rich," Chengzhu Overseas.
Rakuten China CEO Yang Zhou noted: "Rural and urban life convenience barely differs. Even villages have top-50 Asian cafes."
Returning youth still crave "Tokyo’s charm," which e-commerce delivers remotely, sustaining post-pandemic online habits. But what of the future?
for Japanese, offline shopping is about connection.
Neighborhood grocers and greengrocers recommend seasonal ingredients and throw in free side dishes. At department stores like Takashimaya, clerks remember regulars’ preferences for personalized service. Holidays bring "lucky bag" cultures with handwritten cards. Small talk during shopping fulfills social needs, and the ritual of selection conveys emotions hard to replicate online.
To Japanese, shopping is social leisure.
Service is also legendary. Store assistants maintain perfect distance—greeting you with a soft "Irasshaimase" (Welcome), then stepping back unless needed. Even if you buy nothing, they bow and thank you sincerely. Purchases are wrapped meticulously, followed by a deep bow.
At Japan’s core is Omotenashi (hospitality spirit). Offline shopping offers warmth and connection beyond digital reach.
Surveys show touching goods and enjoying service are key reasons Japanese prefer physical stores.
Image.
Teikoku Databank reports ~45,000 century-old businesses in Japan as of September 2024 (No.1 globally), with 2,000 more expected this year. Historic retail has created near-perfect offline ecosystems. In Tokyo and Osaka, TOD (transit-oriented development) is perfected—e.g., Shibuya Station’s underground links multiple commercial zones and residences, enabling full living within 1 km.
Department store giants like Mitsukoshi (founded 1673) and Daimaru (1717) are over 300 years old. Tokyo Daimaru sees 80,000 daily visitors; its lucky bag economy hits ¥30 billion/year. Gift-wrapping at 10% of product prices remains oversubscribed. For VIPs, stores offer off-site "outside sales" services.
Offline’s vibrancy also ties to aging. In 2020, 29.3% of Japan was 65+ (36.25 million), a share still growing. Pre-"lost generation," the postwar Dankai cohort (Japan’s baby boomers) built corporate giants, holding wealth and influence.
Image. Data source: Jifeng Notes.
Additionally, Japan’s Nenkō Joretsu seniority system determines ~49% of pay by tenure/education and 47% by role. Longer tenure means higher base pay, bonuses, and stability (job-hopping resets seniority, slashing income—e.g., ¥1.5–2 million less at age 35). This locks >60% of Japan’s wealth with older generations.
A vivid example: Japan’s 55,950 convenience stores (peak 2021, 1 per 2,253 people) serve mobility-limited seniors. Within 500m, they offer 24/7 essentials, banking, tickets, and deliveries. Online shopping feels alien to this group—they fear mobile payments, preferring "face-to-face cash." Only 47.8% of Chinese over 60 use mobile pay (PBOC data); Japanese seniors’ adoption is <25% (LINE survey).
Trade follows spending power, making Japan’s offline retail dominance unsurprising.
The turning point came post-pandemic. Per GlobalData’s Ravi Sharma: "Japan’s e-commerce grew sustainably over five years thanks to high digital penetration and consumer preference. Even during COVID, e-commerce stayed positive." Mordor Intelligence predicts a 14.3% CAGR for 2025–2030.
Lockdowns boosted e-commerce, habituating some Japanese to online shopping. Post-pandemic, government pushes, infrastructure upgrades, and remote work sustained this habit, complementing offline’s legacy strength.
A key driver was youth "returning home." Post-COVID, young Japanese fled cities—especially in 2023–2024, when Tokyo saw net outflows led by 20–30-year-olds.
Scholar Akira Miura noted: "COVID accelerated moves to suburbs and rural areas. For 20 years, Tokyo grew via downtown condos attracting wealthy avoiding commutes. Now, remote work lets people ditch high rents. Tokyo’s allure doesn’t require living there—e-commerce suffices. Its ‘cultural dominance’ is savable in 3 monthly visits. Rural homes under ¥5 million (~¥313,000), with nature, suit families. More youth see no need to stay."
