Can Product Still Trump Price?
Japan is a world leader in high quality, innovative fabrics, however price pressures are bearing down and forcing mills to rethink their strategies.
by Ernest Kao
Japanese textile companies have been hit by more than one storm this year. In addition to a global financial shakeout continuing to takes its toll on the export-heavy nation, a typhoon swept by the country during the first two days of the Japan Creation fair—greatly reducing the number of visitors anticipated to show up.
Although exhibitors expressed their disappointed with the turnout, many believed that a lower visitor number would have been predictable due to the nation’s severely hurt textile sector. Retail remains cold, and with exports down for the eleventh straight month to $49 billion (41% down from a year earlier), the effects from sluggish external demand and the strengthening Yen has slowly eaten its way into the Japanese textile supply chain.
A Struggle From Abroad and Within
Price competition from China has pounded Japan’s dyeing and weaving and the rate of factory closures has been on the rise. “About 90% of material is now imported from China which means nothing really needs to be made domestically anymore. In terms of the fabric and materials market, it’s actually getting quite severe,” said exhibitor Yusuke Tsuzuki, who works for a large Japanese textile company.
The economic burden was felt at Japan Creation, with many exhibitors citing a significant decrease in orders, even though the fair was targeted for domestic Japanese buyers. “Many customers used to come here,” said Nobuyuki Okuno, director of textile company Kingo Shoji Co. Ltd.
“Buyers are now mainly making enquiries rather than orders. The reason is because most companies do not show their entire collections at the fair for fear of copycats,” he added. Above all, the fair was a better venue for making contacts for follow-up business deals.
Asia Lacks Interest, Europe Lacks Purchasing Power
Problems did not stop there for Japanese mills. In fact, the textile industry was actually falling victim to its own success; which was producing quality and innovative fabrics. “The main problem is quality,” said B.K Charitha, assistant manager at Horiuchi Trading Co. Ltd, a company producing exotic leather textiles.
In the current economic state, Japan will find itself in limbo as it struggles to find new markets in Asia and retain slumping demand from western markets. The problem is however, “Japan is much better at producing quality fabrics but when selling to the Asian market, buyers don’t really care about quality and place more focus on price as opposed to buyers from Europe and the west,” Mr. Charitha added.
And quality often comes at a much higher price. For years, Japanese textiles fought off competition by specializing in using high-quality material, skilled manufacturing techniques, innovative design and high-tech fabrics. Almost on par with their European counterparts, the Japanese commanded premium prices for their goods, but still, people were willing to pay to buy Japanese just for the guarantee of high-quality.
Times have changed and the gap between production techniques of other R&D intensive countries such as Taiwan and Korea with Japan have become narrower and narrower and Japanese textile mills will need to look in a new direction to uphold their competitive advantage.
Japan at the Heart of Innovation
Bad weather and market conditions may have affected the turnout at this October’s Japan Creation trade fair but will not affect the Japanese’ drive for further product development and quality. “Japan will always have a big share in the global innovation and it continues to be important to make an effort to develop new materials and fabrics,” says Mr. Tsuzuki.
This view was echoed by designers and buyers traveling from other parts of the world. “Japanese fabrics are always unique in a sense that they have good quality, nice touch and superb finishing. Japanese weavers and knitters are extremely inventive and creative,” says Luise Schwarze, designer/buyer of Paris-based menswear brand, The Individualists.
The Power is in the Product
Due to price-orientated nature of their textile exports, Japan will have to leverage on their core competencies and take the level of quality and innovation one step further. “Product is our power,” says Amaike Group’s Yoshihiro Kitade, producer of the Amaike Super-Organza fabric.
Mr. Kitade was true to his word. Super Organza, a fiber which the company claims is ‘as light and thin as air’ was as soft to the hand has a piece of tissue. The semi-lustrous, semi-luminescent finish gave the fabric a captivating appeal. “Our product is targeted for European luxury brands and for use in dresses and overlaps. This product is special and I believe we can win with quality.”
Kingo Shoji’s Mr. Okuno, believed that Japan’s opportunities lie in the innovative use of materials, mixing yarns together to create new and improved fabrics. “This is the only way to beat them,” he says. “Korea and Taiwan cannot make yarns of our quality,” he claimed. “Our fabrics are very good but the only problem is that they are high-priced and [non-Japanese] buyers will not understand.”
Also an important aspect was the use of natural and sustainable materials. Although the use of natural material is often expensive, buyers will be looking for sustainability because retailers are looking for sustainability, according to Hiroshi Fukumasu, general manager of the Japan Cotton Promotion Institute.
“Unlike elsewhere, it is strict company policy for many Japanese companies to adhere to sustainable production of textiles. Big companies need to have that image even though consumers, in reality, don’t really care and place more focus on price.”
“The price is higher in Japan compared to other countries including Italy but it’s worth it because we can’t find this type of fabric elsewhere. The Japanese mix ‘culture’ in their textiles but with a touch of modern design,” added Individualists partner, Frank Pouchoulin.