Executive Summary Report
Project of Research Study and Preparation for Export Handbook
of Electrical and Electronic Products to Japan
Under the Program for Entrepreneur Development to Comply
with Standards and Technical Regulations Relating to Export
Presented to
Thai industrial Standards Institute
Ministry of Industry
by
Assumption University
March 2008
Foreword
The Thai Industrial Standards Institute, Ministry of Industry, has employed the Faculty of Business
Administration, Assumption University to do the research and prepare for the export handbook of
electrical and electronic products to Japan. This research belongs to the program for entrepreneur
development to comply with standards and technical regulations relating to export, initiated by the Thai
Industrial Standards Institute, Ministry of Industry. The research study has commenced since June
2007.
Therefore the researcher team has completed the preparation for the final report and the executive
summary report and wish to officially deliver these reports to the Thai Industrial Standards Institute,
Ministry of Industry.
Research Team
March 2008
Contents
Contents
Introduction
i
v
Chapter 1 Standards and Regulations for Electrical and Electronic Products
1.1 Compulsory Standards and Regulations
1.1.1 Electrical Appliance and Material Safety Law
1.1.2 Consumer Product Safety Law
1.1.3 Household Goods Quality Labeling Law
1.2 Voluntary Standards and Regulations
1.2.1 Japanese Industrial Standard
1.2.2 VCCI Technical Requirements
1.2.3 S-Mark Certification of Electrical and Electronic Products
1.2.4 Product Certification by Private Sectors
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Chapter 2 Conformity Assessment of Electrical and Electronic Products
2.1 Conformity Assessment System of Products according to Compulsory Standards and
Regulations
2.1.1 Conformity Assessment of Electrical and Electronics Products according to Denan
Law
2.1.2 Conformity Assessment of Electrical and Electronics Products according to PSC
Law
2.2 Conformity Assessment System of Products according to Voluntary Standards and
Regulations
2.2.1 Product Certification according to JIS Standards
2.2.2 Certification of Information Technology Equipment according to VCCI’s Technical
Requirements
2.2.3 Certification of Electrical and Electronic Products Safety with S-Mark
2.3 Mutual Recognition Arrangements
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i
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Chapter 3 Trade Measures in the Exports of Electrical and Electronics Products
3.1 Regulatory Measures
3.1.1 Customs Duty For Importing Goods (Harmonize System 2007)
3.1.2 Rule of Origin
3.1.3 Other Tax Regulations
3.1.4 Product Liability Act in Japanese Products
3.1.5 Law for the Promotion of Effective Utilization of Resources
3.1.6 Food Sanitation Law
3.1.7 Law Concerning the Rational Use of Energy
3.1.8 Law Concerning the Prohibited Chemical Substances In Japan
3.1.9 International Labor Standards
3.2 Other Trade Measures
3.2.1 ISO 9000
3.2.2 ISO 14000
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Chapter 4 Procedures for Japanese Market Penetration
4.1 Preparation for the Readiness in Export Business
4.2 Product Selection for Export to Japanese Market
4.3 Preliminary Study of the Means for Japanese Market Penetration
4.3.1 Preliminary Feasibility Study of Japanese Market
4.3.1.1 Japanese Consumer Behavior
4.3.1.2 Product Distribution System
4.3.1.3 Preparation for Japanese Importers’ List
4.3.2 Sales Activities
4.3.3 Consumer Protection
4.3.4 Importers’ Financial and Credit Examination
4.4 Contract Preparation for Pre-Shipment
4.5 Export Procedures
4.5.1 Pre-Shipment Procedures
4.5.1.1 Goods Preparation
4.5.1.2 Shipping Arrangement
4.5.1.3 Documentation for Export
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ii
4.5.1.4 Customs Clearances
4.5.1.5 Delivery of Goods
4.5.2 Post-Shipment Procedures
4.5.2.1 Payment
4.5.2.2 Export Promotion and Privileges
Chapter 5 Prioritization of Potential Products to be Exported to Japan
5.1 Initial Product Selection
5.2 Model for the Evaluation of Potential Export Product
5.3 Information Gathering
5.4 Statistical Process
5.5 Evaluation Result
iii
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Table Contents
Table 5.1
Potential Electrical and Electronic Products Exported to Japan
iv
5-6
Introduction
The project of research study and preparation for export handbook of electrical and electronic products
to Japan is the project that is under the Program for Entrepreneur Development to Comply with
Standards and Technical Regulations Relating to Export under the supervision of Thai Industrial
Standards Institute, Ministry of Industry. This project is one of the projects under the government
policy in order to develop the international economy by implementing a proactive marketing policy in
order to build competitiveness of Thai entrepreneurs and expand international cooperation to access
resources, raw materials and the scientific knowledge and technology. Ministry of Industry has
responded to the government’s policy by developing strategies that is important for supporting
industrial goods to become competitive in the world market especially with the important trading
partner of Thailand like Japan, US and ASEAN countries.
Japan is one of Thailand’s important export markets of industrial goods with export value in the year
2005 of 603,177.1 millions baht or 13.5 per cent of total export value and of 625,632.8 million baht or
13.0 per cent of total export value in the year 2006 (Office of Permanent-Secretary of Commerce,
2007). The electrical and electronics are top ranking products of Thai export industry to Japan, thus it
leads to promoting policies for supporting exports of electrical and electronic products.
On 3rd April 2007, the prime minister of Thailand and Japan had signed the Japan-Thailand Economic
Partnership Agreement (JTEPA) in Tokyo and is effective since November 2007. The main topics of
this agreement consists of the reduction and elimination of import duty for more than 90% of traded
goods and import value and extending the impact on service- investment opportunities between
Thailand and Japan in various fields such as nursing home service, spa service, hotel service,
restaurant, and garage service, etc. Furthermore, joint committees are established to supervise general
implementation of the agreement and consider amendment proposals for each counterpart.
Establishment of the joint committees is designated to follow up specific Chapter of the agreement as
well as established special subcommittee on food safety and cooperation of cooperative. JTEPA had
specified the time length of proper review of regulation of JTEPA agreement by reviewing the general
agreement every 10 years and intermittently review for changes in specific chapters. Apart from terms
of agreement in JTEPA, Mutual Recognition Agreement (MRA) for electrical and electronic products
is also made and specified in Chapter 6 and Appendix 4 of the JTEPA agreement.
v
One of the problems that most of small and medium enterprises (SMEs) usually suffered from is that
they do not know the procedures of exporting goods to Japan which led to large time consumption in
finding information and expenses as well as difficulties and complication in understanding Japanese
documents and details for exporting goods that are written in Japanese causing complication and
inconveniences in exporting goods to Japan. These complication evolves from entrepreneurs’ confusion
or unawareness of the product specifications and requirements, manufacturing process, packaging
process, inspection and testing procedures, and product certification that need to conform with the
Standards and Regulations of Japan and also lack the source of information about the organizations that
provide assistance and service in testing laboratory, certification bodies (CB), mutual recognition
agreements (MRAs) on product testing, registration and approval from regulatory bodies before
attaching product labeling. This includes other laws enforced by Japan such as Product Liability Law.
Thus, in order to serve the convenience for Thai entrepreneurs in exporting electrical and electronic
products to Japan, the Thai Industrial Standards Institute (TISI) made the project of research study and
preparation for export handbook of electrical and electronic products to Japan with the intention to
disseminate and distribute the information to the entrepreneurs and other related institutions so as to
create a useful source of information to enhance trade between Thailand and Japan in electrical and
electronic products. The aforementioned project is one of the activities under the Program for
Entrepreneur Development to Comply with Standards and Technical Regulations Relating to Export
which cover 5 important industries namely jewelry, leather products, textile, automotive, and electrical
and electronics industries.
There are 3 objectives of the research study and export handbook of electrical and electronic products
exported to Japan:
1) To study the research and provide the export handbook of electrical and electronic products to
Japan for Thai entrepreneurs
2) To provide convenience for Thai entrepreneurs in exporting goods through providing the
information of export procedure for electrical and electronic products to Japan
3) To prepare and enhance the potential of Thai entrepreneurs toward becoming competitive in
exporting electrical and electronic products to Japan
vi
Therefore, the research study and export handbook of electrical and electronic products to Japan will
present the following information:
Chapter 1: Standards and Regulations for Electrical and Electronic Products
Chapter 2: Conformity Assessment of Electrical and Electronic Products
Chapter 3: Trade Measures in the Exports of Electrical and Electronic Products
Chapter 4: Procedures for Japanese Market Penetration
Chapter 5: Prioritization of Potential Exported Products to Japan
Research Group
School of Management
Assumption University
vii
Chapter 1
Standards and Regulations for Electrical and Electronic Products
Standards and regulations for electrical and electronic products in Japan are separated into 2 groups.
One is developed by government sector and is enforced by law predominantly called compulsory
standards and regulations. Another one is developed by private and business sectors according to
manufacturing condition or market requirement called voluntary standards and regulations. The
important standards and regulations in Japan are as follows.
Compulsory Standards and Regulations
•
Electrical Appliance and Material Safety Law
•
Consumer Product Safety Law
•
Household Goods Quality Labeling Law
Voluntary Standards and Regulations
•
Japanese Industrial Standard
•
VCCI Technical Requirements
•
S-Mark Certification of Electrical and Electronic Products
•
Product Certification by Private Sectors (for example SG Mark, BL Label, Eco Mark etc.)
