The Japanese Market
Japan is the world’s third largest economy and an industrial powerhouse whose corporations and products are household names throughout the world. The market represents a tremendous opportunity for Canadian business however many companies still shy away from Japan because of the language barrier, unique business culture, complex distribution and concentration of stiff local and foreign competition.
This market is indeed challenging and complex requiring time, patience and commitment to establish the customer relationships and develop the channel structures necessary for long term success. However, for Canadian companies with innovative, quality technology, competitive price point, strong technical and sales support from Canada combined with an experienced local partner the Japanese market is very accessible and should yield a substantial percentage of worldwide revenues.
There are typically two alternatives available to Canadian companies for establishing a channel presence in Japan, either establishing an independent local office from the outset or selling through Japanese trading houses, distributors or manufacturer’s representatives.
Many companies are unable to justify the significant risk, cost and logistics of a branch office until stable revenue flow is achieved, a process which can take from 2-5 years or longer. As a result most companies elect to work with a Japanese representative. While this can be an effective strategy finding the right match is not an easy task and many companies experience a range of problems including poor communications, differences in strategy and market focus, distributors handling competitive brands, insufficient market coverage, lack of direct end user access, excessively high margins etc.
There are many other alternative channels such as OEM, system integrator, wholesale, direct end user, multi-tiered distribution, licensing etc. which can facilitate broader market penetration and greater price competitiveness, however, a strong local presence is necessary to establish and manage more complex channel structures.
With the FCMJ acting as a “virtual office”, Canadian companies are no longer limited in their strategic options and have complete flexibility to establish the optimum combination of channel partners ensuring maximum market penetration. This level of flexibility can otherwise only be obtained by establishing an independent local office.