New Zealand’s diplomatic ties and trading history with Japan stretches back more than a century. For much of the 20th century Japan was our biggest Asian trading partner. Now the CPTTP is about to open the trade doors wider than ever.
With so much focus on China’s turbocharged market in recent years, it’s hardly surprising that Japan, a market that has a long diplomatic and trading history with New Zealand, may have slipped under the radar of many Kiwi export firms.
But that should all change when the now-ratified 11-nation Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), to which Japan is a signatory, delivers its first round of tariff cuts in early 2019.
The CPTPP is New Zealand’s first FTA with Japan – the world’s third largest economy and New Zealand’s fourth largest export market (our exports to Japan in the year to June 2018 totalled NZ$4.2 billion).
Those tariff reductions will deliver a competitive advantage for many Kiwi exporters – for a start it immediately removes the tariff advantage Australia’s beef producers have enjoyed over our farmers.
The Japan market will also deliver a number of one-off opportunities in the shorter term, with the upcoming Rugby World Cup and Olympics scheduled to be held there.
Being previously based in Japan, Ye Miao (pictured below), Assistant Head of Asia Division at James & Wells, believes New Zealand’s premium products are well suited to the aspirations of Japanese consumers, and businesses can achieve relatively high margins there.
“Japan is a sophisticated and highly competitive market and its consumers are loyal to brands that consistently deliver high quality products,” he says. “It’s therefore essential to get both the branding and product right at the beginning.”
“Focus on what the targeted Japanese consumer is expecting from your product – the quality, the marketing, the packaging and the presentation,” advises Miao.
Focus on your Intellectual Property
From an intellectual property (IP) perspective, competition in the Japan market means it is essential to develop an IP strategy as part of your overall Japanese market strategy.
That means ensuring your brands are:
- Not infringing on any pre-existing trade marks on the Japanese Register, and
- Are adequately protected to prevent other parties from negatively affecting or ‘coat-tailing’ off the reputation of the brand.
Japan is a ‘first-to-file’ jurisdiction for trade marks, Miao points out, and the country is awash with registered trade marks, reflecting the prominence of the Japanese market for major brands and up-and-coming businesses worldwide. So ensure your brand/s are distinctive, convey what you want them to convey, and that you own and control your brand/s in Japan – all before you enter the market.
He advises Kiwi exporters and businesses looking to enter the Japanese market to obtain good local advice and to ensure their brands have no adverse connotations to the Japanese consumer. He notes that James & Wells works with leading Japanese associates to achieve the best results for clients in the Japanese market.
“Consumer expectations of packaging and presentation are much higher than in other markets. This becomes clear when you walk into any supermarket and look at premium fruit, vegetable and food items, often intricately presented in smaller quantities.”
Japan can be a very profitable ‘high-margin’ market for New Zealand businesses, particularly in the F&B and healthcare sectors, adds Miao. But it’s also a very sophisticated market that requires careful planning to achieve long-term rewards.
“Products and services should be tailored specifically to the Japanese market, where consumer expectations can be very different to other export markets. Japanese consumers have very high expectations not just of a products, but also of its presentation and customer service throughout the entire purchase process”.
Miao says exporters must consider everything from packaging, to the shape, quantity, presentation and marketing of their products and services.
Localisation is also important in Japan. Many Japanese consumers are mono-lingual, and marketing products in the Japanese language within the correct cultural context can be essential. It is important that your product, brand and messaging resonates with your target Japanese consumer.
For instance, packaging and presentation are quite different in Japan, he explains. Consumer expectations of packaging and presentation are much higher than in other markets. This becomes clear when you walk into any supermarket and look at premium fruit, vegetable and food items, often intricately presented in smaller quantities, he says.
“Most Japanese consumers place a premium on quality, presentation and accessibility of products, particularly for what is perceived to be speciality and premium products” Miao says.
How the Japanese see our brands
Japan is home to many outstanding, reputable high-quality, high-value brands – some with origins dating back many decades. Japanese consumers, already loyal to their own home brands, have a natural affinity with other premium brands from around the world – not least of which, from New Zealand. Many consumers are increasingly aware that New Zealand produces some of the world’s finest skincare, healthcare, pharmaceutical and F&B products such as honey, wine and seafood.
Japanese consumers are also increasingly valuing products that are natural and organic, something which benefits New Zealand businesses due to our international reputation and image.
Furthermore, given the relatively small land area compared to its population, there will always be demand in Japan for imported goods – particularly high-quality food and beverages, and nutraceutical healthcare products.
Miao’s advice is to take your time, especially around developing personal connections. Face-to-face meetings with potential business and retail partners are still important in Japan, he says.
James & Wells can facilitate introductions within the Japanese market, and can also connect clients with Japanese advisors in New Zealand’s public and private sector, before heading up there.
“There are a lot of great resources within New Zealand to turn to – including NZTE, JETRO and private sector advisors that can assist in a variety of different ways, including helping you to understand the Japanese market and business etiquette,” Miao says.
Understanding traditional business etiquette is important for doing business in Japan. For example, printed business cards are still important, and the Japanese are often reluctant to verbalise a hard ‘no’ when doing business. “It may take a few meetings with partners to gauge where the other side is at.”
Hierarchy in the business is also important – take care in thinking about and selecting the representative of your business that undertakes the initial visits to your prospective Japanese business partners.
Made for Japan
So the message for New Zealand’s export sector is clear. If you have a high-quality bespoke product that you think will be suited to the Japanese market, then you may be able to achieve higher margins in that country than other markets.
While the Chinese market has exploded, somewhat spectacularly in recent times, Japan has always been there with its sophisticated customer base, hungry for top quality products.
And now that the CPTPP is about to change the ballgame once and for all, it’s time for Kiwi exporters to take a long, hard look at the Japanese opportunity.
Article by Glenn Baker – editor of ExporterToday and NZBusiness magazine.
