Thanks to its many brands and Japanese know-how, the Ueyama group differentiate itself within the clothing industry.
It is our view that Japan is at a very exciting time for manufacturing. On one hand, we have had major supply chain disruptions in the last three years, caused by the COVID-19 pandemic as well as tension from the China-US decoupling situation. As a result, we see many multinational groups try to diversify their supply chains with a focus on reliability. This is where Japan can enter; a country known for decades of high reliability, trustworthiness, and short lead times when it comes to production. Now, with a depreciated JPY, it is our view that there’s never been a more opportune moment for Japanese manufacturers to meet the pressing needs of this macroeconomic environment. Do you agree with this premise, and why or why not?
Our industry has had issues with oversupply and there were too many products in the market. It means that there are an excessive number of suppliers in our industry, so to be honest the situation is not exactly great. However, our firm has been looking at the supply chain and we have started utilizing big data. The data suggests that the supply chain itself has become more efficient and we no longer have excess inventory. In general, our situation is very difficult.
As long as demand is reduced our situation will remain difficult. Despite this, however, as an SME we are small and flexible and we do see that we have opportunities because the possibilities of expanding our business outside of Japan exist.
We heard from many apparel makers and suppliers that COVID-19 was a challenging time because often they have their manufacturing outside of Japan. With the high-quality demands of the Japanese market, firms have to source their material from Japan and then send it outside to produce products. This was tough during the pandemic with all of the supply chain disruptions. How did your firm manage during the COVID-19 pandemic?
We were able to supply fabrics and clothes with little impact because we have domestic procurement and domestic production. We have a sewing factory in Japan, and while it is true that we have sewing factories outside of Japan, our share inside is higher.
Shops were closed, however, and sometimes supplies were delayed due to logistics issues. Customers would complain that they can’t sell the winter clothes because of the logistics delays and therefore they would like us to cut off the sleeves and make them summer ready. Unfortunately, we had to shrink the size of some of our group companies, and this meant that restructuring was necessary. Honestly, there were plans in place for restructuring before COVID-19, and so we expedited this process by conducting internal M&As.
From our point of view as consumers, we believe you have a very cool brand. Shuttlenotes is a perfect example of this; using old shuttle looms and so on to make handmade, high-quality products in rural Hyogo prefecture. You mentioned that most of your manufacturing is in Japan, and obviously, right now Japan is facing a demographic crisis. To use these old machines you need older engineers that have expertise in the field. How are you reckoning with maintaining this image and style with a declining workforce?
Banshu is quite a big producer of these kinds of shirts; It is said that about 70% of made-in-Japan shirts are produced in the Banshu area. There are two cities, Nishiwaki and Takacho, and it is said that around 30% of business in these cities is textile-related. There are around 200 makers still active in our area and most of them are family-run businesses. Some of them have been shutting their doors in recent years and when their businesses fail their staff come to us. We are the second largest weaving company in the area, and with the recruitment we have done the company doesn’t have that many young people. Instead, we have a number of great craftsmen with endless wealth of knowledge.
A unique aspect of our business is that we use both new and old machines. Our oldest machine is our shuttle loom which we bought 51 years ago, but we also use cutting-edge looms produced by Toyota.
Brands like Pure Blue and Iron Horse are synonymous with Japan and some of the best jeans in the world. What they make is called selvage denim, a special analog-based way of manufacturing jeans that replicates the way Americans did it in the 1950s. My understanding is that Japanese companies bought the machines from America. If you look on social media such as YouTube there is a cult following in the West of people who love this type of clothing. In the case of your business that isn’t focusing on denim but instead has a complete range of materials, are you seeing a resurgence in Japanese-based materials or clothing from Western consumers?
I wouldn’t say there is a resurgence per se, but in terms of our branding, we do see customers directly contacting us to buy our products. We produce specific clothes from a specific period, reproducing fabrics and products to make unique textures. Using old looms and sewing machines we can produce lines of clothing that cater to older tastes. In particular, I’ve seen that American people like used clothes from Japan. In fact when representatives from one of American apparel brand visited us they asked if we could take them to a used clothes store and they said it was because Japanese people tend to take good care of their clothes. Old denim that was worn by American workers in the mines is sometimes sold in used clothes shops for extremely high prices. The representatives were very excited about visiting the used clothes shops. This is why we produce new clothes that retain the spirit, taste, and texture of period pieces.
Those older designs honestly don’t have great functions, but people seem to love the aesthetic and the texture of specific eras. In particular with denim, distressed is a style that many like. Shuttlenotes, in particular, use cutting-edge technology but retain an old-fashioned look that many appreciate.
Speaking personally as the president of this organization, is there a particular style or era that is your favorite in terms of this type of fashion?
