April 24, 2024 • 25 mins
How to enter Japan's retail and start selling your goods in this country?
This is the second part of the interview with Rupert Sutton, Director & Partner Director & Partner at Weben Partners.
Rupert has more then 30 years of experience in working in consulting, marketing and sales in Asia and Europe, with biggest part of it of living and working in Japan.
In the Part 1 of our conversation we have discussed the intricacies of the Japanese retail market its structure and other channels to enter Japan with FMCG.
You may find the first part among previous episodes of the Start Global Insights.
In this episode we dive deeper to understand the algorithm of entering the Japan's market.
We have discussed:
- The complexities of traditional distribution channels in Japan.
- Exploring alternative routes to market, including direct retail partnerships.
- The importance of a compelling selling proposition for the Japanese market.
- Gathering market research data to convince potential partners.
- Tradeshows and cold calls.
Listen to the Start Global Insights podcast on all major platforms and YouTube. And don't forget to subscribe not to miss the second part of the conversation.
Don't forget to subscribe not to miss the second part of our conversation.
Speakers LinkedIn Profiles:
Host, Dmytro Shvets https://www.linkedin.com/in/dshvets/
Guest, Rupert Sutton https://www.linkedin.com/in/rupertsuttonwebenasia/
Rupert is also the author of the book Export and Expand. You can find the blog Export and Expand of Rupert Sutton at https://exportandexpand.com/
Please, give us your feedback on Apple podcasts or write to the email: podcast@start-global.biz
Create your international expansion strategy with Start Global, your guide to foreign markets. https://www.start-global.biz/
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
(00:00):
Hi, I'm Dmytro Shvets, your host at The Start Global Insights, where I interview experts
(00:11):
from different countries about local business secrets and international expansion experience.
You are listening to the second part of the interview with Rupert Sutton, a director and
partner at Weben Partners with more than 30 years of experience in marketing and sales
in Asia and Europe, with biggest part of it living and working in Japan.
(00:32):
You can find the first part of the interview in previous episodes of The Start Global Insights,
where Rupert described the structure of Japanese retail market.
In this part, we will discuss how to start sales in Japanese retail, where and how to
find your local clients and other insights from Rupert's extensive experience in Japan.
(00:56):
But before we proceed, I would like to ask you to rate The Start Global Insights on Spotify,
Apple Podcasts, YouTube and other platforms.
Leave your review and help other exporters to discover peculiarities of international
markets.
So, coming back to the steps, to the roadmap, we have finalized the niche, the category,
(01:19):
then we have tested the product with consumer, understood what is the attitude to that and
what how you should position that.
What's next?
Well, we're going to also decide what type of consumers we're going to target.
Okay.
And the attributes, the profile of those consumers.
So it's a common example I give, but Hill Science Diet, which is a pet food product
(01:44):
here.
So pet food, only 20% of Japanese own a pet.
Okay.
80% of Japanese don't own a pet.
This is the second biggest pet market in the world.
So just think about that.
So 80% of Japanese don't own a pet.
So therefore they're not in the pet business.
(02:05):
But then this is the second biggest pet food market in the world.
So that means you've got a small number of people and of the 20% of people who do have
a pet, half of them feed what we call homemade food.
So they don't buy commercial food.
(02:27):
And yet you've got some very big multinational companies selling pet food and making huge
amounts of money in it.
So therefore the number percentage of consumers that they're targeting, percentage of owners
is very small.
We're talking thousands, not tens of thousands, certainly not millions.
So you can have a very targeted, it's again where to play, have a very targeted strategy
(02:54):
strategy.
And if you can identify who those high value pet owners are, of course, they tend to be
people with several dogs and who go to the vet because people who go to the vet spend
more money on pet food and medicines.
They tend to live in houses.
So therefore they're not in the city center and so on.
(03:16):
If you can identify them and you can persuade them that your product is better, then you
can have a very strong loyal business.
So it's also about testing the product and deciding who is going to be the target and
who are we going to convert into our offer.
(03:40):
And then after that, we then understand where they go and then we understand which channels
are important.
And then we think about this, what I say, route to market.
How is the right way to get penetration into these channels?
And again, most people only think of one solution, which is I got to find a distributor.
(04:00):
That's it.
Yeah, this is the most common step.
It's the most common step.
Finding distributors here is difficult because the vast majority of products are not imported.
It's largely domestic companies.
So we got to think of even if I find a distributor, am I going to be able to find a good one who
is going to be exclusive and who has got contracts with all the major chains?
