Editing The Pen Addict 698/transcript (section)

== Japanese Market Context and Inflation ==

* All right.
* Context, which I have gotten from a couple of different sources have mentioned this to me.
* And we might just throw out all the conversation we just had,
* but I think it was a good conversation to have.
* So this email is from Josh, who is a small fountain pen maker,
* like what we consider makers in our business,
* say like a Carolina Pen Co., that type of maker in Japan.
* So let me give this perspective from someone in Japan that might help with all of this.
* I was listening to episode 697 in the sticker-shocking segment
* about the price increases from Platinum and Pilot,
* and I can help you understand some of these price increases.
* I have a small business making fountain pens based in Japan,
* so I can provide some direct context towards the cost of doing business in the country.
* As you say, the cost of basic materials such as gold has risen,
* which naturally affects the price,
* though the amount of gold in a pen is pretty small
* and won't account for the kind of huge price increases we see.
* The reason for the price increases of this magnitude
* is years of inflation all striking at the same time.
* For decades in Japan,
* inflation has been something that actually hasn't occurred very much.
* The banking and currency has been extremely stable,
* as has the cost of housing, food, utilities, etc.
* This also means wages have stagnated with no inflation to drive them.
* This was pretty much all fine as it goes until COVID hit.
* It seems like after the blow to tourism and industry in general,
* Japan has no longer been safe from inflation.
* Utilities, housing, food,
* the cost of everything is rising notably.
* And employers are going to have to start raising wages again soon as well.
* All of this increases the final cost of the pen
* because the companies have to maintain a certain amount of margin.
* The issue is that Japanese brands generally resist small incremental price increases,
* preferring to wait to see if the cost stabilizes
* and eating some of the overall profits for a short while
* because they really don't like to make and announce price increases.
* Seriously, brands here have had press releases in years past
* for raising the price of a bag of chips by 20 cents
* where members of the board have bowed deeply in apology to the public.
* It's seen as bad press.
* So the Japanese pen brands have mostly resisted raising the price too much,
* but now we see reality setting in.
* Man, are they bowing now then?
* I don't know what they're doing right now.
* Nobody has stood up at Sailor last week.
* No.
* These price increases are the result of several years of backlog
* of inflationary price increases
* and likely have a couple years of future inflation built in as well
* because they don't want to announce another price increase six months from now.
* Except for Platinum, who did that in 2025.
* This is all coupled with the weakening yen.
* These companies have to do business internationally
* and their money simply is not going as far as it used to.
* Lastly, in my opinion,
* some of the pens you're talking about have been historically undervalued
* to attract more buyers, especially pilot pens.
* The 823 is simply an amazing pen.
* The filling system and nib are top-notch,
* and at its former price point, pound for pound,
* it's smoked pretty much every other pen in its price bracket.
* Even at its current price, it's still a very good pen,
* but of course, if we're used to paying a lower price,
* then we don't want to pay a higher new one.
* As far as the disparity between the Platinum versus Pilot cost increases,
* like you say, that's a strange mismatch,
* and I couldn't be sure.
* Like you, I'm a big fan of these brands
* and audibly gasped at some of the price increases,
* but unfortunately, it does make sense.
* I can only hope secondhand and vintage dealers
* won't raise their prices commensurately too much,
* but time will tell the tale on that one.
* So thank you, John, from Motome Collection.
* We'll get a link in the show notes to John.
* This was very good.
* Very good context.
* I have been told this from different sources that the...
* So broader, what we've been talking about
* the past two or three episodes
* are the big three Japanese companies, right?
* We've been basically having a Japan exclusive conversation,
* and they're being hit with different financial ramifications
* more than just, you know, price of gold go up.
* We charge more, right?
* So they're having to allocate for many, many different reasons
* for increasing the price,
* including being conscious enough
* to purposefully not raise the price
* and eat some cost,
* and hopefully it goes in the right direction.
* And then when it doesn't,
* they put the big number on it,
* which is what we're seeing now.
* I would say that the conversation we were just having
* about tariffs and stuff,
* I think that all fits in this.
* Like, in the sense of like,
* it's not just gold.
* It's not just tariffs.
* It's definitely not just gold.
* It's not just inflation.
* Like, it's...
* All of this stuff is happening at once.
* And from that context,
* which is very good context from Josh,
* you can see why it seems most shocking
* if you've been resisting needed change,
* and then it's gotten to a point
* where you're clearly not going to restore the prices,
* so they've just gone for it.
* In the hopes that...
* But what this does suggest to me, though,
* is something that I was worried about
* and was hoping would not be the case,
* but now I think it will be,
* that these prices will not go down.
* Right.
* I mean, in...
* Yes, they're not going to go down.
* I was trying to be...
* I was going to say something hopeful.
* In like, maybe five or ten years,
* we see like a reset or an introductory...
* Maybe they'll just, you know,
* recycle the product line, right?
* You know, maybe we'll have the Sailor 1911
* large, big, sexy 14K gold nib at $240.
* I don't want them to call it that.
* In 2032, right?
* They're just reversing like some of the damage, right?
* And reintroducing a lower price point pin.
* That could theoretically happen, but...
* Or they hold further price increases
* for a longer period of time,
* so inflation kind of catches up.
* But yeah, my...
* Yeah, but I don't think anyone thinks
* prices are ever coming down with these companies
* because they're publicly traded companies
* and that's not how stock price goes up works.
* My hope was if it was truly a gold problem,
* that if gold price is stabilized, you could,
* but I don't...
* I feel pretty confident that that is not the case.
* It's going to...
* That would end up being a lower percentage
* of the overall increase.
* So I don't...
* I now feel like I understand less
* about what the future is
* and this probably is going to look like
* if these are going to just be the prices.
* Yeah.
* Not great, Bob.
* Not great.
* $400 and $500 entry-level Japanese gold nib pens.
* Not great, Bob.
* Not great, Bob.