Market research for doing business in Japan

If you want do business in Japan you need to know the regulations, market structure, competition and what investments you should make.

In this article I will provide basic information about the country and highlight how you can collect and evaluate all the information that you need.

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    Doing business in Japan

    Japan, the world’s third-largest economy, is a global hub for innovation, technology, and consumer markets. With a highly urbanized and affluent population, Japan offers significant opportunities for businesses. However, its unique cultural and regulatory environment requires thorough preparation.

    Key Market Numbers

    Japan’s economic strength and high standard of living make it an attractive but competitive market. Below are key statistics:

    • Population: Approximately 125 million (2023).
    • GDP per capita: Around $40,000 USD (2023), indicating high purchasing power.
    • Urbanization: Over 91% of the population lives in urban areas, with Tokyo being the world’s largest metropolitan area.
    • Economic Structure: Services contribute around 70% of GDP, followed by manufacturing and agriculture. Key industries include automotive, electronics, robotics, and advanced materials.
    • Ageing Population: Japan has one of the oldest populations globally, with 29% aged 65 or older, creating opportunities in healthcare, robotics, and senior-friendly products.

    Language and Documentation

    Language and cultural understanding are critical for success in Japan.

    • Official Language: Japanese is the official language, and proficiency in it is essential for effective communication in most sectors.
    • Language Considerations: While English is used in some business contexts, especially in international companies and among younger professionals, Japanese is the preferred language for marketing, negotiations, and consumer-facing materials.
    • Packaging and Documentation: Product labels and manuals must be in Japanese, complying with stringent regulations. Non-Japanese materials are often seen as unprofessional or inaccessible, especially in consumer-focused industries.

    Consumer and B2B Buying Behavior

    Japan’s consumers and businesses exhibit unique behaviors influenced by tradition, quality expectations, and technological adoption.

    • Consumer Behavior: Japanese consumers prioritize quality, reliability, and brand reputation. Sustainability is becoming increasingly important, particularly among younger generations. Online retail accounts for approximately 13% of total sales (2023), with Rakuten and Amazon Japan being dominant platforms.
    • B2B Buying Behavior: Japanese businesses emphasize trust, long-term relationships, and attention to detail. Decision-making processes are often hierarchical and time-consuming, requiring patience and persistence. Personal meetings and formal presentations are highly valued.
    • Online Presence: A localized online presence, including a Japanese-language website and activity on platforms like LINE (a popular messaging app), is essential for both B2C and B2B engagement.

    Market Challenges and Opportunities

    Japan offers significant opportunities, but its market also presents unique challenges for foreign businesses.

    • Products/Services that May Struggle: Products that do not meet Japan’s high standards for quality, safety, and precision may struggle. Overly casual or non-traditional approaches to branding may also face resistance.
    • Test Market Potential: Japan is an excellent test market for high-quality, innovative products due to its discerning consumers. However, success requires careful localization, including adapting products, packaging, and messaging to align with Japanese tastes and cultural norms.
    • Regulatory Environment: Japan’s regulations can be complex, particularly in sectors like food, pharmaceuticals, and electronics. Companies must comply with standards for safety, labeling, and consumer protection, often requiring collaboration with local partners or consultants.

    Convince potential distributors

    A local consultant can find possible business partners, or you have identified them yourself. But how to convince them to market and sell your products or services?

    For this you need an export plan with a clear strategy and sufficient financial details.

    Topics to check before doing business

    Where it comes to assessing the viability of a product or service in a new market, I always look at the following aspects:

    1. Regulatory compliance

    Can the product be imported and sold in the country, what are import duties and are there any restrictions on service delivery? What are the investments to comply to all regulations? 

    2. Market needs

    Is there a genuine demand for this product or service in the market and which aspects are decisive for the customers? What are common channels for marketing and sales?

    3. Competition

    How fierce is the competition and is there a clear market leader? Is there room for a new entrant and what happened to other companies trying to penetrate the market?

    4. Investments

    What steps are needed to enter the market and what are the related costs. How quickly can you expect revenue and what is a reasonable pay-back time?

    You can of course find a lot of information yourself, especially about regulations. But in order to have a good view on the competition, you will have to search locally, visit retail outlets or talk with buyers. Only a local expert can do this.

    Before you focus only on Japan

    Please note that there are many countries in the world and the biggest ones or the ones nearby are not automatically the best choice. It all depends of the market growth, the competition and the barriers for entry. 

    Therefore I would advise you to make a short-list of at least three, but preferably five potential new markets and compare them against the same criteria.

    Get funding from banks & investors

    Entering a new market is an investment. Finding partners, contracts, translations and marketing costs money and you may need additional working capital.

    Only with a good plan with enough financial data you can convince banks and investors to fund you. We help you with the complete business case and documentation.

    Frequently asked questions

    In Japan all aspects count that you normally have in other countries. What are the relevant regulations? How big is the market? What competition will you face? And how much will it cost to enter the market? These questions will help you decide whether to enter the market or not.