How to Have Your Business Succeed in Japan

Japan is the third largest world economy, behind the United States and China. It has a sizeable population and a ready market, as well as other factors ready and available to help a business grow.

However, Japan has been classified as one of the most difficult places to establish a business and succeed, when compared to other industrialized nations. Despite this, many companies have seen huge successes in the Japanese market. The truth of the matter is that setting up a business in Japan, as with most countries, requires significant up-front work.

Starting a business in Japan isn’t difficult and does not require huge startup costs. If you have a unique, quality product or service to offer, then making a profit in Japan doesn’t have to be hard. Three decades of deflation has affected both Japanese salaries and the rent on office spaces, meaning that succeeding in Japan doesn’t have to cost an arm and a leg. Given such a favorable situation, the chance of succeeding in Japan is very high. But in order to succeed, you need to keep in mind the following:

People

In any kind of business, in any part of the world, people are critical to growth. From your business partners to your employees, your customers, your competitors, your suppliers – people make up your business and your success is implicitly tied to them. You will need to understand that the Japanese people have a distinct culture, and from that culture they have a unique perspective and way of viewing things you might otherwise mistake as a constant. You need to learn to understand and appreciate their perspective, and, in doing so, earn their trust and attract their attention. Read more about Japanese business etiquette and culture here to avoid the most common mistakes.

When you refuse to respect Japanese rules and traditions, you could find yourself on the losing end. Many foreign companies have collapsed because they did not respect Japanese law, and had little regard for the Japanese people and their perspective. 

If you do not speak Japanese, you can contact a distributor which will promote your brand. However, because distributors deal with many other brands too, try to find someone who believes in your products and will be happy and eager to support you. A language is not just about understanding what others say, but it is also sharing a cultural background and showing interest to the listener.

There is No Shortcut

As with any market, there is no shortcut to succeeding in Japan. Sometimes, turning a profit takes longer than you might expect. You need to properly plan, strategize and put in significant time investments to find success in Japan.

Although there have been exceptionally quick breakthroughs for some companies, these are outliers. In each case, they already had a product or service that was highly demanded, but they still had a well-executed strategy which helped their launch into the Japanese market.

Many companies have their biggest success in Japan, making a lot of profits. 72% of foreign companies qualified themselves as successful financially and 53% of the successful companies are owned by foreign subsidiaries (Strategy and Performance of Foreign Companies in Japan, 1994). Because Japanese firms are competitive in many different fields, like telecommunication, if you succeed in the archipelago you can be competitive internationally.

But you have to be patient. According to Dr Chatgilialoglu, ‘Patience is a key word when dealing with Japan’. You have to build your network and to earn other companies’ and customers’ trust. It can take more than 10 years to build a relationship with Japanese businessmen, even (and especially) if you think that you are close to them after a few months. Once you have a good network, you can ask other entrepreneurs to promote your products or brand on their social media channels for example. Do not hesitate to travel regularly to Japan to meet partners or possible partners, to expand your network and maintain your relationships.  

Sales and Marketing

Another point which will determine how successful you become in Japan are sales and marketing. You need to take a proactive role here. Many leave this aspect of the business for their Japanese associates to handle. While this may seem like an efficient move, it does not usually get the desired results.

You, personally, need to be active in the marketing and promotion. In fact, Japanese people are not only concerned with the product, but also about the mind behind it. For this reason, you should put yourself out there and be a part of these teams. You must know the particularities of the Japanese market like the back of your hand since you are in charge of thinking about new goods or services that you will sell. Do not take the market research easy: doing business in a foreign country is a challenge and you have to learn everything again, especially with Japan, which is culturally very different from Western countries. But do not be afraid, it is a great experience! To start with, check out the 5 things you need to know when marketing to Japanese consumers.

If you need help to enter the Japanese market, get in touch with us! Whether you need a strategy or assistance with your new innovative product, we provide value for your new product launch in the Japanese Market. We offer Crowdfunding Support and Digital Marketing Services, all under one roof. You can contact us here.

Pricing

Consensus management and heavy regulation in Japan may seem discouraging at times, but you must get the process right. One of the things that can help you recover from investing in the process of registering and starting a business in Japan is to create a pricing model that is profitable and competitive. Always avoid leaving your pricing model to your distributors, as they would simply increase the price and leave your goods to be sold only in narrow channels.

Do not make the mistake of over- or under-estimating your product. Check the price of similar offering and think about how you should position yours. Ask yourself some questions, like who will buy your product (lower-class, middle-class, families, etc.) or why they should buy yours and not someone else’s (and present your arguments when you sell your product – on the package, on your website, on advertisements, etc.).

Usually, foreign companies inflate their price (by 20% to 30% according to Export Japan) – but it is better to keep a round price and to avoid the final numbers 4 or 9, pronounced like ‘death’ and ‘torture’.

It is not overly difficult to succeed in Japan. All you need to do is work smart by connecting with the Japanese people and actively involving yourself in the processes of promoting both your business and yourself to the Japanese market.

Reference:
Khan, S., & Yoshihara, H. (1994). Strategy and performance of foreign companies in Japan. Westport, CT: Quorum Books.
www.japanstrategy.com/japan-strategy/
www.eu-japan.eu/publications/success-story-remembrane-srl-sme-patience-key-word-when-dealing-japan
exporttojapan.co.uk/guide/payment-and-pricing/localised-pricing/