Japan Global Expansion Playbook

Introduction

Japan represents the third largest economy in the world and should be a top consideration for any global expansion. Japan is an advanced economy with high technology industries such as robotics and manufacturing that presents opportunities for companies to explore. Company operators looking to expand to Japan should establish a global expansion playbook in order to ensure a successful execution and growth.

Research & Budget

The beginning phase of any global expansion should be to first ask the question of why you are choosing a particular country over another. This can be accomplished through a combination of macroeconomic factors, target customer base, regulatory analysis, cost of expansion and go to market strategy. Once the reason has been established, a company should then turn to researching technical steps, including company incorporation requirements, tax regimes, and government agencies. For example, companies will need to decide if they incorporate a Godo Kaisha (GK) or Kabushiki Kaisha (KK) and all companies must register their employees in Pension, healthcare, unemployment and other accounts. Once initial research has been completed a finance department will create a budget, including items such as revenue targets, team salary, professional vendor fees, office space and marketing.

Legal Operations

The Japan professional services industry is advanced yet professionals are not always as accustomed to supporting overseas clients. The Japanese economy is so large and self contained that many Japanese entrepreneurs do not expand beyond its borders. A unique feature of Japanese work culture is the concept of employment for life, often at large corporates. The result of this is terminating an employee for any reason short of criminal offenses is highly protected under the labor law. If companies choose to setup a local entity instead of leveraging an International Employer or Record solution then the corporate establishment process will need to first take place before a local team and sales can begin.

Go To Market

When creating a go to market global expansion strategy companies first determine if they will use a single country approach, regional approach or global from day 1. Companies who choose Japan as a global expansion destination often are required to formulate a Japanese only strategy due to the cultural and linguistic uniqueness. Many times managing Japan from another Asian country will not lead to optimal success and on the other hand a Japanese regional HQ is not always ideal for managing the entire APAC region. By choosing one country or region to funnel resources to, you are also not choosing other potentially high growth market to begin to gain learnings. Technology, startups and even enterprise companies can benefit from leveraging lean principles for planning a go to market strategy. By launching an MVP, often in the form of the home market product/service, the local team can thus begin to gain insights into how local customers react.

Hire A Team

Japan has a strong talent pool and education system with high levels of competition. Japanese talent typically look to brand name large corporates that evoke local status as opposed to the uncertainty of an unknown startup or overseas brand. This low risk tolerance requires careful planning when deciding the early employees to hire. In order to ramp up sales and operations, hiring a team with as many local nationals as feasible is recommended. Companies planning their Japan global expansion playbook will usually map out the first 10 hires during the budget phase. Common mistakes that overseas companies do not sufficiently plan for include employer social contribution levels, termination protections, intellectual property protection and common vs mandatory benefit programs. These can be mitigated through a combination of research and working with local partners.

Build, Measure, Learn

Once a team has been hired and go to market strategy established then operators should begin the lean cycle of build, measure, learn. A common mistake firms make when expanding globally is to not treat the local operation as a new company within a company. This requires re-establishing product-market fit through MVP launches, data gathering and iterations. Companies expanding to Japan often underestimate the amount of upfront translation and product/service adaption to even begin gaining learnings. By building a global expansion playbook that is tailored to Japan, companies can gain commercial growth.