Twenty-five years ago, in what was to became known as the bubble economy, many Japanese suddenly found themselves awash in money.
In a book published that year titled “Hokokuron” (“The Theory of National Affluence”), business pundit Taiichi Sakaiya gleefully extolled Japan’s newfound wealth, remarking, “The Japanese view of themselves as not being wealthy is responsible for the general perception that the country is less than affluent; thus by revising the perception, one can alter the reality.”
Sakaiya presented this dialog with an American businessman, who told a group of Japanese high school students that he lived in a 14-room house outside of Boston.
“The house occupies a 1-acre lot. We have a pool and greenhouse.”
When asked what his property was worth, the American replied, “About $2 million.”
“Gee,” came the reply. “America has really become poor. In yen, that’s only about $250 million. (Note: yen-dollar figures reflect 1987 rates.) My family lives in a three-story house in Chiyoda Ward, Tokyo on about 18 tsubo (approximately 60 sq. meters) of land. But we could easily get ¥1 billion ($8 million) for our place.”
An interesting aspect of the short-lived bubble era was how preferences for luxury goods trickled down to Japan’s hoi polloi — a segment marketers termed the “imaginary rich” — who occasionally splurged on high-ticket items. The emblematic Louis Vuitton brand became a favorite, to the extent that Japan accounted for the French firm’s largest single market, and high school girls shocked the nation by engaging in enjo kosai (“compensated dating,” a euphemism for teen prostitution or escorting) to fund their acquisitions of Vuitton bags and other designer brand goods.
One of the better-known manifestations of bubble-era excesses was the kaikin (worldwide release of sales) of Beaujolais Nouveau wine on the third Thursday of each November. Wine was air freighted to Narita and Japan’s bon vivants, determined to be first in the world to partake, would reserve rooms at hotels adjacent to the airport so they could pop their corks at the stroke of midnight.
The economic bubble burst long ago, but the wealthy are still around. The current issue of Shukan Diamond (Oct. 20) devotes no fewer than 50 pages to the latest facts and figures about Japan’s moneyed rich. According to data from the World Wealth Report, there are more of them in Japan than ever before — 1.82 million as of 2011, up from 1.34 million in 2004. And Japan ranks second in the world, behind the U.S., in its number of rich, accounting for 16.6 percent of the world total.
The report defines “rich” as having $1 million (approx. ¥80 million) in financial assets apart from one’s own house, collections and possessions of consumer durables.
It should be noted however that as a percentage of overall households, Japan’s wealthy, at 2.9 percent, rank 11th worldwide (Singapore tops that list with 17.1 percent, followed by Qatar, Kuwait and Switzerland). Moreover, one investment house estimated that Japan’s major players, i.e., those who can be considered as truly wealthy in terms of their consumer power, are only a fraction of the 1.84 million — perhaps around 100,000 people.
Diamond categorizes Japan’s rich into two major types. In the traditional camp are business owners, successful physicians (particularly plastic surgeons) and property owners, who have plenty of assets but little cold cash. The newer varieties are made up of heads of new business start-ups, high-paid corporate CEOs and “petite bourgeois,” often working married couples with high combined incomes.
By far the most colorful of the newly affluent is a free-spending group known as the Hills-zoku (the Roppongi Hills tribe), who work by day and play like there’s no tomorrow. Monthly rents for their palatial 200-sq.-meter apartments in Tokyo’s Azabu or Roppongi district typically run ¥2.5 million. Bedroom furnishings might include a bed costing ¥4 million. Not that it’s used much — many of the apartments’ hyperactive occupants come staggering home around 3 or 4 a.m., and insist they can get by fine on four hours’ sleep.
Great wealth, it seems, also brings with it great headaches, as Shukan Gendai reported in a series of interviews with wealthy individuals. A common concern is finding ways to minimize Japan’s heavy inheritance taxes.
Hiroshi Kawanaka, chairman of an industrial electric firm, relates the time he found himself in a real-estate deal that called for him to invest ¥50 million in a development project in Wakayama Prefecture. Unfortunately the man introduced to him as a “company president” turned out to be the boss of an underground syndicate.
Obliged to fulfill the terms of the contract, Kawanaka relates what transpired when the two went calling on a bank together.
” ‘Fifty million yen? Come on, let me have more,’ the yakuza boss demanded, in an attempt at a shakedown. I could see the bank’s manager was really scared, but I can’t be in business if I’m going to let yakuza push me around, so I told him, ‘Look — I’m a businessman. I came here to do business. I won’t give you a penny more than the contract stipulates.’
“It’s nothing special,” Kawanaka shrugged. “We have to put up with that kind of stuff all the time.”