starting business in Japan


The power of Japanese networking

5.  the power of Japanese networking

I noted in the previous section about the first 3 months of doing business in Japan and entering the Japanese market, that this is a low-risk and in many ways 'one time only' pre-commitment opportunity to accumulate knowledge in preparation for making the key decisions of if, how, and to what extent, you will enter the Japanese market. The decisions made in those first 3 months of doing business in Japan will decide your success in the Japanese market for at least the first 3 years of your Japanese business. The best decisions are typically built on a foundation of knowledge and a good strategy to follow in the initial 3 months is:

  1. network, network, network!
  2. decide the Japanese market entry form (agent, distributor, direct sales etc.)
  3. negotiate partnerships and hire key staff
  4. educate and integrate the Japanese partners and key staff into your corporate culture (of course a never ending activity).

In the first month in Japan, whether operating from JETRO's free Tokyo offices, a hotel room, your accounting firm's Tokyo office or wherever you work from, networking and information gathering are the key activities. Meet with as many potential customers and partners, bilingual Japanese legal firms and accounting firms, Japanese trading companies, distributors and agents, knowledgeable 'locals' (especially other foreign company executives who have been through the same experience) and influential professors and academics at leading Japanese universities (see the section on Japanese business culture to understand the unusual business value of influential academics in Japan) as you can find.

"..potential customers will tell you what presence you need for Japanese market success."

Listening carefully to potential customers should tell you exactly what presence you need to succeed in the Japanese market. For example, if you sell complex technology are they expecting you to establish a domestic Japanese support facility even if you will be using a distributor and not selling directly? In my experience, many influential customers (those 20% that will generate 80% of your Japanese sales and maybe 90% of your Japan business profits) prefer to deal 'direct with the source'. Listening carefully to how they describe your competitors' salespeople or distributors will also give you invaluable hints as to which distributors you should target as potential partners and which to avoid if you decide to go the distributor route.

A key question overlooked by many executives of foreign companies starting business in Japan is to ask your potential customers who they think is the best salesperson, businessperson, support person etc. in your industry. The names you get may well be great candidates for your subsidiary team if you decide to go the direct sales route and will give a head-hunter a place to start. Despite the myth that tells you ' Japan no-one can move from one company to its competitor..' I once did more than $1m of perfectly legal (i.e. not breaking any anti-competition or confidentiality agreement!) new business within 3 months of moving from one US software vendor to become the President of its competitor's Japanese subsidiary. The customers bought from me because they liked me and they preferred the product I was now selling - the 'like, trust, buy' golden rule of sales success applies even more so when doing business in Japan.

By the end of the first month you should have enough knowledge of the Japanese market to be able to make an educated decision, no longer just a guess or hunch, how your company can best start doing business in Japan. Armed with that knowledge you will be in a strong position to accurately determine the Japanese market value of your product or service and forecast an 'ideal' scenario for your revenues in the first 3 - 5 years of Japanese business. That knowledge will be an essential factor for you in the second month when you determine how and maybe with whom you will enter the Japanese market - whether you will distribute or sell direct.

6.  Japanese distributor, Japanese office or both >>

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