1.1 Compulsory Standards and Regulations
1.1.1 Electrical Appliance and Material Safety Law
Electrical Appliance and Material Safety Law (Denan Law) has been effective since 1st April 2001 to
replace the 1961 Electrical Appliance and Material Control Law. The purpose of the Electrical
Appliance and Material Safety Law (hereinafter referred to as “Denan Law”) is to prevent hazards and
disturbances from electrical appliances by specifying manufacturing and sales regulations of electrical
appliances and materials.
Denan Law divides electrical appliances and materials into two groups
1) Specified electrical appliances and materials (Specified Products – SP’s): appliances and
materials which their structure or usability tends to highly cause hazards or disturbances on
consumers (Category A appliances and materials)
1-1
2) Non-specified electrical appliances and materials: appliances and materials which their structure
or usability might cause hazards or disturbances and not classified as Specified Products
(Category B appliances and materials)
In January 2008, 115 and 338 electrical appliances and materials under Denan Law are classified as
Category A and Category B, respectively.
Legal procedure for Japanese manufacturers and importers under Denan Law are listed below.
1) Notification of business commencement to Ministry of Economy, Trade and Industry (METI)
2) Compliance with technical requirements
For Category A appliances and materials, the conformity assessment by a conformity assessment
body registered by METI is required.
3) Self-mandatory test and inspection
4) Obligation of marking
All appliances and materials under Denan Law are obliged to comply with specified technical
requirement and shall be marked with PSE symbol before distributing in Japanese market.
For Category A appliances and materials
The conformity assessment to comply with technical requirements shall be
performed by conformity assessment body registered by METI.
Japanese importers of electrical appliances shall keep the official copy of
certificate of conformity and certificate of testing facilities inspection.
For Category B appliances and materials
Manufacturers can conduct the conformity test and declare the conformity to
technical requirements by themselves (i.e. self-declaration). Test record shall
be retained for a specified period of time.
However, due to market requirement, manufacturers or importers normally also
apply for S-Mark Certification for electrical and electronic products from thirdparty conformity assessment body to increase credibility on safety for
distributors and consumers.
1-2
1.1.2 Consumer Product Safety Law
Consumer Product Safety Law (PSC Law) was enforced since 1973 to protect consumer and prevent
hazard from utilizing hazardous consumer product. PSC Law encourages manufactures and importers
to self create confidence on self-recognition of their products.
Under the consideration of METI, consumer products which have likelihood to cause danger or injury
to general consumers are designated as “Specified Products”. Of these products, those which have
been deemed insufficient for manufactures or importers to secure the quality necessary to prevent
danger to the general public are designated as “Special Category of Specified Products”.
The products covered by PSC Law in 2007 are listed below.
1) Special Category of Specified Products
• Cribs
• Portable lased applied appliances
• Warm water circulatory organ for bathtubs
2) Specified Products
• Household pressure cookers and pressure pans
• Protective helmets for vehicle users
• Mountain claiming ropes
Consumer products which meet the standard requirement are required to label Product Safety of
Consumer Products Mark (PSC labeling), and thus sales of products without such label is prohibited.
For Special Category of Specified Products, the conformity test (obligation to
conform to technical requirements) shall be implemented by a METI authorized
conformity assessment body.
For Specified Products the conformity test (obligation to conform to technical
requirements) can be conducted by manufacturers or importers themselves.
1-3
1.1.3 Household Goods Quality Labeling Law
The Household Goods Quality Labeling Law (Labeling Law) promulgated in 1962 aims to make the
labeling of household goods relating to their quality just and appropriate so that the interests of general
consumers can be protected. The labeling standards established under the labeling law aims to ensure
that consumers can know and identify the quality of consumer commodities when they make the
decision to buy.
Household goods designated by the Cabinet Order which come under the scope of Labeling Law are
•
Textile goods
•
Plastic manufactured goods
•
Electrical appliances
•
Miscellaneous goods
METI shall establish the labeling standards for each item of household goods which are designated by
the Cabinet Order and notified to the public. The labeling standards consist of the following items.
•
•
Particulars to be declared on labels (e.g. sizes, performance, uses etc.)
Matters to be observed for labeling (method of labeling and other matters that manufacturers,
distributors or labeling agents must follow when the particulars are declared on labels)
Remarks: Labeling agents means a person or parties designed from manufacturers or distributors to label
household goods.
17 items of electrical appliances under the Labeling law in 2007 are as follows.
1.
2.
3.
4.
5.
6.
7.
8.
9.
Electrical washing machines
Electrical rice cookers
Electrical heated blankets
Electric type vacuum cleaners
Electric refrigerators
Ventilating fans
Air conditioner
Television receivers
Electric juicers, mixers and juice-mixers
10.
11.
12.
13.
14.
15.
16.
17.
1-4
Electric Panel Heaters
Electric pots
Electric roasters
Electric shavers
Microwave ovens
Fluorescent lamp stands
Electric griddles
Electric coffee makers
1.2 Voluntary Standards and Regulations
1.2.1 Japanese Industrial Standard
Japanese Industrial Standards (JIS) are the national standards of Japan developed according to Japanese
Industrial Standardization Law since 1948. Recently the Industrial Standardization Law was revised
and promulgated from 1st October 2005.
According to the law, Japanese Industrial Standards Committee (JISC) which was notified by METI as
a national standardization body plays a central role in the standardization activities carried out in Japan
such as establishment and maintenance of JIS, supervision of JIS Mark certification scheme, etc. Any
interested parties (such as Japanese Standards Association - JSA which was authorized by METI to
promote JIS) can request a draft standard to be deliberated by JISC. Then JISC through Standards
Board will deliberate the draft standard requested, and, if necessary, will ask for further deliberation by
a competent Technical Committee to get public opinion and consent before declaring it as standard JIS.
JIS covers industrial and mineral products with the exception of (1) medicines, (2) agricultural
chemicals, (3) chemical fertilizers, (4) silk yarn, and (5) foodstuffs, agricultural and forest products
designated under the Law Concerning Standardization and Proper Labeling of Agricultural and
Forestry Products.
The voluntary scheme of JIS Mark certification mainly concern on the quality control of manufacturing
process than on product inspection itself. The scheme is built on the existence of a reliable
infrastructure for the assessment of conformity of the product against relevant JIS; the product must be
manufactured in certified production plant where a quality control system is implemented on the basis
of company standards.
The criteria that are taken into account for the JIS Mark certification of such factory plant are listed
below.
1) Manufacturing or processing facilities
2) Testing facilities
3) Test method
4) Quality control methods
5) Other conditions necessary for quality control
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1.2.2 VCCI Technical Requirements
VCCI Technical Requirements are voluntary control measures to cope with electromagnetic
interference problem arising from information technology equipment (ITE). These requirements are
regulated by non-profit organization namely Voluntary Control Council for Interference by Information
Technology Equipment (VCCI).
Manufacturers or organizations either from Japan or overseas who wish to participate and cooperate in
VCCI voluntary controls are required to be members of VCCI. Members oblige to follow VCCI’s
regulation which covers ITE in Japanese market only.
ITE refers to equipment with a rated power supply voltage not exceeding 600V, which has a primary
function of one or a combination of the following function – entry, storage, display, retrieval,
transmission, processing, switching or control of data and of telecommunication messages – and which
may be equipped with one or more terminal ports typically operated for information transfer. ITE is
divided into two categories as follows.
1) Class A ITE : ITE primarily use in the industrial environment
2) Class B ITE : ITE which primarily use in the domestic environment including
• personal computer, as well as its peripheral equipment
• telecommunication terminal equipment powered from a telecommunication network
• facsimile equipment
• equipment with no fixed place of use, for example, portable equipment powered by built-in
batteries.
VCCI identifies limits and measurement method of electromagnetic interference caused by ITE, in
accordance to technical requirements of the recommendations of Telecommunication Technology
Committee (Japan). These technical requirements refer to international standard, such as CISPR 22:
Information technology equipment - Radio disturbance characteristics - Limits and methods of
measurement, etc.
VCCI members are required to verify technical requirement conformity of their ITE products and
submit a report to VCCI. Only ITE verified by VCCI can use a label for Class A ITE and a mark/logo
for Class B ITE before distributed into Japanese market.
1-6
1.2.3 S-Mark Certification of Electrical and Electronic Products
As the main aspect of safety control for electrical appliances in Japan has been changed by forcing
manufacturers to be more responsible for quality and safety of their products. It states that
manufacturers of Category B electrical appliances under Denan Law or specified products under PSC
Law can themselves conduct the conformity test (obligation to conform to technical requirements) of
their electrical appliances. Consequently, private sector along with conformity assessment bodies has
founded Electrical Appliances Certification Association in 1994. The purpose is to ensure the safeties
of electrical and electronic appliances be marketed for distributors or consumers. They set up the
system that allows manufacturers to self-assure the safeties of their electrical and electronic appliances
system by getting certification from impartial third party and place S-Mark on electrical and electronic
appliances.
In January 2008, Electrical Appliances Certification Association consists of 42 industrial agents,
manufacturers, distributors, consumers and 4 conformity assessment bodies. Managing Director Board is
formed among member parties and 7 of external experts to ensure accomplishment of decided
objectives. Due to the survey by Electrical Appliances Certification Association at end of 2006, 73.5%
of electrical and electronic appliances placed in retail shops are engraved with S-Mark.
