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Remodeling Japan–With U.S. Wood
By Craig Jenkins
Japan’s home remodeling market is hot, growing fast and may soon be providing increased opportunity to U.S. wood exporters.
Two factors are driving the opportunity: improved Japanese home construction and, ironically, the recent economic downturn in Asia.
Japan’s deflationary economy has reduced the incentives to buy a new home, which could lose its value over time.
For now, it’s smarter for many consumers to invest in improving existing homes. This trend is reinforced by the fact that Japanese homes built in recent years are increasingly of high quality.
After World War II, Japanese homes were not built for longevity. They aged, wore out and got torn down. New construction replaced them. But recently there has been an improved quality of homes on the market. No longer is this "scrap and build" mentality cost-effective.
Measuring the Remodeling Market
The market for building materials as a whole is depressed because of a slow economy. But the remodeling sector, though small compared to the total building materials market, is growing much faster than the market as a whole.
Building materials for remodeling, including wood products, rose to $7.9 billion for 1998, or about 15 percent of the entire materials market for new housing.
Right now, U.S. exporters of wood building materials don’t have a large role in this growing market. But that, too, may be changing. In fact, exports to Japan are expected to grow at a rate of 10 percent over the next five years.
Japanese consumers are increasingly exposed to the huge variety of U.S. wood building products. U.S. industry associations and companies are beginning to hear more about opportunities specific to the growing remodeling demand.
What Fuels the Remodeling Boom?
Like many people in the United States, consumers in Japan want both their dinner and their dwelling to be more natural.
Emissions-free materials, like solid wood, fit in well with the "healthy home construction" boom in Japan.
The trend among Japanese consumers is to remodel with solid wood products, including emission-safe wood panels. They want their homes free of the formaldehyde that’s found in the glues used to manufacture some products, such as particle board or other composite panels.
Another factor contributing to the increase in remodeling is the graying of Japanese society. Aging citizens often need to alter their existing homes to make them more safe and accessible, or to accommodate multi-generational living needs.
The Unknown Market
Many U.S. wood exporters to Japan have not seen the forest of opportunity in home remodeling because they have focused on the new construction market, particularly that for single-family housing.
Wood flooring, windows, doors and kitchen cabinets have particularly good potential in the home remodeling market. When marketing these products, exporters should provide the customer with product application and servicing information, in Japanese. Japanese homebuilders often are not familiar with American home design concepts and any extra investment in customer servicing will more effectively secure re-orders.
Know Your Market
Design specifications used in building products, and the styles, shapes and sizes they come in, are different in Japan.
U.S. exporters who are familiar with design features popular in Japan as well as consumer preferences will have a leg up on the competition.
Market Access Difficulties
It is estimated that nearly 50 percent of remodeling jobs are conducted by small local homebuilders who may not be familiar with imported building products. Therefore, these remodelers are less likely to use imported building products. Currently, small local homebuilders have the largest market share, but the number and market share of remodeling specialty companies is increasing. Many of the major remodeling companies and subsidiaries are affiliated with large housing companies or building product manufacturers. Since their parent companies are often competitors to U.S. companies, it may not be easy to sell imported building products to these companies.
Exporters Need
a Family Plan
Owners of single-family wood homes are the people most interested in remodeling.
Single-family wood-frame houses make up 86 percent of all remodeled units in Japan. They also account for 86 percent of the value of the entire market.
Structural remodeling, including additions, represents 56 percent of the value of the market. Cosmetic, or nonstructural remodeling, accounts for the remaining 44 percent. Some of the most popular cosmetic remodeling projects are re-roofing, new flooring, and remodeling of kitchen and bathrooms.
The best bet for U.S. wood exporters may be providing remodeling materials to tradesmen who work on North American-style 2-by-4 homes, which use the same dimensions and scales as U.S. homes, due to the ease of entry of the U.S. products into this type of housing.
Owners of traditional post-and-beam homes and prefabricated homes, whose numbers are far greater than 2-by-4 homeowners, represent a tremendous potential market. Access to this market segment may be more difficult, however, given that the specifications of the products traditionally used in these types of houses differ from U.S. product specifications.
Building for a Senior Market
Japan is aging. Senior citizens are soon expected to comprise as much as 25 percent of the population. So it comes as no surprise that many families are likely to elder-adjust their homes to make them safer and more accessible.
Already the trend is evident. On homes built after 1996, 44 percent had handrails on stairways and in bathrooms. That’s compared with 26 percent of Japanese homes overall. Wide hallways for wheelchairs are in 25 percent of all homes built after 1996, but accounted for only 10 percent of all homes.
So, U.S. wood producers, take note. That huge inventory of housing built before 1996 may contain a host of homes in need of senior-style remodeling.
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The author is an Agricultural Marketing Specialist with the FAS Forest and Fishery Products Division in Washington, D.C. Tel.: (202) 205-7763; Fax: (202) 720-8461; E-mail: ffpd@fas.usda.gov
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