Otsuka Kagu Eyes China Market For Turnaround

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TOKYO (Jiji Press) — Furniture retailer Otsuka Kagu Ltd. will accelerate efforts to develop sales channels in China to achieve a turnaround, President Kumiko Otsuka has said.

In a recent interview, Otsuka said her company will start with luxury futon with down feathers in its fresh blitz in the world’s most populous country.

“We started developing unique futon more than 30 years ago. Chinese people visiting Japan love the products a lot and take them home,” said the daughter of the company’s founder.

Otsuka said the company has finished the major part of its planned streamlining of domestic outlets.

“From now, we’ll spend time and money to improve the quality” of the company’s products and services, she said.

In February, Otsuka Kagu decided to raise ¥3.8 billion by issuing new shares in a third-party allotment scheme to improve its financial health. But the company fell short of the target by ¥1.2 billion.

Otsuka said the result of the fund procurement does not affect its Chinese operations, which do not require much investment.

Still, she added that the latest financing activity was not her company’s final financial arrangements, suggesting possible further fund procurement.

In China, Otsuka Kagu will initially sell futon through local distributors at shopping malls run by its partner, Beijing Easyhome Yundi Huixin Retail Chain Co.

Given that Otsuka Kagu once sold 10,000 sets of futon annually in Japan, the company will be able reach a similar level in China, she said.
Chinese sales could reach several billion yen with luxury futon costing ¥100,000 per set, she said.

Otsuka Kagu suffered a year-on-year sales fall for seven straight months through June on a same-store basis.

The president stressed the importance of taking advantage of an expected demand surge ahead of the October consumption tax hike to 10 percent from 8 percent.

“We would be in trouble if we fail to achieve year-on-year growth during the period” preceding the tax increase, she said.

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