Building Business in Japan: 5 Mistakes to Avoid

With 120 million inhabitants and relatively well-off consumers, Japan is a desirable market for businesses worldwide. The Japanese market has a reputation for being extremely challenging for non-Japanese to enter. While every circumstance is different, there are 5 common missteps made by foreign enterprises operating in Japan.

1. Poor Market Knowledge

It’s easier to grasp the context of cultural differences by first learning about the country.

Not only do small and medium-sized enterprises (SMEs) have trouble but so do giant global corporations like Wal-Mart.

Wal-Mart has not been as prosperous in Japan as in the US, mostly due to a failure to fully grasp Japanese consumer culture. In the United States, Wal-Mart’s “low pricing” strategy appeals to shoppers, but in Japan, where the focus is on quality rather than price, the concept has not been as successful.

Wal-Mart’s success in Japan is attributable to several factors; moreover, most problems stem from a need for more familiarity with the Japanese market and consumer base.

     2. Improperly Anticipating the Effects of a Language Gap

If you want to be successful in Japan, you will need to surround yourself with people who are native speakers of the language. In a country where fewer than 1% of the population has proficiency in English, that language won’t get you very far.

Working with Japanese-speaking clients can become a source of frustration. Even if you don’t speak Japanese, it’s easy to tell when something has been poorly written, just as it is for native English speakers to notice awkward or unnatural phrasing or word choice. Despite this, many brands seem content to run with such errors in Japanese, even though they wouldn’t tolerate them in English.

    3. Insufficient Investment

The truth is that many overseas businesses lack the resources necessary to penetrate the Japanese market.

The minimum investment to establish a business is generally larger than many organizations had planned for, in addition to the other administrative fees of formally setting up your firm to function in Japan. Companies always fail in Japan when they insist on spending only what they consider necessary based on prices in their home market.

The high labor cost is a major element that drives the price of conducting business in Japan. Companies from other countries are often taken aback by the high costs of services in Japan, such as site design, market research, social media management, etc., even if they aren’t establishing a physical presence there.

    4. Overconfidence

Companies with an international focus that believe they are unstoppable will fail in the Japanese market.

However, even those who remain in the market frequently have to drastically change their strategy and conduct business in ways significantly different from how they have previously operated, generally resigning themselves to a less dominant position.

Japanese people are very sensitive to disturbances in the home and community. Furthermore, Japanese lobbyists are highly effective at speeding up the passage of favorable laws to businesses.

    5. Choosing the Wrong Business Partner

Let’s face it: launching and maintaining a business is no easy feat. SME Japan is here to assist you in avoiding the four mistakes mentioned above.

Our mission is to alleviate the burden of dealing with complex administrative processes, such as immigration, incorporation, business licensing, accounting, taxation, and legal procedures.

With us, you can keep your attention where it belongs: expanding your business and bringing in new clients. Our team of bilingual accountants, lawyers, and office workers will take care of all the paperwork and legal requirements for your business.