Why is it a great time to do Business in Japan now?
With its large economy and industrial maturity, Japan has been one of best markets to attract worldwide business. However, Japan has also remained one of the most difficult markets to enter successfully. Possible reasons for this include:
- Communication and Language
- it’s ‘far east’ location
- a unique culture and a history of over 200 years of isolation from the rest of the world
Any business will be taking a risk entering such a notoriously difficult market in today’s globalized economy and society; so should Businesses give up doing business in Japan without truly understanding its market, customers, and ways of doing business?
The answer is no.
The Japanese market is attractive with its size, maturity and stability, but it’s population is decreasing and other emerging markets are growing faster. Japan is safe and clean compared with many other countries in the world and this is attractive to many foreign tourists and residents, and the upcoming 2020 Tokyo Olympics will surely provide great business opportunities for foreign investment and not just limited directly to those in Japan.
Let me briefly explain what I mean:
Japan – A rich country with a mature market, is still untapped by many companies
Big, stable and ripe for business expansion
It may be one of the most mature markets in the world, but Japan is home to a wealth of untapped development possibilities. As the third largest market in the world after North America and China, Japan’s fertile ground is ripe for business expansion. With government initiatives to boost economy such as Abenomics as well as the upcoming 2020 Tokyo Olympics, Japan truly offers opportunity worth exploring.
Japan enjoys a stable economy. This stability reduces the possibility of drastic economic fluctuations that negatively affect foreign investment entering the Japanese market. An example is the relatively controlled appreciation or depreciation of JPY to USD or any other foreign currency, with minimal sudden changes in interest rate.
Japan Politics is stable and it is very unlikely that the ruling party will change in the short term with general public support for Japanese government policy and the continuation of Abenomics initiatives.
Given these key background macroeconomic conditions, interest in Japan, upcoming events and a desire to attract businesses to Japan, the Tokyo Metropolitan Government has partnered with JETRO (Japan External Trade Organization) and opened the Business Development Center Tokyo in April 2015 to provide services and incentives for foreign companies.
There are many projects which have been planned or are ongoing to develop and transform the Tokyo area and not just for the 2020 Tokyo Olympics sports sites or Tokyo Bay area. This city-wide transformation will also generate a better business environment in Tokyo and it’s surrounds.
These many improvements are ongoing in Tokyo and other cities and regions in Japan to make their cities welcoming for tourists and visitors from around the globe. The resulting increase in tourism into Japan will not just be limited to major places like Tokyo and Kyoto, but extend to other regional areas such as Hokkaido, Nikko in Tohoku region, Hakone in Kanagawa, Takayama in Gifu, Hiroshima and Kyushu.
Ideal market for high-value, sophisticated products and services
Japan, a mature market, is great for well-targeted products and services of high value. It is an ideal market to test-market new and innovative products and services. Japanese customers are probably one of the most demanding in the world to satisfy. If you can achieve good customer satisfaction in Japan, you have a high probability of being able to satisfy consumers of other markets more easily. In Japan, customers are prepared to pay well for the products and services they do value.
Globalization – ‘The free flow of goods, money, people and information’
Japan’s history of proactive interaction with the world, and isolation from the world
Japan may be regarded as a mysterious country with limited accessible or fragmented information and it this can make it very difficult to be successful at a market entry and do business in Japan. Many people do say that Japan is an exclusive market, often referring of the over 200 years of national isolation from the world during Japan’s Edo period.
However, Japan has been extremely proactive in interacting with the world, through absorbing different cultures and adapting them to meet its local needs and creating something new. This began from around 600 AD until the present day first from Korea, China, and then from the West.
With drastic changes in recent decades, the world has become far smaller today
When Margaret Thatcher was UK Prime Minister and Ronald Reagan US President around 1980, there was no direct flight between Japan and Europe. I lived in Osaka, so I had to fly from Osaka to Tokyo, and then to Anchorage to finally arrive at London Heathrow Airport. This took a whole day, door-to-door, there were also limitations in carrying cash from Japan when travelling abroad. The amount allowed to travel with was much less compared with a typical shopping filled trip today. The general public could also not make international phone calls as we do today. To make one international call from Japan you had to make a reservation, the phone call did not necessarily connect smoothly and the cost was extremely high.
There was also no Internet so we could neither communicate via Skype, nor browse web content online and one of the only ways for Japanese living abroad to obtain Japanese content was to receive Japanese books, newspapers and magazines sent from Japan. Or another option was to drive hours to London and buy whatever was available at the time in Japanese sections of department or book stores.
Neither YouTube nor Facebook existed, and there wasn’t any access to Japanese TV or video content online. In the early 1980’s employees of some Japanese companies in Japan, would record TV programs on VHS tape and sent them to Japanese colleagues and family abroad. This was the only way to access to Japanese video/TV content at that time.
Today we have access to information from around the globe and can deliver any potential message to the world via the Internet. This allows us access to products and services from around the globe using online shopping and other online platforms. So companies and business owners around the world can have access to Japan, they can deliver information, products and services, and communicate with business partners and customers in Japan, and do business regardless of their location. This is advantageous since Japan is a well-developed market for online business. According to a survey result by MarketingProfs.Com, Japan is the fourth largest e-commerce market in the world after China, US, and UK.
Both the Japanese government and the public are becoming more accepting of foreign tourism, capital and investment, businesses, sports, athletes, foreign content and other entertainment, products and services, coming into the country.
Finally, it is important to emphasize that successful Japan market entry and penetration can be achieved by SMB’s and individual business owners, not just large companies. Why don’t you think seriously about exploring Japan’s potential with an experienced in-market partner, if you have not yet done so?
This Post was written by Megumi Oyanagi: BIJ Member & Moderator, Bridge between Japan and Global, Japan Market/Marketing Professional, and Author of “7 Things to Know to be Successful in Business in Japan”