The following research report contains market research, analysis, statistics and business intelligence relating to research on Interior Textiles In Japan.

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ABSTRACT
The size of the Japanese interior textile market is roughly
estimated at 456.7 billion Japanese yen (US$3,775 million at 131
yen/$) in 1998. Total imports were 122 billion yen (US$1
billion) including imports from the United States of about 7,546
million yen (US$58 million) in 1998. The United States is the
second largest exporting country of interior textiles to Japan.

The Japanese interior textile market has been shrinking over the
last several years because of the very slow Japanese economy. However, the market decline may have hit bottom in 1999 and could
rebound in 2000 because of various economic stimulus measures
taken by the Government of Japan.

In the late 1980s when the Japanese economy was very strong,
sales of expensive European products increased in Japan. However, Japanese consumers are now more price sensitive and
carefully evaluate value for money spent. Therefore, American
products now have more potential if products are reasonably
priced and have colors and patterns attractive to Japanese
end-users. In addition, U.S. companies should understand
business practices of the Japanese interior textile industry,
such as the role of sample books, the annual purchasing schedule
unique to the textile industry in Japan, the necessity of prompt
communication and the importance of accepting small orders.

The Japanese interior textiles market can be divided into three
sub-markets: carpeting, curtains and other products. Each
segment has different market characteristics. Since carpeting
for non-residential use has different market characteristics, it
is covered only briefly in this report.
A. MARKET HIGHLIGHTS AND BEST PROSPECTS

1. Market Profile

a) Market Size

The size of the total Japanese interior textile market is roughly
estimated at 456.7 billion Japanese yen (US$3,775 million at 131
yen/$) in 1998. Total imports were 122 billion yen (US$1
billion); about 26.6% of the total market in 1998. The actual
size of the imported interior textiles market may be somewhat
larger than the market size mentioned in this report because
Japanese companies often import unfinished fabrics for the
manufacture of their products. Import statistics do not
distinguish between fabrics used for interior textiles and other
purposes. Therefore, such unfinished fabrics are not included in
this report. Interior textile imports from the United States
were about 7,546 million yen (US$58 million) in 1998, about 6.2%
of the total imported textile market.

b) Market Segments

The Japanese interior textiles market can be divided into three
sub-markets: carpets, curtains and other products. The sizes of
each market segment were roughly estimated at 187.6 billion yen
(US$1,432 million) for curtains, 292.5 billion yen (US$2,233
million) for carpets and 32.9 billion yen (US$251 million) for
other products in 1998.

Unlike the United States where the upholstery fabrics market is
large, the Japanese upholstery fabrics market is small and no
statistical information is available. However, it is roughly
estimated that the upholstery fabric market is about 10% of the
curtain market and its size was about 19 to 20 billion yen (about
US$150 million) in 1998.

c) Trend and Outlook

The Japanese interior textile market has been shrinking over the
last several years because of the very slow Japanese economy. However, the market decline may have hit bottom in 1999 and could
rebound in 2000. The Government of Japan (GOJ) has been
introducing various economic stimulus measures such as supporting
measures to stimulate new housing tax breaks for homebuyers. These measures, designed to help the Japanese economy recover,
would have a positive influence on the Japanese interior textile
market.

In the late 1980s when the Japanese economy was very strong,
sales of European products increased in Japan. Japanese
consumers were less price sensitive and expensive European
products sold well in the high-end market. However, since the
Japanese economy entered into recession in 1990, Japanese people
have become more price sensitive, and now demand more value for
their money. Therefore, American products now have more potential
if products are reasonably priced and have colors and patterns
attractive to Japanese end-users.

2. Statistical Data

Table 1.

Japan's Interior Textile Market
(in millions of Japanese yen)

Projected Avg
Growth Rate
for 2001 and
2002
1998 1999 2000

Import Market 121,660 124,093 125,954 1%

Local Production 338,566 345,337 348,188

Exports 3,499 3,569 3,623

Total Market 456,726 465,861 470,519 0%

Imports from the U.S. 7,546 7,696 7,773 1%

Exchange Rates 131 120 120

Future Inflation Rate Assumed: 0%
Table 2.

