Entering the Japanese Market: Stacking the Deck and Setting Expectations
Last updated: April 09, 2024 Read in fullscreen view
Recommended for you
- 01 Oct 2020
Fail fast, learn faster with Agile methodology 755 - 01 Nov 2023 Difference between Vendor and Subcontractor 695
- 14 Oct 2021 Advantages and Disadvantages of Time and Material Contract (T&M) 638
- 15 Oct 2022 Project-based team model for one-off and pilot software development projects 612
- 19 Oct 2021 Software development life cycles 598
- 18 Oct 2020 How to use the "Knowns" and "Unknowns" technique to manage assumptions 598
- 19 Oct 2021 Is gold plating good or bad in project management? 578
- 08 Oct 2022 KPI - The New Leadership 488
- 28 Jul 2022 POC, Prototypes, Pilots and MVP: What's the differences? 477
- 19 Mar 2021 Selective Outsourcing of IT Functions - a new trend in business outsourcing 417
- 18 Jul 2021 How To Ramp Up An Offshore Software Development Team Quickly 417
- 12 Oct 2022 14 Common Reasons Software Projects Fail (And How To Avoid Them) 397
- 16 Dec 2021 Why outsource Python development of your project? 354
- 10 May 2021 What are things you should look for in a good IT outsourcing company? 341
- 14 Dec 2021 The Top 10 Problems with Outsourcing Implementation and How to Solve Them 336
- 06 Oct 2021 Intellectual property issues with outsourcing software development 328
- 23 Sep 2021 INFOGRAPHIC: Top 9 Software Outsourcing Mistakes 324
- 13 Oct 2021 Outsourcing Software Development: MVP, Proof of Concept (POC) and Prototyping. Which is better? 317
- 12 May 2021 The Real Cost Between Outsourcing IT vs In-House: A Quick Comparison 315
- 28 Oct 2022 Build Operate Transfer (B.O.T) Model in Software Outsourcing 311
- 03 Oct 2020 Outsourcing Your MVP Development - Streamlined Solutions for future 309
- 08 Feb 2022 Software Development: Fixed Cost or Opportunity Cost? 307
- 15 Aug 2021 TIGO Rate Formula - Things the partners should know 306
- 11 Jan 2024 What are the Benefits and Limitations of Augmented Intelligence? 296
- 19 Oct 2020 The hidden costs of outsourcing software development 294
- 24 Nov 2021 What is the Actual Cost of Hiring Cheap Developers? 291
- 12 Dec 2021 Zero Sum Games Agile vs. Waterfall Project Management Methods 291
- 05 Mar 2021 How do you minimize risks when you outsource software development? 290
- 10 Dec 2023 Pain points of User Acceptance Testing (UAT) 290
- 28 Dec 2021 8 types of pricing models in software development outsourcing 287
- 01 Sep 2019 Outsourcing Software To Vietnam: Facts, benefits and limitations 279
- 22 Mar 2022 8 Mistakes Marketing Agencies or Consulting Firms Make When Outsourcing Web Development 273
- 19 Apr 2021 7 Most Common Time-Wasters For Software Development 265
- 31 Oct 2021 Tips to Fail Fast With Outsourcing 259
- 13 Dec 2020 Move fast, fail fast, fail-safe 253
- 02 Mar 2021 Estimate the Cost of Software Development 250
- 01 Jan 2023 4 New IT Outsourcing Pricing Models to consider in 2023 249
- 31 Dec 2021 Outsourcing Software Development to mitigate the impact of COVID-19 248
- 25 Nov 2021 Low-Cost Software Development: Buy Nice or Buy Twice? 244
- 03 Nov 2021 7 phases of Odoo Implementation and Development: Can they be outsourced? 241
- 06 Feb 2021 Why fail fast and learn fast? 233
- 01 Mar 2022 Top 5 reasons why outsourcing to Vietnam is a smart move 232
- 05 Jan 2022 What Outsourcing Engagement Model is Right For You? 232
- 21 Oct 2021 Advantages and Disadvantages of IT Outsourcing 230
- 04 Jan 2021 VIETNAM AS A BIG ATTRACTIVE DESTINATION IN THE FIELD OF OUTSOURCING 221
- 12 Oct 2021 Vietnam outsourcing path - the silk road connecting ASEAN with the developed countries (EU, US, Japan...) 220
- 12 Jan 2023 Top 10 Trustworthy IT Outsourcing Companies in Vietnam 219
- 04 Oct 2021 Product Validation: The Key to Developing the Best Product Possible 218
- 10 May 2021 Project Audit and Second Opinion Services 205
- 04 Oct 2022 Which ERP implementation strategy is right for your business? 202
- 01 Apr 2021 IT Outsourcing to vietnam: Why It Is A Good Choice? 202
- 18 Aug 2022 What are the consequences of poor requirements with software development projects? 201
- 06 Nov 2019 How to Access Software Project Size? 201
