Japan's Miki House turns to overseas as population shrinks

Japan's Miki House turns to overseas as population shrinks

TOKYO Japan's Miki House, a maker of luxury baby and children's goods in a country with ever-fewer births, is looking overseas for both production and customers for products like its 100,000 yen $760.40 Gold Label brand pyjamas.

President Hisaichi Kimura said the company, which has developed a global reputation based on Japanese technology and quality, has turned beyond its shores as the population ages and its workforce shrinks.

He told Reuters in an interview that they wanted to produce here as much as possible, referring to a network of 200 domestic partner factories. 'Made in Japan' would be my wish, but it's not easy because the craftsmen are gone. According to labor policy research group Recruit Works Institute, the privately owned Miki House, like other Japanese companies, is struggling with a shrinking workforce, with an estimated shortage of 3.41 million workers by 2030.

The clothier has endeared itself to generations of parents with attention to detail, such as techniques in attaching buttons to keep them from becoming a choking hazard.

As Japan's population ages, there's less demand for products like its 242,000 yen white goose down coats for toddlers who will soon outgrow them.

When Kimura founded Miki House in 1971, Japan had approximately 2.6 million births a year and was undergoing a rapid economic expansion that caused parents to splurge on fashionable goods for their children.

In 2022, the nation reported fewer than 800,000 births, the lowest on record.

Japan's Fast Retailing, the nation's biggest clothing seller and owner of the bargain brand Uniqlo, produces almost all of its products overseas.

About 70 per cent of products are still domesticated at Miki House, but some items, such as children's shoes, can't be made locally at scale and are manufactured in Vietnam.

The demand is shifting, with about 60 per cent of sales coming from overseas, where Miki House operates 95 stores in 16 countries and regions.

Neil Saunders, a retail analyst at GlobalData, said that the brand's Japanese heritage helps support its quality position and higher prices.

He said that moving production overseas is a very minor risk of damaging the cultural association with Japan, but the bigger challenge will be to make sure there is no dilution in production standards or product quality.

Miki House, which had 17.2 billion yen in sales in the year through February 2022, has been profitable for the past two years after posting a loss in fiscal 2019 without disclosing figures. If it achieves stable profit growth, it could pursue a public listing, according to Kimura.

The company hopes that a post-pandemic travel rebound will boost the purchases of tourists to Japan to 25 per cent of total sales by the year 2025. The same goods are nearly 50 per cent cheaper in Japan due to differences in duties and transportation costs, compounded by a weak yen.

The Japanese government could do more to help families with childcare to address the declining birthrate, but Miki House is not banking on an immediate turnaround, according to Kimura.

He said we need to balance that decline by going overseas. After 52 years in business, we finally got that balance right.