Market entry strategy for exports to Japan

If Japan is a relatively unknown market for you, you need a clear market entry strategy. This may be different from the strategies you have used so far, as the market structure and the competition is different.

Key in your market entry strategy is some market research. Of course there are reports on market size and market growth, but often these are general. Specific knowledge on how your product is perceived and what your competitions is, is harder to get but more valuable.

Oppportunities for international business in Japan

Japan is known for its unique blend of traditional and modern culture. As of 2023, Japan has a population of about 125 million. It is notable for its technological advancements, rich cultural heritage, and influential economy.

Japan’s economy, with a GDP per capita of around $40,000 USD in 2023, is one of the most advanced in the world. Major industries include automobiles, electronics, robotics, and manufacturing. The country is also known for its strong emphasis on research and development.

Japan’s primary imports are machinery and equipment, fossil fuels, foodstuffs, chemicals, and raw materials for its industries.

Key cities include Tokyo, the capital and world’s largest metropolitan area; Osaka, known for its modern architecture and nightlife; Kyoto, famous for its historic temples and traditions; and Yokohama, a major port and commercial hub.

Opportunities in retail in Japan

The Japanese retail industry is dubbed as being a sophisticated market and is the 3rd largest market for fashion after China and USA. Over the years, the country’s retail sector has been exhibiting moderate growth. Currently, there are around 3,124 shopping malls, 52,417 convenience stores and 240 department stores spread across Japan. In the Shinjuku Isetan Department Store Alone, retail sales amount to about 900 million JPY per day.

Japan’s home furnishings sector

The country recently suffered from deflation, a decrease in the price level of goods and services. One of the affected sectors was the home furnishing market which experienced a downward trend. But as the housing market is picking up, the home furnishing sector is also starting to recover. In the mid-price segment, competition is not so stiff which gives opportunities for business brands to target customers looking for high-quality products with value for money.

Japan Skin care market

Japan is globally famous for its advanced skincare market. It is popular for its premium products, the overall value of which amount to 1500 billion JPY. These items include serums, scalp care products, moisturizers and more. The men’s care segment amounts to 150 billion JPY. With Japanese brands known for their effective products, the country is projected to occupy the largest skincare market in Asia.

Consumption of food in Japan

Based on the data from MAFF, Food Balance, the following comprise the consumption percentage share of the Japanese:

Food Grain (32%)
Vegetables (14%)
Dairy Products (11%)
Seafood (7%)
Fruits (7%)
Meat (5%)
Others (24%)

47% of Japanese consumers shop for their grocery requirements at supermarkets while 32% of customers prefer GMS and 7% go to CVS. Smaller supermarkets account for 5% of the total consumption market share in the country.

The senior citizens market in Japan

Apart from capturing the retail opportunities for the younger group, there is an untapped elderly market. Over the years, the elder age bracket in Japan has purchasing power. On an average, the savings of the elderly group amount to about 30 million JPY. One-fourth of the country’s population is comprised of elders aged 65 years old and more.

Opportunities in the Japan ICT sector

Asia is considered to be the biggest regional cell phone market. The Asia-Pacific region accounts for more than half of the world’s share when it comes to mobile phone shipments. In the region, Samsung has the highest market share. In Japan, Apple has the highest market share with more than 34% of individuals who prefer to use Apple phones. Japanese companies and other global brands have the following market share:

Sharp – 15%
Sony – 14%
Fujitsu – 10%
Samsung – 8%
LG, NEC, Panasonic make up 10% of the market share

Five ways into a market

Your entry model decides your cost, your speed and how much control you keep: sell directly from home, work with an agent, appoint a distributor or importer, sell online, or open a local office.

Control and investment move together. Direct and online selling are cheap to start and easy to stop. A local office gives full control, but needs staff, registration and often a local company.

Most companies start light, prove that there is demand, and only then invest.

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Entering the market in Japan in three steps

Step 1

Validate the demand

Check market size, competitors and price levels, then speak with five to ten potential buyers. Their reaction tells you more than a general market report.

Step 2

Choose channel and price

Pick the entry model that fits your margin and your capacity, and calculate your landed cost: transport, duties, VAT and the margin the channel will take.

Step 3

Pilot, then scale

Start in one region or with one partner, agree what success looks like after six to twelve months, and expand the country plan only on those results.