Japan goes upmarket – in fruit

Japan has found a way to improve its trade with China — selling the Chinese $17 apples. No, this is not a con job. Japanese apples that routinely sell for $15 in Tokyo are now selling for $17 in Beijing. As the Washington Post explains:

To be sure, through luxury fruits the Japanese are exporting their own culinary aesthetic. Apples in Japan, for example, are prized as much for beauty as for taste. On Japanese farms — almost all of which are small-scale operations — even slightly blemished apples are discarded for juice and jams while production is limited to grow fewer but better quality fruit.

And there are enough newly rich Chinese, and others, willing to pay the price for aesthetics:

As big as softballs and as shiny as gems, the precious produce typically goes from the farm to the glitzy retailers of Japan’s big cities — where the high prices charged for such fruit have earned this nation its reputation as the land of the $15 apple.
But this year, the most costly crates of Katayama’s “Japan’s Best” apples are bypassing Tokyo’s chic Ginza district and heading to China instead. There, Japanese apples are being scooped up by the Lamborghini-driving, Gucci-toting nouveau riche in Beijing and Dalian at $17 a piece, or roughly 100 times the price of a Chinese apple. Some of the finest specimens, with dragon designs and Chinese characters in their peels, retail for more than $100 each.
. . .
The crates of “Japan’s Best” apples being shipped overseas are only part of a niche-market export boom from high-end Japanese farms. It includes $240 musk melons flying off to Thailand, $3 strawberries heading to Hong Kong and $170 square-shaped watermelons carted to Kuwait.

Cultivating this upscale market is a one more extension of Japan’s export-led economic strategy:

“Japan may well be beaten by developing nations with cheaper farm and fishery products,” Prime Minister Junichiro Koizumi said at an agricultural conference in Tokyo this year. “But I think Japan can still compete on the international market — by exporting more expensive and delicious goods.”

It may be a little thing – but it goes a long way to explaining why Japan continues to run a trade surplus. (See the chart below from the Statistical Handbook of Japan).
I know many of my economist friends will maintain that the trade balance is all a matter of macroeconomics — savings rates, etc. But I still believe that micro matters — and that business competitive strategy plays a part. At least it does with $17 apples.
Japan trade.gif

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