Japan is known as an exporter. Japanese companies have grown by capturing global demand by expanding overseas. We examined the impact of overseas expansion.

Impact of overseas expansion on companies

Since the Great East Japan Earthquake, many companies have been dispersing their production bases in Japan. It has also been pointed out that overseas expansion has accelerated due to rising electricity rates. Japanese companies’ overseas expansion also has an impact on profits.

One of the advantages of expanding overseas is that we can globalize our products and services. In Japan, many American companies such as Twitter and Facebook provide services. These companies focus on a single service, not a variety of products.

On the other hand, few companies in Japan will grow their companies in the long run by providing only one service. Japanese companies release new services one after another to catch up. This is because revenue from just one service cannot support the company.

However, by expanding overseas, we can focus on one service and provide products. The domestic market is shrinking and demand is limited. If we can concentrate on one product by expanding overseas, we can improve the quality of our products.

American companies, which have a large number of start-ups, are also concentrating their technologies in niche markets. The major difference between global and domestic markets is the size of the market. If you plan to expand globally from the beginning, the market scale will naturally increase.

Japan already has a large market where overproduction and competition are repeated mainly by large companies. The competition for price reductions will make it difficult to secure profits. It may be wiser to set the stage overseas.

risk of being affected by overseas economies

There is also the possibility of incurring risks by expanding overseas. For example, there may be times when overseas economies decline, or when overseas demand decreases and exports decrease. It also costs a lot to expand overseas.

There are costs at the stage of information collection and marketing, but you also need to consider the establishment cost and labor cost of a corporation. Even with these costs, I don’t know if our overseas expansion will get off the ground. In recent years, there have been cases in which large losses have been incurred in the pursuit of global expansion, such as in the case of Mercalli.

One of the reasons why overseas expansion has failed is that it is difficult to retain human resources. The idea of working for one company is a minority overseas. Because of this, the labor market is fluid, and if you are dissatisfied with the employment conditions or are offered a job by a company with better conditions, you will leave the company immediately.

When you go overseas, consider the risk of losing personnel, and consider providing adequate treatment and career opportunities.

Key Points for Successful Overseas Expansion

Key Points for Successful Overseas Expansion
For a company, expanding overseas is an opportunity to significantly change its business structure and management. The key to successful overseas expansion is not to regard overseas expansion as an extension of domestic operations. The Japanese market and the global market are completely different in terms of lifestyle customs, culture and employment patterns.

In particular, successful companies in the country cannot give up their success experience. As a result, it is not uncommon for companies to stick to their existing values and fail to expand overseas. Rather than thinking of setting up overseas bases for Japanese companies, it is necessary to reinvent all of our business strategies to suit the local situation.

Overseas expansion also means developing new, completely unknown markets. Market research can be costly and time-consuming. Consider selecting local partners for overseas expansion.

In order to expand overseas, participating in local exhibitions is also an effective way. Because attention is focused on technologies and services that are not available in the country, they can be used to build local networks. You can also use a local agency.

There is also a strategy to expand overseas through M & A. For example, Japan Tobacco entered into a 2.25 trillion yen merger and acquisition with a British tobacco maker. Conversely, there are cases where overseas investment funds acquire Japanese companies through M & A. The advantage of M & A is that we can quickly expand overseas and develop overseas markets.

Summary

Overseas, products and services that are unthinkable in Japan can be successful. There are cases where things that are common in Japan are not common overseas. The development of products and services for overseas markets will have a considerable impact on our domestic business. In addition, the development of sales channels and overseas product development will be fundamentally different from businesses targeting only the Japanese market. Make sure you plan your business strategy with globalization in mind.

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