Japan's Interior Textile Market
(in millions of U.S. dollars)

1998 1999 2000

Import Market 929 1,034 1,050

Local Production 2,585 2,878 2,902

Exports 27 30 30

Total Market 3,486 3,882 3,921

Imports from the U.S. 58 64 65

Exchange Rates 131 120 120

Future Inflation Rate Assumed: 0%

1998 Import Market Share (Percent for United States and Major
Competitors): USA: 6.2% China: 55.4% Belgium: 4.0% Indonesia
2.9% Iran: 2.9%

Sources: The total market size in 1998 is an estimate by the
Nippon Interior Fabrics Association, a major trade association in
the Japanese textile industry. Total exports, total imports and
imports from the U.S.A. in 1998 are based on trade statistics
announced by the Japanese Ministry of Finance. No statistical
information regarding local production in terms of value is
available. The size of local production was calculated from
total market size and the export and import market sizes. All
figures of 1999 and 2000 are our estimates.

3. Best Sales Prospects

We believe that interior textiles which can be used for multiple
purposes have good potential. Many American upholstery fabrics
manufacturers try to export their products to Japan, but their
sales are sometimes not satisfactory. However, since the
Japanese upholstery fabrics market is small, it is necessary to
provide fabrics which can be used for curtain, bedspread and
cushion products as well as for upholstery. If U.S. textile
manufacturers can provide such fabrics, market potential should
be greater.

In order to further increase market potential, it is also
important for U.S. interior fabrics manufacturers to study
Japanese consumer tastes and preferences. Japanese textile
importers often tell us that the colors and patterns of American
interior fabrics may not be popular in Japan because of
differences in taste between American and Japanese people. They
said that Japanese consumers prefer European colors and designs
which U.S. companies should study.

Other American interior textile products which have good market
potential in Japan include carpets for the contract (commercial)
market because U.S. products are competitive in terms of both
quality and price. On the other hand, in the residential carpet
market segment, carpets (including rugs) from Europe, the Middle
East and China already have a significant share making this a
challenging segment for American products.

The Harmonized System (HS) codes of carpets are 57.01 to 57.05. The HS code for curtains is 63.03. HS codes for interior fabrics
for various purposes are determined by the materials and the
manufacturing processes used, but most products may be 54.07,
54.08, and 55.12 to 55.16.
B. COMPETITIVE ANALYSIS

1. Domestic Production

Domestic production of interior fabrics accounts for more than
70% of the total interior textile market. Like the total market,
domestic production has been declining over the last several
years, and it may take a long time to recover due to increased
inexpensive imports from Asian countries.

Large companies that distribute interior textiles are generally
called brand manufacturers. A brand manufacturer sells products
under its own brand name. Although many of them do not operate
their own factories, they have a wide range of functions: research and development, design and production, research on
production and processing methods, procurement of materials,
order placement for production and processing, and establishment
of distribution and pricing policies. A brand manufacturer
usually subcontracts production to domestic and/or Asian
companies.

2. Third-country Imports

China is the largest exporter with a share of 55.4% of the
imports market in 1998. The second largest exporting country is
the United States (6.2%) followed by Belgium (4.0%), Indonesia
(2.9%) and Iran (2.9%). Because some countries are exporting to
only certain market segments, this report will cover each major
market segment separately.

In the carpet market, China is the largest exporting county with
23.5% of total carpet imports. The United States is the second
with 14.7% of total imports. The other major exporting countries
are Belgium (11.1%) and Iran (8%). We believe that most carpets
imported from China, Belgium and Iran are for residential use. On the other hand, a significant share of American carpeting is
supplied to the contract market.

In the curtain and other interior textiles market China holds an
extremely large market share of 72.8%, followed by Indonesia with
a 2.6% share of the imported market. Most interior fabrics
imported from China and other Asian countries are less expensive
products often designed by Japanese companies. These products
primarily target the low-end market. On the other hand, European
products are expensive and sold to the high-end market.

