Children’s Wear in Japan: A Strategic Reference, 2006
ICON Group International, July 2007, Pages: 131
How to Strategically Evaluate Japan
Perhaps the most efficient way of evaluating Japan is to consider key dimensions which themselves are composites of multiple factors. Composite portfolio approaches have long been used by strategic planners. The biggest challenge in this approach is to choose the appropriate factors that are the most relevant to international planning. The two measures of greatest relevance to children’s wear are “latent demand” and “market accessibility”. The figure below summarizes the key dimensions and recommendations of such an approach. Using these two composites, one can prioritize all countries of the world. Countries of high latent demand and high relative accessibility (e.g. easier entry for one firm compared to other firms) are given highest priority. The figure below shows two different scenarios. Accessibility is defined as a firm’s ease of entering or supplying from or to a market (the “supply side”), and latent demand is an indicator of the potential in serving from or to the market (the “demand side”).
Framework for Prioritizing Countries
Demand/Market Potential Driven Firm
Relative Accessibility
Accessibility/Supply Averse Firm
In the top figure, the firm is driven by market potential, whereas the bottom figure represents a firm that is driven by costs or by an aversion to difficult markets. This report treats the reader as coming from a “generic firm” approaching the global market - neither a market-driven nor a cost-driven company. Planners must therefore augment this report with their own company-specific factors that might change the priorities (e.g. a Canadian firm may have higher accessibility in Canada than a German firm).
Latent Demand and Accessibility in Japan
This report provides a detailed overview of factors driving latent demand and accessibility for children’s wear in Japan. Latent demand is largely driven by economic fundamentals specific to children’s wear. This topic is discussed in Chapter 2 using work carried out in Japan on behalf of American firms and authored by the United States government (typically commercial attachés or similar persons in local offices of the U.S. Department of State). I have included a number of edits to clarify the provided information. Latent demand only represents half of the picture. Chapter 2 also deals with micro-accessibility for children’s wear in Japan. I use the term “micro” since the discussion is focused specifically on children’s wear.
Chapter 3 is a stand-alone report covering a proxy trade indicator that I have authored. Often, the amount of trade flowing into and out of a country is a strong indicator of trading partners, trade openness, and related latent demand. Chapter 3 is purely statistical in nature and covers babies’ garments and clothing accessories of textile fabrics. Although international trade for babies’ garments and clothing accessories of textile fabrics is not a direct measure of latent demand for children’s wear, it does provide a proxy indicator of general market conditions with respect to trade flows and trade openness in Japan in a related category. The methodology for this report is discussed in the introduction of Chapter 3.
Chapter 4 deals with macro-accessibility and covers factors that go beyond children’s wear. A country may at first sight appear to be attractive due to a high latent demand, but it is often less attractive when one considers at the macro level how easy it might be to serve that entire potential and/or general business risks. While accessibility will always vary from one company to another for a given country, the following domains are typically considered when evaluating macro-accessibility in Japan:
Openness to Trade in Japan
Openness to Direct Investment in Japan
Local Marketing and Entry Strategy Alternatives
Local Human Resources
Local Risks
Across these domains, a number of not-so-obvious factors can affect accessibility and risk. These are covered in Chapter 4, which is a general overview of investment and business conditions in Japan. Chapter 4 is also presented from the perspective of an American firm, though is equally applicable to most firms entering Japan. This chapter is also authored by local offices of the U.S. government, as is Chapter 2. Likewise, I have included a number of edits to clarify the provided information as it relates to the general strategic framework mentioned earlier.
