Japan: Strong Opportunities for Sustainable Growth, NOW!

Japan: Strong Opportunities for Sustainable Growth, NOW!

Over the last 10 years, Japan seemed to have disappeared from the priority list of most global executives and marketers. Japan’s lost decade, the global economic recession and the focus on China as Asia’s main growth engine have all contributed to an overall declining business interest in the land of the rising sun. Add to this the traditional market dominance of large, local competitors and the impact of the 2011 earthquake and resulting tsunami and it becomes obvious why most executives have had little appetite to invest or expand in what is today still the 3rd largest economy in the world.But this is all about to change. The economic buzz generated after 1 year of Abenomics and Tokyo’s triumphant bid to host the 2020 Olympics have given the confidence of this 130 million people nation a tremendous boost, and more importantly, has will open significant new market opportunities for Western companies in search of sustainable growth opportunities.

 

When I arrived in Japan in 2005, Agfa Graphics suffered from what I call the “Japan Syndrome”, the general belief that it is impossible to beat “Japan Inc.” and to satisfy Japanese customers. Our Japanese operations were in danger of closing. Together with a focused Japan team, we turned around a money-losing business into a thriving and profitable business in just 2 years. Today, Japan is one of our most profitable markets and continues growing sustainably.

 

What lessons can be learnt by executive marketers from Agfa’s turnaround in Japan(whether you considerentering the market now or already havea presence today)? Besides the fact that success in business is for about 70% about being at the right place at the right time and for 30% about hard work, I believe 3 factors are critical to building a successful business in Japan:

 

  • The need for DIFFERENTIATION and FOCUS. Foreign enterprises have a higher chance of being successful in Japan if they can offer products/services with features that are distinctive enough to differentiate from their Japanese competitors. Western companies that offer me-too products in Japan are likely to be beaten by their Japanese rivals in either quality or distribution.DIFFERENTIATION is step number 1 but FOCUS makes the real difference. Once a unique business opportunity is identified, it is advisable to focus all resources on exploiting that opportunity. Focus is a ‘must’ because Japan is too big and too expensive to spread limited resources over too many opportunities. This is even more the case in a turnaround or start-up scenario in which costs have to be managed rigorously. Focus will also strengthen the differentiation strategy with 1 clear message that will help you stand out from the crowd and build a strong, unique brand and, very important, obtain improved input for the development of next generation products.
  • The need to offer the RIGHT QUALITY. Japanese customers do not necessarily have HIGHER quality standards but rather DIFFERENT quality standards. The perception in the west that “it is impossible to satisfy Japanese customers” is often resulting from a lack of understanding about what really matters to them.As Agfa, we made a 180° change in our approach to quality: while in the past we believed that Japanese customers always complained about “nitty-gritty” things, we now listen to our customers and seek in-depth feedback, take complaints seriously and openly share our approach to improveand rigorously apply Japanese quality standards across our global operations.
  • The need for the right GO-TO-MARKET strategy. Go-to-Market and distribution remain for many western companies a major challenge in Japan. Distribution in most industries is historically dominated by a large network of distributors and agents that are controlled by the large, local Japanese players. Those channels typically bring the customer relationships but fail to reduce business transaction costs. In addition, they are very conservative with strong “farming” capabilities but rather limited “hunting” capabilities. Hence, it is very difficult, almost impossible, to grow your business via traditional channels. To overcome these challenges, we developed a go-to-market strategy based on 2 pillars (1) the build-up and strengthening of a direct sales force and (2) the development of strategic partnerships (private labels / OEM)

 

My advice to any western company targeting Japan is to develop a detailed go-to-market strategy, to execute it rigorously but to be flexible enough to adjust to changing market conditions and competitor moves. Finally, never give up. Japan is offering plenty of opportunities for companies and executives in search of profitable growth and geographic expansion.

 

Tim Van den Bossche Vice President Global Marketing & Strategy, Agfa Graphics

President, Asia-Pacific, Agfa Graphics