1. Arrival of a market-led era
A new era has arrived in regard to the textile industry, in which both quality (needs of consumers are becoming increasingly high-level and diversified) and quantity (demand by consumers is becoming sluggish) are severely determined by market factors (consumers).
2. Arrival of a global megacompetition era
A global megacompetition era has arrived involving Japan's textile industry as Japan increases import of various kinds of international brands and a wide variety of foreign-affiliated businesses that are eager to set up shop in Japan.
3. Arrival of a new frontier era
Technological innovation in the industry has changed the traditional supply system in the industry and opened up various business opportunities for the industry.
1. Lack of adaptability to the market-led era
(1) Remains of costly and inefficient supply system that counteract the market-led era
The major factor behind low profitability and low productivity of Japan's textile industry is the remains of costly and inefficient supply system in the industry that counteract the market-led era, such as unclear accountability for risk-sharing, excessive segmentation of supply system, and synergism of these undesirable factors.
(2) Still incomplete market-in system
Though the concept of market-in system that was introduced in the former report is being recognized increasingly valid, quick-response system, which is needed to establish the market-in system, is still incomplete.
(3) Imperfect structure of Japan's textile industry in light of creation of value (creation of value with consumers)
Though it is essential for an industry to appeal to consumers for the purpose of cooperative creation of value, the three factors that are needed for this purpose are still imperfect in Japan's textile industry-appeal to consumers, resources in creating value, and creative business network.
(4) Activities of successful companies
Despite the downside mentioned above, there are quite a few companies that have adapted to the market-led era and are operating successfully.
2. Need to promote international business operations in the global megacompetition era
(1) International competitiveness of Japan's textile industry that is lower in almost all aspects when compared to development of the textile industry in other Asian countries.
International competitiveness of Japan's textile industry is lower in almost all aspects when compared to other Asian countries. Analysis of the four factors that determine competitiveness-cost, technique, time, and appeal to consumers-shows that though Japan's technique is superior to that of other Asian countries, Japan has problem particularly with the cost factor.
(2) Globalization of Japan's textile industry that is progressing when it comes to production based in Asian countries
(3) Globalization beyond Asia is yet developing.
The biggest problem challenging internationalization of Japan's textile industry is that Japan is lagging behind in making use of the international textile market and that complementary systems to cooperate with Asian countries regarding design and production of textile products have not yet been completely established.
3. Need to tackle challenges from the new frontier era
(1) Insufficient exploration of the frontiers of technology
Exploration of the frontiers of technology and new markets is insufficient because of lack of appeal to and cooperation with the user industry and lack of cooperation with organizations outside the industry, such as universities and national institutes, which provide technical information.
(2) Lack of adequate human resources to support technology
There is growing concern that the number of technical experts in local companies is decreasing and that it is becoming difficult to keep the current number of technical experts in the industry as a whole in the future owing to the decline in the number of textile-related-technology-major college students who seek jobs in textile manufacturing companies.
(3) Poor global strategy of Japan as a technically advanced country
Since Japan is lagging behind in preparing adequate environment for intellectual property and coping with international standardization including standardization of evaluation method of textile products, it is necessary for Japan to promote measures to overcome these weakness of Japan's textile industry.
4. Difficulties in improving textile manufacturing centers
(1) Change of the overall role of textile manufacturing centers (from the macroscopic viewpoint)
The quantitative function as supplier is shrinking. Also, traditional functions of textile manufacturing centers such as vertically-divided function by the type of textile are changing.
(2) Change of function of textile manufacturing centers as job provider (from the semimacroscopic viewpoint)
With the collapse of the labor-division system in textile manufacturing centers, the traditional advantage that has so far provided business opportunities to companies as a result of the labor division in the area is shrinking.
(3) Change of situation of companies in textile manufacturing centers
While excellent companies (company groups) that meet high expectations of consumers in a textile manufacturing center continue to expand their operations, companies otherwise (for example, companies that has no successor) are withdrawing from the markets.