(04:27):
And also does that model work financially?
Because at the end of the day, if a distributor takes 40% margin, a retailer takes 35, 40%
front margin, plus there's back margins, plus I've got to invest in marketing, maybe it
doesn't work financially.
Maybe I end up having a product on shelf that's just way too expensive and the consumer's
(04:48):
not going to buy it.
So then I have to rethink my route to market model.
And then maybe I start to say, well, maybe rather than trying to sell to everybody, I'm
going to target one or two chains specifically, and I'm going to sell to them directly.
Or I say, I'm going to come up and I'm going to work with a Japanese food company who has
(05:12):
got the sales coverage that I don't have.
But my product is complementary to what they're doing and adds to their portfolio, which is
what Kellogg's do, by the way, who've also been very successful here.
Or do I take control of everything myself, which was the Nestle approach, which is we
(05:36):
don't want to work with anybody.
We can do it all ourselves.
Because we know that we will never find a company, a good distributor.
We can't rely upon them.
They're not our own people.
They don't understand coffee.
They don't understand all the details and intricacies.
They're not interested in persuading retailers about how to grow coffee, that sort of thing.
(06:00):
So we have to think carefully about what's the right route to market strategy.
And once you've decided that, then of course you are going to have to find some kind of
partner.
So you're going to have to have what we call a compelling selling proposition, which is
going to be some document.
(06:21):
Of course, it's going to be in Japanese that explains the features, benefits, advantages
of my product, my range, how I'm going to work with a certain company and so on.
And that's hard.
It takes time.
And you need data.
Because they want data.
They want evidence that these things are going to work.
(06:43):
So you need to convince the retailer to take your product because you have already tested
that and know the market.
And you assume that it will be sold in normal quantities.
Well, at the end of the day, the retailers do like to talk to manufacturers.
(07:04):
And it's true in every country.
Retailers like to work with manufacturers directly.
Of course, there's more margin for both.
There's also retailers want to grow the category, right?
They've got a space for chocolate.
They want to see all chocolate sales go up.
They don't just want to see one brand sales go up.
(07:26):
They want to see everybody's sales go up.
So if we're able to talk to them about a category strategy, then maybe we've got a stronger
selling argument to them.
Now, does your average Japanese distributor know about category strategy?
The answer is definitely no.
(07:47):
They don't know what it is.
They're not very good at marketing, actually.
They're very good at moving boxes.
They're very good at logistics.
They're very good at managing returns.
But in terms of like marketing and shopper and that sort of stuff, they don't know it.
They're very behind.
So that's the point that you need to think about your route to market strategy after
(08:10):
you've aligned on the portfolio, after you're confident that you've got a product that works.
And of course, at that point, you're going to do some numbers.
And we spend a lot of time with our clients getting them to do numbers because we want
to help them build some P&Ls, some forward looking P&Ls, forward looking P&Ls of how
(08:31):
this business looks like before they decide to come here.
Because they are going to, it's going to take up a lot of time and resource and financial
and money.
Now, the other thing is, you know, and this applies to every, well, whether it's a European
or an American company, you know, Ukraine's a long way away from Japan.
(08:55):
Marketing product here is going to take weeks physically.
So you have to ask also, am I in the product shipping business?
Or am I going to find a way to find somebody who's going to license my brand?
That could be another route to market.
(09:15):
Yoghurt companies, I mean, you know, Danone has done very well here.
They don't, of course, they don't import yogurt.
It's not flown in.
They've got people manufacturing product here for them.
So this is also an, this is also a different way to slice the cake, as it were, look for
solutions.
(09:35):
Companies have got to be really open minded in terms of the business model that they follow.
I know Ukrainian cosmetics brand, they actually hired a factory in Spain that is producing
shampoos for them.
And they sell it in Europe under like Spanish production, but with Ukrainian recipe and
(10:00):
branding.
Right.
So there's quite a lot of product which is coming into Japan from Thailand, for example.
A lot of chicken, for example, comes from Thailand to Japan because it's a cheap source
of manufacturing.
A lot of the 100 yen shops are sourcing product from Vietnam or from Indonesia, those sorts
(10:23):
of places.
So again, you've got to, you've got to really think through all of these issues before just
rather than just simply saying I'm going to export from Ukraine and I'm going to find
a distributor and they're going to do everything.
It may not, it just may not be feasible.
(10:46):
Yeah.
