Entering the Japanese Market: Hiring a Country Manager vs. Finding a Partner

When expanding to Japan, companies have two key options: hire a Country Manager to manage the business locally in-house, or find a partner that will fulfill similar duties. In this article, we will cover the following:

1. The pros and cons of hiring a Country Manager vs. finding a partner
2. Common mistakes when hiring a Country Manager
3. Traits of a successful Country Manager
4. Different types of partners
5. How to find the right partner

This article is based on a synonymous webinar presented by btrax Senior Advisor Hidemaru Sato. Mr. Sato is a seasoned Country Manager for foreign companies entering the Japanese market. His track record includes companies like AOL, Expedia, DoubleClick, comScore and MarkMonitor. Mr. Sato graduated from Stanford with a Master’s degree in engineering.

You can watch recorded version of his webinar below or review the slides here.

https://www.youtube.com/watch?v=blUbfv3a1lw

Current Japanese Landscape

Before we begin, let’s take a look at the current Japanese landscape for foreign-owned companies and some recent trends.

The chart below shows the number of foreign-affiliated firms operating in Japan and the year-to-year increase of these firms. Although growth of the number of foreign firms in Japan has slowed in the past three years, the overall number of firms operating in Japan is still very high and this looks to remain steady for the years to come.

Source: Teikoku Databank

The chart below shows the breakdown of foreign companies in Japan by region. There is a steady increase of companies from all included regions, with the largest investments from Europe and North America. In recent years, there has also been a significant increase in the number of Chinese firms entering the Japanese market.

Source: Teikoku Databank and Meti

Due to the recent weakness of the Yen, now is a very good time to expand into the Japanese market. However, before you jump straight in and hire a Country Manager or find a partner, you should make sure to do the following:

• Research competitors and market pricing
• Identify your unique value proposition to Japanese consumer
• Create your local online presence for digital marketing
• Localize your brand
• Take a trip to Japan to gain direct market insight

The above are all very important steps to take, but may be difficult to do on your own, so you should consider how you can complete these steps quickly and thoroughly.

1. The pros and cons of hiring a Country Manager vs. finding a partner

Overall, partnering is better for companies in their early stages of expanding to Japan, and hiring a Country Manager is better when the company has established a steady foothold in a new country. This is because partnering is faster to setup and results are quick to deliver, and hiring a Country Manager takes more time because it is important to find the right person.

Therefore, to get your foot in the door quickly, we recommend partnering in the earlier stages then moving to build your own team when you have the in-house knowledge and resources to do so in a new country.

2. Common mistakes when hiring a Country Manager

Although the previous section suggests that finding a partner is better than hiring a Country Manager, this does not mean you should never hire a Country Manager. You will still need to find a good Country Manager and build a team eventually although the process takes time.

The most common mistakes when hiring a Country Manager are the following:

A. Overconfidence in talent recruiters or headhunters

A lot of companies make the mistake of relying too much on headhunters to find them the perfect candidate. Usually, these agents work on a retainer or contingency basis. Both consume time and money significantly. Also, if it’s difficult for you to find a good candidate, it’s also difficult for an agent to do the same since the requirements of a Country Manager are stringent and not many people have the right kind of experience and skills.

B. Overestimating candidate resume track record

When looking at candidate resumes, although work experience is important, it’s even more crucial to study the candidate’s company business performance history. This helps show what the person did actually did to help grow the business. Compare how close the revenue target is versus the actual earnings of the candidate’s previous company and consider what industry and type of business it is.

To avoid overestimating, interviewing thoroughly is important.

C. Not enough interviewing

Interviewing candidates face-to-face is very important. Recruiters should spend at least two hours interviewing the candidate and hear their full performance history. It’s also crucial to get a feel for the candidate’s attitude when they talk. If time allows, take the candidate to dinner or happy hour — create a more relaxed setting. Make sure they have passion and find out their ideas and vision.

Photo by: Janne Moren

D. Lack of background check on corporate management experience and skills

Experience in managing general corporate affairs and human resources are very important but often overlooked during Country Manager interviews. These skills are key to developing a strong team in Japan.

E. Not measuring his or her business and personal network reach

Having a strong network is a very important part of being a Country Manager. When interviewing, be sure to check if the candidate has a strong business and personal network within your particular industry. This not only helps your business growth in the future but also shows that the candidate is truly personable and can maintain strong relationships with others.

3. Traits of a successful Country Manager

Having gone over the mistakes you should take care to avoid making when hiring a Country Manager, we can now look at some character traits you should look for when screening a candidate. It is difficult to find the absolute best person as your Country Manager, but the person you need is someone who can drive your business successfully in Japan, and the following skills and character traits are crucial to this success.

A. The candidate is able to understand and apply both Japanese and Western thinking in their work

Understanding both Japanese and Western cultures is very important. The candidate should be sensitive to the needs of the Japanese market but also understand the culture and beliefs of their Western counterparts. The work of a Country Manager is bridging a foreign business and making it work in the Japanese market, so the candidate needs to be in touch with both sides of the spectrum.