Japan’s society is also middle-class-heavy. In the 1970s–80s, ~90% self-identified as middle-class, with a Gini coefficient of 0.349 (1980). Over 30 years of growth, Japan unified urban-rural healthcare and pensions—standards are identical for PMs or farmers.
Image. Data source: "How Much Wealth to Join Japan’s Rich," Chengzhu Overseas.
Rakuten China CEO Yang Zhou noted: "Rural and urban life convenience barely differs. Even villages have top-50 Asian cafes."
Returning youth still crave "Tokyo’s charm," which e-commerce delivers remotely, sustaining post-pandemic online habits. But what of the future?"The Beauty of Economic Growth" became a buzzword in the first half of the year, striking a chord with countless young people with its intense nostalgia for a vibrant past.
In Q1 2025, Japan's GDP experienced negative growth again, marking 35 years of economic stagnation since the collapse of its bubble economy in 1989. During this period, Japan's share of global GDP dropped from about 15.3% in 1989 to 4.18% in 2022. Its GDP ranking fell from second globally to fourth, overtaken by China in 2010 and Germany in 2023.
Interestingly, despite Japan's prolonged economic weakness, several emerging Chinese e-commerce platforms have begun targeting this "land of lost opportunities." On June 30, TikTok announced the launch of TikTok Shop in Japan, officially rolling out shopping features and allowing sellers to enter the world's third-largest e-commerce market (according to Statista Market Insights, Japan's e-commerce market is valued at $169 billion). Additionally, Temu, TAO (under Alibaba), and JD.com’s Japanese site entered Japan between 2023 and 2024, while SHEIN launched there in late 2020.
Image caption: Thanks to Tencent Yuanbao for collaboration.
If "the beauty of economic growth" represents a hopeful, forward-running aesthetic, then Japan's "lost 35 years" have seen its youth embrace lying flat, consumption downgrading, tiny living, and childlessness—a prolonged state of "hopeless gloom" devoid of beauty.
By 2025, Japan's economic stagnation has become even more pronounced. In the government’s draft "Basic Policy for Economic and Fiscal Management and Reform" for the year, the word "risk" appeared 18 times (including in the document’s table of contents), significantly more frequent than in previous years, reflecting growing concerns about the economic outlook.
So why are Chinese e-commerce platforms turning their attention to Japan now? Could its sluggish market present structural opportunities in e-commerce? Could Japan’s consumption downgrading open new possibilities for Chinese products?
Notably, Japan’s market is unique among East Asian societies. On one hand, the yen is the only non-Western sovereign currency among the world’s top three reserve currencies. At the same time, Japan is the only developed economy outside the U.S. with a population exceeding 100 million (123.44 million as of March 2025, per the Ministry of Foreign Affairs), making it a "quasi-great power" market.
Yet in this advanced economy, some habits remain outdated—cash is still the dominant payment method, and electric vehicle adoption is low. While Japan’s e-commerce sales are projected to grow at a 5.2% CAGR over four years (GlobalData), its e-commerce penetration remains below 10%, and offline retail retains incomparable advantages, starkly contrasting China’s e-commerce boom.
Image: Mount Fuji.
This is a complex and contradictory developed economy. The Chrysanthemum and the Sword once described Japan’s national character as "aesthetic yet militaristic, courteous yet combative, conservative yet novelty-seeking, submissive yet stubborn." This duality extends to consumption: Japanese consumers are notoriously meticulous and hard to please, often deemed "the most challenging market."
Yet in seemingly "slow" Japan, brands from its economic miracle era (1950s–late 1980s) earned global recognition for "perfectionism," "reliability," and "craftsmanship." In 1989, before the bubble burst, Japan’s outward FDI hit $67.5 billion, making it the world’s largest investor. Globalization? Japan practiced it 30 years ago.
This article uses the present as an anchor to observe Japan’s macroeconomic landscape and the opportunities it offers Chinese businesses. By examining historical shifts and market uniqueness, we glimpse the bigger picture. Navigating Japan’s "fast" and "slow," we find perhaps the best market embodiment of "slow is fast"—and the ideal home for patient capital.
