Sunday, October 1, 1995

King Crab and the Japanese Structural Impediment

In a round-about way, the recent rage in Japan for restaurants to offer all-you-can-eat crab feast is connected to the way Japanese motorists are regulated. How so? Read on, please.

Under Japanese law, all new cars must be inspected after three years on the road, thereafter every two years. After a car is 7 years old, the compulsory inspection becomes an annual event. The inspection costs at least the equivalent of $1,500 plus any repairs needed to pass the stringent inspection. The government appointed inspection enterprises have carte blanche in deciding what repairs are needed and therefore the final bill to the hapless owner. The process is so expensive and time consuming that many frustrated owners trade in their old cars for new ones to avoid having to face the inspection fiasco.

Russia's Siberia on the other side of Japan Sea faces a shortage of cars, especially ones that still run, and hungers over the glut of used cars in Japan. However, because of the lack of hard currency to pay for the used cars, Russian ships have been landing in Hokkaido (Japan's northern most island) loaded with king crabs to swap for cars which are then sold for a handsome profit back in Siberia.

One consequence is that the price of king crab has reached the commodity level in Japan. With the restaurants needing to maintain traffic in face of recessionary pressure, the all-you-can-eat of a heretofore expensive delicacy became a marketing solution. Of course, everything is relative. In Japan, a cheap all-you-can-eat crab dinner starts at $25.