Sunday, Apr 14, 2024
logo
Update At 14:00    USD/EUR 0,92  ↑+0.0002        USD/JPY 151,69  ↑+0.174        USD/KRW 1.347,35  ↑+6.1        EUR/JPY 164,16  ↑+0.143        Crude Oil 85,49  ↓-0.76        Asia Dow 3.838,83  ↑+1.8        TSE 1.833,50  ↑+4.5        Japan: Nikkei 225 40.846,59  ↑+448.56        S. Korea: KOSPI 2.756,23  ↓-0.86        China: Shanghai Composite 3.015,74  ↓-15.745        Hong Kong: Hang Seng 16.512,92  ↓-105.4        Singapore: Straits Times 3,27  ↑+0.018        DJIA 22,58  ↓-0.23        Nasdaq Composite 16.315,70  ↓-68.769        S&P 500 5.203,58  ↓-14.61        Russell 2000 2.070,16  ↓-4.0003        Stoxx Euro 50 5.064,18  ↑+19.99        Stoxx Europe 600 511,09  ↑+1.23        Germany: DAX 18.384,35  ↑+123.04        UK: FTSE 100 7.930,96  ↑+13.39        Spain: IBEX 35 10.991,50  ↑+39.3        France: CAC 40 8.184,75  ↑+33.15        

Unlocking Success: Japanese Brand Liberta's Global Journey and Unique Business Philosophy

Interview - November 28, 2023

Discover how Japan's rich history, work ethic, and unique innovations continue to shape global markets, with Liberta's FREEZETECH leading the way

TORU SATO, PRESIDENT OF LIBERTA CO., LTD.
TORU SATO | PRESIDENT OF LIBERTA CO., LTD.

Over the last 25-30 years, Japanese manufacturers have seen the rise of regional competitors who have replicated Japanese products and practices while also taking advantage of cheap labor costs, thus pushing Japan out of certain markets. However, we still see Japanese companies like Muji and Uniqlo as successful overseas. What are some of the competitive advantages of Japanese brands and what added value do they bring into the market?

There are many ways to answer the question, but at the core is Japan's long cultural and philosophical history. There is a strong underlying work ethic, which has led to a variety of new and innovative products. This is my personal opinion and I am not certain if it is true or not, but I believe that a certain fear and lack of confidence in Japanese companies to succeed in doing business abroad is still quite prevalent today. I believe this is because the Japanese have one of the weakest investment mindsets in the world. There is still a belief that business must be conducted using only equity capital and borrowing, and there is resistance to investment by others. This lack of investment mindset makes it difficult to keep up with the speed of the world market and makes it unfair for them to enter the global arena.

I think it is only those companies that have invested heavily in terms of the global market that have been able to lead the way to the giant companies of today. Overall, I believe that the weak point of Japanese companies is their ability to raise funds, which is preventing them from realising their true potential.

When we talk about the 'lost 20 years', I often wonder what we have lost. I believe that in a world where it is becoming increasingly important to develop cheap products, what we have lost the most is the potential for growth. Made in Japan brands were actually quite expensive and had lost their price competitiveness. On the other hand, products that should have been made in Japan were quickly lost to countries such as South Korea, China and Taiwan. However, if you look at the manufacturing ideals and goals of these countries, they all strive to meet Japanese quality standards. Little by little, they have reached a level where they more or less meet those standards, but there are still quite a few companies that have not yet surpassed Japanese quality.

In certain markets, such as electronic products, today Korean manufacturers in particular outperform their Japanese counterparts in terms of market presence. This can also be seen in the automotive sector, where Korean manufacturers are striving to beat the competition, in some cases closing in on the likes of Toyota and Honda. One might ask oneself whether these companies can really match or surpass the quality of Japanese car manufacturers, but to be honest, I don't think they can at the moment. I think that the idea in people's minds that Made in Japan is the benchmark, and that Made in Japan is the standard against which other companies are compared, is driving up the longevity of Japanese products. I think this is connected to the Japanese philosophy of diligence and constant Kaizen.

For the first couple of years, products from other countries may be fine, but when you think about the long term, you will realise that Japanese products are still far superior. Cars are a classic example of this, and you can believe that Japanese cars are still unbreakable. I think we are now at the stage where we really understand what cost means.



You mentioned Japan’s strong philosophy of hard work and the Kaizen philosophy of constant improvement, which has enabled Japanese firms to develop unique technologies and products that are the benchmark for all other competitors. This mindset is under threat however from Japan’s shrinking demographic line. This is causing two prevailing issues; a shrinking domestic market and a labor crisis. What impact has this demographic shift had on your company? Do you foresee any challenges or opportunities coming from this rapid demographic change?

This population decline was foreseen by the state some 20 years ago. However, at that time no company had embarked on any measures to deal with it - 20 years ago, we were still a small company, but at that time we were very much aware of the crisis of a declining population. We took measures such as having connections with overseas companies and creating opportunities to function as a trading company for both imports and exports. Such initiatives, which were probably still rare at the time, have enabled the company to continue to grow to the present day.

Currently, the government is implementing various measures to cope with a declining population, which has increased inbound travel to Japan. This will also deepen the positive understanding of Japan and strengthen the appeal of Made in Japan abroad.

 

Physical retail stores suffered during the COVID-19 pandemic, while at the same time, online sales have jumped 30% in Japan, making Japan the fourth largest e-commerce market in the world. How has your business adapted to take advantage of this growth in e-commerce?

You are right, it is definitely something that continues to grow. As a result of COVID-19, which was already prevalent in the Japanese economy, even the older generation is participating in online shopping through e-commerce platforms.

Seeing this rapid growth, we have recently acquired e-commerce-based companies through mergers and acquisitions to strengthen our own e-commerce capabilities.

