Common Mistakes When Entering the Japanese Market
-By Paul Mcinnis
Success at home doesn't always mean success in Japan and too often International brands will stumble with their first efforts. Believe it or not even Apple had difficulties gaining a foothold in the Japan cellphone market initially. Other difficult starts have included Vodafone, Electronic Arts, Ebay, Wendy's, Pret a Manger, Boots Group and many others. Irrespective of the size of your business, here are some starter ideas on getting big in Japan.
Language comprehension is vital to success in Japan. It is, however, an area non-Japanese companies continue to ignore. There is no way around it, you need native speakers on your side if you want to succeed in Japan. Japanese people can be extremely sensitive to the language-related aspects of business—be it the text on your website or your digital advertising’s headlines and banners.
With various costs required to enter the market it’s easy for the budget-conscious brand to look for ways to minimize those expenses. Language expertise shouldn't be one of them.
The reality is that many global companies are not prepared for the financial investment required to enter the Japanese market.
In addition to the various administrative costs of officially setting up your business to operate in Japan, the minimum investment to run the business is also usually higher than many organizations had planned. When companies insist on spending an amount in Japan they simply feel is sufficient based on costs in their own market, they usually fail dramatically.
One of the biggest contributing factors to the cost of doing business in Japan is simply the high cost of labor. Even for businesses who are not establishing a physical presence in Japan, they are surprised at the market rates of various service providers whether it be web design services, market research, SNS management and so on.
Success at Home doesn't Equate to Success in Japan
Lack of Understanding:
The Japanese market continues to perplex non-Japanese.
Firstly, the culture is vastly different so consumer culture is dissimilar. Without knowledge of Japanese culture, it's difficult to understand the reason behind differences in preferences.
And it’s not just medium-sized businesses who struggle, large multinational conglomerates face these same issues. Wal-Mart who entered the market with Japanese supermarket chain Seiyu failed due to strategic mistakes such as believing that their “everyday low prices” strategy would work in quality-conscious Japan just because it was so successful in the U.S.
Success at Home doesn't Equate to Success in Japan. Foreign companies that think they are invincible do not last long in the Japanese market. Even those that do manage to stay in the market often have to change course and operate very differently than they do in other markets—often settling for a non-market leader position. Look at fast food chains such as Wendy's and Burger King who have struggled for decades in Japan while enjoying enormous success around the globe. Airbnb is also a pertinent example. Airbnb was not prepared for the coordinated effort between Japanese authorities and businesses in the hotel and travel industry, which successfully created new laws that drastically limited Airbnb’s business model in this country. In June 2018, 80 percent of Airbnb listings in Japan vanished overnight as they failed to meet the new laws passed specifically to curb home sharing.
Airbnb had assumed they could enjoy the same results they saw in the U.S. and in Europe. But Japan plays a different game. The Japanese do not take kindly to disruption, especially when it comes to the social harmony of peoples’ living situations. Moreover, Japanese lobbyists are extremely effective at getting legislation that benefits businesses passed quickly.
Choosing the Wrong Partner:
Finding a partner who understands both Japanese and international models of business in key. Localization is a key part of being successful in Japan and having a deep understanding of consumer culture is absolutely essential. Partners can make or break companies entering the Japanese market so choose very carefully.
New Frame KK provides Advisory Services for Japan Market Entry. We support both existing Tokyo based businesses, as well as international firms interested in entering and thriving in the Japan market. Contact us: firstname.lastname@example.org www.newframe.jp