Relationship between High Store Rents and “Product Power” in a Relative Low-income Market

Abstract

: Almost fashion apparels (over 90 %) sold in Japan are made in china. In early times of 21st century (2001 – 2010), Japanese fashion apparel Co. (manufacturing wholesale or manufacturing and retail) investigated to advance into China market. Business men of Japanese fashion apparels thought to be easy to advance there because of low level of Chinese fashion items. However, Japanese fashion apparel Co. which succeeded to advance there is only one (UNIQLO, First Retailing). Income of Chinese people in that time and purchasing power were very low. In contrast, tenant rent of Chinese shopping center was relatively high. Business consultant in that time pointed out that it was the reason to failed to advance into China market. However, we referred to the opinion of a business manager of Japanese OEM (Original Equipment Manufacturer) company who succeeded to advance into China. He said that appropriate time to succeed in China market was 2002 at the latest. 2005 was too late to succeed in Chine market. We thought that the main reason to failed to advance there was that Japanese fashion business Co. in that time couldn’t make items which were sold enough in Chine market. As a consequence of it, Japanese companies couldn’t pay the fixed cost to maintain their tenants. That is to say, fashion apparels designed by Japanese fashion designers hard to realize cash. We call the ability to realize cash of a fashion apparel as “product power” and the ability to realize that of a shop as “sales capabilities”. Here, we explained the relation between product power and sales capabilities by using differential equations, commonly known as the “Lanchester model”. By using her model, we guessed the relationship between product power and payment of fixed cost. The reason to fail to advance into China market is inferred to inability of Japanese fashion designer.