Why is a successful entry into the Japanese market so difficult for foreign companies? A business study exploring the Who, Why and best-practice of Japanese market entry

1. Why Western Companies Fail in Japan An Overviewbywww.schnellinterkulturell.de

2. Why Western Companies Fail in Japan An Overviewbywww.schnellinterkulturell.de Rememberyoucanlike, tweetorflattranytime

3. Why Western Companies Fail in Japan An Overviewbywww.schnellinterkulturell.de Rememberyoucanlike, tweetorflattranytime

4. Let’s start with a few boldstatements

5. The Japanesemarketis infamous for being difficult

6. A lotofforeigncompaniesfailtoentertheJapanesemarket

7. Theycould do a lotbetterwith a littlebitmoreofunderstanding

8. Beforewetalkaboutsolutions, let‘shave a lookattheproblems

9. In thispresentationwe will talkabout…

10. The threeWs

11. Whofailed?

12. Whofailed?Whydidtheyfail?

13. Whofailed?Whydidtheyfail? Whatcanwelearnfromthat?

14. Time for a littlebackgroundknowledge

15. Japan‘seconomyisstagnatingsincetheearly 90s but…

16. …Japan is still theworld‘s3rd largesteconomy USA CHINA JAPAN *dataasof 09/2011

17. Althoughconsumerspendinghasdeclined…

18. …thepotential marketisBIG!

19. Let‘shave a lookathowJapanesepeoplespendtheirincome

25. Thereactuallyismoneytobemade

26. Thereis a bigmarketandthereismoneytobemade. Noproblemright?

27. Not exactly…

28. Time and time again Japan hasproventobe a difficultmarketforforeigncompanies

29. So what‘sthetalkaboutforeigncompaniesfailingin Japan?

30. Let‘shave a smallQuiz

31. Whichofthecompaniesbelowfailed in Japan?

32. Allofthesecompanieshavefailedtogain a foothold in Japan!

33. Let‘shave a moredetailedlookatsomeofthecompaniesandWhytheyfailed

34. Information Services andPlatforms 0100100101101110011001100110111101110010011011010110000101110100011010010110111101101110001000000101001101100101011100100111011001101001011000110110010101110011

35. Information Services and Platforms Case #1

37. ebay‘sUSauctionsitemarketshareisover 90%

38. ebay‘sUSauctionsitemarketshareisover 90% ebay‘sJapanauctionsitemarketshare was about 3%* *Whentheypulled out oftheJapanesemarket in 2002

39. What went wrong? ebaycharged commissions of up to 5% ebay had acutely risk-averse Japanese customers submit credit card information on signup ebay announced their platform well before launching a localized Japanese version ebay‘sUSauctionsitemarketshareisover 90% ebay‘sJapanauctionsitemarketshare was about 3%* *Whentheypulled out oftheJapanesemarket in 2002

40. Information Services and Platforms Case #2

42. Google‘sUSsearchmarketshareis 65% to 90%*2 *1 Depending on yoursources

43. Google‘sUSsearchmarketshareis 65% to 90%*2 Google‘sJapansearchmarketshareisabout 35%*1 *1 Depending on yoursources *2 RecentlytheytookoverYahoo‘ssearchbiz in Japan expandingtheirmarketshare

44. What went wrong? In contrast to Yahoo! Japan Google offers little (well-known) services besides its search engine Yahoo! Japan enriched its platform with Japanese news and entertainment options. Google offered a rudimentary translation of its most popular services (i.e. search) Google‘sUSsearchmarketshareis 65% to 90%*2 Google‘sJapansearchmarketshareisabout 35%*1 Google nowpowersthesearchbusinessofformercompetitor Yahoo! Japan *1 Depending on yoursources *2 RecentlytheytookoverYahoo‘ssearchbiz in Japan expandingtheirmarketshare

45. Food andBeverages

46. Food and Beverages Case #1

48. Wendy‘sis #3 fast-food chain in theUS

49. Wendy‘sis #3 fast-food chain in theUS Wendy‘sclosed all ofits 71 stores in 2009 after tryinggain a footholdfor 30(!) years

50. What went wrong? Wendy’s left the Japanese market after being unhappy with its J-biz growth and their Japanese franchisor Again cross-cultural communication and management issues played a part in Wendy’s failure Wendy‘sis #3 fast-food chain in theUS Wendy‘sclosed all of ist 71 stores in 2009 after tryinggain a footholdfor 30(!) years IsgoingtoreturntotheJapanesemarketatthe end of 2011

51. Communication Services and Products

52. Communication Services and Products Case #1

54. Major player in Europe‘s mobile phonebusiness

55. Major player in Europe‘s mobile phonebusiness Sold thebulkofitssharestoJapaneseSoftBank Corp. in 2006 after failedattemptatJapanesemarketentry

56. What went wrong? Too little – too lateVodafone’s mobiles were no competition to the extremely specialized and at that time very advanced Japanese mobiles Vodafone after acquiring J-Phone did NOT invest into necessary high-speed infrastructure (3G-Network) in Japan Major player in Europe‘s mobile phonebusiness Sold thebulkofitssharestoJapaneseSoftBank Corp. in 2006 after failedattemptatJapanesemarketentry

57. Communication Services and Products Case #2

59. Althoughfightingagainst a dwindlingmarketshare NOKIA is still going strong…

60. Althoughfightingagainst a dwindlingmarketshare NOKIA is still going strong… …exceptfor Japan wherereducedtheirphoneline-uptothevertuseries in 2008…

61. Althoughfightingagainst a dwindlingmarketshare NOKIA is still going strong… …exceptfor Japan wherereducedtheirphoneline-uptothevertuseries in 2008… …beforecompletlyabandoningtheJapanesemarket in 2011

62. What went wrong? Similar to Vodafone, NOKIA also did not adapt to Japanese customer needs and instead marketed its world-wide models Althoughfightingagainst a dwindlingmarketshare NOKIA is still going strong… …exceptfor Japan wherereducedtheirphoneline-uptothevertuseries in 2008… …beforecompletlyabandoningtheJapanesemarket in 2011

63. Not all is lost though!

64. Therearequite a fewexamplesofcompanieswhomadeit in Japan

65. Companies whomadeit in Japan

66. So whatshould I considerbeforejumpingintotheJapanesemarket?

67. Questions to ask yourself before diving into the J-market Am I after short-term profits or do I plan to invest long-term? Can I apply my global strategy or should I develop a local strategy? What’s the (Japanese) competition doing? Can I keep up? Do I market my products correctly to my (Japanese) customers?

68. Questions to ask yourself before diving into the J-market Am I after short-term profits or do I plan to invest long-term? Can I apply my global strategy or should I develop a local strategy? What’s the (Japanese) competition doing? Can I keep up? Do I market my products correctly to my (Japanese) customers? Bonus Consideration Do I haveexcellentcustomerservice? Bonus Consideration Am I catering to special tastes and customer demands Whatareyourideas? Bonus Consideration Does my team understand the cross-cultural challenges?

69. Need more info? Want to connectand exchange ideas? Looking for help?

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71. Schnell Interkulturell Consulting | Training| Market Research Marco Michael Damm TEL: (0049) 02421-2621884FAX: (0049) 03222-9983879MAIL: marco.damm (at) schnellinterkulturell.deWEB: www.schnellinterkulturell.de TWITTER: http://twitter.com/schnellnterkult