Introduction.
In recent years, we are beginning to see a change in the era when "the U.S." was the only choice for many Japanese companies targeting overseas markets. With the weak yen, geopolitical risks, high tariffs, rising prices, and other barriers to entry into the U.S. market becoming higher, "expansion into Europe" is now attracting attention. In this article, we will discuss the benefits and strategies of "entering the European market", ranging from tariffs, target country selection, consumer laws, and practical language support.
European expansion and markets
The European market is often lumped together, but in reality it consists of a diverse range of countries, each with different economic circumstances, cultural backgrounds, and consumer trends.
Nevertheless, the unified framework of the European Union (EU) has led to the commonization of tariffs and legal systems, creating conditions that are increasingly attractive to Japanese companies.
Understand the current hot topic of tariffs
THE FIRST THING TO KEEP IN MIND WHEN CONSIDERING EXPANSION INTO EUROPE IS THE ISSUE OF "TARIFFS. THE ECONOMIC PARTNERSHIP AGREEMENT (EPA) BETWEEN JAPAN AND THE EU HAS ELIMINATED TARIFFS ON MANY PRODUCTS.
As it turns out, there are basically no tariffs between Japan and Europe. This is a big advantage, as it makes the selling price in Europe 20% more competitive on a simple calculation, compared to tariffs of around 20% generated in other Asian countries and the United States.
The European market is known for its high TVA (value-added tax/consumption tax), but when logistics costs and tariff burdens are considered in total, it is a market with excellent cost balance and easy to maintain price competitiveness.
Expanding into Europe, understanding each country and considering target countries
In a nutshell, a country-by-country strategy is very important when it comes to expanding into Europe. Select your target countries from the following perspectives.
1. market size oriented
For companies looking to scale their sales, large markets such as France and Germany are not to be missed. Both countries have high GDP, population, and consumer purchasing power, and both are centers for import/export business.
2. affluent target type
High-income countries such as Monaco, Switzerland, and Luxembourg are promising when dealing with high unit-price products and branded merchandise. Although their populations are small, they have high consumption prices and tend to emphasize brands, so high profit margins can be expected depending on the strategy.
3. price-oriented (for manufacturing and logistics bases)
Eastern European countries (Poland, Hungary, Romania, etc.) have relatively low labor costs and prices, making them suitable for use as manufacturing bases and warehouses. They also have good access to Western European markets and can be considered cost-effective locations.
Understanding the European market and effectively entering the European market
Although Europe is a "federation," consumer laws, labeling obligations, and product labels must conform to the laws of each country.
Therefore, "multilingual support" is essential for sales strategies.
We recommend that our clients use English, French, and German as the basic languages for package design and translation.
Reasons for these three languages:
English: As a lingua franca, it has a broad reach throughout Europe.
French and German: In addition to the major markets of France and Germany, respectively, the following wealthy countries can also be covered.
French-speaking countries:
Switzerland (around Geneva)
Monaco
Luxembourg
Belgium (including Brussels)
German-speaking countries:
Switzerland (around Zurich)
Austria
Luxembourg (some areas)
By addressing these issues, we will be able to accurately cover both the "market size" and the "affluent market.
What is the next step to expand into Europe?
Here is one suggestion.
The biggest obstacles for Japanese companies entering the European market are "localization" and "gaining trust.
Therefore, the following initial measures are very important.
Introduction of a support package for entering the European market
Multilingual Package Design
LABEL CHECK (IN COMPLIANCE WITH EU LAW)
Localization of product catalogs
SNS ADVERTISING PLACEMENT IN LOCAL MARKETS
Support for alliances with local partners
In order to gain the trust of local users, you must not only translate, but also send a message that is in tune with the local culture. In other words, localization = trust building.
summary
Expansion into Europe can be a new blue ocean market for Japanese companies. The tariff advantage, market diversity, and the existence of a wealthy market are just a few of the many attractions.
In particular, preparation based on the premise of supporting three languages, "English, French, and German," will enable smooth and effective expansion. For companies aiming to break away from dependence on the U.S. market in the future and to achieve stable and long-term global expansion, entering the European market is a very promising option.