The Engler Group

When planning your entry into a foreign market the benefits of a careful, knowledgeable approach should not be overlooked. This is especially the case when considering entry into a market which has vast cultural differences with your home market. In past discussions, we have seen how not executing a methodical approach can cause unforeseen problems. Below are two cases which outline the success that is possible when entering the Japanese market with a systematic plan.

Submitting products for approval to transplant Original Equipment Manufacturers (OEMs) can be a daunting and time consuming process, especially if the product is technical in nature. In many cases a US based company must first approach the OEM’s local office. Then, after the product is properly vetted by the local staff, it is sent to the overseas headquarters for engineering review and approval testing. The head office engineers, who are typically responsible for global product engineering, have many projects in line and it may take an inordinately long time to get your product reviewed. Even then, a simple misunderstanding or misinterpretation can lead to a long delay or, in many cases, be cause for your product not to be approved.

In our first case, a US parts manufacturer was finally at the point where the product was being referred to the OEM’s head office in Japan for engineering review. The manufacturer had retained the services of a Japanese business consultant to assist in communication and to have a local presence. The local consultant made contact with the OEM’s head office and was able to arrange a meeting. At the meeting the representative was able to provide background about the parts manufacturer and the product in question. In addition, the representative was able to arrange for the Parts Manufacturer to be present during the product review to insure that no misunderstandings took place. This all took place in meetings where the only language spoken was Japanese and there were no cross-cultural issues to work out before presenting the materials. As a result, information could flow freely and unfiltered to the OEM. The OEM’s engineer’s were better educated about the product and had an overall better impression of the parts manufacturer than if they had relied on printed support material. In addition, since more time had been taken and it had been presented in a manner comfortable to the OEM, the parts manufacturer held a position of higher priority and therefore was able to get its products into review quickly. The end result was that by the time the product review occurred and in the presence of the Parts Manufacturer, the OEM personnel already had a very positive impression and approval was very straight forward.

Another case involves a company with certain intellectual property looking to enter the Japanese Gaming market. Rather than focus its efforts on one potential entry point however, this company chose to take a slower, more methodical approach. It retained a domestic consultant to research the Japanese market and identify potential partners. The consultant identified three sub-industries and set up meetings with several companies in each. Each company was world class and top tier in its respective industry. When the company representatives traveled to Japan, the meetings were extremely productive and resulted in new and previously unforeseen opportunities. Now the company is in the advantageous position of having several potential partners as opposed to just one and the projected revenues from this market have increased as a result and it is now in a stronger position for its upcoming negotiations. By taking the extra time to thoroughly conduct a pre-screening process and research, the initial investment of time and money will be paid back several times over.

As we’ve seen, taking time to research a market before entering will typically lead to a better strategy with a greater chance of success. Companies that choose to “leap” before “looking” will save money during the initial stages but will probably find themselves spending that amount and more cleaning up or restructuring their venture at a later date. Additionally, a strategy that chooses to ignore in country expertise is risky and will usually result in frustration and lack of product acceptance or lackluster sales results. In many cases the difference between success and failure can be found in the subtle differences that only a domestic expert can recognize. It pays to be smart.