Of course, all localizers know that many items need to be adapted for a new market. This is especially true for the Japanese market, one that offers so much pay back but at such a high price. For some companies that have localized successfully, they find that 25-50% of their total revenues are coming from sales in Japan. The income levels, the average education, the acceptance of technology all combine to make this a dream market...except for those nagging details like the writing system, which is probably the complex in the world. Or, maybe except for the total demand for incredible levels of quality and service, which would be hard to support in one's own country, much less one with such...foreign ways of doing things.

The first part of localization should be learning about Japan. This is something you have to do or you will definitely not succeed. You must research the market and also the culture, both in a personal and business context. You know that you will be trying to convince distributors to carry your product and will have to deal with other people in business there in many aspects of getting your product marketed. The more you know both your friends and enemies, the better position you will be in for negotiations, etc.

Use the channels established for this purpose (see the addresses for JETRO, MITI, etc., at the end of this article) as well as your own. Read trade magazines. Note not only the features of the applications that are discussed and reviewed (probably not in great depth), but also see how illustrations are used, the colors that seem predominant, the types of advertising that seems popular, etc. Compare and contrast the features of your product with those of your competitors.

Are your competitors Japanese? If not, is the application localized? Who is the distributor, etc.?

Fluency in the Japanese language is helpful when dealing with Japanese nationals. However, it is not as important as having an affinity for the Japanese, an interest that is rooted in knowledge. For the Japanese, who place an incredible emphasis on interpersonal relationships even while remaining cutthroat businessmen, this interest will mean that they can develop an ongoing business relationship with you.

Remember that since most Japanese in the large companies expect to and do remain with one company for life, they may know more about your company than you do if you have not been with yours long. Because of this pattern of relationships, if it is possible to assign one person from your team to work with the Japanese company, this will prove immensely helpful in smoothing communications. Especially note that it may be even more important to develop personal relationships if you are from a country that historically has had a poor or even warlike history with the Japanese: they may just feel naturally uncomfortable with you. You may feel the same way about them.

Always present proposals in both languages, even if the Japanese seem very fluent in your language. They will appreciate the gesture. Never ever put a Japanese in a position where he has to admit that he doesn't know something or is wrong about a point. In addition, never put the business person "on the spot" with a hard sales approach. If you overwhelm him, the chances are good that your presentation will be unsuccessful and you will never have a chance to regroup and start over.

Quality is probably the lead issue in the Japanese market. James C. Morgan (CEO of Applied Materials, Inc., a semiconductor capital equipment manufacturer that has done phenomenally well in Japan) and Jeffrey Morgan have remarked in their book, Cracking the Japanese Market, that "Understanding quality is a fundamental requirement for doing business in Japan. Competitive markets in Japan are measured in terms of adherence to 'spec' and the number one specification is perfection."

Remember at the same time that along with marketing quality products comes the Japanese insistence on capturing market share. A distributor will want to develop market share before short-term profit; the distributor will want to place a price premium on the product and keep it at that level, holding it at level through all channels. This may annoy the non-Japanese publisher who sees a software product as a perishable commodity, who knows that the localization process will take even more time when the primary concern seems like it should be time-to-market, etc.

Research, Research, Research!

Do your homework. Know that your potential distributors will be much happier and more likely to want to carry your product if they can see that your product has been successful elsewhere. Japan is sometimes called the land of a thousand feasibility studies; don't be surprised if your product/company becomes the object of major one. This contrasts with the Western tendency to make decisions based on "gut feelings."

Plan to optimize the Japanese "look-and-feel" of your app. Try not to use transliterated loan-words from English; try to test your app thoroughly on non technical users. Also try to keep your costs down. Even though the Japanese consumer is used to paying premium prices for software, it is worth it to exploit cost advantages to gain market share-as long as the end user is convinced that the lower price does not indicate a shoddier product.

