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Japan: A major destination for home textiles

The market for home textiles has been affected by overall weak personal consumption in Japan. As a result, demand for home textiles has been very weak. In particular, demand related to new housing starts and gifts showed remarkable falls. Reflecting growing interest in interiors among consumers, demand for home textile products with casual designs that can meet new consumer lifestyles remain very strong, either imported or domestic products.

Home textile imports have been growing steadily, rising 6.8 per cent in 2002 to 109.89 million dozen worth US$ 79.8 billion (up 0.2 per cent) and setting a new all time record. The bulk of these imports 84.9 per cent consists of towels, numbering 93.34 million dozen (up 6.3 per cent) worth US$ 3.9 billion (55.0 per cent of import total). Japanese towel makers and their subcontractor have been moving production to China and other Asian nations that offer lower production costs. Many imports from these countries are made with capital participation and technical assistance from Japan. Imports of bedlinens remained at previous year levels in 2002 (7.8 million dozen), while table linen imports soared to 4.22 million dozen (up 28.1 per cent) after little past movement, mainly from China.

Imports by place of origin

Towel

The leading exporters of towels to Japan are China (71.5 per cent) and Vietnam (26.5 per cent), with virtually all imports coming from just these two countries. Low price imports from China skyrocketed in 1999 and 2000 and the competition dealt a serious blow to the Japanese towel industry.

In February of 2001 the Japan Towel Industry Association petitioned that the Ministry of Economy, Trade and Industry initiate safeguards (emergency import restrictions) under terms of the WTO textile agreement. The government launched an inquiry in April of 2001, and these steps put a damper on import growth from China in 2001. There was considerable fluctuation from month to month during 2002, but for the whole year imports were up 6.3 per cent to 6.67 million dozen.

Import’s market share in Japan

There is no statistical data on domestic production of home textile as a whole. Therefore, it is unclear exactly how large a market share imports have. According to the Japan Towel Industry Association, import’s share of the towel market soared from 46.7 per cent to 64.0 per cent between 1996 and 2000. The association petitioned in February of 2001 that the Ministry of Economy, Trade and Industry initiate WTO safeguard measures against towels from China and Vietnam.

Key considerations related to importing

Regulations and Procedural Requirements at the Time of Importation In some cases, importation of home textile is subject to the Foreign Exchange and Foreign Trade Law.

Foreign Exchange and Foreign Trade Law (Import Trade Control Order)

Under provision of the Import Trade Control Order by the Foreign Exchange and Foreign Trade Law, home textile of silk originated in or shipped from certain countries are required importing procedures as No. 2 approved items or prior confirmation items.

Regulations and Procedural Requirements at the Time of Sale

The sale of home textiles is subject to provisions of the Household Goods Quality Labeling Law.

Household Goods Quality Labeling Law

The law stipulates the format and content of quality labeling for products designed for everyday household use. The purpose is to protect and benefit the consumers by providing information that helps them choose products and informs them about how to use the products correctly. Home textiles must bear labeling as specified by the Household Goods Quality Labeling Law. Products cannot be sold without labels.

Competent Agencies

Foreign Exchange and Foreign Trade Law

Trade Licensing Division, Trade and Economic Cooperation Bureau, Ministry of Economy, Trade and Industry. Household Goods Quality Labeling Law Product Safety Division, Consumer Affairs Department, Commerce and Information Policy Bureau, Ministry of Economy, Trade and Industry

Labeling

Legally Required Labeling

Household Goods Quality Labeling Law

The Textile Product Quality Labeling Standards based on the Household Goods Labeling Law specify both the label content and format.

Product characteristics - Comparisons with Japanese products

Linens were once thought of as a hemp article, but nowadays a wide variety of silk or cotton textiles used in the home are referred to as linens.

Bedlinen

Earlier, most imported sheets, pillow covers and other types of bedlinens were sold to hotels and other commercial users. Recently, many products for home-use have been imported.

Table linen

The table linen market is split between luxury grade products from Western countries and low priced products from elsewhere in Asia. Japanese made table linens fall in the middle in terms of sales patterns, with some apparent degree of differentiation from imports.

Toilet/kitchen linen

The most commonly used type of toilet linen and kitchen linen is towels. Inexpensive imports from China, Vietnam and other Asian countries are often used as “oshibori” towels, the heated towels often given to restaurant customers for refreshment before dining. Japanese-made toilet and kitchen linens are mainly sold to ordinary consumers.

Characteristics of products from different countries/regions

Overall, imported home textiles mostly come from China and other Asian countries, and their main appeal lies not in their design or styling but rather in their price. In addition, some Japanese manufacturing wholesalers who do contract and OEM work have been shifting production to Asian countries and OEM work have been shifting production to Asian countries to take advantage of lower wage costs. In the process these companies have obtained capital holdings in offshore enterprises, provided technical guidance to business partners, and worked to cut production costs. Manufacturer wholesalers are companies that do not own their own production facilities but rather outsource production and handle the distribution and marketing functions themselves.

Sheets and pillow covers from Asian countries are sold mainly to linen supply companies, while bath towels and “oshibori” towels are used either as corporate gifts or by linen supply companies. Countries such as China and India, which are also major cotton producers, are especially well positioned to export low priced merchandise to Japan. On the other hand, Germany, France and other European nations remain the leading suppliers of popular high-fashion merchandise.

Domestic distribution system and business practices

Domestic market conditions

In Japan the very term “home textiles” is still somewhat unfamiliar. Towels and sheets are still more often purchased as gifts than for personal use. This is particularly the case with towels, where traditional year-end and mid-summer gift giving accounts for about 90 per cent of all sales. Chronic recession has dramatically reduced corporate gift giving while imports selling for half the price has seen a wave of bankruptcies among small Japanese towel makers. Corporate membership in the Japan Towel Industry Association dropped from 925 firms in 1990 to just 457 in 2000.

Distribution channels

Japanese-made sheets, pillow covers and other types of bedlinens, especially those without high fashion appeal, are distributed mainly through bedlinens and pillow covers to hotels, hospitals and other institutional users increasingly use imports. These products are mostly imported by general trading companies or specialty trading companies and sold directly to linen service companies. Other types of imported covers are distributed from trading companies to manufacturer wholesalers (brand owners) or department stores.

Japanese-made table cloths, napkins and other types of table linens, which mainly consist of practical use items without high fashion appeal, are mostly distributed from manufacturer wholesaler to fabric wholesaler and finally to department stores and mass merchandisers. Imports are usually handled by general trading companies or specialty trading companies before being distributed to manufacturer wholesalers, department stores, etc. Towels and other types of toilet linen and kitchen linen are sold through department stores and mass merchandisers, although specialty stores and bedding stores also account for a fairly large share of sales. Imported “oshibori” towels and other commercial use towels are distributed through linen supply channels, while other items pass through the same channels as table linens. In recent years there has been an increase in direct imports from overseas manufacturers by manufacturer wholesalers, mass merchandisers and department stores, although the incidence remains comparatively small. There has also been an increase in mail-order sales by department stores and mail order houses.

Key Considerations for entering the Japanese market

Home textiles from the West are imported through general trading companies and specialty textile trading companies, and then are distributed via wholesalers and dealer agents to department stores, specialty stores and other outlets. Many domestic brand makers serve as importer agents for foreign brand names, and they distribute through the same channels as their own products. Department stores and mass merchandisers increasingly import direct from abroad or bring in development imports for sale under private brand labels.

Source: Texprocil