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Japanese brands aim to export unrivaled quality

Article - March 24, 2017

Japanese firms take great pride in what they create and enjoy a loyal domestic customer base. A weaker yen has created an opportunity for Japanese manufacturers across the board to bring more of their high quality products to the global marketplace

Want to take up photography as a hobby or maybe even a profession? You’ll need a high quality camera first. Last month Nikon introduced the D3400, a digital SLR camera that now connects to smart devices. With longer battery life and built-in low energy Bluetooth technology, this camera is great even for beginners to help share high quality photos instantly on all social avenues.

Nikon is one of many electronics manufacturers headquartered in Japan. Long time competitors Canon and Fujifilm are also leaders in the market for top of the line camera equipment. But, like President of the Nikon Corporation, Kazuo Ushida, describes, “We at Nikon are preparing to revolutionize our business portfolio with a view to achieving sustainable growth.” Improvements like integrating the ability to share camera photos instantly into the photographic culture of the world are helping the company to continue being relevant as users rely on their smart devices for their photography.

“You can think of smartphones as competitors to conventional cameras. However, you can also think of smartphones as a tool to support the functionality of your camera. In other words, I think cameras and smartphones can coexist”

Kazuo Ushida,
President, Nikon Corporation

“These days, smartphones have become part of our lives. Everyone has them, even small children,” says Mr. Ushida. “The picture quality on smartphones has gotten better and better. And if you can take pretty good pictures with one, then why go out and buy a dedicated camera? That’s certainly what a lot of people are thinking.”

But Mr. Ushida has another way of thinking about this change in the market. Whereas before only adults were buying cameras for photography and there was a high bar to entry with the cost of both the equipment and getting the photos developed, now there is more opportunity for everyone to have the experience of taking pictures.

“I think it will inspire lots of people to become photographers. You can think of smartphones as competitors to conventional cameras. However, you can also think of smartphones as a tool to support the functionality of your camera. In other words, I think cameras and smartphones can coexist,” says Mr. Ushida. With the release of the D3400, it seems that Nikon has capitalized on that idea and is offering new value to increase their opportunities in the world of photography.  

Mr. Ushida is an engineer with a passion for optical technology that is helping the company move forward in other areas. The company is looking to focus on imaging products and services with greater optimization of use in online environments and medical businesses. In fact, Nikon has already been “researching the eye and ophthalmic lenses for more than half a century, developing many groundbreaking products by applying cutting-edge technology to vision,” he says.

Since 2000, it has collaborated with French lens manufacturer Essilor International. In 2009 both companies established the Nikon-Essilor International Joint Research Center (NEIJRC) with a dedicated team of researchers focused on long-term innovation in fields like opto-electronics, precision optics and advanced materials.  

Other industries are following suit as they seek to diversify their products and provide the highest quality products possible. The influence of Abenomics and the weak yen has created an opportunity for Japanese exports in the global economy. Companies like Toyota have been internationally recognized for their monozukuri management style that is a uniquely Japanese concept focused on superior craftsmanship. This sort of high standard sets a precedent for Japanese products the world over and it is one of the reasons Japan is so hopeful for improvements in the economy with increases in their exports in the world market.

The Japanese garment industry is one such category that is putting a focus on showcasing clothing made in the country. The Japan Fashion Industry Council has introduced a new certification system called “J Quality” that will attach a special tag to genuine Japanese-made clothing. If the weaving, dyeing and sewing are carried out in Japan, companies will be allowed to use the tags on their items. Products like suits, sweaters, or shirts must be completely manufactured in Japan, with the exception of the production of raw materials. Bags and shoes aren’t included in the new labeling process but this differentiation hopes to promote items made within Japan with high skill versus products that are made in China.

Companies such as Onward Holdings, which primarily focuses on design manufacturing and sale of textile products like apparel are “pushing the image and quality of Japanese products in overseas markets,” according to Representative Director and Chairman Takeshi Hirouchi. “Next year will mark the 90th anniversary since Onward Holdings’ founding by Junzo Kashiyama in 1927,” he says. As the domestic market continues to shrink, Mr. Hirouchi explains that, “Our founder, Mr. Kashiyama, always had globalization as part of his vision and objective for the company. His creed was ‘The world will be one.’ Making Onward a global business was always his focus.” The company is quite global now with 104 affiliate companies in Japan and overseas.

“Our founder, Mr. Kashiyama, always had globalization as part of his vision and objective for the company. His creed was ‘The world will be one.’ Making Onward a global business was always his focus.”

