Want to sell your product overseas ? Know thine enemy.

http://www.theeastasiaco.com

Because I live here in Tokyo I do get inquiries occasionally from US and Canadian companies that want to sell their products in Japan. Sometimes I can see a market for the product here. For example two years ago a small company in Georgia wanted me to look into the viability of selling US lumber in Japan. This was not a bad idea because Japan does import a significant amount of lumber from the US, Canada, Australia, China etc. But therein lay the problem, I later realized. There was just too much competition, esp from China for a small company in Georgia to expect to sell lumber in Japan without a full-time presence here. More recently a watch designer in CA has expressed some interest in Japan because he does sell about 20 watches a month online to Japanese customers. His watches seem to have a unique design so it may not be a bad idea.

But sometimes I look at the product and I really have to wonder. A home décor company once asked me about selling high-end New Zealand wool throws here. But I had to tell them that I really didn’t think that would go over well in Japan simply because many Japanese use futons and the throw might seem like a bit of an odd concept for people who sleep on the floor most of the time. A preliminary search of online retailers turned up no throws. So this company might have had 100% share of the market or 0. A very risky proposition. I never heard from them again. And there was the Pet Products company that approached me a few months back and asked me about selling their dog bowls in Japan. On the face of it, not a bad idea because the pet products industry in Japan is huge. But how would a dog bowl whose main selling point is its durability going to match up against local products that are equally if not more durable seeing as they are designed for dogs that spend most of their time outside – because many Japanese do not let their dogs in the house ? Another selling point of the bowl was that it is dishwasher safe. Right then the alarms go off in my mind. I do not know any Japanese who are going to want to wash their dog bowl in the family dishwasher. In Japan this would be the stuff for neighborhood scandal. Not surprisingly when I raised these issues with the company, and told them that it really would make sense to do a feasibility study which would include visiting some stores, talking to dog owners and potential distributors to get valuable feedback, they quickly lost interest. Obviously they just didn’t want to pay me to do research which might have completely taken the wind out of their sails but which also might have provided them with some valuable insights on how they could more effectively market their product here.

My favorite story though of how an overseas company can really stumble in Japan involves General Mills and its failed attempt to bring Betty Crocker to Japan. The Japanese love cake. That was not the problem. The problem apparently was that so few Japanese households at the time had ovens. I can understand because we have lived here for two and a half years and we just got our first oven last month. It was the biggest oven in the biggest appliance store in town. But just one look at it and I can see that it would be a real squeeze to fit a Betty Crocker cake in there.

In the words of. Lao Tsu 知己知彼,百战不殆. Zhi Ji Zhi Bi, Bai Zhan bu Dai
Trans: know thine enemy.

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The China business – as seen from Japan

I am a member of a small business group here in a suburb of Tokyo and I recently had the opportunity to attend an evening of talks about doing business in China – from the Japanese perspective. About seventy small and medium-sized business owners from the area were in attendance. In fact, there had been such interest in this event that the venue had to be moved to accommodate everyone. The three main participants were a well-known China specialist from the Hitotsubashi University Business School, an elite B-School in Japan; the owner of local print business who has been doing business in China for many years; and the head of a research institute who works closely with China. Some of the highlights of the evening were as follows:

– Professor Seki from Hitsubashi University emphasized that up until now development in China has taken place in three regions, Dalian, Shanghai and Guangdong. These are all coastal areas the professor pointed out noting that much of the interior of China has yet to be developed. He is very excited about the possibilities for Japanese businesses going forward in the relatively under-developed provinces. Of course when he said this I could not help but think of Fuyang, China (see Mulberry Fields archives)

– Professor Seki noted that although the cost of manufacturing in China is rising, China will remain the best investment for Japanese small and medium-sized businesses for at least the next ten to fifteen years. He spends a great deal of time in China – he is there at least once a month – and he feels the pulse of development. Interestingly a handful of people in attendance had never even been to China but they are aware that the “China price” is essential to their business success. As someone who lived in China for seven years and has been going there for twenty years, I always enjoy meeting people who have yet to make their first trip to China and I talked to several people like this afterwards.

– The owner of the printing company, Mr. Arai, has been doing business in China for about twenty years. He listed some of the ups and downs of doing business in China – including getting thrown in jail for one night – but said China for him has been a mostly positive experience. Although he detailed the challenges of finding good management – which sounded a bit like musical chairs – he said the overall quality of his rank-and-file employees was outstanding.

– Mr Ito from the research institute for precious metals detailed how he could not find anyone in Japan who could help him develop a particular metal press and he eventually had to look to other countries in Asia. He was emphasizing the importance of sourcing not only product but also talent from abroad, especially from China.

Overall it was a very interesting evening, the theme of which seemed to be that Japanese businesses cannot ignore China if they are to remain competitive. Judging from the excitement in the room, and it was palpable, it is evident that the Japanese are still bullish on China in spite of the recent clashes between Tokyo and Beijing.