Global Sourcing: Japan and Stussy, Inc. Uniqua Brown
Part 1: Stussy, Inc Part 2: The Imported Products Part 3: 8 Steps of Import Buying Plan Step1:Japan Step 2: Country Analysis Step 3: Japanese Business Etiquette Step 4: Importing Trade Agreements, Laws, and Policies Step 5: Classifying the Import Step 6: Cost Sheets Step 7: Shipping Step 8: Documents Bibliography
Stüssy, Inc.
In 1984, Shawn Stussy, a surfboard designer, started an apparel line with partner Frank Sinatra Jr. (No relation to the singer), under his surname ‘Stussy’. Initially, the label sought out simply to make caps branded with the company’s logo and then later designed clothing for the surfing and skating community at the time but eventually over time developed a wide range of ecstatics but is revered as one of the top streetwear brands on the market. In 1991, the company opened their first boutique in New York. The brand became known for their brand logos such as the interlocking S’s and the ‘Stussy’ signature. An Irvine, California-based apparel company, Stussy Inc. has managed to stay modern and current with its urban street fashion for 30 years. Stussy not only has a celebrity following but also an international repartition despite little promotion. In a risky move, from the beginning the company work by limiting it production far below the demand of its products, while this may limit profit it also give the sense of exclusivity to it the brand. Now, Stussy product can be found all over the globe not only in their own stores but also in department and speciality stores. The company has expanded past where they originally set out be to a globally known brand.
“Made in the USA� vs Imports Stussy has a wide range of Made in the USA and Imported products. The Made in the USA products are usually there core basic sweater and hoodies with their logos on them. The top 5 countries for their imported products are: Hong Kong, China, India, Japan, and Taiwan. Made in the USA Products
Imported
Traits of the Country A. Social/Cultural a. Japanese culture is complex and unique. Japanese culture takes immense influence from Chinese, European, and North American culture, leading to Japan having quite a distinguishing culture compared to other Asian ethnicity and cultures. A large array of components has composed the culture of Japan. This array includes The Japanese Language, Japanese Music, etcetc. Japanese society is all about saving face, and keeping one’s pride. The face is seen as someone personal dignity and means having high status with one’s peer’s. Because of this many will not openly criticize, insult, or put anyone on the spot. Harmony is highly valued in Japanese culture, as it is the guiding philosophy for the Japanese people in a family, business, and society as a whole. Because of this value in harmony, Japanese culture also values a community mindset rather than an individualistic one. Lastly, Hierarchy in japan has highly depended on age and status, and everyone has a place in the hierarchy, this is important to remember went doing business in japan. B. Political a. The Japanese government, a constitutional monarchy, is based on a parliamentary cabinet system. Executive power is vested in a cabinet, which consists of the prime minister and 17 ministers of state (or less) that collectively are responsible to the Diet. The Prime Minister, who must be a member of the diet, designated by the Diet. In practice, the prime minister is always a member of the House of Representatives. The prime minister has the power to appoint and dismiss the ministers of state, all of whom must be civilians and a majority of whom must be members of the Diet. Japan’s constitution became effective on May 3, 1947, and consists of 103 articles. C. Economic a. Japan has one of the largest and most prosperous economies in the world. As of 2013, it had the third largest economy in the world by nominal gross domestic product (GDP), the fourth largest by purchasing power parity(PPP) and was the second largest developed economy overall. According to the tradingeconomics. com, Japan’s Per capita GDP is $37,595.18 as of 2014. Japan is a member of the Asia-Pacific Economic Cooperation(APEC), the World Trade Organization(WTO), the Organization for Economic Cooperation and Development(OECD), G20, G8, and several others. D. Geographic a. Japan contains many small islands, but the 4 main islands are Hanshu. Hokkaido, Kyushu, and Shikoku. Japan’s closest neighbors are Korea, Russia, and China. In terms of size, Japan is comparable to Germany or California. More than 50% of the country is mountainous and covered by forests, with the most known and highest Mountain being MT. Fuji. The Population in Japan is approximately 124 million including foreigners residents in the country, many being of Korean descent. Because of its location, Japan experiences frequent earthquakes; Because of this, there are also many volcanos, again the most famous volcano being Mt. Fuji. The climate in Japan can vary because of the large extension of land, but generally, the winters are mild and the summers are hot and humid. There is a rainy season in the early summer and a typhoon season around the end of the summer. Contributing factors A. Labor a. “The structure of Japan’s labor market was experiencing the gradual change in the late 1980s and was expected to continue this trend throughout the 1990s. The structure of the labor market is affected by the aging of the working population, increasing numbers of women in the labor force, and workers’ rising education level. There is the prospect of increasing numbers of foreign nationals in the labor force. And, finally, the labor market faces possible changes owing to younger workers who sought to break away from traditional career paths to those that stressed greater individuality and creativity.”
