Japan Buyer’s Interview
Questions to the procurement manager of a trading company that handles groceries and fancy
foods.
How do you find new import products?
The main ways are to participate in trade shows and to run market surveys. The trade shows
are those taking place in Japan and overseas that present foods and fancy foods. We
participate in food trade shows that are large and globally famous. For foods, those are
ANUGA, which takes place once in two years in Koln, Germany, and SIAL, which takes place
in France at the same interval. For fancy foods, there is ISM, and the Fancy Food Show that
takes place in the USA twice a year. We just participated in this year's Fancy Food Show in
July. Other than these shows, there is the THAIFEX - World of Food Asia in Thailand. When
we go to overseas trade shows, we also conduct local market surveys. Other than that, we
refer to information from embassies and other public agencies to find new products.
Q: What kinds of imported products do you handle now?
They number around 500 items from 63 brands. Groceries include pickles, olive oil, pasta,
condiments, dressings, canned meat and fish, juice, curry, jam, honey and tea. Fancy foods
include chocolate, cookies, candies, marshmallows, snacks and puddings. By country, the
biggest source is Europe, particularly Germany, followed by Italy and Spain.
Q: Why do you specialize in groceries and fancy foods?
The biggest reason is that they can be distributed without refrigeration. Even among
foodstuffs, we do not handle anything chilled or frozen. As a company, we basically think
about the two fields of "foods" and "fancy foods". Alcohol imports have problems with licensing
(permits), so we are not interested in those at present. Another factor is that a group company
does handle beer and wine.
Q: What criteria do you apply for selecting products?
The first is "quality". The second is "appearance (packaging design)", which means, does it
present a salable appearance? The third is "flavor". Finally, there is "price". As you know, the
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Japan Buyer’s Interview
first, "quality", means does the manufacturer clear the international quality and management
standards, such as HACCP, ISO and IFS.
When a customer buys a product, the first thing they base their judgment on is appearance.
The first step starts from what you know about the contents at first glance, and whether there
is an image that makes the food look tasty. Next, does it taste good when you eat it? Finally,
there is the balance with price. If the price is high, we negotiate with the manufacturer. We
tell them that it would be difficult to sell at this price, given the Japanese market price, and
we get them to cooperate as far as possible as the negotiation proceeds, but there are time
when we can't agree a price and have to abandon the trade.
Q: What attributes of counterpart companies do you see as most important?
Their products, above all. Are the taste and quality of the food itself good?
We don't bother much about the size or revenue of the company, but if it has less than around
ten employees, there are concerns over stability and the reliability of production capacity.
Q: Are there packaging designs that are acceptable in the source country but
won't work in Japan?
For example, if it's a plain design with nothing but text, it is difficult to sell because it's not
clear what the content is like. Even if it says "chocolate", you don't know what kind of
chocolate. It's easier to sell packages that give an idea of the contents. It's different with a
famous brand, but packages with nothing but text are difficult.
Q: What are your best-selling, popular products?
For us, it's olives on the groceries side. For fancy foods, it's marshmallows.
The three reasons why they sell are 1) flavor and quality are good, 2) the retail price seems
like a bargain, and 3) there are few domestic products.
The olives come from Spain. When we go to trade shows, we make market surveys. When we
do that, we buy anything that catches our interest, check the taste, the price, the website and
so on, and then contact the manufacturer. The olives are Spanish, but we actually found them
in the French market. The key points at that time were that the shape of the jar was good,
and the price was not very high, so it would be able to compete on price.
The marshmallows are made in America. They can be eaten as they are, or we suggest that
they can be grilled to eat as a dessert at a barbecue. I've seen it said on TV that they are
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Japan Buyer’s Interview
delicious when put on bread and toasted in a toaster.
We make around ten menu suggestions a year in our catalog, and online.
We basically take the recipe suggestions from the overseas manufacturers, but it's unlikely
that all of them will suit Japanese tastes. Some recipes are arranged in Japanese style, and
some are the originals from the manufacturers. In contrast to Japanese products, it may not
be clear how to use some imports, so in those cases we add serving suggestions.
Q: What are your terms of trade?
We make a sole agency contract as the only company in the Japanese market. In some cases it
may be a written contract, in others, a gentleman's agreement. The reason for wanting a sole
agency agreement is that if one product is handled by multiple companies, the prices diverge
and come into competition. For the first transaction lot, we start with case units rather than
containers. After that, we gradually scale up as marketing progresses. We feel it would
probably be difficult to start from container units. Foods and fancy foods differ, and in some
cases we might start importing fancy foods in container units, even for the first time with a
manufacturer. That's because we can anticipate the price band to some extent, and that
makes marketing easier. It is easier to form an image for chocolate, biscuits and candies. For
foods, where we don't know how well they will sell without putting them on sale to see, even
we may not be able to foresee the volume. We make test imports of foods in pallet units and
gradually expand. Test marketing takes at least half a year. Payment is by letter of credit
(L/C) at first. That reassures the manufacturer. Use of wire transfers is increasing, and is now
the most common method. We receive the bill of lading and then pay within a set period from
that time.
