TAKING CARE OF BUSINESS:
Regional Companies Aim for the World
January 31, 2002
Far from Tokyo, more and more companies located in Japan's outlying areas are getting started, growing, and actively aiming at overseas markets. The most famous of these companies is located in the city of Yamaguchi. Fast Retailing Co. sells its own low-priced casual clothing under the Uniqlo brand name and has made a profound impact on the Japanese market. But not content to rest on its laurels, Fast Retailing opened a Uniqlo store in London in the fall of 2001. Many other regional companies are looking to follow suit and expand overseas.
Behind the Success Stories
Why are so many regional companies enjoying success now? According to a marketing expert, thanks to the development of information technology, there is now virtually no difference between big cities and outlying areas in terms of being able to gather and transmit information. In the IT age, even if companies leave Tokyo, Japan's governmental and financial center, they do not find themselves short of information. A move to a more sparsely populated area may actually help the company by reducing its operating costs.
From Green Tea to Glasses
At the western end of the Japanese archipelago in Nagasaki there is an old tea shop called Maeda-en. This small company is attracting attention for operating a gourmet tea bar in the Los Angeles area that specializes in Japanese green tea. Maeda-en, seeking to cash in on the popularity of health food and Japanese food in the United States, first opened a tea shop in Los Angeles in 1989. Ten years later it opened its revolutionary tea bar. Signature drinks include the O-cha Espresso, which is made by putting a dollop of whipped cream in a cup of matcha (powdered green tea), and the O-cha Latte, which is made with matcha and milk. In addition to gaining a foothold in the United States, Maeda-en is hoping to reimport its creations back to Japan.
Kaneko Megane is a company located in the city of Sabae, Fukui Prefecture, an area that is home to the production of some 90% of the frames used in eyeglasses in Japan, mainly major brands produced under license. Kaneko decided to develop its own brand, which it used to propel itself into a period of rapid growth. Kaneko began exporting in 1997, but its products did not quickly achieve international popularity. The company decided that in order to learn the preferences of customers overseas and establish its brand name, it needed its own store, so it opened its first outlet in New York, called Facial Index New York, which sells mainly sunglasses. Following its success there, in September 2001 Kaneko opened a shop selling the same types of glasses in Tokyo's Marunouchi district.
Ramen and Croquettes Experience Overseas Boom as Well
Ramen in Kumamoto is known for its rich flavor of tonkotsu (soup stock made from simmered pork bones). The area in and around the city of Kumamoto is home to 130 Ajisen Ramen (site is Japanese only) outlets, operated by a company called Shigemitsu Sangyo. When Ajisen Ramen began selling curry-flavored Kumamoto ramen last summer, the shops found that the new dish was a hit with customers. This curry flavor is the product of a joint venture in Hong Kong between Shigemitsu Sangyo and a local company and was first developed six years ago. Because it was wildly popular, the company decided to sell it at the shops it was developing in China, Taiwan, and Southeast Asia. Sales everywhere boomed, and the curry-flavored ramen made its way back to Japan.
While this company uses the same rich tonkotsu soup base at all of its locations worldwide, it gives the individual shops as much leeway as possible in choosing what kind of toppings to serve. In Hong Kong, its restaurants offer crab ramen, each bowl of which contains a king crab. In its New York shops, meanwhile, teriyaki-salmon ramen is sold. Shigemitsu Sangyo plans to follow this same philosophy of freedom in its locations in Japan.
The secret to CoroChan's success is its nimble management and the minimal initial investment required. These takeout restaurants require no more room than a single parking space--just enough room for a deep fryer and a freezer to hold frozen croquettes--so the initial investment required is just ¥3 million ($22,000). Making use of this unique business model, CoroChan plans to open shops in Taiwan, Hawaii, and Kenya this year. Potatoes are the main ingredient in Japanese croquettes, and CoroChan intends to grow them locally on the high plains of Kenya.
Many regional companies have succeeded by constructing innovative business models and localizing their products. Their vitality may portend changes in Japanese industry as a whole.