The Promise of Japan for Creative Businesses

The time is ripe for small, artisanal creative businesses to enter Japanese market.

Last week, Egg Press, Hello!Lucky’s partner in Portland, Oregon, visited Tokyo for a week-long trade mission called Pop Up Portland, hosted by the Portland Development Commission (PDC).  

The trip included a pop-up shop featuring Portland-based creative businesses ranging from Keen footwear to high-end apparel brands Archival and Older Brother to hand-crafted bicycle accessories by PDW Design Works. The shop, in Tokyo’s hip Akibahara “electric town” district, allowed Japanese media, retail, and wholesaler buyers experience Portland-based craft brands.  

In addition, PDC set up meetings with Japanese retailers, helping these small business owners develop personal relationships with buyers.  Unlike a trade show, where a small business can easily get lost in the mix, participants received one-on-one attention and support for Japanese translators and facilitators.

According to Egg Press owner Tess Darrow, the trip was a huge success and will likely result in new orders for Egg Press and Hello!Lucky’s letterpress greeting cards from Japanese retailers such as Loft (a large general goods concept store chain similar to Target) and overall growth in Japanese sales.

Pop Up Portland delegates with singer Saori Yuki.

Combined with Prime Minister Shinzo Abe’s historic visit to the U.S. this week, the mission highlighted the exciting opportunity that Japan presents for small- and micro- creative businesses.

Two factors create this opportunity. The first is the Japanese customer. The second is Prime Minister Abe’s economic reforms, which look likely to unleash an unprecedented period of economic prosperity translating into demand for high quality, hand-crafted products.

The Japanese customer: a high regard for quality

According to Mitsuhiro Yamazaki, the Portland Development Commission executive who organized Pop Up Portland, Japanese customers crave high-quality, hand-crafted products. “In choosing to focus our mission on craft brands, we simply followed customer demand. We looked at media coverage in Japanese magazines. There is a great appreciation for hand-crafted, high-end products and the Portland aesthetic is well thought-of.” (One only has to view the TV series Portlandia to understand this aesthetic: organic, hipster, mid-century, minimal, and Americana — and to some extent itself inspired by Japanese design). 

Archival Clothing messenger bag

“The Japanese market is more mature than the Chinese market, where people want more, cheaper, faster — kind of like Japan in the 70’s. Now, growth has slowed and customers appreciate quality over quantity,” said Yamazaki. As a result, Japanese customers are showing an appetite for high-end crafted products and brands. “It’s the right time for quality brands that fit into the context to scale up their presence in Japan.”

The Japanese market: now is the right time to export

Thanks to Mr. Abe’s economic reforms (most notably printing money and setting an optimistic inflation target of 2%) Japan could be poised to once again become a major economic force in Asia — and a significant consumer of high quality imported goods. 

Here’s why:

If TPP (Trans-Pacific Partnership) passes, the Japanese market will open substantially to U.S. agricultural exports. While this has direct benefits to the U.S. agricultural industry, it could also benefit other exporters by freeing up a portion of the consumer’s budget that would normally have been spent on food.

Oil prices are at an all-time low, which is translating into record profits for Japanese companies.  Japan, which historically relies on importing raw materials, manufacturing, and then exporting has seen a major increase in corporate profits due to the lower cost of inputs.  These increased profits are helping to create economic growth that could in turn stimulate demand for imports.

Japanese workers are more productive than most, and their wages have been steadily declining due a rise in part-time jobs, making Japanese manufacturing once again competitive with the rest of Asia. Many leading Japanese manufacturers, including Sharp, Toshiba, and others, have moved manufacturing back to Japan. This will create more job growth in Japan which could translate into economic growth and demand for imports.

Mr. Abe is also proactively trying to get women back to work. Women have historically played a minor role in the Japanese workforce, and with high unemployment and the ongoing recession in Japan there has been little incentive for them to do so.  With a growing economy and governmental encouragement (Mrs. Abe is owns an organic izakaya restaurant), women could have more opportunities to get back into the work force and have more purchasing power.

How does a U.S. small business access the Japanese market?

Accessing the Japanese market — or any foreign market — takes research and relationships on the ground. PDC’s Pop Up Portland mission is unique, but the model could be replicated by other cities and in other markets with thoughtful research and careful planning.

“It’s all about personal connections,” said Yamazaki.  To set up PDC’s first green building trade mission in 2013, he spent “many months” reaching out to Japanese real estate developers and local government officials.

According to Yamazaki, the U.S. government’s approach to trade and small businesses is out of date. When he initially approached the U.S. embassy in Tokyo, he found that staffers were generalists who lacked the industry-specific, on-the-ground knowledge or connections needed to develop new business relationships.   Trade brokers, on the other hand, often lacked big-picture strategy and economic development in general. “You need to be able to sell, market, communicate, and convince.” said Yamazaki, a Japanese national who came to the U.S. for college and has a background is in business and economic development. “That’s what it takes to be successful.”

It also takes U.S. small business owners thinking big-picture and long-term.  “For Pop Up Portland, we approached more than 30 companies to get 7 - 8 businesses to participate,” lamented Yamazaki.  Small business owners are simply too overwhelmed to take the time to travel overseas with uncertain outcomes. They should put aside their fears and seize the opportunity. With Asia’s ascendence as as dominant economic force, small business owners need to follow President Obama’s lead and “pivot towards Asia.”

U.S. small businesses can show their support for Prime Minister Abe’s economic reforms, which directly benefit businesses seeking to access the Japanese market, by supporting TPA and TPP.

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