When we last heard from Hiroshi Sogo of Kinokuniya in 2014, the Tokyo-based company was expanding its international base and opening its AsianBasis company (April 2013) for e-commerce and ebooks, in the face of a badly challenged home market. Today, an update gives us a picture of adaptive corporate savvy in the face of the Japanese book market’s decline. Because of unsatisfactory leasing negotiations, for example, Sogo says that his Shinjuku South store will be downsized, but will specialize in non-Japanese literature in English and other languages. This, in a market Sogo says has undergone 40-percent contraction in 20 years’ time.  — Porter Anderson

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By Roger Tagholm | @RogerTagholm

‘The Billion-Dollar Question’

Fixed prices in Japan ensure “cultural diversity” and prevent a “Trumpian dystopia,” according to Kinokuniya’s Director of Import and Distribution, Hiroshi Sogo, a popular and widely respected figure in the international book trade.

He spoke to Publishing Perspectives in a wide-ranging interview that covered the current market in Japan, the company’s partnership with the Fahasa chain in Vietnam, and the future of brick-and-mortar bookshops.

Publishing Perspectives: How many stores do you now have in Japan, and overseas, and how is trade in Japan at the moment?

Hiroshi Sogo

Hiroshi Sogo: We have 68 stores in Japan and 27 in other countries.  For January to April 2016, book sales grew by 2.9 percent over the same period last year.  However, the total Japanese publishing market, including magazines, stood at 559 billion yen (US$5.36 billion), for this period—down 2.3 percent on the previous year.

In Japan, the publishing industry figures include magazines–Japanese bookshops usually carry a wide range of magazines, which is perhaps different to the US and UK, where supermarkets play a larger role.

Last year’s figures, January to December 2015, looked like this [according to the Research Institute for Publications, a subsidiary of The All Japan Magazine and Book Publishers and Editors Association]:

• Total sales: 1,522 billion yen (US$14.62 billion), comprising:
  • Books – 742 billion yen (US$7.18 billion)
  • Monthlies – 634.6 billion yen (US$6.11 billion)
  • Weeklies – 145.4 billion yen (US$1.45 billion)

Trade book sales were declining sharply last year, but now seem to have plateaued, but magazines (monthlies and weeklies) are in a dire situation, hit by the Net and by people’s attention on social networking sites.

Fortunately, Kinokuniya is standing firm in this environment, partly because we rely less on magazine sales, and partly because we have robust library businesses in the tertiary education market.

That said, the total Japanese publishing industry, including books, saw its peak of sales in 1996. It has lost 40 percent of market size (in terms of yen) in 20 years.

PP: What is the reason for that decline?

HS: Ah, the billion-dollar question. A declining population, an aging population and fewer students are the biggest problem. Then there’s the economic situation—it is often said Japan has suffered from the so-called “lost decades” since the 1990s. Changes in social behavior have had an affect too, like more time and money expended on smartphones and games.

Some people blame the lack of good books, which is of course debatable, but it may be true that we see fewer blockbuster titles and decent bestsellers. They say books are mediocre, therefore won’t sell as much. The list can go on and on. One can only hope that book sales have now reached the lowest point and that people will read more from now on. Wishful thinking? Maybe.

PP: How important are fixed prices to the health of the book industry in Japan?

HS: We believe that the price maintenance mechanism has worked very well, to the benefit of the reading community in this country.  Japan is not enormous in terms of its size, but it is complex geographically, with a lot of inhabited islands along the archipelago.  Books are priced uniformly wherever you live, which serves the fundamental human rights of access to knowledge. Also, books are priced very reasonably priced here compared to the UK, US, and other countries in the world, maintaining accessibility across broader genres.

If allowed, heavy discounting will destroy market order, and idiotic populism will come to reign where popular titles and genres will sell at lower price points while less popular genres—educational and academic, for example—will be sold more expensively.  The market will be distorted.  The haves will be able to afford, while the have nots will not.

