Mid­dle-class king­dom: Made in Japan is now big in China

Mak­ers of house­hold goods seize mo­ment amid a thaw be­tween Asia’s big­gest economies

The Peterborough Examiner - - Business - MEGUMI FUJIKAWA

OSAKA, JAPAN—Mak­ers of con­sumer goods, bask­ing in a warm spell be­tween Asia’s two big­gest economies, have dis­cov­ered that the fac­to­ries in this coun­try have an ad­van­tage China can’t match. They can put “made in Japan” on the la­bel.

That is why Wang Lin, ex­ec­u­tive di­rec­tor of Shang­hai ShenXing Brush-mak­ing Co., de­cided to open a fac­tory in Osaka to make tooth­brushes to sell in his home coun­try. “Be­cause liv­ing stan­dards are ris­ing in China, con­sumers are look­ing for good stuff,” Mr. Wang said. “Chi­nese peo­ple have a good im­pres­sion about Ja­panese prod­ucts.”

Man­u­fac­tur­ers in industries that had long been flee­ing Japan say the coun­try looks at­trac­tive again thanks to de­mand from con­sumers in China and other Asian mar­kets, a sign of how the rise of the mid­dle class is re­shap­ing the re­gion.

Tokyo-based cos­met­ics maker Shi­seido Co. is build­ing new fac­to­ries in its home coun­try for the first time since 1983. Af­ter cut­ting back due to fall­ing sales at home—the com­pany went down to three Ja­panese fac­to­ries in 2015 from six in 2004—it is ramp­ing up out­put again to feed strong de­mand in China and else­where and a re­cov­ery in sales in Japan.

Shi­seido Chief Ex­ec­u­tive Masahiko Uotani said Chi­nese tourists in Japan were snap­ping up cos­met­ics and his com­pany needed to reach Chi­nese who wanted the same Ja­panese-made creams and lo­tions at home. “We have to boost pro­duc­tion even more to re­ally grab this op­por­tu­nity,” he said.

The two new fac­to­ries are set to open over the next two years; Shi­seido’s sales last year rose 20% in China and 18% glob­ally, to ¥1.005 tril­lion ($9.05 bil­lion), ac­cord­ing to the com­pany.

Ja­panese com­pa­nies have long ex­ported high-tech equip­ment and parts to China that China couldn’t make on its own. Chi­nese com­pa­nies then used that equip­ment, plus low-cost la­bor, to turn out con­sumer goods such as cloth­ing and in­ex­pen­sive elec­tron­ics for ex­port.

China’s grow­ing af­flu­ence is up­end­ing that decades-old pat­tern by cre­at­ing a mar­ket for pricier con­sumer prod­ucts from Japan.

“Many Ja­panese de­signs cater to Asians,” said Zhu Aiqin, a 32-year-old teacher in Bei­jing, whose home is filled with Ja­panese goods, in­clud­ing a re­frig­er­a­tor from Pana­sonic Corp. and an air con­di­tioner from Daikin Industries Ltd.

“All these Ja­panese home ap­pli­ances are well made, with good qual­ity and still work­ing af­ter years,” said Ms. Zhu, who is also a fan of Shi­seido cos­met­ics and uses Goon di­a­pers sold by Daio Pa­per Co. of Japan for her in­fant daugh­ter.

Po­lit­i­cal winds have been blow­ing in fa­vor of closer China-Japan eco­nomic ties as the U.S. and China pur­sue a trade fight with puni­tive tar­iffs by both sides. Ja­panese Prime Min­is­ter Shinzo Abe is ex­pected to visit China in Oc­to­ber, ac­cord­ing to a mem­ber of his del­e­ga­tion, and said in May that he hoped Chi­nese Pres­i­dent Xi Jin­ping would soon pay his first visit to Japan. Japan is also tak­ing a greater role in pro­mot­ing the Re­gional Com­pre­hen­sive Eco­nomic Part­ner­ship, a pro­posed trade deal that in­cludes China.