02 As Japan’s Middle Class Shrinks Meets Chinese Manufacturing: The Cross-Border Opportunity for "King of Substitutes"
Under 10% e-commerce penetration leaves huge room for growth vs. China/U.S. A 1.5x sales jump in five years also signals potential. Japan’s "low penetration + high growth" combo means far more upside than zero-sum competition. To Zhou, Rakuten is a "blue ocean" for Chinese sellers: "In 25 years, we’ve only hosted 50,000+ stores. We encourage branding over price wars—it’s a ‘non-cutthroat’ space." But is this opportunity China’s to seize? Advantage 1: World-class supply chains. Many Japanese industry leaders rely on Chinese production—their supply chains often mirror China’s. Advantage 2: Japan’s shift to "cheap but good." Chinese goods’ price-performance and speed outmatch local options, aligning with downgrading trends. Signs of downgrading abound: office workers buy secondhand suits, thrift stores thrive, and ¥500 (~¥25) convenience-store lunches become staples. Japan’s middle class has long eroded. Post-bubble, stagnant wages met rising housing/education costs. The Japan Times notes household median income fell from ¥5.5 million (1996) to ~¥4.4 million (2021). Researchers classify society into four tiers: poor, low-income, middle, and high-income. The middle class shrank from 63.9% (1985) to 58.1% (2018), while the rich grew from 7.4% to 10.3%. COVID accelerated this. Global Times cited a real estate worker whose income dropped 33%, and a clothing store manager’s pay falling from ¥6 million to ¥4.5 million. Japanese seek quality but are price-sensitive—Chinese alternatives could fill gaps. Crucially, years of Chinese branding in Japan have lifted consumer recognition. Where Japanese firms lag, Chinese brands have succeeded. Example: EcoFlow raised ¥500 million+ via Japan’s Makuake in 2020 (then a record), positioning portable power as "disaster essentials" for quake/typhoon-prone Japan. Its camping appeal also drove demand. Similarly, SwitchBot’s "retrofit" smart-home gadgets (e.g., stick-on switches enabling IFTTT automation) won Japan—60% of parent Woan’s revenue comes from there (per its IPO filing). Zhou noted: "‘High value’ and ‘high-tech’ roughly define Chinese brands here. Japan’s e-commerce growth is the main opportunity. Cross-border systems and AI are maturing—good products will shine. 3C/IoT lead in trust; unmet needs (e.g., IoT) let China grab share. But across categories, innovation and quality win." Beyond tech, beauty analysts note branding matters. Japan’s per-capita cosmetics spend is ¥414 (~4x China’s), allowing premium pricing. Florasis leveraged KOLs and "Oriental aesthetics" to charge premiums in Japan—now its top overseas market (40% of international revenue). Regardless of sector, China’s edge lies in rapid iteration. Even if Japan is tough, conquering it earns global credibility as a "Japanese brand." In summary, Japan’s offline-heavy market offers online growth, value-for-money trends, and rising brand acceptance—but this is no winter; spring is coming. Racing ahead remains aspirational. 03 Japan: The Market for Patient CapitalIs Japan truly "non-cutthroat"? Not quite—it competes differently. Japanese firms obsess over process. A Tokyo-raised student shared: "My part-time job at tonkatsu chain Saboten had a manual detailing everything—attire, handwashing, meat prep—with photos and text." Here, long-termism beats short-term gains. Japan’s conservatism (slow decisions, brand loyalty) demands product polish and trust-building. Over-pushing early backfires. Price wars are "suicidal"; differentiation wins. In Kyoto’s Higashiyama, wagashi shops never undercut rivals. They compete on product, service, and culture—not discounts. As wallets shrink, will price sensitivity rise? Where’s the balance between affordability and quality? Image: Dōtonbori, Osaka. Ex-MUJI CEO Tadamitsu Matsui wrote in The MUJI Way: "Reasonably priced" and "just enough" define its philosophy—quality matching brands but 30% cheaper by cutting frills (e.g., branding/packaging). This reflects rational choices amid national gloom. Japanese consumers want products tailored to the mainstream, with meticulous service—only these compete. Tough crowd. Avoiding price wars seems "slow" but is its own "fast." How long must patience last? Zhou estimates: "At least a year—an eternity for Chinese sellers." Moreover, Japan can’t be rushed. Shoppers are famously picky, researching thoroughly before buying. Even social media influence is slow—trust builds gradually. Visibility follows credibility, not hype. Florasis