Since the 1980’s, Japanese investment in the United States has climbed consistently. According to a 2013 report by the Bureau of Economic Analysis of the U.S. Department of Commerce, foreign direct investment from Japan reached $308.3 billion the previous year, making the Asian country the second–largest source of FDI.
On the other hand, the United States has been the largest contributor of FDI in Japan. That same report states that American FDI rose to $134 billion in 2012, an increase of 6.3 percent from the previous year.
With the rise of China the past 20 years, many companies seem to overlook Japan in their Asian expansion plans. But, there remain some American firms that firmly believe in the wisdom of entering the Japanese market, particularly those from the technology sector.
Yahoo!, Evernote and Salesforce.com are among those American companies that have overseen success in entering Japan.
“From the beginning, Evernote and its leaders had a genuine love for Japan, one of the reasons for our success. (Japan) is a big source of innovators and talent, and we have developed win-win relationships with our local partners,” said Evernote Japan Chairman Hitoshi Hokamura.
In the wake of those success stories, other U.S. companies have been inspired to duplicate those experiences.
“Japan is a great entry point for us into Asia Pacific because of the sophistication of technology within its culture. That environment allowed us to find high quality partners that understood the value of our product right away,” explained Livescribe Chief Executive Officer Gilles Bouchard, whose company designs and manufactures “smartpens.”
Livescribe’s smartpens are able to convert handwritten notes and recorded audio files into digital format that is accessible through various devices.
Given how discriminating the typical Japanese consumer is, only the most innovative American tech products have a chance of making a significant impact on the market.
“You cannot get away with mediocre service especially in Japan, where it is very sophisticated with fast moving businesses. It is great for us to be exposed to that because of the influences it has on our companies,” said Leslie Stretch, Chief Executive Officer of CallidusCloud, a leading provider of sales and marketing effectiveness software.
A fellow American technology entrepreneur believes in agility and flexibility.
“Success in Japan requires localizing our product to that market. We made that investment early, and that has accounted for our success in Japan,” said Howard Ting, Vice President of Marketing and Product Management of Nutanix, a developer of state-of-the-art infrastructure specifically for business data centers.
So, a new breed of American corporate leaders has made a strong push toward gaining a better understanding of the intricacies and nuances of doing business in Japan.
“About five or 10 years ago, most U.S. businesses going to Japan that we took care of were mostly online services or software or mobile apps. Now, things have shifted toward business models that never existed in Japan,” said Brandon K. Hill, Chief Executive Officer of btrax, Inc. an integrated marketing services firm that help American companies set up operations in Japan.
“Japan is a great entry point for us into Asia Pacific because of the sophistication of technology within its culture. That environment allowed us to find high quality partners that understood the value of our product right away”
- Livescribe Chief Executive Officer Gilles Bouchard
“If you look at the examples of Airbnb, Square or Uber, those companies provide services that never existed in Japan. U.S. businesses used to simply provide better services than those that already existed in Japan. But today, more innovative services are getting to the market,” Hill added.
As innovation takes center stage, many U.S. companies have looked toward Japan as an excellent expansion location.
“Japan is the market we are investing most heavily in outside of the United States. It is possible for American companies to be extremely successful in Japan if they dedicate themselves to the task, and approach the market in an appropriate way,” pointed out Dan Levin, Chief Operating Officer of Box, a cloud-based storage and platform provider.
This renewed enthusiasm in doing business in Japan has been infectious among new American companies.
“Japan is the most important geographical region for our expansion in 2014. We are taking a deliberate approach into the Japanese market,” said Giacomo Marini, President and Chief Executive Officer of Neato Robotics, a maker of smart household cleaning robots.
The interest in Japan has extended beyond the IT companies. Efforts by the Japanese government to ease regulatory barriers into the Japanese market have ignited excitement in the medical technology industry also.
Based in Northern California, medical device makers Spiracur, Vital Connect and Proteus Digital Health have embarked on plans to offer their unique products to Japanese patients.
With business between Northern California and Japan predicted to rise in the longterm, Japan’s All-Nippon Airways began to operate two routes to and from the Bay Area, with flights from either San Francisco or San Jose.
“When we started operations back in 1998, our passengers were 98 percent Japanese. Today, we see that ratio divided 50-50,” said ANA San Francisco and San Jose Office Sales Director Hiro Yamada.
On a larger scale, the Japanese carrier has also positioned itself to service the expanding passenger traffic between the Americas and Asia. A successful joint venture with American carrier United Airlines for selected trans-Pacific routes has increased capacity and coverage of the two airlines.
That combination of opportunity and accessibility has created the optimum conditions for both Japanese and American companies to develop their businesses overseas.
Whether it be in venture capital, consultancy or food, California-based firms such as SunBridge Partners, AZCA Inc., Scrum Ventures, Turnstone Ventures, Cross Cultural Communications, RedBay Consulting and Sugimura Intellectual Property Services have seen positive results in their trans-Pacific business.
“We have tremendous opportunity to bring American companies to Japan. It is my honor and enjoyment to see American and Japanese companies succeed,” said philanthropist Nobuko Saito Cleary, who is also Chief Executive Officer and President of consultancy firm Cross-Cultural Communications.
The thriving business between both countries has also facilitated notable cultural and charitable exchanges.
Saito Cleary is also chairperson of Japanese Programs of the Community School of Music and Arts in Mountain View California, where she hosted former first lady of Japan Kayoko Hosokawa during a special concert that featured musicians with autism from both countries.
Clearly, the growth of business between Northern California and Japan is showing no sign of slowing down.
- Originally prepared by Global Media for The Japan Times Special Report on Northern California 2014 (Credit: Philippe Le Saux)
