Tanmay Mittal, GM Asia Pacific for mobile engagement specialist Plexure, shares his insights around doing business in Japan – one of the world’s most fascinating, and challenging, marketplaces.
Having grown up in both Asia and New Zealand, Tanmay Mittal’s initial introduction to Japanese culture was through ‘manga’ (comics and cartoons) and the popular video games of the 90s. Much later, research for his Master’s at the University of Auckland led him to discover a deep understanding of Japanese business practices, and the effect of oriental business practices on Kiwi companies entering Asian markets. Then, while consulting for a Kiwi company exporting to Japan and China, Tanmay developed a fascination for the Japanese cultural mind-set, buying patterns and gift-giving culture.
But, nothing could prepare him totally for Plexure’s market entry in 2014, when the company partnered with McDonald’s Japan.
Tanmay describes his first few months in Tokyo as a “rollercoaster ride”.
“The reality was sobering and humbling especially when you compare the scale of business operations in Tokyo with New Zealand. We were a two-person team, having to set up offices, recruit talent and deliver an enterprise software project. I found the bureaucracy and the amount of paperwork required particularly frustrating.”
He says the level of English documentation has improved in recent years but if you don’t read and write basic Japanese, simple tasks can be a struggle. “What helped me keep going in the initial setup phase, was the openness and patience of Japanese people to help Gaijins (foreigners) even if they didn’t understand English well,” he says.
Tanmay was grateful for the knowledge around market entry procedures and cross-cultural business negotiations he had acquired during his postgraduate studies and previous job experience in Indonesia and Singapore. “It was clear that [in Japan] we would need a local support services partner to help with things like document translations, payroll services and guidance around immigration requirements.”
Capitalising on any advisory services and grants for fledgling exporters here in New Zealand was important too, says Tanmay – this involved NZTE’s Beachheads Advisory, JETRO Business Accelerators and local business establishment centres within Japan.
“They also help in connecting with partner companies and ensure we don’t make the same mistakes as many other foreign companies breaking into the Japanese market.”
Respect the culture
Japan is a high context culture and business dealings require sensitivity to the Japanese working style, explains Tanmay.
“Reading the air is key,” he says. “The Japanese communication style is more indirect, implicit and requires reading body language and the group consensus in the room. Japanese are very polite in terms of disagreement. Especially if you are dealing with a traditional or older Japanese client or supplier.
“Look for implicit cues and read between the lines for effective business negotiations.”
Tanmay says it’s important to respect Japanese meeting etiquettes. Seating position is in accordance with rank. Business cards are an extension of your professional identity, while learning basic Japanese greetings demonstrates commitment to prospective clients.
Also, be aware that pre-meetings are often where decisions are made, he adds.
“Japanese people value an informed decision-making process and new information, at the right time. Understanding the opinions of decision makers in an informal setting is key to clarifying assumptions and getting stakeholder alignment.”
With hindsight, Tanmay believes Plexure’s expansion plans for Japan were too aggressive. They underestimated the importance of stakeholder alignment when dealing with traditional Japanese brands.
The Japanese buying process, he explains, is more relationship oriented and driven by group think mentality, particularly in B2B and B2B2C engagements. Persuasive selling, patience and long-term relationship building are key.
“Delivering long term enterprise projects and having a positive and close relationship with partner vendors and our suppliers is something we should’ve focused on from the beginning.”
Reduced barriers
Tanmay says recent measures introduced by the Japanese government are aimed at reducing the barriers to market entry for overseas businesses – specifically reducing corporate taxes, optimizing admin processes to attract FDI in specialty sectors, and introducing open immigration policies to attract global talent.
Global sporting events hosted by Japan, such as the Rugby World Cup and Olympics, are also tipped to inject life into a sluggish economy.
The future’s looking positive, with digitisation impacting tourism, robotics, fintech, artificial intelligence, virtual reality and language support. Japan has a rapidly ageing population, but the under 25 year olds are digitally native, which has prompted hardware manufacturers to move towards IoT-driven smart devices and traditional Japanese companies to embrace digitisation.
“The market is booming for data analytics and customer experience platforms,” says Tanmay, “with focus moving away from traditional marketing channels and above-the-line media to direct and native digital channels like mobile, kiosks and smart televisions that offer better ROI and tangible tracking on marketing spend and conversion.”
Bright future
Trade between the two countries is helped by the fact that the Japanese regard Kiwis as open, kind and easy-going, says Tanmay. New Zealand’s “clean and green” image is also well respected and consumers are happy to pay a premium for certain Kiwi products.
In recent years the perception of Kiwi companies has shifted, he explains. This is attributed to the innovation and digital advances from success stories like merino wool, the application of manuka honey across different sectors, and high-end production and graphic design companies involved in The Lord of the Rings.
It’s a bright future for Plexure too, says Tanmay. “In Japan, every month around 13 to 15 million consumers interact with our clients’ digital channels and our product, and we service targeted digital content and personalised experiences for about 50 million local consumers.
“We are expanding our value proposition in Japan by rolling out e-commerce capabilities.” Plexure is also focusing on the convenience, hospitality and QSR industry verticals, and looking to partner with local companies to deliver best practice shopping experiences for Japanese consumers.
Meanwhile Tanmay’s personal goal is to continue learning Japanese and building cultural understanding. “There is always new things to learn here!”
Article by Glenn Baker, editor of NZBusiness and ExporterToday. First published in the October 2019 issue of NZBusiness.
Setting up shop in Japan: 4 top tips
- Localise your product or service – Japanese consumers are used to exceptionally high levels of customisation and service quality. If a product doesn’t meet Japanese design and customisation standards it risks failure. This includes localisation of marketing collateral, websites, and product documentation.
- Start with a co-working space – These are a great starting point and an opportunity to collaborate and network with other SMEs. You also need a physical address for most government-related processes.
- Outsource administrative tasks – Entering a new market involves many moving parts especially around payroll, taxation and mobility of employees. Outsource these services to start with and later bring them in-house as a long-term growth strategy. Support partners can also help in reducing overheads, digging through paperwork and understanding local market conditions.
- Invest in high-EQ bilingual talent – Finding and retaining bilingual native employees is hard in Japan, especially those who can act as the intermediary and glue between offshore offices and headquarters.
