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Mar. 10, 2015 - Updated 04:16 UTC

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Growing Business with Mongolia

Nov. 24, 2016

An economic pact between Japan and Mongolia is paying dividends, with Japanese companies benefiting both sides by applying technology to Mongolian traditions.

Japanese officials kicked off the economic pact in June. The Economic Partnership Agreement with Mongolia encourages investment and eases the flow of goods between the two countries.

It's the first time Mongolia has entered into such an agreement, and it promises to make strong connections between distant communities.

Two companies are expanding their businesses in Mongolia by combining the strong points of Osaka industry with Mongolian tradition.

One shop in Ulan Bator specializes in selling high-end products made from 100 percent cashmere, such as colorful scarves and other items of clothing.

A coat is the most popular item in the store, and it sells for about half the price it would fetch in Japan. But the fabric used to make this coat was imported from Osaka.

The raw material is first sent from Mongolia to be processed at a factory in Osaka. Mongolian manufacturers don’t have the technology required to produce fabrics suitable for high-quality coats. The fine fabric is then sent back to Mongolia and sewn into garments.

"Fabrics processed in Osaka are less likely to form fur balls," says Ariun, vice president of Gobi Corporation.

The city of Izumiotsu in Osaka Prefecture has been a thriving center of the woolen textile industry. One 126-year-old company there has the technology required to produce cashmere products. It takes orders from clothing manufacturers and processes about 10 types of wool from sheep and cashmere goats.

"Our company produces the finest products, and I want to keep that tradition going," says Masashi Shibahara, the company's president.

The most important stage of the wool-making process is called carding. A roller covered in many small needles scrapes the surface of the wool and raises tiny hairs, creating a fluffy texture.

There’s another important traditional technique called thistle carding. The teasel plant has many thorns like a thistle and it's used to card the wool. By using the teasel's supple needles very precisely, you can create a soft, natural texture.

Izumiotsu's traditional craft techniques bring Mongolia and Japan together to create one of the world's finest cashmeres.

Another company in Osaka installs solar panels and floor-heating systems. Company president Yoshitsugu Aso currently spends 6 months of the year in Mongolia. He has been developing a variety of business opportunities in the region.

Aso started a business there 15 years ago after he was selected to run an Official Development Assistance project. The project installs solar panels on gers, or yurts, the traditional tents used by Mongolia’s nomadic tribes.

Even a single solar panel can dramatically change the lives of nomads, allowing them to use cell phones, artificial lighting, and televisions wherever they go.

"I'm happy, because now I can work at night and watch the national news," says nomad Bazar-Adiya.

"Having new technology has made a tremendous impact on the nomads’ lives. In many parts of the world, life is challenging because things that Japanese people take for granted are not available," Aso says.

When he finished work on the project, Aso started what he called a "problem solving business." It tackles problems in Mongolia using Japanese technology and knowhow.

Every year, Mongolia produces 22,000 tons of sheep wool. The wool was sold cheaply to China but beyond that, it wasn’t put to any practical use.

Aso suggested using Japanese machines to process it into a thermal insulation for buildings, and even built a factory for that purpose. It raised the value of the wool, increased the nomads' income, and created new jobs for young people.

Aso has also been tackling urban problems, which the Mongolian government has been dealing with for many years.

In Ulan Bator’s so-called ger district, about 800,000 residents live in the structures. The area’s soil is polluted because many residents use toilets that go directly into the ground.

Many people there feel their lives are difficult, but can’t move because they wouldn’t be able to make a living elsewhere.

A new plan is being put into action by the government and the residents’ association. It aims to build apartments in the area for local residents. Aso has been asked to find ways to incorporate Japanese technology into the project.

He is planning to find small to midsize Japanese companies to develop waterworks and urban infrastructure that will function in Mongolia.

"I can't manage large-scale projects like countries can, because my company isn’t big enough. But I can help with these projects and create small businesses. I think through them I'll be able to contribute to the development of Mongolia," Aso says.

In Mongolia, the land of steppes, the seeds of new business opportunities are being scattered over the land.


Davaadorj Delgertsogt, the consul general of Mongolia in Osaka, joins anchor Kyoko Tashiro in NHK's Osaka studio.

Please watch the video above to see the full interview.