Business

Cool Japan fund, shippers team up on cold storage facility in Vietnam

by Chris Cooper

Bloomberg

Shipping company Kawasaki Kisen Kaisha Ltd. is taking the export drive called Cool Japan literally by helping to build a $15 million refrigerated storage facility in Vietnam.

Japan’s third-largest shipping line and Japan Logistic System Corp. are teaming up with government-backed Cool Japan Fund Inc. to build the warehouse near Ho Chi Minh City amid a shortage of refrigerated facilities, the company said last month. The unit will serve restaurants and convenience store operators such as FamilyMart Co., as they sell rice balls and Japanese boxed lunches to Vietnam’s growing middle class.

It is part of an effort by Japan to promote everything from pop music and manga to television shows and the country’s “washoku” (traditional cuisine) to build new overseas markets.

The ¥57.5 billion fund, formed last year, is backed by 17 Japanese companies including Mizuho Financial Group Inc.

Dentsu Inc. Kawasaki Kisen’s Vietnam warehouse is one of its first deals.

“Building a refrigerated warehouse brings a new meaning to Cool Japan,” Shinichi Yamazaki, an analyst at Okasan Securities Group Inc., said by phone Thursday. “It’s a very interesting idea to build a warehouse with the goal of promoting washoku,” he said. “It’ll help the shipping line and Japanese companies’ profits at the same time. With the backing of the government, it could be the first of more ventures into emerging economies in Asia.”

Kawasaki Kisen, which gets almost 90 percent of its sales from shipping, is expanding its other businesses after a drop in freight rates led to losses in two of the past five business years.

Nippon Yusen K.K. and Mitsui O.S.K. Lines Ltd., Japan’s two largest shipping lines, are also building nonshipping businesses to stabilize profits. Tokyo-based Nippon Yusen, the world’s largest carrier of vehicles by sea, is investing in truck logistics centers in China and North America.

Mitsui O.S.K. is investing in deep-sea gas production and transportation to tap increasing demand for liquefied natural gas.

Cool Japan was set up with money from private companies and the government, as Prime Minister Shinzo Abe tries to nurture growth of the nation’s creative industries by expanding them abroad as the domestic market shrinks. The fund is considering buying television channels and investing in retail property abroad to showcase the nation’s cuisine, fashion and animation, Chief Investment Officer Koichiro Yoshizaki said last year.

The fund plans to almost double to ¥100 billion in two years, with investments from government and private sources. It does not have specific targets for returns, Yoshizaki said.

Kawasaki Kisen, along with Japan Logistic, is investing $7.65 million in the warehouse, while Cool Japan is putting in $7.35 million, according to a statement from the fund. The warehouse will be 9,300 sq. meters.

The shipper will use expertise from its subsidiary Bangkok Cold Storage to build and operate the facility in Vietnam, according to the company.

Vietnam’s economic growth accelerated to 6.2 percent in the third quarter as rising foreign investment boosted manufacturing and exports, quickening from a 5.4 percent gain in the previous three months, according to data from the General Statistics Office.

“Japan convenience stores have a very sophisticated distribution system,” Mikihiko Yamato, deputy head of research at JI Asia in Tokyo, said Tuesday. “Even trucks used in delivering chilled or frozen products have a constant temperature. Seafood tends to be vulnerable in the type of climate in Vietnam.”

FamilyMart, which had 28 stores in Vietnam at the end of February, opened its first store in the country in 2009. The Tokyo-based company plans to expand that to 73 by February, according to its annual report. It had 1,095 shops in China and 2,897 in Taiwan and 7,925 in South Korea as of February.

The retailer sells Japanese teriyaki chicken lunch boxes, rice balls and frozen food, said Tokyo-based spokeswoman Natsu Takaoka.

“Even though it’s a small investment, looking back 10 or 20 years from now it may be seen as a key step,” said Ryota Himeno, an analyst at Barclays Securities Japan Ltd. “It’s difficult to make a profit in the shipping industry and so it’s good to expand to target stable profits in distribution.”

GET THE BEST OF THE JAPAN TIMES
IN FIVE EASY PIECES WITH TAKE 5