So this is like a long-term investment that you should be prepared to?
Yes, absolutely.
Absolutely.
When you analyze that, so when you already identified the channel, let's say the convenience
store or department store, how do you enter that?
Is there some proper way to do that?
(11:06):
How to contact the category managers or buyers?
What is the practical approach?
Well, yes, you're going to have to meet those, either you yourself are going to have to meet
those retail buyers, but if you don't speak Japanese, that will be hard.
So English is not a way to do this type of business with Japanese retailers?
(11:30):
Eon has an international buying team.
So there are some people, of course, in that team who speak English, but English is not
widely spoken here.
So you are going to have to have some people on your team who can speak Japanese.
I mean, that's one of the reasons I can speak Japanese because otherwise it's really hard
(11:52):
and you are going to have to work with local people.
How easy is it to identify these roles in the shops?
I assume that you know everybody already for so many years, but are they like available
on LinkedIn or?
LinkedIn is not widely used here.
(12:17):
So basically, you know, it's people that you meet over time and who become sort of personal
connections and you know, you have a relationship with.
But you can approach people directly.
You don't necessarily have to know them.
(12:37):
Now the Japanese people won't say that, but I've my experience.
You can approach people directly, but you've got to have a good story and they're not going
to give you a lot of time.
So we've got to be confident that, you know, we've got something really important to tell
them.
That's why some of the trading houses, some of the contacts in those trading houses like
(13:01):
Mitsubishi, Mitsui, Itoichu can also be very helpful.
They also own stakes in some of those retailers.
That's also important.
They own a stake.
So it's not just they've got a business relationship.
They're actually a shareholder of.
(13:22):
So they can be helpful in getting you introductions there.
But I think you have to have as a manufacturer your own view on how you want these your products
to be sold.
And that also comes from the experience that you have in other markets, because this is
(13:44):
a complex market.
If you you've got to have a view in terms of, OK, well, we've sold in five markets already.
This is what we know that works.
This is how we're going to execute.
That's what Dyson has done.
Dyson, by the way, is another company that's done well here.
Electronics premium.
(14:06):
What price way above what the Japanese companies had, but they've got a superior product offering.
And they said, OK, well, we have to be in some of the large electronics stores.
We're going to trade directly with them, but we're also going to focus on online sales.
And we're also going to have our own retail stores, because that's the only way that we
(14:27):
can get the brand visibility that we want.
I think getting distribution in retailers here is honestly difficult and keeping distributions
even harder because they've got such high hurdle rates on rate of sale.
(14:48):
And God help you if there's any consumer complaint, because people get delisted for consumer complaints.
So it's really I think for me, I would be saying to Ukrainian companies, where can I
go that I can control everything?
Do I invest some money in department stores?
(15:12):
Are there other retail outlets where I can build my own physical presence?
I can build my online business.
And that's the way that I'm going to go to market.
I think a lot of people come here thinking that they're going to do a business in convenience
stores.
It's really tough because they're so competitive.
(15:34):
And there aren't that many imports in convenience stores.
Almost everything is manufactured locally here.
And those convenience store retailers are ruthless.
From your experience, what is the easiest channel to enter?
(15:55):
Well, physically the easiest channels are things like e-commerce, because you can actually
control all of that yourself.
But then the challenge becomes a marketing challenge, which is how do I get visibility
on the digital shelf?
(16:16):
If my pet owner then clicks on pet food, does my brand come up on the digital shelf?
Does it come up on amazon.com?
So then that requires a knowledge of marketing keywords and that sort of thing.
And you have to have Japanese people to help you do that.
(16:38):
So for me, if I just going to go back to what I was trying to say originally, if you remember
originally I said there's three channels.
There's a retail channel, there's a food service, so Horika channel, and then there's an industrial
channel.
I think if I was a manufacturer from Ukraine, I would probably be thinking less about retail
(16:59):
to start with, probably more about food service because some of the, well, you've got some
food service companies here which are foreign, McDonald's, KFC, Domino's Pizza, Pizza Hut.
Dot dot dot, right?
So these people are used to working with international companies and they're big enough of scale
(17:20):
that you could have a business with any one of those and you would have tens of millions
of dollars of sales.
If you get your cheese listed by McDonald's or whatever, you are going to have sales,
substantial sales just with that one customer.
So I think I'd probably be thinking more about food service because then it's more a direct
(17:43):
relationship.
I don't have to get involved with these distributors.
I can maybe have a direct trading relationship.
