Crafting a Legacy: Ryuzo Nishikawa on the Global Future of Japanese Wool

Japan has a historically deep clothing culture with examples such as kimonos and yukatas. This clothing is characterized by timeless lines that have gone through numerous eras with improvements over time. Today, Japan is famous for its cultural heritage, craftsmanship, quality, and innovative designs and technology integrated into supply chains. How would you define the uniqueness of Japan’s fashion and apparel industry?

Let me first explain a little about the history of Japanese fashion. VAN JACKET INC. was founded in 1948 and promoted the American lifestyle to the Japanese market in the 1960s and 1970s.

The American style of fashion was extremely popular throughout the 1970s. In the 1980s, that trend shifted to favor a more European style. Fashion designers such as Yohji Yamamoto created fashion that was very popular among young people living in Japan, and they were seen as trendsetters. This European-influenced trend continued for the next 20 years.

Japan's bubble economy collapsed in 1990, and a deflationary economy continued for more than 30 years, a period commonly referred to as the "lost 30 years." In this deflationary economy, Japanese consumers increasingly sought out cheaper goods. Since around 1990, casual clothing stores and men's suit stores have expanded into chains all over Japan and have become more prominent. In their pursuit of quantity, quality and cost, they began to build connections with textile manufacturers and sewing factories around the world, and at the same time established Japanese-style technical guidance and quality control standards, building and strengthening their supply chain. The change in the Japanese market has been a shift from luxury brands to high quality, high added value, or cost-effective brands.

Today we are seeing another big paradigm shift when it comes to Japanese textiles and fashion. Japan is now seeing a lot of attention from overseas, and thus, exports are increasing, as well as inbound tourists visiting Japan. On the other hand, because of the JPY exchange rate to the US dollar, raw materials are more expensive despite Japanese products being price competitive as far as exports go. How do you foresee the next five years of the Japanese textile sector playing out? How do you account for the growing popularity of Japanese apparel and textile brands around the world?

In terms of apparel exports alone, there are more stores of famous Japanese designers in Europe and the US than ever before, but unfortunately this only represents a small part of the Japanese fashion industry.

Within Japan's textile industry, synthetic fibers such as polyester are recognized worldwide. This may be because Japanese cars and home appliances are of high quality and extremely durable, so people in the West may have a similarly positive image of synthetic fiber raw materials and fabrics. In recent years, its reputation has not only spread to Europe and the United States, but exports to Middle Eastern countries have also been booming.

Founded in 1929, your company now boasts nearly a century in the wool industry and today continues to be centered around a core focus of woolen materials with operations spanning four divisions; ladies, men, formal, and uniform, with a separate planning and production department. How has your business evolved over time, and what are some of the competitive advantages of your company?

For the first 40 years of our company we only produced formal textiles. From there we began producing men’s suits with checked patterns as well as stripes. It was from here about 10 years ago that we finally began producing ladies’ textiles. Historically, it has taken about ten years to start up a new idea and establish itself as a business. Every ten years, we try to start something new. We are now discussing what the next new business will be.  

Bishu has always been seen as the Mecca of wool products in Japan. However, today, Japan has a rapidly shrinking and aging population. This has resulted in labor shortages for manual labor positions, which is very present in the Bishu area with companies that don’t have successors or craftsmen to continue the work of previous employees. On the other hand, the decreasing population of Japan is also leading to a smaller domestic market with fewer consumers to sell things to. As a company in the Bishu area, how are you facing these two challenges? 

We have used a lot of suppliers, and the age of those suppliers is getting rather high. Also, the facilities and equipment are getting old, and some of the suppliers need more to make investments in new equipment. Recently, at Nishikawa Keori, we introduced six new pieces of machinery, but this doesn’t cover the entire range of our production. The reason why we introduced these pieces of machinery is actually to help transition techniques and know-how to the next generation of craftsmen.

Bishu produces a significant amount of wool, and as a company you are dedicated to the continuous production of innovative woolen textiles, constantly bringing new materials to market with over 100 new materials developed each season. What is so great about the wool produced in Bishu?

