CHAPTER 3. DISTRIBUTION SYSTEM OF KEY IMPORTED
4.2. Some solutions aimed to improving penetration ability to distribution
4.2.2. Separate solutions for each export sector
Organizing regular: These fairs display Vietnam’s products, help fashion firms to find and to sign trade contracts, but at the same time, promote Vietnamese cultures in order to enhance tourism development…
Creating websites specialized in textile and garment products in Japan in English, Vietnamese and Japanese: Cost for create this website can be covered by textile and garment firms who want to export their products to Japan, together with financial assistance from Vietnam Garment and Textile association, or from Trade Promotion Department,… This website will be connected to website of Japan Export Trade Research Organization (JETRO), website of Japan Textile Federation and websites of other organizations and huge textile and garment business firms in Japan.
One prestigious technology company will take charge of creating this website to prevent technical problems and to update regularly. Information for the content of the website will be provided from Japanese market experts and textile and garment companies. The website can focus on some following content areas:
Analysis of current state of Japan’s textile and garment import (monthly update)
Analysis of market demand and supply and rivalries in each sector of textile and garment industry
Introduction about management mechanism and procedures for importing textile and garment products to Japan’s market.
Introduction about key trading and transaction centers and distribution system for textile and garment products in Japan
Introduction about fashion types, which are currently in Japanese consumers’ favor and predictions about changes in textile and garment market
Introduction of the government’s trade promotion programs, which assist private enterprise to penetrate Japan’s market
Introduction about fairs, and exhibitions of textile and garment products in Japan and procedures, conditions and cost for participant firms
Introduction of experiences of textile and garment companies from both Vietnam and other countries, who have succeeded or even failed in Japan’s market
Based on help from JETRO, Trade Promotion Department, Vietnam Garment Association, the website can introduce partners to Vietnamese companies or vice versa. Alternately, this website can have a separate section for finding business partners for only Japan and Vietnam companies to introduce themselves and find a suitable business partner.
b. Proposed solutions for textile and garment companies exporting their products to Japan’s market
At present, compared to other competitors, the majority of Vietnamese companies are operated in a small and medium scale, have not established a brand, and have not impressed Japanese consumers. Therefore, it is relatively hard for them to export their products directly to Japan in a short period. Thus, each enterprise needs to build up a development strategy regarding Japanese market penetration, based on assessments on their potential, strengths, weaknesses,… in the short run and in the long run. The long run goal is to export to Japan’s market directly without any intermediaries. To build up a foundation for this goad as long as achieve it, in the short term, Vietnam companies need to perform well contracts for handicrafts with Japanese businesses. They need to ensure product quality and delivery time. They also need to be more active in finding business partners, especially big general commercial and trading corporations, and should not wait for their customers to bring the contracts to them. Additionally, in this period, enterprises need to establish and standardize management procedures, learn more about technology, and about management skills from Japan. In particular, they also
need to seek domestic input material sources, which are of good quality, to replace imported input material with a view to not only increasing their product competitiveness but also impressing Japanese partners as well as consumers, and to accumulate more resources for long-term market penetration strategies.
Apart from measures regarding improvements in production process, enterprises need to pay more attention to trade promotion and market development, especially for a market, which is particularly hard to penetrate its distribution system, like Japan. In a limited scope of this graduate thesis, I would like to propose some possible solutions regarding market development in Japan, which textile and garment companies can consider applying in order to penetrate Japanese goods distribution system step by step.
*Market development solutions regarding production activities:
In Asia, demand for textile and garment products of Japan’s market is always considered to be in the top. Japanese consumers are becoming stricter in the way they choose what to wear, and continuously requiring producers to create more goods, which need to be of good quality, with nicer designs, with more details, and to fit popular fashion and market trend. Therefore, the first condition for an easy market penetration is that enterprises need to perform well in stages regarding product manufacturing. In addition to investing in improving machineries, in purchasing modern equipment, in enhancing technology to boost product quality, they need to pay more attention to researching new fashion trends in Japan’s market.
