Opportunities in Japan are During Times of Economic Upheaval

The following is by Guest Contributor, Robert Imrie, who thinks the way I think. When everyone else is yelling 'the sky is falling' about the economy, he knows that its time to really get down to business.

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Read international headlines and you might be forgiven for thinking that now is not the time to venture into Japan. Japan’s GDP plummeted 12.7% in the final quarter of 2008; double the rate of the U.S. (-6,3%).  Japanese economic growth for all of 2009 is expected to be –6%.  Japanese companies don’t want to talk business––they’re broke!

Economic downturns can be the perfect time to consider exporting to Japan and to seek Japanese business partners: when times are good, Japanese are the most change-averse country among the world’s economic powers.  Change is expensive.  Change is unknown.  Change is scary. If it ain’t broke, don’t fix it.

The last time the Japanese economy was in such hardship proved to one of the best opportunities for foreign companies in years.

Case in Point:
The Japanese Yen increased almost 30% against the US dollar between1994 and1995, and briefly touched ¥80/US.  Japan’s real estate bubble of the 1980s had burst, saddling its banks with billions of Yen in bad loans that they were unwilling or unable to shed. Japanese stock brokerages like Yamaichi Shoken were going bankrupt as consumers lost trust in the stock market and stopped trading.

Into the carnage stepped Citibank, opening and remodeling several new branches in the heart of key business districts. Citibank’s offer: US dollar-denominated savings accounts and Certificates of Deposit that offered higher interest rates than Yen accounts and the possibility of gains when the Yen retreated from its highs and ease of use (you could make foreign exchange transactions and create CDs over the phone, something that Japanese banks were slow to adopt.)

Citibank also created rechargeable international cash cards something Japanese tourists and parents of children studying abroad appreciated. Customers lined up literally around the block waiting to open new accounts and transfer their savings from Japanese banks into Citibank.

Unique example?  No.  The 1990s saw the age-old aversion to allowing foreigners to own or control Japanese companies fall to the wayside, as bankruptcy became the only alternative. Mazda sold a controlling interest to Ford in a transaction initiated by Japanese banks no longer able to carry the Japanese car company’s massive debt. American computer companies set up shop in Tokyo and allowed consumers to shop by phone!  -- a revolutionary concept for a country used to herding its shoppers to designated shopping areas like Nipponbashi’s miles of electronics stores.  Appliance stories offered giant refrigerators imported directly from US factories.  Clothing stores started selling suits made in – egads! – Southeast Asia – for a fraction of what department stores charged for well-made but over-priced Japanese-made suits.

Is today different than the 1990s?  Sure, but the principle is the same. The current economic crisis will create opportunities for foreign companies and entrepreneurs that can provide solutions––in the form of products, services, manufacturing, financing––that Japanese companies may suddenly find themselves unable to deliver profitably.  You just have to find them.

How?  Educate yourself.  Start reading the English version of the Nikkei Shimbun, Japan’s equivalent of the Wall Street Journal. For real-world business perspective, read this blog and also check out japaninc.com. Read one of Japan’s daily newspapers like the Japan Times for general business news - find out what Japanese are reading, buying and doing.

Finally, find a reputable, experienced, Japanese-speaking consultant to research and report on the viability of selling your products and services in Japan and to help you make the right partnerships. Many of these types companies will be written about in this blog, so use this as a resource.

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Robert Imrie is a Consultant and Author. He is a partner in DRD International, a consulting company dedicated to helping small and mid-size companies find foreign partners and markets for their products and services.  His last novel, FALLEN FLOWER, a murder mystery set in Osaka, is available through  any on-line book seller.  He can be reached at: [email protected].

 

Comments

[john smith]

not only japan many countries are in hardship which really is havoc

[yorker]

economic upheavel have a great a gr8 effect on each phase of life