To maximize success in the Japanese market, U.S. firms should partner with local agents or distributors with deep industry knowledge and sales relationships to market their products to end-users in Japan or establish their own office to have a representative on the ground. Relationships are critical in Japan, and customers tend to be loyal to these long-term, well-maintained relationships. Especially in the commercial/industrial market, reliability and consistency are critical. The quality of a product and its presentation also play an important role in the buying decision. Japanese consumers are extremely discerning and detail-conscious, both in the consumer and business sectors. Products must be presented well; packaging, fit, and finish are key in this market. Moreover, after-sales service is significant, not only in the original buying decision, but also in maintaining the sales relationship. U.S. suppliers should either have their own representative with adequate operations in Japan or obtain a Japanese representative who can offer sufficient after-sales service. 

Trade Promotion and Advertising

Trade Shows 

Building long-term business relationships is important to your success in Japan. Exhibiting at an international trade show in Japan may be the most effective means to enter the market or expand your business in Japan. If you work with a local distributor, you may not need to come to Japan. However, you can show your strong commitment to the Japanese market and network with the right people by traveling to Japan and participating in a trade show. U.S. companies with establishments in Japan will also find trade shows to be effective means of promoting their products as the U.S. company officials can visit the trade show and reflect their respect and appreciation to Japanese customers.  

Industry associations often organize the leading industry-specific trade shows in Japan. You can reference many of these trade shows in the “Leading Sectors for U.S. Exports and Investment” sections in this Country Commercial Guide. CS Japan can also provide additional information and/or provide counseling on how to prepare for a trade show held in Japan. CS Japan sometimes organizes a pavilion or a sample booth at leading trade shows to promote U.S. products and maintains a list of upcoming events. 

Besides industry associations, the following exhibition companies organize trade shows in Japan: 

RX Japan Ltd. organizes trade shows in industry sectors such as automotive, apparel, gifts, education, and cosmetics. 

Messe Frankfurt Japan organizes ten trade shows each year, including Beauty World, InteriorLifestyle Living, InterPet, and ThermoTech.   

Most trade shows are not open to the public. However, some consumer goods trade shows offer limited public access. For example, there are regional shows for pet products and sporting goods that offer opportunities to promote directly to consumers.  

In addition to trade shows in Japan, U.S. companies may also want to consider exhibiting at a trade show held in the United States. Japanese buyers tied to the world’s cutting-edge technologies and trends often attend major trade shows held in the United States to learn about the latest products, technologies, and services. Exhibiting at a trade show in the United States may be an effective way to find a new distributor and retail customers. U.S. companies should directly contact trade show organizers to request additional information on which potential Japanese buyers plan to attend a particular trade show. In addition, U.S. companies may want to have promotional materials in Japanese in case it may be helpful to Japanese buyers. Such an extra touch is what Japanese firms look for when forming new business relationships.  

Single Company Promotion  

CS Japan offers fee-based single company promotion services to U.S. companies and their Japanese distributors to help them organize promotional events such as seminars, webinars, and receptions. It is a custom-made service to meet a U.S. company’s specific needs. 

Digital Advertising 

Digital advertising strategies may be more important than traditional media advertising in Japan. The 2020 Japanese Time Use Survey conducted by the NHK Broadcasting Culture Research Institute reflects current TV viewing tendencies in Japan. The number of people who watch TV programs decreased in 2020. Those younger than 40 years old spend more time online surfing the internet and watching videos. In February 2022, Dentsu, a leading Japanese advertisement agency, reported that the size of Japan’s digital advertisement market for the first time exceeded the size of its traditional media market – including TV, newspaper, magazines, and radio. 

Digital advertising is a targeted, data-driven advertising strategy. There are various advertising methods, including search, display, social media networks, and video. U.S. companies will want to develop digital advertising strategies based on their targets and objectives. 

Search Advertising.  Promote your products and services on major search engines commonly used in Japan, such as Google and Yahoo.  

Display Advertising. Sometimes called “banner advertising” in Japan, display ads appear in designated corners of webpages and social media platforms. They are usually showcased in the form of a banner ad, such as graphic, text, or GIF animation. According to a digital marketing agency that specializes in Japanese online marketing, a steady but large share of the digital advertising dollars spent in Japan has gone toward display advertising. A number of firms have online advertising experts that design banners and assist with digital advertising campaigns. In addition, Google Ads and Yahoo! JAPAN Ads help companies to meet advertising goals and maximize effectiveness by targeting audiences based on their interests and purchase intentions. For example, targeting by location and the location in users’ search queries is possible on these platforms. 

Social Media Network Advertising. In Japan, social media networks are very popular. According to a Japanese social media marketing company, the most popular is LINE, followed by Twitter, Instagram, and Facebook. 

Video Advertising. Videos can often grab viewers’ attention better than images or texts. Non-English speakers may be able to better understand features of your product or service by watching a video rather than reading product information. In Japan, YouTube is the most popular video sharing site, with 65 million users. YouTube Advertising provides instructions on how best to create a video and run video campaigns to target the audience you want to reach. Companies can advertise on specific YouTube channels or work with a Google Ads specialist to create a custom plan.

