| So You Want To Export To Japan? The Land of Rising Opportunity With the highest per capita income and the second largest consumer economy in the world, the Japanese market presents exceptional challenges and opportunities for U.S. manufacturers. In April 1991 the Japanese government introduced an aggressive grassroots effort to further stimulate the already growing domestic demand for imports. This effort includes incentives for manufactured goods importers, and the elimination of tariffs for many manufactured products. This trend towards trade liberalization can only lead to further opportunities for U.S. manufacturers to penetrate the Japanese market. The most common reasons for failure in the Japanese market are: 1) lack of information about the market and 2) lack of commitment to developing export business. To combat this, I recommend that you obtain as much information about Japan as you can, make sure the long-term commitment comes from the very top, and that the top is prepared to visit Japan personally and establish the necessary relationships. At the very least, information and commitment will allow you to take advantage of the opportunities available to you in Japan. Patience and Perseverance Differences between American and Japanese culture and business etiquette dramatically impact the way business is conducted. Japan is an island nation that experienced almost total self-imposed isolation from 1600-1854 under the Tokugawa Shogunate. This isolation led to deep, fixed relationships that have resulted in an emphasis on the value of long-term business connections over isolated transactions. Thus, Japanese are generally non-confrontational, and tend to stress group harmony at all costs. Relationship building in Japan takes patience and perseverance, but can be extremely rewarding for those companies prepared to make a commitment to the long-term. In Japanese there's a proverb: "Three years on a stone," meaning that to accomplish anything, about three years of preparation and perseverance are required. This may not always be the case, but if that kind of long-term vision intimidates you, I do not recommend pursuing business in Japan. When starting to build your Japanese relationships, it is a good idea to provide as much information as you can in Japanese: specifications, information on ingredients or components, raw materials, company history, and officer biographies. This will underscore your commitment to good communication and willingness to go the extra kilometer to get the business. Do take care, however, when translating your material in the U.S., especially technical information. It is important that you use the current terminology in your industry so as not to appear out-of-date. Understanding the Japanese Distribution System The distribution system for goods in Japan consists of many layers of middlemen. After a U.S. product hits the port it may change hands three or four times before it reaches the consumer. This complex system developed due to the transportation limitations inherent in Japan's mountainous terrain, which makes it necessary to have numerous distribution centers throughout the country. There are many routes you can follow in choosing a method of distribution in Japan. Keep in mind your own firm's corporate culture. Are you entrepreneurial? You may want to avoid large-scale bureaucratic style distributors. If you are a small company, you should probably stick to a smaller distributor in order to enhance negotiating leverage. I definitely recommend using a Japanese distributor rather than trying to establish your own distribution network because of the cultural differences involved in sales and marketing your product in Japan. * Trading companies: Large trading companies have strong distribution for industrial products. Since they take low margins, they generally require large volumes to justify the business. * Regional wholesalers: While often limited to a region, they are very efficient within their regions and can provide good distribution for bargain products that may not succeed in the larger metropolitan areas. * Joint ventures with manufacturers: Manufacturers give you the advantage of a nationwide distribution and sales network but may not be sufficiently motivated to handle products that compete with their own in a given category. * Agents: Make sure their distribution network is compatible with your products. Do You Have What the Customer Wants? You will have to think about product development in Japan just as you do in the United States. Is the design appealing to the Japanese? Does it meet government standards? Do the specifications match those of similar Japanese products? Are any of the ingredients/ components prohibited? These are issues that must be given serious consideration. Quality is another issue. Japanese consumers demand very high quality, and attention to detail with respect to product appearance and packaging is important. This is true even in the case of samples, which are critical in creating a positive first impression to a potential Japanese buyer. In addition, most people with experience marketing in Japan will recommend introducing your highest quality product first in order to establish a high-quality image. Although Japanese standards for product quality is much more independent of price than in the United States, the Japanese market is a mature one, and pricing for export must be competitive. Price your products differently than you would for Cincinnati. If you incorporate into product cost such expenses as domestic advertising, research and development, and corporate overhead, you may price yourself right out of the market before you get to the negotiating table. Start with an average Japanese market price for a similar product and work backwards, taking into account all applicable duties your product may face in order to determine what kind of export price you can live with. As a note, discounting in Japan is not common as a means of repricing and conveys a low quality image. Where Do I Start? If you are a small company without the staff to devote to full-time marketing in Japan, a consultant will be essential to introduce you to the right people, conduct market research, and find appropriate distribution for your product. In addition, when traveling to Japan, it is a good idea to have someone on your team familiar with your industry who can interpret language and customs for you. Even though small firms may not have the ability to go this route, lack of information is no excuse these days. The following organizations have knowledgeable staff who can be of tremendous assistance in providing useful publications, conducting market research, and getting you involved in trade shows. * Japan External Trade Organization (JETRO)(213) 624-8855 * Int'l Trade Administration/ U.S. & Foreign Commercial Service (213) 575-7104 * Japan Export Information Center (202) 377-2424 * California Chamber of Commerce/ Int'l Trade Division (916) 444-6670 * California State World Trade Commission (213) 590-5965 Best of luck exporting to Japan, and remember, Luck is what happens when Preparation meets Opportunity. Anne P. Sharp lived in Tokyo for 12 years, and holds a B.A. in Economics from the University of California, Davis. She currently works for Toyota Motor Sales, U.S.A., Inc. Corporate Headquarters in Torrance, California and serves on the Advisory Council of the Associate Program at the Town Hall of California. |
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| This article appeared in Japan Expo '91 magazine. Please note that statements and opinions were based on facts that were true at the time of writing. The following are scans of the cover and the article itself. The content appears below the images. |
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| So You Want to Export to Japan? |
| Anne P. Sharp Los Angeles CA, USA Telephone (310) 600-9247 |
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| Anne P. Sharp |
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