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 people’s 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 down”culture.
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”
