2017年1月2日月曜日

What are Challenges and Obstacles in Doing Business in Japan?

With its economy size and maturity Japan is an attractive market to do business in. However, it is not easy to enter and penetrate the market. Why?



1.    Regulations and rules



1)   Regulations and rules that apply to every industry and company



Regulations are one of the main factors that shape the external business environment and determine the “game rule”. Corporate tax rate and tariff apply across all industries and companies. This is why Abe cabinet is working on cutting the corporate tax rate of Japan to attract foreign investment.



Tariff truly shapes an important game rule in international trade and business. This is why countries and regions devote much effort in negotiations for FTA (Free Trade Agreement), EPA (Economic Partnership Agreement) and TPP (Trans-Pacific Strategic Economic Partnership Agreement). Japan is no exception.



2)   Rules specific to respective industries and rules/systems specific to Japan



It is impossible to list numerous regulations and rules specific to respective industries, when regulation-heavy industries include healthcare (pharmaceutical, medical device), cosmetics, food, drones, energy and finance to name just a few. And, regulations are set by each country/region thus, for example, pharmaceutical regulations for Japan is different from those of other countries.



Moreover, many things are regulated by license, including submission of documents to Agency for approval in pharmaceutical business for example, and it is not always easy to understand whether you need submission or not, or if needed whether it needs to submit to national, prefecture or local license. As often found, Japanese rules are not necessarily clearly specified.



2.    Knowledge of market and customers



1)   Need to know what works and what does not work in the Japanese market



Each market is different thus you need to tailor products/services, sales and marketing to meet local needs of Japan, and should not push the way adopted in your home country. Otherwise, your business in Japan would not be successful.



2)   How Japanese market and its customers are “unique”



In general, the Japanese market is mature and recently has been becoming bi-polarized (i.e. the two extreme segments of low-end minimum price segment and high-end luxurious pricy segment) when it used to be mostly of mid-class people.



Japanese consumers are likely to be the most difficult to please due to their high expectation on quality and their sophisticated “taste”. They demand sophisticated design and color, compactness and ease of use, and durability. They prefer “sophisticated sweetness i.e. not too sweet” for food and beverages to “extremely sweetness”. They also are attentive to supple texture and avoid coarse-textured food thus for example, they usually peel an apple and rarely eat the apple crust.



3)   Examples of markets that likely exist only in Japan



One is an anti-aging product of the beauty market, which blocks UV (Ultra-Violet) rays and keeps customers from getting tanned. Japanese customers believe this function helps to keep their skin from becoming aging.



Another is the market for anything that makes peoples daily life convenient and efficient. In mail order catalogs (print or online), we usually find a section of アイデア商品 (literal translation is “products full of ideas), which are designed to make our life more efficient and productive.



3.    Language



1)   Tool of communication in doing business



Language is not the first and the only issue in global business but is a key issue in doing business in Japan where very limited Japanese are fluent in English, even in MNCs operating in Japan. This is why interpretation is inevitable in Town Hall Meetings and in seminars of industry trade shows and conferences when we have non-Japanese speakers and/or attendees.



In general, Japanese people are better in reading and writing than speaking and listening. It a challenge to join TC (teleconference), even for people who can communicate in simple English, because it relies entirely on listening and speaking skills and you cannot “read” the body language and facial expression unlike in face-to-face communication.



Additionally, the Japanese are not accustomed to speaking up and express their views, and this makes them difficult to communicate in English in global business. This is because of their education and long cultural history of “silence is beauty”, their collectivism and “a nail that sticks out is hammered downculture.



2)   Translation vs. localization



Interpretation or translation can be a solution when language is an issue, but it has limitation. The level of interpretation depends on interpreter’s English level and how much he/she understands the topic.



In the case of localization from English to Japanese, first it needs to be of high quality translation i.e. not only grammatically correct but also the translated Japanese text should become “natural” to native Japanese. This kind of “language audit” can be done by native Japanese who is trained to do so.



Additionally, the content needs to be tailored so that it is relevant and makes sense to the Japanese audience, and the style needs to be in a way that Japanese audience finds comfortable with. This is the way supposed to be when we say “localize to meet local market situations and needs”.



