Sales have remained depressed in 1998, and domestic production will inevitably be affected. Despite slumping, sales at suburban specialty stores still account for 55 percent of total sales. Some 100 plants have been set up overseas independently or as joint ventures by Japanese trading firms and makers, and these are located mainly in China. Although some merchandise produced overseas is marketed locally, the majority is exported back to Japan. Thanks to Japanese technical assistance, the quality of these products has been improving significantly.
Department stores purchase foreign products through trading firms, particularly brand-name goods.
Suburban specialty stores are themselves expanding overseas and exporting suits back for sale in Japan. Materials have until now been sent to plants overseas, but recently Daido Keori has set up a joint venture in China, and locally produced materials are now starting to replace materials sent from Japan. As indicated above, although there has been a shift from imports due to overstocking and the depreciation of the yen, this is just a temporary phenomenon. Given the high cost of labor in Japan and labor shortages in the sewing industry in Japan, developing offshore production remains the more advantageous option in the long term.