B. Inputs a. Fish & Negligible Mineral Resources C. Products a. Japan’s top exports are: i. Vehicles: US$134 billion (21.4% of total exports) ii. Machines, engines, pumps: $117.7 billion (18.8%) iii. Electronic equipment: $95.6 billion (15.3%) iv. Medical, technical equipment: $35.7 billion (5.7%) v. Iron and steel: $27.5 billion (4.4%) vi. Plastics: $22.5 billion (3.6%) vii. Organic chemicals: $17.9 billion (2.9%) viii. Ships, boats: $11.4 billion (1.8%) ix. Oil: $11.4 billion (1.8%) x. Rubber: $10.3 billion (1.6%) D. Transportation a. In many cities, there are mass-transit rail systems available which feature a loop line around the city center and radial line into the central stations and the subway system. E. Business climate a. “The business climate in Japan seems to be improving. According to the Wall Street Journal, business investment in Japan rose for the first time in 3 quarters of 2011. During the October to December period, in a positive sign that will be used to revise fourth-quarter GDP figures according to the Ministry of Finance, capital spending grew 7.6%. However, the data also showed Japanese companies remain under pressure, with pre-tax profits decreasing by 10.3% during the period compared with a year earlier and corporate sales falling 1.3%, said the paper” [business-in-asia.com]
F. Effects of quota removal a. The effect of the quota removal for Japan was a positive one while the effects of tariffs on labor productivity were insignificant.
Strength * Stussy holds a wide range of both imported and made in the USA products * Japan has good relations with the USA in terms of trading * Japan is a part of Asia-Pacific Economic Cooperation(APEC), the World Trade Organization(WTO), the Organization for Economic Cooperation and Development(OECD). * Stussy is a well respected and known brand in their market
Weakness * Japan doesn’t have a large labor industry in regards to clothing compared to China or India * Stussy’s seek for exclusivity may hurt them in the future * Likewise becoming too big and “corporate”, and having the image of “selling out” could also hurt them in the future * There are other Asian countries that can produce garments for cheaper cost
Opportunities * The streetwear and lounge/ sportswear industry are becoming bigger and gaining more traction in the media, meaning more customers will be interested in the brand. * Japan has many brands that align with Stussy (such as Bape), showing that the brand can be and is easily big in japan
Threats * Likewise, the Streetwear and lounge/sportswear are becoming bigger causing more and new competition * The garment market is always growing and getting cheaper
Code of Conduct While making clothes is fun, it’s also serious business. We don’t just work with anyone – we’ve got rules, and they all support our mission. NON-USE OF CHILD LABOR No person shall be employed at an age younger than the age of 15 (or 14 where the law of the country allows) or, the age for completing compulsory education where such age is higher than 15. NON-USE OF INVOLUNTARY LABOR There shall not be any use of forced labor, whether in the form of prison labor, indentured labor, bonded labor, or otherwise. FREEDOM FROM COERCION AND HARASSMENT Each employee will be treated with dignity and respect. No employee will be subject to corporal punishment, threats of violence or any other forms of physical, sexual, psychological or verbal harassment or abuse. NONDISCRIMINATION No person shall be subject to any discrimination in employment, including hiring, salary, benefits, advancement, discipline, termination or retirement on the basis of gender, race, religion, age, disability, pregnancy, union membership, marital status, sexual orientation, nationality, political opinion, or social or ethnic identity. FREEDOM OF ASSOCIATION Each employee shall have the rights of freedom of association and collective bargaining, so long as such activity is conducted in a peaceful and lawful manner, without penalty or interference. In the absence of freedom of association laws, manufacturers must facilitate parallel means to provide workers the option to communicate confidentially and/or work in a collaborative manner to address workplace issues. HEALTH AND SAFETY STANDARDS Employers shall provide a safe and healthy working environment to prevent accidents, injury, and illness arising out of, linked with, or occurring in the course of work or as a result of the operation of employer facilities. Employers shall comply with all applicable laws regarding workplace safety and health, however employers may be expected to substantially exceed such laws in the event that such local laws do not provide adequate protection. At a minimum, employers should provide reasonable access to potable water and sanitary facilities, fire safety, adequate lighting and ventilation, and reasonable assurance of personal safety. Such minimum standards must be met both in workplaces as well as in any employer-provided housing. FAIR COMPENSATION We expect our partners to recognize that wages are essential to meeting employees’ basic needs. Our partners will, at a minimum, comply with all applicable wage and hours laws and including those related to minimum wages, overtime, maximum hours, piece rates and other elements of compensation and provide legally mandated benefits. Wages shall be paid in a timely manner.
