This post was originally posted on uuchiwa.
We sat down with Fariza Abidova, the CEO and president of Trusted Corporation and SOPHYS Corporation. She has over 7 years of experience helping Japanese organizations expand their businesses globally. Some notable clients of hers include NEC group, NTT group, MUFG, Keidanren and etc. I asked her how she succeeded in building her business in Japan to see lessons could be learned.
About Fariza:
Fariza interviewed 200 Japanese managers and 500 international employees about cross-cultural miscommunication and created a database and seminar content to help Japanese companies perform better in the global business environment. Fariza currently provides business solutions and up-skilling seminars to the top 3 companies in Japan’s manufacturing, automotive, engineering, healthcare, IT and financial industries at her own companies: SOPHYS Corporation and Trusted Corporation. From her work and contribution to other businesses, Fariza was nominated for the British Chamber of Commerce in Japan’s Entrepreneur of the Year award in 2017.
Go From Small Companies
Fariza:
Big Japanese firms, like any large companies in other countries, can be slow at making decisions. This is often due to the systems, rules and procedures in place within companies. From my experience, I’ve found that smaller businesses in Japan are generally faster in making decisions.
The key to making what you want to happen more quickly with Japanese companies is to be insistent and determined.
Aki:
Right. I’ve had similar experiences having worked with SMBs in Japan.
Fariza:
Right after I started my business in Japan, I garnered a partner opportunity with a big Japanese corporation to sell my seminars. I was so excited about the opportunity and had strong confidence that my business would go well.
However, it turned out that it took so long for them to start selling my practice because they needed to go through many internal approval processes. While I was waiting for them to move forward, I had to get a part-time job to survive.
After the struggle, I began to seek out small companies to partner with so that I can make my company’s cash flow healthy.
Aki:
I see. Can I ask how you found SMBs to work with?
Fariza:
Sure. I decided to make my competitors my business partners. Having had a lot of positive feedback from my clients saying my practice is unique, I came to realize that even my competitors would be interested in my services. Many companies agreed to partnering because their clients requested the types of training services that my company provides. So we found an opportunity to collaborate and work together through revenue share.
Aki:
Fascinating! Didn’t you think that your competitors might steal your practice?
Fariza:
No, my seminars are packed with interviews and case studies and aren’t something you can easily copy. Even if they could, the quality of the seminars would significantly decrease without the seminar content database I created, and my personal research, knowledge and experience in the field. From a business standpoint, it wouldn’t make sense for them to steal given that it takes time to learn, develop and sell it.
Think Long-Term For Your Potential Loyal Customers
Fariza:
Another thing to note is they become loyal once you earn their trust. It doesn’t matter whether you are a service vendor, agency or partner.
Aki:
Right. It may become a big roadblock for overseas companies who want to disrupt the Japanese market.
Let’s pretend that I’m a tool vendor originating from the US who tries to penetrate the Japanese market, but some Japanese companies invented a similar tool for the Japanese market. They also had done well in Japan and had already dominated the Japanese market by the time I started getting into the market, which I suppose is a common scenario. How would I penetrate into the market?
Fariza:
They are loyal, but it doesn’t necessarily mean that they don’t switch their vendor.
Even larger Japanese companies evaluate their vendors every two years and you still have a chance to replace your competitors if your products are better in some ways such as product quality. They might not switch to your services right away — especially when they have a good relationship with a current vendor — but they eventually will. It just takes time because they test your product while keeping the current vendors.
Aki:
What’s your thoughts on a pricing issue? I’ve noticed that generally prices in Japan are relatively lower than in the US. US companies would struggle there.
Fariza:
True. It’s fine as long as you have rationale to support the higher prices. You certainly can’t bring your price model from the US directly to Japan and you may need to consider customization for the Japanese market.
I’ve noticed that the pricing model in Japan is designed for long term. Their price model seems low at a glance, but it will garner the same amount as US ones at the end of the day.
If you are struggling with the price model, start with dividing your services into more granular level to encourage starters to give it a try more often.
Don’t Negotiate Too Hard
Fariza:
It’s also important that you don’t negotiate too hard with Japanese companies. They are not used to negotiating and it may end up backfiring on you.
When I was negotiating with my Japanese partner about revenue share percent, I offered 15% revenue share in the hopes that we eventually can settle around 20 – 25%. But when I made the offer, the mood became really quiet and we end up with agreement at 15% revenue share.
At first, I was so happy for the unexpectedly good deal, but after 6 months passed, the company hadn’t sold my seminars at all. it turned out that they didn’t attempt to sell my seminars, meaning that they weren’t okay with my offer even though we agreed upon the deal — they simply didn’t try to negotiate.
I ended up lowering my offer voluntarily by giving them 25% revenue share to encourage them to sell my seminars.
Aki:
Interesting.
Fariza:
Right after that, they started selling my seminars. The lesson here is don’t do tough negotiation with them — it doesn’t work in most cases. When negotiating with Japanese companies, I would recommend researching what the market revenue share price is (it’s usually between 20-22%), and offer the company the market price. Use common sense, and be rational and fair when negotiating with Japanese companies, because they don’t bluff.
Build A Personal Relationship Outside Of Work
Fariza:
Lastly, building personal relationship in Japan is important regardless of the size of company. They would appreciate you showing your personal side. To do that, I would recommend you be yourself and share your personality. Don’t put your professional mask all the time.
In Japan, usually a meeting gets to the point without any small talk. You may want to have a business lunch or dinner to consolidate your relationship.
Wrap It Up!
It was so enlightening to hear her thoughts on Japan market entry. All of her tips are practical and fully embody her experience — I hope her tips help with your Japan market entry. Thank you, Fariza!
