A brief project on textile industry in Japan and how to set up anew one.

1. JAPAN: TEXTILE INDUSTRY
BUSINESS PLAN
POST GRADUATION DIPLOMA IN MANAGEMENT
BIRLA INSTITUTE OF MANAGAMENT TECHNOLOGY
GREATER NOIDA, UTTAR PRADESH

2. March, 2020
Introduction
Opening a business in Japan is a very appealing idea for those seeking to operate on one of the
largest and most technologically developed markets in the world. Trading, retail, and pharma are
some of the most prolific industries in Japan thanks to the great purchase power of the
population.
When entering the retail industry can explore the many possibilities offered by the textiles sector
by setting up manufacturing companies in Japan. Through this project, I have explained how to
start a textile manufacturing company in this country.
Japan’s Economy
The economy of Japan is a highly developed free-market economy. It is the third-largest in the
world by nominal GDP and the fourth-largest by purchasing power parity (PPP) and is the
world's second largest developed economy. According to the International Monetary Fund, the
country's per capita GDP (PPP) was at $38,937. Japan is estimated to have a GDP per capita of
around $38,490. The Japanese economy is forecast by the Quarterly Tankan survey of business
sentiment conducted by the Bank of Japan. The Nikkei 225 presents the monthly report of top
blue chip equities on Japan Exchange Group, which is the world's third-largest stock exchange
by market capitalization. In 2018, Japan was the world's fourth-largest importer and the fourth-
largest exporter. It has the world's second-largest foreign-exchange reserves worth $1.3 trillion.
It ranks 29th on Ease of doing business index and 5th on Global Competitiveness Report. Japan
is also the world's third-largest consumer market.
Textile Industry in Japan
Japan has a long history of textile production, and is one of the largest producers of technical
textiles. In a global market flooded by cheap textiles from China and other emerging nations,
Japan’s textile industry is transforming itself into an industry specialised in technical and smart
textiles to survive the competition. Innovations like synthetic spider silk and wearable health
monitors are among the efforts to set the Japanese textile industry apart from others.
Why open a textile manufacturing company in Japan?
Also, known as textiles mills, these types of Japanese companies can imply multiple benefits for
the owner. The reasons to open a textile manufacturing company in Japan are:
 this type of business can be set up as a small or medium-sized company;
 the textiles sector in Japan is very developed, therefore the profit margin is quite high;
 Japanese citizens buy only high-quality textile products, therefore the goods produced
here must meet their requirements;

3.  Japanese companies also produce textiles for export in neighboring countries.
Registering a business in the textile manufacturing sector in Japan
The limited liability company is the safest options when starting a textile manufacturing business
in Japan. Before the company is registered, the foreign investor must first:
 draft a viable business plan which will ensure a good start for the company;
 purchase the necessary equipment and machinery for manufacturing the products;
 find fabric distributors which will meet the requirements related to the quality of the
goods;
 Find a suitable location for the textile manufacturing company.
In order to operate in a safe environment and to better promote their activities, textile
manufacturing companies can enter the Japan Textile Federation.
Benefits of doing any business in japan
1. If you are an individual entrepreneur - taxes are simple and planned.
2. Legislation, politics and economy are quite stable. For example Russia generally averted the
2008 crisis. If regulations in the sphere of business are changing - they tend change for the better.
3. Japanese business space is very sparse, compared to other countries. Competition is
significantly lower.
Foreign Investment in Japan
According to the 2019 UNCTAD World Investment Report, FDI flows to Japan remain low
compared to most other developed nations across the world. Furthermore, inflows are relatively
unstable, with FDI reaching USD 9.9 billion in 2018, down from 17.75 billion in 2016 and USD
10.4 billion in 2017. This was mainly due to massive divestments from the Japanese retail and
communications sectors. However, from a global point of view, world inflows decreased by 15%
in 2018, while they decreased less in Japan (-5.9%). FDI stocks in Japan were estimated in 2018
at about USD 213.8 billion, up from USD 200.1 billion in 2017. In 2018, the United States, the
United Kingdom, France, and South Korea were the main investing countries and represented
nearly 85% of the FDI inflows. Investments were mainly oriented towards electric machinery,
finance and insurance, chemicals and pharmaceuticals, transportation equipment production and
real estate.
Finally, Japan ranked 29th out of 190 countries in the World Bank's 2020 Doing Business
report, an increase from 2019, when it ranked 39th. The country has a solid net foreign creditor
position and external indicators are generally robust. Japan is actively opening its doors to
foreign business, as it's aiming to create the best possible environment for overseas investors,

