Export Your Way Out of Trouble

Export Your Way Out of Trouble

For the last 15 years, Japanese manufactured goods have been too expensive for global markets. Consequently, most brand name makers are now running factories out of China. This has caused Japan's exports to fall over the last few years to only 10% of GDP - a surprisingly low figure. Most remaining manufacturers made up for lost overseas business by focusing inwards and selling to the domestic market. However, recession and deflation in the last 3 years have limited the effect of that strategy too.

Part of the answer to the problem of a dwindling market is clearly to return to an export economy. But when you're too expensive globally, what can you do? I believe that the Japanese government is working towards solving this problem with a combination of marketing, financing, and education initiatives. Rumors are JETRO - an organization originally set up to help Japanese companies export but which over the last 20+ years has existed to help foreign companies get into Japan - is about to be reorganized so it can become export-oriented again. Clearly, this would be an excellent first step. Following that there will obviously have to be measures to get the volume of start-ups to increase, and also to help smaller companies fund their technology R&D.

Although we can wait until the government starts priming the export pump, the fact is that there are a number of younger (and thus energetic) companies out there that are already coming to the conclusion that the only way out is to develop export markets on their own initiative. By the very nature of the threat from China, these companies are not Japan's heavy manufacturers, but are indeed its value-added businesses. I'm a high-tech guy, so what I'm seeing is some exciting new stuff being created in the wireless, networking, encryption (surprised?), and robotics - spaces which have few competitors and therefore are "export-competitive".

Where is the opportunity here? Firstly, quite a number of these younger companies have IPO'd in the last two years, thanks to the buoyant Japanese IPO market. They know that the local markets are too tight for them to grow much more, and they have the cash to start expanding offshore. What's surprising through is that many of these same excellent companies have little or no export-awareness and capability. Indeed, in many of them, no one in senior management speaks English and therefore their international capabilities are almost zero.

Thus we need a solution. I have seen a number of talented older (over 50 years old) bilingual executives lose their jobs recently because of general down-sizing and cost reduction in larger companies. If you're in this group, have been in senior management, and have export know-how and a human network, clearly now is the time to make an unsolicited approach to the CEO's of freshly IPO'd companies and pitch the idea of starting up or running the export department. If you are such a person, you may have to offer a substantial price reduction (or even start off as a success-based consultant) to get started. But once you have started delivering an overseas network to the Japan-based CEO, your value and continued involvement in the company should become clear.