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Expanding your business reach in Japan: How to
go about it
Phil Ingram – STC Tokyo and Country Manager – Japan
What I am going to talk about
• Setting the scene
• The key to success
• Why it works
• Help is there
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Japan is back – the good news keeps on coming
Continuous GDP growth is the longest lasting since the 1960s Izanagi Boom – 58 months
Nikkei grew by 40% in 2005 and is holding up this year
Unemployment is at its lowest in 8 years – 4.3% in 2005
Deflation is over – prices are going up +0.6% in 2006
Corporate profits are at record levels – fifth straight year
Companies are investing in new plant & equipment at levels not seen since 1980s
Real estate prices are turning up
The mood is positive!
Australian Exports to Japan are riding the recovery
22% of export sales are high value add -That’s $6.6billionMore than our total exportsto India
Exports to Japan were $31b and rose by 24% in 2005-06
And add another $3.2b in exports of services
Consumer
2%
Other
16%
Manufacture
9%Mineral
56%Food &
Beverage
17%
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Japan has never been better for Australians doing business
1. It is simpler: distribution, logistics, regulations, establishing a company, hiring staff, moving around
2. It is more transparent and open: corporate governance, accountability, and de-regulation – easier for Australians to understand – foreign investment really is welcome!
3. The business opportunities are a good match:
- 75%-80% of both economies are service industry based
- growth is in knowledge based industries where both countries are internationally competitive
- high disposable incomes consumers seek individualised services
- “Lifestyle” improvement products and services are the go
- direct sales and e-Commerce are easier routes to market
71142
232260
306
357
384
0
100
200
300
400
500
600
700
2001-2002 2002-2003 2003-2004 2004-2005
EE
NED
More and more Aussie companies are succeeding in Japan
Data source: CBS
616
499
377
260
Number of companies making an export sale to Japan with Austrade’s assistance
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An example: Japan finally gets on board to Australian Fast Ferries
INCAT: two x 112m 412 vehicles/800 passenger ferries + 1 optionExport sales @ A$75m
The first Australian made ferry to operate on a regular domestic routeWill halve the time between Aomori and Hakodate
What else is hot?
In 2005-06 Austrade Japan assisted 1,800 companies do business with Japan, and 600 achieved sales through Austrade
From low tech (but good value) to high tech, simple services to highly sophisticated services
The scope of products and services we export is surprising:
• Agribusiness: mangos, oaten hay, live queen bees, wagyu cows, racehorses
• Food: pasta, olive oil, emu meat, cherries, organic chicken, functional foods, organic fish
• Beverages: wine, lemon myrtle Tea, whisky, green tea,
• Consumer: jewellery, UV children's’ bathers, aromatic oils, casual fashion wear,
• Industrial: packaging machinery, bench top machinery, gaming machines
• Building materials: bricks, timber, cladding
• ICT: electronic mapping, sleep detection system, game software
• Biotechnology: bionic mice, clinical waste conversion, bionic composting
• Environmental: water treatment technology; waste tyres, clinical waste disposal
• Health and welfare: aged care services, palliative care, chiropractic training
• Services: indoor sports centres, commercial flight training, music, serviced offices, legal training for jury system, children’s puzzle books, security training, tourism standards, music, business services, financial advisory services, film services
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The key is to become an ‘Insider’
The business landscape in Japan has changed and to take your business to the next level means you have to change from an FOB mentality to an
“Insider Mentality”
There are many ways to do this:
• Appoint a Japan marketing expert
• Appoint your staff inside your distributors office
• Use the Web
• Spread out into regional Japan
• Set up a branch in Japan
• Establish a subsidiary
• Buy a Japanese business
Why will it work?
Four compelling reasons for becoming an “Insider”:
1. The Customer is “God”
2. You’ve Turned Japanese
3. You are where the action is
AND
4. No one knows and cares more about your business than you do, so why entrust it to others who don’t have your passion and incentive to get results
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Wine-in-a-can ! Trendy, portable & convenient
Aussie ingenuity wins big time in the land of canned drinks and vending machines
The Land Where the Customer is God
There are inherent difficulties selling from “the Outside”
1. One culture, one people = self sufficient = No Import Culture
2. Different business customs: eg ‘gotobi’,‘henpin’ = Too hard to match domestic competition
3. “Okyakusan = Kamisama” = You gotta have Wa
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You’ve turned Japanese
Just by being there:
-You have demonstrated commitment – you are in it for the long haul
-You can be reached – 24hr/365days
-You are close to being an ‘insider’ – you are accepted
McDonald’s – A Japanese Fast Food Company!