Unless materials are localized in such a way, it would not appeal to Japanese audience. The reality today, however, is that many are of “literal translation” i.e. replacing English words to Japanese equivalent, the content is not necessarily relevant to Japan market and their consumers, and the style is not Japanese. Such tendency is especially noticed in start-ups (new entrants) in Japan.



4.    Selling, distributing and collecting money



1)   Delivery - a key factor in pricing and total product/service package



Marketing and communication/PR campaigns perhaps can be done by the Internet only, which might be of mostly one-way communication. But that is not necessarily the case when it comes to selling, distribution and collecting money. Follow-up from marketing to sell, even if done online, needs to be interactive. It is far better to do so face-to-face especially in Japan where face-to-face communication is preferred.



This tendency is stronger when it comes to customer support and distribution, and making sure to collect money. Delivery/distribution or SCM (supply chain management) and collecting money after selling are usually named as top two challenges and risks in international business. It is not realistic to handle all these without your local organization or partnership in Japan.



The quality of delivery (especially for fragile items) and cost are challenges of delivering tangible products. These together with customer support are factors that constitute total product/service package, and pricing needs to be done based on the total package.



2)   Collecting money – usually the biggest challenge and risk



Collecting money after delivery is often named as the biggest challenge and risk but not necessarily so in Japan. It is often a challenge to convince Japanese customers that they need to pay for services including consultancy and content, probably because they are so used to free services and content they benefit from like free gift wrapping in department stores. But, once you convince them, collecting money after delivery is usually of less risk in Japan than in other countries - Japanese clients tend to keep promise once they trust you and decide to work with you.



5.    Manners and customs, culture



1)   Business card culture of Japan vs. individual oriented culture of the west



Manners and customs, and culture are diverse while they are rarely documented. In Code of Conduct of globally well-known MNCs, for example, they usually set overall concept and then simply say “to comply with the local law, manners and customers”.



Japan can be summarized as of “business card culture”. It is a norm in Japan to first exchange business cards when you meet a business person. Japanese would pay attention to the company name, title on business card and office location, while western people are more interested in the specialty and contact information of the “individual”.



This helps you understand why Japanese companies only do businesses with entities (rare exceptions with freelancers and self-employed professionals) and they expect the business owners to have an office and not working from home.



2)   Some other Japanese business culture worthy to know



First, Japanese expect “company overview/profile” information in all materials and in conversations.



Second, a distinctive difference in payment can be found between Japan and the west. For example, when it comes to paying for booth and sponsorships in industry conferences, advance payment is not the norm in Japan when the Japanese have long lived in “cash culture” (only about 30% use credit cards) and are not accustomed to making advanced payments unless it is of prepaid cards.



Third, email marketing approach in Japan is usually different from the west because of the Privacy Law in Japan. Under this law, it is not allowed to purchase email addresses (private information) from the third party and use it in email marketing. You can send your emails only to those who agreed to receive your emails and they are allowed to say “I no longer need emails from you” anytime i.e. Japan is of Opt-in and Opt-out culture.





Despite the above obstacles, with right approach, you can be successful in business in Japan.





This Post was written by Megumi Oyanagi: Bridge between Japan and Global, Japan Market/Marketing Professional, the Author of “7 Things to Know to be Successful in Business in Japan

2016年12月30日金曜日

Why Business in Japan Now?


With its economy size and maturity Japan has been one of markets that have attracted worldwide business owners and companies outside Japan, but has remained one of a few markets too difficult to enter and penetrate. Possible reasons may include its language, geographic "the far east" location, unique culture of over 200 year isolation from the rest of the world, and so on.



Is it still too difficult to enter and penetrate Japanese market in today’s globalized economy and society? And, is it really wise for you to give up doing business in Japan without understanding its market, customers, and what it is like to do business in Japan?



The answer is no.