There are some raw materials that cannot be imported into Japan, so we comply with
Japanese law and check the raw materials list before importing.
Q: What are the biggest problems and barriers to bilateral imports?
There are three concerning import counterparts.
Firstly, it takes time to make inquiries about quality, identify causes in the event of claims,
and devise measures for future improvements.
Secondly, it may not be possible to supply manufactured goods with recent dates.
Thirdly, manufacturing changes can bring in the use of additives that are not permitted in
Japan, preventing further imports.
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Japan Buyer’s Interview
Q: And what are the problems on the Japanese side?
Firstly, Japanese retailers are strict in their management of expiration dates, and at least
half of the time to expiration must be left when the products are delivered. Manufacturers
make their products in advance for inventory and ship them in order of manufacture. In
Japan, if the expiration date is a year ahead, we can only deliver the product to customers in
the first half year. For example, if a canned product has four years to expiration, and the
manufacturer wants to ship stock that is a year and a half old, that stock has two and a half
years left from the manufacturer's point of view, so they want to know why the Japanese side
will not accept it. They say "isn't that the point of canned goods?" In Japan, whether the
expiration period is long or short, the volume retailers want to have at least half that period
left. Really strict places might demand two thirds. That means goods that expire in three
years must be delivered within one year. Japanese import specialty stores might be more
understanding about expiration dates, but it is difficult to get volume retailers and
convenience stores to do that.
Secondly, some of the additives that are approved in North America and Europe are not
approved in Japan. For example, emulsifiers for chocolate can be soy lecithin or vegetable
lecithin, but not sunflower lecithin.
Thirdly, consumers' perception of quality is out of ordinary by international standards. For
example, perceptions of harmful allergens are the same as they are internationally, but dents
in cans, trivial defects in packaging design labels, and minor problems that have no effect on
quality or flavor trigger customer complaints.
One recent example was a jelly candy that has jelly around the edges, and there was a
complaint from a customer who had eaten the whole thing and found that one edge lacked
jelly. Products must be replaced if their packaging or design labels are even slightly torn. I
don't think that happens much overseas. Some manufacturers will be reasonable and make
repairs. Basically, any manufacturers will be understanding and try to make improvements,
but the fact is that there are defective products, and if we make a complaint, some
manufacturers accept our complaint and some don't. That varies between countries.
Another example is that in the case of the avian influenza, manufacturers must check
whether there is any problem with the birds they use for raw materials. When there was the
O-111 outbreak in German cucumbers, it was on the news in Japan, and we got requests from
supermarkets and wholesalers to investigate. We check with the manufacturers every time
for problems in their raw materials. A long time ago there was a problem with pectin in jam,
and we got inquiries about swine influenza, but some manufacturers don't like to business
with Japan because they have to check so many things.
Fourthly, there are fewer ships running directly from Europe than there used to be, and it
takes time to reach Japanese ports. It is increasingly common for goods to come via China,
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Japan Buyer’s Interview
South Korea or Singapore, and it can take a week longer to reach port.
Q: Are there any other points you could tell us about entering the Japanese
market?
As I've said before, the key points are flavor and quality. Next, the price must be reasonable.
The packaging must make it easy to understand what's inside. Between importing a product
and making the first sale, we make snap inspections and other investigations to check
whether it really is good enough. For example, when the product first arrives, we inspect and
check 10%, and if we find any problem, we check 50%. For chocolate, we check for blooming,
and whether it has ever melted. We put a logging thermometer inside the container for
chocolate, to check that it was properly kept at low temperature. We also share any problems
in the log with the manufacturer.
Q: Are there any countries or items that currently interest you?
We are now looking for honey graham cookies in North America, but there are no companies
offering an acceptable price. The manufacturers we are currently in contact with have good
products, but their prices are around JPY1,000 per box. We are looking for products at around
JPY500-600, at most.
We try, as far as possible, to choose products that do not compete with those we already
handle. Of course, the best things are goods that face little competition, are reasonably priced,
and are either marketable or meet customer needs. When our sales staff go overseas, they ask
retailers what kinds of products they want, and the answer they get is "products that sell",
without any specifics. That's because the products are already in Japan, to some extent. They
go to trade shows and find new things, or new products from companies that did not attend
before. Other than that, they just look around in the market.
Q: What is the outlook for the import market in Japan?
We think product imports will continue on a flat line. However, the business model that gets
manufacturers to produce private brands, developing products for outsourced production and
importing them to Japan, has potential to grow in future. I think our import industry deals
with products for niches and gaps. If we develop all sorts of products and at the same time
find and offer products that suit the times, there are enough elements that can grow.
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While Japanese manufacturers sell products overseas, they will develop and make products
that they can copy to get an edge, or that will suit Japanese people. Those copies will not be
very different in their content, but they are lowering volumes and price brackets to develop
products that are right for Japan.
Putting it the other way, imports have a part to play in stimulating the domestic market.
Import specialty stores often say they do not need expensive products. Conversely, it's enough
to have a hit product. If the price is high it will be copied and Japanese manufacturers will be
making the same thing in two or three years.
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