Easement/Abolishment of Economic Regulations Still Needed

From Economic Regulations to Social Regulations: Shifting Focus to Liberalizing Government Activity

Efforts towards easing/abolishing of social regulations aimed at promoting environmental protection and safety for citizens in areas such as medical care, welfare, and child care have also strengthened since 2001. The focal point of discussion regarding deregulation has gradually shifted from economic regulations to social regulations. In recent years, the government has stepped up efforts towards opening up its activity to the private sector, as shown by the experiment of privatizing the levying of national pension payments.

In this way, the focus on economic deregulation has been steadily decreasing. There are economic regulations, however, that still present a serious obstacle for companies. Among them is the regulation that is derived from the barber and beautician laws.

This research looks at how regulations from barber and beautician laws are hindering the business of companies in the barber/beauty industry, using the example of QB Net Inc. (hereafter QB Net, or the shop name QB House) as a base.

The QB Net Business Model: Specializing in Core Service Modules

The traditional services of barbershops include hair washing, shaving, simple massages and so on. QB Net has to the extent possible squeezed out such services, which can be a waste of time for some customers, and only provides ten minute haircuts for 1,000 yen. This could be called a business that has reevaluated service processes considered common sense in the past, and has kept only its core service as its module.

QB Net has achieved robust growth since opening its first shop in 1996, with the number of shops reaching 355 by the end of June 2007. The chain attracted 9.52 million customers in the 2006 fiscal year (until June 2006), representing a 167-fold increase since the first fiscal year. In the background of such business expansion are the following innovative approaches: 1. Opening shops within train stations in 1998 when “business inside stations” had not yet taken root; 2. Headquarters gathering information on customers’ location and time of visit, waiting time, cut time, gender, age and etc., and assigning barbers and beauticians in accordance with the busyness of each shop.

Securing barbers and beauticians who tend to have a strong spirit of independence, however, is proving to be a bottleneck for management. The regulations from the barber and beautician laws have made this problem even worse. These regulations make it difficult to respond to the needs of customers, and represent a significant obstacle in business development.

Regulations from the Barber and Beautician Laws: Variety of Negative Effects, Should be Eased

The most pronounced adverse effect of these regulations is that barbers and beauticians cannot work in the same shop. Because of this, QB Net changes the barbershop or beauty salon notification depending on the shop, and only those who report with the proper qualifications are employed.

Furthermore, because barbers and beauticians differ in their cutting expertise, the fact that they cannot work at the same branch makes it difficult to respond to customer needs. Barbers cut hair straight across, while beauticians tend to cut down from the top of the head. As such, beauticians tend to have difficulty providing close-cropped haircuts. This regulation therefore makes it difficult to assign a combination of barbers and beauticians, each with different skill sets. For QB Net, the ideal ratio is one barber and two beauticians per store.

As a last-ditch measure to respond to customer demand, QB Net has opened eight shops that double as both barbershops and beauty salons. These shops have one waiting room, but the rest of the shop is divided into one side with barbers and another side with beauticians, each with separate entrances.

To combat the adverse effects of these regulations, the QB Net has applied for a special structural reform zone that will eliminate the division between barbers and beauticians, and for recognition of a haircut-only qualification. As of June 2007, however, such requests have not been approved. This has to do with opposition from the barber/beauty industry.

In addition, unit-type shops called “QB Shells” are being developed to put branches in small pockets of “dead-space” in areas with high traffic-flow, as well as to make it easier to conduct test shops (recipient of the 2006 “Good Design” award). The barber and beautician laws, however, stipulate a specific area for the waiting room in barbershops and beauty salons, and QB Shells without waiting rooms/areas cannot be opened in Japan. QB Shells have been opened in Singapore and Hong Kong, and have been successful. (A QB Shell has also been placed inside of the Ginza shop for promotional purposes).

Countries and regions that require national qualifications for barbers and beauticians are rare; furthermore, the only countries that distinguish between the two are Japan, South Korea and Taiwan. Recently there has been a dearth of people in Japan aspiring to become barbers, while many barber vocational schools have shut down. The situation is slightly better for beauticians, who have been positively impacted by the “charisma cutters” (highly popular beauticians). Yet, even if one passes the national exam (passing rate of about 40%) after paying vocational school fees upwards of 1.5 million yen (about US$13,000), the fact remains that wages are low and there are not many employment opportunities. This drives many away from the industry. In Japan, the level of skill required to obtain the national qualification is the highest in the world, and it should be possible to develop a business model specializing in haircuts that utilize this skill globally. A further relaxation of the barber and beautician laws is desirable to maintain the industry’s global competitiveness and to promote further growth.