Despite its wealthy consumers and high standard of living, Japan is a market that many global companies find difficult to penetrate. Even when the potential for success is high, the obstacles are often overwhelming: endless negotiations with Japanese intermediaries, seemingly impenetrable business networks, and the high cost of establishing a market presence in Japan.
But one Danish company has achieved a breakthrough in Japan by applying a novel market approach that bypasses many of these problems. A small manufacturer of high-quality gift items, Rosendahl had tried for years to secure a foothold in Japan’s huge gift giving market. Yet it wasn’t until three years ago, when the company revised its strategy in Japan, that its sales began to soar there. What does Rosendahl do differently now? In a recent article, Export Manager Martin Glisby distilled his company’s new strategy into four maxims on what it takes to succeed in Japan today:
- A presence is needed in Japan, but not all the time. The key change in Rosendahl’s strategy was to stop using intermediaries (local agents, importers, and wholesalers) and sell directly to its customers in Japan: retail stores, department stores, and gift shops. Since Rosandahl didn’t have an office in Japan (and couldn’t afford one), the company set up a “Japan office” in Copenhagen and staffed it with native Japanese living in Denmark. The result: Almost immediately, Rosendahl was able to broker more deals faster in Japan and within two months concluded agreements with two of the country’s largest department stores. What’s more, direct contact with customers helped uncover new market segments in Japan, like corporate gift giving, which Rosendahl was unaware of before and quickly tapped into.
- Always employ Japanese staff, but they don’t have to be based in Japan. To conduct business in Japan, Rosendahl now relies exclusively on its Japanese staffers in Denmark, who make frequent trips to meet with Japanese retailers, deepen cooperation with customers, and engage in knowledge-sharing activities. Glisby claims that this setup actually works better than having an office in Japan. The reason: The expatriates hired by Rosendahl have lived outside their country for years and hold fewer fixed ideas than Japanese locals about how a foreign company should operate there. Working from headquarters, they also have a deeper understanding of the company, can better communicate its brand and vision to customers, and work more aggressively to expedite decisions and introduce deadlines for action.
- Maintain strong relationships, but not necessarily exclusive ones. Released from the exclusive contracts of intermediaries, Rosendahl set out to develop its own business partnerships in Japan by targeting a carefully selected group of retailers (based on their distinctive strengths and networks) and working with them closely to improve sales through intensive knowledge-sharing sessions. “We did not impose our strategy on our business partners,” says Glisby. “Instead we consciously involved them through cross-cultural interplay with the strategy as it unfolded.” This approach, which Glisby calls a “synergistic co-creation of the market,” appealed to the Japanese need for collaboration and helped Rosendahl develop a strong reputation for knowledge sharing, which Japanese companies look for in a business partner.
- Develop a long-term vision, but with a short-term focus. In strategic discussions with Japanese partners, Rosendahl always made sure to emphasize its long-term vision (the Japanese expect you to have one) but also included specific requirements for action, such as a sales launch or a promotional event. Not only did this improve short-term results, says Glisby, it helped Rosendahl quickly establish a record of success in Japan. In just three years, by combining collaboration with firm direction, Rosendahl was able to build a network of solid, long-term partnerships in Japan, without surrendering total control over how to market its products there.
For more information, see the Academy of Management Executive, vol. 19. no. 2, 2005. To purchase a copy of this article, call 914-923-2615 or email AOM@pace.edu.