His­tory shows that po­lit­i­cal ten­sions can erupt quickly, in­flamed by mem­o­ries of the 1930s and 1940s when Japan oc­cu­pied much of China. In 2012, an­tiJa­pan demon­stra­tions broke out in China over a ter­ri­to­rial dis­pute in the East China Sea. Shops sell­ing Ja­panese brands in China were forced to close tem­po­rar­ily and tourism to Japan dropped sharply.

“In coun­tries like China and South Korea, it is dif­fi­cult to think of po­lit­i­cal and eco­nomic re­la­tion­ships sep­a­rately,” said Shinichiro Kobayashi, an economist at Mit­subishi UFJ Re­search and Con­sult­ing. If po­lit­i­cal ten­sions re­vive, he said, “Chi­nese con­sumers may try to show their pa­tri­o­tism by boy­cotting Ja­panese goods even if they are be­com­ing part of their daily ne­ces­si­ties.”

For now, those con­sumers would rather show off their so­phis­ti­ca­tion with a Ja­panese la­bel. Many are do­ing so by visit­ing Japan. In 2017, about half of Japan’s nearly 29 mil­lion for­eign tourists came from China, Hong Kong and Tai­wan, and those ar­eas ac­counted for nearly 60% of the $40 bil­lion in to­tal spend­ing by tourists, ac­cord­ing to gov­ern­ment data.

Ca­sio Com­puter Co., known for its G-Shock watch se­ries, re­cently boosted pro­duc­tion of a $20 watch at a fac­tory in north­ern Japan. Un­til now, it mostly made that model in China and Thai­land.

Tet­suya Kawai, who is in charge of Ca­sio’s watch busi­ness, said all the fac­to­ries have the same qual­ity, but buy­ers abroad “have a per­cep­tion that made-in-Japan goods are more sub­stan­tial.”

More Chi­nese ex­ec­u­tives are re­al­iz­ing that a com­pany doesn’t need to be Ja­panese to put the cov­eted words on their pack­ages. The num­ber of China-based man­u­fac­tur­ers with units in Japan, in­clud­ing Hong Kong com­pa­nies, rose to 49 as of March 2017, ac­cord­ing to Ja­panese gov­ern­ment data, dou­ble the num­ber five years ear­lier.

Shang­hai ShenXing Brush­mak­ing makes in­ex­pen­sive brushes in China as a con­trac­tor for other brands. But Mr. Wang, the ex­ec­u­tive di­rec­tor, thought it could sell a higher-end prod­uct to Chi­nese con­sumers and came up with the idea for a Ja­panese fac­tory a few years ago.

“My busi­ness friends didn’t un­der­stand my idea at first and called me crazy” be­cause of the higher costs in Japan, he said. “But if we come to Japan and make prod­ucts here, they be­come authen­ti­cally Ja­panese.”

Mr. Wang de­cided to make a tooth­brush as his first orig­i­nal brand, and spent five years de­vel­op­ing the prod­uct with Ja­panese de­sign­ers.

The com­pany now ex­ports most of the 50,000 tooth­brushes it pro­duces each month to China, where con­sumers can buy them for about $5 apiece on the on­line shop­ping mall JD.com.

The One-Third model comes with a re­place­able brush head and black bris­tles that use bam­boo char­coal, an an­tibac­te­rial in­gre­di­ent of­ten used by Ja­panese mak­ers.

The pack­age sold in China has Ja­panese writ­ing and a sticker placed on the back with a Chi­nese trans­la­tion, to re­in­force the im­pres­sion that China is just a side­line for a prod­uct mainly used by Ja­panese peo­ple.

In fact, Mr. Wang said he wasn’t in­ter­ested in be­com­ing pop­u­lar in Japan. Still, the prod­uct is avail­able at some drug­stores in Osaka and on Ja­panese e-com­merce sites like Ya­hoo Shop­ping.

“I thought it would look strange if the prod­uct we call ‘made-in-Japan’ isn’t sold in Japan,” he said.

Newspapers in English

Newspapers from Canada

© PressReader. All rights reserved.