3. U.S. Market Position

The United States is the second largest exporting country to the
Japanese interior textile market. In the carpeting market, the
U.S. share of the imported market was 14.7%, but its share was
only 1.6% in the curtain and other interior textile markets in
1998. U.S. products are well received in the contract carpet
market where only U.S. companies are the major foreign companies
competing with Japanese companies. On the other hand, in the
curtain and other interior textile markets, U.S. products compete
with European and Japanese products, but not with cheap Asian
products.
C. END-USER ANALYSIS

1. New Home Buyers

Japanese consumers often purchase interior textiles when they buy
new homes. Therefore, new home buyers are extremely important
potential buyers of interior textiles. Housing starts clearly
reflect sales trends in the Japanese interior textile market.

Total housing starts hit 1.7 million in 1990, the third highest
number in Japan's history, but dropped significantly in 1991. In
1996, housing starts increased 11.8% to 1.64 million in a rush to
beat the April 1997 rise in the consumption tax from 3% to 5%. However, from January 1997, monthly housing starts began to
continuously decline against the same month the previous year
with annual housing starts dropping 15.6% to 1.39 million in 1997
and 13.6% to less than 1.20 million in 1998. In March 1999
starts increased for the first time in 27 months and have been
increasing steadily except for May 1999. The slow but steady
recovery of the Japanese housing market will likely lead the
recovery of the interior textile market.

The following table shows Japan's annual housing starts from 1989
to 1998.

Table 3. Japanese Housing Starts

Japan's Total Housing Starts
(1989 - 1998)

Year Total housing Change from the
starts previous year
---------------------------------------------
19891,662,612 -1.3%

1990 1,707,109 2.7%

1991 1,370,126 -19.7%

1992 1,402,590 2.4%

1993 1,485,684 5.9%

1994 1,570,252 5.7%

1995 1,470,330 -6.4%

1996 1,643,266 11.8%

1997 1,387,014 -15.6%

1998 1,198,295 -13.6%
---------------------------------------------
Source: Ministry of Construction

2. Aging Society

Japanese society is aging very quickly. Japan's aging society
will have influence on various aspects of the Japanese economy
and the interior textiles market. The ratio of people over 65
years old was 12.1% of the total population in 1990, but the
Ministry of Health and Welfare estimated that it will increase to
17.3% in 2000, 22.3% in 2010 and 27.5% in 2020. Because of this
rapid increase in seniors, over the long term, demand for new
housing and interior textiles will likely slowly decline despite
the current market recovery over the short term. The demographic
change in Japanese society may also affect consumers' tastes and
preferences regarding the color and design of interior textiles. Therefore, American textile companies should carefully study the
future market trends and changes in consumer buying habits.
D. MARKET ACCESS

1. IMPORT CLIMATE

(a) Duties

Import duties for interior textiles are determined by product,
materials used, and manufacturing process. The rates applied for
carpets (HS Codes: 57.01, 57.02, 57.03, 57.04, 57.05) are 9% to
13.4% except for carpets for automobiles which are free. The
rates applied to other interior textile products (HS Codes: 63.02
63.03 63.04) are 4.% to 13.9%. In addition to the tariff, a 5%
consumption tax is levied at the time of import.

The Government of Japan will reduce tariffs on many interior
textiles from January 1, 2000, based on the agreement of the
World Trade Organization (WTO).