Pricing

Japanese average annual consumer expenditures have varied little in the past 13 years – at just over $30,000 for households of more than two people. The graph below shows Japan’s flat consumption since at least 2009. In addition, fluctuations in the consumer price index (CPI) have been minor for years. Japan’s core CPI, which excludes volatile fresh food but includes oil costs, has risen slightly above zero since November 2021. In April 2022, Nikkei reported that the producer price index, which indicates the cost of goods traded among companies, rose 9.5 percent in March 2022 from a year ago. The steep increase is due to the war in Ukraine’s effect on increasing prices for energy and raw materials. The index has increased more than 5 percent for 10 consecutive months. In February, the same index reached 9.7 percent, the highest in over 40 years. At the same time, the CPI was only 0.9 percent. These figures indicate that Japanese companies have not been able to pass higher costs on to consumers due to concerns that households in Japan would hold back on spending.  

Average Japanese Annual Household Expenditure in U.S. Dollars from 2009 to 2021. 

Source: Family Income and Expenditure Survey by Ministry of Internal Affairs and Communications  

High-end products are more popular in Japan than mid-range products. Multiple market research institutes anticipate that the COVID-19 pandemic may have led to an acceleration of this trend. Japanese consumers, who generally suspended travel and expenses for dining out, have been paying extra for luxury products. For example, department stores reported this trend in their monthly sales reports to the Japan Department Stores Association (JDSA). Department stores reported a drastic decrease in sales in the spring of 2020. However, starting in October 2020, consumers increased purchases of certain luxury goods, such as watches, jewelry, fine art, and precious metals. In February 2022, JDSA reported that sales of luxury products had increased for the past 13 months when compared with the corresponding month from the previous year. This trend is encouraging for U.S. exporters of high-quality products classified as high end.  

When working with a local distributor, the distributor usually sets the product’s retail price in Japan. According to Japanese importers, if the retail price in Japan is much higher than its retail price in the United States, there is a chance that end-users may purchase a product from the U.S. market. If the retail price is too low, distributors will not be able to cover costs and investments to market the new product and make a reasonable profit. Their efforts may include production of new packaging and labels in Japanese, participating in a trade show, and/or providing customer service.  

The pricing structure that shows how your distributor sets a retail price for the Japanese market varies from company to company and from product to product. A retail price in Japan could be as high as 2-3 times its retail price in the United States after adding import costs and margins for distributors and retailers. This is especially true when the product needs special registration, testing, or additional processes to be imported into Japan or when distributors are unsure about the marketability of the product. 

Below is an example of a pricing structure set by an importer and distributor of a sporting goods company. During the process of setting a retail price in Japan, Japanese companies often assume that 30 percent of the price of buying from a U.S. company will be required for costs related to shipping, insurance, customs duties, consumption taxes, and other handling fees. Distributors consider this landed price as the purchasing cost and often set it at 35 percent of the good’s retail price in Japan. Based on the retail price calculated, Japanese distributors will examine the marketability of the product and will decide if they want to sell the product or not. In this case, the same product may be sold for $200 in the United States, which means the retail price in Japan is approximately 1.8 times that. If a U.S. company wishes to enter the Japanese market and work with a Japanese importer or distributor, it may want to consider setting special export prices, which are lower than its wholesale prices for the U.S. market.

Example of Pricing Structure 

When a U.S. company with a representative office in Japan sells directly to the Japanese market, it sets retail prices by considering costs, such as promotion and marketing, customer services, exchange rate risks, and the U.S. retail price. Based on a cost comparison of a number of goods, Japanese retail prices of U.S. brands that are directly operated by the U.S. company are approximately 20 percent higher than their retail prices in the United States. This price differential is smaller when the U.S. company expects the product will sell well. U.S. companies can also choose to work with retailers. In that case, the pricing structure itself may be similar to the one listed in the table above.

Sales Service/Customer Support

Excellent customer service and support are fundamental to successfully penetrating and retaining market segments for most products and services. CS Japan recommends that any product requiring after-sales training or technical support have a qualified local company available to assist the customer. Due to the importance of long-term business relationships in Japan, company reputations can be harmed if quality support is not available.

Local Professional Services

Japan has a highly developed market with the full range of professional services such as legal, financial, human resources, executive recruitment, and real estate. A greater choice is concentrated in metropolitan areas such as Tokyo (also referred to as Kanto), Osaka (Kansai), Nagoya, and Fukuoka. These four metropolitan areas account for more than 90 percent of Japan’s GDP.  

The Japan External Trade Organization (JETRO), a government-related organization that promotes mutual trade and investment between Japan and the rest of the world, maintains a directory of professional services companies in Japan. The American Chamber of Commerce in Japan (ACCJ) also has an ACCJ Member Business & Service Provider Directory.

Principal Business Associations

U.S. companies that just entered or are planning to enter the Japanese market may find the ACCJ helpful to network with other U.S. companies already in the market. ACCJ has offices in Tokyo, Osaka, and Nagoya. Below is a list of additional principal business associations in Japan. 

The Japan Business Federation (Keidanren)  

The Japan-U.S. Business Council (JUBC)  

The Japan Chamber of Commerce and Industry (JCCI) 

The Tokyo Chamber of Commerce and Industry (TCCI) 

Japan Small and Medium Enterprise Management Consultant Association (J-SMECA)

Limitations on Selling U.S. Products and Services

Japan is in general an open and transparent market, but some nontariff barriers remain. These are described in the United States’ Trade Representative’s annual National Trade Estimate Report and in this report’s “Trade Barrier” section under “Customs, Regulations and Standards.”  For sector-specific regulations, please contact the U.S. Commercial Service in Japan.