Do Businesses Need a Local Business Partner When Entering the Japanese Market?
Japan is an ever-evolving market and one of the top places in the world when it comes to technology, but also various other industries such as agriculture, transport, mining, fishing and manufacturing which are highly advanced. Entering the Japanese market provides great business opportunities.
When considering entering the Japanese market in any industry, a common question comes up: Do you need a Japanese business partner in order to succeed with your market entry, or can you succeed on your own?
This article will help you with this decision, providing pros and cons for either strategy.
Reasons to Expand to Japan
Why is Japan a great market to enter for foreign entrepreneurs and companies?
Among a variety of countries that you could enter in your global expansion efforts, Japan offers promising opportunities with its unique and highly developed market.
Japan is one of the world’s largest markets, with over 125 million people that you can sell your products to.
Moreover, Japanese people tend to adapt to new things easier when compared to other markets. They are open to new ideas and products, making Japan ideal for a company offering novel products and services.
Unlike other countries in the region, the purchasing power of the Japanese is rather strong, meaning this market provides great business opportunities.
When you start doing business in Japan, be it with a Japanese business partner or not, you can access great local talent. There are a plethora of talented professionals that you can hire in Japan, giving you access to lots of expertise and knowledge.
We should also note that the legal framework in Japan is very well established. That’s also helpful for anyone who wants to enter the market and start a business here. You have clear regulations and transparency, something that creates a stable environment for business creation.
Japan can be a very fruitful market, especially if you provide a new product or a unique take on an existing product, and are willing to adapt your offerings to the demands and preferences of the Japanese customer.
Partnering with a local business as a way to enter the Japanese market
When entering a new market, there are always challenges you need to face. Japan in particular is known as a difficult market to enter for foreign businesses. English is not very common here, so there is a language barrier. On top of that, Japanese culture is very different when compared to many western cultures. That’s why it will be hard to connect with local customers without involving local experts, who understand the preferences and behaviors of the Japanese.
Because of that, having a Japanese business partner can be key to setting up a profitable business that can compete with local alternatives. A local partner already knows the market very well, but also cultural differences, local platforms and technologies, as well as relevant regulations. This local knowledge can provide a unique insight into the process, while also helping you navigate some of the business creation challenges.
A local business partner can give you ideas and insights when it comes to product and brand protection. They can also inform you about certain risks that might arise if you don’t optimize the product for the local market. With a Japanese business partner, you will find it much easier to adapt your products, services and business strategies to local needs. You will be able to develop and implement creative solutions, and to ensure they will resonate with the local customer target.
Is it mandatory to have a Japanese business partner?
Generally, a foreign business can start their activities in Japan without a Japanese business partner. However, that can be very difficult, because you need to follow the local regulations, understand how to successfully communicate with and convince the Japanese customer, and navigate a variety of other factors that might be very different than in your home country. Yes, it’s possible, but also extremely challenging, and there are numerous foreign companies who have failed with their Japan market entry due to neglecting the importance of the above.
You will find entering the Japanese market much easier with a Japanese business partner, since they already know the market very well. They can help you get started easily, especially when it comes to the business setup process and dealing with compliance and regulation requirements. Once you get past those initial hurdles, your local business partner will be able to offer you all the necessary guidance and support. It provides a tremendous opportunity, and is one of the best ways for you to expand and grow as a company in the long run.
Advantages and disadvantages of choosing to work with local business partners
When you try to enter the Japanese market, having local know-how and expertise can prove to be extremely valuable. However, choosing to work with local business partners might come with a high initial investment. Since business partners will require to be paid for their support, it is crucial to enter an agreement that is mutually beneficial.
The benefits of working with local business partners
One of the key benefits of having a Japanese business partner is that it allows you to obtain the much-needed cultural awareness. There’s no denying that Japanese culture is very different to pretty much every other country. Making sure that you understand the preferences and tastes of the Japanese, and get in touch with locals in a way they appreciate is crucial for business success (and one of the challenges many foreign companies fail to achieve). One example of adaptations you might have to conduct in this sense is providing high-quality customer service. Japanese customers are used to this, and failing to provide the same can be a reason for business failure in Japan. A local partner can help you with these kinds of challenges.
