Pen Maker Had Lots of Local Help : U.S. Firm Cracks Japanese Market
A. T. Cross Co. doesn’t expect to be exporting many more of its high-priced pens because of Japan’s recent import-promotion campaign. The Lincoln, R.I.-based company cracked the Japanese market years ago, with lots of local help.
“You can sell your goods in Japan, provided they are of top quality,” says J. John Lawler, vice president of the Lincoln., R.I., company that has become No. 1 in Japan’s “luxury pen” market.
“It has been said that almost every Japanese who visits Hong Kong or America comes home with three things: a Rolex watch, a Du Pont lighter and a Cross pen,” said Lawler, who directs the firm’s international marketing efforts.
Discerning Customers
“The Japanese are discerning customers. They recognize what is good and buy it regardless where it is made,” Lawler said recently.
Even with a unique, high-status product that had no competition from Japanese brands, Cross found that it wasn’t easy to get around tariffs and other import barriers. The pens are expensive--from $15 to $120--and tariffs added 10% to the retail price.
When Cross began selling in Japan in the mid-1960s, Lawler said, it sold a meager $25,000 worth of pens a year. Instead of packing it in, however, the company invested more and formed a team with Yoshishigi Terauchi and his family in a local partnership, Cross Co. of Japan, in 1970.
The Terauchis, who were established pen merchants in Tokyo, gambled on selling Cross products exclusively. Cross Co. of Japan, 20% owned by A. T. Cross and 80% by the Terauchis, now imports Cross pens and distributes them to retailers.
Imports usually pass through three layers of often tightly knit companies before reaching Japanese consumers: a retailer buys from a wholesaler who buys from a big trading firm. Not only is that system slow and inefficient, Lawler said, but each step adds to the retail price.
By forming a joint venture with the Japanese, Cross eliminated the middlemen and was able to promote its product heavily.
Within six years of forming the joint venture, Cross Co. of Japan reported sales in excess of $1 million a year and has placed Japan among the top five export markets for the parent company, Lawler said.
Lawrence Krause, a trade specialist senior fellow at the Brookings Institution in Washington, believes that Cross has succeeded in Japan because it was selling “an esoteric product and because it was willing to form a joint sales company with the Japanese and share profits with them.” It would be very difficult for manufacturers of such mundane consumer goods as diapers, detergents or aluminum baseball bats to do as well, Krause said.
Lawler declined to reveal the annual sales figures in Japan, except to say that they amounted to several million dollars in recent years.
That hardly makes a dent in Japan’s trade surplus with the United States, which hit $37 billion last year and brought threats of retaliation in Congress.
Patience Is Key
Recently, Prime Minister Yasuhiro Nakasone pleaded with his countrymen to buy more foreign goods. He suggested that everyone buy $100 worth of imports this year.
Lawler said he does not expect a big jump in sales of Cross pens and other U.S. products in Japan because of Nakasone’s appeal, “but I think they are moving in right direction.”
Patience is vital, Lawler believes. American businesses tend to look for a quick result, he said, and may give up after a year or two.
“I think five years is not an unreasonable period of time” in which a foreign businessman can spend in Japan to understand the country and develop its market, he said.
