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Business

Japan's elephant brand trying to raise its overseas profile

Zojirushi suffers as Chinese tourists binge less on kitchen appliances

Foreign tourists in Osaka check out some Zojirushi appliances.

OSAKA -- Zojirushi is looking overseas for more sales now that Chinese tourists to Japan have curtailed their bakugai collective spending binge in the country.

The kitchen appliance maker on Monday announced that its group operating profit for the year ended Nov. 20 fell 35% from the previous year to 7.8 billion yen ($68.8 million). It blamed a chunk of the fall on Chinese tourists to Japan, who are no longer snapping up the company's thermos bottles and rice cookers like they used to.

The company, whose name translates to "elephant mark," predicts its operating profit will grow about 10% to 8.6 billion yen for the current fiscal year as its overseas sales strategy takes hold.

In the year ended November 2016, the company's operating profit skyrocketed to 12.1 billion yen, up from 1.8 billion yen three years earlier, as visiting Chinese bought stacks of Japanese-made cooking devices for relatives and friends back home. But these tourists recently downsized their Japanese shopping expeditions, delivering a blow to Zojirushi.

Nevertheless, President Norio Ichikawa remained upbeat about Zojirushi's outlook during the results call on Monday.

"Our sales efforts in overseas markets are beginning to produce results," he said.

The company's overseas sales grew to 28.7 billion yen during the recently closed fiscal year, up from 27.5 billion yen during the preceding 12 months.

Foreign sales accounted for 33.7% of Zojirushi's total group sales during the past business year, up 2.8 percentage points.

The company needs to raise its international profile if it is to grow less dependent on purchases in Japan.

Yoshihiko Miyakoshi, a Zojirushi director who has been in charge of overseas operations for over 20 years, said the company is doing just that.

"In the past," Miyakoshi said, "I was often stopped at customs while on business trips to North America because the name of our company was not known. Now, they say, 'Oh, you're the elephant."

The company in 2003 set up a sales unit in China, where during the past business year sales topped 10 billion yen for the first time.

In China, Zojirushi has launched high-end products similar to those it offers in Japan, although China's overall income levels remain lower than in Japan. Still, though, Ichikawa pointed out, "the richest 10% of Chinese consumers form a market larger than Japan."

Zojirushi also offers high-quality, Japan-standard customer service in China, where its main sales channels are department stores and shopping malls.

It directly operates repair services in four major cities, including Shanghai. These repair shops are equipped with leisure spaces to make parents with young children feel comfortable while they wait for their gadgets to be fixed.

The customer-oriented marketing strategy has spruced up the elephant's image, helping the company maintain product prices despite fierce competition.

Rival Tiger has also rolled out high-performance rice cookers in China to cater to well-heeled consumers.

Tiger is now planning to bring a coffee maker that has proven a hit in Japan to China. The coffee maker made its Japan debut in September.

The Zojirushi competitor in the future wants to get 50% of its sales from overseas markets.

Similarly, Zojirushi is aiming to push up the ratio of its overseas sales to around 40% by the year through November 2022.

Hitting that target will require expanding sales in Asian markets other than China's.

While there are many places without electricity in Southeast Asia and India, Zojirushi can still make inroads because its mainstay products include thermos bottles and other nonelectric appliances, Ichikawa said.

In Thailand, Myanmar, Cambodia and India, the company has so far limited its offerings to nonelectric products.

But the elephant is expecting demand for rice cookers to grow in these countries as their economies grow.

Thailand will get Zojirushi rice cookers in one or two years. The company is now studying Thailand's culinary culture so it can develop market-specific products.

The maker has been trying to enhance its brand power overseas by offering products with the same levels of quality and performance as those it sells in Japan.

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