Publisher's Message: A Role for Market Entry Consultants

It is no secret that market entry consultants everywhere have developed a bad reputation for being expensive and simply telling you things that you already know. But the fact is that countries where most outsiders don’t speak the language, such as Japan, South Korea, Taiwan, and China, not having a bilingual person on the ground could lock you out of that market completely.

Terrie Lloyd
Publisher, J@pan Inc Magazine
Writer of Terrie’s Take
terrie.lloyd@japaninc.com

At the same time, not doing business in North Asia is no longer the discretionary option that it once was. These days North Asia is almost the only place apart from the Middle East and Russia where there is still money flowing through the system. Yes, consumers are tightening up, but nonetheless, the demand for luxury goods ranging from French handbags to Italian Ferraris is continuing apace in north Asia, and is earning the respective producers the majority of their profits right now.

There are many avenues for a company looking for help to enter the Japan market. Depending on the country, there is usually a government-sponsored trade group with an office in Tokyo and possibly some other regional cities. In addition to national-level assistance, individual states or regions in some larger countries may have their own trade operation here. Then of course there is JETRO, the Japan Export Trade Organization. Funded in part by the Ministry of Economic Trade and Industry (METI), JETRO has more than 100 offices in Japan as well as internationally, and sees its primary mission as helping foreign firms come to Japan.

But while government funded organizations are good with market research and finding distributors, there is a limit to the scope of what they can do. For example, they have to be open to all their constituents because they are funded by tax payer dollars. This situation can lead to inefficient use of scarce Japan-based resources, or to inordinate amounts of time being spent on projects for companies who are still learning the ropes of how to export, rather than focusing on those ready to export to Japan.

A second problem is that government funded organizations have to pull out of a company’s trade development just as things start getting interesting, else they start to get involved in decision-making, or advice that results in decision-making—opening them up for liability later on. Typical requests from exporters include: advice on deal structuring, corporate structuring within Japan, international distribution structuring for tax efficiency, financing, hiring good staff, and troubleshooting.

If you decide to choose a private market entry consultant, it is best to ask a government organization for a list, and make sure a selection of firms provide a reference. Pick consultants with some reasonable volume of business (a sign of success) and also with a variety of accounts, because every company is different, and there is no magic bullet.

It is estimated that the top five market entry consulting firms are responsible for about 100 deals a year, comparing favorably to the various foreign government organizations and JETRO. Typically private firms handle mostly technology, opportunities, new media (Internet, etc.), biotech, and more recently ‘green and clean tech.’ However, so long as your product/service is innovative and has a reasonable amount of know-how or patented Intellectual Property attached to it, then private firms should be able to help you to get not only a distribution/sales partner, but also a higher valuation of your product’s worth, as well as the possibility of funding to boot.JI