Navigating the Asian Market: How to Expand Your Business in Japan and China
Expanding your business into new markets can be an exciting opportunity for growth and increased revenue. Japan and China are two of the largest and most lucrative economies in Asia, attracting companies from all over the globe.
With a combined population of over 1.5 billion people, these two countries offer a wealth of potential clients and business partners.
Unfortunately, it isn’t easy to break into the regions, as targeting Japan and China brings a unique set of challenges. These concerns could make it difficult for foreign enterprises to establish themselves in such competitive markets.
How can you effectively navigate the difficulties of each nation to increase your business’ chance of succeeding? Is there a way to find the connections your company needs before you start your operations?
Read further to discover the answers to these questions and more. We provide a comprehensive guide to what your business may encounter when tapping into these dynamic markets to ensure your venture makes a profit.
What Makes Diversifying Into Japan and China So Attractive?
Japan and China offer many benefits that make them attractive for companies of all sizes looking to expand.
Let’s explore some of the advantages cementing these nations as an essential part of any international marketing strategy:
Stable and Growing Markets
Foreign investors see both Japan and China as the most attractive Asian countries for global business expansion. The pair of economic giants account for two-thirds of the region’s output and approximately 50% of its trade.
Japan’s highly industrialized and technologically advanced market is one of the most developed in the world.
The nation’s government has implemented a range of policies to encourage further growth, including tax incentives and support for small and medium-sized companies.
The country’s 127 million citizens enjoy a per capita GDP of around $40,000, reflected in their strong consumer culture. Local shoppers are early adopters of new technology and are always on the lookout for exceptional products and services.
Analysts project China’s economy will recover from the pandemic and expand by 5.2% in 2023. It remains attractive to foreign businesses who want to take advantage of this vigorous growth.
The local government has also set reforms in place that make it easier for international companies to set up operations in the Red Dragon.
Chinese consumers’ spending habits have played a significant role in driving their country’s economy and represent a massive market. The world associates this large population with its love of luxury goods and prioritizing quality over low prices.
Strong Business Cultures
Japan and China both have long histories of strong business cultures that helped to shape their economies and drive growth and development.
One of the most essential aspects of Japanese companies is their focus on quality. These enterprises are well-known for their commitment to produce only top-standard goods, establishing the country as a leader in industries like electronics, robotics, and automotive.
Innovation characterizes business in China. Local companies quickly adopt new technologies and adapt them on a large scale, which has driven the country’s growth and development.
These countries have strong work ethics, implement long-term planning, and build relationships with customers, suppliers, and stakeholders. This perspective creates stability, making it easier for foreign companies to plan for the future.
Japan and China’s geographical locations in Asia allow businesses access to the largest markets in the region, like South Korea, Taiwan, and Singapore. Companies who expand into the two giants have the potential to tap into an even larger consumer base.
Well-developed transport networks are also crucial for successful operations. Japan and China are major distribution hubs, with connections to Europe and North America, allowing foreign businesses to move goods between markets at lower costs.
What Challenges Could Your Business Face When Expanding Into Japan and China?
The possibility of diversifying into Japan and China is exciting, however there are certain challenges businesses could face when entering these markets.
It’s essential for your company to understand and prepare for these aspects to ensure your operations do well in the areas.
Here are the most prudent challenges foreign businesses face in Japan and China:
The corporate culture of these two nations starkly contrasts that seen in the west. Both Chinese and Japanese people have unique values, beliefs, attitudes, and behaviors that influence the way these countries conduct business.
There’s a strong emphasis on group decision making, hierarchy, and respect for elders in Japan. Foreign businesses used to making quick, independent choices might struggle with these processes in the Land of the Rising Sun.
Japanese professionals also often use indirect, nonverbal cues that could be confusing for foreigners used to more direct communication.
Having personal relationships is a massive part of doing business in China. Potential partners voluntarily offer to provide favors with the expectation you will reciprocate in the future.
Networking plays a huge part in corporate interactions in the country, and by not observing the customs, you risk losing opportunities and facing distrust.
Chinese managers are also used to obedience from their subordinates. Asking questions or raising disapproval during meetings won’t result in the same enthusiasm as in Western business environments.
Japan and China have complex legal and regulatory systems that can be difficult for foreigners to navigate.
Both countries impose a range of laws regarding labor, taxes, intellectual property, and data privacy. There are lengthy, unfamiliar administrative procedures to complete before obtaining the relevant permits across national or local jurisdictions.
Many industries in these countries, such as cosmetics, food, pharmaceuticals, and energy, also have regulations specific to these niches.
It isn’t easy to understand these rules, as they’re often not clearly specified in English.
Strong Local Competition
Japan and China have established local companies who develop strategies to compete against any new entities. These businesses also have a deep understanding of the regional market and customer requirements.
It could be difficult for foreigners to keep up with them, as they likely won’t have the same knowledge, resources, and relationships as their local counterparts.
Language barriers are a significant challenge for businesses looking to expand into Japan or China. Both nations have unique dialects that make it difficult for foreigners to communicate effectively with customers, suppliers, or partners.
While these countries teach English in schools, it’s not widely spoken in their business communities.
Seeking help from an interpreter comes with many limitations. The level of translation depends on the interpreter’s English and whether they understand the topic.
The translated Japanese or Chinese should also sound natural to the native speakers and presented in a way the audience is comfortable with. Unless you localize your information in this way, it won’t appeal to your potential partners.
This need for material to be tailored to the local markets also makes using translation software impossible for conducting business.
These apps replace English words with their direct Chinese or Japanese equivalents, often resulting in irrelevant and grammatically incorrect language.
Strategies for Success in Japan and China
While there are many obstacles to overcome, expanding your business into Japan or China is a lucrative opportunity. It offers access to two of the largest and most dynamic economies in the world with affluent populations, well-established infrastructure, and strong work ethics.
Implementing a suitable strategy with Innovation Park provides your best chance of prevailing in these exciting markets. We ensure proactive, well-prepared approaches that overcome the key difficulties foreign companies face in Japan and China.
Allow us to fully establish your entity abroad and source the local connections your business needs to tap into the potential of these economies. Enjoy a personalized sales and development team who help you navigate regulations and build strong relationships.
We also find local, native-speaking translators who understand the nuances of your industry to communicate effectively with your customers and partners. Offering authentic, relevant materials and dialogue helps your brand stand out from the competition.
Are you ready to take advantage of the opportunities Japan and China offer your business? Book a consultation with us to learn more.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.