I can maybe use my international know-how and you can use that to build some momentum
in the marketplace.
I have some experience here, the first experience of sales there.
Correct.
(18:03):
And one of the advantages Ukraine's got is you've got lots of raw materials.
They don't have them here.
Grains, meats, those sorts of things.
So how can we get what sort of customers in Japan that will be interested in those?
There will be some food manufacturers, there'll be some trading companies, those sorts of
(18:24):
things.
That's a way to start doing business here, start building your network, start building
some cash flow.
Going into retail requires a knowledge of the consumer, a deep knowledge of the consumer,
requires expertise in branding, requires a big innovation pipeline and you've got to
(18:47):
have a substantial sales force to get coverage.
It's challenging to say the least, which is why there's only two foreign companies in
the top 100 in consumer products list.
Which one?
Only two, Nestle and Coke.
Okay.
So it's hard.
(19:08):
So the foreign brands that have done well here have either gone and followed a niche.
Remember, it's a huge market.
So even if you're not in the top 100, you'd still have 100 million plus sales.
Or they've licensed, so for example, Tropicana, the orange juice, licensed to Kirin.
(19:29):
Kirin does everything.
Tropicana just collects royalty.
So you can think smart.
Oreo, when they started, they were in bed with a Japanese bakery company.
So they licensed their brand to a Japanese bakery company.
There might be bakery companies here that'll be buying flour and those sorts of things,
(19:53):
which are not available domestically.
They got to import them.
So there may be things that you could do with them on those ingredients plus a brand.
And then that becomes maybe an interesting way into the market.
Okay.
Okay.
What about the trade shows?
I'm just still thinking how to get to this contact persons, to these roles that take
(20:17):
the decision to start working with importers.
And if you don't have this type of network that you have, how to find them, how to contact
them, trade show may be one of the options.
Absolutely.
A trade show definitely can be one of the options.
But trade shows are a bit of a lottery because you don't exactly know who you're going to
(20:39):
meet at the trade show.
And usually at a trade show, there are thousands of exhibitors.
So is every retailer going to drop by your booth?
The answer is no.
So if you're going to go down the trade show route, then you might want to have some special
invites to invite certain people in advance.
(21:04):
I mean, trade shows are important or you could think of a more niche trade show.
There are the international trade shows, but there's also Japanese trade shows.
Maybe those are the ones that you might want to consider to get better visibility.
I think the other thing is that you have to use the power of your embassy.
(21:31):
This is very important because Japan diplomatically is trying to support Ukraine at the moment.
If a company gets a request from the Ukrainian embassy to attend such and such an event,
it's hard for them to say no.
(21:52):
Might work.
Other than that, is it okay?
In Europe, for example, in Sweden, you can call to the retailer's office phone network
and then ask for the buyer.
Sure.
You could do that here.
A Japanese company will say, oh, no, you can't do that.
But I have done that.
(22:12):
Of course you can do that.
But once you get the person on the line, you've got to have a very good pitch within a few
seconds probably in Japanese to catch their attention.
But we do do that and you can get appointments.
And emails?
(22:33):
Emails I don't recommend because they're usually not replied.
So basically you need to call a company.
That's the way the headhunters work here.
They call a company, they find out who the people are, then they call that person.
It may take several goes to catch the right person.
But if you decide it comes back to where to play, if I've decided that I want to work
(22:58):
with Costco, I've decided I want to work with Eon, I want to work with Itoyokudo, then you
will be prepared to spend a week or however long it takes trying to find and track down
that right person.
Yeah, maybe months.
Yeah, that's okay for the whole world.
In the UK, the same story.
Exactly.
(23:18):
So they will be the same story.
And at the end of the day, those buyers, of course, they're buyers, so they're not easy
people to deal with.
But at the end of the day, they have needs as well.
They want to have innovation, they want to have new brands, they want to have companies
who have got budgets, and they want to have companies who believe that they can grow their
(23:42):
category.
So if you could answer some of those questions and get a meeting, why not?
And if they say no, then that is also part of your answer.
Sure, sure.
And especially if they say no and say why no, that is the most amazing answer that you
can get.
Right.
Exactly.
(24:03):
Good, Rupert.
Thanks a lot.
There's definitely a lot of information to digest.
And it was a really, really interesting conversation.
No problem.
No problem.
It's a pleasure to talk with you.
Good luck.
And I wish you every success.
Thanks.
Thanks, Rupert.
