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In this issue: January 1, 2012

How to Successfully Approach the Japanese Market
- Basic Philosophy –

If you are currently doing business in Japan but there has been no sales growth for the past three quarters, you may find solution in this issue.

The following are the facts of Japan.

  • Your price to Japan is 15% cheaper now due to currency fluctuations.
  • Population of 130 million people.
  • Same land size as state of California.
  • One of world’s longest life expectancy.
  • The world’s second largest economic power after the U.S.
  • The world’s highest disposable income holder.
  • The world’s highest oral, skin and health care notion.
  • The world’s highest quality standard.
  • Manufacturing society with world’s topnotch mega manufacturers.
  • Highly technically-oriented nation.
  • Over 40% of Japanese housewives have Louis Vuitton bags.
  • Over 60% of Japanese housewives use PC at home.

As an international business executive, what do you think of the Japanese market and how do you develop the market for your product or service in Japan?

The chances are that you will be able to successfully develop your business in Japan as long as you do not underestimate the Japanese unique business practice and culture. We have seen many American executives shouting at the Japanese executives at the meetings in an attempt to force them to accept American way.

Remember money is not everything for the Japanese people, so there is no custom of tip in Japan. The Japanese people in general are motivated entirely differently from Americans.

Sell the right product to the right market

 Many U.S. companies have failed in Japan because they tried to sell red shoes to the blue market.

  • Big Three U.S. auto makers tried to sell their cars that did not fit the Japanese tiny roads.
  • They also tried to sell their cars with steering wheels on the left side while the Japanese cars have their steering wheels on the right side. The Japanese could not drive the U.S. cars as they are.
  • Sears, Roebuck & Co. conducted an extensive market research on Sears’ Craftsman branded hand tools in Japan for three months with great acceptance and sales potential results with the proviso that all tools must be marked with metric sizes. Sears failed because they tried to sell “Craftsman” with “inch” size while the Japanese people use “metric” size.
  • Sears, Roebuck & Co. and Japanese Seibu retail group giant allied to begin Sears Catalog Sales in Japan by setting up “US Connection Corner” in Seibu retail stores throughout Japan. They used Sears English catalogs with Japanese lady translators in each Corner. The translators could not digest over 20,000 kinds of Sears merchandise and this joint venture failed soon.

Huge amount of money had been spent on these ventures. What a waste!!! Most American companies thought they could do the same thing in Japan, too.

Is there any sure way to get feelings whether your product will be salable in the Japanese market or not?

Yes, there is.

Product Acceptance Test

How to know if your product can be sold in the Japanese market in defiance of fierce competition from Hitachi, Toshiba, Panasonic, Sharp, Sony, Sanyo, etc.

If you are seriously thinking about doing business in Japan, you need to check the market response to your product or service in Japan to find out whether or not your product can be salable. So, the first step is to conduct some Market Acceptance Test on your product.

However:

  • Do not use any market research firms or focus group in Japan if your product is already completed.
  • Conduct preliminary research of your products or services in the out-of-box thinking.

Our experience reveals:

1)    Japanese people in general do not make good comments on the new product and ask for many changes or modifications. The market research results would just reflect those negative comments.

2)    Focus Group provides critiques about the product and usually ends up with their suggestions for radical changes for improvement requiring additional huge investment in basic design changes.

  • What if your product is already completed and is ready for release?

Are you going to reinvent the tool based on the market research results?  Can you afford to pay such big money?

Our best practice:

  • Conduct a Product Acceptance Test before your product is completed.

We have developed a unique Product Acceptance Test through our 40 years experience, knowledge and wisdom in the US/Japan business environment.

We will discuss this when we get together.

Selection of Your Business Model

If your product is found acceptable in Japan, the next step is to determine the business model that best fit your business purpose in Japan.

There are seven major business models to choose from or you can mix some of them in doing business in Japan

  1. Build own operation
  2. Appoint national distributor
  3. Form a joint venture with a Japanese company
  4. Sell through Japanese trading company
  5. Sell directly to retail stores and consumer businesses
  6. OEM business
  7. E-commerce

Build Own Operation

You will build your own sales organization in Japan from scratch. If your company has commitment, a right product, sufficient financial resources and has capability to support your Japanese operations by providing sound U.S. marketing and sales strategies, this is the best business model for your company to generate maximum revenue.

In our next issue, we will discuss eight (8) easy-to-follow steps to establish your own operation in Japan.

We are looking forward to your comments.

JapanBusinessConsultancy.com
Editor-In-Chief

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