4 Proven Market Entry Strategies for Success in Japan

If you're planning anything related to market entry strategies into Japan, you typically have two choices: you either manage it yourself or hire someone based in Japan to handle it for you. Alternatively, you can find a solution that allows you to remotely control activities in the Japanese market from overseas.

There are, of course, mergers and acquisitions, but those strategies tend to apply to larger companies, which isn't what we're discussing here.

DIY style

Option #1: If you decide to go it alone but don't understand Japanese—reading, writing, or speaking it—you'll likely need a translator or interpreter to handle the middle work so you can communicate with people in Japan, especially since you're dealing with a different culture.

However, I don't recommend using an interpreter during sales meetings, which normally involves intensive Q&A sessions. Things can get complicated when conversations go off-script. If you're not deeply familiar with your product or service, it becomes difficult to properly convey the nuances to someone from a different culture, with a different mindset, and a distinct decision-making process within their organization.

Hiring a team

Option #2: Hiring a local representative in Japan can cost you at least $5,000 per month. If you need someone more experienced, like a senior sales director, that price can double or triple. If your budget allows you to hire a team in Japan, it's a no-brainer and a great starting point. However, most SMEs and early-stage startups don't have that luxury unless they've successfully raised funds or won a pitch event, securing millions in venture capital.

Channel Partners

Option #3: Working with a local partner. This is perhaps the most practical way to engage with Japanese end-users without needing to establish an entity or hire a local team. You can leverage channel partners and their existing account lists, setting up success-based commissions. In this case, your primary role would be to support localization efforts for sales and marketing materials, websites, etc., while also providing some education for the channel partner.

The challenge here is that even if upper management is enthusiastic about the partnership, frontline sales teams might not be aware or interested. They may not even know about the agreement or your product/services and whether it aligns with their current sales accounts. At this point, you'd need to educate the local salespeople directly in Japanese, which becomes tricky if you don't speak the language.

Fractional local rep

Option #4: Fractional local representation, which is closer to what we offer as a company. People often say that if you're hiring locally, you need to be prepared for upfront investments, incorporating entities, dealing with lawyers, accountants, HR specialists, and all the administrative headaches. While this is true if you're going that route, however we believe there are many items that you can cover before thinking about incorporation.

Even if you're 120% sure your product or service will succeed in Japan, competitors and alternatives must be factored in. The market might already be saturated, leaving no room for new overseas entrants. And most of the time, these competitors or alternatives are already top-of-mind for your target customers when considering services from the market.

Start small

To resonate with Japanese customers, you need to speak their language—not just literally but culturally. Highlighting success stories from Indonesia or Thailand may impress people in that region, but Japanese clients often aren't familiar with those logos. While mentioning large companies' sizes and histories may initially catch their attention, it won’t create the same resonance as referencing well-known Japanese competitors in the local market.

Understanding the competitive landscape is crucial, but so is considering other factors like pricing, regulations, or local news, all of which are essential to make a strong first impression and build trust in initial meetings, which can lead to further engagements.

In this fractional local rep, sales agencies fall into this category. Interestingly, many Japanese sales agencies prefer contracts with a minimum term of six to twelve months, with a monthly retainer of around $5,000. On top of that, they might charge per appointment generated, around $400 to $500 per meeting—exactly what one of our clients experienced.

These services are well-known in Japan and target large companies. There's nothing wrong with that model, but for smaller companies, it creates a pricing mismatch.

Fractional service for SMEs

We focus on small businesses, SMEs, and early-stage startups with around 20 to 50 employees worldwide. Often, the CEO is directly involved in sales activities. In such cases, we work directly with the CEO, starting by understanding what they're selling and then localizing the value proposition—not just through language translation, but by refining the entire business positioning.

We complete this process in 30 days for a flat fee of $1,500 USD. No surprises, no hidden costs. From a business standpoint, I believe longer contracts are beneficial, but that's subjective. For smaller companies, the process moves much faster without the internal politics that slow down larger organizations, which is one of the biggest advantages for SMEs and startups.

Most companies are happy with the results of our 30-day process, and we often continue working with them on further business development, leveraging the market research we've conducted to engage with end users and acquire partners. If this sounds interesting, feel free to reach out to us.