Japan boasts the third largest economy in the world, bigger than both the UK and Germany’s combined, and with both the 2019 Rugby World Cup and Tokyo 2020 Olympic Games on the horizon, the potential for East of England businesses is huge.
We sat down with Trade Adviser Jose Richart to find out a little bit more about the market and how UK businesses should prepare when looking to export to Japan.
Hi Jose, thanks for speaking with us. Are you able to give our readers some background about yourself?
I’m an Export Development Adviser with over 15 years’ experience in international business, export consultancy and business development. Up until 2011 I worked in Valencia, Spain where I grew up, and have since been living in England working for the Department for International Trade (DIT) supporting companies in the food and drink and retail sectors to export their products and services internationally.
Earlier in my career I undertook a Japanese executive programme in Tokyo which was funded by a European grant. This led me to work as an intern for 2 different Japanese retail companies. Here I learnt a lot about Japanese culture and how business works in Japan compared to Western society.
What sectors are currently thriving in Japan?
Major sectors in Japan include automotive, business and financial services, pharmaceutical, and due largely to the ageing population in the country, life sciences.
For the consumer market there has recently been a big drive for authentic British brands that have a “Britishness” about them, particularly those in the food and drink and fashion sectors. This hunger for brands that have heritage is exemplified by my client Aspall. The award winning cyder brewery has been producing cyder on their site in Suffolk since 1728, and this is incorporated into the product branding and bottle design. This type of British legacy is exactly what the Japanese consumer is looking for, so it’s no surprise to see Aspall having success in the market.
We also must not forget that Tokyo is playing host to some of the world’s biggest sporting events this year and next! I’m sure the Rugby World Cup and Tokyo 2020 Olympic Games will provide some great opportunities for our British brands.
It certainly sounds like there is a lot of potential for businesses in the East of England! How does conducting business in Japan compare to the UK?
There are quite a few things to consider when exporting to the Japanese market:
- English is not a widely spoken language in Japan, so I would always advise hiring an interpreter when visiting the market and looking to build relationships. The Japanese are very polite, and this can often deceive you into thinking that your conversation with them in English is being understood. To make sure business meetings are effective, be sure to have someone there to translate the conversation.
- In Japan relationships are key to business, so do not expect quick sales. First Japanese buyers will want to build up a relationship with you and your company, and then when they have gained your trust they will begin doing business. It’s also important to have patience, as it’s likely they will want to ask a lot of detailed questions about your business and products. The more you put into this initial process, the more likely they will trust you.
- Attention to detail is highly regarded in the country, so make sure that you are well prepared when visiting clients. They expect a high level of professionalism and business etiquette, and it is important to be punctual when attending business meetings. Have presentations and materials prepared in advance so there are no hiccups when you arrive and make sure you’re business cards are translated into Japanese on one side. Remember that you should hand over your business card with two hands, and treat business cards you receive with respect. It’s helpful to think of the business card as the face of the person, so do not deface or write on the card. If you’re in a meeting keep their business card on the table facing them.
- Decision making in Japan is always done in a consensus, so don’t expect quick decisions! They will debate, have meetings and make decisions as a group which will take more time. Again this goes back to my previous point about patience, it’s really essential to stay patient when conducting business in this market.
- Hierarchy and respect is very important in the workplace in Japan. You should address the most senior person first, so it’s advisable to find out the hierarchy before a meeting and make sure you address people appropriately and in the right order.
- Finally, it’s also wise to think about the end consumer too. Packaging and branding is just as important as the product itself, and products that are considered visually appealing to people in the UK may not always be as successful in Japan. Consumers in the country like bright and colourful packaging, with red, yellow and green proving most popular.
It may seem like a lot to think about, but with support from Advisers like myself at the DIT, you can put yourself in a really strong business position when developing relationships face to face.
Would you say it’s unlikely that you’ll be able to do business without visiting the market and meeting Japanese suppliers face to face?
Yes, it’s pretty unusual to do business in Japan without visiting the market. Despite Japan being a very technologically savvy country, its best to build relationships from meetings in person, and this means that exporting to Japan can be a big investment for businesses. You will need to regularly travel to Japan after deals have been completed to keep up the relationship you have built, so it’s important to understand that selling in Japan is a long term investment.
When could I expect to see a return on this investment?
Japan is a wealthy country, and for well established brands that have invested in building relationships with suppliers and gained their trust, it’s likely that you will have very loyal customers in the long run. This loyalty means they will not swap out your brand easily, which is a great pull for businesses looking to trade there.
If you have a high quality product that has interest from the Japanese market, just be patient and utilise the free support available from the DIT and you will soon see a return on your investment.
You’ve mentioned that the Japanese are technologically savvy, is selling online an option for smaller businesses that might not have as much investment available?
Yes, Japanese e-commerce is growing remarkably quickly. Over 91% of Japan’s population have access to high-speed internet, and with the countries fantastic delivery network and appetite for high quality British products, there are plenty of opportunities for businesses who would prefer to start off at a smaller scale.
The most popular eCommerce platform in the country is Amazon, accounting for 20% of eCommerce transactions in 2017. This market share has made Japan Amazon’s 3rd biggest marketplace, overtaking the UK and sitting just behind the USA and Germany, so this really puts into perspective how much e-commerce is growing! Obviously success isn’t always guaranteed, so it’s wise to investigate and research the market to find both the risks and rewards involved.
If you’re interested in finding more out about selling in Japan with Amazon, we’re hosting a webinar alongside Amazon Japan experts Rising Sun Commerce on the 14th May. This should be a great starting point to find out about Japanese market trends, the eCommerce landscape, details of tax and compliance and much more.