resources: Setting Up Shop in Japan

This page is based loosely on an article titled Realizing Worldwide Opportunities for High-tech Products and Services with Japanese Partners by kamo, inc. president Christopher R. Keener appeared in the 3rd Quarter 1998 issue of the Austin Software Leader.

Doing Business with Japan, part 1.

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Japan may be the largest market for high-tech products and services outside of the US, but it also tends to be one of the most difficult markets for foreign companies to enter. The approach that works in the US market might achieve success with only minor modifications in many other countries. A successful approach to the Japanese market involves considerable patience, flexibility and an enduring long-term strategic perspective, but the potential rewards can be well worth the effort.

Prepare a strategy early on

The task of getting started in Japan seems so daunting to many foreign companies that they put it off thinking that they will attend to it later when their organization has sufficient resources to handle it properly. By then it is often too late to form the quality of relationships that will realize the full potential of the opportunity. It takes considerable time to forge the kind of strong relationships with capable Japanese partners that will result in enhanced access to Japanese and other world markets.

Many startups succeed in the American market by the merit of the quality of their products and services alone. This approach rarely works in Japan where it is usually necessary to have an awareness of corporate affiliations and to win the favor of well-placed adopters that can provide access to broader markets.

Strange as it may sound, the correct approach is not always to aim to make money right away. Trying to develop the market too quickly can have disastrous results. An American Fortune 500 company -- which had been selling its products in Japan for over a decade through a Japanese distributor -- decided to open its own office in Tokyo to aggressively promote a new product line. Opening this office soured it's relationship with its distributor and made its existing customers suspicious about its intentions. When the new product line failed to take off, the company had no choice but to close its new office in Japan. The company's reputation was now stained -- it had poisoned the field in Japan and it would be extremely difficult to grow anything here again.

It is possible to avoid these kinds of scenarios through careful planning and execution. The rewards are certainly well worth the effort.

Learn about your options

Most high-tech companies have had some contact with Japanese companies, albeit usually passively engaged: their products and services have been purchased by Japanese customers and they have received inquiries via the Internet and other media or while exhibiting at trade shows in North America and Europe. An easy first step is to take a more active approach to begin to understand the appropriateness of your existing contacts to your business goals.

One of the best ways to begin to familiarize yourself with different options for partnership is to visit a trade show in Japan. (Nikkei Net Interactive and Computing Japan have trade show information on their web sites) Simply by walking through the exhibition floor, you can learn a great deal about which Japanese companies are marketing products and services which are competitive or complementary to those of your own company. You will probably discover several strong potential partners with which you were previously unfamiliar. Potential partners you meet at the show may appreciate the commitment you have demonstrated to learning about the Japanese market by making the effort to attend a Japanese trade show.

The next step is to begin to evaluate potential partners and to determine which is the most appropriate partner for your business. The partners you select will have considerable impact on your firm’s ability to access the Japanese market. Your company and its technology will be judged by the position of the partners you select. It is not an easy task to trade up to better quality partners later on.

Maintain a strong commitment

Once you have selected distribution partners, your efforts have just begun. The next task you should concern yourself with is helping your partners to gain reference accounts at prominent Japanese organizations. Without a list of Japanese reference accounts, it is usually difficult to achieve widespread acceptance for your products in the Japanese market. If you choose your distribution partners well, they will be loyal and effective promoters of your technology, but their success can only be assured by the continued commitment of your company.

Be prepared to provide your Japanese distribution partners the support they need to satisfy your first customers. Your executive staff should plan to make multiple trips to Japan to maintain momentum for the implementation of your strategic plan. Your technical staff must be capable of providing prompt and adequate replies to pre- and post-sales support inquiries, even though the volume and nature of these inquiries may seem out of proportion to the immediate revenue potential.

Make every effort to involve your distribution partners in devising a localization plan; your partners and customers will be much more enthusiastic with your technology if you demonstrate a willingness to adapt your products and services to address their concerns. Satisfying your partners and early customers is what opens so many opportunities within and beyond the Japanese market. It may take a few years of concerted effort for your company to begin to see a commensurate return in revenue, but it is certainly better to forego instant gratification in the form of immediate revenue in order to achieve future opportunities of far greater potential.

Doing Business with Japan:
setting up shop
Japan in context
beyond Japan
resources: doing business with Japan
Japan business links small is beautiful kamo's community
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