Takeshi Hirouchi,
Representative Director and Chairman, Onward Holdings

“Although fashion is our main business domain, Onward is also looking at diversifying its activities. We are trying to fulfill people’s lives in other areas than fashion. In Guam for example, we have two hotels and a golf course. In Paris, we have a soba restaurant. We actively try to sell ballet shoes and leotards, ballet-focused business as well,” says Mr. Hirouchi. This kind of diversification helped the company end the year in February with 263.5 billion yen ($2.6 billion) in net sales.

Rising cosmetics exports
Japan’s cosmetics industry has seen an uptick in sales of its high quality “Made in Japan” products. A 35% jump in exports to 167.5 billion yen ($1.66 billion) in 2015 shows that international markets are open to Japanese beauty products. The aging population has stifled the demand for some beauty products internally, but on the other hand, has increased the demand for products with skin and personal care benefits. Older consumers are more concerned with health and seek out more low maintenance beauty routines. It is likely that there will be a push for products that work to help older consumers regain some of their youthful looks, but for the moment, growth rates will most likely be constrained in this sector. That is why cosmetics contract manufacturer Toyo Beauty is working to expand in the international market.

During its 76-year history, Toyo Beauty has built a reputation for quality and consistency at the highest level. The company offers a comprehensive original equipment manufacturer (OEM) service, from planning and formulation to production, utilising state-of-the-art R&D capabilities to produce true-quality, ‘Made in Japan’ cosmetics products to a wide client base. Among its clients are Max Factor and British-Dutch mulitnational Unilever.

“I think that our products’ quality is one of the most important factors,” says President Ryohei Takimi.  “We also have to make sure that we create the best products to fit our customers’ needs. Since we are an OEM business, we are not working on our own, but alongside and with our customers.

“We want to further leverage the qualities of the ‘Made in Japan’ products. We hope we can do more in the next five years to directly reach customers abroad”

Ryohei Takimi,
President, Toyo Beauty

“We want to further leverage the qualities of the ‘Made in Japan’ products. We hope we can do more in the next five years to directly reach customers abroad. We have recently established an international department, and we have started employing more and more people who are knowledgeable about international markets, who are proficient in English and other foreign languages since each country and region have different legislations and requirements. While taking into consideration those factors, we want to expand our business overseas.”

The weak yen has also increased tourist appeal in 2015 and saw many busy sales counters, particularly in duty free retailers. The affordable prices of the products attract the customers as well as the perception of their high quality. What the Japanese manufacture is reasonable in price and maintains high standards, which is something that has fostered brand loyalty within the country for years. If the Japanese can meet these same expectations abroad, their products will have a better shot at profitable growth, especially in areas like the food industry. In fact, Japan’s exports of agricultural and food products hit a record high for the third straight year, rising 21.8% to 745.2 billion yen ($7.38 billion) in 2015.

Companies like Calbee have partnered with major players like Pepsico in the United States and are seeing success in the healthy snack space that is in high demand from Americans. Chairman of Calbee, Mr. Akira Matsumoto, explains, “U.S. consumers are very aware of the calories in food, so we have developed low-calories snacks made of vegetables.” These products are placed in the fresh vegetable section in stores like Walmart.

“Our Harvest Snap snack is very popular in the United States. Our sales there are over $100 million, and we have a high growth rate,” Mr. Matsumoto says. Harvest Snaps are a low-calorie, high-protein crunchy snack made of snap pea crisps or lentil beans. They come in tasty flavors like black pepper, tomato basil, caesar and wasabi ranch. They’re also gluten free and made with non-GMO products like Safflower and Canola oil which makes them appealing to American consumers concerned with healthy eating.  

Social responsibility
The Japanese have recognized that corporate social responsibility and honest business practices are important to sustainability for their economy in the long term and have the ability to make their products more appealing in the global market.

The cosmetics industry is one such area that will benefit from initiatives like moving away from animal testing to promote cruelty-free products in international markets. To compete with European labels, brands like Shiseido have also banned animal testing with the exception of products sent to China. China requires that products be tested on animals before going on sale there. Legislation and educational awareness will help in the process of putting a stop to this practice.

Brands like Kao and Mandom and Miss Apricot have already adopted similar bans, following Shiseido’s lead.

The Japanese are concerned with the long term effects that private and public sector commerce will have on their environment and sustainability. Expanding business globally has also extended humanitarian efforts as Japanese companies are involved in more projects and markets. Like Mr. Hirouchi describes of his company, “I am very proud of Onward’s contribution to society and environmental edge. For example, we collect used clothing and we recycle them to make blankets and other cotton work gloves to give to refugees all over the world and others who need help. Until today, we have collected 2.1 million clothes and gave the recycled items to 380,000 people.”

The ‘Made in Japan’ brand is perhaps one of the strongest global marketing impressions that will continue to develop as the Japanese enter into international business pursuits. Time honored traditions of producing quality products could give Japan the competitive edge it needs to boost profits in the global arena.