Assess: What changes are needed before you go global? There are a multitude of things you need to consider before going global. Your product is one of them. Product Profile What differentiates your product in your domestic marketplace? Will that difference be sufficient to win share in Japan? If your main differentiator is price, know that in Japan a low price can be both a plus and a minus. Even though their price was more expensive, one company was able to capture a sizable share of the Japanese market with their component precisely because it was better made and resulted in a better end product. Japanese buyers love low pricing, but they won’t sacrifice quality for price. Know Your Customer Another company didn’t succeed in Japan until after they realized that what was an acceptable reject rate in the rest of the world isn’t acceptable in Japan at any price. After tightening inspection parameters they succeeded in reducing rejects. They weren’t able to raise the price of their product but they did eventually win a larger share of the customer’s business. Understanding the Japanese customer mindset is critical for success there. In the case above, quality payed a much larger role than was expected. Even compared to other countries, Japan is known for it’s fierce attention to detail and quality. Coupled with Japanese procurement and buying practices that squeeze every last penny out of the logistics cycle, many US companies are at a loss to understand how to get past the buying office quickly and with a healthy profit margin. Roadblocks to Success The pricing and reject rate examples above are exactly why it’s so hard to do business in Japan for foreigners. In my experience, there is only one way to break into this market and that’s by using expert help. While it is possible to ‘go it alone’ it requires vast amounts of time and local knowledge which most businesses just don’t have. Relying on an expert for assistance is a far better option. Make sure your expert is fluent in Japanese and has deep connections there as it’s a society that values connected introductions far more than the US.
