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China Gets All the Attention, but Japan Remains a Land of Opportunity
China made headlines recently when it surpassed Japan to become the second-largest economy in the world. Commentators have pointed to this as a symbol of the contrasting fates of the two countries, with China the land of opportunity and Japan the land of the setting sun. For me, the contrasts seem overblown.
Indeed, the commentary about China reminds me vividly of the attention received by Japan’s “economic miracle” back in the 1980s. Ironically, the milestone also provides an opportunity to point out many features that continue to make Japan an attractive market.
To start with, Japan’s economy is huge and highly commercialized. With a highly educated population of 127 million, a vibrant consumer market, and more of the world’s largest companies than any country except the U.S., Japan is a well-established market. Even after years of slow growth, Japan’s gross domestic product is still more than double that of either the U.K. or Italy and four to five times larger than either Mexico or South Korea.
Japan also offers an excellent environment for business. Most importantly, it has a respect for the rule of law. Companies can enter contracts, develop and sell intellectual property, hire staff, finance new ventures and generally conduct business without having to worry about corrupt officials or policies that change without notice. Predictability is a hallmark of Japan’s economic and business experience.
While distribution channels in Japan are complex, it’s easy to forget that Japan has exceptional physical and commercial infrastructure. People, money and goods move quickly, easily and safely around the country. Companies large and small compete for business and a wealth of service providers can meet almost any business needs imaginable. Sales and marketing channels abound.
Even Japan’s culture can be an advantage for business. To the uninitiated, Japanese companies can seem slow and inscrutable. However, once a strong partnership has been formed, a Japanese company will often remain intensely loyal to its counterpart. Moreover, companies in Japan obsess about quality and timely delivery – desirable characteristics in a prospective partner. From a slightly different angle, Japanese consumers can be very demanding, but they also have a strong affinity to foreign brands.
Of course, doing business in Japan has its challenges. Most importantly, a company must be prepared to spend time and money understanding its customers, fine tuning its products and establishing credibility in the market. And, given language and cultural barriers -- not to mention the domestic competition -- many foreign companies decide the cost of doing business is high. But do those challenges seem so different from doing business in other attractive markets?
Japan may be destined to remain in China’s shadow. However, looking back thirty years, I recall a time when Japan’s growth seemed like it would continue for the foreseeable future. Undoubtedly, China, as well as all the companies rushing to do business there, will hit their share of bumps in the road. And, while they’re navigating those bumps, I’m happy to keep pursuing plenty of neglected opportunities in Japan.
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