4. backed by Prime Minister Shinzo Abe’s pro-global business policy known as Abenomics. The
country's key strengths are its position as a leader in advanced technology and R&D. The
potential barriers to investment are essentially demographic, linguistic and cultural. The disaster
that hit Japan in 2011 (the devastating earthquake and tsunami), as well as the environmental and
health concerns related to the situation at the Fukushima Daiichi nuclear power plant, continue to
hold back future foreign investment. Nevertheless, Japan remains a key market for investors.
Moreover, the Japanese economy has been financing the reconstruction of the country without
too much difficulty, thanks to a surplus of savings accumulated in recent years. Prime Minister
Shinzo Abe's growth strategy aims to double the value of FDI by 2020 compared to the end of
2012. The government has been incorporating rules for corporate governance, gradually reducing
the effective corporate tax, and has established R&D centers and special economic zones in order
to become the world’s most business-friendly nation.
Type of Business: Textile
This business caters to all the male & female section of the Japanese population. With such a
business, the attempt is to introduce the Japanese people to the much celebrated ethnic wear of
India and some of high quality ‘kimono’ based items. Through such an approach, the idea is to
bring the two cultures together and further enhance the cultural bond between the two countries.
Cultural commonalities
Asian Indian and Japanese cultures have a plethora of cultural similarities. Both are located in
Asia and have three distinct "Asian" cultures. Buddhism is an integral part of each country's
culture (Buddhism was largely infused with Hinduism in India, yet still survived in Northern
areas) and Hinduism has a significant influence as well (some Japanese Kami spirits originate
from Hinduism). Animism is also present (India- South Indian Hinduism in Kerala and Tamil
Foreign Direct Investment 2016 2017 2018
FDI Inward Flow (million USD) 17,751 10,430 9,858
FDI Stock (million USD) 196,614 200,193 213,754
Number of Greenfield Investments*** 213 245 253
FDI Inwards (in % of GFCF****) 1.0 n/a n/a
FDI Stock (in % of GDP) 3.8 n/a n/a

5. Nadu with its worship of nature spirits and village deities. Both the countries also have
cultural/ethnic/genetic diversity with a mixture of mongoloids and caucasoids. Japanese
Buddhists may use the siddham or bonji script derived from Sanskrit Devanagari. Tea is also
important in both the regions. Both regions follow lunar and lunisolar calendars and have sixty
year cycles for naming years. They also have complex medical and astrological systems and
emphasize meditative practice for balancing the mind and body. Many Sanskrit words have been
adapted into Japanese languages, especially with the spread of Buddhism.
Location: Tokyo
It tops the list of the most populated Japanese city with more than 13.8milion people. Tokyo is
no 1 for the choice, coolness, great shopping mood, unique store designs and professionalism
and friendliness of retail staff and it is well known for its investment friendly and supportive
business environment. The strategy is to set up 2 medium sized shops naming JaipurRaga in
sendton city shopping center, a major attraction for not just the tourists, but also the locals living
there and also Japanese fashion store especially for women’s clothing. This outdoor assortment
of booths offers the best in fresh produce and other domestic products. Be prepared to
haggle/bargain, especially over non-produce items.
SWOT analysis of Textile industry in Japan
Strength
 High quality raw material used
 Clothes based on the famous ‘Kimono’ concept
 High quality at moderate costs
Weakness
 Introducing weather sensitive apparel
 Initial supply Chain Issues
 Market penetration in the local cheaper markets
Opportunities
 New fashion segments
 High purchasing power of people
 Requirement of high quality clothing
Threats
 High Competition

6. Major Competitors
 Chiso
 Eisaku Noro Company
 Gunze
 Kuraray
 Takata Corporation
 Tomioka Silk Mill
 Unitika
Range on offer
1. We intend to service female clients with an extraordinary range of formal and semi- formal
wear
2. We shall also offer limited edition office accessories like handbags and other Indian jewelry.
3. We shall also custom design suits and formal and semi-formal designer wear at the cheapest
rates.
Price range
2000 to 2500 Yen with the customized wear having slightly higher costs. This price range has
been considered by taking into perspective the costs of the same item of clothing or accessory
here in India. The aim is to provide service to all females with age being no bar mainly catering
to the middle to upper middle-class section of the society.
Financing
Family Money can be used for the initial financing of the business in the early periods. After
being another mode of financing can be through Angel Investors by presenting them the business
proposal, making them understand the marketing strategy and providing a forecast for the future.
Future plans
A lot of it depends on degree of success of the two shops. If the required success is met within
the given time frame and regular profits are achieved, then other more influential places such as
Yokohama can be targeted for further market growth.

7. References
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