Photo by: Cola21

B. Fluency in English is a big plus

However, be aware that you should not expect a native level of English. Fluency in the language is acceptable to communicate with the US team.

C. Self-starter

This trait is more difficult to find in Japan, but it’s important to hire somebody who takes the initiative and has a vision. The candidate should be able to prioritize well and take action on their own.

D. Strong business and personal network in Japan

Especially as a startup or at the early stages of global expansion, a strong network is a very helpful feature to have for a Country Manager.

E.  Able to build trust from the very first day

This should be obvious, but the hiring entity and the Country Manager should be able to trust each other immediately, and you should have confidence in the Country Manager from the moment he or she begins working.

Photo by: Drew Leavy

F. Reports bad news first, good news later

Many people tend to report good news first and then report bad news later, but often, reporting bad news too late can exacerbate the problem. You want to hire somebody who always addresses the problem head on and communicates directly about it. This can help the team solve the problem early to prevent it from getting worse.

G. Capable of developing business roadmaps, sales policies and strategies

Since these are key responsibilities of a Country Manager, it’s important to make sure the candidate is not only capable but excels in these areas.

H. Capable of sales, marketing and training

All of these are important skills the Country Manager should have. Sales and marketing for growing the business, but also training experience for growing the team.

I. Identifies problems and solves them

A good Country Manager can identify problems and solve them. In the interview, you should ask the candidate what kind of problems he or she has encountered in their previous work and how they solved it.

J. Team player – “Never put off until tomorrow what you can delegate today.”

Being a self-starter is good, but Country Managers should also be good at sharing and delegating responsibilities effectively instead of hoarding all the work and taking credit. There’s always a lot to do and prioritizing and delegating properly is key. Good Country Managers should be able to make the right decisions on whether he or she has to delegate internally or externally.

Photo by: Creative Sustainability

K. Capable of connecting with all levels of Japanese industry associations

Joining and connecting with members of Japanese industry associations can be a very effective way to support expansion into the Japanese market. This is another reason why the Country Manager needs to be someone who fits into Japanese culture and knows the market inside and out; they may not be native English speakers but as long as they’re fluent enough to communicate, knowledge of their local market has more weight.

Again, it’s very difficult to find someone who fits all of the above criteria, and if you ever meet a candidate and find that they don’t have everything stated above, do not write them off immediately. A candidate’s passion, ideas and vision may make up for the missing skills and experiences.

However, because finding the right Country Manager takes time and money, and you need to build a team and scale your business in Japan quickly, finding a partner in the meantime is a great way to enter the Japanese market smoothly while you take your time to find the right candidate.

4. Different Types of Partners

• Business and marketing agencies
• Agent
• Distributor

A good partner should understand Western and Japanese culture and help you bridge the gap. There are not many partner candidates that satisfy this requirement for the Japanese market.

5. Finding the Right Partner

Below are some tips on how to find the right partner for your Japanese expansion.

• You can contact JETRO, an organization for Japan External Trade. They have lots of information regarding potential partner candidates and will recommend the ones suitable for your business. Also, feel free to ask us – btrax has many contacts in this area and can help you identify the best partner candidates. Not to mention we can also work with you as your partner if you so choose.
• Communication is key for ensuring business values and objectives are aligned. Your partner should have good communication skills to help you grow your business. Bilingualism is also important.
• Developing relationships in Japan takes a long time. One advantage of hiring a partner is that you can utilize the breadth and depth of their business network. If you find a partner that has done extensive cross-cultural work, they should have a valuable network that you can tap into by partnering.
• Your partner should have some industry track record in your area of business as well as experience working with both US and Japanese companies.

Photo by: Peter Thoeny

• Roadtrip: There’s only so much asking around you can do. Nothing can replace actually visiting the country and seeing the landscape in person to further understand your own needs.
• Size matters: Big agencies can be cost prohibitive for market testing, but partners that are too small may not have enough experience.

Relative to finding a good Country Manager, finding a good partner is easier. However, a good partner should be familiar with both Western and Japanese business cultures, and have a stellar industry track record.

btrax helps solve the language, culture and time zone problem of Japanese expansion by having offices in both San Francisco and Tokyo and employing a team experienced in Japanese market entry and localization.

Contact us today to start a conversation.

Going Forward

To setup your business in Japan quickly, partnering is a good option. Again, you will still need to build your Japan team and find a Country Manager eventually, but it takes time and money to find a good team. In the past, btrax Senior Advisor Hidemaru Sato has also worked with partners during the initial period of market expansion. For example, Expedia worked with btrax and smoothly transitioned into Japan, after which Mr. Sato joined as a Country Manager.

In Summary:

1. When it comes to Japanese market entry, now is a good time to take action.
2. Understand the market challenges and size
3. Partnering is a good option
4. Keep in mind common mistakes and key traits when you hire a Country Manager
5. Nothing is done 100% solo – help your Japan team achieve their best performance
6. Make your team feel valued – communicate!

Photo by: Nuno Martins