Japan's Dying Industry

Seated in a Tokyo conference room, Sawako Takahashi leafs through glossy brochures advertising handmade urns and Western-style coffins. For three hours she and her silver-haired friends contemplate their own deaths, helped by an entrepreneurial nursing-home manager who moonlights as a funeral planner. They draft guest lists, sample appropriate music and learn how to estimate the cost of their own departures. Takahashi finds the presentation less impressive than the funeral-planning show she attended last month. "They had special appetizers and sake for us to taste," she says. "And tables set up for us to practice writing our own death announcements."

While many Japanese businesses are edging closer to extinction, the country's death industry is alive and kicking. Buoyed by an ever-graying demographic--by 2007, one in five Japanese will be 65 or older--those in the death trade are gearing up for a spike in demand for their services. But the yen doesn't stretch as far as it once did, and fewer families are willing to pay the standard $40,000 for a funeral. "It used to be that no one questioned price, but all of that is changing," says a spokeswoman for the Japan Funeral Association. "Suddenly the death industry has become extremely competitive."

Death in Japan is as complicated as it is time-consuming. Traditionally, the body is brought back to the home, where mourners serenade the departed with Buddhist chants. The family must purchase an altar and prepare a framed photo of the deceased, which is displayed throughout the mourning period. Black and white banners, lanterns and flowers must be ordered and hung outside the house. Priests and mourners must be hired, and a spot at the nearest crematory reserved (cremation is mandatory in Japan because of the shortage of land). Families show their appreciation to guests by handing out funeral mementos, such as towel sets or prepaid phone cards, which must be imprinted with a note of thanks. "At the end, the family receives a gigantic bill from the temple or funeral coordinator," says Midori Kotani, researcher at the Yokohama-based Life Design Institute, an industry think tank.

It's little wonder that Japan's funerals rank among the world's most expensive. (A typical service runs $5,000 in the United States and $3,200 in England.) Few Japanese today can afford to give their loved ones a proper ceremony without seriously draining their bank accounts. So while the number of Japanese customers is growing, they are becoming far more careful in planning for their final exit. Tokyo funeral-home director Yutaka Nakashima recalls a recent workshop he hosted. After he provided a breakdown of the charges, one elderly woman asked whether she could receive a discount since she "had fewer bodily fluids and was much smaller" than most adults. "No one questioned us 10 years ago, so we could get away with charging high prices for big funeral packages," says a Kyoto-based funeral-home operator.

More than 5,500 death-related companies have sprung up to compete for a part of this $1.7 billion funeral industry. "There has been a surge in funeral promotion because demand for services has increased as people get older and worry about cost," says Yumiko Imai, a spokeswoman for Koekisha, a funeral company in Osaka. "This is changing the way we hold traditional services." The rising demand for funeral services is now flooding the market with unexpected entrants: local town halls, elder-care centers and paper companies want a slice of the business. Even some Buddhist temples, which typically don't engage in ad campaigns, are peddling funeral retreats. Last summer the Jinguji Temple in Nagano prefecture hosted a funeral fair showcasing new products such as specially designed rice-paper coffins. Desperate for business, one family-altar retailer targeted housewives with new ads in Tokyo subways last month: "Choosing your family altar has become fun and stylish!"

Some entrepreneurs are going a step farther, peddling modern funerals for less money. Tokyo-based Pre-Need 21 now offers a special "space funeral." The new service promises to fill a capsule with a teaspoon of cremated remains, which is shipped to the United States and shot into space along with satellites. "The space theme had mostly been popular among our younger, more eccentric clients," says director Hiroyuki Miyachi. "But we're getting interest from average families now, partly because of the cost." With more and more Japanese heading into their sunset years, even space is not likely to be the final frontier.