December 29, 2005

Funeral business too undergoes restructuring in Japan

For a while I wondered why the cost of Japanese funerals was so high. About 6 months earlier I read about an account of a guy who loses a loved one in Japan. The expenses come upto 25000 $. This experience left him with bad feelings about the funeral services in japan.
Now the site- reports that the funeral business is undergoing a restructuring like many other japanese businesses. And who's leading this? Foreigners who are fed up of getting shafted with 5 digit funeral bills.
Japan: The Death Biz Isn't What It Used To Be
Outsourcing enables American startup to enter Japanese funeral services industry
American business models have been used as levers to open many industries in Japan to participation by foreign firms, from toy retailing to fast food restaurants and from consumer banking to direct selling of computers. This case describes the efforts of All Nations Society to apply an American approach to outsourcing, pricing, and service bundling in the very traditional industry of funeral services so as to create a competitive advantage for itself against companies that practice opaque pricing and have high overheads.
Foreigners breathe new life into Japanese funeral business

It wasn't all that long ago that Japan was accused of closing its markets off to foreigners. But now, Yomiuri Weekly (1/1) says, there's a lucrative business Japanese are actually dying for foreigners to get into -- literally.

Average Japanese funerals cost enough to make the deceased roll in their graves. Costs often run well into the millions of yen and bereaved families are often so fraught with dealing with the loss of a beloved one, they pay out whatever and whenever the undertaker demands.

In fact, a Fair Trade Commission study found that 96 percent of consumers felt that they were not in a position to get selective about the funeral business they chose to use, while 36 percent didn't even receive a quote for services before they were charged.

That's where people like John Kamm and the All Nations Society come into it. Kamm has a postgraduate degree from prestigious Waseda University and studied the Japanese funeral business.

"Conditions are surprisingly close to what they were in the United States in the 1980s," Kamm tells Yomiuri Weekly.

Kamm introduced the idea of pre-need funerals into Japan. His All Nations Society allows people to decide what type of funeral they'd like to have while they're still alive -- a concept that spread widely in the U.S. two decades ago. Doing so, the weekly says, allows bereaved families not to fall victim to preying undertakers.

All Nations Society offers ceremony packs. A 10,000 yen membership while still alive entitles the buyer to such funeral packs as the 850,000 yen service that covers cremation, funeral hall costs, a hearse, a prayer altar, urn for ashes and commemorative photo. There are, Kamm says, no other costs.

All Nations Society can even provide single day funerals (most death ceremonies in Japan run for at least a few days) for a bargain basement 350,000 yen, almost a quarter of the average 1.4 million yen most Japanese funeral operators charge.

"Sometimes, the amount demanded for the cost of an urn for ashes can be really expensive, but the actual cost of the urn is cheap," Kamm tells the magazine. "If you act according to your conscience, it's possible to provide a cheap funeral service."

Kamm says All Nations Society has set up more than 2,000 funerals in advance since starting business in Japan in November 2003. He says that the biggest problem with Japanese funeral operators is collusion.

"They only ever use the same florists, the same transport companies. Funeral prices are set like a cartel," he says.

A desire to provide something more individual, away from the norm helped inspire Taiwanese native Fumitada Naoe to establish Sanctuary a couple of years ago. A tragic end to the life of his first love provided the final step for him.

"At her funeral, her commemorative photo was displayed on an angle. Neither the priest giving the service or the funeral operator straightened it," Naoe says. "I thought that was a terrible insult."

He took out his frustrations by taking business off Japanese undertakers. Sanctuary's basic payment plan offers four types of increasingly elaborate funeral services whose costs range from 400,000 yen to 1 million yen, while on top of that are customized plans promising a ceremony celebrating the dead person's character and tastes at a cost of anywhere from 1 million to 3 million yen.

Midori Kotani, a Dai-Ichi Mutual Life Insurance Co. Economic Research Institute researcher well versed in the Japanese funeral business, says more foreigners like Kamm and Naoe are not the only changes people in the death trade are likely to see.

"Japan's funeral services are going to become a lot more varied," she tells Yomiuri Weekly. "You're going to see more hotels, restaurants and florists get involved." (By Ryann Connell)

December 26, 2005

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