Japanese Market Entry – A Checklist for Foreign Brands Setting Up Shop in Japan

Posted By Jim Kersey

Depending on how far down the road you are, you probably already have a long list of things to research, plan or implement as part of your Japanese market entry strategy. And as you gather more advice about your new venture, you might find this list growing almost exponentially.

We’d say this is completely normal and an important part of entering a market as diverse and complex as Japan, whether you’re looking to register a new company here or simply sell products on popular ecommerce platforms. The important thing is distilling everything into a checklist that you and your team can use.

As a Western-facing Japan-based marketing agency helping brands bridge the gap between their home markets and their dreams of Japanese expansion, we’ve helped quite a few companies flesh out their strategies and build their own checklists.

This blog takes what we’ve learned over the years and offers some important suggestions for the kind of things you need to include in your roadmap for entering Japan.

If you feel you already have a good sense of the basics, you might find some of our more comprehensive guides and how-tos more helpful:

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Identify Clear Opportunities

Japanese gamer symbolising market opportunities for Japanese market entry

While indicators like subdued economic growth or falling birth rates might be things some investors should be wary of when entering Japan, there will always be a set of growth drivers and opportunities that apply more specifically to your brand and type of business.

For instance, Japan is one of the biggest consumer societies in the world with people buying large volumes of products in several categories. Knowing what these are and how your product fits into the product ecosystem can better help you predict the possibilities for your brand.

Japan is also home to one of the biggest ecommerce markets in the world — with revenue expected to show an annual growth rate of 6.5% between 2020 and 2025 — and consumers with high disposable income they’re willing to spend on high quality luxury goods. The right product serving the needs of the right audience can do extremely well here.

Having a clear understanding of opportunities and gaps is crucial for refining your strategy and brand messaging so you actually can achieve your intended market position. If you’re currently still trying to figure this out, we’d recommend taking a look at our blog: Japan Market Analysis – Intelligent Insights to Guide Your Market Entry Process.

Opportunities in Japan

 

Retail As the fourth largest importer of US products after Canada, Mexico, and China, Japan has exhibited a substantial appetite for foreign brands.
Biotechnology In line with its ageing population and the maturity of its technology sector, Japan has invested heavily in healthcare related technologies in recent years.
Healthcare In some health-related fields, such as childcare and psychology, companies originating in country’s with a good international reputation for quality are well received in Japan (e.g. Finland for child healthcare).
Educational services Education is incredibly important in Japan, as is professional training and courses for adults on several topics such as vocational skills training and languages.
Leisure and travel Japan is one of the most visited destinations on the planet by tourists, and although the residing foreigner population is less than 3%, it continues to cater to millions of visitors each year speaking dozens of different languages.
Gaming After only China and the US, Japan has the third largest games market estimated at $18,683 million according to Newzoo. Now, VR gaming is a rapidly growing sector presenting opportunities for both domestic and foreign brands.

 

To learn more about the consumer mindset in Japan, take a look at our blog: 10 Important things You Need to Know About Japanese Consumers

Evaluate Your Chances

Offices in downtown Tokyo for businesses engaged in Japanese market entry

With a clear idea about where you want to be, there are a few things you can do to assess how hard it will be to get there. Many of these apply to any new market, while others are particularly important for Japan.

 

Product suitability Do you know how much your products or services will need to be adapted to suit local preferences? You may find that your major value proposition for your home market is less impactful in Japan than other characteristics your brand can offer. Or that the same customer benefit needs to be rephrased and reshaped to resonate with local consumers better.
Competitors You’ll need to clearly map out where gaps are and the level of competition you face from domestic companies who are generally more favoured by consumers who prefer to buy from brands they’re familiar with, rather than new foreign companies.
Entry timing In some cases, first movers in Japan have a clear advantage over slower rivals, but this doesn’t mean that success is impossible.
Industry life cycle stage Your odds for success in Japan will be influenced by how far along consumers are in understanding your specific product, as well as their relationship with existing brands offering this product.

With high loyalty levels here, it can be incredibly hard to pry away existing customers from competitors even with superior products, so you’ll need to consider carefully how much of the total market is left for the takings.

 

Choose an Appropriate Entry Strategy

There are several ways to implement your Japanese market entry process. You can start small and scale up by working with distributors to put your products out there first, or establish a completely new business entity to run large-scale operations in your new market.

Equally, you might simply want to sell online with Amazon’s FBA program to handle most of your local logistics for you while you focus on marketing your products.