The root cause of problems overseas is what James A. Lee calls the "self-reference criterion." This is the situation where a manager makes a decision using an unconscious reference to his own cultural values when dealing with foreign countries. All managers of localized products and localizers need to be aware of this tendency within themselves.

Genba Wa Tsuyoi--"Strength is with the field."

In loosely translated Japanese, this means that before making plans for others in a particular area, one should know the situation firsthand. Don't send your people into a situation where the outcome is likely to be negative unless you know that this is possible. Be aware of field conditions, in other words.

There are five possible marketing strategies:

• gray marketing
• technology licensing
• working with a Japanese partner
• setting up a sales office in Japan
• starting a Japanese subsidiary

Gray marketing can seem like an easy way to enter the Japanese market, usually before localization is completed. It generally means that the end user is obtaining the product outside normal channels. For instance, it could happen when a tourist is traveling and picks up a new application and then brings it home. Or, it could mean that someone has ordered through a foreign catalog.

Initial sales may be good- take note of registration cards coming from Japan. However, especially for the Japanese market, this is probably not a wise idea. The customer expects the kind of after-sales support that won't be there after the gray sale. Your app will not have the advantage of shelf space and advertising to gain market share. Add this to the fact that the app has probably not been localized or adapted for the market and you can foresee a fall-off in sales, with potential customers switching to the competitors after hearing of dissatisfaction.

You can reduce gray marketing in several ways. One way is to make localized prices a close as possible to non-local prices.. This makes it more attractive. Another method is to localize the application, which then gives it a distinct advantage over the nonlocalized versions (particularly if the pricing is similiar).

Licensing means that you are giving your technology to another company for a price. In return, you receive a lump-sum payment or royalty checks. With lump-sum payments you lose all rights to future sales of your product there. If you need cash and don't want to deal with the hassles of the Japanese market, this may be a reasonable choice.

Japanese Partnering

Most publishers who want to enter the Japanese market choose to work with a Japanese partner, whether a distributor, republisher, etc. Choose your partners carefully: it may be the most important decision you may make in Japan. Be clear about objectives. The plan to meet these should be flexible and state minimum positions. The plan should include:

• Why you want to be in the Japanese market
• What your market share goals are
• What are your long-term profit expectations
• Specify the lowest level of price, volume and profit you need in order to go ahead with the deal.

Don't be afraid to ask questions: not every distributor is competent enough, or has the right mixture of experience and resources, to handle your product. Or, the company may just not be the "right fit" for you. This is the time to find these things out. so do your own investigating.

Find out:

• Who will provide marketing and after-sales technical support?
• Does your partner have the resources and ability to handle your product?
• If your partner handles products from your competitors, can they assure you that they will get adequate shelf space and promotions for your product?

Even when you are sure you have made the right decision, be prepared for the following chronology of your partnering deals.

1. You are in honeymoon mode, bubbling with enthusiasm, curiosity and interest (these are requisite in dealing with the Japanese market anyway).
2. You trust and respect the Japanese side at first, even though some things are happening that you don't quite understand.
3. You become bewildered as strange things continue to happen and promises are not being met.
4. You become angry, irritated, shocked and wonder whether you should give up.
5. You pull yourself out of it briefly.
6. You become depressed, bitter and melancholy; you think about chucking the entire deal; you may feel victimized or tricked by the Japanese, and may believe that they have acted unethically.
7. Eventually you attain a more balanced view, seeing the situation from the Japanese side as well. You redo your numbers to reflect short-term potentials and learn to live with the Japanese, even if sometimes unhappily.

Republishers are a bit different from distributors. Republishers handle most software sales in Japan and their services can range all the way from product redesign to demand creation to technical support. Remember, however, that the more services the republisher provides, the larger the share of profits they will expect to keep. In addition, however, you can sell direct, through mail order, etc.

Consider carefully the idea of giving exclusive distribution rights to one company. This is particularly true at the beginning of the relationship when you really don't know if the relationship will work out to your advantage-you really don't know the true capabilities of the distributor at this point. If it turns out to be the wrong partner, your sales may be depressed for many years.

