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No. 359, August 1999

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American Companies in Japan


The largest toy producers in the United States and Japan have signed a wide-ranging alliance agreement. Under it, Barbie, Fisher-Price, Hot Wheels, Matchbox and other MATTEL, INC. products will be marketed in Japan by BANDAI CO., LTD. Sales are scheduled to start at the beginning of next year, with revenues projected at $83.3 million in 2002. Before then, however, El Segundo, California-headquartered Mattel, the undisputed number one in the world toy business, will become a minority owner of Bandai, purchasing a roughly 5 percent stake for $30.5 million. In return for its new partner's help in Japan, where Mattel has had very little success operating on its own in recent years, the U.S. company will market Bandai's Power Rangers and other lines in Latin America, aiming for revenues of $41.7 million in three years. Bandai currently has no presence in that region. Sales of Bandai's toys in the United States will continue to be handled by the company's Cypress, California subsidiary, but Mattel does have the right to sell certain Bandai toys at its soon-to-be-launched Web site. Mattel and Bandai also will collaborate on product development. The American toymaker is particularly interested in Bandai's interactive toy expertise. The Mattel- Bandai tie-up comes just months after HASBRO, INC., Mattel's main rival, signed an exclusive distribution deal with TOMY CO., LTD., Japan's number-two toymaker (see Japan-U.S. Business Report No. 351, December 1998, p. 27).

NIKE INC.'s subsidiary is putting more emphasis on its golfing products. It has brought together in one marketing unit all golf-related items — shoes, clothing and bags and gloves; previously, each was handled by a different part of the company. The Nike affiliate also plans to develop its now-limited women's golfwear business by introducing new lines this fall.

In the hope of boosting sales of older DVD movie titles, TIME WARNER ENTERTAINMENT JAPAN INC. will slash prices on these products by 30 percent to 40 percent to between $16.70 and $20. When movies first come out on DVD in Japan, they cost somewhere around $40 each. In a related move, both SONY PICTURES ENTERTAINMENT INC. and the Buena Vista Home Entertainment unit of WALT DISNEY CO. have started to rent DVD movies. Industry analysts estimate that 2,000 DVD titles have been released in Japan since this format arrived on the market at the end of 1996.

Catalog shopping just became more convenient for L.L. BEAN INC.'s Japanese customers. All of the Freeport, Maine retailer's products now are priced in yen, and shipping merchandise anywhere in Japan costs a flat $5.00. Shoppers also can place their orders by calling a toll-free number. Perhaps most significantly, L.L. Bean's Tokyo subsidiary is handling all exchanges and returns. Previously, customers had to send merchandise back to the United States. The big mail-order retailer has projected its 1999 Japan revenues, including store sales, at $125 million to $166.7 million.

Two manufacturers of commercial cleaning products have signed JOHNSON PROFESSIONAL CO., LTD. to distribute specific products. The Yokohama affiliate of S.C. JOHNSON & SON, INC., which was set up at the beginning of 1998, is marketing a mobile mop and bucket unit made by RUBBERMAID COMMERCIAL PRODUCTS LLC of Winchester, Virginia. In September, it will begin sales of a floor-cleaning machine manufactured by Englewood, Colorado-based WINDSOR INDUSTRIES, INC. under the JohnTec Windsor name. Goods produced by both companies already are available in Japan, but RCP turned to Johnson Professional to expand its local product lineup, while Windsor Industries sought out the firm to increase its marketing channels.

The subsidiary of outplacement specialist CHALLENGER GRAY CHRISTMAS INC. sees a new source of business in corporate Japan's downsizing. It is offering training and advice to people let go, with the goal of helping them find new jobs in a fairly short time. In general, this is a service that the newly unemployed have to pay for themselves. Consequently, the market still is fairly limited, although some 30 companies, led by DRAKE BEAM MORIN INC., offer outplacement services. For these firms as well as Chicago-headquartered Challenger Gray, a major thrust of their marketing effort is to persuade big companies to offer outplacement services as part of the package of benefits made available to cut employees.

Competition to provide outplacement services will increase as well now that RIGHT MANAGEMENT CONSULTANTS, INC. has finalized its purchase of a 20 percent share of WAY STATION, INC. (see Japan-U.S. Business Report No. 355, April 1999, p. 35). The Japanese company, said to be number two in the local outplacement business, had a pretax profit of $1.5 million on revenues of $12.9 million in FY 1998. Philadelphia's Right Management, which had revenues of $168 million in 1998, specializes in what it calls career transition counseling, although part of its business comes from managerial and executive recruitment.

One of the world's biggest ad agencies, New York City's GREY ADVERTISING INC., has strengthened its position in a market second only to the United States in terms of billings. It made GREY DAIKO ADVERTISING INC. a wholly owned subsidiary by buying partner DAIKO ADVERTISING INC.'s 40.9 percent stake for an undisclosed amount. Formed in 1963, Grey Daiko had 1998 billings of $134 million, derived mostly from foreign companies. The 110-employee firm will continue to operate under the same name. Grey Advertising and Daiko Advertising, which ranks as Japan's fifth- largest agency, say that they will continue to cooperate both overseas and in Japan despite the end of their formal relationship.

With help from DAYMON ASSOCIATES, a Stamford, Connecticut-based company that provides marketing and merchandising advice on corporate-brand products, especially to the grocery industry, SEIYU, LTD. will review its private-label processed foods strategy. The big supermarket chain operator plans to introduce a new line of private-label products next March based on Daymon's input, which includes everything from product development planning to manufacturing, distribution and marketing.

Information and intelligence on Japan's pharmaceutical, biotechnology and medical device companies and industries soon will be part of SKILA, INC.'s subscription-based Global Healthcare Intelligence Platform, which now covers these businesses in North America and Europe. To obtain data and insight into the Japanese health-care market, the Mahwah, New Jersey company formed a wholly owned subsidiary in Tokyo.

The Tokyo subsidiary of ARTHUR ANDERSEN LLP now has a hospitality and leisure services consulting practice. The first of the Big Five accounting firms to offer this expertise in Japan, the professional services organization expanded into the field by taking over the operations and the employees of the Japanese unit of HORWATH ASIA PACIFIC LTD., a company owned by HOTEL RESTAURANT SYSTEMS INC.

Nine years after forming UPS YAMATO CO., LTD. to provide international small- package shipment services, UNITED PARCEL SERVICE OF AMERICA INC. and YAMATO TRANSPORT CO., LTD. will split the joint venture into three companies in January 2000 to better focus on specific operations. Atlanta's UPS will be a 51 percent owner of a firm that specializes in international home-delivery services. It will take over UPS Yamato's distribution networks in Japan's metropolitan areas. Yamato Transport, Japan's top package delivery company, will be the majority owner of a firm that handles the part of the current business involved in air cargo. The third and equally owned company will be responsible for customs-clearance services for its siblings. UPS Yamato had revenues of $447.5 million in FY 1998.

An exchange rate of ¥120=$1.00 was used in this report.aaaaaa

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