Selecting the Right Market Entry Strategy

Market Entry Strategy for Small Firms

For small companies entering the market, Japan Entry recommends the appointment of an exclusive Japanese distributor which performs product localization, markets aggressively (as if it were an extension of your company), and becomes nearly self-sufficient in providing technical support. Often the ideal partner is a specialized division of a large firm, or sometimes a small company, that makes your product its flagship offering.

Some small Western companies have a limited number of big ticket strategic Japanese OEM or telecommunications customer targets. In this case, Japan Entry can act as an OEM sales representative to sell on a direct basis. Once projects have been successfully closed, clients can engage Japan Entry to hire local staff, or alternatively appoint a systems house to provide local engineering and project management resources.

Market Entry Strategy for Large Firms

Japan Entry recommends that large clients sign up multiple non-exclusive resellers, and recruit a small sales and technical team to manage these channels, perform demand creation, and provide support in Japan. Demand creation is essential to success. There are over 165 Japanese integrators whose revenues exceed $100M. The majority are subsidiaries of large manufacturers or financial institutions. These companies tend to be reactive, and not invest in marketing. However, by “co-selling” in tandem with local partners, even a small two-man operation can leverage the deep customer contacts and technical resources of its large partners.

In certain cases, a large company can appoint a long-term exclusive distributor. If there are significant marketing or localization expenses, the partner needs several years to become profitable, without the fear of having its distribution rights taken away. Like any good marriage, compromise and constant effort is required to be successful.

Market Entry Strategy for Service Firms

In the case of service companies, there are various partnering scenarios. To fully localize and replicate the Western company’s service menu, a joint venture partner willing to commit significant staffing, infrastructure, and market development funding is recommended. If the service can be delivered remotely, a pure sales agency relationship will suffice.