Australian Companies – Building Relationships & Networking to Succeed in Japan

In the last two years there has been a notable increase in the number of Australian companies from a cross range of sectors that have made the decision to invest in their business with Japan through the establishment of an office or some other type of permanent physical presence in Japan. Previous JETRO publications have featured the successful entry stories of companies such as leading Australian executive search and selection company Carmichael Fisher which opened a branch office in Tokyo in November 2009 in order to fully cater to the local culture, establish strong relationships with clients, and support them throughout the recruitment process. Other examples have included ASX listed Dyesol, a Leading Supplier of 3rd Generation Solar Technology, and its establishment of Dyesol Japan Co., Ltd. (Kabushiki Kaisha K.K.) in December 2009 and Sydney based MyStaff, a developer of internet delivered fully integrated Human Resource Management System delivered as a Software as a Service (SaaS) that opened its Tokyo office in 2009 in order to closely collaborate and provide quality sales and technical support to their Japanese business partner and their network of clients both within Japan and China.

Articles have also highlighted the significant number of Australian companies that have taken advantage of economic and tax accounting laws and increasing investment in hotels/resorts and tourism related businesses over the past 5 years predominately in Japan’s most northern major island Hokkaido injecting an estimated US$300 million+, creating employment throughout the region.
The next few JETRO Australia published newsletters will feature the stories of three other Australian companies that have opened offices in Japan over the last 12 months. Companies to be featured include, Blake Dawson, a leading Australian law firm operating globally and employing over 1,500 staff, Lansa, a medium sized Sydney based software firm employing over 200 staff globally, The Australian Semiconductor Technology Company, ASTC, a relatively new Australian company established in 2008 and employing 10 staff globally with its headquarters in Adelaide. While the corporate size and industry sector as well as their individual respective experiences of initially entering Japan and working with customers is uniquely different, a key attribute to the success of each of these Cases is their long-term commitment to the Japan market through the building of relationships with new and existing Japanese business partners and clients.
Much has been written and emphasized about the importance of building relationships and trust with Japanese partners and customers in order to survive in the long-term. As an increasing number of foreign firms, particularly from America and the EU, establish a permanent presence in Japan allowing them to solidify their position and fully service the market while staying abreast of the competition and gaining direct feedback from sales people and customers. In the past trade barriers, tight commercial restrictions and a highly regulated market were major deterrents to foreign firms wishing to establish themselves in Japan but concerted efforts over the past ten years by the Japanese Government to attract to foreign investment has created a door for firms looking to make the most of opportunities in Japan for the long-term.

Background to Japan’s Increased FDI

Historically foreign direct investment (FDI) into a country leads to the introduction of new technologies and management know-how, and brings in new products and services that stimulate competition, leading to the formation of new markets and the stimulation of economic growth and employment. In an effort to overcome Japan’s stagnant growth, in January 2003 Prime Minister Koizumi Junichiro announced that in order to stimulate the economy through inward direct investment a "Program for the Promotion of Foreign Direct Investment into Japan" amongst various other measures would be launched to present Japan as an attractive destination for foreign companies with a view to doubling the cumulative amount of investment ([yen] 13 trillion) within five years. Concurrently the "Invest Japan" initiative was launched highlighting a list of objectives, essentially; (1) a review of administrative steps to clarify and simplify procedures necessary for investment, (2) improving the business environment by reforming the legal system to better facilitate cross-border corporate amalgamation and buyouts, (3) reforming immigration laws and otherwise building of an employment and lifestyle environment, (4) assisting local governments in aggressive efforts to lure foreign companies and laying the structural and legal groundwork between the central government and localities, as through the use of a special structural-reform zone system, (5) publication of investment information inside and outside the country.

As part of the Government’s commitment to the “Invest Japan” initiative, in 2003, the JETRO Business Support Center (IBSC) offices in Japan were also established. JETRO’s IBSC services provide free support to foreign companies looking to establish a physical presence in Japan. In most cases foreign firms invest in their local presence in Japan through the establishment of a branch or fully-owned office or through a collaborative alliance of some type including joint ventures or M&A. Specialist Advisers at the IBSC office are able to provide foreign firms with information about business registration, incorporating options and procedures, taxation/accounting, recruitment and employment of local staff and respond to other market entry and establishment questions. JETRO IBSC Offices also provides new entrants free temporary office space for up to 3 months. In order to take advantage of this service initial consultation with the JETRO Investment Adviser in the country of the Company’s head quarters is necessary.