Introduction.
As interest in global markets grows, many Japanese small and medium-sized enterprises are exploring overseas expansion. With the domestic market maturing, the population declining, and competition intensifying, an increasing number of companies are turning their attention to overseas markets.
However, the road to success is never smooth. What is needed is planning, strategy, and a long-term perspective. In this article, we will explain the key points that small and medium-sized enterprises should keep in mind when expanding overseas, based on the track record of supporting over 1,000 companies in Europe.
Plan your overseas expansion goals
First, it is important to clarify why you are expanding overseas. Here are some common cases:
- Recognizing the limits of growth in the domestic market and wanting to expand sales channels
- After achieving some success in the Asian and American markets, we want to target the European market next.
- We are seeing an increase in inquiries from overseas, and we feel that things are going well.
These are all noble motivations, but rather than being motivated by a "vague feeling" it is key to set goals based on specific sales targets, brand strengthening, and the phased design of global expansion.
Organize internal resources
Expanding overseas is like starting a new business. Identify the resources you need:
Human resources with extensive knowledge of overseas business (language, legal affairs, import/export, marketing)
Knowledge of product management, sales contracts, and regulatory compliance
Experience in international remittance and sales terms formulation
You will need to decide whether to produce these in-house or to use a local support company .
Especially when considering mid- to long-term deployment, do not be stingy with investment in human resources . On the other hand, in the early stages, it is also effective to utilize external partners and conduct trial deployments.
Plan your annual investment
Expanding into overseas markets is a business that requires upfront investment. Financial leeway is essential to gain recognition locally.
Your options include:
- Planned investments with own funds
- UTILIZING SUBSIDIES AND GRANTS FROM JETRO AND LOCAL GOVERNMENTS
- LOANS FROM FINANCIAL INSTITUTIONS, INVESTMENT FROM VCS
However, you should be careful about relying too heavily on a performance-based model. Based on our experience, companies that pursue results only with zero initial investment have a low success rate and tend to withdraw midway.
Target country selection
Although we generally refer to overseas locations, the risks and opportunities vary from country to country.
Asian market: Barriers to entry appear low, but price competition intensifies
The American market: large but also highly competitive
European market: Strong brand consciousness and high affinity with Japanese quality
The French market in particular is a dream destination for wealthy Asians. Achieving results here will also help improve your brand value. You can also aim for a marketing effect in Japan by re-importing your brand.
Importance of Market Research
The key to successful overseas expansion is accurate market research .
Attributes and preferences of the target audience
USAGE TRENDS OF LOCAL MEDIA AND SOCIAL MEDIA
Price difference and competitiveness with products in the same category
If you cannot accurately grasp these, the risks of "pricing errors" and "sales promotion failure" are very high. Decisions based on old information or inaccurate data are a breeding ground for failure.
We strongly recommend that you contact a specialized research company or local support company.
Clarify your short-term vision
Define your purpose early on in your international expansion:
- Available at local retailers?
- Obtaining a local distributor?
- Test marketing?
Particularly, you should be careful about relying on local antenna shops. Not only are they too niche, so visits to the shops do not translate into sales, but they are often asked to pay a commission in the name of test sales, so they end up bearing the risks.
In addition, even when acquiring an agency, it is important to check whether the company has "existing sales channels," "sales power," and "human resources." There have been many cases of failure where an exclusive contract was given to an agency with no sales power, resulting in no sales at all.
summary
For small and medium-sized enterprises to succeed in expanding overseas, "preparation," "human resources," "funds," "market research," and "setting short- and medium-term goals" are essential.
Overseas expansion is no longer a dream, but a viable growth strategy.
By having the right knowledge, a trusted partner, and proceeding in a planned manner, you can achieve great results.
With a track record of supporting the overseas expansion of over 1,000 companies, Swapsss Co., Ltd. provides total support from planning to local expansion.
Please feel free to contact us.