Japanese market is attractive with its size, maturity and stability even though its population is decreasing and other emerging markets look more promising. Furthermore, the country is safe and clean compared with many other countries in the world, which is what most of people who have visited or relocated to Japan say. Moreover, the upcoming 2020 Tokyo Olympics will surely provide great business opportunities to stakeholders around the world, not limited to those in Japan.



Let me briefly explain what I mean.



1.    Japan - rich country with its big and mature market, but still untapped by many companies        



1)   Big, stable and ripe for business expansion



It may be one of the most mature markets in the world, but Japan is home to a wealth of untapped development possibilities. As the third largest market in the world after North America and China, Japan’s fertile ground is ripe for business expansion. With government initiatives to boost economy called Abenomics as well as upcoming 2020 Tokyo Olympics, Japan truly offers opportunity worth exploring.



Japan enjoys stable economy. There is very little possibility of drastic economic fluctuation that negatively affects foreign investment entering and penetrating Japanese market such as sudden sharp appreciation of JPY to USD or any other foreign currency, sudden change in interest rate and so forth.



Politics is stable and it is very unlikely that the leading party will change for the time being, which means Japanese government policy will be stable and Abenomics initiatives will continue.



With this background, Tokyo Metropolitan has partnered with JETRO (Japan External Trade Organization) and opened Business Development Center Tokyo in April 2015 to provide services and incentives for foreign companies.



Many projects are planned and ongoing to develop and transform Tokyo area, not just where the athletes will be playing sports or Tokyo Bay area during 2020 Tokyo Olympics. This means better business environment in Tokyo.



So many improvements are ongoing in Tokyo and other cities and regions in Japan to make their cities friendly for tourists and visitors around the globe, when we have more and more tourists coming into Japan not limited to major places like Tokyo and Kyoto, such as Hokkaido, Nikko in Tohoku region, Hakone in Kanagawa, Takayama in Gifu, Hiroshima and Kyushu.



2)   Ideal market for high-value, sophisticated products and services



Japan, a mature market, is great for well-targeted products and services of high value. It is an ideal market to test marketing of new and innovative products and services. Japanese customers are probably the most difficult ones in the world to please and satisfy. If you can satisfy them you have high probability of being able to satisfy consumers of other markets. Japanese do, however, pay for the products and services they do value.



Why don’t you seriously think to explore Japan’s potential with an experienced in-market partner, if you have not done so?



2.    Globalization - free flow of goods, money, people and information



1)   History of proactive interaction with the world as well as isolation from the world



With very limited and fragmented information about it, Japan may be regarded as a mysterious country and you may have no clue of how to make a market entry and do business in Japan. Many people do say that it is an exclusive market, often mentioning of the over 200 years of national isolation from the world during its Edo period.



But, on the contrary, Japan used to be extremely proactive in interacting with the world, absorbing different cultures, adapting them to meet its local needs and creating something new. This is from around AC 600 until today, first from Korea and China, and then from the west.



2)   With drastic changes in the last decades the world becomes far smaller today



When Margaret Thatcher was leading UK and Ronald Reagan US around 1980, there was no direct flight between Japan and Europe. I lived in Osaka, so I had to fly from Osaka to Tokyo to Anchorage to finally arrive at London Heathrow Airport which took a whole day door-to-door. Also, there was limitation in carrying cash with us from Japan when travelling abroad. The amount was insufficient for us to do shopping as we do today.



The general public could not make international phone calls as we do today. To make one international call from Japan we had to make a reservation and the line did not necessarily get through smoothly. And the cost was about 1/3 of the average wage of a Japanese worker.



There was no Internet so we could neither communicate via Skype nor browse web content online. Therefore, the only way for Japanese living abroad to obtain Japanese content was to receive Japanese books, newspapers and magazines sent from Japan. The other option was to drive hours to London and buy them in Japanese departments or book stores.



There were neither YouTube and Ustream nor no access to Japanese TV and video content online abroad. From around 1982 employees of some Japanese companies in Japan recorded some TV programs in home video tape using their personal VCR and sent to Japanese colleagues abroad. This was the only way then to access to Japanese video/TV content from abroad.



