Thinking of Entering a New Market? First, Ask Yourself Three Questions

Politicians in both the U.S. and Japan like to point to exports as a key driver of future economic growth. As a market entry consultant focusing on U.S.-Japan business, I often work with companies that are on the front lines of these efforts. Based on those experiences, here are a few thoughts to help you distinguish between legitimate opportunity and a wild – and expensive – international goose chase.

Let's start with a few questions. First, how is your business doing in your home country? Although new ventures – especially technology firms – can win business overseas, a company with decent sales and a proven ability to deliver its product starts with an advantage.

In both countries but especially in Japan, potential customers and partners often want evidence of a company's capabilities before they agree to meet. Longer-term, a company's experience dealing with customers and operations can be critical to successfully navigating the demands of a new market.
Second, why are you interested in exporting to the U.S. or Japan? If your interest was prompted by, say, a random comment from a former Miss Universe candidate (as one prospect recently told me), well, you may need professional help.

In contrast, if you have previous in-market experience, are aware of an unmet market or customer need, or have a well-defined strategic objective, you're on the right track. Likewise, if you've recently fielded a call from a would-be buyer or partner in the other country, you know there's some interest (although you'll need to explore further).

Finally, what are your expectations about the opportunity? I'm surprised by how many companies seem to think they can unearth a golden opportunity by shipping a box of samples (or worse, paper brochures) to an overseas consultant and turning him loose. Free advice: save yourself the FedEx charges. Successfully entering a market entry requires a realistic budget and timeline as well as a meaningful commitment to the market.

If after answering these questions you still think you see a good opportunity, then what? Start by deepening your understanding of the target market. Who is the customer, what does he or she need, and what is the competition? Many sources can provide helpful information, including JETRO (Japan External Trade Organization), industry associations, government websites, or private sector consultants, who are often glad to meet and share preliminary information and advice.

Then develop a market entry plan. It should include concrete goals as well as a supporting strategy, a real budget and timeline. Entering a new market requires that you make many key strategic choices, such as whether to go direct or partner, how to deliver the product and service customers, and whether to staff the operations with locals. Your decisions will have big implications, so you should evaluate carefully.

Finally, implement the plan – and be ready to adapt as the business changes and new challenges and opportunities arise. At a minimum, you should expect to spend significant amounts of time and effort in getting the business right.

In return, companies that follow a good approach may find lots of attractive opportunities – and a path that is less crowded than they expect.

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