Game-makers poised to profit from Asian health trends.
Japanese companies and local governments must now measure the waistlines of all employees and family members over the age of 40.
According to this new health-care initiative - which started this week - men whose girth exceeds 33.5 inches and women whose waistlines exceed 35.5 inches are considered overweight.
The new guidelines affect nearly 56 million people, or roughly 44% of Japan’s total population. They’re based on studies done by the International Diabetes Foundation in 2005, which looked at size and weight thresholds and used them to identify health risks.
Individuals who fail to meet these standards won’t be penalized or have to pay up personally. But their employers will - in the form of penalty payments and higher health-care premiums for every additional inch - thanks to this new waistline law that’s aimed at slimming down this island superpower.
As reported on CNN, NEC Corp. alone faces $19 million in such penalties. Other companies find themselves in a similar spot and could potentially owe hundreds of millions of dollars in punitive health-care fines.
Naturally, the law is controversial, with many believing that it’s at the very least unnecessary - and perhaps even represents an intrusion on a person’s individual liberties. However, others think it’s a very timely initiative, as well as one that’s badly needed.
Either way, the Ministry of Health aims to achieve its goal of reducing the Japanese overweight population by 10% in the next four years and an enviable 25% during the next seven years. It also intends to dramatically reduce national health-care costs at the same time.
The reason?
"Big" people have never populated the nation - but the people are getting bigger.
Since World War II, the average Japanese citizen has gained between three and six inches in height, 20 pounds in weight and, evidently, a bit too much around the waist. While the root causes are subject to debate, much of it comes down to more advanced medicine, changes in lifestyle and, to be perfectly blunt, and the introduction of Western foods including - you guessed it - fast food.
For years in Japan’s company cafeterias - long the domain of harried salary men eating quickly in order to get back their desks - a typical Japanese meal consisted of fish, pickles, some rice, and perhaps green tea, and accounts for between 600 and 800 calories. But Western alternatives - a McDonald’s Corp. (NYSE: MCD, Stock Forum) hamburger meal, for example - can tip the scale at nearly 1,400 calories.
My personal favorites includes the Godzilla-sized "Mega Macs," which weigh in at 754 calories and contain a staggering 45.9 grams of fat, and the "Mega Teriyaki" which, thanks to its sweet lemon sauce and sugary teriyaki sauce, muscles up at 903 calories and 64.3 grams of fat all by itself!
(And I’m being sincere in labeling these as "personal favorites" - because they’re really tasty - even though I can practically feel my arteries clogging up as I eat them.)
While I’m not a social scientist, nor do I pretend to have any special analytical powers, I have spent long stretches in this region during each of the past 20 years, meaning I’ve got plenty of anecdotal evidence that seems to support the data.
For instance, many younger Japanese are taller than they were in the past. When I first started going there in the late 1980s, I towered over most of my Japanese counterparts. Now we stand eyeball to eyeball. My wife, who at 5′6" was regarded as tall when she was growing up, is now average height.
In general, Japanese kids are also bigger, which is painfully evident - literally - as modern-day children try to cram themselves into school desks designed and installed in schools across that nation generations ago. Many actually have to duck when entering and exiting buildings with ceilings and doorways that are now too "low." Still others can’t sleep comfortably on traditional tatami mats, which were the measuring standard for hundreds of years, because the mats are now too short.
With change, however, comes opportunity.
Companies that design, manufacture and sell comprehensive obesity-management programs - not just games, or such one-off items as pedometers, scales and the like - stand to make out big.
One such firm is Konami Corp. (NYSE: KNM, Stock Forum), which we twice rode to profits (once 49.91% and then 39.31%) earlier this year in our sister publication, The Money Map Report. While most people know Konami as a video-game maker, the company actually operates a string of health-care clubs and is at the center of Japan’s new "healthy" movement.
Showing some real forward thinking, Konami has been able to market some of its leading games, like Dance Dance Revolution, as physical-education programs and medical devices. And those products are now being adopted worldwide by frazzled physical education teachers who find themselves faced with unmotivated, overweight kids. The problem is particularly acute here in America, where as many as 17% of our children are now obese, according to various studies.
Not only do such games offer an alternative to traditional exercises, but they’re also approved medical devices. And that means that school systems can introduce them - and count on insurance companies footing some, or all, of the bill.
Nintendo Co. Ltd.’s (OTO: NTDOY, Stock Forum) Wii is taking the same approach. With its Wii Fit programs, the company appears ready to duke it out in what may well be a newly emerging class of entertainment - video-weight-management programs.
In China, where Yum! Brands Inc. (NYSE: YUM, Stock Forum) has more than 3,000 restaurants - and where its KFC outlets are the dining venue of choice for many middle class Chinese consumers - we expect a similar onset of obesity. In fact, during my most recent trip there, I observed bigger Chinese in general than I’ve ever seen before.
Weight management is clearly becoming an issue there, too. And mark my words: Obesity will be an ultra-sensitive topic for the Chinese, who have long regarded fatness as a sign of prosperity, wealth and good fortune.
But that neither diminishes its potential impact nor the opportunity when it comes to profiting from the fight against obesity.
While it’s too early to predict choices there, our best guess is that companies like online-game developer Perfect World Co. Ltd. (NASDAQ: PWRD, Stock Forum) will adapt the single-player concept to reflect the Chinese predisposition toward massive multiplayer online adaptations. As a result, it will introduce new games that haven’t even been contemplated - yet.