The distributor is likely to push for these rights. Push back! Sign for only one year, if signing is necessary, and then reevaluate the partnership. Note that even though localization is usually considered to be the most crucial issue in an application's success in the Japanese market, the distributor can make sure it gets done correctly but more importantly, does the job of distributing-adequately.

Be aware, meanwhile, that the time required for negotiating all this for the first time is probably considerably longer than it would be at home.

Setting Up A Sales Office

Generally, you would be interested in setting up a sales office if you need more feedback than you think you'd get from a partner. At the same time, you know that you do not have the resources to handle warehousing , distribution, etc. You would leave these issues for your partner in this case. This allows you to make a presence for your company without making the large investment that is required to start a true subsidiary.

Setting Up A Subsidiary

Because setting up a true subsidiary in Japan is such an expensive proposition, only the largest companies tend to do it. Some companies tend to like having a native staff while others like to import staff from the "home office." Still others refer to have mix of nationals and domestic staff.

The advantages of using a Japanese staff is that they can deal with other Japanese nationals and you will then be spared the requirement of a really complete education of the Japanese culture that your homegrown employees would require.

Other advantages of establishing a subsidiary would be in maintaining control and also feedback to the mother company. The main disadvantage is the money required to set up the subsidiary, particularly when staff from the home office are used. If you do choose to set up a subsidiary despite the risks, make sure to send only your top people. You might also want to remember that the Japanese do have a lot of respect for seniority as well.

Included here are some addresses of organizations that can help you try to get information about the Japanese market and what you'll need to be doing to get there.

Market Research Firms

Dataquest Japan
Taiyo Ginza Building 2F, 7-14-16 Ginza, Chuo-ku, Tokyo 104
Telephone: 81-3-5556-0411
Fax: 81-3-5556-0425

JPL (the Japanese PC Laboratory)
Cosmo Session Mejiro 101
Mejiro
Toshima-ku, Tokyo 171
Telephone: 03-5996-0919
Fax: 03-5996-0922

Arthur D. Little Japan, Inc.
International Research and Marketing
Rosei Building, 1-4-2 Higashi-Azabu,
Minato-ku, Tokyo 100
Mitsubishi Research Institute, Inc.
Time & Life Building, 2-3-6 Otemachi, Chiyoda-ku, Tokyo 100
Telephone: 81-3-3270-9211
Fax: 81-3-3279-1308

Japanese Government Organizations

Ministry of International Trade and Industry (MITI)
1-3-2 Kasumigaseki, Chiyoda-ku, Tokyo 100
Telephone: 81-3-3504-4411

Japan External Trade Organization
2-2-5 Toranomon, Minato-ku, Tokyo 105
Telephone: 81-3-3582-5511

Manufactured Imports Promotion Organization (MIPRO)
World Import Building 6F, 1-3,
Higashi-Ikebukuro 3-chome
Toshima-ku, Japan 170
Telephone: 81-3-3988-2791
Fax: 81-3-3988-1629

General Computer Publications

ASCII
ASCII Corporation
Three F Minami-Aoyama Building, 6-11-1 Minami-Aoyama,
Minato-ku, Tokyo 107-24
Telephone: 81-3-3238-7111

Nikkei Personal Computer
Nikkei BP
Misaki-cho 3-3-23, Chiyoda-ku Tokyo 101
Telephone: 81-5210-8171
Fax: 81-5210-8448

Pasokon World [1]
PCW Communications Company, Ltd.
Shonen-gaho-sha Building, 5F, 3-3-12
Misaki-cho, Chiyoda-ku,
Tokyo 101
Telephone: =81-3-3239-4161
Fax: =81-3-3239-1810

Asahi Pasokon [1]
Asahi Shinbun
5-3-2 Tsukiji Chuo-ku Tokyo 104-11
Telephone: 81-3-3545-0131

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[1]The term "pasokon" means personal computer in Japanese.