And one more point.
May I leave your LinkedIn in the comments so people could contact you if they would like
(24:28):
to enter Japan?
Yes, please.
And if you wouldn't mind, I have a website with a blog called exportandexpand.com.
Okay.
I've got a blog on there and I've also written a book which is called Export and Expand.
Great.
So you can find a link to that book on exportandexpand.com as well.
(24:49):
And that also talks about like an export roadmap, which is one of the questions that you're
asking.
I will definitely leave the link in the description of this episode.
So wherever you listen to that, either on YouTube, Apple podcast or Spotify, you can
find in the description the direct link to Rupert LinkedIn profile and for the website
(25:12):
with the book about the expert and the roadmap.
Thanks again and hope to see you maybe sometime in Japan.
Yes, absolutely.
Well, good luck and see you soon.
Hi, I'm Dmytro Shvets, your host at The Start Global Insights, where I interview experts
(00:11):
from different countries about local business secrets and international expansion experience.
You are listening to the second part of the interview with Rupert Sutton, a director and
partner at Weben Partners with more than 30 years of experience in marketing and sales
in Asia and Europe, with biggest part of it living and working in Japan.
(00:32):
You can find the first part of the interview in previous episodes of The Start Global Insights,
where Rupert described the structure of Japanese retail market.
In this part, we will discuss how to start sales in Japanese retail, where and how to
find your local clients and other insights from Rupert's extensive experience in Japan.
(00:56):
But before we proceed, I would like to ask you to rate The Start Global Insights on Spotify,
Apple Podcasts, YouTube and other platforms.
Leave your review and help other exporters to discover peculiarities of international
markets.
So, coming back to the steps, to the roadmap, we have finalized the niche, the category,
(01:19):
then we have tested the product with consumer, understood what is the attitude to that and
what how you should position that.
What's next?
Well, we're going to also decide what type of consumers we're going to target.
Okay.
And the attributes, the profile of those consumers.
So it's a common example I give, but Hill Science Diet, which is a pet food product
(01:44):
here.
So pet food, only 20% of Japanese own a pet.
Okay.
80% of Japanese don't own a pet.
This is the second biggest pet market in the world.
So just think about that.
So 80% of Japanese don't own a pet.
So therefore they're not in the pet business.
(02:05):
But then this is the second biggest pet food market in the world.
So that means you've got a small number of people and of the 20% of people who do have
a pet, half of them feed what we call homemade food.
So they don't buy commercial food.
(02:27):
And yet you've got some very big multinational companies selling pet food and making huge
amounts of money in it.
So therefore the number percentage of consumers that they're targeting, percentage of owners
is very small.
We're talking thousands, not tens of thousands, certainly not millions.
So you can have a very targeted, it's again where to play, have a very targeted strategy
(02:54):
strategy.
And if you can identify who those high value pet owners are, of course, they tend to be
people with several dogs and who go to the vet because people who go to the vet spend
more money on pet food and medicines.
They tend to live in houses.
So therefore they're not in the city center and so on.
(03:16):
If you can identify them and you can persuade them that your product is better, then you
can have a very strong loyal business.
So it's also about testing the product and deciding who is going to be the target and
who are we going to convert into our offer.
(03:40):
And then after that, we then understand where they go and then we understand which channels
are important.
And then we think about this, what I say, route to market.
How is the right way to get penetration into these channels?
And again, most people only think of one solution, which is I got to find a distributor.
(04:00):
That's it.
Yeah, this is the most common step.
It's the most common step.
Finding distributors here is difficult because the vast majority of products are not imported.
It's largely domestic companies.
So we got to think of even if I find a distributor, am I going to be able to find a good one who
is going to be exclusive and who has got contracts with all the major chains?
(04:27):
And also does that model work financially?
Because at the end of the day, if a distributor takes 40% margin, a retailer takes 35, 40%
front margin, plus there's back margins, plus I've got to invest in marketing, maybe it
doesn't work financially.
Maybe I end up having a product on shelf that's just way too expensive and the consumer's
(04:48):
not going to buy it.
So then I have to rethink my route to market model.
And then maybe I start to say, well, maybe rather than trying to sell to everybody, I'm
going to target one or two chains specifically, and I'm going to sell to them directly.
Or I say, I'm going to come up and I'm going to work with a Japanese food company who has
(05:12):
got the sales coverage that I don't have.
But my product is complementary to what they're doing and adds to their portfolio, which is
what Kellogg's do, by the way, who've also been very successful here.
