The Japanese market is an incredible market for corporate products and services, in part because Japanese companies are still prepared to pay premiums for quality, reliability and service. Understanding Japanese corporate sales will allow you to do very profitable business with Japan’s largest corporations; in my experience some of the most profitable business you can do anywhere in the world.
2 or 3 decades ago, when those infamous myths of doing business in Japan first emerged, Japanese business culture must have seemed impenetrable and the barriers to Japanese business must have appeared higher than Mount Fuji! Fortunately for foreign companies entering the Japanese market in 2004, the protracted recession of the 1990s and the explosion of communications and IT technologies in Japan in the past 10 years, have dramatically changed the business climate in Japan for foreign companies entering the Japanese market. The changes have made it a lot simpler for those foreign companies that understand Japan’s business culture to successfully do business in Japan, and especially to do substantial and very profitable business with major Japanese companies.
So how do sales to Japanese companies differ from sales to companies in the US or Europe? These are some of my thoughts after 13 years of doing business in Japan – much of which has been corporate sales involving traveling around the country, meeting, presenting, negotiating and closing contracts face-to-face with many of Japan’s largest and best-known companies.
Japanese sales technique often seems very old-fashioned and full of unnecessary ceremony to US and European businesspeople used to doing much of their business electronically. In many ways, the Japanese sales process reflects the importance of personal service in the Japanese culture and can be very people and time intensive. The prices of most products and services are high in Japan compared to the US or Europe and those extra margins allow Japanese companies to continue people intensive sales activities which would be impractical on the much slimmer margins typical elsewhere. Discount stores (and Japan’s famous “100 Yen” stores) have become very popular in the past 15 years and traditional department stores have correspondingly faced huge problems, but at heart Japan remains a service-oriented society, the extremely service-oriented “mom-and-pop” businesses continue to dominate and customers are still content to pay a premium (albeit a reduced premium) for that personal service.
To understand just how people, time and service intensive sales to a Japanese company can be, lets look in detail at the traditional sales process to a larger Japanese company:
- the sales team (Japanese salespeople usually work in teams of 2 or more) identify a prospect company in their region,
- they try to arrange a personal introduction to the prospect company through an existing customer but failing that, will personally visit the prospect company and, after enquiring the name of the manager responsible for purchasing, leave business cards with the receptionist or with a junior clerk from the purchasing department,
- after a further 1 or 2 such visits over a few weeks, they will ask to see the buyer in person and, if successful, exchange business cards with the buyer, make a few polite inquiries, bow and leave,
- after another 1 or 2 such visits over a few more weeks to reinforce their dedication and commitment, the salesmen will begin to more seriously pitch their product portfolio to the buyer,
- if the salesmen represents a much smaller company than the prospect company, then at this stage they may take their senior managers (and often their President if the opportunity is substantial) to meet with the buyer and one of the buyer’s senior managers – if the salesmen represents a large Japanese company and the prospect company is also large, then they may take a team of 5 or more senior managers to meet with the buyer and a team of his senior managers,
- at this point (maybe 2 – 3 months after the initial visit) the buyer may ask for a quotation for a small initial ‘gesture’ order,
- assuming the initial order is satisfactorily completed, the salesmen start a regular pattern of personal visits, giving the traditionally expected summer and winter gifts, sending New Years cards and gradually building the depth and value of the relationship over a period of several years.
In 2004, despite 99.99% of Japanese executives and managers having mobile phones, regularly using e-mail and being more directly accessible than ever before, almost all Japanese salespeople still do the majority of their sales in the foregoing traditional manner.