Everyone agrees that China is a hotspot for global business. So where does that place Japan? Does the world’s second-biggest economy, with a culture of robust individual consumption, still attract as much attention as it deserves? Yuko Nakao reports.
Is the Australian love affair with Japan over? Even if Japan’s sustainable ‘new economy’ is displaying steady growth and a stronger recovery than ever, and even if this ramped-up economy means more opportunities and potential for Australian businesses?
As a Japanese living in Australia, I have felt a marked decline in interest shown towards Japan by Australia. Ten years ago, it seemed mandatory for every five-star hotel in Australia to employ Japanese-speaking staff, and ambitious parents would send their children to Japan to improve their future employment opportunities. But since the recession of the 90s, Japan doesn’t seem to be such a sexy market.
I view the consequences of the so-called bubble economy collapse with mixed feelings. It clearly delivered painful outcomes for many. The unemployment rate rose; the security of lifelong employment no longer exists. The number of part-time and contract workers has risen considerably. Japan’s changed economy has even engendered a new dictionary entry: NEET, ‘Not in Education, Employment or Training’. But there have been many positive changes as well. For one, the Japanese came to recognise the importance of sustainability and a quality lifestyle; for another, prices plummeted as they learned to be smarter consumers and demand value for money. In business, the recession drove the Japanese to more efficient work practices, focusing on results rather than traditions and obligations. This has included an acceptance of foreign management and imports. And the good news is that the Japanese economy is on the rise again. Some attributes die hard, such as a people’s desire to achieve and stay on top, and hard work and diligence won’t be removed from the Japanese character.
No doubt China has enormous potential. The East Asian economy is growing at an astonishing pace. But so is economic integration in this region, in which Japan plays an important role. JETRO (Japan External Trade Organisation) stresses that Japan possesses all the qualities required in international business to become a hub of Asia. According to a JETRO report, during the period from 1998 to 2003, East Asian regional trade grew by 76 percent. With the strategic location of manufacturing hubs in Japan, China and other Asian countries, the region has achieved a division of labour networks, enabling optimum production and procurement. Japan’s role in this network is to be a hub for research, development and the production of high value-added goods.
Integration is also evident at a consumer level. Trends in consumer goods, such as digital products, clothing and cosmetics, often spread throughout East Asia after emerging in Japan. Last year at New Zealand Fashion Week, I met an editor from a Chinese fashion magazine who told me she buys editorial content from a Japanese fashion magazine and translates it for publication in her magazine. This did not surprise me, as I was aware of the popularity of Japanese magazines in East Asian countries and regions. As well as through magazines, Japanese trends are picked up through Japanese TV dramas and films, which are widely watched by young East Asian people. As this sharing of purchasing preferences and lifestyle requirements becomes stronger in East Asia, Japan has emerged not only as a focal point of research and development, but also as a key hub for marketing activities.
Undoubtedly, many business opportunities can be identified by closely monitoring trends and current affairs in the marketplace. For Australian businesses, an effective way of doing so is to ride on waves of publicity generated by Japan’s fast-paced media, as has been the case with lamb and other food products.
“Currently what’s really hot from Australia is chilled and frozen lamb, especially grain-fed. Exports are rising quickly—by about 25 percent per annum—and Japan is now the second-largest export market for Aussie lamb after the US,” says Phil Ingram, country manager Japan and senior trade commissioner of Austrade Tokyo.
This is due to the current Genghis Khan restaurant craze, reportedly set in motion by several magazine articles about two years ago. The legendary Mongolian leader is practically synonymous with Mongolian-style barbecue. Prior to this trend, lamb was not widely consumed in Japan, but the number of Genghis Khan restaurants has grown from 50 to 250 in just two years.
Lamb quickly won favour as being a healthy red meat alternative and the trend spread from Tokyo throughout the country, including to Hokkaido, a region where Mongolian barbecue is particularly popular. Undeniably, Australian meat exporters are enjoying the unexpected boost in lamb sales as much as Hokkaido restaurant owners are.
Trends greatly affect success in business and a good place to study Japanese trends, as suggested by the Aussie lamb case, is magazines.
Hanako is one of Japan’s longest-running magazines targeting working women. Restaurant and food reviews feature strongly in the magazine, which reaches 200,000 spendaholic readers, mainly aged in their 20s and 30s, around Tokyo each fortnight. These readers have an average of A$680 per month to spend on leisure activities such as dining, fashion and travel.
Kuniko Nose, editor of Hanako and responsible for sourcing the magazine’s world news features, associates Australia with a certain image. “I try to feature things never before seen in the Japanese market, and from Australia, I choose stories and products reflecting themes such as organic, natural and relaxed lifestyle.” Recently Hanako featured an Australian product called Ecoya, eco-candles made from soy bean wax, giving the product a half-page exposure with an advertising value of A$8,500. Although new to Japanese consumers, the eco-candle matched their expectations of Australia being a clean, natural environment.
Building a brand image from scratch is costly, especially in Japan, where advertising costs are still among the highest in the world. Ecoya is an example of the strategic sense it makes to use consumer trends to one’s advantage, along with favourable images already established in the marketplace.
Beef is another recent example where the Australian image of cleanliness has been crucial. During a recent consumer spat that became one of national concern, Australia worked this image to great advantage. The Japanese government had suspended US beef exports for six months due to an American company bringing in banned cuts of meat and violating the bilateral agreement guidelines. This incident made Japanese buyers and consumers extremely cautious and food safety became a national concern. Not only could Australian beef exporters enjoy the absence of their biggest competitor, they also milked their chance to further push the image and reputation of Australian beef as being clean and safe. Even after the Japanese Government lifted the ban, Australian success is expected to continue, with Japanese buyers reluctant to go back to their US suppliers.