Or do I take control of everything myself, which was the Nestle approach, which is we
(05:36):
don't want to work with anybody.
We can do it all ourselves.
Because we know that we will never find a company, a good distributor.
We can't rely upon them.
They're not our own people.
They don't understand coffee.
They don't understand all the details and intricacies.
They're not interested in persuading retailers about how to grow coffee, that sort of thing.
(06:00):
So we have to think carefully about what's the right route to market strategy.
And once you've decided that, then of course you are going to have to find some kind of
partner.
So you're going to have to have what we call a compelling selling proposition, which is
going to be some document.
(06:21):
Of course, it's going to be in Japanese that explains the features, benefits, advantages
of my product, my range, how I'm going to work with a certain company and so on.
And that's hard.
It takes time.
And you need data.
Because they want data.
They want evidence that these things are going to work.
(06:43):
So you need to convince the retailer to take your product because you have already tested
that and know the market.
And you assume that it will be sold in normal quantities.
Well, at the end of the day, the retailers do like to talk to manufacturers.
(07:04):
And it's true in every country.
Retailers like to work with manufacturers directly.
Of course, there's more margin for both.
There's also retailers want to grow the category, right?
They've got a space for chocolate.
They want to see all chocolate sales go up.
They don't just want to see one brand sales go up.
(07:26):
They want to see everybody's sales go up.
So if we're able to talk to them about a category strategy, then maybe we've got a stronger
selling argument to them.
Now, does your average Japanese distributor know about category strategy?
The answer is definitely no.
(07:47):
They don't know what it is.
They're not very good at marketing, actually.
They're very good at moving boxes.
They're very good at logistics.
They're very good at managing returns.
But in terms of like marketing and shopper and that sort of stuff, they don't know it.
They're very behind.
So that's the point that you need to think about your route to market strategy after
(08:10):
you've aligned on the portfolio, after you're confident that you've got a product that works.
And of course, at that point, you're going to do some numbers.
And we spend a lot of time with our clients getting them to do numbers because we want
to help them build some P&Ls, some forward looking P&Ls, forward looking P&Ls of how
(08:31):
this business looks like before they decide to come here.
Because they are going to, it's going to take up a lot of time and resource and financial
and money.
Now, the other thing is, you know, and this applies to every, well, whether it's a European
or an American company, you know, Ukraine's a long way away from Japan.
(08:55):
Marketing product here is going to take weeks physically.
So you have to ask also, am I in the product shipping business?
Or am I going to find a way to find somebody who's going to license my brand?
That could be another route to market.
(09:15):
Yoghurt companies, I mean, you know, Danone has done very well here.
They don't, of course, they don't import yogurt.
It's not flown in.
They've got people manufacturing product here for them.
So this is also an, this is also a different way to slice the cake, as it were, look for
solutions.
(09:35):
Companies have got to be really open minded in terms of the business model that they follow.
I know Ukrainian cosmetics brand, they actually hired a factory in Spain that is producing
shampoos for them.
And they sell it in Europe under like Spanish production, but with Ukrainian recipe and
(10:00):
branding.
Right.
So there's quite a lot of product which is coming into Japan from Thailand, for example.
A lot of chicken, for example, comes from Thailand to Japan because it's a cheap source
of manufacturing.
A lot of the 100 yen shops are sourcing product from Vietnam or from Indonesia, those sorts
(10:23):
of places.
So again, you've got to, you've got to really think through all of these issues before just
rather than just simply saying I'm going to export from Ukraine and I'm going to find
a distributor and they're going to do everything.
It may not, it just may not be feasible.
(10:46):
Yeah.
So this is like a long-term investment that you should be prepared to?
Yes, absolutely.
Absolutely.
When you analyze that, so when you already identified the channel, let's say the convenience
store or department store, how do you enter that?
Is there some proper way to do that?
(11:06):
How to contact the category managers or buyers?
What is the practical approach?
Well, yes, you're going to have to meet those, either you yourself are going to have to meet
those retail buyers, but if you don't speak Japanese, that will be hard.
So English is not a way to do this type of business with Japanese retailers?
(11:30):
Eon has an international buying team.
So there are some people, of course, in that team who speak English, but English is not
widely spoken here.
So you are going to have to have some people on your team who can speak Japanese.
I mean, that's one of the reasons I can speak Japanese because otherwise it's really hard
(11:52):
and you are going to have to work with local people.
