With Japan’s aging and shrinking population, expanding overseas is one of the most effective ways for companies to survive. However, many business owners may not know where to start when they think of expanding overseas. If they proceed with overseas expansion without knowing what to do, they may not only waste resources and fail to increase sales, but may also unknowingly violate local laws and regulations. In this article, we will explain the key points that food companies should consider when expanding overseas.
Is Now a Good Time Food Companies to Expand Overseas?
In 2013, “Japanese food” was registered as a UNESCO Intangible Cultural Heritage. With this, Japanese food is gaining recognition and attention worldwide. This is a tailwind for food companies seeking to expand overseas. In fact, the number of Japanese restaurants overseas and the value of exports of agricultural, forestry, and marine products and foodstuffs are increasing, and the impact of this can be seen from the figures.
(1) Increase in the number of Japanese restaurants overseas
2013: 55,000 → 2017: approx. 118,000
(2) Increase in the value of exports of agricultural, forestry, marine, and food products
2013: 550.5 billion yen → 2017: 807.1 billion yen
Points to Consider When Expanding Overseas
Overseas expansion can take many forms. There are various cases such as exporting products manufactured in Japan, manufacturing in local factories and selling locally, and utilizing cross-border EC. In this article, we will not limit ourselves to specific cases, but rather explain the points that are common to many cases of overseas expansion.
Five points to consider when preparing for overseas expansion
- Find a partner who can support you.
- Organize the strengths of your products and clarify the elements that will appeal to local consumers.
- Understand local laws and regulations.
- Research local business customs, culture, religion, and preferences.
- Secure a sales destination.
Find a partner company or consultant to support your overseas expansion
It will be difficult for a company that has never been involved in overseas business to expand overseas on its own. This is because foreign countries differ from Japan in many aspects, including language, culture, preferences, and business practices. In order to succeed in a business environment that differs greatly from Japan’s, a partner with a thorough knowledge of the local situation is necessary. Partners can be overseas subsidiaries, Japanese companies that have already expanded overseas, or consultants who provide support for overseas expansion. You can find a partner on your own by following your own leads, or you can use the partner matching programs held by JETRO (Japan External Trade Organization) and other organizations. Finding a reliable partner is the key to success in overseas expansion. It is necessary to find a partner who shares your philosophy and build a relationship of trust through communication.
Organize the strengths of your products and clarify the elements that appeal to local consumers
Clarify the strengths and appealing points of your products when marketing them. The key is not to be limited by the experience you have gained in the Japanese market. It is good to refer to the information and knowledge you have gained in the Japanese market, but overseas, the market environment, local needs and preferences, and competition are completely different from those in Japan. What was an advantage in the Japanese market may not be an advantage overseas, or conversely, an unexpected advantage may become an advantage.
For example, something that is commonplace in Japan, such as “Made in Japan” or “Made in Hokkaido,” a well-known Japanese or regional product, a uniquely Japanese flavor such as “green tea flavor,” or a souvenir rooted in a region in Japan, may have strong brand power overseas. Once you have worked with your partners and based on information from your target countries, you should sort out the strengths and appeal points of your products.
Understand the local food laws and regulations
Food laws and regulations are unique to each country. There are food ingredients that are allowed to be used in Japan but prohibited in other countries, and each country has its own regulations regarding labeling and other matters. If you neglect to check the laws and regulations, thinking that “it is safe because it is sold in Japan,” you may unknowingly commit a violation of laws and regulations. If you violate laws and regulations in the country in which you are operating, you may be subject to suspension of transactions, penalties, and fines, so you must be careful.
For example, China has established a national standard called “GB Standards” to control food standards. There is another international food standard called “Codex,” and some countries have their own standards based on Codex food standards, according to their own ideas. It is important to find out what regulations are in place in the country you are selling to and be prepared to comply with those regulations.
Research local food customs, business practices, religion, culture, and national character
Food customs and food culture differ from country to country. Be aware that Japanese common sense will not apply. In some cases, there is a risk that it may have a significant impact on your business. For example, in Islam, there are strict rules on what Muslims who believe in Islam can eat, called Halal foods. Pork and alcohol, for example, are prohibited in Islam. Failure to check this and selling a product containing pork or alcohol that is consumed by a Muslim can be a major problem. There are also other areas where vegetarian and vegan eating habits have taken root. It is important to research such local cultures and preferences well in advance to avoid unexpected pitfalls.
In many countries, business practices are different from those in Japan, and this is not limited to the food industry. One example is the speed of decision-making. In Japan, business negotiations are not decided on the spot, but are often brought back to the company and a formal decision is made after consulting with a supervisor. On the other hand, overseas, you may be asked to make a decision at the business meeting, and if you take the decision back to your office, you may be recognized as a company that is slow in making decisions, and you may not be able to build a relationship of trust as a business partner. In order to build a relationship of trust with local customers, it is advisable to confirm the local business customs in advance and prepare countermeasures.
Secure sales partners before expanding overseas
Once preparations (1) through (4) have been made, start sales activities. Securing local sales partners is an important point for successful overseas expansion. You can use your partner’s contacts for sales contacts, or you can approach existing customers who are already doing business with you in Japan and have already expanded overseas.
When discussing business with customers, focus on hearing about local preferences and needs. For food products whose tastes differ greatly from country to country and region to region, the real voices of customers who are already doing business locally are the most useful information. Based on this information, it is necessary to improve your products to match local tastes and to brush up your appeal points. Of course, it is not always the right answer to change the flavor to local tastes, but there are cases where it is the right answer to deliver the Japanese taste to the local market as it is by taking advantage of the Japanese brand. It may not be possible to achieve results right off the bat, but persistent communication with your customers and thinking through what strategies will lead to results is essential to success in overseas expansion.
Conclusion
In this article, we have explained the key points for food companies to expand overseas. As Japan’s birthrate declines and the population ages, the size of the food market will gradually shrink. Competition will intensify accordingly. On the other hand, there may be opportunities to leverage their strengths to gain an edge in the world. Furthermore, with the registration of Japanese food as a UNESCO Intangible Cultural Heritage, the value of “Made in Japan” foods is increasing, and this is a time of opportunity for Japanese food companies to expand overseas. For food companies that have been doing business unrelated to overseas, expanding overseas may seem like a tremendous challenge, but we encourage you to take the first step toward overseas expansion by referring to this article. Then, please use this article as a guide to take the first step toward overseas expansion, and showcase your products that you have been refining to the world, leading to the growth of your company.