- 03 Nov 2022 Top questions and answers you must know before ask for software outsourcing 195
- 16 Mar 2021 Outsource Data Engineering Services - TIGO Streamlined Solutions 191
- 01 Jan 2023 Software Development Outsourcing Trends to Watch Out for in 2023 189
- 31 Aug 2022 What are the best practices for software contract negotiations? 186
- 08 Oct 2024 Vietnam: The Rising Star in Global Outsourcing – Trends and Costs for 2025 185
- 10 Nov 2022 Poor Code Indicators and How to Improve Your Code? 178
- 04 Apr 2024 Unlock Vietnamese-Japanese outsourcing potential 173
- 30 Dec 2022 Top 6 Reasons to Partner with TIGOSOFT 172
- 11 Mar 2023 Common Pain Points in Software Development Outsourcing 168
- 02 Nov 2023 What are the pros and cons of iIT outsourcing? 162
- 01 Jan 2023 Top Software Development Challenges in 2023 162
- 26 Dec 2023 Improving Meeting Effectiveness Through the Six Thinking Hats 159
- 13 Oct 2021 Why Outsourcing Software Development Services Is Gaining Traction With Non-Technical Leaders? 157
- 17 Feb 2022 Prioritizing Software Requirements with Kano Analysis 154
- 17 Oct 2020 How Outsourcing can Improve Time Management for Better Business 149
- 01 Mar 2023 Bug Prioritization - What are the 5 levels of priority? 149
- 01 Jan 2023 Why is Vietnam the Top IT Outsourcing Destination of 2023? 148
- 01 Oct 2022 Vietnam is a favorite supply of IT outsourcing services to Japan 148
- 01 Jan 2023 Top 5 IT outsourcing countries in 2023 147
- 08 Aug 2021 Why Nearshore Software Development is better than In-House Development? 147
- 21 Oct 2022 Outsourcing Billable Rate 145
- 09 Jan 2021 How can outsourcing enable business agility? 141
- 21 Aug 2022 Forbes: IT Outsourcing Hotspot: Vietnam, A Small But Mighty Powerhouse 137
- 01 May 2023 Streamline Your Business with Outsourcing 136
- 01 Jan 2024 Tech Partnerships: Choosing the Right Software Outsourcing Firm in Vietnam 136
- 10 Mar 2021 The 7 Biggest Mistakes to Avoid Before Outsourcing a Web Development Project 129
- 05 Sep 2023 The Cold Start Problem: How to Start and Scale Network Effects 128
- 01 Feb 2023 [InfoWorld] Is your outsourcer agile enough? 125
- 01 Dec 2023 Laws of Project Management 125
- 01 Jan 2024 12 reasons for software development outsourcing 125
- 01 Jan 2024 Software Outsourcing Questions for 2024 123
- 01 May 2024 Warren Buffett’s Golden Rule for Digital Transformation: Avoiding Tech Overload 123
- 01 Jan 2024 Hiring Tech Talents in Asia: An Overview of Skills, Costs, and Potential 122
- 13 Jan 2023 What are the Hourly Rates in Offshore Software Development? 120
- 08 Jan 2024 Outsourcing on an As-Needed Basis 117
- 07 Nov 2024 Outsourcing Crisis Looming: Will Trump's Policies Transform the Global IT Landscape? 116
- 17 Jan 2024 What are the benefits and challenges of using multi-sourcing or single-sourcing strategies? 115
- 28 Oct 2022 Expect the unexpected in 2023 - How Outsourcing Can Help? 115
- 15 Nov 2023 IT Staff Augmentation Types and the Best Choice for Your Business 112
- 06 Feb 2024 What are benefits and drawbacks of co-creating solutions with your clients? 108
- 05 Jan 2024 Easy ASANA tips & tricks for you and your team 106
- 09 Sep 2022 Close Collaboration and Communication Can Overcome the Challenges of Distributed Teams 105
- 03 Jan 2023 IT Outsourcing Costs: Is outsourcing really cost-effective? 103
- 06 Mar 2024 [SemRush] What Are LSI Keywords & Why They Don‘t Matter 102
- 10 Jan 2024 Facts Chart: Reasons for outsourcing 98
- 12 Mar 2024 How do you create FOMO in software prospects? 79
- 01 Jan 2024 What The World Is Flat Means to IT Outsourcing 76
- 02 May 2021 Outsourcing Software Development: Avoid 8 Mistakes 68
- 14 Mar 2024 Why should you opt for software localization from a professional agency? 64
- 12 Aug 2024 Understanding Google Analytics in Mumbai: A Beginner's Guide 54
Japan, believe it or not, is an amazing market for software companies. It’s the 3rd largest economy and 2nd largest IT market in the world; it’s also the largest SaaS / Cloud market in Asia. Despite whatever you may have heard about Japan’s closed Japanese business culture, it’s warming up quickly to non-Japanese companies for a variety of reasons. In other words, there’s never been a better time to be a software startup trying to move into Japan.
