Japan is said to be one of the most attractive and growing markets in the world. The GDP of the Kanto Region alone is bigger than all of the United Kingdom. However, like any other market Japan will have unique historical and cultural characteristics that make entering the Japanese Market a unique challenge. My advice would be to investigate the market as much as you can prior to trying to enter it.
Some business consultants say that at typical Japanese companies, one of the major concerns is organizational and systematic issues such as “slow decision making processes” or “slow adoption”. From my experiences I understand that it may appear this way, but there is more to understand. The Japanese market has transparency and fairness, and there are customers who are able to evaluate the value of your product strictly, whether it inspires their imagination or not.
Most failures of market entry begin with misunderstanding of trifling expectation gap, and distrust of the partner. By appropriate advice, the trifling gap will be solved. Therefore at first what you need to do is to find out a reliable advisor and then partner. This is a key factor to the success or failure of the business.
ASK AN ADVISOR. Shuji Inoue Ph.D.
Intel Corporation (Tokyo)
Technology-manufacturing group / R6D managerNext-generation CPU technology development. ISO9001 Lead Auditor qualification. SCM and advanced technology R & D. Management. Received a long-term management training in the United States.
Aoi Electronics Co.Ltd
New product development, reporting directly to the president of the organization. Technology development as well as commercialization. Lithium-ion battery development and manufacturing. Manage the quality and sales . Also engaged in the development of power storage system. Managed semiconductor microfabrication technology development and near-infrared spectroscopy technology development.
R&D dep/Quality insu/factory managerWhile managing operation of domestic plants, responsible for new product development and product warranty. Relocating factory to China.
Here are several examples of key points that need to be considered before entering the Japanese Market.
Intellectual Property Rights
Intellectual property management is one key to success. The relative benefit of pricing and performance used in comparison with other brands changes with time. If you have a competitor in the market , your advantage may continuously change and will eventually become cost competition.
Intellectual property rights are important for your product to differentiate from others and maximize your product value. It is about business “Vision” and a “Big Piccture” and to know your product’s strengths and weaknesses”. Additionally you need to avoid the risk of someone who is inspired from the product and may create clones. This is more comprehensive than a “pros vs. cons comparison list” which a patent attorney will typically perform. For example, mapping intellectual property rights by making sure the pros vs. cons and the right coverage which you can insist on clear should be prepared. This is important to set the business strategy making your position clear in the market. As m,uch as there is value, the problem in intellectual property rights may occur. For prevention a legal communication route in Japan should be prepared ahead of time. Furthermore, to avoid other potential problems, the intellectual property rights training for your employees coming in contact with the outside is required as well. So they are ready to handle it appropriately in a front line.
Risk management and preparation for regulations
Any product cannot deny the possibility of safety issues which you can’t prevent based on safe assessment and evaluation data. Unexpected issue occur, and pl insurance to show tthe posture of the company.
More so for markets of developed countries, the company should in order that the that common international guidelines-laws-regulations-green procurement standard and industry self-imposed restraint are applied to a products and gathering those intelligence and the correspondence of standard rules to be cleared is necessary.
Enforcement takes both time and expense, but is mandatory, and the responsibility of the entry side. There is no route for a shortcut. The company should regard this as an international standard not a peculiar requirement for Japanese market and. When certified, it proves the product value.
Key Roles and Limitation of Agency
One thing you need to understand is selection of Japanese local agency, and sometimes their experience and past business results do not become success guarantee of your market entry. So careful selection is necessary, and also it is natural for the agency to focus on products that have higher sales profits. Otherwsie they simply put your simple product introduction among many other products in a catalog. Do they have a power to filling out the gap between you and them by making new proposal jointly as a team? You probably need a proactive local advisor, who knows the market well, to work and monitor the whole business promotion process.
Japanese customers are seeking new ideas and products to inspire them from the market, however, sometimes they are at a loss of what they want. Your intellectual property shall make the product more robust, and it is necessary to finish it as an attractive product to excite the imagination. “If even a place to sow a seed in is not worng, the result appears by all means.”
The product and its application are just one example you proposed and your customer may send their application of the product. For market analysis of the product, relevant and timely data is needed. There are many frequently updated market research resources, but these data sources should be evaluated appropriately. By entering into the existing market, even products that are better than competitors it is always inside of the price competition in the late departure group. It is necessary for it to become the starting group. How do you approach it?
In my opinion the marketing strategy that must be used must allow the customer to choose the product by its natural attractiveness. There are a lot of analysis reports available publicly, and they are usually expensive. Most of these reports use data from public sources, such as METI (Ministry of Economy, Trade and Industries they are gathering all product data periodically, and is analytical it to evaluate each market trend. Market share data by product and supplier are also in internet.
For more detail analysis, a research company, in general, carry out the questionnaire survey in an entry company and their customer, and summarize/document it as their report. However, if you are the person concerned, will you reply a questionnaire definitely? I think they may reply it to the research company, but its accuracy is still questionable because of their business strategy. So the report is only “Postmortem” result of the past rather than now and these will b e changeable in the future. Many people are interested in hearing inside information of competitors, but the reliability is surely limited because you cannot verify it.
The above points are just examples for your reference. Your advisor or consultant might have another ideas, but there is no perfect solution to let the market entry succeed. However, I’m sure that there are a lots of opportunities for the company intending to enter into the market. The market is advanced, and customer is always looking for a high standard product to inspire imagination.