Luggage / Japan
Fascinating case study
Why does Japanese luggage firm Ace travel so well? We check in with the CEO for a lesson in product development and diversification.
Hiroaki Morishita is telling us about his firm’s “torture room”. But don’t be alarmed: it’s for suitcases. “It’s a quality-control room where we test everything from wheels to handles in different temperatures,” says the ceo of Japanese luggage titan Ace, sitting in his office at the company’s Harajuku HQ. To ensure suitcases can withstand cobblestones in Rome and the sub-zero temperatures of an airplane’s hold, Ace’s state-of-the-art Proteca models are put through their paces in this small space. They’re dropped from a height, fixed on a treadmill to travel 16km and locked in for 500 hours at 40c with 85 per cent humidity. Ace is so confident in its product that it offers unlimited free repairs for three years.
Bags are taken very seriously in Japan. People appreciate quality in everything from crisp canvas totes to hard-backed four-wheel suitcases. Ace has been selling handsome carriers for about 80 years, and these days boasts annual revenue of ¥33bn (€273m) and 100 shops around the world. (Its main competitor is the Samsonite Group, whose bags it used to produce under licence.) Leading Japanese department stores such as Mitsukoshi, Takashimaya and Tokyu Hands cannot get enough of the models from two of Ace’s original brands, while international players including Mackintosh Philosophy, Adidas and Champion depend on Ace to produce their Boston bags and backpacks under licence. Now it’s looking to boost its global profile.
Ace was founded by the late Ryusaku Shinkawa. He started with a small bag-manufacturing company in Osaka in 1940 and was always on the lookout for the next big thing. He collaborated with textiles behemoth Toray on now-classic ranges of nylon and synthetic leather holdalls in the 1950s and 1960s, and signed a licensing deal with Samsonite under which he produced its first “Made in Japan” suitcases. Still restless, he toured the globe in search of ideas and returned to produce the Madison Bag, a school holdall that sold 10 million units.
Morishita, who was born in Ishikawa and studied economics at Keio, joined Ace in 1986 and took over as ceo in 2006. He has a punishing schedule, with regular trips to Shanghai, Kuala Lumpur, Hong Kong and Singapore (where he has opened subsidiary companies), as well as New York. He regularly swings by department store concessions across Japan to gauge opinions about Ace’s brands from shopfloor staff.
His most inspired move has been to develop Ace’s own brands. Within a year of taking over he had led Ace’s acquisition of US luggage brand Zero Halliburton, best known for its high-end aluminium suitcases. “We need to cater [to different audiences] with different prices and tastes through multiple sales channels, just like Toyota has Lexus, Crown and Corolla,” he says. Ace already had about 30 original bag and luggage labels back in 2005 but it was missing a luxury product – until the Zero Halliburton purchase.
Like many Japanese companies across all manner of sectors, Ace made great products but had struggled to develop its brand name. When Morishita took over, 80 per cent of the company’s income depended on licensing, with the rest coming from its original brands. Today those numbers have almost reversed: Ace’s own products bring in three quarters of its revenue.
The most compelling offering is the Proteca label, which is produced at Ace’s 130-person-strong factory in the Hokkaido city of Akabira. “Our suitcases are real ‘Made in Japan’, not in name only,” says Morishita. In an age where the meaning of country-of-origin tags is clouded by phrases such as “assembled in” or “designed in”, Ace does literally everything in Japan, including moulding polycarbonate shells, bending magnesium frames and assembling the final Proteca products. “At one point I wondered if we should stick to ‘Made in Japan’,” he says. “I could have chosen a path of profit first but I opted for monozukuri [craftsmanship] instead.” Ace commissioned award-winning Japanese design studio Nendo to refresh the signature Proteca suitcase with new design details and functions. Soon after its first Proteca flagship store opened in Hibiya, Tokyo, near the Imperial Palace.
Morishita is constantly scanning the horizon for opportunities. “The investment in airport infrastructure is growing in Asia – such as with the expansion of runways – and this means there’s a greater movement of people in the Pan Pacific region,” he says. By 2023 he aims to have doubled Ace’s number of stockists in Asia (there are currently 80). An office in Taipei and a partnership in Seoul are in the works this year, with projects in China to follow. As it stands, Shanghai is Ace’s main Chinese market but Morishita is looking to open shops in other major cities, such as Beijing and Chengdu.
“We’re a 79-year-old company but our global expansion has only just begun,” says Morishita. “Our strengths are attention to detail and the excellent quality that is unique to Japan.” And don’t forget that torture room.
Ace in numbers:
Year founded: 1940
Original brands: 15
Main brands now: Proteca, Ace, Zero Halliburton and Kanana Project
Shops globally: 100
Sales in 2018: ¥32.9bn (€272m)