took five years from Amazon Japan (2021) to Ginza flagship (2025), via campaigns, drama placements (Animals), and collaborations. The upside? Just 5–10% average e-commerce return rates—a boon for cross-border sellers. Plus, loyalty is extreme: once hooked, customers stick. Unlike China’s gamified retention, Japan rewards upfront product education. Other speed bumps: infrastructure gaps in logistics and payments. Logistics suffers from inefficient long-haul (20–30% pricier Tokyo-Osaka vs. China’s Yangtze Delta), last-mile hurdles (70% homes on narrow streets, 10–15% delivery costs vs. China’s 5–8%), and labor shortages (22% of delivery workers are 60+). Five firms dominate 80% of logistics, with siloed systems worsening inefficiencies. Returns are also consumer-paid, with strict laws making online post-sale service pale versus offline. One silver lining: since 2022’s Fed hikes, the yen hit 160/USD (1986 low), lowering marketing, logistics, and ops costs. Payments? "QR codes flopped in 10 years," griped one seller. Japan’s disjointed systems (PayPay, LINE Pay, Alipay) charge 3–5% fees (vs. China’s <1%). Japan is a unique blue ocean. Zhou added: "High compliance and cultural fit are hurdles. Rakuten demands strong products and certifications. Japanese consumers need localized ops talent to engage them." Now, Chinese platforms are testing Japan’s shifting landscape. Most see post-COVID e-commerce as an added channel—but success requires long-run patience. Per Quiet Japan, Temu’s early adopters are Japan’s 1 million Chinese expats/students ("new Chinese"), who then influence older migrants and locals. Temu wins on price (e.g., ¥3,000 sofas vs. Amazon’s ¥10,000), but quality lags. China’s e-commerce playbook can’t copy-paste here—only parts apply. Beauty expert Guo Xiruo noted some online-offline bridges: "Virtual try-ons solve makeup shade matching for homebodies." Japan is slow yet advanced—its e-commerce must balance tradition and innovation, enhancing offline with smart solutions, not just digitization.
Postscript The beauty of an upward economy can be a kind of thriving and high-spiritedness, but it can also be a kind of blurred prosperity. Market sentiment, the majority of people who follow the crowd, and the growth figures often make people ignore risks and forget the truth. In 1986, Japan's Daiichi Real Estate bought the Tiffany & Co. building in New York, USA, at the highest price in history. At that time, the amount of real estate invested by Japanese capital in the United States increased from US$1.9 billion in 1985 to US$16.5 billion in 1988. At that time, in Australia, you could even buy land directly with Japanese yen. Japan's once-glorious prosperity also amazed the world. In the late 1980s, including many Europeans and Americans, everyone believed that "Japan is the center of the future world economy because the Japanese economic system is superior to the economic systems of European and American countries." At that time, several researchers from the Massachusetts Institute of Technology published the book "Made in America: Regaining the Productive Edge", which mentioned that "American companies must also develop like Japanese companies." Even in the American movie "Pretty Woman" released in the 1990s, the male protagonist is a successful industrialist who is crazy about investing in Japan. In January 1992, when then-US President George Bush visited Japan, at the dinner, George Bush vomited on the knees of Japanese Prime Minister Kiichi Miyazawa, who was sitting next to him, and fell off the chair. At that time, many Japanese felt that "the US president fell down, and the Japanese prime minister helped him up. This is a symbol of Japan-US relations, and Japan is stronger than the United States." Then the cheers stopped abruptly. Like a cola without gas, the Japanese economy has been drinking bland "little sweet water" for 35 years, without a burst point and mediocre. After the epidemic, many people are looking for similarities between the Chinese economy and Japan. The unmovable balance sheet is also telling us that we are about to enter the "little sweet water" stage without a burst point. People still miss the small bubbles that can jump up and "pop" and burst, and we also look forward to creating another high-speed growth overseas. Just like Japan in the second half of the 1980s, some people say, "I miss the bubble era and hope it happens again." But after the bubble is cleared, there is another kind of healthy and benign beauty, which will be full of sweetness and lasting.
|
Posted on