There are 4 conformity assessment bodies that registered for S-Mark certification for electrical and
electronic appliances as follows.
1)
2)
3)
4)
Japan Electrical Safety and Environment Technology Laboratories (JET)
Japan Quality Assurance Organization (JQA)
UL Japan Co., Ltd.
TÜV Rheinland Japan Ltd.
Illustrations of S-Mark issued by each conformity assessment body are as follows.
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1.2.4 Product Certification by Private Sectors
Besides 1) PSE Mark 2) PSC Mark 3) JIS Mark 4) VCCI Mark and 5) S-Mark, exporters of electrical
and electronic products to Japan can apply for additional voluntary product certificates from any private
sectors who certify products by objective. The purpose of these certifications is not to legally enforce
but to create confidentiality on quality, safety and environment friendly of certified products among
consumer. Those product certification by private sectors are as follows.
1) SG Mark
SG Mark is a product certification mark issued by the Consumer Product
Safety Association (CPSA) for consumer products which could inflict
injury on people or threaten human life or cause danger to structure or
material used to manufacture that product. Products which conform to the
qualification standards are allowed to bear the SG (Safety Goods) mark.
2) BL Label
BL Label is a product certification mark issued by The Center for Better
Living (CBL) to certify quality and safeties of household goods. Currently,
BL Label has already been issued for 66 kinds of product including
electrical and electronic appliances.
3) Eco Mark
Eco Mark is an Environment Labeling Program operated according to
ISO14020 and ISO14024 to assure that certified products are designed and
manufactured with nature and environmental friendly concerns. This mark
is issued by Japanese Environment Association (JEA) with intention to
bring in social the consciousness on environment.
4) PC Green Label PC Green Label is issued by the PC3R Promotion Center to certify
Manufacturers who deliberately design and manufacture their products
with environment as well as recycle awareness. Products under PC Green
Label are personnel computer, mobile computer/notebook and other related
products.
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Chapter 2
Conformity Assessment of Electrical and Electronic Products
Standards and regulations for electrical and electronic products in Japan are already described in
Chapter 1. Conformity assessment system for electrical and electronic products which are officially
regulated by laws and by business sectors according to market requirement will be described in this
chapter. Details are divided into 3 parts, as follows.
1) Conformity Assessment System of Products according to Compulsory Standards and Regulations
•
Conformity Assessment of Electrical and Electronics Products according to Denan Law
•
Conformity Assessment of Electrical and Electronics Products according to PSC Law
2) Conformity Assessment System of Products according to Voluntary Standards and Regulations
•
•
•
Product Certification according to JIS Standards
Certification of Information Technology Equipment according to VCCI’s Technical
Requirements
Certification of Electrical and Electronic Product Safety with S-Mark
3) Mutual Recognition Arrangements
•
Legal Binding MRAs
•
Voluntary MRAs
2.1 Conformity Assessment System of Products according to Compulsory Standards
and Regulations
2.1.1 Conformity Assessment of Electrical and Electronics Products according to Denan
Law
All appliances and materials under the scope of Denan Law are obliged to comply with specified
technical requirement and shall be marked with PSE symbol before distributing in Japanese market.
Denan Law divides electrical appliances and materials into two groups, i.e. specified electrical
appliances and materials (or Category A appliances and materials) and non-Specified electrical
appliances and materials (or Category B appliances and materials). The difference in the criteria of
conformity assessment for each group is as follows.
2-1
•
•
For Category A appliances and materials, the conformity assessment to comply with technical
requirements shall be performed by Conformity Assessment Body registered by METI.
For Category B appliances and materials, manufacturers can conduct the conformity test and
declare the conformity to technical requirements by themselves (Self Declaration).
Thai manufacturers who want to export electrical and electronic products to Japan need to prepare the
following:
1) In order to design the product to be compliant with safety regulations, the manufacturers should
study technical requirements specified by Denan Law for their own products type or study the
international standard (e.g. IEC standard) together with Japanese National Requirements which
could deviate from international standards. Furthermore, the manufacturers have to prepare
safety test equipment specified by Denan Law to be installed in the factory. List of test
equipment and their accuracy are specified in the technical requirement for each product type.
2) The manufacturers need to contact their business partners (Japanese importer), and their
business partners will apply the notification of business commencement to METI. According to
Denan Law, only the importers and manufacturers in Japan are obliged to notify their business
commencements to METI.
3) In case of Category A appliances and materials, the manufacturers shall apply for conformity
assessment to a conformity assessment body (CAB) registered by METI. Normally, the CAB
will recommend the choice of technical requirements to be used for conformity assessment. If
the technical requirement which refer to international standard (paragraph II) is used, the
manufacturers have to ensure that the conformity test covers all additional Japanese National
Requirements. As of 1st May 2007, METI has registered a total of 13 CABs (6 domestic CABs
and 7 oversea CABs) as follows.
• Japan Electrical Safety and Environment Technology Laboratories (JET)
• Japan Quality Assurance Organization (JQA)
• Japan Electric Cable Technology Center, Inc. (JCT)
• Cosmos Co., Ltd.
• UL Japan Co., Ltd.
• TÜV Rheinland Japan Ltd.
• Underwriters Laboratories' Co., Ltd.
• UL International Demko A/S
2-2
•
•
•
•
•
TÜV Rheinland Product Safety GmbH
TÜV Rheinland Hong Kong Ltd.
TÜV Rheinland Taiwan Ltd.
Intertek Testing Services Hong Kong Ltd.
China Quality Certification Centre
4) The manufacturers have to send the sample of their products to CAB for conformity test. In case
of the “type” of the product which is notified to METI in step 2) has more than one model, only
one sample among all models will be selected according to the recommendation by CAB.
5) The manufacturers have to prepare for the factory inspection which will be performed by CAB.
The objective of factory inspection is to inspect the safety test equipment specified by the Law.
6) The manufacturers will receive the certificate of conformity when the results of both product test
and factory inspection comply with the requirement. The manufacturers do not have to apply for
any conformity assessments when the same type of certified products are produced and exported
to Japan within the valid term of certificate (3-7 years according to the type of product). The
manufacturers have to send the certificate of conformity (of both product test and factory
inspection) to the importer for the retention required by the Law.
7) The manufacturers will affix the PSE mark in accordance with the importer’s request before
submitting their products to be placed in the Japanese market.
8) The manufacturers have to perform a routine self-mandatory test and inspection specified in the
technical requirement for each product type in order to assure the quality and safety of the
products. The self-mandatory test and inspection includes (1) test within the manufacturing
process, (2) test of completed products and (3) inspection of test specimen in case of a change in
the main material, parts, manufacturing method or facilities. The manufacturers shall retain the
records of these tests at least for a period of 3 years.
In the case of exporting Category B appliances and materials to Japan, the manufacturers do not have to
apply conformity assessment to a CAB as in step 3) and 4). The manufacturers can conduct the
conformity test and declare the conformity to technical requirements by themselves. However, due to
market requirement, manufacturers or importers normally also apply for S-Mark Certification for
electrical appliances and materials from third-party conformity assessment body to increase credibility
on safety for distributors and consumers.
2-3
2.1.2 Conformity Assessment of Electrical and Electronics Products according to PSC
Law
The criteria of conformity assessment of consumer products covered by PSC Law are as follows.
•
•
For Special Category of Specified Products, the conformity test (obligation to conform to
technical requirements) shall be implemented by a METI authorized conformity assessment
body.
For Specified Products the conformity test (obligation to conform to technical requirements) can
be conducted by Manufacturers or Importers themselves (Self-Recognition).
Technical requirements and certification system for each product according to PSC Law are specified
in METI’s ordinance; Technical Requirement of Specific Products Prescribe the Technical Requirements
and Conformity Assessment Procedures (Articles 3, 14 and Appendix Table 1). As of 1st May 2007,
there are 9 conformity assessment bodies operating under PSC Law.
Special Category of Specified Products
METI Authorized Conformity Assessment Body
Cribs
- Japan Recreation and Miscellaneous Goods
Safety Laboratory (MGSL)
Portable lased applied
appliances
- Japan Quality Assurance Organization (JQA)
- UL Japan Co., Ltd.
- Cosmos Corporation Co., Ltd.
Warm water circulatory organ
for bathtubs
- Japan Electrical Safety and Environment
Technology Laboratories (JET)
- Japan Gas Appliances Inspection Association
(JIA)
- UL Japan Co., Ltd.
- Japan Heating Appliances Inspection
Association (JHIA)
- Cosmos Corporation Co., Ltd.