(4) Problems of textile manufacturing centers
Improvement of textile manufacturing centers is lagging way behind the current structural changes of the textile manufacturing centers mentioned above.
1. Roles that Japan's textile industry is expected to play in the 21st century
Textile industry to support people in creating value and realizing themselves.
Textile industry to revitalize local economy.
Textile industry to create Asian fashion culture.
Textile industry to explore the frontiers.
Textile industry to promote ecology movement.
Textile industry to support welfare.
2. How to develop the textile market in the future
(1) Textile industry that makes Japan the leader of the global fashion businesses with its creativity
Toward the direction in which Japan will become the world's supply center of "products with distinctive originality" by making use of Japan's superior technique in the process of making products ("Japanese fashion").
(2) Textile industry that provides products swiftly and efficiently based on a high-level designing and distribution system
Toward the direction in which globally standardized designing and distribution system will be established and consequently "multivalued products" in wide variety of product lines can be marketed while making standard articles from among Japan's distinctive products.
(3) Textile industry that establishes a high-level production network worldwide focusing on Asian countries
Toward the direction in which "cost-conscious standard articles" and "global standard goods" are focused on in order to rethink Japan's domestic-oriented distribution strategy and promote overseas business operations.
(4) Textile industry that is to become a key industry by exploring the frontiers of new field
Toward the direction in which the frontiers are to be expanded in the field of "new material products" by making use of Japan's technical potential.
1. Establishment of market-oriented designing, manufacturing and distribution systems
(1) Direction of reforms
a. Taking the initiative in the process of retail
Restructuring of the industrial structure of the textile industry into consumer-oriented for the purpose of creating value through mutual contact with consumers.
b. Creation of clear-cut accountability for risk sharing
Shift from the traditional consignment sales system under which return of unsold goods is conditional to compulsory purchase system or system under which purchase is made after all the stock is sold.
c. Promotion of information sharing and information distribution
Establishment of quick-response system through integrating sales channels and using information technology.
d. Promotion of efficiency of overall supply chain system (vertical cooperation and integration)
Clearance of overlapping functions of companies through reexamining role sharing between companies and promoting efficiency regarding the conventional distribution system which is excessively segmented.
e. Establishment of business practices which is transparent and open
Improvement of transparency of business practices, establishment of an open network of companies that promote entry into the industry, and increase of accountability of companies.
(2) Specific measures for these reforms
a. Reforms by using the market mechanism on the initiative of companies and the industry
Strengthening of appeal to consumers.
Improvement of risk control capacity in the process of retail.
Active utilization of electronic commerce system.
Reengineering of business process of overall supply chain system.
Vertical integration, cooperation, and restructuring.
Formation of open and creative business circles in the industry.
Disclosure of corporate information on a global standard scale.
Utilization of intellectual property.
b. Reforms to supplement functions of the market mechanism
Deregulation.
Commitment to improvement of transparency of business transactions.
Improvement of business environment so that the market mechanism can function soundly.
Support for small-and-medium-size companies in establishing information system.
2. Development of the textile industry on a global scale focusing on Asian countries
(1) Direction of reforms
a. Advance into overseas markets
b. Adaptation to the new era of globalization and development in cooperation with Asian countries
c. Contribution to establishment of global standard
(2) Specific strategies of the reforms
a. Reforms by using the market mechanism on the initiative of companies and the industry
Strategies to nurture multinational companies in light of markets and supply functions.
Improvement domestic competitiveness regarding costs.
Promotion of information sharing with various industries in various countries.
b. Reforms to supplement functions of the market mechanism
Improvement of various systems, deregulation, and gradual promotion of regional strategies focusing on Asia.
Measures to cope with rapid increase in import and problems related to unfair trade.
Correction of market structure that impose high costs.
3. Establishment and reinforcement of basic structure of the textile industry as a key industry by exploring the frontiers of new field
(1) Direction of reforms
a. Promotion of development of high technology
b. Promotion of development of human resources in technical field
c. Preparation of adequate environment for intellectual property and promotion of international standardization
d. Response to requests from society
Environmental preservation, promotion of recycling, preparation for aged society, and consumer services.
