Tokyo's Apparel Town - Japan Fashion District

Back in Apparel Town, the shopkeeper shrugged at the disparate quality of my new socks. "You have to swallow it," he told my interpreter. "Don't expect high quality from cheaply priced goods. This is mass production, and I import very big lots to sell at low prices, so there are bound to be some mistakes. ;Nevertheless, he allowed me to change my socks, but not before warning that I might choose another pair that were just as bad.

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Into this environment will soon come Thailand's garment manufacturers, freshly released from the burden of tariff duties by next month's implementation of the Japan-Thailand Economic Partnership Agreement (Jtepa). There is widespread hope, particularly among Thailand's food and textile industries, that the free-trade deal will boost trade and cooperation between the two countries. But it may not be the piece of cake many imagine.

Yukichi Urushidani, president of the Palais du Louvre Agency and a face behind one of Apparel Town's 300-400 counters, told me Japanese consumers no longer expected premium quality in fashion apparel. So the Japanese market is monopolised by China, which holds a massive 90-per-cent share. Imports from Thailand and India share only 5 per cent.

Shusaku Takahashi, general manager for textile planning at Summikin Bussan, a leading Tokyo trading firm, said eight out of every 10 Japanese people wore clothing imported from China. Ninety per cent of his company's imports come from China, and imports from Thailand account for only 1 per cent of the total. "Japanese consumers these days ignore where a product comes from. They're focused on price and fashion trends," Takahashi said.

Apparel Town's total trading volume reaches an astounding average of ?3 trillion per year. A few years ago, one of its leading traders, Hayashi, set up a promotional project to encourage other traders in the market to import more Thai garments. However, Thai exporters could not serve the demands of the Japanese market.

The trader recommended Thailand export smaller lots, thereby serving an area in which China was unable meet Japanese traders' requirements. Moreover, Thai textile manufacturers have highly skilled labour and high-enough quality to capture a different market in Japan.

He suggested Thai exporters open shops in Japan rather than trading through middlemen. Thai exporters would then be in direct contact with Japanese buyers and consumers, and would be able to design products to serve market demand. Thai exporters should also concentrate on speedy shipments by air freight. "If you want to access any fashion market, shipment speed is the most important thing," he said.

The Apparel Town trader said Thai exporters could also use a rising tide of complaints around the world about Chinese quality to boost their exports to Japan. For instance, lingerie could gain particular advantage in this regard, because of its direct contact with the human body.

"It's a good time for Thai garment manufacturers to boost their exports to Japan, not only because of the benefits from zero tariffs under the bilateral free-trade agreement, but also because Japanese consumers still feel better when they can buy high-quality goods," he said. Under Jtepa, import tariffs on Thai garment products entering the Japanese market will fall from 10 per cent to zero.

Traders from South Korea and India have opened shops in Tokyo's Apparel Town, in a bid to capture more of the market. Rafique Uddin said he opened his shop, Hiromi Trading, six years ago with the aim of selling apparel designs different from others in the market. It sells garments from India, South Korea, Italy, Vietnam and China. However, its main sources are South Korea and China, and the value of the shop's imports reach an average of ?5 million per year.

Uddin imports summer collections from Thailand, which he said were well designed and different from others. Thailand should produce more winter collections, in order to penetrate the market further, but at present Thailand's winter designs are no good, he said. However, Uddin said in terms of both volume and value, Thai garments had increased in Japan over the past three years.

A South Korean trader who asked not to be named said his products came mainly from his country, despite the wholesale price of Chinese goods being 50 per cent below the cost of imports from other countries. "All imported garments have to face tough competition from Chinese goods. You must order in big lots, and you cannot compete with cheaper-priced products from China. Thai manufacturers should focus on product variety and smaller lots than those required by China," he said.

The Thai Garment Manufacturers' Association hopes to boost the country's exports to Japan 25-30 per cent once Jtepa is implemented and import tariffs are eliminated. Association president Dej Pathanasethpong explained that Thai products would not be competing with cheap Chinese goods. Thai exporters no longer export low-end products to Japan. Instead, they produce middle-market to high-end products, he said.

To capture a greater share of the market, Thai garment manufacturers are also seeking Japanese partners to form joint ventures. The idea is aimed at not only manufacturing products that directly serve Japanese demand, but also upgrading Thailand's production through technology transfer. "The Thai garment industry is planning to make Thailand the manufacturing hub of the region. The geographical position of Bangkok will support us in this. We want to become an integrated manufacturing base for global demand," he said.