Future of Japanese Ramen Industry in Singapore: Through the presentation in JETRO

2017/03/16
School of Economics
Yuko ERYU

1. Abstract:
              The theme of presentation was announced as “Choose one food/drink which you want to compare between Japan and Singapore, and describe what value the food/drink possess in Singapore market based on research in retail stores.” Our group chose Japanese ramen industry as the theme, and set the issue as “Why Japanese ramen is expensive and how to cut the price”, because we had interest in the reason why Japanese ramen are popular in Singapore even though the price is high than their ordinary expense for food, and we expected that finding the way to lower the price would lead to rise popularity of Japanese ramen. Through this presentation and field investigation, the conclusion was drawn as the expectation was wrong that Japanese ramen companies were not eager to lower the price nor thinking to spread ramen to non-rich people by cutting cost of ingredient. What companies hold, in fact, is not negative goal like cutting cost and making margin but positive one like making more sales. To explain why companies do not cut the price and describe my idea that how to make more sales, this paper is classified to 6 parts, Why our group chose Japanese ramen industry as the theme (2. Introduction), How we build the presentation (3. Method), What feedback JETRO gave us about it (4-1. Result), What we learned by field investigation (4-2), How Japanese ramen companies make more sales (5. Idea), and Conclusion (6).
 
2. Introduction:
As mentioned above, we made a presentation about Japanese ramen industry in JETRO, and there are three reasons why it was chosen.
              Firstly, after the issue of presentation was announced, to learn what kind of food/drink companies already succeeded in Singapore, we searched “日系 食品産業 シンガポール (Japanese company, food industry, Singapore)” on google. After browsing, we found that Japanese food companies succeeded in the field of eating-out, such as sushi restaurant, ramen restaurant, and yakiniku restaurant, and people in Singapore seemed to accept Japanese food as one category.
              Secondly, by the articles of JETRO, we found that people tend to eat out especially for lunch and dinner rather than cook by themselves. There are over 21,000 places for eat-out, such as Hawker center, food court, restaurant, fast-food restaurant, and coffee shop, and this number has been increasing in this 5 years*¹. That means that the success of Japanese food companies in eat-out industry was not a coincidence, but expected result because people in Singapore already had a habit of eating out.
              Lastly, we voted for sushi, ramen, and yakiniku depending on what do we had interest the most, and ramen won.
 
3. Method
              There were three times for the preparation of presentation, and at first one, we did just a report that Japanese ramen in Singapore is expensive than one in Japan based on official statistics from government and websites of Japanese ramen restaurants in Singapore. We did not understand what to do nor even what the question given meant. After receiving advices from Professor Doi, we focused on the cost of ingredient. Singapore relies on import for almost all food supply, and we found the reasons why the cost of ingredient is high: regulation difference for import, and infrastructure difference among ASEAN countries. Regulation difference is obstacle for free trade and infrastructure difference prevent moving cheap ingredient to other countries efficiently.
              We described that the regulation problem would be solved because ASEAN countries are increasingly getting together to realize AEC blueprint, and infrastructure problem would be solved because recently countries like Japan and China has invested for the development and other efforts are being made by east and south-east Asian countries. After these explanation, we calculated and showed ramen became cheaper by $5.6.  
 
4. Result
4-1.        Feedback from JETRO mentioned mainly three points.
The first is to solve regulation problem is difficult and even after ASEAN economic integration, it is not said that regulations change so fast because of the quality.
The second point is our cost estimation. We estimated that the cost for employment and for land were not so different from Tokyo ones, but the costs of Singapore are actually two or three times as high as Tokyo ones.
The last point is about Japanese brand, which means whether ramen made from non-Japanese ingredient is said as Japanese ramen.
Based on these facts, especially on the first and third one, we visited three Japanese ramen restaurants and asked questions.
 
4-2.        What we learned by visiting restaurants was the reason why the ramen stay expensive and what Japanese ramen companies pay attentions for. I found that the reason why price is high comes from “the consumer mind” and “the supplier mind”. “The consumer mind” means that customers do not care the price so much and value the expensive ramen because of the taste, quality, and Japanese brand. On the other hand, “the supplier mind” means that restaurant managers recognize lowering price as lowering the quality. Then, they pay attention more to advertise and make sales rather than cutting price.
              This match of the demand and the supply makes the high price ramen, and there are two questions left: How to increase sale, and How to solve regulation problem.
 
5. Idea:
              I offer answers for the two questions above.
              First, to increasing sale, there are two types of solving: advertising, and open a branch. In this case, as the manager of Nanchat-Tei (a Japanese ramen restaurant we visited) said, they already had made a lot efforts to advertise on SNS, TV, and the blog, so new approach is needed. That is opening a branch, especially on Hawker centers. When I visited Hawker centers, I wondered why there are not many Japanese food stalls even though Japanese food is popular. As Pokka said, it is the most efficient for food companies to make sale that approach people who eat at Hawker centers. What is the problem expected is job-hopping, and non-accumulation of know-how, and JETRO can make educational help.
Second, to solve regulation problem, even though JETRO said it difficult, I offer to educate farmer or animal production in developing counties especially in ASEAN. I could not present detail project, but I consider exchanging know-how of agriculture and animal production with the help of JETRO will definitely make it easier to solve regulation problem.
 
6. Conclusion
              In conclusion, our research question, “finding way to lower price of ramen is useful for Japanese ramen companies in Singapore”, was wrong because the companies do not seem to want to lower the price but make efforts to increase sales.
              As above, sometimes research question does not suit the issue and expected answer is not proved. In this case, our presentation could not succeed mainly because we could not investigate in the field in advance and mistakenly estimated that Japanese ramen companies would like to lower the price. I realized that data does not cover what I want to know all and researching on site is sometimes incredibly effective.
*¹referred from: https://www.jetro.go.jp/ext_images/_Reports/02/2016/bf290058d8a77515/rp_research_jpstSingapore201603.pdf
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