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distribution partner in Japan

Ultimate Guide to Choosing a Distribution Partner in Japan

Is your business in Japan looking for someone who can distribute your products or services? If so, then you’ve come to the right place! A distribution partner in Japan can be a single person or a company to whom you give the right to market, distribute, or resell your products. If you’re curious to know more about a distribution partnership, this article will guide you toward learning what a distribution partnership is, why your business might need one, and how to build your next partnership with a Japanese distributor.

How can distribution partners help expand my business in Japan?

Distribution partners vs. Channel partners

Before thinking of how a distribution partner in Japan can help your business grow, one may want to consider if your business needs a distribution partner or a channel partner. As mentioned in the earlier paragraph, a distribution partner in Japan is an entity that your company allows to distribute your products. However, people may mix this up with channel partners.

To differentiate the two, channel partners use co-branding and combined marketing. This will allow the channel partner access to the main company’s established customer base and network. On the other hand, distribution partners will buy your products and sell them without collaborating on any other business aspects. In simpler terms, a channel partner is much more interdependent than a distribution partnership.

Benefits of a distribution partnership in Japan

distribution warehouse

For foreign individuals with businesses in Japan, developing a distribution partnership will provide a handful of benefits in terms of business expansion. This list will briefly explain four of the many benefits that your business might need to grow even more!

  1. Local market knowledge
    • A distribution partner in Japan holds in-depth knowledge of consumer preferences, cultural nuances, and regulatory requirements.
    • Partnering with a Japanese distributor could serve as a major step towards understanding factors such as the feasibility and profitability of your products. 
    • You will be able to discover any points of improvement that you can make, or measures you need to take to further meet the needs and standards of Japanese consumers.
  2. Established network
    • Local distributors in Japan often have a strong foundation and network of key stakeholders. 
    • Established connections can be maximized to lead your business toward more potential customers and business opportunities. 
    • A distribution partner in Japan can sell your products to retailers, suppliers, and other entities to boost your business exposure and growth.
  3. Cost-efficiency
    • Working with a Japanese distribution partner who is able to collaborate in your language will reduce time and financial costs rooted in language barriers and other foreseeable challenges.
    • An eased market entry guided by a distribution partner in Japan can be done by leveraging their existing networks and expertise in the local market.
  4. Logistical support
    • A distribution partner in Japan could provide support in the form of warehousing, transportation, and inventory management. When it comes to selling the products that they purchase from your business, it is essential that these items make it to consumers safely and on time. 
    • Doing this will give you an optimal logistical operation and a boost in positive reputation for your business.
    • Better credibility will make it easier and quicker for other companies to decide upon building a connection with your business.

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How do I find the right distribution partner in Japan?

There are different ways to find a distribution partner in Japan. For example, the Japan External Trade Organization (JETRO) offers a program that allows businesses to find a Japanese distribution partner in different industries. Additionally, you can also expand your professional network and meet more businesses by joining a chamber of commerce in Japan. Check out our article on Chambers of Commerce in Japan for a comprehensive look at what they are and how to join one! While the JETRO program and chambers of commerce focus more on where you can find a partnership, this section of the article will help you understand how to know if a distributor is right for you.

Market expertise and knowledge

The first thing you should consider in choosing a distribution partner in Japan is what specific industry or market a distributor caters to. This will make sure that your product and their network are compatible with one another in order to make sales. For example, if your business offers IT-related products in Japan, a possible distributor partner would be Daiwabo Information System Co., Ltd. or DIS. With establishments beyond the Kanto region of Japan and a history dating back to 1982, DIS is no short of experience in the IT industry.

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Reputation and track record

Another significant consideration is a company’s reputation and track record. You want to be sure that the distribution partner in Japan that you are partnering with is known to be able to fulfill their end of a contract. With all possible expenses that go into running a business, entrepreneurs must be careful and selective in choosing their connections to avoid making any unnecessary costs.

By partnering with a reputable distribution partner in Japan, the risk of any losses is minimized. One example of a reputable distributor company is Mitsubishi Shokuhin. As the name suggests, this company falls under Mitsubishi Corporation, one of the largest names in Japan and on the global stage. Some of their projects are with LAWSON, Inc. and Loyalty Marketing, Inc.

Cultural Considerations

It is no news that foreign businesses and startups face tough competition with local Japanese companies. In selecting a distribution partner in Japan, we recommend connecting with a company that is able to cater to a foreign business. This will allow effective communication and mutual adaptability between both parties. Some traditional Japanese companies might not be able to offer a partnership due to certain limitations such as language. Kaldi, for example, is an international grocery chain. If your business offers foreign food and drinks, Kaldi is a possible distribution partner worth looking into!

What are some challenges I might face with a distribution partner in Japan?

Once you’ve found the right distribution partner in Japan for your business, here are some things you might want to anticipate. It’s best to enter a partnership with necessary preparations for any hurdles that the relationship is likely to face. In this section, we will focus mainly on communication barriers, differing business practices, and legal customs.

Communication barriers

A heavy language barrier may pose a hurdle in business communication with a distribution partner in Japan. This impacts negotiations, in-depth understanding of market needs, and effective marketing strategies. It could also be difficult to find partners who are able to accommodate a collaboration in English or your home country’s language. However, you can start overcoming this by learning Japanese yourself! To get you started, here’s one of our articles on the Best Japanese Business Phrases.

Differing business practices

The Japanese approach to business and management could be different from the way a foreigner has been accustomed to working. For example, the decision-making process under Japanese management is very hierarchical. Seniority in a company is also an important factor in how things operate in Japanese companies. It is easy to be culture-shocked by these kinds of things when partnering up with a local distributor, so we recommend looking at our article on Japanese management. This article will guide you through the basic principles of Japanese management to prepare you for your future connection with a distribution partner in Japan.