How easy is it to identify these roles in the shops?
I assume that you know everybody already for so many years, but are they like available
on LinkedIn or?
LinkedIn is not widely used here.
(12:17):
So basically, you know, it's people that you meet over time and who become sort of personal
connections and you know, you have a relationship with.
But you can approach people directly.
You don't necessarily have to know them.
(12:37):
Now the Japanese people won't say that, but I've my experience.
You can approach people directly, but you've got to have a good story and they're not going
to give you a lot of time.
So we've got to be confident that, you know, we've got something really important to tell
them.
That's why some of the trading houses, some of the contacts in those trading houses like
(13:01):
Mitsubishi, Mitsui, Itoichu can also be very helpful.
They also own stakes in some of those retailers.
That's also important.
They own a stake.
So it's not just they've got a business relationship.
They're actually a shareholder of.
(13:22):
So they can be helpful in getting you introductions there.
But I think you have to have as a manufacturer your own view on how you want these your products
to be sold.
And that also comes from the experience that you have in other markets, because this is
(13:44):
a complex market.
If you you've got to have a view in terms of, OK, well, we've sold in five markets already.
This is what we know that works.
This is how we're going to execute.
That's what Dyson has done.
Dyson, by the way, is another company that's done well here.
Electronics premium.
(14:06):
What price way above what the Japanese companies had, but they've got a superior product offering.
And they said, OK, well, we have to be in some of the large electronics stores.
We're going to trade directly with them, but we're also going to focus on online sales.
And we're also going to have our own retail stores, because that's the only way that we
(14:27):
can get the brand visibility that we want.
I think getting distribution in retailers here is honestly difficult and keeping distributions
even harder because they've got such high hurdle rates on rate of sale.
(14:48):
And God help you if there's any consumer complaint, because people get delisted for consumer complaints.
So it's really I think for me, I would be saying to Ukrainian companies, where can I
go that I can control everything?
Do I invest some money in department stores?
(15:12):
Are there other retail outlets where I can build my own physical presence?
I can build my online business.
And that's the way that I'm going to go to market.
I think a lot of people come here thinking that they're going to do a business in convenience
stores.
It's really tough because they're so competitive.
(15:34):
And there aren't that many imports in convenience stores.
Almost everything is manufactured locally here.
And those convenience store retailers are ruthless.
From your experience, what is the easiest channel to enter?
(15:55):
Well, physically the easiest channels are things like e-commerce, because you can actually
control all of that yourself.
But then the challenge becomes a marketing challenge, which is how do I get visibility
on the digital shelf?
(16:16):
If my pet owner then clicks on pet food, does my brand come up on the digital shelf?
Does it come up on amazon.com?
So then that requires a knowledge of marketing keywords and that sort of thing.
And you have to have Japanese people to help you do that.
(16:38):
So for me, if I just going to go back to what I was trying to say originally, if you remember
originally I said there's three channels.
There's a retail channel, there's a food service, so Horika channel, and then there's an industrial
channel.
I think if I was a manufacturer from Ukraine, I would probably be thinking less about retail
(16:59):
to start with, probably more about food service because some of the, well, you've got some
food service companies here which are foreign, McDonald's, KFC, Domino's Pizza, Pizza Hut.
Dot dot dot, right?
So these people are used to working with international companies and they're big enough of scale
(17:20):
that you could have a business with any one of those and you would have tens of millions
of dollars of sales.
If you get your cheese listed by McDonald's or whatever, you are going to have sales,
substantial sales just with that one customer.
So I think I'd probably be thinking more about food service because then it's more a direct
(17:43):
relationship.
I don't have to get involved with these distributors.
I can maybe have a direct trading relationship.
I can maybe use my international know-how and you can use that to build some momentum
in the marketplace.
I have some experience here, the first experience of sales there.
Correct.
(18:03):
And one of the advantages Ukraine's got is you've got lots of raw materials.
They don't have them here.
Grains, meats, those sorts of things.
So how can we get what sort of customers in Japan that will be interested in those?
There will be some food manufacturers, there'll be some trading companies, those sorts of
(18:24):
things.
That's a way to start doing business here, start building your network, start building
some cash flow.
Going into retail requires a knowledge of the consumer, a deep knowledge of the consumer,
requires expertise in branding, requires a big innovation pipeline and you've got to
(18:47):
have a substantial sales force to get coverage.
It's challenging to say the least, which is why there's only two foreign companies in
the top 100 in consumer products list.