Today we have access to information around the globe and can deliver message to the world by the Internet. We also have access to products and services around the globe and can shop online. This means companies and business owners outside Japan have access to Japan and can deliver information, products and services, and communicate with business partners and customers in Japan to do business regardless of their location. This is advantageous since Japan is a well-developed for online business. According to a survey result by MarketingProfs.Com, Japan is the forth e-commerce market in the world after China, US, and UK.



And today, the Japanese government and people are basically open to people (tourists and relevant business persons, athletes etc.), goods (products and services), capital and information (content and entertainment) coming into their country.



Lastly, I would like to emphasize is that successful Japan market entry and penetration is not something only for large companies but also can be achieved by SMBs and individual business owners.





This Post was written by Megumi Oyanagi: Bridge between Japan and Global, Japan Market/Marketing Professional, the Author of “7 Things to Know to be Successful in Business in Japan

2016年6月29日水曜日

Respect & Accept Japan’s Business Culture and Manners & Customs for Successful Japan/Global Business – Japanese Businesses & MNCs Operating in Japan


So far, I have outlined 6 approaches that are inevitable in successful business in Japan.



In order to make them work, you need 1 thing; without this, you will never be successful in doing business in Japan even with the 6 approaches.



That is, do not assume “Japan Way” and the way done in your country is similar.



This is about business culture, manners and customs, communication style and so forth.  This is more about soft part, or mindset and behavior, attributing to the country’s long history, culture, religion, education, how things work in the society etc.



One of the things first mentioned by non-Japanese about this topic is exchanging business cards in Japan.



This is true while you need to understand something behind it that leads to many other things you encounter in doing business in Japan such as how you would need to communicate and get things done in business professionals in Japan especially in formal settings, and setting up your office in Japan.



These are because in Japan “the organization the individual belongs” and his/her title have much significance than the individual.



Another key thing is that face-to-face communication is the key in Japan and it is very unlikely you can get along only with online communication, unlike in large countries such as in the US.



These attribute to the Japan’s long history and culture. You would simply need to respect and accept it instead of pushing your way in doing business in Japan if you want to be successful, as in the saying “When in Rome, do as the Romans do”.



In fact, this was the topic I did one hour consultation with an American business executive who started his business in Japan with a local JV over an international phone call last year. He said communication with the Japan local JV has not been going on well and he tried to understand why by reading books but thought it better to have the consultation on Corporate Culture.



Such a thing is quite understandable because this kind of things are difficult to include in manual, nor can be understood and put into practice overnight.



Having said that, there are things that are universal such as basics of business, ethics/morale/compliance, and how you should treat other people.



After all, this is all about Diversity and Inclusion.



This is one of the topics I have covered in my two eBooks I wrote, which was published by StartiaLab, a leading Japanese eBook publisher in November, 2015.






This article was originally posted on Megumi Oyanagi’s Blog About Japan

2016年6月22日水曜日

Leverage the Internet/Digital while Mixing with Face-to-Face for Successful Japan/Global Business – Japanese Businesses & MNCs Operating in Japan


So far, I have outlined 5 approaches that are inevitable in successful business in Japan.



In order to make them work, you need 2 things, which are the 6th and the 7th approach.



The 6th is to leverage the Internet technology.



It allows you to network with experts around the globe via social media, just as I am doing NOW using LinkedIn, blogs, Facebook etc., as well as getting information online using search.



It is this way that I have access to information worldwide and have been gaining relevant information/data as long as they are in Japanese (my native language) to English. 



It is this way that I met people outside Japan/my area who turned out to be great friends and experts in respective realm who kindly provided with their wisdom especially via LinkedIn discussions. They consequently helped me writing my eBook as well as in doing other things at work or outside work.



Key people in writing and completing the eBook include those whom I met online, and worked/collaborated online. Some of them I also collaborated offline (i.e. face-to-face) if/where possible.



My advice is you take similar approach. In doing so, you need to remember that social media landscape in Japan is quite different from those in your country.  You also need to remember that Japanese people do prefer face-to-face communication. They would not start business only by interaction online.



This is one of the topics I have covered in my two eBooks I wrote, which was published by StartiaLab, a leading Japanese eBook publisher in November, 2015.








