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.

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    Our consultants typically charge between 3.000 and 15.000 Euro on fees for market research or a partner search, depending on the complexity and country.

    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

    Travel to Japan for a better impression

    The best preparation for doing business in any country is visiting it. This way you can experience the culture, check the shops and build your network.

    With Trip.com you can compare flights and also book your hotel.

    Hotellook compares different hotel sites so you always have the best rate.

    Localrent connects you to national rental car providers per country.

    Consumer products in Japan: Distributors, retailers or online

    If you have a consumer product that you can’t sell directly from your home country to your end customer, you need at least one step in between. This can be a distributor (who also acts as wholesaler or importer), a big retailer directly, or it can be a large web shop. Let’s look at the pro’s and con’s of each option.

    Distributors

    • Distributors are used to import, store and physically distribute a product.
    • They normally don’t invest in promoting your product to consumers.
    •  They are the best chance to get your product in the market so that you can gather sales data.

    Large retailers

    • Retailers are very risk averse, may ask for a listing fee before  they put your product on the shelves.
    • They can help you promote your product in their stores and in their magazines, but will also ask a fee for this.
    • They are the quickest route to the mass market, if you can convince them.

    Online

    • Specialised web shops may have a greater interest in your product than general web shops.
    • They can experiment more easily with pricing and ways of promoting.
    • Volumes may be lower, but working with web shops is still a good way to collect reviews and get brand awareness.

    B2b or customized products for Japan

    For a B2B product that is not a commodity or for customized solutions the story is different. Here sales needs to be done in alignment with the department that actually delivers the service or that determines the price case by case. Also then you have three different options.

    Agents

    • Agents represent you in the country and have a limited negotiation room.
    • They often sell not only for you, but also for other parties.
    • A good agent already has a network in your target market and can start selling directly.

    Local offices

    • Local offices are a costly option, but give you full control on your sales.
    • You have to send someone over and hire local staff and office facilities.
    • This gives the opportunity to do local marketing and business development from within the country.

    Distance selling

    • If you product can easily be delivered and serviced from abroad (like software) this may be a good option.
    • Video conferencing is more accepted now and can limit travel.
    • Lead generation may be done with SEO, advertising and email marketing.

    Where it all starts: select a target group

    As counts for any country: you first have to define the target group that you want to sell to. If these are businesses, then you can reach out directly through emails and targeted advertisements, e.g. on LinkedIn. If this arouses interest and gives a sufficient response rate, then you may have found an easy way to get the market’s attention. 

    If your target group is more diffuse, or is a consumer group, then you have to rely more on advertising such as on Facebook or Instagram.

    Do your first approach with instantly.ai

    If you target people in Japan in a specific industry or with a certain role in the company (like HR directors) you can do an easy first trial yourself.

    With the tooling of our partner Instantly.ai you can define your target group, whether it’s 50 or 50.000 people. Send them a sequence of emails, directly in their inbox, for typically under 10 dollarcents per persoon.

    Frequently asked questions

    First determine who are the end-users of your product or service. And where do they buy it now? The best way to determine the right entry strategy is to approach these parties. Would they consider your product or service as an alternative? Do they agree with the positioning that you have in mind? And what competitors are they buying from now? These data will help you determine the right strategy.

    This al depends on the product or service that you want to sell and the competition. Typically, if you already sell in comparable countries as Japan, also here it should be possible, unless there is strong local competition. This is something that you only discover if you dive into the market.
    Yes, if you have registered your brand for Japan or you trust it will not be used by others, you can use your brand there. You only need to recognize that in every new country you need to build brand recognition and brand standing separately. Therefore you need a good positioning, the right distribution structure and a marketing plan.
    Although your product or service often can remain te same, the marketing that you need in Japan may be different from other countries. You may have to translate your materials and advertisements, adjusting it to the local ‘tone of voice’. Also marketing communication channels may be different.

    Market entry strategy for other countries