1 INTRODUCTION & METHODOLOGY 1
1.1 What Does This Report Cover? 1
1.2 How to Strategically Evaluate Japan 1
1.3 Latent Demand and Accessibility in Japan 3
2 CHILDREN’S WEAR IN JAPAN 5
2.1 Latent Demand and Accessibility: Background 5
2.2 Latent Demand: Market Composition 5
2.2.1 Market Profile 5
2.3 Market Data 6
2.3.1 Market Size 6
2.3.2 Domestic Production 7
2.3.3 Imports 8
2.4 Best Prospects 11
2.4.1 Toddlers 11
2.4.2 Natural, Mother, and Kid Styling and Vintage 11
2.5 Accessibility: The Structure of Competition 12
2.5.1 Prospective Buyers 13
2.6 Accessibility: Market Entry 14
2.6.1 Distribution 14
2.6.2 Cash and Carry 15
2.6.3 Direct Export 15
2.6.4 Presence 15
2.6.5 Licensing Programs 15
2.6.6 Seasons 15
2.6.7 Shipment 15
2.6.8 Delivery 16
2.6.9 Key Factors 16
2.6.10 Time and Effort 16
2.7 Market Issue and Obstacles 16
2.7.1 Custom Duties and Consumption Tax 16
2.7.2 Harmful Substances 16
2.7.3 Lead Buttons 17
2.7.4 Labeling 17
2.7.5 Sizing System 18
2.7.6 Financing 19
2.8 Accessibility: Trade Events 20
2.9 Key Contacts 20
3 TRADE INDICATORS: BABIES’ GARMENTS AND CLOTHING ACCESSORIES OF TEXTILE FABRICS 21
3.1 Overview 21
3.2 Japan and the World Market 22
3.2.1 Imports in Japan in 2007 22
3.2.2 Exports from Japan in 2007 23
3.3 Imports in Japan: Babies Garments and Clothing Accessories of Textile Fabrics 24
3.3.1 Africa 24
3.3.2 Asia 28
3.3.3 Europe 41
3.3.4 Latin America 49
3.3.5 N. America & Caribbean 51
3.3.6 The Middle East 53
3.4 Exports from Japan: Babies Garments and Clothing Accessories of Textile Fabrics 56
3.4.1 Asia 56
3.4.2 Europe 62
4 MACRO-ACCESSIBILITY IN JAPAN 63
4.1 Executive Summary 63
4.2 Economic Trends and Outlook 64
4.2.1 Dynamic Markets 65
4.2.2 Agricultural Production 70
4.2.3 Government Intervention Risks 70
4.2.4 Infrastructure Development 71
4.3 Political Environment 72
4.3.1 Economic Relationship with the U.S. 72
4.4 Marketing Products and Services 73
4.4.1 Distribution Channel Options 73
4.4.2 Pricing Issues 74
4.4.3 Use of Agents/Distributors and Finding a Partner 74
4.4.4 Franchising Activities 75
4.4.5 Direct Marketing Options 76
4.4.6 Joint Ventures and Licensing Options 76
4.4.7 Creating a Sales Office 78
4.4.8 Selling Strategies 79
4.4.9 Advertising and Trade Promotion 79
4.4.10 Public Sector Marketing 81
4.4.11 Hiring Local Counsel 82
4.4.12 Due Diligence and Checking Bona Fides 82
4.5 Trade Regulations, Customs, and Standards 83
4.5.1 Customs Regulations 83
4.5.2 Controls on Exports 86
4.5.3 Local Standards 86
4.5.4 Technical Regulations 87
4.5.5 Product Liability Law 89
4.5.6 Free Trade Zone Options 89
4.5.7 Adherence to Free Trade Agreements 89
4.5.8 Additional Trade Issues 89
4.6 Investment Climate 90
4.6.1 Liberalization of Investment Restrictions 92
4.6.2 Limitations on Facility Development and Availability of Investment Real Estate 92
4.6.3 Corporate Tax Treatment 93
4.6.4 Investment Incentives 93
4.6.5 Conversion and Transfer Policies 94
4.6.6 Expropriation and Compensation 94
4.6.7 Dispute Settlement 94
4.6.8 Performance Requirements and Incentives 95
4.6.9 Right to Private Ownership and Establishment 95
4.6.10 Protection of Intellectual Property Rights 95
4.7 Transparency of the Regulatory System 96
4.7.1 Capital Markets and Portfolio Investment 97
4.7.2 Environment for Mergers and Acquisitions 97
4.7.3 Bankruptcy Laws 100
4.7.4 Credit Markets 100
4.7.5 Political Violence 100
4.7.6 Corruption 100
4.7.7 Bilateral Investment Agreements 101
4.7.8 OPIC and Other Investment Insurance Programs 102
4.7.9 Labor 102
4.7.10 Free Trade Zone Options 102
4.7.11 Major Foreign Direct Investments by Foreign Companies 103
4.8 Trade and Project Financing 104
4.8.1 The Banking System 104
4.8.2 Foreign Exchange Control Risks 105
4.8.3 Financing Exports 106
4.8.4 Types of Available Export Financing and Insurance 106
4.8.5 Availability of Project Financing 107
4.8.6 Project Financing Options 108
4.8.7 Banks with Correspondent Banking Arrangements 108
4.9 Travel Risks 109
4.9.1 Travel Advisory and Visas 111
4.9.2 Work Week 111
4.9.3 Infrastructure for Conducting Business 111
4.9.4 Entering Temporary Imports 111
4.9.5 Country Data 111
4.10 Key Contacts 112
4.10.1 U.S. Embassy Trade Personnel 112
4.10.2 Contacts in Washington D.C. 114
4.10.3 Japanese Trade Associations/Chambers of Commerce 115
4.10.4 Agricultural Trade Associations 117
4.10.5 Japanese Government Agencies 118
4.10.6 Market Research Firms 119
4.10.7 U.S. Federal Government 120
5 DISCLAIMERS, WARRANTEES, AND USER AGREEMENT PROVISIONS 122
5.1 Disclaimers & Safe Harbor 122
5.2 Icon Group International, Inc. User Agreement Provisions 123
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