Development of business relationship in Japan - part II.

Due to low familiarity with the Central and Eastern European countries, most Japanese consumers have no specific images of these countries and their products. The lack of CEE's brands names and low awareness of products having good chance to compete with western quality brands are difficulties to face in Japan. Why are Eastern European producers not so successful in the Japanese market? According to the Japanese food/wine importers from these countries, there are three main reasons for that.

 

 

  • The food producers are reluctant to come to Japan to understand the market.
  • The food producers do not understand the distribution system in Japan.
  • High cost of the imports and the distribution system.

How should they overcome these obstacles? The best way would be, if the producers would establish their own representative office in Japan. If this is not feasible, the producers would have to work with a good Japanese business partner. Together with the partner, they must solve the before mentioned obstacles and
a) define sales point of their product and determine to which market segment the product is aimed at
b) determine price and also provide quality labelling, trademark and advertisement support
c) appoint an importer or wholesaler company to work with etc.

And only after this process, the real business starts. This process can take one to two years even if utilizing a professional Japanese business partner. During this time, not only above mentioned obstacles have to be addressed, but also problems with the product quality and profits of the middlemen in the distribution system must be settled. Building up the sense of security among the customers is also a fundamental step to work on. Therefore, the role of the Japanese partner is not only selling i.e., to open market and find out customers, but providing and creating the sense of stability and security in the business relationships.

Another issue which should be addressed is more active CEE manufacturers’ sales promotion and marketing. According to some Japanese importers, so far, most sales promotions and marketing activities are only on the Japanese side. However, the sales promotion activities are common practice in Japan and many Japanese importing companies hope to see an increase in such practices.

The HORECA sector in Japan (hotels, restaurants and wine bars, catering services) offers opportunity for new wines/food to enter the Japanese market, including countries which have been traditionally underrepresented on the Japanese market. Generally, the HORECA sector covers cca 40% of the total market and is the ideal distribution channel for lesser-known brands and of medium-high quality. Therefore one possibility how to enter food market in Japan is to get you product into the distribution channels of restaurants and hotels.

To attract attention of excellent Japanese distributors is not an easy task, since they are also the most selective. Offering "only" good profit margins for quality products will not be enough to attract their attention. You must convince the distributor that people would purchase your product rather than the product of your competitors. Easier way would be for instance to offer such product which complements the products that they are already distributing.

Reference: Tomášková A." Brief Guide for European Companies on Importers and Wholesale Distributors in Japan", EU-Japan Centre for Industrial Cooperation, Tokio 2015, zde.
 

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