Export Knowhow

Market entry in Japan: Only those with a long-term plan will be successful

Entering the Japanese market takes a lot of patience. However, once Swiss SMEs have overcome the barriers to entry, they can look forward to sustainable success. S-GE Japan Expert Jacqueline Tschumi tells us what needs to be considered.

Marktanalyse Japan

Japan is both a very large and very sustainable market. However, Swiss exporters with their sights set on entering the market need to start thinking more long-term.

“Success can take a long time. The Japanese market is more comparable to a marathon than a sprint, and it is certainly not a market for beginners,” says Jacqueline Tschumi, summing up what one is up against.

Not untypical for an island state, Japan is a closed market; Tschumi even speaks of an almost isolated market. The Japanese like to work with other Japanese, she says, which is why you will need a strong business partner or a local office. She explains that interested exporters will have to spend a large part of the time requirement finding such a partner. One also needs to take account of the time it takes to build trust. S-GE expert Tschumi cites Japan as a people-business market: “Business partners need to have some degree of rapport with one another. It is not a purely financial-driven market like the USA. If a Japanese person doesn't gel with someone, they won’t make a deal with them.” It is therefore important to cultivate relationships: “Once a relationship has been established, Japanese business people are very loyal.”

Good opportunities for the MEM industries

Japan’s MEM and MEM-tech sectors are particularly significant for Switzerland. Tschumi stresses that these are very traditional industries. Just like in Switzerland, these industries are economically strong and the personal factor is still very important. In contrast, the expert from S-GE sees more flexibility and dynamics in startups – for example, in the ICT sector. The automotive, watch and cosmetics sectors also offer good business opportunities. There is a huge range on offer in the area of cosmetics, whereby opportunities exist in the natural and functional cosmetics sectors in particular.

Swiss products enjoy a good reputation in Japan. They are considered to be high quality, but expensive. In contrast to many other countries, many high-quality goods and services in Japan are produced and offered by native providers, which presents a special challenge for exporters. Tschumi says:

“Japan is unlike many other markets. You need very specific strengths to hold your own against domestic Japanese competition, of which outstanding quality is one.”

Language as a sticking point

In addition to the domestic competition and high prices for Swiss products, a lack of language skills is often a sticking point when it come to market entry. Added to this is the bureaucracy associated with customs clearance and certificates. According to Tschumi, many forms are only available in Japanese. It is therefore clear that interested Swiss exporters are well advised to work with a partner from the outset or at least to engage a local lawyer.

For the MEM industries in particular, these matters have been facilitated by the free trade agreement concluded between Switzerland and Japan. The agreement does not make customs clearance itself any easier – the forms are still the same – but it has made customs tariffs more favorable. Thanks to the recently concluded agreement between Japan and the EU, Japan has generally recognized certain international certifications. According to Tschumi, this also benefits Switzerland: Only in the case of agricultural products does Switzerland's free trade agreement compare unfavorably with the agreement concluded between Japan and the EU.

Make active use of trade fairs

If you want to gain a foothold in Japan, you need to actively use trade fairs to arrange meetings. All too often, Tschumi sees Swiss companies playing a passive roll in this regard. “Again and again, we see representatives of Swiss companies sitting at their stand and waiting for visitors to come over. This is simply not enough: a trade fair is a platform that must be used properly.” It is also essential to staff stands with people who speak English and Japanese. Japanese people are rather shy and do not engage in open conversations so quickly – and even less so with foreigners. “This can incur additional costs, but it's definitely worth it,” Tschumi is convinced.

How to get the most out of your trade fair presence in Japan: Tips for Swiss exhibitors

Although it is somewhat cheaper than the Swiss market, Japan is still a high-price market with high quality standards. Consumers attach great importance to quality and strong brand names, and are prepared to pay a higher price for these. The demands are correspondingly high. Tschumi adds: “Although Swiss companies are known for their high-quality products, they often underestimate the extremely high standards. An example: If a machine part has a scratch that is not visible to the eye, a Japanese person will not want this machine. The Japanese interpret such defects as a lack of respect for the product and the buyer. No-one sells anything that is not 100% perfect. If you want to do business in Japan, you have to watch out for this particularity.”

Ideal sales market

Despite the high standards, Tschumi considers Japan to be an ideal sales market for Switzerland. With a population of around 130 million, Japan is the third largest economy in the world and the sixth largest export market for Switzerland. Just like in Switzerland, Japanese customers have high expectations when it comes to quality, technology and customer service. A lack of resources in the high-value industry and an increasingly aging population mean that there are many business opportunities for Swiss companies. The best opportunities are in industry, innovative technology sectors or e-commerce business. A strategic market access with an in-depth market analysis and a detailed partner search is therefore essential for successful market entry.

Get excellently prepared with a tailor-made market analysis from S-GE

Get a foothold in Japan with the help of experts

Have you set your sights on Japan as a target market? Switzerland Global Enterprise supports Swiss startups on their path to new markets – with practical tips, expert consultation and a global network of experts. Discuss your export project today with our consultant for Japan, Jacqueline Tschumi, in a free initial consulting session.

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