For big companies, they can also establish a new department, specialized in fashion design and fashion shows. It also includes a Japanese fashion market researcher teams. The main responsibilities of this department are:
To establish a relationship with Japanese fashion designers
To design new model to provide and sell them to member companies
To research on prediction about new fashion trend
To follow legal procedures to establish intelligence property rights for new fashion designs and business trademark
* Market development solutions regarding commercial activities:
Appropriate investment in marketing activities: establish market research department, in which there is some experts, taking charge of researching Japan’s market (if the export quantity is large enough, the company can consider building up a Japan’s market researcher team). Their responsibilities are:
To research general market demand and supply, and price conditions of companies’ export products in Japan’s market in order to suggest suitable measures to management team.
To sign partnership contract with international travelling service companies (with a focus on Japan tourists) with an aim of not only marketing products but also introducing the Vietnamese fashion culture to foreign tourists.
To promote trade and assist companies to improve efficiency of their participation in market fairs and their advertising for new products and fashion designs
To collaborate with sale department (export department) to maintain, enhance and strengthen their relationship with Japanese customers
To contact with fashion design teams (or fashion show companies of their own corporations) to collaborate in advertising activities
To update and provide information to other functioning departments of the companies in order for them to take part in building an effective strategy regarding direct distribution of Vietnam’s textile and garment products in Japan
To create a website for the companies in Vietnamese, English, and Japanese and carry out online trade promotion activities with Japan’s market
*Improvement in effectiveness level of enterprises’ trade promotion activities: at present, although many textile and garment export enterprises spend a lot on marketing their products, their effectiveness level is not very high. To improve this situation, companies should:
Actively and regularly research on trade promotion programs organized by governmental organizations, associations or local authorities. From this, they can grasp opportunities to promote trade with Japan’s market in particular
and with other countries’ market in general and then to design a suitable plan for their own companies. This activity helps enterprises to reduce cost for trade promotion activities.
When participating in market fairs, companies should prepare carefully their own documents, catalog, product introduction and other factors that their partner may be interested in. they should have their own plans to find new partners. Before meeting with business partners, they should know their strengths and potential in order to have suitable strategies when negotiating and establishing a business partnership.
Establish a representative office in Japan when companies are strong enough
*Establishment of a direct distribution channel for textile and garment products in Japan:
Sell their products through stores owned by Vietnamese citizens in Japan.
At present, many Vietnamese citizens in Japan have opened department stores are mini- supermarkets to sell Vietnam’s textile and garment products as well as handicraft. This is a good route to introduce Vietnam’s products to Japanese consumers.
Move to sign a contract to act as a direct supplier of the retailer system and supermarket in Japan
In order to do the above-mentioned measures, the first condition is that companies need to be able to create impressive products and to show off their brand in Japan’s market. Other important condition is that a large amount of capital is required to sell goods on credit for retailers and supermarkets. Additionally, companies need to have a detailed plans and feasible measures in terms of managing their product distribution. Furthermore, there is a need for an excellent and trustworthy expert team to run the distribution system. Companies also can consider hiring Japanese experts in this field.
4.2.2.2. Solutions for wood and wood product industry a. Proposed solutions for macro-level management
*Combination of many sectors to promote trade to Japan’s market
Ministry of Trade and Industry, Wood Product Association and Trade Promotion Department,… collaborate with big companies to Vietnam’s festival in Japan, market fairs and product display in Japan’s market on a regular basis. These events will not only introduce and promote Vietnam’s products but also will attract more tourists to Vietnam, through which we can boost tourism export. At the same time, enterprises of two countries will find their business partners in order to collaborate in their production investment or to perform wood product trade right in Japan’s market.
*Establish representative offices of Wood Product Association and showrooms introducing Vietnamese wood products in Japan’s market.
Annually, Wood Product Association, Trade Promotion Department and JETRO are in partnership to organize competitions to choose the best wood products favored by Japanese tourists (voting is done by Japanese tourists, have been to Vietnam, or in the internet).