HOURS OF WORK Except in extraordinary circumstances employees shall (1) not be required to work more than the lesser of (a) 48 hours per week plus 12 hours overtime or (b) the limits on regular and overtime hours allowed by the law of the country, if such laws are more restrictive, and (2) be entitled to choose to take at least one day off in every seven day period. Additionally, all employees will be entitled to either (1) all physically and legally required breaks during the work period or (2) at least one ten minute break every four hours worked and one thirty minute meal break per each eight hour shift. Extraordinary business circumstances will not justify work in excess of 72 hours per week for more than four months per year. OVERTIME COMPENSATION In addition to compensation for regular hours of work, employees shall be compensated for overtime hours at the greater of (1) the legally required or prevailing premium rate or (2) 1.5 times the regular hourly rate for hours in excess of 48 per week (or lower, if required by local law). DISCIPLINARY PRACTICES Partners shall develop appropriate mechanisms for resolving employee grievances. Such mechanisms should include at least the following components: (a) employees have a right to representation by a person of their own choosing during use of the grievance procedure, (b) employees have a right to express their viewpoint without fear of retaliation, (c) the result of use of such grievance procedure shall be documented, indicating clearly the reasoning behind all final resolutions of grievances. Such documents will be reviewable by Tulong LLC to assure compliance with the code of conduct and fair treatment of employees. Deductions from wages as a disciplinary measure shall not be permitted. ENVIRONMENTAL IMPACT Partners shall strive to minimize the negative impact of operations on the environment to the greatest extent possible. USE OF SUBCONTRACTORS All subcontractors are expected to express in writing their commitment to comply with the entirety of this TCC (Tulong LLC Code of Conduct), including monitoring and compliance. Licensees will not use subcontractors for the manufacture of lurŽ merchandise without Tulong LLC’s express written consent, and only after the subcontractor has entered into a written commitment with Tulong LLC to comply with this Code of Conduct. ADDITIONAL ITEMS Should there be a prevailing industry standard higher than those minimums enunciated above, the higher standard should be met. Tulong LLC will have oversight of licensees to monitor compliance with this Code of Conduct. Partners agree to provide all data and access necessary, including unannounced on-site inspections of facilities, reviews of books and records relating to employment matters; and private interviews with employees to monitor compliance. Licensees will maintain on site all documentation that may be needed to demonstrate compliance with this Code of Conduct. Oversight may be performed by a 3rd party. PUBLICATION OF THIS CODE OF CONDUCT This code of conduct shall be translated into local language(s), provided in writing (in local languages) to all employees and posted (in local languages) in a prominent location readily accessible by all employees in the workplace.