2-4
Specified Products
Household Pressure Cookers
and Pressure Pans
Protective helmets for vehicle
users
Mountain claiming ropes
Conformity Assessment Body
- Japan Recreation and Miscellaneous Goods
Safety Laboratory (MGSL)
- Japan Vehicle Inspection Association
- Incorporated Administrative Agency
National Institute of Technology and Evaluation
(NITE), Kita-Kanto Regional Office
2.2 Conformity Assessment System of Products according to Voluntary Standards
and Regulations
2.2.1 Product Certification according to JIS Standards
General requirements for product certification according to Japanese Industrial Standards (JIS
standards) under the revised Japanese Industrial Standardization Law are in effect from 1st October
2005. The certified plants according to the old JIS Mark system have to adjust in order to be certified
by the new system by 30th September 08. Thai manufacturers who want to apply for new JIS Mark
have to follow these procedures:
1) Choose a certification body (CB) accredited by METI in the scope of relevant products. As of
4 th April 2007, METI has accredited a total of 19 certification bodies as follows:
•
Korean Standards Association
•
Japan Paint Inspection and Testing Association
•
Japan Testing Center for Construction Materials
•
General Building Research Corporation of Japan
•
Japan Gas Appliances Inspection Association
•
Japan Electrical Safety & Environment Technology Laboratories
•
Japan Textile Products Quality and Technology Center
•
Japan L.P.G as Instrument Inspection Association
•
Japan Recreation And Miscellaneous Goods Safety Laboratory
•
Japan Quality Assurance Organization
2-5
•
Japan Water Works Association
•
Japan Sewage Works Association
•
JIC Quality Assurance Ltd.
•
Japan Heating Appliances Inspection Association
•
Japan Electric Cable Technology Center, Inc.
•
Management System Assessment Center
•
Bureau Veritas Japan Co.,Ltd.
•
Center for Better Living
•
The Ship Equipment Inspection Society of Japan
2) Submit an application to the chosen CB according to 1)
3) The CB conducts a quality management system audit and product testing.
4) The CB considers the audit and test results for approval of certification.
5) The manufacturer signs the agreement for use of JIS Mark and condition for surveillance as
specified by CB.
6) The certified manufacturer attaches JIS Mark on the product.
7) The CB conducts periodic surveillance as specified in the condition. Under the Japanese
Industrial Standardization Law, CB shall conduct surveillance at least once every 3 years.
2.2.2 Certification of Information Technology Equipment according to VCCI’s Technical
Requirements
Voluntary Control Council for Interference by Information Technology Equipment (VCCI) is
responsible for establishing Rules for Registration of Measurement Facilities. When the VCCI
member’s EMC testing laboratory has passed the audit according to the VCCI’s technical requirements,
member will get the Certificate of Registration with the Registration Number which will be valid for 3
years. In order for member to get registration of measurement facilities, this can be done in 2 ways.
First, through one of the three laboratory accreditation bodies recognized by VCCI: including
Voluntary EMC Laboratory Accreditation Center (VLAC), in Japan; National Voluntary Laboratory
Accreditation Program (NVLAP) and American Association of Laboratory Accreditation (A2LA) in
U.S.A. Second, through the Federal Communications Commission (FCC) in U.S.A, who is only one
foreign body appointed by VCCI.
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2.2.3 Certification of Electrical and Electronic Product Safety with S-Mark
The Category B products under Denan Law or the Specified Products under PSC Law can be attached
with PSE Mark or PSC Mark and place into the Japanese market after the manufacturer has selfverified the product conformity according to relevant technical requirements (Self Declaration).
However, these kinds of products (including other electrical and electronic products which are not
enforced by any laws) can be applied for S-Mark certification by the third party in order to ensure
distributors and sellers as well as consumers in general of the product safety.
Four conformity assessment bodies (CABs) providing S-Mark certification are as follows:
•
Japan Electrical Safety and Environment Technology Laboratories (JET)
•
Japan Quality Assurance Organization (JQA)
•
UL Japan Co.,Ltd.
•
TÜV Rheinland Japan Ltd.
S-Mark system is the model certification which consists of product test and factory inspection. The
CAB may use a factory inspection report from other certification system as an evident for consideration
for approval of certification such as the inspection report from JIS Mark certification, the inspection
report from the Optional Registration System for Components and Materials used in Electrical
Appliance, and the audit report from ISO 9001 certification body that is recognized by the CAB.
The CAB will conduct surveillance at the factory as specified for each period (normally once a year) in
order to confirm whether the quality management system is still maintained effectively, and not
different from the being seen at the initial factory audit. If the CAB found major nonconformities in the
surveillance audit, it may ask for a special factory inspection in addition.
2.3 Mutual Recognition Arrangements
Mutual Recognition Arrangements (MRAs) on conformity assessment results between Thailand and
Japan can be classified into 2 types as follows:
1) Legal Binding MRAs
2) Voluntary MRAs
The Government of Thailand and the Government of Japan have signed the Japan-Thailand Economic
Partnership Agreement (JTEPA) on 3rd April 2007 and this Agreement is in effect from 1st November
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2007. Under JTEPA, there is a legal binding MRA, namely JTEPA MRA, to facilitate trade of
electrical and electronic products between the two countries. The JTEPA MRA is a mechanism to
establish the mutual recognition on conformity assessment resulting between the Thai Industrial
Standards Institute (TISI), a counterpart of Thailand, and the Ministry of Economic, Trade and Industry
(METI), a counterpart of Japan. The scope of JTEPA MRA is as follows:
1) The electrical and electronic products which are enforced to conform with the Thai Industrial
Standards by the royal decrees (TISI’s Mandatory standards). There are a total of 19 mandatory
standards.
2) The electrical and electronic products which are classified under Specified Products or Category A
products according to Denan Law. There are total 115 products.
TISI shall encourage and support the high-potential domestic conformity assessment bodies (CABs)
such as the ISO/IEC 17025 accredited testing laboratories, to develop their competencies to perform
conformity assessment services, including testing, inspection and product certification, according to the
requirements of Denan Law. The CABs have to establish their product certification systems in
compliance with “ISO/IEC Guide 65 General Requirements for Bodies Operating Product Certification
Systems” and focus on high-potential products to export to Japanese market. TISI may provide
particular trainings and coordinate with METI to facilitate the application process for being assessed
and registered by METI.
For Voluntary MRAs , TISI has been the signatories to the MRA of IECEE CB Scheme, the MRA of
the Asia Pacific Laboratory Accreditation Cooperation (APLAC MRA) and the MRA of the
International Laboratory Accreditation Cooperation (ILAC MRA)
TISI shall seriously consider selecting appropriate product scope under the IECEE CB Scheme. TISI
may consider these following factors: export growth, percentage of local content, as well as export and
import volumes between Thailand and its major trade countries like Japan. In addition, TISI may
consider negotiating with VCCI to have a MRA on accreditation of EMC testing laboratories. The
MRA between TISI and VCCI will support Thai manufactures, whose products need to use VCCI mark
to apply for VCCI membership and registration of their testing laboratories according to VCCI’s
technical requirements through the laboratory accreditation body under TISI.
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Chapter 3
Trade Measures in the Exports of Electrical and Electronic Products
Trade measures that affect the exports of electrical and electronics appliances to Japan can be divided
into two important categories. First are the trade regulatory measures or regulations enforced by the law
or under the JTEPA agreement, and second are the other regulations. The other regulations are
regulations not enforced by the government upon exports of electrical and electronics appliances to
Japan. However, if producers can abide by the regulations, this will make their products accepted and
can easily penetrate into the Japanese market.
3.1 Regulatory Measures
3.1.1 Customs Duty for Importing Goods (Harmonize System 2007)
Import tariff is one of the tariff measures used as a barrier of international trade in the form of import
tax collected on goods from abroad. International trade measures between Thailand and Japan is
directly influenced by the Japan-Thailand Economic Partnership Agreement (JTEPA) whereby from
the agreement the import tariff between Thailand and Japan had been reduced and eliminated for more
than 90% of the imported goods and in terms of overall import value whereby the imposition of the
import tariff will be in accordance with the Harmonize System 2007 (HS 2007).
HS 2007 is a method of providing a standard structure for classifying goods for trade purposes which
incorporate 4-10 digit numbers. The first two digits will indicate the Chapter which is the main
category. The Chapter plus two more digits (four digits) represents the Heading or the sub category of
the Chapter. For electrical and electronic products, most are categorized in Chapter 84 and Chapter 85.
The HS 2007 will be used to impose the import tariff rate which will differ with respect to different
types of products.
According to JTEPA, which is enacted since 1st November 2007, the reduction and lifting of import
tariff is imposed by adjustment of tariff downward every year with respect to the type of products
covering more than 90% of the products traded. For most electrical and electronic products, tariff rates
will be fully lifted within 6 years.
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3.1.2 Rule of Origin
The Rule of Origin is an international trade measure which is a result between the member countries in
the free trade area utilized with import and export goods between the member countries through
imposing member countries to declare product origination as a base information together with the other
restrictions that align with the tariff measures agreed upon in the free trade agreement or in this case the
JTEPA. The making of the certificate of origin can be done by requesting the certificate of origin form
from the Ministry of Commerce. For electrical and electronic products, inspection of the product
origination will be in accordance with the HS 2007 with the criteria that the value that has the
qualification or the value of local content must be no less than 40%.
3.1.3 Other Tax Regulations
In Japan, producers need to consider the different regulations on taxation. The structure of the public
administration of Japan is divided into two levels which include first the general administrative level
and second the provincial administrative level. The provincial administration has the power to impose
the type and rate of tax by themselves. Thus, producers need to pay the taxes to the public
administration at both levels, general and provincial administrative levels. Some of the important tax
policy include personal income tax, value added tax, provincial commercial tax, etc.
