Why Invest in Japan (despite poor GDP growth)

Why Invest in Japan (despite poor GDP growth)

This is adapted from a speech I delivered at a Hong Kong SME Chamber dinner event on Dec 3, 2015.

Bad economy.  Really?

Economists are telling us Japan is in recession again.  Is Japan economy really that bad?

Japan recession
Source: Financial Times

I go to Japan all the time.  Next Monday, I’m going to a customer dinner in Tokyo.  I wanted to book a teppanyaki restaurant that I knew.  My assistant told me they were already fully booked weeks ago.

teppanyaki steak sq
A5 grade sirloin, Medium please.

Fully booked on a Monday night?   I thought the economy was bad.

I’ve been to this restaurant once.  I spoke to the chef, he said he used to work in a 5-stars hotel, and he decided to open his own restaurant.

This is a nice small restaurant in the basement of a side street, in a not so busy district.  It has good food and service, and a cozy atmosphere, unlike typical high priced places in Ginza or Roppongi

.teppanyaki nakamura sign

Recession.  So what.

The technical definition of recession is “3 quarters of negative GDP growth”.

Well, comparing to China, Japan’s economy really hasn’t grown at all. But as a businessman, how much does GDP growth matter to you? How about GDP size?

A very big economy

wp-1448931861754.jpeg
source: JETRO

Japan used to be the second largest economy in the world.  Now it is the third.  It is still a large country, with a lot of people spending quite a lot of money everyday.

How big? The size of Kanto area (Tokyo and surrounding) is that of the UK. Shikoku, an island in the south, really the middle of nowhere (sorry Mr Takagi, if you are reading this), is that of New Zealand.

No matter how fast or how slow the GDP of Japan grows, Japan is still a very large economy, worthy of considering to sell your product or service there.

You are not selling everything to everyone!

So don’t worry about the falling total GDP.

Japan is a country with sophisticated consumers/business buyers. A lot of them. Yes, competition is fierce. So is the case for China. Or in any other market economy. If you have a good product or service that already works in your own country and a couple others, you have a good chance to success in Japan too.

Or if you only just have an idea!

You can sell anything in Japan

If it has good quality and good marketing.

A few years ago, a couple of guys from Chicago and Seattle thought they would start a business selling popcorns. They knew about making good food, as they were chefs in fancy restaurants.

They decided, out of all places, to start their new business in Tokyo.

HillValley popcorn 1

Obviously, you need good marketing to succeed (Product, Price, Promotion and Distribution, as per Neil Borden). And you need really good marketing in Japan. As I said, Japanese buyers are sophisticated, so are the competitors.

HillValley popcorn 2

So for popcorns, you need many different flavours, fancy names, and a healthy way to make them (super hot air, not cooking in oil).

These guys have grown from one shop in a not so prime location in Tokyo, to 14 outlets in 2 years’ time!HillValley popcorn 3

 

A large and homogeneous market

Of course, good promotion is important. These days, for this kind of thing, it is more internet and social media word-of-mouth.

Japan is a country with 127m people who speak the same language. They pretty much watch the same TV channels, browse the same internet portals. If a celebrity mentions your product on a TV show or his/her blog, or if you have clever marketing, your marketing message can easily become viral.

Easy to replicate success, and grow

My experience running a consumer business in Japan was, Japan has super good logistics. Suppliers are reliable, rule of law is clear (sure, they are bureaucratic, but they are predictable, unlike in China.  You know what I mean.) Once your ideas is proven to work in one location, it is fairly easy to replicate country-wide.

In the past 10 years, people seem to have forgotten about Japan.  All news headlines are about China. Everyone is moving to Shanghai, and learning Chinese.

If you have an idea, or an already successful product/service, I encourage you to think about Japan too.

Industrial products too

The above is all about consumer marketing.  Japan has many world-leading high-tech manufacturers. As this was a dinner event, I wanted to keep this speech short, so we could start eating sooner. Perhaps I can talk about industrial product/service marketing in Japan next time.

 

About the speaker:

Leroy Yue, currently based in his hometown Hong Kong, is a business advisor focusing on Japan and China. He has held senior positions in large global companies, and has worked and lived in London, Tokyo, Shanghai, Hong Kong and Manila.

Leroy speaks fluent English, Japanese, Putonghua and Cantonese. He has an MBA from London Business School. He also did a program at Sophia University 上智大学 (Tokyo), and an executive program at Shanghai Jiaotong Univsersity 上海交通大学.

more about Leroy Yue

LinkedIn Profile

 

 

 

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