 

Distributorship A distributorship allows foreign companies to deliver their products and services through an already established Japanese company.
License arrangements This model allows a Japanese company to acquire the rights of your products or services and deliver it to the Japanese market.
Joint ventures Joint ventures involve collaborating closely with a Japanese company to share resources, knowledge, and expertise as you both try to bring success to your product or services. You could benefit from priceless resources and support including an existing distribution network, or a comprehensive understanding of the market.
Set up a local office Officially incorporating your company in Japan is a major commitment, but it can often make the difference between short and long-term success when making moves to grow your local presence.
Just selling online If all you want to do is sell your products online in Japan and keep running things from your home country, you may not need to work directly with any Japanese companies or set up your own. However keep in mind that using certain Japanese ecommerce platforms like Rakuten and Yahoo! Shopping will require you to complete registration requirements which involve setting up a local bank account and business registration.

HB Pro Tip: While we would recommend starting small with the help of local experts to guide you with your first important steps during Japanese marketing entry, the trade-off is that unless you are invested in getting your hands dirty by having a local presence and engaging with your market directly, there is little chance to truly learn about the Japanese market and identify where the greatest opportunities lie.

Build a Strategy that Matches Your Goals

Japanese customer shows how TikTok is a potential channel for brands engaged in Japanese market entry

Scalable Approaches such as PPC marketing on social media channels are great for new companies, but long-term success often relies on long-term strategies that blend a combination of brand awareness initiatives with conversion-focused ads.

Most Popular SNS Channels in Japan

 

*Tap or Hover on the graph below to see details.

Sources: Insta Lab

Unlike in Europe or the US, LINE is the most popular SNS platform in Japan with almost 90 million users. Demographic breakdowns might also be quite different to what you’re used to, meaning it’s always important to evaluate each platform first before investing in it.

Strategies

Below are some of the most popular strategies used by foreign brands entering Japan.

 

PPC PPC (pay-per-click) is most commonly used on platforms like Google and Facebook, allowing you to buy traffic to your site, rather than earning those visits organically. If your ads are not clicked, you don’t pay anything.

This approach can help you to quickly get your ads in front of new potential customers. If you don’t have the online presence to get people to your site organically, PPC advertising in Japan can help you to be seen in competitive markets that are otherwise crowded and hard to gain traction in.

SEO Search Engine Optimization (SEO) is an important way of building your presence on Google. By publishing original content on your site, optimizing for keywords on which to rank, and other best practices for SEO, you can increase your rank in search results and improve your online visibility. If done correctly, this will lead to greater traffic to your site and more conversions.
Influencer Marketing With Japanese consumers looking to their existing network of friends and icons they follow on their preferred social channels, influencer marketing is becoming one of the best ways to convince Japan customers that you, as foreign brand, are worth taking the time on.
PR Public relations has played an integral role in the success of pretty much every big Japanese brand you can think of. While digital PR has a relatively low barrier to entry today, traditional PR, focusing on the nation’s biggest outlets, can be a complicated (and often costly) process to get right.

HB Pro Tip: Most strategies for Japan involve a certain amount of original localized content in order to resonate with your target audience. You might be able to rely on others to handle this for you, as is the case with influencer marketing, but it’s likely that you’ll still need to bring some strong creative talent to the table to craft messages that engage your new market.

Localize Your Content and Campaigns

Example of women enjoying localized marketing content from brand engaged in Japanese market entry

Content needs to be localized. Translation of one language into another is only the beginning. Content should also be adapted to resonate with specific groups within Japan, which is made up of incredibly diverse tastes and preferences despite many people assuming that widespread homogeneity means everyone likes the same thing.

It’s also recommended to adjust your targeting parameters for your Instagram and Facebook ads, for example, if you’ve identified that certain groups within your targeting parameters have different lifestyle habits and patterns for content consumption.

Gather the Right Team

You don’t necessarily need to hire local staff, but having people who have a good existing knowledge of the market and what customers are looking for is priceless. Many brands choose to work with local partners who can take over certain aspects of the process while still giving them ultimate control over how things are run.

If you do decide to hire locally, consider doing a decent amount of due diligence into researching the capabilities and success rate of your potential recruitment partners when handling the needs of foreign clients.

In particular, check how well they understand the processes involved in digital marketing which is a less mature sector of Japanese society than traditional advertising. Things are changing gradually, but it’s harder to pick up junior or mid level digital marketing talent in Japan than in many other nations where you’ll be able to pick from a larger pool of people.

Need a Partner? We Might be Able to Help!

Getting Started

View from offices of company implementing Japanese market entry strategy

We’ve helped a lot of foriegn businesses start growing their presence and make sales in Japan. Some have had to adapt their products and services more than others, but even the most Japanese-suitable brands have needed to adjust their messaging slightly to be more effective within their new market.

If you need help with mapping out the opportunities for your brand and building a feasible Japanese market entry plan, we’d be happy to hear from you and potentially support your journey in taking on such an exciting market!

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