 

Liberta has five different business divisions; beauty, functional apparel, household, food, and watches. Which division are you currently focusing on and which do you believe has the most potential for future growth?

The beauty sector is definitely our central axis, so in terms of global business, we want to continue to grow our beauty business consistently and strengthen our product range abroad. In addition to this, one of our most urgent tasks is to respond to the growing threat of climate change and global warming. We are convinced that demand for our FREEZETECH functional apparel products will increase accordingly. We intend to strengthen the marketing of FREEZETECH abroad.

 

What makes your FREEZETECH different and unique from your competitors’ products?

FREEZETECH uses very interesting technology. The material feels cool to the touch, so you feel cool as soon as you put it on. This sensation lasts for about five minutes until the effect is lost through exposure to sunlight. This is common for this type of apparel, but we have added improvements to it to make it even better than the products currently on the market. There is a special ink printed on the inside of the garment that absorbs sweat as you wear it, which activates the cooling effect. Essentially, as soon as sweat is absorbed, a chemical reaction starts, cooling the wearer. This is a never-ending process. We believe that such materials will be in increasing demand worldwide.



Do you believe this product has potential growth in the athletics field?

We think so. Recently, FREEZE TECH was provided to the Softbank Hawks, a Japanese professional baseball team, for use as summer practice wear. It is something that is becoming increasingly popular not only in the construction industry but also among athletes. There is also a product called Mist, which is a special fabric-cooling mist that can be sprayed onto what you are wearing. Once sprayed, it can keep the body cool for up to an hour.

 

How are your products able to adapt to different kinds of wetness around the world?

This would manifest itself in the form of adapting marketing activities in each region. What this means is that we market our products in accordance with the culture of each region.  Our company actively travels to exhibitions and trade fairs around the world to promote its products and constantly seeks out opportunities to import interesting products from abroad. Despite this proactive attitude, we notice that the presence of Japanese companies at these exhibitions is extremely low. It shows how Japanese companies focus on the domestic market and inflict damage through their activities abroad.

 

Many interviews we have conducted have often seen a theme emerge, the theme of partnerships and collaborations as a way of unlocking the international market. We know that in 2010 you began operations in Shanghai China. What role do partnerships play in your business model and are you looking for any new partnerships or collaborations in international markets?

Let me first talk about the role of our presence in China. Given that China has a population of more than 1.4 billion people, if even one of our products becomes a bestseller in China, it will have a significant impact on our business, so with that in mind we have created a locally registered company. Furthermore, we are thinking about how this local company could be useful for other Japanese companies considering doing business in China. These companies see China as a unique country, but to be honest, even if they stay for five to ten years, it is quite difficult to do business there. By immersing ourselves in the environment and the business culture, we have a better understanding of how to do business in China and offer our services to other Japanese companies.

Local partners, in my view, are an essential strategy for doing business, and without local partners, there can be no successful overseas business. Nevertheless, I think Japanese companies are very cautious when it comes to finding local partners, do not rely much on third-party services to find local partners and are not at all familiar with the process. I think this is a major weakness.

 

For a Japanese firm, Liberta is technically quite young. Could you please highlight the main competitive advantages and strengths of your firm?

On the question of what competitive advantage means, I do not necessarily believe that we need to have an advantage. This is because we don't believe we have competitors, or it may appear that we do, but we don't believe it is something we should follow. Perhaps at the product level, we may find competitors or other brands with similar technologies and products in similar markets, but still, we don't necessarily see ourselves as competitors in those areas. It is quite difficult to explain how we function as a company, but it gives you a better understanding of our company. There are many aspects and angles we can talk about, but one thing I can share with you is the fact that we don't necessarily have our own factory. What we do can be compared to a translator or interpreter who actually markets and brands other manufacturers' products and technologies.

For example, the ink with a cooling function I mentioned earlier is not a technology we created in-house. It is a technology created by another manufacturer, which our company has branded and deployed. In a way, we are not tied to a specific product under our own brand. We extract added value from various technologies and products, make them attractive and sell them domestically and internationally. This is our role and the reason why we do not have competition in the traditional sense.

 

We’ve already talked about how you expanded to China back in 2011, but we know that you also do business in over 60 other countries worldwide. With that in mind, which regions or countries do you see as pivotal for the continued growth of Liberta overseas? Could you elaborate on your international strategy for us?

Through doing business in China over the past decade, we have learnt that the Chinese market is still our strongest area and where we want to continue to focus our efforts and grow. The strategy is not necessarily an aggressive approach, but rather a relaxed and steady approach to managing risk. When it comes to doing business in China, this is the path we are taking.

Our next focus is on the US market, which will be a more aggressive approach. We hope to set up a local subsidiary next year. Because we believe there are all kinds of ways we can grow in that market. We want to build solid contacts and networks that we cannot build just by being in Japan. We believe that if we don't create this local subsidiary, we will lose a lot of growth opportunities. After the US, the Middle East is next, but we don't know what the approach will be or whether we can build an office there yet, but Dubai and Saudi Arabia are specific targets. From there, we think we can get an inside look at markets like India and Pakistan. The most difficult market would be Europe.

 

Imagine if we come back in four years and have this interview with you all over again. What goals or dreams do you hope to achieve by the time we come back for that new interview?

This is information that is publicly available at the moment, but we don't want to limit product development to just in-house, we want to roll out a product development platform and create a system where people all over the world can develop products and launch their own products. Users can come up with an idea for a product they want to create, and using our AI-integrated system, they can fine-tune that idea into a product and launch it on the platform. These ideas and data can then be used by other companies as a sort of database for their own product development. If an idea is adopted as an actual product, the person who came up with the idea can earn royalties from it. We believe that this platform will be a game-changer, enabling industry professionals to find their big break.

  0 COMMENTS