How to Successfully Enter the Japanese Market?

PESTLEanalysis Team
PESTLEanalysis Team
Table of Contents
Table of Contents

Japan seems to be the ideal place for any company to expand their business and target a different market. But investing without thorough research could result in a loss instead of profit.

Japan is among the largest markets in the world. It has a population of about 126 million and the third-largest GDP in the world as of 2020. Japan represents about 10 % of the world economy. 25% of all high-tech products are made in Japan, and Japan’s smartphone game sector is the largest in the world. Japan is also among the leading manufacturers of electronics and automobile industry.

Japan’s local market is robust and not very welcoming to foreign competitors. Yet in 2013, the newly elected Prime Minister of Japan, Shinzo Abe, stood on the floor at the New York Stock Exchange and urged foreign investors to invest in Japan. After that, the Japanese market observed a massive influx of foreign investment.

Japan seems to be the ideal place for any company to expand their business and target a different market. But investing without thorough research and in-depth knowledge of the Japanese market could result in a loss instead of profit.

Japan Market Research: Things to Consider

The Japanese market and business community are a bit different than that of the US or EU. Many entrepreneurs make the mistake of not conducting thorough research about the Japanese market. Then they end up losing big time, even though they were flourishing in the Western markets.

A prime example is Vodafone’s acquisition of J-Phone. Vodafone spent about US$ 20 Billion to own 100% of Japan’s third-largest telecom operator. But the acquisition failed, and Vodafone sold J-Phone to SoftBank and withdrew from Japan.

To flourish and make profitable investments in the Japanese market, investors should consider the following:

1. Conduct Proper Research

The Japanese market is not like the traditional Western market. The country flourished for a long time with little foreign investment, so the consumers are more accustomed to using local products. Gaining consumer trust and satisfaction is a significant factor deciding whether you will go big or go home.

Financial conglomerates, known as “Keiretsu,” dominate the industries. A Keiretsu refers to the Japanese business structure made up of a network of companies including:

  • banks,
  • suppliers,
  • distributors,
  • manufacturers.

These Keiretsu make it difficult to trade across the boundaries of each Keiretsu. If you need suppliers to get your goods to the markets and a supplier outside of your Keiretsu offers you better rates than the one in your Keiretsu, you will still have to use the services of the one in your Keiretsu even though you know it’s bad for business.

Another thing about the Japanese market is that only around 30 % of people speak English. The country has been somewhat isolated from the world. As a result, Japanese consumers’ thinking patterns are not like Western customers. Many companies make this mistake when designing their marketing strategies and fail to target the right audience.

So before investing in the Japanese market, it is very much advised to research as much as possible to increase your odds.

2. Have a Digital Presence

We live in the age of the internet, and the Japanese people became accustomed to the web long before anyone else. The global mobile internet revolution of February 22, 1999, came with Docomo’s i-Mode, which started from Japan. So one can assume that the average Japanese consumer surfs the web daily.

Creating a computed digital plan and web existence will not only generate legitimacy but also show the consumers that you are serious about being successful in Japan. Having a digital presence is a must if you want to flourish in the Japanese market.

While creating a website for your Japanese audience, be sure to hire a Japanese native copywriter, as grammar mistakes are not taken lightly and show unprofessionalism.

Another thing to keep in mind is that info about the business owner or CEO must be available on the website. It also helps consumers build trust in the organization.

Privacy concerns are widely present among internet users, and many want to maintain their privacy. For example, many internet users opt to use a virtual private network (if you ever googled “How to hide my IP,” you’ll understand why) while surfing the web and provide as little information about themselves as possible. So don’t make your website too aggressive with banners or newsletter opt-ins.

The last thing that is a must-have on your website is the FAQ page that will further elevate this trust with the intrigued Japanese consumer. It also shows them that the organization cares about its customers’ views and opinions.

3. Plan Long Term

The Japanese are traditional people and won’t change their trusted producers if they sense that the company is only in the market to make a quick buck and won’t be staying long.

Another reason you should be prepared for the long run is that most Japanese businesses will only partner up with you if they believe that you will stay for the long haul. Some companies might partner up with you, but the relationship won’t be sustainable.

So the key to making long-lasting, mutually beneficial, and sustaining relationships that bear fruit is to show your partners that you entered the market for the long haul.

Analysis Techniques

You can use analysis techniques like “PESTLE” or “SWOT Analysis” to develop your business strategy. Creating a business strategy can be the difference between the company going bankrupt or generating revenue. These analysis techniques will help you determine your strengths and weaknesses and assess the best possible solutions.

There are several things you need to consider while using these techniques to help you get better and accurate results relevant to the Japanese market. But be ready to dedicate time for proper research about political, social, and environmental situations in Japan. And if possible, employ a native speaker living in Japan to help you out.

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