MD 8

Despite policies designed to keep the birth rate in check, China remains the most populous nation on the planet. That many people means a lot of new babies every year, and the digestive tracts of babies in China have as busy a schedule as infants anywhere.

What we’re trying to say is that China has to deal with mountains of baby poop every day. And since some Chinese parents have a penchant for keeping their kids dry with Japanese diapers, consumers in Japan have been reporting shortages of Japanese brand Merries, as Chinese speculators in Japan buy up the local stock.

Japanese health and beauty goods manufacturer Kao first released its Merries paper diapers in 1983. The product quickly gained a reputation as being especially gentle on babies’ skin, and has since gone on to capture a sizeable chunk of the Japanese diaper market.

Ordinarily, you can find Merries wherever diapers are sold in Japan. However, over the past few months, shoppers in Japan have noticed something strange. When they head to the store to buy diapers, the Merries are often sold out. But why? Could it be that industrious Japanese babies, inspired by the way so many of their parents dutifully work overtime, are double-timing the production of the only thing they know how to make?

▼ Burdock root is both a delicious ingredient in many Japanese dishes and high in fiber, but it’s not usually given to babies.

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It turns out that Merries are a hit not only in Japan, but in China as well. And with 16,000,000 Chinese babies born annually, demand is so high that it seems there aren’t enough Merries to adequately cover both countries.

At this point everyone who stayed awake in Econ 201 is wondering why Kao doesn’t just make more Merries. If they’re so popular in China, the market is probably big enough to justify building a factory for local production, right?

Earlier this year, that’s exactly what Kao did, as operations began at the company’s new diaper production facility in Anhuui Province. The cost benefits of producing in China translates to a cost of 24 yen (US $0.24) per diaper, about half of what Japanese-made Merries exported to China go for.

Kao even went the extra mile in tailoring the Chinese-made Merries to the local market, implementing advanced production techniques not even used in the company’s Japan-spec diapers. The Chinese Merries have a special dimpled inner surface, reducing the area of contact with the baby’s behind to reduce rashes, and are also more absorbent than the Japanese version.

Nevertheless, Kao hasn’t been able to convince all of its fans in China to switch over to the locally-produced Merries. Recent product safety scandals involving Chinese-produced goods have apparently weakened the faith of even Chinese consumers in the middle and upper income groups, and several are insisting that regardless of what the spec sheets say the better diaper is, they’re sourcing their Merries from the Japanese domestic market.

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MD 4

Responding to customer demand, online retailing giant Rakuten has added shipping options for customers in Hong Kong, mainland China, and Taiwan on orders for Merries. But if you’re wondering how it makes economic sense to have your diapers delivered from overseas, bear in mind that the Merries craze is so powerful in China that they command astounding premiums, with Japanese-made Merries selling in China for two and a half times their usual price in Japan.

The markup potential is so enticing that a cottage diaper brokering industry has sprung up, with individuals buying up Merries in Japan, then reselling them to customers in China.

Sometimes I make more than 30,000 yen (US $300) in a day,” said a Japanese man in his fifties who’s been buying Merries and reselling them since June. “If I really felt like it, I could rake in 1 million yen ($10,000) a month.”

It seems several broker groups operating in Japan are made up of Chinese nationals, according to shopper accounts.

“I noticed that since a few months ago, Merries are often sold out at the drugstores in my neighborhood. I asked a clerk why this has been happening, and he filled me in on how Chinese customers come in and buy up all the stock.”

“When I went to the store in June, there was a van parked out front. When I looked inside it, I saw bags filled with Merries,” recalls another Japanese consumer. “Inside the store, I saw a young women filling a cart with them. She checked out, and then about four or five other people helped her carry the bags to the van. I could tell right away they weren’t Japanese. Then they came right back in, and started filling up a cart with Merries again. I was worried they were going to buy up everything, so I panicked and bought two packs myself.”

Some stores in Japan, attempting to ensure an adequate supply for local infants, are limiting Merries purchases to one pack per family, with notices posted in Japanese and Chinese.

▼ Japanese

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▼ We have no idea why the Chinesse version includes so many question marks.

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One retailer is applying an even trickier method to attempt to prevent stockouts. “In our store, when we put the Merries out on the shelves, they get bought up by Chinese customers. So instead of putting them on display, we only bring them out when customers ask us for them,” the clerk explains.

We’re not entirely sold on the effectiveness of this method, however.

▼ Anyone with the gumption to start their own diaper exporting venture easily has enough determination to learn how to say “Where are the Merries?” in Japanese.

MD 5

But despite countermeasures like these, some Japanese shoppers still complain of not being able to purchase Merries for their babies. “I had to special order them through Babies R Us,” laments one parent. Another mother, unable to find Merries anywhere, settled for buying another brand, but was dissatisfied with the looser fit.

▼ A good diaper is like a good racing seat – if it doesn’t fit snugly, things are going to get messy.

MD 6

Some exasperated consumers in Japan have been taking to the Internet to criticize the diaper speculators. “What’s with them?” grumbled one shopper who observed a diaper broker group making a run. “There was something scary about them, so I moved away from the diaper section.” Another had harsher words still, calling the practice “vulgar and immoral.”

Kao has yet to comment on the situation. And while we can certainly understand the frustration of Japanese shoppers unable to get their hands on Merries, this would be a good time to remember that due to the nature of atmospheric currents, air quality issues in China occasionally affect that of Japan. While no one appreciates a dust storm coming from their neighbor, imagine how much worse it would be mixed with particulate matter from the uncovered behinds of 16 million infants.

▼ “Everyone” includes Chinese babies.

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Source: Naver Matome
Top image: Save 22
Imsert images: Sakura, Starting Grid, Exblog, TWPL, Tofugu, Bride Racing, Amazon