3.1.4 Product Liability Act in Japanese Products
Product Liability Act or PL Act is the law made to protect and provide justice to consumers to create
consumer confidence in utilizing the products. The Act emphasized on the compensation toward
consumer in terms of life and physical damages caused by the utilization of the products which is not
expected. The ideology of the act is that producers will have to be responsible to the damages occurred
on consumers except in the case that producers can provide the evidence that the damage did not arise
as a result of utilizing the product.
3.1.5 Law for the Promotion of Effective Utilization of Resources
The Law for Promotion of Effective Utilization of Resources is a law imposed for the purpose of
promoting the effective usage of resources with the main concepts of implementation as follow:
•
Increase in the recycling of different resources by having different business unit collect and
recycle different products that had been used.
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•
•
Reduce the amount of garbage by promoting the sufficient use of different resources and
increase the usage period of the products.
Support new measures for the reuse of parts that are from used products, meanwhile, support the
measures to reduce the industrial garbage by recycling.
From this law, Japan had issued several formalized supporting laws. One of the laws is the Home
Appliance Recycling Law, which enforce that consumers who throw away products need to be
responsible for the cost of transporting the product to be eliminated or undergo recycling, while the
seller and producer have the responsibility to implement the recycling of the products. At present the
law has been enforced on 4 types of home appliances including air condition, television, refrigerator/
freezer, and washing machine. Besides, the entrepreneurs who produce electric appliances of the
following 6 types namely television, air-conditioner, refrigerator, washing machine, microwave oven,
and the clothes dryers, must maintain an effective utilization of raw material and enforce the process of
recycling to enhance the efficient utilization of the products and decrease the creation of electrical and
electronic garbage.
3.1.6 Food Sanitation Law
Food Sanitation Law is a law that takes care and control food and products used with food to be safe for
consumption. The law imposes that before the importation of the products, there is a need to investigate
and examine the electrical product safety used in products that is used or in contact with food in its
utilization process.
3.1.7 Law Concerning the Rational Use of Energy
To develop the effective utilization of resources from the transportation, construction, manufacturing to
production process including different types of equipments imported, the part that is related to the
electrical and electronics products deals with the various imported equipments and products which need
to have an effective energy utilization rate not less than the criterion specified. The criterion is specified
from effective energy utilization rate of products available in the market. For electric and electronic
products within the framework of this law, there are a total 15 items; namely, air-conditioner, neon
lamp, television, photocopier, computer, hard disk, tape recorder, refrigerator, electric toilet seat,
vender machine, adaptor, electronic rice cooker, microwave oven, and digital video player.
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3.1.8 Law Concerning the Prohibited Chemical Substances in Japan
In Japan, there are five laws used to control the chemical substances that is dangerous to human and
environment which include 1) Law for the Investigation and Control of Chemical Substances, 2) Law
for the Protection and Preservation of the Ozone Layer, 3) Law for Labor Safety and Sanitation, 4) Law
for the Control of Hazardous Substance and Substance that Activate Violently, and 5) Law Prohibiting
the Production of Chemical Weapons and the Control on Specific Substances. Producers need to be
aware not to have in possession or utilization of any of these regulated substances in their products
whereby a check list of forbidden chemical names can be searched for the following website.
http://www.safe.nite.go.jp/data/sougou/pkc_e_search_frm.html
3.1.9 International Labor Standards
Many developed nations are trying to push through regulations on labor standards which are seen from
some countries utilizing a lower labor standard practice than other countries leading to advantages of
these countries in terms of production cost.
The main concepts of the labor standards include the following 1) provision of employee freedom in
choosing to become a member of the labor union, 2) employment must not be under coercion or forced
labor, 3) restriction on the use of under age employment, and 4) restrictions on selective practice on
certain type of employment.
The labor standards enacted under the international labor organization (ILO) is in the form of
conventions. Convention of Labor Standards that Thailand and Japan ratified include 9 conventions
namely 1) Equal Remuneration Convention 2) Employment Policy Convention 3) Employment Service
Convention 4) Equality of Treatment (Accident Compensation) Convention 5) Forced Labor
Convention 6) Minimum Age Convention 7) Worst Forms of Child Labor Convention 8) Final Articles
Revision Convention (1946) and 9) Final Articles Revision Convention (1961). The convention that
Japan had ratified but Thailand did not ratify include 3 conventions where two conventions relating to
labors in the shipping business while the other convention relating to the labor in the production
process as the Tripartite Consultation (International Labor Standards) Convention.
Thai producers that produce goods to sell in Japan should strictly consider ethical practice toward
labors according to the convention that Thailand and Japan ratified such as restrain from using force
labor or under age employment. More importantly, producers should abide by all the laws that are
related to the labor practice according to the regulations imposed by Thailand’s Ministry of Labor.
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Such will be a practice that will not oppose the several international conventions and neither creates a
matter of possible trade disputes.
3.2 Other Trade Measures
This is the measure which importer asks for the producer in Thailand to apply in order to manage
quality and environment. The measure supports goodwill of organization and confidence of the goods.
They are two standards that Japan utilizes in public.
3.2.1 ISO 9000
ISO 9000 is a family of standards for quality management systems. ISO 9000 is maintained by ISO, the
International Organization for Standardization and is administered by accreditation and certification
bodies whereby one of the requirements in ISO is ISO 9001, which is one of the standards in the ISO
9000 family. The idea of the system is that a good process will get good output which leads to customer
satisfaction. ISO 9000 concerns the control of the production process in order to build confidence of
quality and service on the consumers. It helps the organization to have an effective working
environment whereby work process to depend on the system but not solely on people.
3.2.2 ISO14000
In the period where the world is giving larger importance to the environmental issues as a result of the
different pollutions such as air pollution, effluent, land contamination, and other issues, these have
created immense impacts on people throughout the world. Upon this pressure, the International
Organization for Standardization (ISO) has developed the environmental management standards known
as the “ISO 14000 Series”. ISO 14000 Series is the set of standards relating to environmental
management system which include Environmental Management Systems, Environmental Auditing and
Related Environmental Investigations (EA), Environmental Labeling (EL), Environmental Performance
Evaluation (EPE) according to the Product Life Cycle Assessment (LCA).
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Chapter 4
Procedures for Japanese Market Penetration
This chapter provides the information about the preparation process for exporting products that have
potential in the Japanese market. This is to help entrepreneurs and exporters have a systematic
understanding of the Japanese market in terms of information on market share, competitors, distribution
channel, search engines for Japanese producers and importers’ lists, sales promotion, organization that
provide the consultant for exporting into Japan, export procedures and preparation of important
documents for export. These are important procedures that entrepreneurs and exporters need to
understand in order to succeed in exporting electrical and electronic products to Japan.
The process of exporting electrical and electronic products to Japan consists of five steps as follow:
•
Preparation for the readiness in export business
•
Product Selection for export to Japanese market
•
Preliminary study of the Means for Japanese market penetration
•
Contract preparation for pre-shipment
•
Export procedures
4.1 Preparation for the Readiness in Export Business
In the export business, the important things that entrepreneur need to consider about entering the
Japanese market include the capital investment, location, human resources, capabilities in product
design, product development, production capacity and competency for the international market such as
the business registration, registration of value added tax, proposal for the number and the identification
card of personal income tax and tariff and registration for custom clearance.
4.2 Product Selection for Export to Japanese Market
Entrepreneurs that want to export electrical and electronic products to Japan need to select products for
export by considering the efficiency in production or procurement of the products that match the
specifications required from the technical and regulatory requirements as well as requirements from
trade measures that importers impose on exporters. This is to certify the quality of the goods that it
abides by the Japanese regulations or the restrictions of other organizations that are accepted by the
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Japanese market or consumers. Moreover, there is a necessity in considering the import tariff and other
tax and trade measures that are related to each product which need to include as indirect cost of
products.
From the research in Chapter 1–3, research team has utilized the information that entrepreneurs and
exporters need to consider the factors for the selection of goods to export and summarized as follow:
1. The name of the electrical and electronic products according to the Electrical Appliance and Material
Safety Law (Denan Law) as well as the information technology equipments that are not covered by
Denan Law. For products under Denan Law, they can be classified into two categories: “Specified
Products” (Category A) and “Non-specified Products” (Category B).
2. Customs code under Harmonized System 2007 (HS 2007) and import tariff rate for Japan during the
first three years according to JTEPA effective since 1st November 2007.
3. Standards and technical regulations related to electrical and electronic products that can be divided
into 2 groups:
Group 1: Compulsory Standards and Regulations mean the standards and regulations that
Japanese government imposed which are laws that enforce Japanese producers and importers to
produce and distribute electrical and electronic products that have standards according to the
following laws:
•
Electrical Appliance and Material Safety Law (Denan Law)- See details in chapter 1 section 1.1.1
•
Consumer Product Safety Law - See details in chapter 1 section 1.1.2
•
Household Goods Quality Labeling Law - See details in chapter 1 section 1.1.3
•
Law for the Promotion of Effective Utilization of Resources - See details in chapter 3 section 3.1.5
•
Food Sanitation Law - See details in chapter 3 section 3.1.6
•
Law Concerning the Rational Use of Energy - See details in chapter 3 section 3.1.7
Group 2: Voluntary Standards and Regulations mean the standards and regulations which
Japanese government and other organizations imposed as a law or technical requirements to be the
guide for upgrading the product quality by focusing on consumer safety in utilizing the product.
