How Do You Know Japan is the Right Market for You?  

Expanding into a new market is an exciting opportunity, but it comes with unique challenges—especially in Japan. With a large economy, broad market, and sophisticated consumer base, Japan offers immense potential for foreign businesses. However, this potential is balanced by the need to navigate strict regulations, unique consumer preferences, and high operational standards.

Before committing resources, it’s essential to validate whether Japan is the right market for your business. Careful preparation ensures you minimize risks and maximize your chances of success. This article outlines a step-by-step process to help you evaluate market potential, assess your readiness, and develop a solid plan—all before reaching out to local partners or stakeholders. By following these steps, you’ll be better equipped to enter this competitive but rewarding market.

Understanding Market Potential  

Your first stage is to identify why you want to enter the Japanese market and that it makes sense for your business to do so. Japan has some strict regulatory standards and unique consumer preferences, which unfortunately means that not all products can easily gain traction. Before taking the risk in a new market, it is important to understand what the risk is, what you are willing (and able) to invest, and if this is even the correct market for you.

Market Potential Checklist:   

• Assess your product viability for the Japanese market
  • Does your product meet Japanese consumer preferences, cultural norms, and tastes?
  • Are there existing competitors offering similar products? If so, how does your product compare to them?
  • Could you be competitive within the market?
• Evaluate the demand for your product
  • Have you identified any trends within the Japanese market that indicate that there is demand for your product?
  • Have you reviewed trade data, market reports and eCommerce trends to validate that the demand for your product exists?
• Review Regulatory Requirements
  • Would your product be subject to any import restrictions, certification, or compliance standards?
  • Have you reviewed what type of product adjustments need to be made for the Japanese market at a high level? (eg. Packaging, Labeling, Branding)
• Analyze your Opportunities and Risks
  • Does Japan’s economic environment, consumer behavior, and market trends align with your product?
  • Are there gaps or unmet needs in the market that your product can address?
  • What are the key risks involved in entering the Japanese market (eg. high competition, regulatory hurdles)?
  • What is your risk tolerance level for this expansion?
  • Have you identified what entry barriers exist for your product (eg. Language barriers, high operational costs, consumer preference)?

Readiness for Market Entry  

Once you have understood the Japanese market and initially validated it for market entry, it is time to evaluate your readiness for the expansion. Before launching into a new market, it is important to evaluate your current financials and capacity to ensure that you can realistically move forward. Setting clear and realistic sales goals and understanding the timeline for returns will help you gauge your readiness and plan effectively.

Market Readiness Checklist:

• Define Investment Capacity
  • How much time, money, and resources are you prepared to commit to market entry?
  • Can your business afford the potential upfront costs (eg. regulatory compliance, localization, taxes)?
  • Can your business handle potential losses or delays in achieving profitability during the market entry phase?
  • Have you allocated a budget specifically for this expansion effort? If not, is your company able to allocate a budget for this new market?
• Assess Operational Capacity
  • Is your production or supply chain equipped to meet increased demand from the Japanese market?
  • Can your team handle the additional workload associated with a new market, either to manage it internally or to outsource it to a trusted partner?
  • Have you reviewed your infrastructure (eg. customer support, fulfillment, after-sales) and identified what you need to invest in to support your Japan efforts?
    • Keep in mind that the Japanese market differs significantly from others, and resources or strategies successful elsewhere may not directly apply.
• Clarify Your Objectives and Define Goals
  • Why do you want to enter the Japanese market?
  • What specific goals do you aim to achieve (e.g., revenue growth, brand expansion, market share)?
  • What are your sales goals for the Japanese market? Are your sales goals realistic based on market research and financial projections?
  • Have you accounted for seasonal fluctuations or cultural factors that might impact sales?
  • What is your expected timeline for achieving a return on investment (ROI) in Japan?
• Milestones and Scaling
  • Have you set short-term, medium-term, and long-term milestones for market entry success?
  • How does entering Japan fit into your company’s broader growth strategy?
  • If your entry is successful, do you have the resources and processes in place to scale operations within Japan?

Develop a Go-To-Market Plan

With the first two steps completed, it is time to start developing your Go-To-Market Plan and reaching out to potential partners or stakeholders to discuss how to execute your plan. At this stage, it is vital to also start making some early decisions about your market entry in order to focus on your market approach.

Market Plan Checklist:

• Confirm Stakeholder Buy-In
  • Is your leadership team fully aligned on the decision to enter the Japanese market?
  • Have you secured buy-in from key stakeholders (eg. investors, partners, or internal departments)?
• Consult External Expertise
  • Have you sought input from market experts, consultants, or industry peers who understand the Japanese market?
  • Are you leveraging local insights or connections to validate your assumptions?
• Check Regulatory and Compliance Preparedness
  • Have you confirmed your ability to comply with Japan’s regulatory requirements for your product or service?
  • Have you identified local legal or regulatory advisors to help navigate compliance issues?
    • Some companies can perform a pre-market check on your products to identify if they will be able to enter the market, if product changes will be required and if there are any restrictions for marketing on your product.
• Evaluate Distribution Channels
  • Have you identified the most effective channels for selling your product in Japan (eg. eCommerce, distributor, wholesale)? Do you have a strategy for how to approach partnerships in these channels?
  • If selling on eCommerce, have you decided which platforms (eg. Rakuten, Amazon Japan, your own online store) you’ll prioritize?
  • If selling to a distributor or wholesaler, have you identified potential partners and created a sales development plan to approach business partners?
  • Have you identified how you will manage logistics, warehousing, and delivery in Japan? Or will you be testing the market via cross-border eCommerce first?
• Establish Your Marketing and Localization Strategy Foundations
  • Who are your primary customer segments in Japan (eg. demographics, purchasing behaviors, preferences), and what type of marketing do you need to reach them?
  • Have you evaluated your market or conducted market research? If not, have you identified a potential partner in Japan to support you with this?
  • Are there any changes needed to your product to resonate with your target audience better (eg. flavors, sizes, packaging)?
  • Do you have a plan to localize your product, branding, and marketing materials for the Japanese market?
  • Have you identified local partners, agencies, or freelancers for translations and cultural adaptations?
• Gauge Competitive Readiness
  • Have you analyzed competitors’ strategies and determined how you will differentiate your brand or product?
  • Are you prepared to compete on pricing, quality, or service where necessary?
  • Have you conducted an analysis of the market (eg. SWOT analysis, competitor benchmarking, online sentiment analysis)?
  • Do you have any outlines or style guides that you would like to apply to the Japanese market based on your research to improve your market positioning?
  • Do you require local support with execution and have you identified potential partners to support you?

Preparing for a new market is not an easy process, but Japan’s unique opportunities make it worth the effort. Thorough research, careful planning, and an understanding of the local business environment can lay the foundation for a successful entry. By validating your market potential, evaluating your readiness, and crafting a robust Go-To-Market plan, you ensure that your expansion is guided by data, insights, and strategic focus.

While there’s no single way to enter the Japanese market, one constant is the value of local expertise. Companies that collaborate with trusted local partners often navigate challenges more smoothly and build stronger connections with Japanese consumers. With the right preparation and support, you can unlock the potential of one of the most dynamic markets in the world.

Are you ready to take the next step? COVUE has helped over 500 international brands successfully bring their products to Japan. Contact us today to discuss how we can support your journey and make your market entry a success.