The words "diaper shortage" may lead some to scratch their heads when paired with Japan. After all, Japan's low birthrates are practically notorious at this point.
It's well understood that the current generation is hardly concerned with keeping the population growing.
Is the report of a diaper shortage due to a sudden baby boom that no one saw coming? No, not at all.
The diaper shortage can be blamed on two seemingly unrelated factors: A sales tax hike...and China.
The Japanese sales tax climbed from five percent to eight percent as the adjustment went into effect today. Japanese consumers had gone on a major spending spree ahead of the tax hike. Demand was high for items ranging from cigarettes to luxury cars.
Buyers were eager to get their hands on products that were a few days away from becoming more expensive.
Such a surge in sales occurred the last time Japan raised its sales tax. The difference is that once the fervor halted in 1997, the urge to spend went with it.
A diaper shortage in Japan and counterfeit diapers in China. What will happen next? http://t.co/ivopUs5KDF
— Chitranjan Agarwal (@chattychd) December 21, 2013
Analysts are looking to determine whether or not history will repeat itself.
Where do Japanese diapers fit into this examination? It turns out that the mad dash for the infant necessity wasn't made by native Japanese citizens, but by consumers from China.
The quality of Japan-made goods has made a strong impression on affluent Chinese shoppers. With the new sales tax firmly in place, it's possible that the Japanese economy may find a greater deal of support from abroad than what occurred nearly two decades ago.
Having consumers from outside the country could soften the economic blow of Japanese shoppers closing their wallets. It could also go a long way towards avoiding an Asian financial crisis similar to what hit in the late 1990s.
This may be of little comfort of Japanese diaper companies.
The tax hike, rising fuel costs, and growing manufacturing expenses mean that for certain companies, selling out their diapers means nothing. They'll be lucky to break even.
An Osaka-based diaper broker was particularly gloomy of the outlook. He said, "This business used to be profitable."
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