An assessment report on Toy’s Economic and Legal Issues in Japan.

 

Introduction

Japan is one of the largest economies in the world. In 2014, Japan economy was ranked third largest in the world. Toys are one of the products that Japan export. Usually, toys are, produced in units, batches and tailored made to fit customer’s preference. Economic and legal issues bind toys. Some of the legal issues involve laws enacted, rules and regulation that prohibit toys manufacturers from some areas and allows the same. Just like other manufactured products, toys are also regulated by various laws in Japan. Such requirements include food sanitation law, safety, and precaution laws. Toys must also pass compliance test conducted in laboratories. Toys must pass a safety test, flammability tests, safety and risk assessment tests, electrical safety tests, chemical test, and mechanical tests. Toy industry falls under the ministry of economy, trade, and commerce. The department approves associations and unions that had been formed by the toys companies. They include Japan safety toy mark programme, Japan toy association among others. Toys are also subject to international rules such as International Electrotechnical Commission, International Telecommunication Union, Federal Communication Commission, et al. There even economic issues that affect toys production industry in Japan. The country is an all time running economy, this means that the industry operates at all time. Production rate is too high making more significant margins. But also this is also a problem since people tend to overwork within the producing units. Another is that Japanese toys experiences high level of competition from other big producers like China, this makes the China a monopolist in the market. Due to its more significant share of the market, it can control prices thus making Japan suffer in external markets. Our research paper is based on these economic and legal factors that have affected toys production in Japan.

 

    There are legal factors that regulate toys production in Japan. They are both internally and externally enacted laws, rules and regulation. Japan legal system passes internal instituted statutes but implemented by the ministry of economy, trade, and industry. One of the requirements in Japan food sanitation act (Matsuura, 1998, p. 45). This act focuses on those toys which belong to younger children of six years of age and below. It also includes definitions of material contacts and articles specifications. This act is divided into several categories namely; category one which regulates those toys which come into direct contact with the mouth of the kid. Specific measures must be taken into note when producing those toys. For example, they should not have sharp projections in order not to pierce the tongue of the child. They also include pacifiers. The second categories are those toys that have potentials to come into contact with the mouth of the child. Such toys are clay dolls, housekeeping toys, and balloons. The last category is the accessories that are related to those toys of grade one and two respectively. It states that for a toy production to be complete, it must have passed the compliant test and tested thoroughly. This act of rules is regulated by the Ministry of Health, Labour and Welfare and the approved toys testing laboratory. Toys are also subjected to safety toy standard that is controlled by Japan Toys Association (Suzuki, 1996, p. 52). They are mainly toys for children of fourteen years of age. It consists of three categories. First is a mechanical and physical property which deals with an outlook for the toy. They give directives of how such toys are manufactured. They include electrical safety testing which controls test to radio controlled, battery, electric, heat and fire resistance toys. According to this law, all toys should not have sharp edges and points. The second category is flammability which regulates volatility of toys. Toys should be manufactured using low volatile materials to protect the kids from fire hazard. The last parts are chemicals which are restricted in making the materials which are used in production. Such compounds are mercury, chromium, cadmium, lead et al. that is harmful to human (Tobin, 1998, p. 62). It is because children have the tendency of sucking, swallowing and chewing their toys and thus may consume such metal elements creating complication to their health. There are also other regulations that govern not only toy industry but also other industries. Such laws are compatibility and waste disposal, restriction of hazardous items, battery waste and disposal requirements especially for those remotes, food Imitation requirement and last but not the least is cosmetics rules.  All these rules are applied to different levels of toys production. They are assigned to experienced managers who ensure every law and regulation adhere to (Ellington, 2009, p. 47).

