When planning their entry strategy for Japan, a lot of companies, either product or service based, have challenges to find the right partners to expand their business.
It’s no secret that doing business in any foreign country is not easy; you have to be prepared to do the due diligence and groundwork to get started – everything from creating a go-to-market plan to hiring staff and having a workable sales strategy.
If you are not ready to spend that kind of cash out of your operational budget, it may make sense to find partners who are willing to work with you and sell your product or service in Japan.
The advantages of working with a partner in Japan are many:
• Not having to go through the process of setting up offices, legal entity, hiring, payroll and other related matters.
• A clear path to your target clients and buyers, shorter sales cycle.
• People who are intimately knowledgeable about Japan and what motivates your buyers.
• For B-2-B, the trust factor is a big issue; working with a reputable partner establishes confidence that your solution is good for businesses in Japan.
• For B-2-C, distribution, advertising, promotion is done more effectively with the aid of a partner who may have sold similar or like products to yours.
The disadvantages of working with a partner in Japan may include:
• Your partner may be working with multiple products or services, and there`s no 100% guarantee that they will invest their time and money to see it through.
• If your product or service works on the hierarchy stack, there is not a lot you can do insure that you get the same attention that the next company receives – in this case it’s about money and who pays more of it.
• There may be issues with dilution of brand value or messaging.
To overcome some of the disadvantages, it’s imperative that your company’s president, and/or senior staff get involved closely with the partner you are working with early on. Relationships are important in Japan and Asia. In fact, they are almost everything.
The success cases I have seen over the years are ones where the relationship has existed previously for many years, or, as a result of a confidential introduction that leads to a long-term and beneficial relationship. Both parties nurture and invest time in the partnership, through face-to-face visits, phone calls, and emails; they do not let the relationship drop-off, but rather see it through to success.
The failures are ones where individuals and companies are more interested in short-term cash gain or turning a quick profit; they solicit anyone or go to big companies because that potential partner may have been hyped in the media, or they heard something via word-of-mouth. What may have started as positive quickly turns sour, and it becomes a game of control and cajoling to get what the other party wants.
To avoid such cases, I would highly recommend giving yourself a good 3 – 6 months or longer to properly vet potential partners before you get involved in a situation that quickly turns sour.
Howard Ichiro Lim is the President and CEO of Incredible Consulting Group, a firm focused on helping Foreign Multinational companies develop and grow their businesses in Asia. He is based in Tokyo and San Francisco, splitting his time equally between both countries. You can reach Howard through his Linkedin profile here.
[featured image via Shutterstock]