We’ve written a lot about misconceptions surrounding Japanese business culture, from overblowing the importance of business cards, to the notion that a foreign company will be successful only if they go through a distributor already embedded in Japanese businesses. And just like any other culturally-enmeshed aspects of business in Japan, sales is also often mistaken for having an impenetrable cultural moat foreigners just won’t be able to break through.
While there are culture-specific nuances to selling and gaining traction in any culture, I believe these are just nuances, and sometimes obstacles, but never mysterious nor impossible to bridge. However, you do need to be aware of them, and actively work with how things work in Japan if you’re to succeed in expanding your operations to Japan.
Setting Expectations with HQ
If you’re reading this, I’m going to assume that you’re not going to be the person selling directly to Japanese corporations. You’ll most likely be hiring a team in Japan (or a handful of Japanese professionals where you are) down the line to handle day-to-day Japan operations.
So, no matter how much we talk about how to enter, and sell in, Japan, a lot of the tactics are moot if you personally won’t be able to execute on them.
What I’ve found is that many representative directors in Japan managing the office, and Japan teams in general tend to have a hard time convincing management back at HQ of the differences between the Japanese market and that in the US, especially for executives expanding operations to Japan for the first time.
Instead of talking about specific sales tactics, what I’d like to focus on here is the expectations you should have, and how to make sure you can reconcile what you expect from your US team v. your Japan team.
What Types of Companies Lend Itself Well to Japan Market Expansion?
While Japan is a great market for software companies, there are a few factors that can make it easier or harder to enter Japan. As you start thinking about moving to Japan, being able to take a pulse of the Japanese market without diving straight in is invaluable. But how do you do that? If your company has these following traits, you might be able to test the waters with a few early-stage customers in Japan.
Developer-Centric vs. Business User-Centric Software
I’m defining “developer-centric software” as those sold to IT and developers, and used primarily for building (or helping build) something technical. These include, but are not limited to DevOps tools (CI/CD, testing tools, etc.), developer tools (SDKs, identity management tools, etc.), business intelligence tools, databases, etc.
Business user-centric software, on the other hand, are those sold to non-technical users, for non-technical functions. This could be HR and payroll solutions, expense management tools, digital advertisement solutions, and content management tools.
Between these two, developer-centric tools may be easier to sell into Japan, at least initially, compared to business user-centric tools because developers are much more used to dealing with software with incomplete support. A lack of product localization, a small Japanese community, and very little Japanese documentation are par for the course when using non-Japanese software. Japanese developers have gone through this cycle time and time again as new tools and methods crop up outside of Japan, and they are relatively independent and unbiased in their evaluation of tools. These factors make it easy to measure Japan expansion viability through initial organic adoption without much upfront work (think GitHub and their organic growth in registered users in Japan), though organizations will have to have a Japan support strategy in the long-run (again, think of GitHub as they start selling enterprise licenses).
Individual licenses v. enterprise licenses
Simply put, it’s much easier to convince one person to sign up for a freemium service or purchase one software license compared to going through a POC cycle and having to convince a room full of decision makers. Of course, companies will still have to eventually figure out how to sell into larger accounts more efficiently, but getting 100 users who signed themselves up is much more cost effective than having to hire a sales team first.
Self-service v. professional services
This is no different than in the US, but software that is completely self-service, from signing up to implementing and operating the tool, can garner a significantly higher number of users (revenue notwithstanding) than those requiring professional services support.
Exceptions
These three factors are just a few ways to start asking about an organization’s Japan expansion viability. But by no means does this mean that a business user-centric tool on an enterprise sales cycle with heavy professional services for onboarding cannot expand into Japan. In fact, Salesforce and Oracle are two great examples of companies that have been extremely successful in Japan that exhibit exactly the traits that may have made initial expansion difficult.
For better or worse, understanding these factors can be a way to tally up the market opportunity and start with incremental steps to increasing market share in Japan, rather than jumping straight into opening up an office.
Moving In, and Moving Up
Once you’ve decided Japan possesses the qualities of an attractive overseas market, you will most likely kick off a project to incorporate in Japan, and find a representative director (also commonly known as country managers).
The good news is that these people know Japanese business like the back of their hands. The bad news is that it’s going to be difficult for you, a non-Japanese person, to fully appreciate what the team in Tokyo are working through because you don’t have experience in Japan. This means that you might set unreasonable standards without adequate HQ support, or conversely, not know exactly when to push back on your Japan team’s input.