Cultural diversity will be under serious threat, and high end creativity and artistry in literature, drama, music and the visual arts will be demolished.  Poetry will belong to archaeology. Here comes a Trumpian dystopia.  No, we do not wish to see that happen.

“Come August, BKT will become a standalone international bookshop right in the heart of Tokyo.”Hiroshi Sogo

PP: Some UK publishers report very strong sales at your Dubai store.  Are there any stores, either at home or abroad, with which you are particularly pleased?

HS: Yes, there is no denying Kinokuniya Dubai’s success. With its 68,000 square feet of space, it is not necessarily Number One in terms of square-foot efficiency among Kinokuniya stores across the world, but it has been continuously growing in strength since it opened in November 2008.

Right now, during Ramadan, it is open until 2 a.m. until around July 6. Its cafe faces the Dubai Fountain and the Burj Khalifa. On New Year’s Eve, the cafe sells a ticket for a seat and meal for AED 1,000 (US$272) per head for those who wish to observe the now world famous Burj Khalifa fireworks after the spectacular countdown.

In Japan, we are rather proud of the architecture of our flagship store, Shinjuku Main Store, in Shinjuku Tokyo, which was built in 1964.  I

It was designed by Kunio Maekawa, the renowned Japanese architect from the mid-20th century and the Number One disciple of Le Corbusier in Japan. It’s a nine-story structure (eight levels above ground, on basement), with approximately 50,000 square feet of floor space.

PP: Are you looking at other international locations?

HS: Yes, we are constantly looking for opportunities. We have received invitations from the Middle East, from Southeast Asia—Myanmar, Cambodia and Vietnam—and from North America. We are very cautious, however. Unless economic terms and conditions suit our requirement, we stay away. We examine every single proposal very carefully.

Meanwhile, we have entered a partnership with FAHASA in Vietnam, where we started selling Japanese books at FAHASA’s two bookshops in Ho Chi Minh City since May this year. This is in line with our underlying thinking that where a country is rising, education will need to be focused, and there will be demand.

FAHASA is a state-backed book retailer and distributor in Vietnam with 84 bookshops across the country. The Vietnamese population is young, with more than half under 30.  Many aspire to learn foreign languages, and Japanese is one of a few that attracts a lot of students.

PP: What is happening with ebooks in Japan at the moment?  Approximately what percentage of the market does digital occupy?

HS: A widely trusted statistic shows that about 10 percent of the market is digital. However, it’s believed that the major share of it is taken by manga and/or comics. There still exist many authors who do not wish to be digitized, including Haruki Murakami. He is digitally published in English by Penguin Random House, but not in Japanese on the home soil. Academic publishers are also slow to migrate to digital, presumably because there is a lack of financial resources to invest in order to develop the necessary facilities.

Dedicated ebook reader devices are not very popular in Japan. You seldom see a Kindle on commuter trains, for instance. A [Rakuten] Kobo is rarer. However, tablets and smartphones are everywhere, and you sometimes see people reading on an iPad or other devices. Many are reading newspapers instead of books, though.

Manga and/or comics are popular in digital, although avid manga readers tend to say that a digital rendition of manga content on tablets cannot do justice because, for example, the velocity of flipping the page has got to be very fast and ferocious when it comes to a cliff-hanger moment, and the digital version won’t do that with the current technology.

“If allowed, heavy discounting will destroy market order, and idiotic populism will come to reign where popular titles and genres will sell at lower price points while less popular genres–educational and academic, for example–will be sold more expensively.”Hiroshi Sogo

PP: Why do you think ebook sales have not taken off in Japan as much as it has in other countries?  Is this because Japanese people love physical books? And, if so, why is that?

HS: There is a school of people who think that reading on paper and screen are not the same. However, the biggest factor in my personal view is that publishers are reluctant to invest in digital. The paucity of content in the Japanese language is a large stumbling block for ebook proliferation.

PP: Why is a Kobo ereader such a rare sight? That seems surprising, given that the company is a Japanese-owned, by Rakuten.

HS: I do not have the answer to this. I feel that they spent a lot of money in promoting it in the beginning, but nowadays you hardly see any advertisements.

