Monday, December 24, 2012

How New Companies Can Succeed in Japan - And How They Fail

Many new companies, especially in IT, think that to make it in Japan, all they need to do is release a Japanese language version of their product... They couldn't be further from the truth. Japan is an entirely different animal.

To succeed in Japan, of course a company needs a Japanese version of their product, but just that won't do the trick. They'll need experienced, well-connected PR and Marketing in Japan or the best solution is a Japanese subsidiary. 

On top of that, the new company product/service will probably only have one chance to do their initial product/service release right in the Japanese market. Their first release is their Golden Chance in Japan.... It could also be their only chance in Japan. 

If a company blows their initial release of the product/service in this country, the company will most probably not succeed here. Ever. No matter how much money is spent on PR and advertising. 

Many before who have made this mistake have tried to recover and failed; even ones with multi-million dollar budgets. A good case in point is Pepsi Cola. Pepsi spent tens of millions of dollars and twenty years for terrible results.

Now, they've finally gotten smart and tied up with a Japanese beverage maker so their prospects are better... Why didn't they do that from the start? Disney, Coca-Cola, McDonald's, and many others did. 

Why did Pepsi even bother to try to reinvent the wheel?

How to correctly handle a new product or service release in Japan?

A new company/product/service will need to appoint somebody in Japan to handle PR for them in Japan - or set up a subsidiary - and work with that company to make a plan. 

A necessary part of any good plan of attack would be that the representatives in Japan arrange meetings with major media at least 1 - 2 weeks before Japanese release day, as pre-press release. This is critical.

If this sort of ground-work is not fully prepared by the company and their reps in Japan, I strongly suggest that the company postpone the release of the product/service (or fire their representatives and set up a competent company) and then get properly prepared. If this sort of pre-press release is done correctly, the Japanese media will then follow-up and prepare and study the circumstances of the product/service and company so that they may be able to publish and provide better information for the Japanese audience (don't forget that the Japanese media are competing with each other, too, to provide up-to-date concise information, so this has to be done. No short-cuts here). This is critical for the success of any new company in Japan.  

Even after years of repeated failures by various companies, to this very day, foreign companies come to Japan and repeat the mistakes Pepsi Cola and Seven-Up made decades ago. Some recent examples are Linkedin; E-Bay Japan, Paypal, and a few others. (I strongly suspect Sugarsync is about to make the same mistake too!)

Take, for example, Linked-in. Linked-in came out with a Japanese version quite a while back but no one here in Japan uses it because no one knows about it; they had no local representation; no pre-press release information. 

Kind of shocking, when you think about it; a supposedly forward thinking company coming to Japan and making such an amateurish mistake. 

E-bay is another example of a successful service in the west which came to Japan and completely flopped because of not having experienced people on the ground in Japan. Neither Linked-in nor E-bay Japan will probably ever recover... 

No, not probably... There's no way they will ever recover here.

Sad. Had they thought about what they were doing and not tripped over the half-dollar in order to pick up the penny, they probably could have partnered with a huge Japanese company - or set up a subsidiary - and been worth hundreds of millions of dollars in Japan alone by now. 

The situation today? I only know of one other person besides me who even knows that Linked-in has a Japanese version. People know what E-bay is, but prefer Yahoo Auctions by a laughable margin. 

Oh dear! Linked-in and E-bay blew it... and in the second largest market in the world. I wonder how this will affect their stock price? 

Why won't they recover? Well, because they already launched and flopped... They are not newsworthy, except as failures. If the Japanese want to read about failures, they'll read about their politicians. 

An example of a successful Japan launch recently was Evernote. The PR company which handles that was able to get Evernote into Sony so that Sony scanners come pre-installed with Evernote. 

A Japanese language release might have some sort of plan like this:

1) Setting the Key Concept for Japanese Market 
2) Arranging Press Releases for TV, Internet, Papers and Magazines promoting the URL and product/service
3) Press conference for Japanese Market 
4) Make a presentation to major Japanese companies in order to obtain a major Japanese corporation as partner for the Japan market

In Conclusion

Japan is the #2 market in the world... Being lazy and trying to break into this market without understanding the underlying differences between the Japanese psyche and the west is a sure fire recipe for failure.

Pepsi, along with many others, failed... And they spent tens of millions of dollars... Don't repeat these mistakes. Why not make a little effort and find the people who can help you? You do need Japanese representation here on the ground, in Japan, to make your product/service a success.

Remember that success is 80% preparation.

Many others have already shown you how to fail... Here is written the best way to succeed... Will you learn the lesson?

This article was written in consultation with Koji Kamibayashi (who founded TXBB and 4 years later set up IPO with annual sales of over $70 million USD and Tim Williams who founded Value Commerce (IPO with over $50 in sales annually). Thanks guys!

1 comment:

Boo said...

I see this a lot.
Corporate HQ issues a directive to do something a certain way, and it succeeds around the world, except in Japan. The companies that succeed have Japanese staff that can explain themselves to HQ, and receive the right amount of flexibility to localize.
I have seen it go the other way too, where local staff get their desired flexibility, and decide this is their chance to create an entirely independent organization, which then fails as well.

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