Japan Carpet Industry
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Chinese knotted carpets are noted for the subtlety of their relief patterns and shading and for their distinctive color schemes. Carpets from different parts of China also have their own distinctive traits. Tianjin is known for its luxury- grade products, while Qingdao is known for its mass-market products and Shanghai for its silk carpets.
Iran and other Middle Eastern countries are best known for their so-called Persian carpets. There are six traditional carpet-making areas in Iran, all of which have their own distinctive styles and patterns. For its part, Pakistan is known for its brown and beige elephant foot pattern carpets. Pakistani carpets are priced somewhere in between Iranian and Chinese carpets. Some observers say that the main producing area of Peshawar in Pakistan has been afflicted with lower product quality and falling prices after the return to their homeland of Afghan refugees who had been working as skilled weavers.
Among European products, Wilton carpets from Belgium are popular for their sophisticated color schemes, elaborate designs and affordable prices. Imports from the United States primarily consist of synthetic tufted carpets and auto floor carpeting. But in recent years American imports have been declining because of stiffer competition from Chinese products.
Green purchasing
The Law on Green Purchasing that went into effect in April of 2001 has now made it standard practice for public buildings, health care and welfare facilities and educational facilities to purchase compliant products. Interior fabric makers are expanding their product line of Green Purchasing Law compatible products in response. "Green purchasing" means "to carefully consider the necessity of purchase and to think over the environment, not to mention the quality and price, and to purchase the products or services with less environmental burden from business entities who make efforts to reduce the environmental burden" and the following criteria and considerations are provided for curtains and carpets.
(3) Distribution System and Business Practices in Japan
The most common distribution channel for imported carpets is from overseas supplier to import trading company to wholesaler to retailer and finally to the consumer. Recently there have been more cases of wholesalers doing business directly with overseas suppliers. At the same time, there have also been instances of trading companies venturing into retailing. Thus, the borderline between trading company and wholesaler has increasingly become blurred. Imports of hand-woven Iranian, Pakistani and Turkish carpets through import channels other than the traditional specialty trading company channel have been increasing rapidly.
Retailing in Japan has also witnessed new market entrants from other industries such as mail order companies (including Internet-based on-line shopping and television shopping) and door-to-door sales companies. Furniture specialty stores increasingly offer total coordination of curtains and carpets revolving around a complete lifestyle concept. Other distribution pattern for carpets is to sell direct to general contractors, housing makers, building contractors, and interior furnishing contractors (so-called contract route). It becomes important to form networking in an effort to increase home remodeling sales.
Import Trends in Japan
Japan's carpet imports in 2004 totaled 61.14 million m2 (up 16.5% from the year before), representing a sixth consecutive year of growth to top the 60 million m2 mark. After dropping in 2003 for the first time in four years, import value recovered quickly to an all-time record of ¥49.7 billion (up 10.6%). Most of imports are mass-produced tufted carpets (25.1 million m2, share 41.0%) or woven carpets (24.0 million m2, share 39.3%, including some hand-woven). Growth was especially strong in carpets imported from China. As a result, the average unit price per m2 of imported carpets has fallen from ¥1,399 in 1998 to ¥813 in 2004, a drop of nearly 40%. Most carpets classified as "knotted carpets" under HS classification come mainly from China, as Chinese dantsu knotted carpets, and from Iran and Pakistan and neighboring countries, as Persian carpets. The products of this category are hand woven and expensive. Prices have declined dramatically in recent years both on Chinese dantsu carpets and Pakistani carpets, and imports of these products have declined on a volume basis as well. But, it is notable that the demand for imports of high-class products from Iran shows a slight.
Leading Exporters to Japan and ASEAN's Position
Japan imported carpets that varied greatly by type, material, production method and manner of use from 58 different countries all over the world. But, in recent years only China has recorded striking growth in exports to Japan with low-priced tufted or woven carpets. Chinese carpet exports to Japan climbed another sizeable 40.9% in 2004 to 36.30 million m2, increasing its share from 49.1% the year before to 59.4% of all carpet imports. On a value basis as well, import value from China rose from ¥19.3 billion to ¥24.2 billion, with a share of nearly half (48.8%) of the market. Trailing far behind China in the rankings were the United States (¥4.11 billion, share 8.3% mainly automotive tufted carpets), Belgium(¥3.52 billion, share 7.1%)and India (¥2.97 billion, share 6.0%), whose main carpet export were woven carpets, and Thailand (¥2.96 billion, share 6.0%, mainly mass-produced tufted carpet). Among them, only Thailand posted growth for the third straight years.