Step 3: Japanese Business Culture 1.Type of culture Many see Japanese business culture as a large obstacle when starting and wanting to state business in japan. They may think that dealing with Japanese business culture is too risky but you can be successful in japan and many have become successful in japan. So, how can we do it? We need to understand the culture. What Japanese business culture thrives on is the staple long-term relationship, that is loyal and trusted. You can not expect to work once with a Japanese business and be done with it, when working with a Japanese business you should aim to build a long-term business relationship with them. Japanese business culture is extremely polite in dealing with other people, do not mistake this for them being pushovers, though, they are firm in their standards even if they do not inform the other person/business. One thing to always remember about doing business in another country is, you want to do business with them and in their country, so you must play by their rule and standards 2.Masculine or Feminine A. Japan can be seen as both a masculine and feminine culture 3.Negotiation style and strategies A. Japanese people do negotiate but are non-confrontational people. They will go to great lengths to be polite, and will be quite reluctant to say ‘no’. They usually negotiate in groups and group-decision making in japan is very important. Japanese people do not make decision rushingly, and it may take 2 to 3 meetings before they will wholeheartedly agree. 4.Type of Communication A. Japan’s indirectness reaches as far as it’s non-verbal communication, unlike westerners. Japanese find it rude to interrupt in the middle of a conversation and silence is looked at as a time to think. Because Japanese people are rather indirect, you have to understand what’s not being said, or rather what is being implied B. Japanese body language is minimal compared to their western counterparts. Japanese people seem to be very still in a meeting sitting in a formal upright position, it’s rare to is much emotion. 5.Social and Culture Elements A. Appropriate Business Attire a. Business attire in Japan is what you expect from traditional business attire: Conservative, Dark Colored suits, women in skirts. One thing to make sure of is to wear shoes that are easy to take off, as it some situation you will have to take off your shoes. It is best to look clean cut and put together. B. Greetings/Introductions a. It is accustomed to shaking hands is a Japanese business environment, but when greeting another person it can be even better and more respectful to shake hand and bow slightly. This is seen as the courtesy and will be appreciated by the Japanese people. b. If you wish to go the extra mile and introduction yourself in japanese you would say, “Hajimemashite, [Name] desu. Dōzo yoroshiku onegaishimasu.” (Nice to meet you, I am [Name]. Nice to meet you aswell. This is not absolutely necessary, but it is a nice, and impressive gesture. Since you are going to them and their country for business and it shows you have respect for their culture
C. Presentation of Business Cards a. In japan, Business cards are seen as an extension of one’s self, and should be respected. Firstly, it is best to accept the card with both hands, read it shortly, and placed in a business card holder. DO NOT take the card halfheartedly, and simply put it in one’s wallet or back pocket without reading it. And when giving one your own card, again giving with both hands directly to the person you want to(and this goes the same for other important documents). D. First Name or Title a. In a Japanese business environment, people usually call each other by their last name plus the suffix-san and in more conservative companies, people are called by their title. DO NOT call someone by their first name, as it will make the other person feel uncomfortable. First names are usually used by family members and close friends and are not suitable for a business environment. E. Gestures a. Nodding is very important, it shows that you are listening and understand. One gesture to avoid in Japan is the ‘Okay’ hand sign because in japan this means ‘money’. It is also best to avoid pointing with the index finger, as it is considered rude. F. Colors, Numbers, and Their Meaning a. Colors i. Black- Unknown, Mystery, Night ii. White - Death, Morning, Purity iii. Yellow-Courage, Nobility, cheerfulness iv. Green- Eternal Life, Youth v. Purple: Wealth, Privilege, Royalty vi. Pink: Spring, Femininity, Youth vii. Red: Life, Fertility, Passion viii. Orange: Love, Happiness, Courage ix. Brown: Earth, Strength, Durability b. Numbers to be weary about in Japanese culture are 4 and 9. 