(2) Specific strategies of the reforms
a. Reforms by using the market mechanism on the initiative of companies and the industry
Accurate understanding of needs in the market concerning the frontiers of the industry.
Enhancement of technical basis by actively utilizing technical seeds created based on cooperation between the industry and universities.
Promotion and preparation of industrial environment for strategic technical development, preparation of intellectual basis, and establishment of global standard.
Promotion of development of human resources in technical fields.
Promotion of commitment of companies and the industry to recycling and environmental preservation.
Preparation for aged society and promotion of consumer services.
b. Reforms to supplement functions of the market mechanism
Development of common basic technology in the industry, technical development by small-and-medium-size companies, and human resources development.
Preparation of intellectual basis, establishment of global standard, and preparation of a certification system.
4. Self-sustainable and continuous development of energetic local companies and enhancement of industrial agglomeration.
(1) Direction of reforms
a. Draft of strategies making use of advantages of small-and-medium-size companies
Drawing a clear managerial strategy, creation of merits of companies by improving managerial resources and specializing in a specific product line, and formation of a cooperative group to supplement each other's function if needed.
b. Improvement of business environment of textile manufacturing centers
c. Cooperation between manufacturing centers beyond the borders of industries and countries
(2) Specific strategies of the reforms
a. Reforms by using the market mechanism on the initiative of companies and the industry
Execution of strategies to become excellent companies.
Promotion of cooperation between companies and support for improvement of the ability of planning.
b. Reforms to supplement functions of the market mechanism
Strengthening of coordinating functions, support for strategic cooperation, information exchange system, human resources development, and creation of new industries.
Coordination between industries.
5. Securing and developing of human resources (an important theme common to the four reforms mentioned just above)
a. Reforms by using the market mechanism on the initiative of companies and the industry
Commitment from various angles to development of human resources as resources of value creation.
Preparation of a framework of cooperation between the industry and universities.
Promotion of mobility of labor of excellent human resources in companies and in the industry as a whole.
b. Reforms to supplement functions of the market mechanism
Support for promotion of industry-university cooperation and development of human resources in order to contribute to production activities at local textile manufacturing centers and creation of new businesses.
1. Main reformers (importance of corporate activities and need for complementary support by the government in the market)
The five reforms mentioned in Chapter 2 are expected be realized to a considerable extent by corporate activities in the market.
If efforts by only companies are not enough to carry out the reforms, it is reasonable that the central or local governments execute supportive policies on behalf of the industry.
2. Importance, peculiarity, and universality of the textile industry
Since the textile industry is considered to remain to be an important industry also in the future, the bottom line is to carry out carefully-prepared policies based on the reality of the current situation of the textile industry.
Having said that, since the peculiarity of industries is a matter of relativity, it is more effective and advantageous to the textile industry that the governments carry out general policies while paying attention to the universality of the problems concerning the textile industry of Japan.
3. Understanding of the textile industry-related policies in the United States and Western Europe
The United States and Western Europe are maintaining import restriction regarding textile products based on the MFA (Arrangement Regarding International Trade in Textiles) and that restriction will continue until 2004. In this connection, since a large number of items of textile products which have been under the restriction of MFA are not included in those already integrated step-by-step into GATT, there are concerns that this situation may cause the relative increase of Japan's imports of textile products from developing countries. Therefore, it is important that the United States and Western Europe will make substantially meaningful integration in the future.
In the United States and Western Europe, a production system is being established covering a wide range of areas by utilizing tariff reduction system in processing trade and concluding regional trade agreements with neighboring countries. The rule of origin of NAFTA, which is one of the regional trade agreements, is considered to be against WTO agreements because of its effect of making barriers higher against other countries, therefore, Japan is pointing to the unfairness of it.
In pursuing the textile industry-related policies, Western Europe is executing policies common to all the industries while the United States is executing technical development policies exclusively prepared for the textile industry. Taking notice of these countries¡¦policies, Japan should carry out necessary policies for the purpose of contributing to improvement and deregulation of international rule and securing internationally collaborative development of textile industry.