Wool production in Bishu is divided into different sections covering different techniques and steps in wool production. This means that massive amounts of investment is not really needed. There are thousands of combinations of processes, meaning companies can mix and match processes themselves, thus resulting in something new. These new combinations lead to new earnings. Since this division exists, it also allows factories to surpass maximum capacity by shifting processes around.

Your company has collaborative partnerships all across the world including partnerships with manufacturers in Italy, China, and other countries. What role do collaborative partnerships play in your business model, and are you looking for any new partnerships in either domestic or overseas markets?

I have personally visited overseas locations to talk with potential partners. In the case of China, the products are different from those sold in Japan. We can control production processes and retain quality, meaning that we can teach overseas partners the essence of our company and how to make our products to a satisfactory level.

China has seen consistency and quality levels rise over the years, but we saw in our research that you also collaborate with companies in Vietnam and India, that have lower quality levels than China even though they have great access to raw materials. How do you ensure quality management at those partner factories?

Although quality is something we certainly concern ourselves with, something else we think about is the tariffs. We are ideally looking for countries that won’t place tariffs on our products.

Our customers are not importing the fabric itself, they import products, so you have to consider where the fabric is going to be used and sold. You also have to consider the root of the products, which will change the tariffs themselves. No matter the location, we try to ensure the same quality.

You mentioned different production bases there. Today the apparel industry has the longest supply chain which has a strong environmental impact. As such, the textile industry has been the target of many criticisms from media and consumers for its environmental impact. Wool stands apart here since it is biodegradable and it is mainly produced in New Zealand and Australia, eco-friendly countries. Considering the advantages of wool, how is your company bettering its environmental performance in the production of its solutions?

Wool itself is slightly different from polyester, which itself is made from oil. China is always deeply involved in supply chains. With wool you need to wash it and 90% of washing locations are in China. This is why companies are centering around China, since the supply chain has so many steps in China.

You supply textiles for both men’s and women’s products, catering to a diverse clientele that includes mass retailers and prominent Western brands. Additionally, you have a division dedicated to formal wear and a uniform division that handles planning proposals for hotels, restaurants, and more. What are some of your areas of expertise and competitive advantages that make you so appealing to clients?

As I mentioned earlier, we use a lot of outsourced suppliers, meaning it is not an integrated supply chain, we use a separated supply chain. It allows us to deal with a variety of requests. Whenever we receive a request from a customer, if we see potential in that request, we try to challenge that, establishing a new business avenue.

I think we as a company should follow the example of Italian brands and improve the brand recognition of Bishu, becoming a place known worldwide for wool.

Just then you mentioned a desire to become a world famous brand, and you are well on your way with exports to Europe, Korea, and China, among many others. Where do you see the most potential for further capitalizing on the global market?

The targets right now are countries with emerging markets and growing populations. Those would be China, India, and the United States. Within China and India, supply chains are already established, but the United States no longer has an internal supply chain, as they are now buying products from China. In the next 20-30 years, the Middle East will emerge as a target as the culture of equality and freedom continues to spread. The population in that area is on the rise, which means there is an opportunity.

Currently in the Middle East there aren’t the facilities for fabric, but I think that once demand increases supply chains will be established there.

As you look towards the future, is there an ultimate goal or dream you would like to achieve as the president of Nishikawa Keori?

We had expected to record record sales in fiscal 2023 and continue to grow smoothly in the future. However, business in fiscal 2024 is expected to be extremely tough, with sales expected to fall to 85% compared to the previous year.

The main reasons for this are that rapid global warming has led to wool, which is thought of as a warm fabric, being avoided not only in women's fashion but also in men's fashion, and while demand has increased sharply as we recover from COVID-19, the subsequent oversupply has caused retailers to end up with excessively bloated inventory. This is not just a Japanese market trend, but a global one, with raw wool prices falling sharply and some sheep farmers in Australia and New Zealand being forced to go out of business as it is no longer profitable. This is a crisis not only for sheep farmers but for the entire wool industry.

Wool has many functions, such as temperature and humidity control, water repellency, odor resistance, antibacterial properties, and heat insulation, making it the most excellent fiber of all. We believe that our mission is to promote this wonderful fiber to the world, but there is a limit to what a single company can do, so we would like to work with clothing companies around the world to further promote wool.