In order to close the gap between your expectations and the unknown (to you) reality, we’re going to lay out what to expect during the sales process, along with a few dos and don’ts.
1. Qualify, always
This seems obvious, but your team in Japan may be reluctant to ask qualifying questions upfront, thinking that it’d be impolite to start asking questions about their business and pain points over email before meeting the prospect. Many of them will want to go onsite, exchange business cards, and go through a company overview deck before asking questions.
- Do push hard on your team to qualify, even if it’s a few high-level questions. Given most meetings take place in-person, going to a meeting without any upfront information means wasting almost 2 hours of each attendee’s time. Come up with a few qualification questions, and make them into a template they can easily paste into their email while scheduling the meeting.
- Don’t just agree to the pushback that asking these questions are impolite. You won’t lose any prospects just because you asked a few questions, and the worst they can respond with is a “let’s chat about it in person.” In fact, asking pointed questions upfront can signal a level of expertise to the prospect, and can lead to them trusting you more than just walking into a room to run through a dry presentation.
2. Always Assume In-Person Meetings for Introductions
American executives generally don’t realize how ingrained on-site introduction meetings are in Japan. Especially in Tokyo, where you can get anywhere within 30 mins via the well-oiled machine that is the Tokyo subway system, the expectation is that your team will visit each and every prospect for meetings.
- Do accept this as a fact and a cost of doing business in Japan. Yes, meetings will take twice as much time considering the amount of time it takes to get to the prospects’ offices, but you’re not going to go far if you try to overturn this long-standing piece of business culture.
- Do make sure your sales teams are qualifying these prospects before jumping head-first into an intro meeting (refer to the point above).
- Do try to find other meetings that could be done online, like POC check-in meetings, and second, or third meetings without executives involved. Your sales team can always say that they’re going to be traveling around that time, and can only chat over video conference. Of course, this isn’t going to work for negotiations and other important presentations.
3. Clarify POC Objectives or Get Into a 2-Year POC Time Sucker
As your sales team walks prospects through their products and services, the topic of running a free POC will inevitably come up. The only problem is that they’ll speak to a larger number of people than you’re used to back in the US, and none of them have decision-making authority. The Japanese sales person, thinking running a trial is the right way to get the attention of higher-ups, agrees to a free trial, but isn’t able to get information on their budget cycle, and who will be signing the dotted line (and it’ll most likely require multiple people approving the project). A few months of hands-on support from your organization, and the prospect comes back with new requirements, a request for a second round of evaluations, and a longer than expected timeline.
POC: A proof of concept is typically used to test the core features, usability, and overall viability of a product idea at different times during the development lifecycle. It's a way of verifying a product can work as intended and has the potential to address a specific need.
- Do make sure there’s a clear POC objective and a path to final approval. Japanese organizations are group consensus-oriented, which makes finding the one decision maker almost impossible (in fact, there are usually many people who have to sign off). Going into a trial with out either of these will guarantee a long-term cycle of multiple trials as new decision makers and goals crop up, along with egregious scope creep.
- Do make sure you know their fiscal calendar with budget cycles. Because Japanese organizations go through a round of reorganizations every year, the trial you’re currently working on may mean close to nothing once your champion leaves their post and is replaced by somebody completely unfamiliar with the project, along with new corporate goals that can easily shift the importance of your POC. Also, there’s very little point in running a trial right away if they have to wait 3 quarters to even submit new budget / project requests to consider purchasing your software (happens all too often).
4. Negotiation
Aside from asking for discounts, I’ve experienced very few instances of Japanese prospects negotiate hard on contracts. From what I know (and that’s just a drop in the bucket compared to all sales cycles in Japan), Japanese prospects are pretty straight forward and honest about their needs and requests. A lot of who I worked with collaborated on coming up with a fair price and licensing structure without playing hard-to-get or any of the games we’re used to seeing back in the US. That’s not to say you won’t get some prospects who aren’t as forthcoming, but on the hole, Japan is a very easy place to come to an agreement on pricing.
Frequently Asked Questions
What is the best market entry strategy for Japan?
Why is Japan a good market to enter?
How is business different in Japan?
What is the Japanese style of meeting?
What is the single most important concept in Japanese management?
Kaizen: Understanding the Japanese Business Philosophy
Kaizen is a Japanese business philosophy that focuses on gradually improving productivity and making a work environment more efficient. Kaizen supports change from any employee at any time. Kaizen translates to change for the better or continuous improvement.
What are the advantages of Japan's market economy?
High rates of investment in productive plant and equipment. The application of efficient industrial techniques. A high standard of education. Good relations between labour and management.
Explore more on these topics
Guest Blogging: The Definitive Guide
Top Trending Topics
Share This
Recently Updated News