2016年6月15日水曜日

Your Country is Not the Only Source of Wisdom for Successful Japan/Global Business – Japanese Businesses & MNCs Operating in Japan


So far, I have outlined 5 approaches that are inevitable in successful business in Japan, which are basics in planning and doing business.



What makes it difficult to go through them is probably the fact that you cannot do them all by yourself or your staff due to insufficient knowledge, know-how, network, resources and so forth, especially if you are business owner/professional of small & mid-sized business.



You can overcome it by networking with experts around the globe and seeking help from them, in respective topics such as market research, marketing, supply chain and so forth. After all, two heads are better than one.



The more the budget you have the better, but you can somehow do so with limited budget, too.



You might think you need to know Japanese language to do so for Japan business. Actually no.



Japanese bi/multi-cultural with English fluency is probably the first go-to-person while it is quite interesting to know there are non-Japanese based in Japan, or non-Japanese working for Japanese clients and the like who may well know about specifics of doing business in Japan and cultural aspects more than most of the Japanese.



That is quite understandable because it is when you have been exposed to multiple different environment that you can compare and understand the uniqueness of your own country or Japan.



This is one of the topics I have covered in my two eBooks I wrote, which was published by StartiaLab, a leading Japanese eBook publisher in November, 2015.




2016年6月8日水曜日

Operational Excellence from Marketing, Sales, Delivery to Collecting Money for Successful Japan/Global Business – Japanese Businesses & MNCs Operating in Japan


It is after developing your strategy and plans for your business and marketing as in the previous post that you are ready for execution.



Operational Excellence is a key in this phase, assuming you have developed your products and services hence you decided to do your business and have reached to this point.



That is, the end-to-end chain of marketing, BD (business development)/sales follow-up of leads generated, and distribution of your products & services you’re your local staff or partner operating smoothly, to deliver value to your target customers.



From web content I come across it seems many people tend to think marketing and sales are different and it is a challenge for the two to work together. To customers all functions of the company/business/brand is the same. You need to provide high quality customer experience at all touch points, online and offline.



Doing marketing targeting the market and customers you are not so familiar with is a challenge while there is some ways to overcome that. And, when your marketing becomes a success; i.e. generates leads (e.g. customers are interested in your products & services and wanting to know more) you need to make sure you follow up and this is sales, which needs to be done locally otherwise it would not work.



And, what is more, distribution which come next is a challenge especially if your business of selling tangible products as you can imagine. You cannot do this globally only but what if you cannot set up an entity in Japan and hire local staff?



Moreover, collecting money from your customers after delivery is crucial and this also requires someone doing this locally. How can you overcome this?



This is one of the topics I have covered in my two eBooks I wrote, which was published by StartiaLab, a leading Japanese eBook publisher in November, 2015.




2016年6月1日水曜日

How to Develop and Execute Your Plan Strategically and Systematically for Successful Japan/Global Business – Japanese Businesses & MNCs Operating in Japan


After doing research and developing strategy as in the previous post, now it is time for you to develop action plans. At this point, many business professionals might dive into making to-do-list but wait.



You need to be strategic and systematic in developing your plan. It is wise to use key marketing framework and methodology.



Define positioning of your business and products/services based on the research & analysis and strategy. Do you want to position yourself as luxurious brand or commodity brand? Niche brand or brand for the general public? High-end or volume-zone?



Your positioning determines targeting i.e. the customers you want to target after customer segmentation, which is the key in developing and executing marketing strategy/plan.



Your targeting determines 4Ps of marketing (Product, Price, Place, Promotion), which leads to action plans with timeline, role & responsibilities of people involved, budget etc., i.e. concrete allocation of resources (budget, manpower, time).



Among the 4Ps of marketing, there are a few that are truly critical in doing business outside your country. Once you get them wrong, it is very difficult to put them back into track.



Planning for execution is one of the topics I have covered in my two eBooks I wrote, which was published by StartiaLab, a leading Japanese eBook publisher in November, 2015.







This article was originally posted on Megumi Oyanagi’s Blog About Japan