From robotics to toilets, Japan is world-renowned for its advanced technology. Entrepreneurs from around the world dream of joining the industry.
Yet when it comes to IT, Japan has actually had relatively sluggish growth, while countries like the US forge ahead.(1)
Now, a Japanese government initiative seeks to “position IT as an engine of economic growth,”(2) presenting, among other things, the opportunity for foreign IT vendors need to crack the Japanese market.
It won't be that easy.
As an IT professional with 20+ years’ experience as a manager in Japanese subsidiaries of IBM, Microsoft and other U.S.-based companies, I will try to show why Japan’s IT industry has been so hard to penetrate, and what can be done. I hope also to provide hints for non-IT businesspeople interested in starting a business in Japan.
A Hard Day’s Night
To illustrate a common challenge, let me share a personal anecdote.
Back in the mid-1990s, I worked for EDS (Electronic Data Systems). My client at the time was a large Japanese bank. Our team was working hard to install EDS’ banking software for my client. This software was new to Japan, so no one had any experience of installing it.
It took almost one year for them to sign the contract and to begin using our software. During that lengthy negotiation period my clients asked us numerous questions:
-“Who is using your software?”
-“What issues are solved by using it?”
-“How does it work to solve those issues?”
-“How long did it take to install your software with that client?”
-“Why did your other client select your software?”
I had to relay those questions to my colleagues in U.S. to get the correct information to translate into Japanese. This involved sending e-mails to America at midnight (Japan time) and responding to my client the next morning.
In most cases, the initial answers were not satisfactory. I often had to work for several nights in a row to get the “right” answer.
The hardest part was explaining to my American colleagues why the client’s concerns were important and why our answers were not clear enough for them.
In many cases, my U.S. colleagues were puzzled as to why my client insisted on knowing such incredibly detailed information. I replied that as a Japanese person, even I would probably want to know!
Eventually, I would get enough information from the U.S. to satisfy my client, but in exchange for some bad feelings from my irate colleagues abroad.
Honestly, it was a really tough time.
I had similar experiences every time I tried to introduce a new software package in Japan. I began to wonder why Japanese clients ask for so much information.
Japanese Standards: Beyond the Basics
Recently, I spoke with a Japanese president of a U.S.-based IT company, and she confirmed that she had had similar experiences in Japan over the last decade.
“Our Japanese client’s requirements even for the ‘basic standard’ are extremely high compared to other markets,” she said. Even with near impossible tasks such as “zero data loss from databases” and “zero privacy leaks,” many Japanese companies still pressed for maximum quality.
She said one of the keys to her success is simply being patient.
In many ways, I agree with her sentiments. When I lived in U.S., I jokingly used to assume that half of all ATMs were out of service at any one time. In Japan, on the other hand, I always expect a 100% operation rate. Also, many Japanese ATMs have special features that foreign machines lack, such as the ability recycle bills inside—a function which made a U.S. engineer friend of mine gasp, “That’s crazy!”
I guess Japanese people really are obsessed with the details.
Akinai, a Business Keyword and So Much More
There is a Japanese word akinai, which means “business, trade and commerce.” Akinai also sounds like “don’t be tired” and “don’t lose interest.” In Japan, seasoned businessmen will often say that they should be patient because a situation is akinai.
When doing business in Japan, whether in IT or another industry, you may discover untapped opportunities to start new businesses and expand your market. However, please remember that Japanese service and quality standards are extremely high, so it will help to be patient with your clients.
If they ask for unbelievable amounts of information before (and after) making a contract, please cooperate. If you do, I believe you will be able to forge long and fruitful relationships, reaping the benefits of growth along the way.
(1) Japan’s IT Investments and Earnings Power in IoT Era,” 8 April 2015. Daiwa Institute of Research.
(2) Prime Minister’s official website; Japan Revitalization Strategy (Revised 2014; 24 Jun 2014).
Cover photo by Alex Knight. ATM photo by tktktk.