Although the voluntary standards did not impose a law to penalize producers, Japanese government
and several organization that impose such standards have provided public information and promote
Japanese sellers and buyers of electrical and electronics products to consider the safety of product
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utilization and look for the quality and standards certification marks to insure safety for consumers.
It could also be said that Japanese sellers will not place and sell products that do not have any
labeling of product certification due to lack of assurance in the quality and standards of the product.
Apart from this, importers can utilize the voluntary standards as the condition in considering their
purchase from exporters. In general, these are product standards, labor standards, management
standards, and product certification from various private organizations. Thus, Thai entrepreneurs
and exporters might need to utilize these standards in the organization in order to create the image
of the organization and product to be accepted by the importers and can be used as an indirect tool
to increase the capabilities in competing with other entrepreneurs and could create reliability from
Japanese consumers as well.
Voluntary standards and regulations include:
•
Japanese Industrial Standards - See details in chapter 1 section 1.2.1
•
VCCI Technical Requirements - See details in chapter 1 section 1.2.2
•
Safety Mark (S-Mark) - See details in chapter 1 section 1.2.3
•
Product Certification by Private Sectors such as SG-Mark, BL-Label, Eco-Mark and PC Green
Label - See details in chapter 1 section 1.2.4
•
International Labor Standards - See details in chapter 3 section 3.1.9
•
Quality Management Standards (ISO 9000) - See details in chapter 3 section 3.2.1
•
Environmental Management Standards (ISO 14000) - See details in chapter 3 section 3.2.2
4.3 Preliminary Study of the Means for Japanese Market Penetration
4.3.1 Preliminary Feasibility Study of Japanese Market
To study and analyze the potential to penetrate the Japanese market, exporters should be cautious in
finding market information of electrical and electronic products such as trends in import, supply and
demand conditions, competitive analysis with other countries’ product and domestic Japanese product,
import procedures, laws, trade regulations and standard requirements, customs code identification for
both Thai and Japanese market, import tariffs, excise tax, distribution channels, business process,
Japanese lifestyle and consumer needs of electrical and electronic products, preparation for importers’
list, export procedures, management, production process, product preparation and certification
according to Japanese regulations.
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4.3.1.1 Japanese Consumer Behavior
Exporters should have interest in the development and sales of the product that change with respect to
the daily lifestyle of Japanese people who concern more on healthy and environmental protection,
convenience to use, time saving, distinct design, reasonable price and high quality. They also
emphasize on conveniences, compatible size, light-weight, friendly-use, and after-sale services.
4.3.1.2 Product Distribution System
The infrastructure of Japan consists of mountains which make transportation and logistics in Japan
more difficult. The density of 127 million people is also another major problem. Thus there are many
retail stores and channels selling same product categories. The electrical merchandises are passed to
more than one middleman. They are moved from one manufacture to the wholesalers before the
retailers distributed to final customers.
For the structure of the distribution system of electrical and electronic products in Japan, it starts from
the foreign producer of the electronics and electrical appliances goods. They will import and distribute
the goods through the subsidiaries of producer that is joint venture with Japanese company or the
company that import-export electrical and electronic products within Japan. After that the company will
distribute the goods to the wholesalers. Then the retailers who received the goods from wholesaler will
redistribute to final customers in Japan respectively; the retailers’ customers will consist of department
store, large retailer, home shopping, home center, discount store, identical goods store etc.
When the brand is in a period of consumer acceptance, and receive high reliability; the next step to
penetrate to Japanese market can be pursued. Establishing a direct presence in Japan is the best way,
but this can be an extremely expensive strategy. The use of agents/distributors is a more realistic
marketing strategy for a small or medium-sized Thai exporting firm, but this approach requires great
care in the selection of the representative. Exporters who wish to collect information or improve
communication with business contacts in Japan may wish to establish a representative office, a branch
office or a joint-venture with business partners as well as use other approaches like franchising, direct
marketing and licensing.
4.3.1.3 Preparation for Japanese Importers’ List
To arrange for the electrical and electronic products Japanese importers’ list, exporters can go directly
to find out information at Japan External Trade Organization (JETRO, Bangkok), Japanese Chamber of
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Commerce (JCC-Thai), Department of Export Promotion, Ministry of Commerce, Thailand. Moreover,
there are many recommended websites where exporters can easily find the name list of Japanese
importers and also market information relating to statistics, market trends, regulations and export
procedures such as websites from JETRO, Tokyo Trade Center, Japan Telephone Directory
iTownpage, Japan Electronics and Information Technology Industries Association, Ministry of
Commerce, Thailand, Department of Export Promotion, Thailand, Export-Import Bank of Thailand and
etc.
The exporters can search for list of members related to associations such as Japan Electrical
Manufacturers’ Association: (JEMA), the Japan Refrigeration and Air Conditioning Industry
Association, Association of Electric Home Appliances, Japan Machinery Importers’ Association,
Japanese Chamber of Commerce, Bangkok, Royal Thai Embassy and associated agencies at Tokyo.
In addition, the exporters can receive some guidance and also more detailed market information at the
library of the Department of Export Promotion, Bangkok, Thailand. The online information about
foreign-trade statistics, market shares, business situations, consumer behaviors, and also distribution
channels are available here.
Some organizations like Japan External Trade Organization provides business matching database
between Thai and Japanese by using Trade Tie-up Promotion Program, and Department of Export
Promotion, Thailand also offers On-line Trade Matching and facilitates mutual trade and interactive
response throughout 24 hours.
4.3.2 Sales Activities
To promote marketing activities in Japan, the exporters should prepare the necessary document such as
brochures, sales media, sampling, importers and contacts’ list.
In case that the exporters are seeking for business opportunities to participate in any fairs and
exhibitions held in Japan, they can register at Japan Trade Fair Information or J-Messe, one of the
services offered by JETRO. Exporters will benefit from joining but continual participations should be
in mind for success.
Exporters can search for extensive trade fair database that offers comprehensive information on
interested fairs and exhibitions in Japan and worldwide at http://www.jetro.go.jp/j-messe/e.
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Participation in trade fairs and exhibitions is a good chance to access Japanese Market and meet
business partners.
When dealing with Japan, exporters may have to wait for a relationship to establish before the actual
business of exporting products takes place. These take time to establish and nurture. While many
Japanese business executives speak some English, a skilled and well-brief interpreter is essential to
prevent communication problems. Patience and repeated follow-up are required to clinch a deal.
4.3.3 Consumer Protection
Exporters should foresee the possibility of problems from consumer protection. They have to find out
more information about the electrical and electronic product problems and issues occurred in Japan.
Japanese consumers are able to raise any problems at the National Consumer Affairs Center of Japan or
NCAC. The NCAC will conduct tests relating to product safety, environmental and other aspects
concerning to standards and certifications of such products. Exporters should pay serious attention to
make their products in compliance with the Japanese standards and technical regulations.
4.3.4 Importers’ Financial and Credit Examination
Before accepting any business contract with Japanese importers, in case that Thai exporters and
Japanese importers just firstly start doing business, it would be necessary for examining the importers’
creditability and also their financial status. JETRO recommends Dun & Bradstreet Customer Service
Center (http://www.dnb.com) and Teikoku Databank, Inc (http://www.teikoku.com) that offer this kind
of services through websites.
4.4 Contract Preparation for Pre-shipment
The export trade requires knowledge and skills for entire export processes and its component subprocesses. Thus, exporters should understand how to cope with more complex international
transactions in order to achieve the company’s overall goal and ensure the success.
Exporters can reduce the occurrence of risks happened from transportation, noncompliance product as
prescribed, unexpected rate of exchange, unforeseen circumstances from law and regulation difference,
and non-payment for goods delivered . They require knowledge and skill to perform general
international sales of goods.
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To reduce such risks, exporters may need to deal with these four key contracts as follow:
•
International Sales Contract
•
Contract of Carriage
•
Payment-Related Contract
•
Insurance Contract
4.5 Export Procedures
There are two main steps for the export process; pre-shipment and post-shipment.
4.5.1 Pre-Shipment Procedures
4.5.1.1 Goods Preparation
Exporters are responsible for goods preparation including packaging and classifications in accordance
with transportation conditions necessary for the purpose of delivering the goods from the exporting
country to the importing country. In addition, they may have to check or inspect their goods prior to
shipment.
4.5.1.2 Shipping Arrangement
Even though goods are shipped abroad by several mode of transportation, international transportation
frequently requires ocean or airfreight modes. The exporters must understand the specific properties of
the different modes in order to use them intelligently. In general, sea mode is widely used especially
shipment by container mode because the international expenses can be more economical as opposed to
shipment by airfreight. However, the high-valued items and perishable goods are more likely to be
shipped by airfreight.
4.5.1.3 Documentation for Export
After exporters has executed the shipment. They are also required to prepare or obtain the
complementary documentary exchanges. Export-import risk management is based on documentary
systems and customs which translate the rights, costs and the responsibilities of the export process such
as tax refund, insurances, dispute resolution into documentary equivalents.
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The commercial documents can be classified into 2 groups: commercial documents and financial
documents. The commercial documents include commercial invoices, packing list, transport
documents, certificate of origin, customs entry form, and etc. The financial documents include bill of
exchange and bank draft.