At one time high-grade knotted carpets made up a fairly large portion of China's carpet exports to Japan, but lately much of the exports come from offshore factories of Japanese makers or OEM production for Japanese companies. Low-priced woven carpets (15.52 million m2 worth ¥8.94 billion) and tufted carpets (7.96 million m2 worth ¥8.41 billion) now are China's leading carpet export to Japan. China posted particularly strength in woven carpets (import share 51.6%), putting itself farther ahead of Belgium (¥3.10 billion, share 17.9%), which once held the lead in this category on both a volume and a value basis, and India (¥2.57 billion, 14.8%) in the rankings. Japan imports large volumes of tufted carpets from Thailand, which is priced even lower than those from China. Despite its disadvantage in this category, China saw its exports to Japan grow from ¥6.63 billion (7.96 million m2) the year before to ¥8.41 billion (11.28 million m2) in 2004, lifting it farther above the United States (¥3.79 billion, 2.86 million m2) and Thailand (¥2.84 billion, 6.56 million m2). Knotted carpet imports are broken down into two major exporters of Iran (¥2.63 billion, share 41.3%) and China (¥2.58 billion, share 40.4%). Upscale Iranian carpets which have been recently pressed by Pakistani low-priced carpets are slightly regaining its strength in 2004.
Carpet imports from ASEAN totaled ¥6.08 billion in 2004, accounting for 12.2% of total. ASEAN posted strong growth in recent two years, increasing by approximately ¥1 billion. Among them, ¥5.6 billion come solely from tufted carpets and gained the share in this field was high of 27.3%. Thailand (total carpet imports: ¥2.96 billion), Indonesia (¥1.57 billion) and Vietnam (¥815 million) all have seen their imports grow to record levels.
Imports' Market Share in Japan
Tufted carpets make up nearly all of Japan's domestic carpet production. As Japanese manufacturers increasingly shift production sites to China, imports command a growing share of the Japanese market, a share that had risen year by year to 44.7% in 2004. Despite the upturn in new housing starts in and after 2003, domestic production of carpets in 2004 remained almost the same as the previous year at 78.03 million m2 (down 0.2% from the year before), but showing signs of having bottomed out
Key Considerations related to Exporting to Japan
(1) Regulations and Procedural Requirements at the Time of Importation in Japan There are no regulations on carpets at the time of importation in Japan.
(2) Regulations and Procedural Requirements at the Time of Sale The sale of carpets is subject to provisions of the Household Goods Quality Labeling Law and the Fire Service Law. Apart from this, the Law for Control of Household Products Containing Harmful Substances regulates curtains and carpets containing insecticide or fire-retardant materials.
a.) Household Goods Quality Labeling Law This law requires the format and content of quality labeling for products designed for everyday household use. The objective is to protect the advantage to consumers by providing information that helps them choose products and informs them about how to use the products correctly. Pile carpets (other than felt carpets) must bear labeling to list appropriate items as specified by the Law. Products may not be sold without labels.
b.) Fire Service Law According to the regulation of the Fire Service Law, any carpet 2 square meters or larger used in public buildings and other fire prevention property must be certified as fire-retardant items based on provisions of the Fire Service Law. Products that do not bear the required labeling may neither be sold as fire retardant items nor displayed in the storefront for purposes of sale as fire-retardant items. Only those products may display fire-retardant label, which are confirmed by the registered confirmation organizations with the Minister of Internal Affairs and Communications
c.) Law for Control of Household Products Containing Harmful Substances The Law prohibits use of the following three fire-retardant compounds on curtain material. Curtains treated with these compounds may not be sold or displayed for commercial purposes. Carpet that containing insecticide or fire-retardant compounds must comply with similar standards set forth under the Law.
a.) Legally Required Labeling
[1] Household Goods Quality Labeling Law
Under the Textile Product Quality Labeling Standards based on the Household Goods Quality Labeling Law, the label of carpets must list the composition of fiber, the name of the labeler and information contact (address or telephone number). The Law once mandated fire-retardant information, but this requirement has been eliminated by a decision that it is sufficient to comply with labeling requirements under the Fire Service Law.
[2] Fire Service Law
Fire-retardant carpets must bear fire-retardant label in the stipulated format that indicates either 1) the Fire and Disaster Management Agency registration number or 2) the name of the registered confirmation organization (when submitted for outside confirmation).
