Juki, the supreme sewing machine for the global rag trade

Across factories in South China, millions of young Chinese spend their days churning out garments for consumers in Japan, South Korea, Europe and the US. For many of the workers, their most important piece of equipment - after the umbilical smartphone - is a sewing machine made by Juki.

The Tokyo-based company, which started making sewing machines in 1947, has customers in 170 countries from China to the Vatican. While some of the big manufacturers - such as Sony - that were synonymous with the rise of Japan have lost their lustre, Juki is an example of the low-profile companies sustaining Japan's economy.

The business is the leading player in the industry, with 30 per cent of the market, and is especially popular among manufacturers that produce for multinational retailers. "It's rather a personal preference, like choosing a car," says Gerhard Flatz, managing director of the Chinese apparel manufacturer KTC, which uses Juki for more than 90 per cent of its machines. "But Juki machines are as reliable as a draught horse."

TAL, a Hong Kong apparel maker whose customers include Brooks Brothers and Burberry, says at least 80 per cent of its machines are Juki. Harry Lee, TAL chairman and a leading figure in the Hong Kong garment trade, says the Japanese group owes its success to the close relationship it builds with its customers.

Naotake Miyashita, head of Juki's sewing machine business, who spends half his time visiting clients, also stresses the importance of relationships - sometimes nurtured over the umeshu plum wine it makes in the grounds of its factory in Tochigi prefecture north of Tokyo - and how the company is quick to respond. "When TAL has a problem, we hear from Harry Lee," he jokes. "I have been summoned many times over our long relationship."

The Tokyo-listed company's origins are in the second world war. When the army ran out of its most popular rifle in 1938, small manufacturers came together to form a group to produce the Type 99 guns, which are called juki in Japanese. As demand for rifles evaporated after the war, Juki switched to making domestic and industrial sewing machines. The group wanted to keep the name but wrote the word juki with different Japanese characters that meant heavy machinery instead of rifle.

While Juki also makes robots to place components on circuit boards, its sewing machine business - which generates 73 per cent of its turnover - provides a window on trends in the global textile business.

<

The tabular content relating to this article is not available to view. Apologies in advance for the inconvenience caused.

Speaking at Juki's headquarters in western Tokyo, Mr Miyashita says the company entered China in 1976 when it won a contract to supply the state-owned clothing manufacturer, which had 32 factories across the country.

After Deng Xiaoping launched economic reforms in 1979, Juki increased its orders - a trend that continued as Hong Kong companies moved production across the border, and accelerated following the 1997 Asian financial crisis. "Until then, even though China had started reforms, there was still a lack of capital and infrastructure," says Mr Miyashita.

Companies such as Walmart, Nike and Adidas decided China was more stable because the government had insulated the country from the currency crisis and because there was an abundance of cheap labour.

"The situation in China was nothing like today . . . when a factory advertised for 1,000 people, 10,000 people would gather outside the factory gate," recalls the Japanese executive.

As more factories moved to China, it started to account for a bigger share of Juki's global sales, rising to 50 per cent in 2000 and staying there for much of the decade.

Everything changed in 2005. China unpegged its currency from the US dollar and allowed it to appreciate slowly, which in turn increased manufacturing costs. Then, in 2008, China introduced a new labour law that ensured workers enjoyed better conditions, but dramatically raised labour costs.

"Costs rose, the renminbi kept getting stronger, and profits started to fall," says Mr Miyashita. "Retailers said China was becoming difficult and slowly started shifting orders to southeast Asia."

Currently, 25 per cent of Juki's sales are in China. In recent decades, Juki has successfully expanded across the globe, leaving its main Japanese rival, Brother, in its wake.

Today, Juki faces a challenge from a new rival: Jack, a Chinese company that has 12 per cent of the global market.

Mr Miyashita recalls one trip to Bangladesh where the president of an old customer took him around the factory to show him how the sewing machines were being operated.

"He told me all its machines were Juki, but as soon as we entered the factory I realised they were Jack," he says. "We are Juki and they are Jack with exactly the same font," he says with a smile.

On other occasions, he claims, factories have phoned to complain that their new Juki machines have already broken down, only to be told that their equipment was actually made by a Chinese company based in Taizhou, a city in Zhejiang province where most of China's sewing machine companies are based.

The issue highlights a problem faced by many foreign companies in China: trademark copying. Mr Miyashita says: "There was a Chinese company called JUKL, but we sued them and they went away."

Mr Miyashita, who spent more than two decades in Hong Kong and Shanghai building up Juki's China business, says other Chinese companies are also trying to get in on the game.

One Fujian company has created a brand called "Brosister", which is similar to the name of rival manufacturer Brother. "They really come up with amazing names," he says.

Additional reporting by Mitsuko Matsutani and Nobuko Juji

© The Financial Times Limited 2014. All rights reserved.
FT and Financial Times are trademarks of the Financial Times Ltd.
Not to be redistributed, copied or modified in any way.
Euro2day.gr is solely responsible for providing this translation and the Financial Times Limited does not accept any liability for the accuracy or quality of the translation