    Apart from legal issues, toys production in Japan faces economic benefits and challenges respectively. Japan economy has a large population that provides a large workforce. This population consist of skilled and unskilled though little, workforce. The toy industry capitalizes on this workforce to produce quality toys on the market. This gives them high consumer satisfaction rate thus raising their margin. There are also new innovations of toys since the involved makers are elite (Araki, 2002, p. 21). The economy runs day and night making Japan an all-time economy. This has some detriments such as health issues due to long working hours that cause physiological mental problems to the workers (Araki, 2002, p. 32). The other economic issue that affects toy industry is the high level of competition within and overseas markets. China is the largest exporter of toys to outside market. This is because it had acquired rights for toy companies from other nations. This makes it to have mass production and thus control market. These make China somehow monopoly and thus control prices of those products in the markets. This makes Japan toy industries to suffer from low sales volumes. China also seems to disobey agreed market laws with international communities (Dato, 1988, p. 12). Japan also suffers from natural catastrophes such as earthquakes that frequently happen since its location is along the tectonic fault line. This earthquakes destroys toys factories making it difficult to run business. A lot of resources are used to repair the factories. Therefore, there is a sluggish toward achievement of the industry goals. Another economic issue that affect this industry is the fact that Japan is a scattered Island country and therefore costs such as transportation expenses incurred are too high. It is because some toys components manufactured are different companies located in the different region. Workers also have to travel from different regions; therefore companies in this industry have to cater this cost (Araki, 2002, p. 102). This makes their margin to be less. Japan also lacks some resources and therefore had to import them through outsourcing from outside country. This also increases cost of production for the toys. Japan taxation system had favoured toy industry. It is because consumption tax on imported raw materials and manufactured goods is made to as low as eight per cent being a final tax (Matsuura, 1998, p. 58). This encourages even potential investors in this industry. Japan government has also invested more in ensuring that conducive environment for this industry had been created. This is by allowing less regulation requirements of opening toy shops and accessibility of internet. This enables more customers to have availability of toys product through these systems. A research by European Union-Japan Centre for Industrial Cooperation shows that sales of toys through specialized chain toy shop still have the biggest share in the market. It is closely followed by online shops. Toys from outside Japan have also a stake in the country market. China is the biggest importer of toys in Japan economy. They are regarded as inexpensive compared with locally made toys. The recent low birth-rate in Japan has also affected this industry negatively. This is because there is a decline in sales volume of the product.  Japan also exports their toys to overseas countries. Some of the biggest overseas markets are country like Germany, United Kingdom, Hong Kong, United States Taiwan and South Korea. Exports to United States are subjected to WTO tariffs and taxes. This is causes laxity to the amount of toys exported to the American market. There are programmes that the government has introduced to nurture talent. These provide the companies with best-skilled workforce (Amaya, 1988, p. 42)

    We can conclude that toy industry have both pros and cons during operations. The benefits in this industry are that Japan government has put more effort in helping and protecting local toy industry. This is through provision of amenities that creates conducive environment. This ensures that investors in this industry are encouraged and well protected. Amenities such as good internet system have made this industries make their sales increment to be more. This is because the market share had been expanded even to other countries. Customers can buy for toys on online. The government reduction consumption tax to as low as eight per cent is also a plus to this industry. Both local and international investors have availed their interest on this industry. They can evaluate the viability of their investment. The government has also extended their hospitality to this industry by making this tax to a final tax levied to product from this industry. Japan government has also ensured that there is a favourable competition within the market. This is done by limiting and regulating toys imported from other countries into Japan economy. Improvement of infrastructure like transportation system by the government of Japan is also a plus. Transportation being one of the hindrances that affect this industry has been given attention. The government has constructed roads, railway lines and airports. This makes movement of factors of production such as human resource, capital et al more mobile. There is also introduction of innovative hubs that nurtures talents from its citizen. This provides the industry with most perfect toys production that caters all the needs of its users. Due to population decline, the market share has been declining. Therefore the industry must come up with new strategy that will cater such obstacles. The industry must also support their unions so as their plight and grievances can be heard by the government and the international communities as whole.

Reference

Amaya, N. (1988). The Japanese economy in transition. Japan and the World Economy, 1(1), 101-111. doi:10.1016/0922-1425(88)90008-4

Araki, T. (2002). Labor and employment law in Japan. Tōkyō: Nihon Rōdō Kenkyū Kikō.

Dato, R. (1988). Japan and the world economy. Japan and the World Economy, 1(1), 1-2. doi:10.1016/0922-1425(88)90002-3

Ellington, L. (2009). Japan. Santa Barbara, CA: ABC-CLIO.

Matsuura, I. (1998). World economy and financial markets. Japan and the World Economy, 10(3), 387-390. doi:10.1016/s0922-1425(98)00040-1

Suzuki, Y. (1996). The main issues facing Japan's economy. Japan and the World Economy, 8(3), 353-360. doi:10.1016/0922-1425(96)00014-x

Tobin, J. (1998). World economy and financial markets. Japan and the World Economy, 10(3), 377-379. doi:10.1016/s0922-1425(98)00038-3