The Ultimate Guide to Japanese Management

Legal and regulatory customs

The legal system of Japan has a reputation for its complexity and tight regulations concerning standards, safety, and quality control. For foreigners, it could be difficult to navigate such a complex regulatory framework, especially if the majority of it is written in Japanese. Furthermore, laws on privacy, consumer protection, and contractual obligations would also require much attention to detail. In summary, developing intensive familiarity with the legal aspect of business in Japan may not be as easy as it comes.

How can I overcome challenges in a distribution partnership in Japan?

To help you prepare for the challenges mentioned earlier, we have listed a few tips that will help you face these hurdles when they come.

Adapting to cultural and communication practices

As mentioned earlier, we briefly suggested learning Japanese yourself. However, you can also choose to invest in translation services instead. Although this may cost you a little more, it could help you save your time so you can focus on improving other aspects of your business. In terms of cultural adaptation, reading between the lines is an important ability in Japanese business culture. Learning unspoken rules in, say, consensus-building with Japanese companies is critical in building strong ties with them. We have a comprehensive podcast on Japanese business culture, so you might want to give it a listen!

Strategic partnerships and market understanding

One of the key considerations we recommend in choosing a partner is making sure that you are compatible with them. Ideally, you would want to connect with a distributor partner in Japan who has extensive experience working with other companies in the same industry as you are in. In other words, the partnerships you form must be made strategically so as to make it easier for both parties to discuss current market trends and consumer preferences. Having a common understanding and shared industry goal with your distribution partner in Japan can make partnerships much easier to work around especially when it comes to compromising and negotiations.

Legal compliance

It is ideal to invest in legal and regulatory experts who can offer their services in your preferred language. This will allow for continuous learning and adaptation to the Japanese legal framework. Understanding how and why things work in this context will also help you gain patience and flexibility in the process of ensuring that your transactions abide by the law.

How can I forge a long-term relationship with a distribution partner in Japan?

Japanese business culture places a strong emphasis on trust and personal connections. Building a strong relationship with a distribution partner in Japan takes time but is worth the effort. Ultimately, strong long-term relationships lead to better communication, mutual understanding, and smoother negotiations between businesses. In this section of the article, we will discuss what efforts you can make in forging a long-term relationship with a distribution partner in Japan.

  1. Engage in cultural exchange opportunities:  Cultural exchanges will help in fostering mutual understanding and respect among partners. Hosting or participating in cultural exchanges will also help you and other participants learn more about differing traditions. These events don’t need to be as complex as renting out a venue and preparing decorations! It can simply be in the form of dining in foreign cuisine restaurants around the area or casual conversations with one another.
  2. Make regular in-person visits: Whether it is to a warehouse, a meeting, or other possible venues for transactions, it is nice to make an effort to be present. While Zoom and remote work have been deemed more convenient since the pandemic, face-to-face meetings are still highly valued in Japanese business culture. In-person connections can also significantly strengthen relationships with each other.
  3. Initiate joint Corporate Social Responsibility (CSR) projects: Initiating joint CSR projects is a good way to give back to the environment and to communities. Additionally, it can also be a good display of morals and character. Doing so will show your partners and customers that your company is doing its part as a member of society and is making efforts to contribute to a sustainable economy.
  4. Discuss long-term business plans: It is a big assurance to show your partner that you can commit to the partnership. One way you can do this is by engaging in long-term business planning sessions with one another. You can discuss any goals and hurdles to anticipate as the partnership goes on.

Learn their language: One of the best ways you can show a distributor in Japan that you are committed to a partnership with them is by learning Japanese. Basic Japanese language skills and knowledge of business phrases will demonstrate the respect that you have for your partner’s culture. This will boost positive relations with one another and you can use this to encourage language learning to other members of your team as well.

3 success stories of foreign companies utilizing a distribution partner in Japan

Care for some stories of foreign companies achieving success through a distribution partner in Japan? This section tells the stories of three big names in the commercial world and how they reached success in the Japanese market.

Originally from Ohio, USA, Procter & Gamble (P&G) is a consumer goods company with a specialty in personal hygiene products. Upon deciding to expand to the Japanese market, P&G hired local experts. Their job was to manage local enterprises by implementing regional marketing strategies. Additionally, the corporation also invested in brand management and human resources training to help them further adapt to the Japanese market. Although they also faced the inevitable challenges of cultural differences in advertising, this was overcome thanks to the local expertise of their staff.

The world-renowned Coca-Cola implemented consumer segment targeting and pricing strategies unique to the Japanese market. Doing so helped them come up with Soukenbicha, a blended tea beverage, and Aquarius, a sports drink. Further catering to the Japanese taste, Coca-Cola also ventured into producing alcoholic beverages through Remondo. These products were deliberately created to fulfill a customized strategy just for Japanese consumers by considering their local preferences.

In 1997, Spanish fast fashion brand Zara expanded to Japan. As commended by JETRO, Zara operates through a fast-moving supply chain that allows retail employees to participate in customer research. Furthermore, their success is also a result of quality that meets Japanese standards, fair prices, and quick turnaround times. In short, Zara’s debut in the Japanese market has since been successful thanks to their adaptability to shifting consumer trends and tastes.

Conclusion

To sum it all up, a distribution partner in Japan is a company to whom you give the right to market, distribute, or resell your products without co-branding and combined marketing. Having a distribution partner in Japan could help you grow your business by offering support in different aspects such as language, logistics, and regulations.

Although challenges such as cultural differences could pose a hurdle in a completely smooth partnership, there are always measures you can take to minimize the difficulties. Reflecting upon the three success stories of some of the biggest brands in the world, this article aims to motivate and guide you towards pursuing a fruitful distribution partnership in Japan.

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