4. Measures in response to changes of situation in which policies are carried out
In recent years, the government is carrying out a lot of effective general fornearly all industries. So efficient utilization of this trend is important and it corresponds with the basic principles formulated at administrative reform conferences concerning role sharing between the government and private sectors.
When changing policies concerning the industry into general industrial policies or making the private sector responsible for the policies, it is important to consider the process so that the transition will proceed smoothly. Particularly, comprehensive examination will be needed when policies are to be changed in such areas as information systems and local textile manufacturing centers.
1. Evaluation of existing policies and direction in which policies to be formulated in the future
(1) Plans to restructure of the textile industry
The ripple effect of the plans will be limited. Consideration should be given regarding whether the reforms should be continued by pursuing policies to promote strategic cooperation between energetic small-and-medium-size companies.
(2) Plans to prepare basic environment for information system
The ripple effect is expected to be far-reaching. It is important that the textile industry pursues the plans on its own initiative and a wide range of policies is needed to achieve the goal of the plans. At the same time, continuous support for small-and-medium-size companies in establishing information system is also important.
(3) Support for creation
The ripple effect will be limited. It is necessary that the textile industry and local communities take the initiative in achieving the goal. Also, it is necessary to utilize the existing structure.
(4) Vitalization of textile manufacturing centers
In providing support for textile manufacturing centers, priority should be shifted from giving support for overall companies to giving support for energetic companies in textile manufacturing centers. It is also required that local governments tackle this issue on their own initiative and make use of general government policies. At the same time, support for soft-landing should be considered.
(5) Support for internationalization
Policies related to promotion of globalization such as tariff reduction concerning processing trade are functioning effectively. It is required to strengthen and continue these policies.
(6) How to cope with trade issues
Efforts to reduce undesirable impact on domestic industry caused by increase of imports are premised on self-help of the industry and based on support of government policies. However, when invocation of Transitional Safeguard (TSG) on textile products is requested, it should be decided taking all relevant factors into consideration, based on the established rules and guidelines, whether TSG should be invoked. At the International Trade Council held in December 1998, the issue regarding the procedure of TSG was argued with taking account of the implementation of the ATC (Agreement on Textiles and Clothing), and it was recommended to shorten the probe period and to lighten the probe-related burden at the Council.
(7) Development of technology and technical human resources
It is necessary to pursue development of technology by utilizing various policies also in the future. Concerning development of human resources in technical field and in local manufacturing centers, it is necessary to grasp specific needs in formulating policies.
(8) Consumer service and environmental problem
Proper measures should be taken also in the future concerning these matters.
2. Treatment of the Law or Extraordinary Measures for the Structural Improvement of the Textile Industries
It is proper to abolish the law instead of extending its valid term. Supportive measures for small-and-medium-size companies in making cooperative strategies based on general framework should be considered.
3. Treatment of operations of the Textile Industry Restructuring Agency
Main operations, such as support for building information system for small-and-medium-size companies, support for human resources development, and support for vitalization of textile manufacturing centers, should be transferred to the Japan Small Business Corp. for the time being.
Operations of the QR Code Center should be transferred to the Japan Small Business Corp. for the time being while preparing for privatization of the operations.
4. Other organizations to pursue policies related to the industry
Continuous regional operations of the Textile Resource Center should be maintained regardless of the center's legal status.
It is expected that operations of Associations of Textile Manufacturing Centers will change.
It is important that the industry take the initiative in providing continuous support for the Institute for the Fashion Industries as common property that contributes to improvement of the textile fashion industry.
1. Issues concerning registration of cottons threads at commodity exchanges
Issues concerning establishment of fair prices and transaction practices should be actively discussed among industries related to the matter.
2. Promotion of Japanese-style clothing
In pursuing this goal, application of reform measures aforementioned in Part 2 of Chapter 2 and promotion of those measures through further discussions by those related that this matter is necessary.
Follow-up by the textile industry and the government through fulfilling their respective roles.