PP: Can you tell me a little about the AsianBasis Corporation [its ecommerce operation]?

HS: AsianBasis is up and running in Dubai now. The Dubai site was set up last year. You can see the site here. How to respond to growing demand for Arabic books is a challenge.

PP: How do you see the future for physical bookstores?

HS: As it stands at the moment, in many places in the world, decent bookshops are being rediscovered. Lousy bookshops will be weeded out. We do not believe that the book industry is finite and we are playing a zero-sum game. The more educated you are, the more you tend to read. The book industry is always pegged to social evolution. If we are to see more dictators and bad guys in governments, our collective intelligence will diminish and the book trade will suffer from that.

On the other hand, if more progressive and well-read officers are in less bigoted administrations, more literature will be produced and creativity soars, science and technology will progress and the trade should flourish.

Digital delivery and online bookselling will continue to antagonize physical bookshops, but without the physical presence of books in showrooms, online cannot keep growing. There will be an equilibrium point, which may shift from time to time depending on fashion, and the economic and political situations of the time.  Therefore, physical bookshops will not be annihilated. However, only good bookshops with respectable ranges and common sense, conscientious services, with up-to-date technological assistance in an aesthetically pleasant space, can survive.

“We aim to build a brand image that we are a bookish bookseller, and alternative comics with our own branding apparatus—such as original covers—may help us make a progress in the right direction.”Hiroshi Sogo

PP: Is the Japanese government supportive of bookshops in terms of lower rates and rents?

HS: As far as I am aware, no support looks forthcoming from the authorities. The industry bodies, including the Publishers Association and Booksellers Association, have been lobbying for a special tax rate for publications, to no avail so far. Only newspapers have been granted a special consumption tax rate, should it rise in 2019.

The general rate is expected to rise from the current 8 percent to 10 percent then, but the tax for newspapers will stay at 8 percent. It seems unlikely that the government will reduce the tax on books from 8 percent.  The zero rate of VAT in the UK is always referred to as a great example of supporting culture. The tax is now scheduled to rise to 10 percent in Oct 2019. The BA and PA of Japan are saying it should not rise for books and magazines.

Rent is killing retailers across the board. Only those who can afford will remain open. Consequently, every high street across the country will look the same in time, with the same mix of brands and products offered. This is a global problem, and Tokyo is no exception, I suppose.

Just recently, we announced the closure of the great part of a major store—Shinjuku South Store, scheduled at around the end of July after 20 years of operation since it opened in 1996.  Some 90 percent of the space will be relinquished and handed back to the landlord. This is entirely due to the lease negotiation that did not see a reasonable conclusion from our viewpoint.

However, we agreed to retain one floor, where we will continue to operate our main foreign book operation called Books Kinokuniya Tokyo (BKT). Kinokuniya’s decision not to choose Japanese books to stay and instead to champion English and other languages publications has been praised by people from many walks of life. It is the largest bookstore specialising in imported books in Japan, and visited not only by Japanese regulars but expats, touring authors and publishers alike.

Come August, BKT will become a standalone international bookshop right in the heart of Tokyo.

PP: You are experimenting with different covers for manga in different territories. How is that going?

HS: This is still at an experimental stage.  Our comics buyer at our New York Store, Terence Irvins, talks to publishers to create a ‘Kino original cover’ edition, which is shared by other Kinokuniya stores around the world. But it is early days.  One thing for sure is that we aim to build a brand image that we are a bookish bookseller, and alternative comics with our own branding apparatus—such as original covers—may help us make a progress in the right direction.

PP: What hat do you like to read yourself?  What is by your bed at the moment?

HS: I’m an omnivore, so to speak.  I take up whatever interests me.  I am concurrently on Long Defeat: Cultural Trauma, Memory, and Identity by Akiko Hashimoto (OUP) and Dark Matter and Dinosaur: The Astounding Interconnectedness of the Universe by Lisa Randall (Ecco/HarperCollins).  My next book will be At the Edge of the Orchard by Tracey Chevalier (Borough Press).