Which one?
Only two, Nestle and Coke.
Okay.
So it's hard.
(19:08):
So the foreign brands that have done well here have either gone and followed a niche.
Remember, it's a huge market.
So even if you're not in the top 100, you'd still have 100 million plus sales.
Or they've licensed, so for example, Tropicana, the orange juice, licensed to Kirin.
(19:29):
Kirin does everything.
Tropicana just collects royalty.
So you can think smart.
Oreo, when they started, they were in bed with a Japanese bakery company.
So they licensed their brand to a Japanese bakery company.
There might be bakery companies here that'll be buying flour and those sorts of things,
(19:53):
which are not available domestically.
They got to import them.
So there may be things that you could do with them on those ingredients plus a brand.
And then that becomes maybe an interesting way into the market.
Okay.
Okay.
What about the trade shows?
I'm just still thinking how to get to this contact persons, to these roles that take
(20:17):
the decision to start working with importers.
And if you don't have this type of network that you have, how to find them, how to contact
them, trade show may be one of the options.
Absolutely.
A trade show definitely can be one of the options.
But trade shows are a bit of a lottery because you don't exactly know who you're going to
(20:39):
meet at the trade show.
And usually at a trade show, there are thousands of exhibitors.
So is every retailer going to drop by your booth?
The answer is no.
So if you're going to go down the trade show route, then you might want to have some special
invites to invite certain people in advance.
(21:04):
I mean, trade shows are important or you could think of a more niche trade show.
There are the international trade shows, but there's also Japanese trade shows.
Maybe those are the ones that you might want to consider to get better visibility.
I think the other thing is that you have to use the power of your embassy.
(21:31):
This is very important because Japan diplomatically is trying to support Ukraine at the moment.
If a company gets a request from the Ukrainian embassy to attend such and such an event,
it's hard for them to say no.
(21:52):
Might work.
Other than that, is it okay?
In Europe, for example, in Sweden, you can call to the retailer's office phone network
and then ask for the buyer.
Sure.
You could do that here.
A Japanese company will say, oh, no, you can't do that.
But I have done that.
(22:12):
Of course you can do that.
But once you get the person on the line, you've got to have a very good pitch within a few
seconds probably in Japanese to catch their attention.
But we do do that and you can get appointments.
And emails?
(22:33):
Emails I don't recommend because they're usually not replied.
So basically you need to call a company.
That's the way the headhunters work here.
They call a company, they find out who the people are, then they call that person.
It may take several goes to catch the right person.
But if you decide it comes back to where to play, if I've decided that I want to work
(22:58):
with Costco, I've decided I want to work with Eon, I want to work with Itoyokudo, then you
will be prepared to spend a week or however long it takes trying to find and track down
that right person.
Yeah, maybe months.
Yeah, that's okay for the whole world.
In the UK, the same story.
Exactly.
(23:18):
So they will be the same story.
And at the end of the day, those buyers, of course, they're buyers, so they're not easy
people to deal with.
But at the end of the day, they have needs as well.
They want to have innovation, they want to have new brands, they want to have companies
who have got budgets, and they want to have companies who believe that they can grow their
(23:42):
category.
So if you could answer some of those questions and get a meeting, why not?
And if they say no, then that is also part of your answer.
Sure, sure.
And especially if they say no and say why no, that is the most amazing answer that you
can get.
Right.
Exactly.
(24:03):
Good, Rupert.
Thanks a lot.
There's definitely a lot of information to digest.
And it was a really, really interesting conversation.
No problem.
No problem.
It's a pleasure to talk with you.
Good luck.
And I wish you every success.
Thanks.
Thanks, Rupert.
And one more point.
May I leave your LinkedIn in the comments so people could contact you if they would like
(24:28):
to enter Japan?
Yes, please.
And if you wouldn't mind, I have a website with a blog called exportandexpand.com.
Okay.
I've got a blog on there and I've also written a book which is called Export and Expand.
Great.
So you can find a link to that book on exportandexpand.com as well.
(24:49):
And that also talks about like an export roadmap, which is one of the questions that you're
asking.
I will definitely leave the link in the description of this episode.
So wherever you listen to that, either on YouTube, Apple podcast or Spotify, you can
find in the description the direct link to Rupert LinkedIn profile and for the website
(25:12):
with the book about the expert and the roadmap.
Thanks again and hope to see you maybe sometime in Japan.
Yes, absolutely.
Well, good luck and see you soon.
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