Japan is an awesome tech company market. It is the world’s third largest economy and the world’s second biggest IT industry; also Asia’s largest SaaS/Cloud market. Although you may have learned about Japanese company culture closing off, Japanese businesses are fast warming up for many reasons for non-Japanese companies. In other words, the timing for a tech startup to venture into Japan has never been better.
We have written a great deal about misunderstandings about the Japanese market community, ranging from overwhelming the value of business cards to the belief that an international corporation can only prosper if they move to an already incorporated Japanese firm. Also, like all other cultural elements of Japanese industry, revenues are often misunderstood since foreigners with an impenetrable cultural moat cannot break through.
While there are complexities in culture to sell in every culture and to gain momentum, I believe these are merely nuances and barriers, but they are never obscure or unbridgeable. However, if you wish to extend your activities to Japan, you must be mindful of them and consciously deal on how things work in Japan.
Set HQ anticipations
If you are reading this, I presume that you would not be the person selling directly to Japanese companies. You will potentially recruit a team from Japan to conduct every day Japanese operations (or a handful of Japanese professionals where you live).
No matter how much you’re dreaming about accessing and selling in Japan, certain strategies are moot if you can’t directly do it.
I find that various representative managers in Japan are running the firm and that Japanese teams typically appear to fail to persuade them of the disparities between the Japanese and American markets. Implementation is the assumption you should be able to have and how you can reconcile what you expect from your US Team vs. your Japanese Team, instead of worrying about concrete sales strategies.
What kind of businesses are good for Japan's growth in the market?
Although Japan is a great tech company market, there are a variety of variables that can make entering Japan easier or harder. When you begin to plan about moving to Japan, it is indispensable to be able to take a pulse from the Japanese economy without going straight. However, how do you do this? You could be able to test the waters in Japan with some early stage clients if your business has these features.
Developer-centric v. Enterprise User-Central Apps
I describe “developer-centered software” as being marketed to information technology and developers and used only to build (or support) something technological. This includes, but is not limited to, DevOps tools (CI/CD, tools for checking, etc.), developers’ tools (SDKs, ID Control Tools, etc.).
Business-focused applications for non-technical functions are marketed to non-technical customers. There may be HR and payroll solutions, cost accounting software, multimedia publicity solutions and tools for content management.
In contrast, commercial user center applications and developer-centered tools are easier to market in Japan because developers are often more commonly used to handle unfinished support apps. A lack of localization of goods, a little Japanese culture, and very little documentation of Japanese applications are parallel to the course.
Japanese developers have continuously been through this loop as new technologies and techniques are created outside of Japan and their reviews of tools are largely objective and impartial. These considerations make it possible to calculate the feasibility of Japan’s expansion through initial organic acceptance, while companies would have to have a long term Japan support policy (e.g. GitHub’s organic growth in Japanese registered users and when they start selling enterprise licenses).
Single licenses v. business licenses
In other words, it is much better than going to a POC loop and trying to ask the entire room of decision-makers to sign up for a freemium service or buy a software licence. Companies would of course have to work out how to market more successfully with bigger accounts. Since it’s more cost efficient to have 100 registered customers, than having to employ a sales team first.
Technical Facilities Self-Service
Entirely self-service applications, beginning with the installation and maintenance of the tool, will have a substantially higher percentage of customers, than those with funding for professional services. This is no different than in the US.
These three considerations are just a few approaches to map out the feasibility of a company to expand to Japan. This does not mean that a company user-centered tool with heavy technical on-board resources cannot extend to Japan. In reality, Salesforce and Oracle are two big examples that are very popular businesses in Japan with precisely the characteristics that may have had a complicated expansion.
To better understand these considerations can be a way to recognize business possibilities and continue with small measures towards growing market share in Japan, rather than beginning to open an office directly.
Moving to and from
Once you have determined that Japan has appealing overseas qualities, you will probably launch a project in Japan and will find a representative manager.
The good news is that these people know Japanese business like the back of their hands. The bad news is that you, a non-Japanese person, would have trouble completely appreciating what the team in Tokyo does because you have no background in Japan. So without sufficient HQ assistance, you could not be aware of unrealistic expectations, or, in return, whether you should force the input of your Japanese team.
We will set out what to expect during the sales process, along with a couple of other tips when doing business in Japan:
1. Always Qualify
This sounds simple, but in Japan, the staff might be hesitant to ask qualification questions in advance. They would assume that it would be unnecessary to ask your company questions until you meet the prospect. All of them would like to visit, share business cards and visit a summary deck of their organization before answering questions.
- Drive the team to qualify, even if there are some high-level issues. Given the majority of meetings in person, a meeting without up-to-date details means that the time each participant would spend nearly 2 hours. Create any qualifying questions and you can quickly type them in a prototype during the conference.
- The best way you can react is to “let’s chat about this in person.” In fact, posing detailed questions at the front of the page can show you a depth of experience and bring you to confidence more, than to go through a dry presentation.
2. Still embrace personal introduction meetings
U.S. leaders do not normally know how introduction meetings are in Japan. Especially in Tokyo, where the oiled subway system Tokyo enables you to reach anywhere within 30 minutes. It is expected that your team will attend any meeting prospect on time.
- In Japan, conversations will take twice as long to hit the prospects’ departments, but if you’re trying to break this long-standing corporate culture, you’re not going to get too far.
- Before beginning your first meeting, make sure your sales staff qualify those chances (refer to the point above).
- Try to locate other remote sessions, such as POC check-ins and second or third meetings without the involvement of supervisors. This will not fit with negotiations and other big presentations, of course.
3. Clarify to get in to a POC time for a two-year period
When the sales staff discusses their goods and services, that will eventually be the subject of running a free POC. The other thing is that they can refer to more people than you used to in the USA and none of them have the right to decide.
In order to get the interest of higher people, your Japanese salesperson will suggest testing a solution is the best way, by agreeing to a free trial. However, they can’t get specifics about the budgetary period and who will sign the dotted line (and will most likely need many people to approve a project). Your company will send you a few months of realistic assistance and updated criteria, a second round assessments submission and a longer than planned timetable to get back to you.
- Be sure that the POC goal is transparent and that a final approval route is available. Japanese organisations are group-based, which makes it nearly difficult to identify the one decision maker (in fact, there are usually many people who have to sign). Trials would mean a long-term period with several trials without either of them will end in new policies and goals with an unacceptable reach.
- Make sure you know the spending periods in their fiscal calendar. Every year the trial that you are now working on may mean absolutely nothing as soon as your champion leaves his job and is replaced by someone totally inexperienced with the project and new organizational priorities that can quickly change the value of your POC. Often, if they have 3 quarters to even send a new budget / project proposal to discuss buying the software there would be very little point to conduct a trial immediately.
In addition to negotiating any discounts, there are also relatively few occasions in which Japanese prospects have difficult contract talks. Japanese viewpoints are very straightforward and truthful with respect to their desires and demands. Many of those with whom I have collaborated have worked to come up with a decent prize and licensing structure without playing hard. This is not to suggest that you may not have any opportunities, but Japan is an easy place to find a price compromise.
Do not begin to bargain downward at an extremely high price point for your Japanese peers. Japan is heavily regulated and structural, so they want you to propose a price which is fair and real and not too playable. They will either not proceed with prosecution, or will not attempt to ask for a cheaper price, if you shock them with a number.