The Japanese mindset has changed greatly in terms of food safety. On a recent trip to Tokyo, I bought a packet of chocolate coated beans—an ordinary $2 pack from a corner store. But what caught my eye was that every ingredient on the packet was labelled ‘organic’ or ‘not genetically modified’. This labelling on processed foods was inconceivable 10 years ago. It wasn’t long ago that Japanese consumers showed blind faith in anything on offer in supermarkets. Most shoppers wanted perfect-looking fruit and vegetables, and only the health conscious bought organic foo
d. Now, not only are organics big on the fresh produce scene, but the organic movement has expanded to include processed foods as well.
Marcus McLeod, managing director of Sunshine International, sells processed food and beverages including frozen sweets and natural cordials imported from Australia and Europe to Japanese shops and supermarkets. Having lived in Japan for 15 years, and with a near-native command of the language, McLeod sees challenges and opportunities for Australian businesses in the Japanese processed food industry.
“Many Australians think they can sell their products for a high price here, but Japan imports products from all over the world and as far as the processed food and beverage industry is concerned, Japanese buyers are more price-conscious than you might think. Your products have to be unique and competitive. One problem is that Australian products generally have to come from a large manufacturer to get a big trading company interested. Most of these big-name products are already here, and these days there isn’t much differentiation between China, Thailand, Philippines and Australia in terms of regular processed food. But natural and organic is a growing market and I think this is one area where Australia could do well in the future.”
McLeod agrees there is an increasing awareness among Japanese wholesalers and consumers that Australia is a reliable and safe origin for processed foods. But food is not the only arena where natural and organic ingredients are attractive to Japanese consumers. South Australian skincare company, Jurlique International, has enjoyed great success since opening its first shop in Japan in 1996. The company’s presence has since expanded to 30 shops including at the prestigious Isetan Shinjuku department store, which attracts 30 million customers annually.
If you’re inspired to expand your business to Japan but uneasy about the unfamiliar culture, take a look at the following tips to help you through your first landing. And for those who put Japan on hold after the economy crashed, it’s time to look carefully and think again. There are more opportunities than ever.
Japanese Etiquette
While it might not make or break your meeting with a new Japanese partner, here are some pointers to Japanese etiquette that will stand you in good stead, especially if you haven’t done business before.
In General: Business etiquette and practices are important in Japan. The Japanese place great importance on politeness, respect and social rank. Modesty is also well regarded.
Attire: You are expected to wear suits and ties; casual business attire is thought to reflect unprofessionalism and poor manners. During the steamy summer months, however, an increasing number of people are leaving their suit jackets and ties at home in response to the government’s Cool Biz campaign, which aims to reduce air conditioning and electricity consumption to aid in the fight against global warming.
Business Cards: Bring plenty of business cards, as meetings often begin with the exchange of them. They should be received in both hands and laid carefully on the table. Don’t place the card in your pocket or write on it. It would be considerate to have your business cards printed with your name in Japanese.
Office Hours: Office hours are Monday to Friday from 9am to 5pm, but many employees stay back until 8pm. Some post offices and banks are open on Saturday and Sunday. Retail stores operate from 10am to 7pm and are open all day on Saturday and Sunday. A one-hour lunch break is strictly observed.
Meetings: Given long commuting times, breakfast meetings are rare but meetings after 5pm are common. Most large companies will not meet on Saturdays but some medium to small firms will accept meetings on Saturday, although this should not be taken for granted. If you find the daytime meetings a little slow or felt that discussion of key issues was avoided, try going out at night for drinks or dinner with your client. This is often when more useful information is fed back to you. Remember that many Japanese companies prefer to build up a business relationship over a long time, rather than make immediate commitments with an attractive newcomer. Be prepared to invest long-term in your relationship with the Japanese, through regular meetings and business correspondence.
Language: English is not widely spoken and meetings in English are rare. An interpreter is generally required. To minimise the communication handicap, visual business tools such as product brochures or a company profile will prove handy when you visit a Japanese company for the first time. Learn where to find English-language resources about Japan’s business climate, such as Austrade or JETRO libraries, and consider contracting a bilingual liaison person to conduct on-ground research and communications on your behalf in Japan.
Partners: It is inappropriate to take friends, spouses or children, to business meetings. Spouses are not usually invited out for business functions either, unless the Japanese company is familiar with western business practices.
Seating: In formal situations, the most important guest sits furthest from the door and the host sits closest to the door. If uncertain, ask where you can sit or wait to be seated.
Politeness & Ambiguity: The Japanese equate being indirect with being polite. This is often misunderstood and interpreted as indecisiveness or non-commitment from the Japanese side. In these situations, patience is the key. The Japanese try hard to avoid open conflict, and may answer ambiguously or even agree to an offer that they have no intention of accepting. If you want clearer indications after a meeting, you can prepare a brief to clarify the obligations of both parties and submit minutes to the Japanese side as a record of the meeting. This will force the Japanese side to respond if your understanding was not mutual.
Timing: Make sure you arrive before the appointed meeting time and if you are running late, call ahead and let your contacts know. It’s not the practice to give lavish gifts, especially if no business has been completed, and at most a simple gift like a company pen or pin for all the contacts is sufficient. However, for long-term, important clients, a gift from Australia like a glossy book on a special occasion would be appreciated.
More Info
Those interested in learning about export opportunities in Japan should consider subscribing to the Japan Exporter’s Newsletter, provided free of charge by Austrade. The newsletter is designed to inform Australian businesses about trends and opportunities in the Japanese marketplace.
Visit www.business.australia.or.jp/newsletter/english/ to register for the newsletter.
Other useful information can be found at: Austrade Japan: www.business.australia.or.jp Japan External Trade Organisation (JETRO): www.jetro.go.jp