(b) Flame Retardant Regulations

The Fire Service Law specifies that some textile products such as
carpeting and curtains installed in most commercial building must
comply with flame retardant regulations. The Japan Fire
Retardant Association publishes English language information on
the Japanese Flame Retardant Law and its testing methods. For
details on these regulations and printed information in English,
please contact:

Japan Fire Retardant Association
Koyo Bldg. 7F 4-6-7 Nihombashi-Honcho
Chuo-ku, Tokyo 103-0023
Phone: (03) 3246-1661
Fax: (03) 3271-1692

2. DISTRIBUTION/BUSINESS PRACTICES

(a) Distribution

Distribution channels for interior textiles are complex. Imported interior textiles are usually distributed through the
following channels:

Exporters ------:
: :
:------- Importers :
: : :
: Brand Manufacturers
: : :
: Sales agents :
: Wholesalers :
: : :
:--------------------------:
:
: --- Specialty Stores ----:
: --- Department Stores ----:--- Customers
: --- Supermarkets ----:
: --- Other Retail Stores ----:

(b) Business Practices

i) Sample Books

Brand manufacturers play an important role in distribution
channels. They produce "Sample Books" every few years, which
contain all fabric samples they are handling. Sample books are
distributed to retail stores to be shown to customers who select
products from sample books. It is therefore extremely important
for imported interior textiles to be included in sample books.

Manufacturers and wholesalers are expected to continue to supply
products included in their sample books until new sample books
are produced. It is necessary for U.S. companies to continue to
supply these productsas long as the sample book is valid. Importers are often frustrated because U.S. companies introduce
new products every year and sometimes stop producing some of
their products after a very short time rendering the sample books
obsolete.

ii) Annual Schedule

U.S. companies should understand the annual product selection and
purchasing schedule system widely used in Japanese interior
textile business. For example, in the upholstery fabrics market,
manufacturers, wholesalers and importers first show their new
products to their largest and most important customers such as
furniture manufacturers in fall. Customers select fabrics and
request hanger-samples. After they examine the hanger-samples,
they make small orders (typically 50 meters) in January. In
February and March, furniture companies use these fabrics to make
sample furniture products. Furniture companies also show their
sample furniture to furniture retailers. After receiving
feedback from the furniture retailers, they will make their final
decisions and place orders in spring, typically April and May. The above schedule roughly applies to most other interior textile
products.

Because of the above purchasing system used in the industry, it
may be wise for U.S. companies to come to Japan in the autumn
months. Exhibiting at Japantex, the major interior fabrics trade
show held in January is also recommended.

(c) Important Business Practices

The following are important factors to consider when doing
business with Japanese companies:

i) Prompt Communications and Delivery

Effective communication and prompt delivery are critical for
success when doing business with Japanese companies. Japanese
companies sometimes complain that responses from American
companies are slow, and in some cased no reply to inquiries is
received. It is extremely important to send a response or at
least an acknowledgement quickly when a fax or e-mail message is
received. Prompt delivery is also very important.

ii) Small lot orders

American companies often require a very large lot order. However, Japanese companies may be reluctant to place a large
order when they are first starting business with a new American
supplier. It is also very costly since warehouse and inventory
costs are high in Japan. Therefore, U.S. companies should accept
small orders from Japanese customers. Preferably, the minimum
required order should be 50 meters.

(d) Suggested Marketing Strategies

One Japanese interior textile importer suggests the following
marketing strategies for U.S. companies:

- U.S. companies should select or produce 20 to 30 fabrics having
a European color and design which Japanese consumers prefer. These products can be used for several purposes such as curtains
and upholstery.

- U.S. companies should produce small lots of these 20 to 30
fabrics samples, for example 500 meters, and make their own
sample book for distribution to importers and large retailers at
Japantex. By making such a sample book, Japanese importers and
large retailers can select fabrics and will be much more likely
to make a first order.

3. FINANCING

The payment method for imported interior textiles is negotiable
and often depends on the relationship between exporters and
importers, but payment is usually made by letter of credit in
U.S. dollars. Between Japanese companies, payments are usually
made by bank draft, 120 days to 180 days after sight. Cash flow
is therefore a significant problem for Japanese manufacturers and
wholesalers. They often request a bank to discount these drafts
in order to obtain enough cash, and for this reason they tend to
develop close relationships with their banks. U.S. companies
which plan to do business by themselves through their own
subsidiary in Japan should remember the importance of having a
close relationship with their Japanese bank.

