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No. 366, March 2000

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American Companies in Japan


As part of a worldwide restructuring of its procurement, manufacturing and distribution operations, H.J. HEINZ CO. will close its plant in Utsunomiya, Tochigi prefecture at the end of August. Opened in 1982, the factory has five production lines that can turn out about 130 tons of sauces and soups a day. However, high raw material prices in Japan and the cost of labor there make the facility uneconomical. Heinz will transfer the sauces and the soups made at Utsunomiya to a plant in New Zealand. Some of the 79 local workers will be offered jobs at Heinz's new technical service center; the rest will be dismissed. The big Pittsburgh food processor has not yet decided what to do with the plant site.

In an unusual diversification, GRADCO SYSTEMS, INC., a manufacturer of sorters, feeders and other peripherals for copiers, fax machines and printers, acquired from an ITOCHU CORP. affiliate exclusive rights to distribute for five years frozen dessert products made by DIPPIN DOTS INC. of Paducah, Kentucky. The new business is being run by a Tokyo subsidiary recently formed by the Irvine, California- based company. Local management personnel have a 10 percent stake in the venture, which took over distribution agreements with 32 dealers. Gradco Systems explained its move by noting that the switch to digital copying and printing has curtailed the market for its traditional products. Therefore, the company is trying to find new ways to apply its distribution skills in Japan.

One hundred and counting. That is the number of Starbucks outlets open in Japan. All of these stores are located in the metropolitan Tokyo area or in the Kansai region. The joint venture between STARBUCKS COFFEE CO. and retailer/restauranteur SAZABY INC. that runs the Seattle company's Japanese operations opened the first Starbucks in August 1996. This year, Starbucks plans to expand into the Tokai region and down to Kyushu.

RAINFOREST CAFE, INC., the developer and operator of combination restaurant/retail facilities featuring a tropical rain-forest theme, will locate its first unit in Japan at the Ikspiari complex scheduled to open in July at the new Tokyo Disney Resort. The Tokyo Disney Rainforest Cafe will be run under a franchise agreement among the Hopkins, Minnesota firm, MITSUBISHI CORP. and ORIENTAL LAND CO., LTD. The 350-seat restaurant, which will offer an American menu, and retail space will be spread over two levels totaling 17,200 square feet. The rain-forest environment will be created through the pairing of animation and special effects.

Hoping to reverse falling ice cream sales at its outlets, HAAGEN-DAZS CO. will close the poor performers among its 84 stores in Japan — about 20 percent of the total — and replace them with better-located shops modeled on the dessert cafe it opened at the start of 1999 in Tokyo's Shibuya district. Interestingly, the bulk of Haagen-Dazs' revenues, which were flat in 1999 at $306.4 million because of the lagging outlet sales, comes from grocery stores.

An exchange rate of ¥109=$1.00 was used in this report.aaaaaa

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