*Each traditional craft village need to have a general development plan with detailed strategies for product, prices and export promotion. In each craft village, there should be a connection between business households to avoid unnecessary competition. There should be a shared website for the whole village to introduce special features of their products with a logo, to impress Japanese commercial firms and consumers. There should be a commercial and product promotion offices for the whole village, together with a market research team. This office will create different designs, which meet market’s demand and then provide them to production household in each village.
* Associations in wood product industry and Vietnam’s General Department of Tourism should collaborate traditional craft villages with tourism firms, to create new form of travelling, which is ancient craft village tourism.
Tourists will visit traditional craft villages, take part in artist’s performances right there, are guided to create their own product. There are some areas for tourists to build their own products and buy them back home. This form of tourism will improve attractiveness of travelling in tour and contribute to attracting more tourists
to Vietnam. At the same time, it creates favorable conditions for traditional craft villages to get used to mechanism and get closer to international business frame to advertise their product with lower cost but higher level of effectiveness.
*Construction of three big commercial centers for handicraft products in general and for wood products in particular in three big cities Ha Noi, Hue and Ho Chi Minh City:
In these places, there will be showrooms to introduce products and functioning room showing videos about the potential and tradition of Vietnam’s wood product industry. It can serve as a trustworthy contact point for Japanese companies finding business partners in Vietnam. In addition, the centers will receive goods packages sent from traditional craft villages. They can also create websites to promote the potential of wood products in each region, perform online transaction with traditional craft villages and with foreign commercial companies to promote wood product export
b. Proposed solutions for wood product production and export companies
For Vietnam’s wood products can penetrate the Japanese complex and strict market, apart from investment for product quality and designs to promote competitiveness, companies should carry out some of following trade promotion measures:
*Understand tastes and preferences of Japanese consumers:
Producers need to establish a harmonious and trustworthy relationship with Vietnamese exporters and Japanese importers so that they will update them information about market in time, enabling them to meet consumers’ demand quickly. It prevents producers and exporters from merely focusing on their jobs, which otherwise will later cause severe results regarding outdated designs or not enough goods produced for export. This is the weakness of wood and wood product industry in particular and of Vietnam’s commercial sector in general.
Companies need to research and analyze websites and product designs displayed by top enterprises in Vietnam and other countries in the wood and wood product sector exporting to Japan or by other online stores from developed countries.
Then, producers can generate more ideas for their own products.
Companies should display their products in international market fairs and exhibitions for handicraft in general and for wood products in particular in Thailand, India, the Philippines, Indonesia,…. These are competitors of Vietnam’s wood product industry in Japan’s market. Their products penetrated the Japanese market long time ago, therefore they should have a certain amount of knowledge and understanding about Japanese consumers’ preferences. This activity enables Vietnam’s producers to learn from their competitors’ experiences in catching consumer’s preferences in order to create their own original products.
*Product design:
Although product design is not directly related to trade promotion activities, it is one of the major factors, which have significant effects on helping products penetrate a market, especially a strict one with regular changes in taste and preferences like Japan. Vietnam’s wood products are believed to have unimpressive designs and when compared with products from countries in the region (such as China and Thailand), Vietnam’s products are still not as good. To improve this weakness, Vietnamese enterprises should:
Introduce their product on websites or send samples, which are carefully designed, to Japanese importers, Vietnamese exporters, potential customers, trade promotion offices, and related department to gather feedback directly from them
Link production units with fashion designers who have a good command of fashion and market demand, international experts, especially Japanese ones, Vietnamese citizens and students in Japan, art schools,..to have model and design which will meet market demand
Train fashion designers: combining training activities in Vietnam and in toher countries by appointing some employees to travel to these countries and to learn more from them, especially in Asian countries that export wood products to Japan. Then, they can create a foundation for training activities in the future.
*Establish a trademark for wood products:
Before penetrating Japan’s market, producers need to establish a prestigious trademark, which is issued copyrights from legal offices. Together with establishing
a trademark, producers and traditional craft villages need to register property rights for their brands, designs, production address not only in Vietnam but also in Japan to prevent their competitors from copying them.