Ultimately I tend to go with a more traditional style, something I would describe as gentlemanly. Honestly, I feel this style is great for any occasion. I was considering turning up to this interview in denim, but I felt that it wasn’t exactly appropriate for a professional environment.
We actually cannot produce thick denim fabric, but we do have the capability to produce the thin types. That fabric might be used for shirts. As Japan is a small country I’m very aware of almost all major material and apparel manufacturers. We have tight-knit communication and it means that companies can share materials or collaborate on projects. This closeness allows similar companies to increase their manufacturing levels together.
Earlier you mentioned how now is a good time to look outward towards the global market. Are you now looking to partner with makers overseas as well to continue that spirit of collaboration?
We started our international business in 2006, but I would say our goal wasn’t necessarily to procure and produce outside of Japan at a lower cost. Instead, the main goal was to sell made-in-Japan products, and this is why we haven’t been affected by the growing tensions between China and the US. Japanese products are not as expensive as you might think, still the prices of those products are high. We are seeking partners outside of Japan who can possibly provide materials.
As the appetite for made-in-Japan goods is increasing and the price is becoming more competitive have you considered e–commerce? What are your thoughts on e-commerce as a platform to reach potential new customers domestically and internationally?
As you might know, we do have e-commerce sites for BasShu and Shuttlenotes. We have also used external services to sell our products across Japan. Originally we were a B2B company and therefore don’t have much inventory for B2C. Our supply chain for B2C has not been fully established yet.
We have registered trademarks in the US and China, so once our external services for cross-border trade get more developed we would like to sell our products there. Ideally, that would be some of our fabrics being sold to international customers. Currently, the procedure is pretty complicated for things like duty and tax, thus we are not happy conducting these kinds of activities now, but in the future, if these kinds of cross-border trade services get better then we will be able to sell our products more easily and directly to international customers. We are currently preparing for this possibility.
You mentioned that your B2B and B2C channels’ scale is still very small. Is this something you plan on increasing in the future or do you plan to stay mostly as a B2B-oriented company?
We have maintained more focus on B2B because of our factory capacity. Right now we can weave fabric as much as we could make 5000 shirts a day, but if we focused more on B2C then that number would have to increase. It is difficult to increase that number considering our current factory capacity. The textile industry is based on the economy, therefore it is vital to have a big focus on B2B. It is important to enhance profits as well as focus on branding. Our company needs to continue our efforts in establishing our branding so that more customers and retailers recognize our products. More retailers these days are using tags in their clothing, so we feel that if we supply them with our clothes we can apply our brand name. In that sense, we need to work harder in terms of B2C.
This industry has a division of work system, so if a step is missed then companies further down the line cannot produce their products or their delivery might be late. To mitigate this there might be a necessity for more M&As.
A significant trend in the fashion and apparel industry right now is environmental consciousness. In particular, some fast fashion outlets have massive turnover and very short shelf lives for their products. One of the main advantages of your manufacturing in particular is durability, for example with Shuttlenotes, where shirts can maintain their form and strength even after many washes. Can you tell us more about your brands and manufacturing processes that are more in line with some of these environmental initiatives?
I believe recently tests were done between our Shuttlenotes shirts and a Chinese competitor and it was discovered that after several washes our shirts were still much better. Our products have excellent durability and now we have an advantage where shops stocking our products are also singing the praises of the durability of our shirts.
One of the companies that conducted the test, and they are committed to transparency, traceability, and sustainability. We are also cautious to fall in line with these environmentally conscious goals. The Ueyama Group is currently in the process of obtaining international certification relating to labor environments because as you might be aware, there are issues in China relating to sweatshops.
When do you expect to receive this certification?
We have applied and we are confident in receiving this certification. I think this is a good opportunity to improve the environment in our factories. Being an SME it is quite difficult to file paperwork such as this for international standards. The company overall has goals of becoming larger than a typical SME, so making our factories an attractive place to work with the accompanying certification is an important step.
We’ve heard throughout this interview that you're changing your focus to be more globally-oriented. Moving forward, which markets do you believe to be the most promising for your international expansion?
My highest priority is the US because they are already a developed country yet they continue to grow further. I think there are exciting opportunities in the US so I think we have a good affinity for the US in terms of passion. In addition, China shows good promise as well.
Imagine that we come back in 2028 and have this interview all over again to celebrate your company’s 80th anniversary. Do you have a personal goal or ambition that you would like to have achieved by the time we come back for that new interview?
Our export business is doing great right now, so I would say the next big goal for me personally is international certification. Ueyama actually makes products with a company which is a bio-derived customizable materials manufacturer. We hope that is successful, and from my understanding, they are working with some top brands as well.