Cash-in-hand is important to Japanese consumers.

There is a difference between wallets in Japan and wallets in the United States (US). Wallets in Japan have to be designed with more room for cash. Wallets in the US have to be designed with more room for credit cards.

Why?

The US population is twice that of Japan. But the amount of credit card debt in the United States is 23 times greater than that of Japan!

Both of the above telling facts come from an Agence France-Press story carried by the Business Report, the business section of several South African newspapers. The story appeared on August 23, 2005.

From the Bank of Japan (BOJ), comes a 1999 paper titled: "Why Has Japan's Household Savings Rate Remained High Even During the 1990s?"

The not very mysterious answer provided by the BOJ is: Japan's population is aging and there is a great deal of anxiety among even younger workers that resources might not be available to provide for their retirement years.

So the Japanese are among the world's great savers. And it is no secret that Japanese consumers have an almost visceral loathing for credit. As the AFP story observes, neither the BOJ nor private credit card companies can encourage Japanese consumer borrowing.

Only 8 percent of transactions in Japan are executed with credit cards, the rest is in cash.

The design of the chart on page 1 began with the hypothesis that it would be possible to show how disposable income and propensity to consume moved together. But it clearly shows something far more interesting.

To get a clear picture of the two measures moving together, the scale of the monthly percentage change in the index was calculated and reduced by 10 times so the measures could be shown together.

For the last half of 2004 and the first two months of 2005, the two measures moved together according to the hypothesis. But from March 2005 through July 2005 disposable income and propensity to consume moved in opposite directions!

The vertical black line on the chart shows where the change occurs.

A review of the numerous statistical series provided by the Bank of Japan initially offered only unsatisfactory answers as to why this might occur. But one series did suggest an obvious connection, given what is known about Japanese consumer attitudes toward money.

The BOJ tracks actual cash money that workers take home--disposable cash. And that series did seem to parallel what was going on in the chart--but with these differences.

With less disposable cash available overall disposable income and the propensity to consume moved together. With more disposable cash, they move apart suggesting a much more primitive, concrete attachment to money matters on the part of Japanese consumers.

And it is surprising also how nearly instantaneous the 'cash in hand, not going to spend' reaction is.

It is important, too, to observe at this point that these ideas are offered suggestively and not definitively. Much more rigorous investigation would need to be done to be definitive.

For marketers, a sensitivity to Japanese attitudes to cash could provide opportunities to sell at a higher level.

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