With a registered label, the position of products will be improved in Japan’s market. Early label registration will present companies to face costly disputes with competitors once their producers are favored by the market.
*Pay more attention to product delivery stage:
Wood products are cumbersome; therefore, producers need to invest in on route product maintenance stage in a serious way. It is because products with even a small scratch will be considered defected in Japan’s market. Companies should invest in stages regarding packaging, instruction how to assemble products from separate parts, and product maintenance to create favorable conditions for safe product transportation.
Another requirement for Vietnam’s exporters to Japan is on-time delivery, sufficient product quantity and quality. Therefore, to prevent the breach of contracts and to maintain long-term customers, companies need to calculate possible unfavorable events in advance and expect the length of time delay to estimate appropriate delivery time. In unexpected and inevitable events, which delay delivery time, companies need to inform their customers immediately. When signing the contract, companies need to be well aware of their abilities to select ones with a suitable scope. They should not sign a too big contract and then later ask for a reduction in product quantity, which reduces the amount trust placed in them by business partners.
The effectiveness of appropriate investment in product transportation and delivery stages will ensure the sustainment of product quality before reaching customers’ hands, reduce product fault due to transportation, ensure on time delivery, and improve prestige for not only these companies’ products but also Vietnam’s in Japan’s market.
*Improve price competitiveness of export wood products
Vietnam’s export wood products are often relatively more expensive than their competitors, which cause many difficulties in penetrating Japan’s market.
Therefore, there is a need to find a way to reduce price to attract Japanese importers.
Apart from performing specialization in production stages and improvement in technology,. Companies should:
• Establish a solution to input material problems
• Link with other export companies in the same or different sectors to export a large quantity of goods, reduce transportation cost and receive commission for shipping companies
• Move closer to traditional craft villages linked with big Vietnamese commercial firms to distribute their products directly in Japan’s market, to reduce intermediate costs, and potentially decrease product price in Japan
*Improve effectiveness of trade promotion activities via the Internet:
Next step, every production firm, wood product exporter, and traditional craft village will create an advertising website and introduce their own products.
Organization with high export level with Japan can have a website introducing their products in Japanese.
Establish online transaction teams with Japanese customers to sell products online Participate in online market fairs and wood product exhibition (every year, JETRO in partnership with Vietnam’s Trade Promotion Department organize this event)
CONCLUSION
In recent years, the friendly partner relationship between Vietnam and Japan has achieved new heights in many areas, especially business partnership. Japan has become Vietnam’s largest export market, particularly for wood and wood products, fisheries, textile and garment and vegetables and fruits,… Vietnamese products have been gradually impressing Japanese consumers; Vietnamese companies’
prestige has been improved in their partners’ eyes. However, at present, export scale and market share of some Vietnam’s key products such as textile and garment, wood products, … in Japan’s market is still small and limited. One of their limitations is that the ability of the majority of Vietnamese companies to penetrate Japanese goods distribution system is still very weak. They have not established their direct distribution channel; most of them export through intermediaries. The reasons for this situation is partly due to the complexity, tightness and xenophobia of Japan’s goods distribution systems, and partly due to the fact that Vietnamese companies are not active in building a Japanese market penetration strategy as well as have not carried out trade promotion activities effectively. In addition, governmental organizations have not provided sufficient assistance for businesses in this aspect.
Approaching and penetrating Japan’s good distribution system is one of the criteria, which must be fulfilled if they want to increase their export turnover.
Therefore, in order to maintain the current export growth rate and increase it in the next few years, and to achieve set goals, businesses need to focus on improving their product competitiveness, boost trade promotion activities in Japan’s market, and establish a suitable market penetration strategies based on their production scales and common features of their industry. In addition, the government and industries’ offices, association and traditional craft villages need tom improve their legal environment, follow bilateral and multilateral regulations and commitments with Japan, and especially increase business assistance regarding trade promotion activities, market research and finding business partners,…