Japanese small businesses in China are gaining new business opportunities

Executives of Japanese small and medium-sized companies who have been in China for 20 to 30 years are working on new businesses. Unlike large Japanese companies, which change their staff every few years, small and medium-sized companies with limited talent lack the capacity to relocate staff, and they are turning this disadvantage into an advantage of local knowledge.

Dandong city in Liaoning Province is a border city with North Korea. Takashi Otsuka (68), head of the Chinese factory of Japanese mold maker Longtian, is working on vegetable production. Special equipment is set up in the factory to use lighting to grow lettuce and spinach without pesticides. The cultivation device draws on component-making techniques that the company has traditionally excelled at.

The produced vegetables are sold wholesale to restaurants and individuals, and the monthly sales are now about 5,000 yuan, about twice that of last year. Due to the shortage of production capacity, we are considering cooperation with customers in China to increase production. Otsuka said confidently: “Monthly sales should reach 30,000 yuan.”

From 1998 to 2002, Otsuka was stationed in Dandong as an employee of a company in Nagano Prefecture. He also returned to Japan as his business exited, but later moved to Longtian before returning to Dandong in 2006. He lived in Dandong for about 20 years.

Convinced that “as Chinese incomes rise, the demand for pesticide-free, tasty vegetables should increase,” he set up a joint venture with a Chinese company in 2013 to commercialize the vegetable cultivation business. Dandong is located on the border and has the advantage that labor costs are lower than in major cities such as Shanghai and Beijing. Although Dandong did not have high-speed railways or expressways in the past, as China’s economy developed and transportation improved, he saw an opportunity to set up business outlets in nearby cities.

Kenichi Matsui, 59, president of Songjing Food Co., Ltd, a Japanese seasoning company that has a factory in Dalian, which is adjacent to Dandong, said, there are opportunities for whisky produced in China as the country is in vogue.

In the business of seasoning manufacturing, the technique of selecting and matching raw materials is very important. Kenichi Matsui believes it can make good use of these technologies in the whisky business.

At present, Kenichi Matsui has been in Dalian for 33 years. As president, he stayed in Dalian to direct foreign business in the rapidly changing Chinese market. His sister manages day-to-day operations at the headquarters in Japan.

In December 2022, Matsui received approval from the Dalian municipal government to produce and sell whisky.

Approximately 2 billion yen was invested in the construction of a new plant within the existing plant in Dalian. The plan is to start production in 2024, after the ripening period, the market in 2027. The most popular whiskey in China is mainly the strength of foreign brands such as Europe, the United States and Japan, which is a huge challenge.

“China’s economy is growing fast and it’s an exciting market,” Matsui said. I will continue to make efforts here. Long-term roots in the local unique business sense and quick action are the advantages of smes.