Japan is ranked among the 10th most populated countries with 1.5% of foreign workers. So expanding the company there was challenging yet not impossible. The apparel industry in Japan is one of the largest in the world, to be more precise, is the fourth largest market in terms of consumption and third in terms of import. Having access to cheap labor, we feel we can tap into this opportunity. And Japan gives us a scope to expand rapidly as its projected consumption of ready-made garments is expected to reach over 92 billion US dollars by the year 2021. With a highly eccentric and unique youth demography, Japan presents us with the opportunity to export not only low and/or medium range products, but also, high end designer items.
Tax and Tariffs
As a Bangladeshi firm, we are to enjoy the zero-percent tax quota on our Japanese exports. This gives us a massive competitive advantage over other countries. And because of the recent relationship improvement between the Bangladeshi and Japanese governments, the future of Bangladeshi and Japanese economic ties seems formidable. Moreover, as Japan is closer to Bangladesh than the EU, USA, and Canada, the shipment costs are lower which makes the same Bangladeshi product cheaper in Japan than the other countries.
Although there are many similarities between the two countries, there are also few differences. For example, both countries are high contextual, traditional, and extremely polite. But that does not mean the road of economic relationship ahead is paved with rose petals. There are many differences as well to overcome. The differences we are most likely to face are:
- Language: The two countries have no common language. Both parties will have to rely on English for communication. The two native languages are so vastly different that even when you translate them both to English, a lot gets lost in translation. As a result, the intended meaning gets misinterpreted.
- Idealism versus pragmatism: Overall, Japan is a very pragmatic society as opposed to Bangladesh who is more idealistic. The Japanese buyers, at their core, want profit maximization. But that does not mean they do not stand by their suppliers in times of need. This mainly comes from the traditional value of Japanese society. A Japanese buyer always seeks to build a personal relationship with his/her supplier(s).
Political and economic difference
- The political situation in Japan is rather steady. Bangladeshi government has always had a good relationship with its Japanese counterpart. With the Shinzo Abe getting re-elected, the political uncertainty in Japan is minimal. On the other hand, Bangladesh is virtually politically crippled.
- Even though in recent times, Bangladesh has seen somewhat stability, the general trend indicates high levels of political uncertainty. Of course this is one of the biggest hurdles a Bangladeshi company has to overcome. Traditionally, systematic risk is very high in Bangladesh. This is mostly due to the volatile nature of its economy. The interest rate, for example, fluctuates often. The bureaucratic clog in Bangladesh is a major hassle for any business operator. The bureaucratic culture thrives on bribes, which poses massive disadvantage. Also, the customs in Bangladesh is very slow. The sea ports are out of date which makes loading and unloading of products at the docks a time-consuming process.
- With a GDP per capita PPP $39,000 Japan is certainly one of the wealthiest nations. Coupled with its high literacy rate, this makes Japan a dream for any exporter. The population spread between 15 to 60 years makes it an ideal target for any apparel industry. The unemployment rate of Japan is considerably low (2.5 percent), and the disposable income is approximately $29,000 per person which means it is suitable for both mass and high-end products. Traditionally Japan has been able to control its inflation rate very well which is why we are eyeing Japan as a market for our merchandise.
Doing Business in Japan
- Entry strategy: Japan, as a market, is obsessed with quality and our reputation as a supplier of quality assured garments has brought in orders from local Japanese importers through whom we will be distributing our products at first.
- Target customers: We believe with our excellent product quality; we can supply to every major Japanese clothing retail. Therefore, the potential target is the Japanese clothing industry altogether.
- E-commerce options: Our website has been online since 2012 which we recently upgraded to a user-friendly website where the buyers can easily place orders of template items and also inquire for specialized ones.
- Future plans: Our plan is to penetrate the Japanese apparel industry to its entirety. We believe we can provide clothes for every Japanese retailer; be it budget or exclusive. We capacity to expand ourselves at demands will. At this moment, we are producing basic products, but we have been indulging in different varieties of products.
- Over and aging population: Due to over population in major cities, Japan lacks the importance of punctuality in most cases because their vast population leads to traffic congestion in peak hours and thus results in loss of valuable labor productivity. On the other hand, Japan’s aging population is very high and birth rate is lower than it should be, thus they are facing a huge crisis in man force.
- Frequent natural disasters: Japan is prone to natural disaster due to its geographical positioning and the over population and constant development have the risk further.
- High public debt: Japan is listed as the third most indebted country. In 2015, data suggests, the amount of debt exceeded $11.06 trillion which is more than twice their annual gross domestic product.
- Falling economy: The country often faces a long term fall in their economy thus their inflation rate is higher comparing other developed countries and it is forecasted that it will rise even more and the recession will last longer than the economists expect. Though, recently they have solve this issue for the time being.
- Market Risk: Japan’s legislation is lucent and well enforced. The intellectual property of this country is based on similar principles as of United Kingdom. Recent IP of Japan has been focusing on supporting business innovations and encouraging new businesses. The Japan Patent Office (JPO) are the main organization which is engaged with activities such as the industrial right system which grants appropriate industrial property rights, drafts industrial property related measures, promotes international harmonization and assists to developing nation and so on. The importance of the system administered by JPO has increased over time to improve the resident’s lives in this century.
- Commercial Risk: Japan’s personal and press freedom is very high. The country ensures an independent judiciary and a strong commitment in the rule of law. For foreign companies like The Purple Bots Clothing we should go to the Financial Services Agency of Japan or the Securities and Exchange Surveillance Commission (SESC) as they follow a similar framework as the United Kingdom.