Serial entrepreneur Terrie Lloyd says there are a number of traps for new players in the Japanese market, including going too far to assimilate.
TOKYO, Japan, August 15, 2007 (Investor TV) – New Zealand-born serial entrepreneur Terrie Lloyd has founded 15 companies and sold five during his 24 years in Japan, with the latest being the country’s top online recruitment site. Having endured the ups and downs of Japan’s boom-bust-and-boom again economy, he told Investor TV that newcomers to the Japanese market need to be true to their origins despite Japan’s uniqueness.
“Many companies come into the country thinking that they can set up their company the same as they would elsewhere – which you can do; you can hire the service providers and so on to do that,” he said.
“But there are a number of traps for new players that will have implications later on. Things like work regulations, employment regulations, the way you declare your tax. So I strongly recommend people who are freshly arriving in the country to get some professional advice right from the start.”
After laying the foundations right with the right advice, the foreign entrepreneur says business is business – despite Japan’s many differences.
“Doing business in Japan is common sense. You have your social niceties and cultural behaviours that you have to observe, but to a certain extent being a foreign company in Japan and certainly if you have foreign leaders, you can break out of the mould to a certain extent,” he said.
“There’s quite a lot of leeway offered by Japanese to foreigners in Japan, and given the current boom that’s never been more true.”
He said companies should not try too hard to assimilate, as any Westerner struggling with geta sandals will testify to.
“I strongly encourage companies not to be too Japanese – observe the requirements at the start but then after that it’s business as usual. Pay attention, do your due diligence, your controls and so on, and press forward the same as you would in any other country,” he said.
Now focused on recruitment, information and information technology services through his Linc Media group, Mr Lloyd says business has never been better due to Japan’s emergence from the “lost decade” of the 1990s.
Ironically the improved conditions coupled with a shrinking labour market have made it harder than ever to find quality staff, especially for new entrants to the Japanese market.
“On a mass level, what I discovered is that the Japanese still very much respond to brands,” he said.
“So for larger companies that are here in Japan and they’re perhaps struggling with recruiting, one of the best pieces of advice I can give is get out there, do your marketing – not only to sell your product but also to sell the company to recruits, because they are quite choosy.”
Mr Lloyd said traditional Western forms of marketing such as telephone sales often proved difficult in Japan due to a cultural preference for long-term and personal business relationships.
“Japanese like to do business with a person, not a concept. So it’s very hard to do telephone sales, for example. It’s very hard to represent yourself as a brand, unless of course it’s a world famous brand,” he said.
“What they want to see is someone who’s done the hard yards and who understands their situation, and who can communicate. It’s very strange in a way – you’ve got 127 million people operating at a village level, interacting with each other and wanting the face to face time.”
Company management also need to foster a family-like environment within the company to boost staff morale and keep the headhunters away, Mr Lloyd said.
“At a micro level, Japanese work on several different levels. Maslow’s hierarchy of needs is not quite as well established in Japan as it is elsewhere, where money comes first. Just like brand awareness, many Japanese are looking for an environment that they can feel comfortable in,” he said.
“This is not an outgoing culture, it’s a very introverted culture, and it’s one that responds well to a family atmosphere within a company. So I often give advice that senior leadership should be espousing a family environment, and spending a lot of time with their staff. In Japan, the company often is more important than the family, even now.”
Asked whether foreign companies could succeed in the Japanese market without any representation on the ground, Mr Lloyd said it all comes down to the type of business.
“If it’s a small company, and if that company doesn’t have ambitions beyond maybe a couple of million dollars a year in sales, with very little or no costs other than the costs of producing the goods and shipping them, then clearly a distributor is the way to go,” he said.
“If, on the other hand, the company has a strong emphasis on brand - particularly if it’s a consumer product or consumer services company - then I usually recommend that they set up their own operation.
“What a lot of companies do is that they start off with a distributor, they sign a five-year agreement, and then they start introducing their own marketing. Then, if they feel confident enough or if they’ve established an alternative distribution channel, they’ll take over the distribution rights as well.”
“Many companies come into the country thinking that they can set up their company the same as they would elsewhere – which you can do; you can hire the service providers and so on to do that,” he said.
“But there are a number of traps for new players that will have implications later on. Things like work regulations, employment regulations, the way you declare your tax. So I strongly recommend people who are freshly arriving in the country to get some professional advice right from the start.”
After laying the foundations right with the right advice, the foreign entrepreneur says business is business – despite Japan’s many differences.
“Doing business in Japan is common sense. You have your social niceties and cultural behaviours that you have to observe, but to a certain extent being a foreign company in Japan and certainly if you have foreign leaders, you can break out of the mould to a certain extent,” he said.
“There’s quite a lot of leeway offered by Japanese to foreigners in Japan, and given the current boom that’s never been more true.”
He said companies should not try too hard to assimilate, as any Westerner struggling with geta sandals will testify to.
“I strongly encourage companies not to be too Japanese – observe the requirements at the start but then after that it’s business as usual. Pay attention, do your due diligence, your controls and so on, and press forward the same as you would in any other country,” he said.
Now focused on recruitment, information and information technology services through his Linc Media group, Mr Lloyd says business has never been better due to Japan’s emergence from the “lost decade” of the 1990s.
Ironically the improved conditions coupled with a shrinking labour market have made it harder than ever to find quality staff, especially for new entrants to the Japanese market.
“On a mass level, what I discovered is that the Japanese still very much respond to brands,” he said.
“So for larger companies that are here in Japan and they’re perhaps struggling with recruiting, one of the best pieces of advice I can give is get out there, do your marketing – not only to sell your product but also to sell the company to recruits, because they are quite choosy.”
Mr Lloyd said traditional Western forms of marketing such as telephone sales often proved difficult in Japan due to a cultural preference for long-term and personal business relationships.
“Japanese like to do business with a person, not a concept. So it’s very hard to do telephone sales, for example. It’s very hard to represent yourself as a brand, unless of course it’s a world famous brand,” he said.
“What they want to see is someone who’s done the hard yards and who understands their situation, and who can communicate. It’s very strange in a way – you’ve got 127 million people operating at a village level, interacting with each other and wanting the face to face time.”
Company management also need to foster a family-like environment within the company to boost staff morale and keep the headhunters away, Mr Lloyd said.
“At a micro level, Japanese work on several different levels. Maslow’s hierarchy of needs is not quite as well established in Japan as it is elsewhere, where money comes first. Just like brand awareness, many Japanese are looking for an environment that they can feel comfortable in,” he said.
“This is not an outgoing culture, it’s a very introverted culture, and it’s one that responds well to a family atmosphere within a company. So I often give advice that senior leadership should be espousing a family environment, and spending a lot of time with their staff. In Japan, the company often is more important than the family, even now.”
Asked whether foreign companies could succeed in the Japanese market without any representation on the ground, Mr Lloyd said it all comes down to the type of business.
“If it’s a small company, and if that company doesn’t have ambitions beyond maybe a couple of million dollars a year in sales, with very little or no costs other than the costs of producing the goods and shipping them, then clearly a distributor is the way to go,” he said.
“If, on the other hand, the company has a strong emphasis on brand - particularly if it’s a consumer product or consumer services company - then I usually recommend that they set up their own operation.
“What a lot of companies do is that they start off with a distributor, they sign a five-year agreement, and then they start introducing their own marketing. Then, if they feel confident enough or if they’ve established an alternative distribution channel, they’ll take over the distribution rights as well.”