4.5.1.4 Customs Clearances
The procedure relating to the importation, exportation, movement or storage of goods, is mandatory
and required to ensure compliance with relevant laws and regulations. Prevention and suppression of
smuggling, tax and duty evasion including other customs offences are the major tasks of Thai customs
department. The exporters must perform their customs clearances obligation to comply with laws and
regulations. The customs clearance procedure may involve checking of the export related documents
and physical inspection of the goods as well.
4.5.1.5 Delivery of goods
In the delivery aspects, the exporters must fulfill delivery obligation by delivering the goods to named
place on the date or within the period agreed for the delivery. On the other hands, the importers must
take delivery of the goods when they have been placed at disposal at the agreed time and place.
Exporters require knowledge of International Commercial Terms (Incoterms) which explain about
international delivery obligations between exporters and importers.
4.5.2 Post-Shipment Procedures
4.5.2.1 Payment
There are a wide variety of payment methods available in the international trades which include the
following options:
•
•
Consignment – In international consignment, the goods are shipped to a foreign distributor who
sells them on behalf of the exporter. The exporter retains title to the goods until they are sold, at
which point payment is sent to the exporter. The exporter has the greatest risk and least control
over the goods with this method. Additionally, receiving payment may take quite a while.
Cash or advance payment – Receiving payment by cash in advance of the shipment might seem
ideal. In this situation, the exporter collects payments before he actually delivers the goods to the
importer.
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•
•
•
Open account – In a foreign transaction, an open account is a method of payment where exporter
would first export the products to importer under consideration that importer is well established,
has a long and favorable payment record, or has been thoroughly checked for creditworthiness.
With an open account, the exporter simply bills the customer, who is expected to pay under
agreed terms at a future date.
Bill for Collection – The exporter simply shipped the goods before they actually receive the
payment. In collection, the bank acts on behalf of the exporter to collect payment from importer.
Like Open account, collections carry the risk that they will be dishonored.
Documentary Letter of Credit – A letter of credit adds a bank's promise to pay the exporter on
behalf of an importer provided that the exporter has complied with all the terms and conditions
of the letter of credit. Payment under a documentary letter of credit is based on documents, not
on the terms of sale or the physical condition of the goods. The letter of credit specifies the
documents that are required to be presented by the exporter, such as an ocean bill of lading.
4.5.2.2 Export Promotion and Privileges
An existence of tax privileges and other export promotion program offered by the government can have
a major effect on the exportation as the benefits derived from lower duties and tariffs. As result, the
exported price would become more competitive in the world market place. The important measures
implemented so far include Duty Drawback or Refund under Section 19 BIS of Customs Law; Duty
Relief for goods placed under the Customs Bonded Warehouse scheme; Duty Exemption for goods
taken into the Free Zones established by Customs; Duty Exemption for goods taken into the Export
Processing Zones (EPZ); and Duty refund such as Value Added Tax.
The Japan-Thailand Economic Partnership Agreement (JTEPA) has been in effect since 1st November
2007. Exporters of electrical and electronic products to Japan shall contact the Department of Trade
Negotiation, Thailand, for details relating to tariff reduction program under JTEPA. The additional
information like Certificate of Origin Form JTEPA is available for customs process and for exporters’
benefit.
4-9
Chapter 5
Prioritization of Potential Products to be Exported to Japan
We have been assigned by Thai Industrial Standards Institute (TISI) to evaluate the potential of
exporting electrical and electronic products to Japan, prioritize the importance in promoting
entrepreneur, and selection of two categories of electrical and electronic products to make two
categories of export manual within the electrical and electronic products.
Trade statistics showed that the total value of trade between Thailand and Japan during the first eight
months of 2007 is 28.23 billion US dollars, increased by 9.08 per cent from 2006. The export from
Japan to Thailand accounts for 16.30 billion US dollars, an increase by 9.68 per cent. The import from
Thailand to Japan accounts for 11.93 US dollars, an increase by 8.27 per cent. This showed that Japan
achieves a trade surplus over Thailand by 4.37 billion US dollars, which is 13.75 per cent higher than
that of 2006. At present, Thailand is ranked the tenth in terms of source of Japan’s import products
holding 2.98 per cent of total market share in Japan.
5.1 Initial Product Selection
It was found that Thailand exported a large amount of electrical and electronics product to Japan with
the value of exports increasing every year accounting for more than 70 product categories. To identify
the potential electrical and electronic products exported to Japan, three important criteria are used for
the initial selection namely:
•
•
•
Products are included in the Denan Law.
Products have more than 10 million US dollars in annual export value to Japan, according to
statistics of the year 2006.
Products have export value to Japan exceeding import value from Japan, according to statistics
of the year 2006.
This initial selection resulted in 9 electrical and electronic products that meet the three criteria:
1. Air conditioner: This product has the largest number of Thai entrepreneurs and the highest
export value to the world among the electrical and electronic products. At present, Thailand is
the second largest source of air conditioner exporter into Japan, and holds 16 percent of total
market share.
5-1
2. Refrigerator: Thailand is the second largest source of refrigerator exporter into Japan, and holds
47 percent of total market share.
3. Showcase/freezer: Thailand exports showcase/freezer to Japan more than other countries, holds
13 percent of total market share, and has higher export growth rate every year since 2002.
4. Compressor: Thailand is the largest source of compressor exporter into Japan, holding 34
percent of total market share, and has higher export growth rate every year since 2002.
5. Microwave oven: Thailand is the largest source of microwave oven exporter into Japan, and
holds 62 percent of total market share.
6. Washing machine: Thailand is the second largest source of washing machine exporter into
Japan, and holds 22 percent of total market share.
7. Hair dryer: Thailand is the second largest source of hair dryer exporter into Japan, and holds 38
percent of total market share.
8. Cable/cord: This is the second most exported product from Thailand to Japan, holding 6 percent
of total market share, and has higher export growth rate every year since 2002.
9. Ballast for fluorescent lamp: This product has the largest number of Thai entrepreneurs, holding
12 percent of total market share, and has higher export growth rate every year since 2002.
5.2 Model for the Evaluation of Potential Export Product
In order to evaluate the potential of the above 9 products exported to Japan, we have reviewed a paper
on “Measures of International Competitiveness: A Critical Survey”, a research paper by Peter J.
Buckley, Christopher L. Pass and Kate Prescott from University of Bradford in United Kingdom, which
was printed in the “Journal of Marketing Management” in 1988. This research classified variables for
the evaluation of product’s export potential into 4 levels namely country level, industry level, firm
level, and product level. Each level with their related variables is further divided into 3 groups of
measures including performance measures, potential measures, and management process measures.
The research from University of Bradford had been used as a guideline in choosing the right variables
from the industry and product level to assist in our research. However, variables relating to the impacts
from Free Trade Agreement (FTA) are not provided in the Bradford research. Considering the benefits
of the JTEPA agreement that will affect the potentiality of electrical and electronic products export
between Thailand and Japan, we decided to some related variables from the free trade agreement
5-2
including benefits from the relaxation of technical regulations, Rule of Origin (ROO), and tariff
reduction under JTEPA.
Summarizing the variables from Bradford University research with our added variables from benefits
of JTEPA, a total of 8 variables will be included for our evaluation of the product’s export potentiality.
We have transformed the conceptual variables into the operational variables as follow:
1. Export Market Share: Utilizing “Percentage of Market Share in Japan in 2006” will reflect
Thailand’s competitiveness compared to other countries.
2. Export Growth: Utilizing “Growth Rate of Export Value from Thailand to Japan during 20022006”, will reflect the trend of product demand and the expansion of the market.
3. Commitment to International Business: Utilizing “Number of Entrepreneurs who produce and
export electrical and electronic products in 2006” will reflect the experience of Thai
entrepreneur in exporting the product. (The word “export” here includes the export from
Thailand to every country around the world, not only the export from Thailand to Japan.)
4. Economies of scale: Utilizing “Number of Entrepreneurs who produce electrical and electronic
products in 2006”. The more number of producers in the industry reflects the higher benefit in
terms of economies of scale in production. This enhances domestic supply chain to be stronger
and more competitiveness in terms of cost and price of the products.
5. Product Champion: Utilizing “Export Value from Thailand to Japan in 2006” reflects the
popularity of the product.
6. Technical Regulation: Utilizing “Number of Technical Regulations enforced on electrical and
electronic product” consisting of
• Denan Law
•
Consumer Product Safety Law
•
Household Goods Quality Labeling Law
•
Law for the Promotion of Effective Utilization of Resources
•
Food Sanitation Law
•
Law Concerning the Rational Use of Energy
The greater number of technical regulations reflects the larger difficulties in developing the
products and the higher cost undertaken by the producers.
5-3
7. Rule of Origin: Utilizing “Percentage of Local Content”. The products that are qualified under
the Rule of Origin will receive the benefit from JTEPA and achieve cost competitiveness.
8. Tariff Reduction under JTEPA: Utilizing “Tariff Rate Reduction during the first three years
after JTEPA implementation”. Only products with at least 40 percentage of local content will
benefit from JTEPA.
5.3 Information Gathering
We use two sources of information. Firstly, we gather primary data from interviewing 16 entrepreneurs
of electrical and electronic products concerning the local content of each product. Secondly, we gather
secondary data of tariff reduction under JTEPA from Ministry of Commerce and from statistics of
import and export value of electrical and electronic products between Thailand and Japan from
Customs Department of Thailand, Japan Tariff Association and World Trade Atlas.
