Introduction.
In today's globalized world, the number of Japanese companies considering expanding into France is increasing every year. However, "just entering the market" is not enough to increase sales. In particular, a strategic approach is essential to ensure sales growth as an overseas business unit and to build a presence in the European market.
There are basically two commercial approaches that can be considered for a successful entry into France or Europe.
One is "full-scale distribution in the local local market" and the other is "limited expansion for the purpose of performance. However, many companies aiming to expand sales in the local market have often contracted with local distributors for ineffective commercial distribution or vague objectives, and have not achieved the expected results.
THIS ARTICLE EXPLAINS SPECIFIC POINTS FOR SUCCESSFUL ENTRY INTO THE FRENCH MARKET FOR COMPANIES AIMING TO "SECURE SALES IN THE LOCAL MARKET" RATHER THAN "PR OF HANDLING RESULTS" OR "TEST MARKETING".
Clarification of objectives for expansion into France and Europe
First, it is essential to clearly define objectives in order to successfully expand into France. Many failures are attributed to the fact that this step is left ambiguous before proceeding with local partner selection and product development.
- Securing sales in the local market: do you want to distribute your products to French retailers and generate serious local sales?
- CREATING A TRACK RECORD FOR DOMESTIC PR: DO YOU WANT TO UTILIZE YOUR LOCAL HANDLING TRACK RECORD FOR BRANDING AND SALES IN JAPAN?
- In the meantime, you want a distributor: Without a defined distribution strategy, do you think that you can "get by with a distributor"?
- Test Marketing: Do you want to test market the product for a period of time to see how it responds in a new market?
- B2B or D2C strategy for sales channel expansion: Do you want to expand sales channels to vendors or sell directly to consumers through cross-border EC or local marketplaces?
Clarifying these objectives at the outset will greatly change the direction of the strategy, the partners to choose, and the method of product development.
Conclusion.
Strategic alliances with local distributors are essential to expand sales.
In order to successfully expand into France and double the sales of the overseas business unit, it is essential to build a strategy around local distributors (local wholesalers and agents).
Many companies tend to misunderstand and think that if they sign a contract with a local distributor, they will be able to sell their products. In reality, contracts with agencies that do not have distribution networks and sales capabilities often end up being a waste of time and money, and there is no end to the number of companies that withdraw within five years of entering the French market.
Local Distributors in this context are partners who meet the following criteria
Has a sales department and conducts sales activities as an organization.
Annual sales in excess of several hundred million yen
Network of many retailers (retailers) in France
Or a hybrid type where the company is a retailer with multiple stores and can also provide wholesale services at the same time.
By working with these companies, product distribution and sales can be scaled.
Identifying Distributors
There are two main types of distributors.
- Sales-oriented distributor: A company that actively introduces new brands to the market and conducts its own sales activities.
- Passive distributors: companies that do not have a sales department, sell only to existing customers, and do not seek new business.
If you sign a contract with the latter "passive" type, you will experience the phenomenon of "distributorships but no sales". Since the number of distribution is often extremely small, resulting in a loss, careful partner selection is necessary.
We don't give away exclusive distribution rights easily.
Many Japanese companies tend to easily hand over exclusive marketing rights in order to get their products on the market as soon as possible. However, this decision involves risks.
Some local firms may enter into exclusivity agreements solely to prevent the distribution of competing products.
In Europe, lower-tier distributors rarely become higher-tier distributors, creating unnecessary intermediate margins in distribution.
In some cases, even when major distributors are interested, negotiations collapse due to existing exclusivity agreements.
At the time of contracting, it is important to consider establishing exclusivity in stages, limiting the amount handled, region, and period of time, and to develop flexible terms and conditions.
To obtain sales-type distributors
Finding and building a trusting relationship with a leading sales-type distributor requires the following preparation and understanding
- Understanding of European business rules: contract flow, price negotiations, logistics terms, lead times, etc.
- Understanding pricing: In Europe and the U.S., the concept of a "top price" (suggested retail price) is less common, and it is necessary to know the price at which the product will eventually appear on the store shelves.
- Establishment of sales terms and conditions: handling of problems such as returned goods, damage, wrong shipment, etc., payment terms, and responsibility sharing in case of customs clearance stoppage.
- REGULATORY COMPLIANCE: SOME PRODUCTS REQUIRE EUROPEAN STANDARDS AND CERTIFICATIONS (CE, REACH, ETC.).
- Conditional Exclusive Distribution Agreement: Gradation type contract design based on transaction volume and value.
- Clarification of fee burden: Classification of burden for remittance fees, intermediary bank fees, etc.
By having these in place, negotiations with local partners will proceed smoothly.
Market research and marketing to prevent initial mistakes
If you neglect marketing and information gathering when entering the French market, no matter how good your products are, they will not sell. The following points are particularly important
The latest trends: understanding consumer needs and trends in the French market
Regulatory: check GDPR and other Europe-specific rules, certifications, and required registration procedures
Appropriate means of promotion: Even if PR is conducted from Japan on social networking sites, organic reach may be limited due to GDPR. For example, TikTok may not be displayed for France, so local transmission is key.
It is essential to have a local headquarters or branch office or to work with consultants and marketers who are strong in the local market.
summary
In order to double the sales of the overseas division in France, it is essential to strategically select a local distributor and work with a sales-type partner, rather than simply signing a contract with a distributor.
In addition, a deep understanding of the French market's business culture, laws, and trends, and the development of pricing and contract terms that are tailored to them, is key to a sustainable European expansion.
To ensure that your expansion into France is not only a "brand extension" but also a "substantial sales expansion," be sure to follow the steps above.