Why Japan topped IPSOS National Branding Index

Japan is the 1st non-western nation as No.1

In a groundbreaking achievement, Japan has secured the top spot in Ipsos National Brand Index (NBI), becoming the first non-Western country to do so. This accolade is a testament to Japan’s steadily growing brand power, which has remained consistently strong for the past 18 years since this Index has been launched.

Here’s the link to the Ipsos index; link

This result went surprisingly un-noticed among the Western media, but also very low-key in Japan as well. Maybe in Japan less people speak English so understandable it was under the radar. But I think the Western media should have picked it up more, and I thought, maybe the Ipsos result was somewhat counter-intuitive, and went against the widely shared narrative that Japan is the land of setting sun.

During the “Lost 30 Years,” a period of economic stagnation of a deflationary economy (what everyone is terified China is reciprocating this cycle), Japan’s private sector effectively utilized its accumulated wealth to stabilize society, nurture cultural maturity, and enhance originality and creativity.

However, the government’s policy of allowing the depreciation of the yen, which led to the erosion of Japan’s brand power through discounted pricing against peer currencies and aggressive competition, has been a significant concern.

One survey result that has sparked considerable discussion among the government and business leaders is this Ipsos National Brand Index (NBI). This annual report, published by the renowned global research company Ipsos, provides insights into the strength of national brands worldwide. You can find detailed information about the report in the link at the top.

This year’s NBI marks a historic milestone, as it is the first time a non-Western country has claimed the top position. It is also noteworthy that Japan has consistently ranked within the top seven and secured the second spot last year.

Question: What factors do you think have contributed to Japan’s steady rise in brand power over the years?

In recent years, many people have lamented that Japan has become a “passé” due to the historic depreciation of the yen, the “lost 30 years” of being left behind in global economic growth, and political turmoil.

However, I have a different opinion.

In the field of economics, renowned economists like Paul Krugman or the Yoda of investors Warren Buffett have been unpenning their Japan evaluations. Buffet has increased his shares of Japanese trading companies, and a flock of institutional investors followed suit. And Paul Krugman, our beloved economist who has consistently been tough on Japan but always with a grain of love, mentioned that Japan has actually managed the deteriorating demographics successfully and maintained the economic growths that is almost on par with that of U.S. — that is, give and take the decline of labor and other negative factors. In an increasingly unstable world, the “appeal” of Japan, which have slowly matured culturally while maintaining social stability over the past 30 years, have actually skyrocketed.

When you think about it, for the past 1 and ½ years, when the rest of the world was freaking out on inflation, Japanese central bankers had it “bring it on baby!” Because what they have been fighting for as long as one can remember is the “deflation.” So a bit of upward pressure on prices from covid-19 and Ukraine supply chain disruptions was almost like the missing third arrow of Abenomics that was never shot. It pushed the consumer goods prices, finally giving it a go to major Japanese companies to hike their prices, again, for the first time in as long as one can remember.

In the manufacturing industry, there has been a trend of “de-lisking” (reducing risk) in China, where foreign companies are under pressure and there is a risk of sudden policy changes by the government. Since the COVID-19 pandemic, there has been a movement to relocate factories and supply chains to other countries.

In the real estate market, there are concerns about the potential risks of a Chinese version of the Lehman Shock, and Chinese consumers are tightening their purse strings, leading to a slowdown in growth.

Amidst all this, we can feel the relative rise in the presence of the Japanese market. Foreign companies that have been increasing their sales in Japan have been on the rise lately. Of course, it depends on the industry, and even within the same industry, the situation varies. However, there are companies that have shown double-digit growths.

This has also been proven by the recent reverse in the GDP growths rate between Japan and China. For the first time in, well, as long as one can remember, Japan is growing FASTER than China.

What is driving this is not only the robust inbound tourists consumption, but actually the “Japanese consumers” themselves.

If you produce good products, Japanese consumers will appropriately appreciate them. And when you are recognized by Japanese consumers, it has a ripple effect on sales in markets beyond borders in China and other Asian countries. So, the Japanese market has always been important for consumer goods manufacturers.

However, for the past 10 years or so, anyone working at a global company’s Japan office has felt the trend of being China-focused and not caring much about Japan. This is what we call “Japan Passing.”

But now, the Chinese government is strengthening its confrontational stance in the economy with Western countries, including the United States, and promoting “guochao 国潮,” literally translates into “the national tide” — which favors Chinese-born companies and goods. Specifically, they are tightening control by forcing foreign companies to disclose their trade secrets and detaining individuals on suspicion of corporate espionage just for having contact with government officials.

Against this backdrop, more foreign companies are reflecting on their China-centric approach and re-balancing more investments in Japan. Even at the firm I work for, , we have appealed to our headquarters about the importance of Japanese consumer insights and how consumers will appreciate us if we have the right strategy, and we are once again being noticed. Before Covid, no one could care less about Japan. Big difference.

And now, Japan has achieved the top spot in the Ipsos National Brand Index. It hasn’t received as much attention as I expected, but I feel that everyone should pay a little more attention to it. It may be very “Japanese” to say, “It’s not a big deal,” but if we can convert this brand power into economic strength, it could even lead to “wage increases.”

Next time, I will delve deeper into this brand power.

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