Japanese firms’ big play for the region

Regional – Last year saw Japanese brands coming out to Asia Pacific in a big way, with many Japan-based firms setting up new operations, partnerships or acquiring to reach these markets.

Traditionally a self-contained market, the last two years have seen Japanese firms and agencies turning their focus to the region in a big way.

For instance, in January last year, Panasonic finally established regional headquarters outside Japan for the first time, despite already having a significant presence in Asia for many years.

Previously all decision making and distribution came out of Japan, but the company finally launched its regional office to better serve its regional markets.

Hiroyoshi Suga, managing director, Panasonic Consumer Marketing Asia Pacific cites several factors for the move. Internally, new emerging markets such as Bangladesh, Sri Lanka, Cambodia and Myanmar offer high economies of scale and market opportunities, making it strategic to set up an APAC base in Singapore, he told Marketing. It also allows efficient resource allocation and ease in gathering market information.

From a macro perspective, factors such as the 2011 Fukushima nuclear disaster and appreciation of the Japanese yen have pushed firms to diversify and expand outside of Japan, adds Suga.

When asked if it meant the market was reaching a saturation point, Suga says opportunities are still available, but exponential growth is unlikely.

“The Japanese market is a developed one, established through Panasonic’s wide range of product categories. It has a strong consumer base with relatively high level of disposable income. The market size is at a stage where it is not able to expand exponentially, unlike in Asia Pacific. However, there are still market opportunities in Japan.”

Also, according to Japanese paper Yomiuri Shimbun, Japanese companies have come together in a larger marketing initiative to Southeast Asian markets, establishing a new TV channel under its “Cool Japan” campaign to broadcast exclusively Japanese content to these markets.

A local cable TV station has been reportedly set up in Singapore, though no details have been released. The initiative is aimed at renewing interest in Japanese culture and in turn, developing demand for Japanese products, eventually boosting its economy.

Agencies follow

The trend obviously extends to agency partners.

A massive and sophisticated market all on its own, the Japanese advertising industry is the second largest after America, taking up 10.5% of global ad spend in 2011, according to an Advertising Age study.

Japan’s largest airline All Nippon Airways also made its first agency appointment for Southeast Asia, hiring Dentsu Singapore for its marketing outreach to South Asia and Southeast Asia.

Meanwhile, Japan-headquartered Asatsu-DK(ADK) tied up with WPP’s Maxus, looking to leverage the latter’s network in Asia for Japanese marketers.

WPP CEO Sir Martin Sorrell said the network would be looking for more ways to collaborate with its Japanese partners and offer them improved access to services globally. The partnership will allow ADK’s clients direct access to media planning and buying duties across the region.

Neil Stewart, CEO, Maxus APAC said that while Japanese brands have already been a force in global brand leadership, a drop in local demand is forcing these brands to look overseas. “I think we are seeing a bigger push into Asia for the same reasons that all global brands are looking to Asia for.. growth. Lower domestic demand in Japan is forcing more and more brands to look outside Japan for growth.”

But it is facing steep competition. “At the same time we are seeing more from Korean and Chinese brands looking especially to South East Asia for growth,” added Stewart.

In possibly the most significant move, Dentsu bought European network Aegis Media for US$4.9 billion, creating one of the largest media buying groups in Asia Pacific and establishing a strong presence beyond.

Hakuhodo Consulting Asia Pacific, moved by the number of Japanese firms venturing into other Asian markets also launched this month, based out of Singapore.

A Clash of Cultures?

Kelvin Tan, chief marketing officer/head of human resources, Long John Silver’s says while Japan, like other developed nations, is facing social issues such as an aging and declining population, Japanese companies are sitting on trillions of cash (due to a tax game in Japan) and a war chest fattened by a stronger yen (against the dollar), also driving its acquisition spree.

“The feeling is to battle it outside a mature Japanese market, which is seeing slower growth than before,” said Tan. The Long John Silver’s franchise was recently acquired by Japanese firm Zensho Holdings.

As these firms and agencies move quickly into the region, will the country’s distinct organisational culture become an issue?

“Those who have ever worked for a Japanese business, will come to realize that its operational style, vaunted for efficiency and innovation, remain grounded in the Japanese way of management – this cascades down to their daily way of solving problems the kaizen way or adopting a nemawashi-ringi way of decision making,” says Tan.

From a management perspective, this might mean a higher relative challenge in transferring Japanese management style across cultures since the process of management is culture bound, and perhaps working with home agencies that originated in Japan would be an easy way to increase familiarity and efficiency more quickly, he adds.

Finally, will the move into APAC markets mean a decentralisation of decision-making for Japanese firms, long known for their highly bureaucratic nature?

For Panasonic, a spokesperson told Marketing that active communication between the product planning and marketing team stationed in Japan and regional companies would still be “crucial to ensure efforts are coordinated” and that decision making would be a “shared responsibility” between headquarters in Japan in regional companies in APAC.

However the person conceded that the company would not simply adopt Japan’s marketing strategy in a wholesale method “as consumer demographics are varied in APAC.”

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