4. KEY CONTACTS

(a) Government Agencies

Ministry of International Trade and Industry (MITI)
Consumer Goods Industries Bureau
1-3-1 Kasumigaseki, Chiyoda-ku, Tokyo 100-8901
Phone: (03) 3501-1511
Fax: (03) 3501-2857
http://www.miti.go.jp/index-e.html

Japan External Trade Organization (JETRO)
2-2-5 Toranomon, Minato-ku, Tokyo 105-8466
Phone: (03) 3582-5562
Fax: (03) 5572-7044
http://www.jetro.go.jp/top/index.html

(b) Trade Associations

Nippon Interior Fabrics Association
Fukuda Bldg. 6F, 2-3-23 Hamamatsu-cho
Minato-ku, Tokyo 105-0013
Phone: (03) 3433-4521
Fax: (03) 3433-7860
http://www.nif.or.jp/english.html

Japan Textiles Importers Association
Nihombashi Daiwa Bldg. 9F, 1-9-4 Nihombashi Honcho
Chuo-ku, Tokyo 103-0023
Phone: (03) 3270-0791
Fax: (03) 3243-1088

(c) Trade Publications

Interior Times
1-35-28-410 Hongo, Bunkyo-ku, Tokyo 113-0033
Phone: (03) 3816-6651
Fax: (03) 3816-6650

Senken Shimbun
3-8-5 Kayaba-cho, Nihombashi, Chuo-ku, Tokyo 103-0025
Phone: (03) 3664-2341
Fax: (03) 3669-5610

(d) Trade Promotion Opportunities

JAPANTEX (Japan Interior Fabrics Show)
Nippon Interior Fabrics Association
Fukuda Bldg. 6F, 2-3-23 Hamamatsu-cho
Minato-ku, Tokyo 105-0013
Phone: (03) 3433-4521
Fax: (03) 3433-7860
http://www.nif.or.jp/english.html

JAPANTEX is held annually at the Tokyo International Exhibition
Center - Tokyo Big Sight. The U.S. Department of Commerce
organizes a U.S. pavilion in JAPANTEX every year. For more
information, please contact the following office:

United States Department of Commerce
International Trade Administration
Office of Textile & Apparel
Market Expansion Division
Phone: (202) 482-1856
Fax: (202) 482-2859

(e) U.S. Trade Center in Tokyo

The U.S. Department of Commerce's Commercial Service operates a
first class trade center facility in downtown Tokyo which is
available for use by individual U.S. companies or their
representatives in Japan. These exhibit/seminar/meeting
facilities offer an inexpensive American ambience for seminars or
individual trade shows. Interested companies should contact:

Director
U.S. Trade Center
Unit 45004, Box 229, APO AP 96337
Telephone: (03) 3987-2441
Fax: (03) 3987-2447

(f) U.S. Trade Center Tokyo Online

The U.S. Trade Center, Tokyo - Online is a Japanese-language,
Internet-based tool for promoting American exports in the world's
second largest economy. Through industry-specific "online
exhibitions," U.S. companies can introduce a new product, refer
Japanese inquiries, test the market, search for a representative
or distributor, and supplement ongoing marketing efforts in
Japan. Each company receives an attractive, individual webpage
that includes a description of its products and services in
Japanese, up to five captioned photographs, and a link to its own
homepage. Viewers can send E-mail directly to the U.S. company
or its Japanese agent. For more information please fax
81/3/3987-2447 or send an E-mail to ustc@csjapan.doc.gov for
application materials. To view a sample company webpage go to
http://www.csjapan.doc.gov/online/ or find more information on
the Japanese market from other menus at www.csjapan.doc.gov.

DISCLAIMER
Information in this report relies on sources including Government Publications, Opinions of industry experts and other public sources. Infomat can accept no responsibility for the accuracy or completeness of such information or for loss or damage caused by any use thereof. All prices subject to change without notice.

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Published: 2006 August
Market: Mens Womens Childrens
Region: Japan
Industry: Textiles
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