The story so far③

table of contents

2. It has grown to become the No. 1 factory in Mongolia. However...

Impact of the COVID-19 pandemic

The COVID-19 pandemic hit us just as we were growing steadily. It has affected many industries, but HushTug was also hit hard.

First, there is the impact of the state of emergency declaration leading to people refraining from going out and the start of remote working.

At the time, the majority of HushTug's products were bags and backpacks. As people started going out less, the demand for bags and other items naturally decreased, and sales declined for a time.

This also affected the logistics of sending products from Mongolia to Japan.

Due to unstable transportation services such as planes, trains and ships, inventory ran out and products could only be sold by pre-order, with a wait time of several months.

Up until now, Japanese and Mongolians have worked together across borders, and have experienced many problems.

We talked to each other and tried our best for Mongolia, and somehow managed to overcome these troubles, but the impact of the global COVID-19 pandemic was something that our efforts could not overcome.

However, we managed to keep running the brand with all our might, and thanks to our customers who chose HushTug, we were able to recover our business.

Over the course of about two years, we have been chosen by over 20,000 customers, and the impact of COVID-19 was beginning to subside.

Further troubles continued to strike HushTug.

The impact of Russia's invasion of Ukraine

Mongolia is a country located in the northern part of East Asia and imports a variety of things from neighboring countries.

Particularly large are China and Russia, which has had close historical ties with Mongolia.

In order to make a bag at HushTug, many other materials and equipment are required in addition to the original leather.

The invasion of Ukraine had caused Russia to lose friendship with many other countries and the very way of life of its people, making it difficult to import materials from the country, and material costs continued to rise.

China's Zero COVID Policy

Mongolia also has close ties with its other large neighbor, China.

On the Mongolian side of China is the Inner Mongolia Autonomous Region, and in terms of logistics and imports into Mongolia, the relationship is even stronger than that with Russia.

Meanwhile, China's zero-COVID policy has closed the border with Mongolia, causing the cost of goods to rise and making it difficult to obtain materials and equipment for making leather products.

HushTug products travel by train from Mongolia to China and then by ship to Japan, which has made logistics unstable and resulted in a significant increase in the cost of selling HushTug products in Japan.

Impact of the weak yen

In 2022, due to various factors, the yen depreciated more rapidly than ever before.

From Mongolia to Japan. HushTug, which imports and sells leather products, was naturally greatly affected.

The cost of production and transportation has risen sharply, causing the cost to rise significantly.

Lack of successors to operate factories

At this time, the operator of the HushTug factory faced a problem of a lack of successors.

The Japanese factory manager who had been managing the Mongolian craftsmen was retiring, putting the factory in a critical situation where it "might not even be able to operate."

Of course, there is the option of having someone go to Mongolia in his place, but with other troubles piling up, such as Russia's invasion of Ukraine, the zero-COVID policy, and the weak yen, it could be described as a quadruple whammy.

"If things continue like this, the HushTug brand itself will be over."

I still remember thinking that.