Just to reiterate, I brought a few cakes, and even though people did know about fruitcakes—they import 60% of what they eat into the islands of Japan—most of those cakes were coming from Germany and England. They had never tasted such a good one from Canada.
To modify this cake, which was originally a product from my great-great-grandmother, who came from Austria, I designed a fruitcake that I thought the Japanese would enjoy. I suppose I've been quite lucky, because this is really a micro-operation. I'm a one-man operator. I make 3,000 cakes a year, a third of which are sold in Japan. Another third are sold in retail outlets in the province of Quebec, and the rest I sell out of my little operation in Montreal.
I guess my interest in Japan—I'll make this quick—maybe goes back to when we were children, when my mother would collect these porcelain salt and pepper shakers with this “Occupied Japan” on it. We used to laugh; you know, we thought it was so funny, “Occupied Japan”, but that was back in the 1950s and the 1960s. Since then they've shown us what they were able to do.
Basically, the process to get there was through MAPAQ, which in Quebec is the ministry of food and fisheries. The Montreal office put me in contact with the commercial attaché in Tokyo, who I pitched to, and after opening a dossier, this commercial attaché introduced me to the people I do business with, who are food importers based in Osaka. They import mostly maple syrup, and they took on my cake about three and a half years ago.
Following our agreement, we decided to get the product approved. One of the biggest challenges in Japan is getting any item, but especially a food item, a certificate of approval. Of course the import duties are part of that process. Much depends on the custom officer's knowledge of the product.
In my case, there are more than 20 ingredients in the product. The ingredients come from every part of the world. In order to satisfy the requirements, there were all kinds of letters of guarantee that the products were not only fit for consumption but also wouldn't make people sick.
That was a lengthy process to get, not only from the distributors from whom I purchased my ingredients but also from their suppliers. This was something the Japanese were very centred on. They wanted to know exactly where everything was coming from.
I would say that another preoccupation they had, something that needed to be dealt with and that initially gave us some challenges, was their concern about freshness and the “best before” date. My product is good for two years. It doesn't have any artificial preservatives in the cake. People there couldn't understand how a cake that was two years old could be good to eat. This was also a challenge.
Now I'll turn to the variations in duty. The import duty on my product is levied at 30%. I use pure maple syrup. If I used maple sugar, the import duty levied would be 17%. If there's one gram of sugar in any of the dried fruits, the duty increases immediately to 50%. Otherwise it's 30%.
A 25-kilogram bag of flour from Saskatchewan, which in Montreal costs me $19, is $40 there, plus transport, port fees, and the overall 5% tax. So if you add up all of those things, it makes a lot better sense at this present time to keep making the cake in Canada, because it would be even more expensive to do it the way things are in Japan. I don't know if you need to know this, but I wholesale that for $27 FOB in Montreal, and that is equal in terms of import duties. The import duties, on a percentage basis, are equal to the cost of the ingredients of my cake, so it's quite considerable. Not only do I have one or two partners, but I have quite a considerable silent partner over there.
I'll read you a couple of quotes from people who I do business with. I don't know where the quote is right now—excuse me—but I'll tell you that what I wanted to quote was from the commercial attaché who wrote to me a couple of days ago and said that a lot “depends on the custom office at airport or port”. For example, he said, for maple spread, the customs officer charged 35%. He thought it was dairy butter, but he's referring here to maple butter. Therefore, he said, the importer changed the port from Kobe to Osaka and then the import duty became 17%.
These kinds of things happen on a regular basis. In the quote from the importer, the people I do business with, they say, “In general, the duty on sweets is very high...”. His appreciation of this is that the Japanese want to protect a confectionery industry that is of very high quality. But indeed, he feels that a new deal with lower tariffs would be good for everyone involved.
In conclusion, I believe that a new deal would not only improve the flow of goods but would also aid the Japanese in attracting the foreign investment they seek. A lower tariff would perhaps entice companies to set up production there, and specifically in the affected part of the country that was ravaged by the tsunami.
In general, then, that's basically my presentation.