Are there winning formulas that lead Japanese companies to succeed in the emerging Asian market? In June 2017, Professor Kazunari Uchida of Waseda Business School gave a keynote speech at FUJITSU Asia Management Forum 2017. This article reports on his speech, which was entitled “Global Advantage—How to Create and Maintain a Winning Formula Viable in Emerging Markets.”
[FUJITSU Asia Management Forum 2017 Keynote Speech]
To Compete in Asia, Localization Is Key
As emerging countries rise, how should Japanese companies expand their businesses in the global and Asian markets?
Professor Uchida suggested that, “Localization is key. The important point is how you compete and where in the world you compete. There is no single correct answer that can lead all businesses to success. Companies must find the answer that is correct for them.”
Professor Uchida first noted that each Asian country has very different conditions, introducing the example of selling South Korea’s Samsung products in Vietnam. Samsung products have sold much better in Vietnam than in Vietnam’s neighboring countries. He explained that the increased popularity of Korean music and animation raised Vietnamese consumers’ interest in Korean products.
“In Vietnam, people already know how good Japanese products are. Samsung would not have done well if they emphasized quality there. Meanwhile, Korean culture is popular in Vietnam. Samsung effectively referenced features of Korean culture to successfully market their products. Their approach was completely the opposite of the Japanese business model in which companies first export products and then attempt to market them.”
Professor Uchida then talked about the challenges Uber faces in Indonesia as a contrasting example. Indonesia has serious traffic congestion, and people usually use motorcycles instead of passenger cars. Given this situation, a service called GOJEK is increasing its market share. GOJEK uses motorcycles to transport not only people but also flowers and lunch boxes. At a customer’s request, even a massage professional can be transported.
In a country in which services that satisfy local needs are offered, even Uber is finding it difficult to remain competitive. Professor Uchida pointed out that one particular winning formula will not work at all in a different country: “To compete in an emerging country, you must first learn about that country. Different kinds of business activities thrive in different countries.”
Professor Uchida then noted how challenging it will be for Japanese companies to expand their market shares in the emerging Asian market: “Each Asian country has distinctive characteristics, giving rise to a unique market. This means that Japanese companies face opponents they are not even aware of yet.”
There Is No ‘Right Way’ to Success. Each Company Must Find Its Own Winning Formula.
What do Japanese companies that are succeeding in Asia have in common?
According to Professor Uchida, “Only a few companies have succeeded using the global standard written about in textbooks.” Instead, he has found that companies that have created their own winning formulas are strong.
For example, Toyota Motor Corporation brings local employees to Japan to educate them about the Toyota way of working until they fully master it. Meanwhile, Yakult is expanding its worldwide market share by selling products to customers directly from Yakult Ladies. In both cases, the companies are bringing their working styles to the global market.
Professor Uchida emphasized that, “Toyota is implementing the Toyota style globally, not a Japanese way or global standard. Like Toyota, Japanese companies must strengthen their originality and find their own winning formulas.”
Manufacturers are not the only ones to have created unique winning formulas. Professor Uchida introduced a service offered by Kumon Educational Japan, which has expanded its Kumon Method business globally. Kumon Educational Japan’s number of market territories exceeds the number of Japanese employees the company has stationed overseas, making it a successful example of leaving local operations up to local employees. He then explained the company’s business policy, which states: “The fundamental principle of education for children is local teachers teaching in the local language. Since all parents wish for their children’s growth, the company recruits parents to become Kumon instructors.”
Winning Formulas Are Created by Trial and Error
How did successful companies create winning formulas? How can local personnel be taught to follow the Japanese head office’s business style?
Professor Uchida expressed his view: “Companies must arrive at their own ways through trial and error and many mistakes.”
Toyota invites local personnel to Japan and educates them on the Toyota Way. Besides learning techniques and skills, they are also taught Toyota’s rules and regulations implemented in Japan. Professor Uchida then noted the importance of education’s psychological aspect: “Toyota teaches personnel not only techniques and skills but also the required mentality, such as Toyota’s philosophy. Toyota quality is achieved through this education on attitude. Failure to provide such education is like plowing the fields but forgetting to plant the seeds.”
Professor Uchida introduced the policy of Unicharm Corporation, for which international sales account for more than half of all sales: “They hire people who deeply identify with their corporate philosophy.”
Many companies try to hire competent individuals, but it is not unusual for such people to leave a company when searching for the next career step. However, according to Professor Uchida, “Local employees who join a company while deeply identifying with its corporate philosophy will serve for many years, thus continuing to provide value to the company.”
Finally, Professor Uchida concluded his speech with this comment: “In terms of creating a winning formula, there is no correct answer waiting for you. You must repeatedly carry out trial and error and learn from your own experience, even though this may include painful lessons. Successful Japanese companies make the most of their established strengths in the international market in some form or another. It is important to rely on the strengths you have developed in Japan if these are also viable in the international market, and to localize as necessary.”