Japan exclusive market

Press, 11 February 1983, Page 8

Japan exclusive market

After serving as a New Zealand trade commissioner in Tokyo for three years Mr John Hundleby believes that too few New Zealand businessmen are putting enough time into developing manufactured products exclusively for the Japanese market.

One result is that, though Japan has become one of New Zealand’s three top business partners along with Australia and the United Kingdom, more than 95 per cent of New Zealand’s exports to Japan still comprise raw materials that Japan processes into products for its own export or domestic markets.

“Too often New Zealand businessmen try to sell here the same products that they’ve developed for the United States, Australia or even New Zealand,” Mr Hundleby says. “In my experience, nine times out of 10 those products won’t sell in Japan. “A greater sense of longterm commitment is needed. Overnight sales are not going to .be achieved given the different lifestyles. Companies have to spend time, money and effort developing products to suit this market. “And there’s a tendency to be put off for that very reason. The strong impression of this market is that it is a very tough nut to crack.” But the nutshell is not impenetrable, Mr Hundleby says, pointing to several cases of successful market-

ing in manufactured items.

One is Canterbury Timber Products’ medium-density fibreboard, whose sales Mr Hundleby assesses as a “noteworthy achievement against increased competition from the United States and amid general depression in the timber industry.” Sales of the board have expanded from 1651 tonnes in 1979 to 2319 tonnes for the first 10 months of last year. Another is Personality kitset furniture, a brand that, first marketed two years ago by New Zealand Furniture Japan, Ltd, is now sold through three major supermarket chains. But New Zealand Furniture Japan, Ltd, as a Japanese agent dealing solely in a New Zealand product line, is the exception rather than the rule.

In spite of two-way trade last year having topped SNZ2 billion, still no New Zealand companies have trade offices in Tokyo excepting Air New Zealand.

This means, Mr Hundleby says, that most New Zealand firms exporting to Japan must rely on the services of big Japanese trading houses which “can be selective” in the marketing information they allow to disseminate and in the clients they choose to introduce.

He sets the cost of keeping a Tokyo office at about $200,000 a year, probably more in the first year. “There aren’t many companies with a turnover that would warrant that kind of

expenditure. If anjdhing does it, it will be timber sales.” Mr Hundleby, who did two years’ Japanese language study in Tokyo before becoming trade commissioner, says that the ability to speak Japanese is "not essential” to do business in Japan. About 50 per cent of his contacts spoke English. But he says it does give the freedom to be able to independently explore trade possibilities beyond what the trading houses acting as agents may be prepared to offer. Judging from the frequency of business inquiries, he sees trade growth areas in wool-based products, such as woollen “futon” Japanese style bedding, horticultural products such as cut flowers, plants, seeds and shrubs, processed foods, and “great potential for timber product sales in about 10 years time.” In explaining why New Zealand has failed to attract significant Japanese investment in the • manufacturing sector, Mr Hundleby says that although New Zealand is regarded in Japan as politically stable, it "does not seem to have the incentives”

that Japanese investors find elsewhere. “New Zealand needs to identify product areas where it wants investment,” he said. “The onus is on New Zealand.”

Mr Hundleby returns to New Zealand this month to become assistant regional director for trade at the Department of Trade and Industry’s Christchurch Regional Office.