For growing brands looking to expand their business globally, Japan is often one of the first foreign markets many hope to enter. This line of thinking makes a lot of sense since in addition to having a population of over 120 million people, the country also boasts the worlds 4th biggest ecommerce market with sales exceeding 160 billion USD as of 2018.
If we look at things from a more qualitative perspective as well, Japan is an aspirational market for brands due to its image as a trendsetter—not only within Asia but also the rest of the world.
At the same time, however, the country has earned a reputation for being incredibly difficult for non-Japanese companies to enter and compete in.
While some brands simply enter the market and try to figure things out as they go, this approach almost always ends in failure. That’s why in order to give your organization the best chance at success, there are a number of things you should consider before entering the Japanese market.
Is there demand for your product in Japan
How do you gauge whether or not there is demand for your product in Japan?
There are various approaches to answering this question, but we would recommend first conducting exploratory research into the Japanese market. Certain products may be a hit in one country, but totally bomb in another for any number of reasons. Sometimes it can even simply come down to cultural differences.
Even if you come to the conclusion that there is little demand or it’s not feasible for your brand to sell in Japan, by conducting proper market research you will have saved yourself significant time, money, and resources on something that may not have panned out. As most information is available exclusively in Japanese though, this can be a challenge for those foreign brands without Japanese speakers to help conduct market research.
Have you done a competitor analysis
In addition to getting a feel for the demand for your product in Japan, without a proper understanding of the competitive landscape you may find yourself in a situation you thought would be lucrative quickly turning unprofitable.
The biggest surprise for non-Japanese companies who come to Japan is finding out they have a lot more competition than they had initially thought. The worst thing that can happen to an overly eager brand that enters the Japanese market is when they constantly are discovering new companies they were not aware of. This is not the position you want to find yourself in.
This is why conducting a thorough competitor analysis is part of the first things we do as part of any exploratory research for your company.
Just like with gauging the overall demand for your product or service it’s hard to do an in-depth competitor analysis when you don’t read or understand the language. It can be hard to not only find your competitors, but also to see what they are doing well and potential areas where you could do better than them. However, just as you would do in your own country, competitor analysis is an essential part of entering the Japanese market that can make or break your chance at success in the market.
Is your product or service offering solid
Given the competitive landscape in Japan, unless you have a solid value proposition or your product or service has a unique selling point that no Japanese competitor can lay claim to, you may find yourself in an uphill battle when it comes to selling in Japan.
For non-Japanese brands who already are at a disadvantage when it comes to understanding the language, the market, and Japanese consumers, having a unique offering can often be their only hope at gaining a foothold in the market. Simply establishing this foothold though, requires a deep understanding of Japanese consumers and what value your product offers to them—something that non-Japanese brands usually are unable to discover on their own without help from a local partner.
Are you prepared for the investment needed to enter the Japanese market
Lack of investment is one of the most common mistakes foreign companies make in Japan, and this is something that must be discussed at the beginning stages of your planning; ideally well before entering the Japanese market.
The fact of the matter is that there is a significant upfront investment required to do business in Japan and without it, your chances of success are drastically reduced. The majority of industries in Japan are simply too competitive for half-hearted attempts at market entry (i.e. looking for low-hanging fruits) or sticking to a budget that is unrealistic (i.e. too small) for the Japanese market.
There are a number of things any prospective foreign entrant into this market needs, including a website with relevant, localized content as well as a comprehensive strategy to promote your brand and product or service offering. The only way to really gauge how much your organization’s market entry will require is to consult with those who have experience in the market, as everything is heavily dependent on your specific situation as well as your objectives for Japan.
Are you capable of offering customer service in Japanese
The last thing to consider before entering the Japanese market is how you will handle customer service. Japanese customers are used to receiving customer service by a real, native-speaking Japanese person. For any businesses that handles a lot of customer inquiries, this can pose a significant hurdle.
How your brand handles interactions with Japanese customers plays a huge role in your future ability to make sales, since it impacts both customer trust and your brand’s reputation. Do not let your hard earned customers slip through your fingers by neglecting to invest in Japanese-speaking customer service.
Things to consider before entering the Japanese market: Summary
While the Japanese market continues to attract up-and-coming brands with global ambitions, due to both its size and potential, few are able to truly penetrate the market. Failures can sometimes arise from poor planning and execution, while at other times the market may simply be overly saturated and the space you would usually position your product already occupied taken by a domestic competitor. Finally, lack of appropriate levels of investment—in a variety of areas—continues to plague foreign brands and hampers their performance in the market.
Before entering the Japanese market your business or brand should carefully consider the points listed above. In doing so you stand to improve your chances of success.
Considering entry into the Japanese market? Contact us to schedule a call to see how we can help.