Registrants under the former Ministerial Ordinance are treated as having already been certified under the revised Ordinance. In this instance, the registrant may list its own name and display a statement indicating it has confirmed fire-retardant performance on its own.
b.) Voluntary Labeling based on Provisions of Law
[1] Industrial Standardization Law (JIS Mark)
Under the Industrial Standardization Law, standards are set for the quality of industrial products (Japanese Industrial Standards: JIS). Because of the amendment of the Law, all industrial products for which JIS standards are set will be transferred to a new JIS Mark Labeling System starting from October 2005. Still, the certification of the existing JIS factories will be effective until the end of September 2008 and the current JIS Mark can be indicated.
c.) Voluntary Industry Labeling
[1] Unified Mark for Ticks Prevention Processed Products, and for VOC Radiation. Interior Fabrics Performance Evaluation Conference composed of affiliated five organizations, including the Japan Interior Furnishing Material Association and the Japan Carpet Association, provides the "voluntary standards for ticks prevention processed products" (enacted in 1999) which intended for carpet (and bedding and the like), and the "voluntary standards for VOC radiation" (amendment enforced in 2004). Products that comply with these standards are eligible to display the unified marks. With regard to the standards for ticks prevention, there are established standard values for "avoidance effect" not to let ticks come close and "propagation repression effect" not to increase ticks, and the durability of ticks prevention effect and the safety of processed chemical are to be confirmed. VOC standards are categorized into 3 sections according to the emission speed of formaldehyde. The subject of this certification system is limited to corporate members of affiliated five organizations.
Key Considerations for entering the Japanese Market
Prospective exporters of carpets to Japan need to develop products that match Japanese consumer preferences in terms of design arrangements and color combinations, regardless of hand-woven and machine- woven. For example, more and more overseas carpet makers are now making carpets the same size as a Japanese 4.5 "tatami" mat room (approx. 7m2), a common room size in Japanese homes and apartments.
After-Sales Service
Retailers deal with problems with embroidery work and color retention for imported curtains and carpets. In addition, because of differences in cleaning practices, problems with care and cleaning sometimes arise with direct imports of curtains. Consumers need to be made aware of these potential problems. In Japan, the Product Liability (PL) Law has been enacted in order to stipulate the liability for compensation of manufacturers etc. and to protect the victim in case that it is verified that the damages to human life, body or properties have been caused due to defects in manufactured goods. For the imported products, since the importers shall be liable to compensation for damages, the importers need to be careful about the handling manuals and warning indications, not to mention the quality control.
(5) Considerations for Related Products
Tapestries are a type of carpet with patterns and sizes that make them suitable for use as wall hangings. Most tapestries feature either landscapes or religious subject matter. Regulatory requirements and distribution practices are the same as for carpets. Depending on the type of plant material used, these products may be subject to provisions of the Plant Protection Law.
(6) Regulatory Agency Contact
o Household Goods Quality Labeling Law
Product Safety Division, Consumer Affairs Department, Commerce and Information Policy Bureau, Ministry of Economy, Trade and Industry
TEL: 03-3501-1511 http://www.meti.go.jp
o Fire Service Law
Fire and Disaster Management Agency
TEL: 03-5253-5111 http://www.fdma.go.jp
o Law for Control of Household Products Containing Harmful Substances
Office of Chemical Safety, Evaluation and Licensing Division, Pharmaceutical and Food Safety Bureau,
Ministry of Health, Labour and Welfare
TEL: 03-5253-1111 FAX: 03-3593-8913 (Direct) http://www.mhlw.go.jp
4. Tariff Duties and Consumption Tax in Japan
(1) Tariff Duties
Applicable tariff rates are minutely differentiated by product type and material used as shown in. Fig. 17 on the following page. In case of confirming the tariff classification or applicable tariff rate in advance, it is convenient to use the "advance counseling program." By making an inquiry to the customs orally, or through document or e-mail, the customs will reply to such inquiry. Contact: Customs website http://www.customs.go.jp
[Preferential Tariff System]
In order to apply for preferential tariff rates on curtains and carpets imported from preferential treatment countries, the importer should submit a certificate of preferential country of origin (Form A) issued by the customs or other issuing agency in the exporting country (not required if the total taxable value of the shipment is no greater than ¥200,000). For more details, please contact the Customs and Tariff Bureau, Ministry of Finance. Application of tariff rates on ASEAN countries is as follows.
If fabric or other auxiliary material is exported from Japan and used as raw material to manufacture textile articles (HS Chapter 57: Carpets and other textile floor coverings, Chapter 63: Interior goods made up textile articles), then imported back to Japan within one year of the export permit date, the Temporary Tariff Measures Law provides for a reduction on applicable customs duties on the exported article. The reduction is equal to the price of the exported raw materials times the tariff rate for the imported product. To qualify for the reduction, a "Declaration of Confirmation of Processing or Assembly Export Cargo" form must be filed and be approved by the customs at the time of export. For more details, please contact the Customs and Tariff Bureau, Ministry of Finance.
(2) Consumption Tax
(CIF + Tariff Duty) x 5%
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