4 is seen as unlucky in many Asian cultures because the pronunciation for 4 (shi) is close the to the pronunciation for Death. Likewise, the pronunciation for 9 (Ku) is close to the pronunciation for the word agony or torture. Because of how these numbers are pronounced, there are some number combinations to watch out for such as 42 which is (Shini) and sounds like ‘to death’. or 49 which is(shiku) and sounds like ‘to run over’. On the other hand, numbers that are considered lucky are 7 and 8. Like many other countries is considered 7 in japan, but they have their own reasons for thinking so. The number 7 is considered an important number in the Buddhist religion and is a part of Japan’s traditions and customs. Also, 8 is considered lucky, this is due to the shape of the character. It’s seen as luck because the character becomes wider at the bottom signifying one’s prosperity and growth G. Gift Giving a. Gift-giving is important in Japanese (and other Country’s ) culture. It is a good policy to always be ready with gifts when needed, being prepared is a good rule of thumb and looks good to possible business partners. Wrapping does matter, it is best to make sure, regardless of the content, that the appearance looks amazing. Lastly, be prepared to give a gift to everyone, and receive gifts in return. H. Time a. Like any other business environment, time is seen as serious, but can be slightly different than how people in the west see it. Japanese people are more concerned not with how long something takes to
happen, but with how time is divided up in the interests of properness, courtesy, and tradition I. Joke Telling a. It’s best not to tell jokes in a business environment unless they are at your own expense and can be easily understood. Especially if you try to tell western style jokes, I will not be understood and will make the Japanese person will uncomfortable. 6. Business Entertaining A. Table Manners/Proper Use of Utensils a. The primary utensils use in Japan(and other east Asian countries) are chopstick and sometimes spoons. Being a foreigner in Japan, you may be offered a fork rather than chopsticks, only accept if your chopstick skill is absolutely horrible; but ideally, it is best to practice beforehand, as this is a good way to impress Japanese people and show respect to the Japanese culture. When using chopstick don’t use them to pierce the food, simply try to pick it up as difficult as it may seem. DO NOT stick chopsticks in a bowl of food and leave it there, this is an action used for the dead, it is best to use the chopstick holder provide when not in uses. Lastly, when having a having a meal in Japan, the meal may be family style or have shared dishes, It is important to not eat directly from these common dishes but to put the food you want on your separate dish. b. As for other table manners, it is best to wait to be told where to sit, this is because you and everyone around you may be sitting according to your position/status or age. You want to try everything, even just a little, you are served, it is a sign of respect. Know that in japan it’s okay to slurp, and even invited, because it’s a sign to the chef that you are enjoying your meal. Do not expect many conversations, instead, enjoy your food and talk after. Lastly in Japan(and other east Asian countries) don’t tip. Tipping is not something done in japan, and some may even be offended, thinking you are looking down on them. B. Alcoholic Beverages a. If you are done drinking, don’t finish your drink, and empty glass basicly means you want more. C. Appropriate Conversation Subject a. When it comes to after business activities, as expected people, in general, want to talk about anything besides business. Japanese people feel more comfortable doing business with people they trust and these are the chance they have to trust you. Talking about hobbies, travel adventure, interesting things you’ve seen while in japan---is best. D. Topics to Avoid a. Religious Beliefs b. Political Beliefs c. Sexuality d. Poverty e. Historical Conflicts