80% of Japanese kids think that a Big Mac is Japanese food -
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You are where the action is
Your presence in Japan means:
• You find out first
• You keep close touch
• You get the opportunities first
Bionic Ear from Cochlear Japan – the number one ear implant product in Japan
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What difference will it make?
• It could mean the difference between a viable and growing business and no business at all
• It could mean you take your business to the next level up
• It could mean you develop the business in all sorts of ways you never considered possible
Ok, but how do I do it?
How to reduce time, expense and risk to expand your business reach in Japan:
Do your research
- revisit your existing business in Japan
- develop new strategies based on being an ‘insider’
Go step by step
- look at all the options: jv with existing importer;
- secondment of staff to distributor;
- one man/virtual office;
- M&A;
- regional office etc
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Driza-Bone – first flagship store opens in Tokyo through partnership with World Co. (http://www.drizabone.jp/
How to succeed in Japan
• Be committed - allocate the resources and have a long term plan
• Be strategic - don’t take the first opportunity and think through your value proposition and where you can fit in the market
• Build long term relationships and use allies and networks
• Become an Insider!
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Setting up in Japan – not all that hard
Legal entities – easy to set up a company but need one local director
Offices/warehouse/factory – easy to rent – serviced offices/outsourcing of distribution and IT needs
Bank accounts - shop around
Commercial funding - low interest rates – guarantors required
Staffing - labour market is tight / recruit recruitment companies can help
While some the laws and regulations differ, basically it is not more difficult or complicated to set up a business in Japan than in any other developed country
Setting Up in Japan – not all that expensive
A. High Cost Option
Manager from head office with a 50sqm office in downtown Tokyo with a bilingual office assistant – allow A$750,000 pa!
B. Low Cost Option
Bilingual young person operating out of home office - allow A$150,000 pa
Staff costs – salaries on par with Australia but expect 20% more for a bilingual person
Office costs – 20-30% higher than Australia, but you use less of it!
Telecommunication and travel costs – on par or cheaper than Australia
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Nagoya
Grant Hunt -TC & Consul
Est 1992 3 BDMs
Tokyo
Phil Ingram-STC &
Japan Country Manager
Est 1935 2 TCs &12 BDMs
Sendai
Catherine Taylor
TC & Consul
Est 1992 2 BDMs
Sapporo
Sally Phillips
TC & Consul
Est 1992 2 BDMsOsaka
Michael Clifton
STC & Consul-General
Est. 1974 8 BDMs
Fukuoka
Jarrod Waring- STC & Consul – General
Est 1992 5 BDMs
Since July – one BDM in Naha
Austrade Japan Network
6 Offices52 staff
Austrade Set Up Shop in Tokyo in 1935 and have had all of Japan Covered since 1992
Survey of Japanese Buying Power
50,020
56,930
85,920
132,547 189,485
23,820
487
16,104
774
1,162
3,710
4,705
8,927
11,902
0 50,000 100,000 150,000 200,000
NT
ACT
Tas
SA
WA
Qld
Vic
NSW
Hokkaido*
Tohoku*
Kyushu*
Chubu*
Kansai*
Kanto*
Annual Expenditure on Food
(A$ million)
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Austrade services in Japan
• Market research
• Potential importer/distributor search
• Arranging visit programs with qualified business contacts
• In-market briefings by Austrade staff on local industry, culture and business practices
• Trade exhibition support – Austrade coordinates displays for Australian exporters at industry-specific trade fairs around the world
• Showing samples of your product or service to potential customers in-market on your behalf
• Arranging interpreters and translation of documents
• Follow-up with potential customers and partners
http://www.business.australia.or.jp/newsletter/english/
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Contact Austrade
• Call 13 28 78 and speak to one of our advisers
• Visit www.austrade.gov.au
• Visit www.businessclubaustralia.com.au
• Email [email protected]
Austrade can give you the edge to help your business stay ahead of your overseas competitors
There is a lot of help out there
• Austrade, JETRO and DBJ
• The State Governments
• ANZCCJ – www.anzccj.jp
• JMEC – www.jmec.gr.jp
• Local Governments – eg Tokyo Business Entry Point http://www.tokyo-business.jp/en/exp_en.html
• And your fellow Aussie exporters!
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In summary:
Japan is full of opportunities for Australian companies
To seize the opportunities, Australian business must:
- re-examine their perceptions and approaches to the market
- commit resources
Become an Insider!
There is plenty of help for you to do it!
Japan is Now Simpler!
See you in Japan