By working with a local partner, you can eliminate the language barrier. English is spoken by 10% of the population or less. In addition, Japanese consumers are very particular about the correctness of any provided information. Chances are that if you provide poor translation on your product packaging or in your marketing messages, your offering will not resonate well with local customers. A Japanese partner will help you localize your product, and ensure that you establish seamless communication with the Japanese target audience.
Complying with Japanese regulations and laws can be quite challenging as a foreigner. Language barriers and country specific guidelines can make this aspect fairly complicated. Again, that’s the type of field where a local partner can be extremely helpful. They can bring you all the necessary guidance and support.
In general, having a Japanese business partner can help to save resources like time and money. Local companies can help you mitigate taxes and lower manufacturing costs. They can also use their local connections to speed up processes as well. All in all, involving local business partners in Japan is extremely beneficial and can provide you with a quicker way to grow your company.
The downside of working with a local business
Not everyone can be trusted, and there is a chance that you can encounter a low quality service provider. If you are not familiar with the local language and practices, it can be difficult to separate strong from weak potential business partners. It is therefore important to perform due diligence before finally choosing a local company.
It is important to note that not every local company has a lot of relevant connections. Even if they can help you on certain things, you might still need to hire other companies for specific aspects, which can raise costs quickly.
In addition, every company will have different demands and expectations. It is crucial to come up with a proper business agreement between you and the Japanese business partner that will satisfy both parties.
In general, having a Japanese business partner is extremely helpful. Although it comes with challenges, one can argue that the benefits and higher chances of business success overweigh the downsides. Just make sure that you’re not rushing into this process. Instead, perform your due diligence and make sure to make it a priority to find the right partner. Checking reviews and recommendations and talking with other people in your industry can help make your choice.
How to find and choose a Japanese business partner?
Once you have decided to include a Japanese business partner for entering the market, the challenge comes from finding the right one. The truth is that finding a reliable business partner can prove to be difficult if you don’t know where or what to look for. Here are some ideas to consider in this situation!
Where can you find a business partner from Japan?
Talk with a consulting company specialized in Japanese business; they might be able to help you find the perfect business partner. Some consulting businesses have great connections in Japan, and they might be able to help you narrow down the best option.
Go to trade shows or conferences. Those are great opportunities to learn about market trends and key players in your target industry, but also to get in touch with potential Japanese business partners as well. Actively networking at events like these might lead you to important business connections for the future.
Online business directories can be helpful too. You can easily research various relevant companies and get in touch with them directly.
Hiring an agent that’s local to you, but who has many business partners or affiliates in Japan can be another viable option. He can talk with potential partners and initiate a meeting. Such an indirect method might not be the ideal option, but it can help you find a business partner fast.
How can you choose the best Japanese business partner?
A good idea is to check the track record of that company. See who they worked with, and check reviews to find out how happy their clients are. You might even reach out to some of these clients.
How vast is their network? It’s helpful if your potential Japanese business partner has a vast network in Japan. That will make it easier to connect with legal experts, manufacturers, and other relevant companies. In doing so, your business has the potential to grow faster.
Are they a financially stable business with a good reputation? When that company introduces you to others, you’re relying on their reputation. If their reputation is not great, that might hamper potential business opportunities.
Make sure you understand the Japanese business partner‘s intention. This partnership needs to be mutually beneficial. When connecting with them, see what they expect from their partnership, what you can provide.
Once you have chosen your Japanese business partner, it is crucial you take enough time for relationship building and don’t rush into business matters too quickly. Compared to most other countries, getting a business partnership started takes a lot more time in Japan. Since Japanese prefer to build partnerships for the long term, they put a lot of importance on building a strong relationship first, before discussing business matters.
Conclusion
Finding a great Japanese business partner is very helpful since Japan is a tricky market to navigate. Not only will you deal with a very specific, culture-focused market, but there are also legal and financial requirements you need to know as well.
A local business partner can help you set up and optimize your business for local clients while also giving you the necessary support and guidance when it comes to marketing. They might also help you with marketing and any other expenditures as well. Involving a local partner can offer you a simpler, more effective way to create and grow a business in Japan successfully.
If you are considering entering the Japanese market, GlobalDeal can help you with your market entry strategy. Having expert knowledge on the Japanese market, we can provide support with your business expansion efforts. From coming up with a business strategy for Japan to connecting you with relevant businesses and crafting a local marketing strategy, we are your one-stop solution for entering the Japanese market. Feel free to reach out for a free consultation!