Step 5: Importing Trade Agreement Part 1: Trade Agreement Specific to the Country in their dealings with the United States A. Recently Japan and the United States have launched an initiative between each other, in November 2010, the US-Japan Economic Harmonization initiative (EHI) is a new bilateral initiative that aims to contribute to the county’s economic growth by promoting cooperation to harmonize approaches that facilitate trade, address business climate and individual issues and advance coordination on regional issues of common interests. Part 2: Laws of the United States that Affect the Importation of the products A. As of now, there are no laws that affect the importation of Knitted Cotton Tops
Step 5 Classifying the Import How Are HTS Numbers Organized? HTS numbers are organized by chapters, beginning with 01(Live animals and animal products) and ending at 97 (works of art, collector’s pieces, and antiques). The United States and certain other countries also use chapters 98 and 99 to cover special categories of products, such as goods temporarily imported for repair or alteration(USA), donations of clothing and books for charitable purposes(Canada), household and other goods imported by someone resuming residence in the country(New Zealand). Under each chapter is heading and then a subheading that further describes that product. The following is a breakdown of the product: Chapter: 61—Articles of Apparel and clothing accessories, Knitted or Crocheted Heading: 6110—Sweaters, Pullovers, Sweatshirts, Waistcoats(vests) and similar articles, Knitted or Crocheted Subheading: 6110.20— Of Cotton Tariff item: 6110.20.338—Other, Sweatshirts: Men’s
Style: 749204 Generation: 1 Size:S-M-L-XL Season: Winter 2016 Description: Knitted Top COMPONENT COSTS: Fabrics: Cotton Lining: Other: Front placket (TOTAL FABRICS) Trims: Woven Label/Care
Yds/Qty
Unit Prc
$ Amt
1.5 yrds
$7.02
0.25 yrds
$0.50 $7.52 1
$0.87
(TOTAL TRIMS) CMT COSTS: Grading: Marking: Cutting: Make Charges: Thread Sewing Top-‐Stitching Labor
$0.87
Wash/Type Press/Trim QE/Bag & Tag (TOTAL LABOR) PACKING MATERIALS: Tissue Polybag Inner Box Outer Box (TOTAL PACKING) (TOTAL COST): WHOLESALE PRICE WHOLESALE MARGIN RETAIL PRICE RETAIL MARGIN
$0.20 $0.15 $0.15 $5.26
$0.70 $0.40 $1.00 $81 $1.00 $0.60 $0.25
$0.10 $0.15 $0.40 $0.50 $1.15 $13.05 $17.55 30% $85 73%
Style: 395710 Generation: 1 Size:S-M-L-XL Season: Winter 2016 Description: Knitted hoodie COMPONENT COSTS: Fabrics: Cotton
Yds/Qty Unit Prc $ Amt 2 yrd
$4
$7
$0.30
$0.60 $0.40 $1.00 $0.60 $2.60
Lining: Other: (TOTAL FABRICS) Trims: Grommets 2 Embroidery Logo Front Pocket 0.25yrds Woven Label/Care (TOTAL TRIMS) CMT COSTS: Grading: Marking: Cutting: Make Charges: Thread Sewing Top-‐Stitching Labor Wash/Type Press/Trim QE/Bag & Tag (TOTAL LABOR) PACKING MATERIALS: Tissue Polybag Inner Box Outer Box (TOTAL PACKING) (TOTAL COST): WHOLESALE PRICE WHOLESALE MARGIN RETAIL PRICE RETAIL MARGIN
$4
$1.00 $0.50 $1.10 $0.90 $2.00 $1.50 $0.50 $0.20 $0.50 $0.30 $8.50 $0.50 $0.60 $0.90 $1.00 3 $21.28 $30.40 30% $95 68%
Step 7 : Shipping Part 1: Ocean Freight A. Type of box used: cardboard (24” x 18” x 18”) B. Number of Case Packs (boxes): 250 C. Type of container: Dry Storage Container (20’ FT) D. Space needed in container: 1125 Cubic Feet E. Cost to ship the merchandise: $823.06$909.70 Part 2: Two Timelines (choose one) A. Shipping: 15 - 22 days Part 3: Maps:
John Doe Corporation
California Stussy, Inc.
Jacks and Co.
Jacks and Co.
Stussy, Inc. John Doe 1308 KG
01/15/16
Stussy, Inc. 17426 Daimler Street Irvine, CA 92614 U.S.A Japan
Sea Tokyo, Japan to Los Angeles, USA
68951 250 4
Retail
Men’s Cotton Knit Tops
1308 KG
Takuya Koh
01/15/16
Stussy, Inc. 17426 Daimler Street Irvine, CA 92614 U.S.A.
749288450275
06/03/15
06/03/15
06/03/15
06/03/16
06/03/16
06/03/16
Stussy, Inc. 17426 Daimler Street Irvine, CA 92614 USA
Men’s cotton knit
Japan
01/15/16
Stussy, Inc 17426 Daimler Street Irvine, CA 92614 USA
Men’s Cotton knit tops
456876 03/07/16
356916
Jacks and Co.
03/07/16
159348
452272524546
USD
Japan
Tom Johnson 250 1308 KG
Sea Japan
Cotton knit Tops
John Doe
Stussy, Inc.
3,000 1308 KG
John Doe
$5,259.38
$25,500.59
01/15/16
Stussy, Inc. 17426 Daimler Street Irvine, CA 92614 USA 1-888-978-8779 1304 KG 3000
Stussy, Inc. 17426 Daimler Street Irvine, CA 92614 USA 1-888-978-8779
Sea USD
Men’s Cotton Knit Tops
John Doe
01/15/16
01/01/16
264662971635
Otemachi Tower, 1-5-5 Otemachi, Chiyoda-ku, Tokyo 100-8176, Japan
$5,259.38 03/12/16
Jacks and Co.
01/15/16
264662971635 $5,259.38 Mizuho Bank
01/15/16 264662971635
Mizuho Akihiko Kobayashi
Akihiko Kobayashi, DM