5.4 Statistical Process
Our 8 variables have different scales of measurement, and there is a specific suitable statistic for each
one. In our model, we use two types of scales.
•
•
Ratio scale: For preliminary evaluation.
Ordinal Scale: For secondary evaluation which will rank the value of each variable from the
primary evaluation.
Ranking of the value of each variable will be from 1 to 9 (for the 9 products) with standard of the
scoring for each rank as follow:
•
Rank 1 receives 9 scores
•
Rank 2 receives 8 scores
•
Rank 3 receives 7 scores
•
Rank 4 receives 6 scores
•
Rank 5 receives 5 scores
•
Rank 6 receives 4 scores
•
Rank 7 receives 3 scores
•
Rank 8 receives 2 scores
•
Rank 9 receives 1 score
5-4
If two or more products are in the same rank, we will give them the same score and skip the next rank.
After ranking the value for each variable into 1 to 9 and set the standard score for each rank, we will
sum up the standard score of all 8 variables. The accumulated standard score will show the potentiality
of exporting the product. The product with the highest accumulated standard score will have the highest
potential in exporting, and the product with the lowest accumulated standard score will have the lowest
potential in exporting. Finally, we will rank the accumulated standard score of all the products to
prioritize the products that have the highest export potential.
5.5 Evaluation Result
The evaluation of potential electrical and electronic products exported to Japan is calculated according
to the statistical process defined in 5.4 and its result is shown on Table 5.1. In conclusion, the
arrangements of the prioritized products that have export potentiality into Japan are as following:
Rank 1 Air conditioner
Rank 2 Cable/cord
Rank 3 Refrigerator
Rank 4 Showcase/Freezer and Washing machine
Rank 6 Microwave oven and Ballast for fluorescent lamp
Rank 8 Compressor
Rank 9 Hair dryer
5-5
5-6
9.25
Hair dryer
Cable and cord
Ballast for fluorescent lamp
7
8
9
36.11
23.40
8
9
4
5
2
3
7
1
6
2
1
6
5
8
7
3
9
4
Rank Score
1188.28
83.65
8.88
157.15
128.18
96.48
34.73
23.27
40.78
(02-06)
%
Exporter
1
5
9
2
3
4
7
8
6
9
5
1
8
7
6
3
2
4
9
20
1
11
6
7
17
10
46
6
2
9
4
8
7
3
5
1
Rank Score Number Rank
Growth Rate of Export
Value
Remark: * Hair dryer is not complied to the rule of origin under JTEPA
Source: Researcher team
6.76
Washing machine
6
60.41
Microwave oven
45.26
13.23
5
Showcase/freezer
3
61.98
Compressor
Refrigerator
2
17.12
%
4
Air conditioner
Products
1
No.
Export Market Share
4
8
1
6
2
3
7
5
9
17
38
1
12
6
7
21
10
101
4
2
9
5
8
7
3
6
1
6
8
1
5
2
3
7
4
9
Score Number Rank Score
Entrepreneur
10.64
276.9
44.84
86.68
158.68
142.78
29.43
221.93
176.48
USD
million
Technical Regulation
9
1
7
6
4
5
8
2
3
1
9
3
4
6
5
2
8
7
1
1
1
3
5
2
4
5
4
1
1
1
5
8
4
6
8
6
9
9
9
5
2
6
4
2
4
Rank Score Number Rank Score
Export Value
50
40
20
75
60
40
85
80
90
%
6
7
9
4
5
7
2
3
1
4
3
1
6
5
3
8
7
9
Rank Score
ROO (Local content)
Table 5.1 Potential Electrical and Electronic Products Exported to Japan
7.50
7.50
0*
6.67
15.00
5.00
15.00
15.00
6.67
(first 3 yrs)
%
4
4
9
6
1
8
1
1
6
6
6
1
4
9
2
9
9
4
Rank Score
Tariff Reduction under
JTEPA
9
2
23
49
6
4
43
41
6
41
4
43
8
3
46
35
1
Total Rank
50
Total
Score
TISI should support the export of prioritized products to Japan by making an export manual for each
specific type of product. The manual will be distributed to the entrepreneurs and used as a guideline to
maintain and increase the competitiveness of Thai entrepreneur. In the first year, we recommend TISI
to make the manuals for these two groups of products
1. Air conditioner and cooling machines including air conditioner, showcase/freezer, and
compressor
2. Cable and cord including cable for appliances and cord set.
Air conditioner and cooling machines
Air conditioner and cooling machines are electric motor-operated products, included in Category A and
Category B of Denan Law. With a large number of entrepreneurs, Thailand has high potential in
exporting air conditioner, showcase/freezer, and compressor. Moreover, the industry is supported with
a great number of local entrepreneurs and suppliers in the industry.
•
Why “Air Conditioner”
This is an electronic product with the highest export value from Thailand to the world having a value of
2,084.50 million US dollar in 2006. Thailand is the second largest source of air condition exporter into
Japan, and holds 16 per cent of total market share. The main competitors include China, USA, and
Malaysia.
However, 90 per cent of all air condition exporters from Thailand to Japan are subsidiaries of Japanese
companies while the rest of them are subsidiaries of foreign companies located in Thailand or Thai
entrepreneurs who produce the products for other foreign companies. There is no air condition under
the Thai brand being exported to Japan although there are more than 60 Thai manufacturers who are in
air-conditioner and associated components industry.
Due to the dynamism of this industry in Thailand and the continuously increasing demand for the
products from Japan, Thai entrepreneurs still have good opportunities to increase their market share in
Japan. Thus, the product must be developed for the specific use in Japanese life-style, and should also
be differentiated from the products produced by China.
•
Why “Showcase/Freezer”
Showcase/freezer ranked the 30th in export value among the electrical and electronic products exported
from Thailand to the world with a value of 121.64 million US dollar in 2006. Thailand is the third
5-7
largest source of showcase/freezer exporter into Japan, holding 13.31per cent of total market share after
China and US. There are 21 entrepreneurs in this industry which has higher export growth rate every
year since 2002. Thai entrepreneurs have the ability to produce showcase/freezer with almost the same
quality as Japanese producers. However, the export value of showcase/freezer is still low, and there is
no showcase/freezer under Thai brand name being exported to Japan.
•
Why “Compressor”
Compressor ranked the 11th in export value among the electrical and electronic products exported from
Thailand to the world with a value of 579.61 million US dollar in 2006. Considering the Japanese
market, compressor is ranked the 13th in export value among the electrical and electronic products
exported from Thailand into Japan. Compressors are mostly exported to Japan, US and China
respectively. Thailand is the largest source of compressor exporter into Japan holding 33.54 per cent of
total market share. The main competitor is China who holds the 2nd largest share. In addition, export
growth rate had been increasing every year since 2002.
Most compressor entrepreneurs in Thailand are foreign companies, especially Japanese companies, and
others are Thai entrepreneurs who produce the product under Japanese brand names. Compressor is a
part of supply chain of air conditioner, showcase/freezer, and refrigerator industry. In order to increase
and strength production of air conditioner, showcase/freezer, and refrigerator products, Thailand will
need to expand the potential of the compressor industry.
Cables/Cords
Cables/Cords are included in Category A of Denan Law. The product complies with the requirement of
the rule of origin under JTEPA with local content of producers greater than 40 per cent.
Cables/Cords ranked the 8th in export value among the electrical and electronic products exported from
Thailand to the world with a value of 709.90 million US dollar in 2006 and 687.90 million US dollar in
2007. Considering the Japanese market, cables/cords is ranked the 5th in export value among the
electrical and electronic products exported from Thailand into Japan.
According to our evaluation, cables/cords ranked the second in product priority, which means it has
very high potential in exporting to Japan. Its export growth rate has been increasing every year since
2002. Its major competitors include China, Vietnam and Philippines, respectively. However, the
increase in Japanese import of cables/cords from Thailand increased by only 3.27 per cent as compared
to the overall electric wire exports from Thailand into Japan which increase by 16.28 per cent. This
5-8
shows that Japan had increased the imports of cables/cords from the other countries instead. Thus,
Thailand needs to improve the quality and the variety of the products in order to enhance its market
share in Japan, whereby Thailand’s market share of cables/cords in Japan is about 6.13 per cent with
the market value of 4,500 US dollars in 2006. Market value of cables/cords to Japan is one of the
largest among electrical and electronic products.
Recommendations for the manual making
In 2008, we recommended TISI to make the manuals for the following two groups of product
•
Air conditioner and cooling machines
•
Cables/cords
In the following year, we recommend TISI to make manuals for another two groups of products:
•
Washing machine
•
Ballast for fluorescent lamp
Concerning refrigerator, microwave oven, and hair dryer, there are still a small number of
entrepreneurs in Thailand and many are foreign companies or subsidiaries of foreign companies.
Therefore, the making of the manual for these three products are not necessary for immediate
implementation and could be done at a later period.
5-9
Research Team
Ms.Ing-wei
Mrs.Suwanna
Mr.Yodying
Ms.Muthita
Ms.Yindee
Mr.Narat
Mr.Suppasit
Mr.Trirat
Mr.Poom
Huang (Project Leader)
Kowathanakul
Kongtong
Thailimthong
Wangsatith
Rujirat
Sornsri
Ridtimani
Luangjarmekorn