Marketing in Japan

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Marketing in Japan Japan has been an attractive destination for foreign business, and progressive businesses are aware that they need a presence there. Some of the walls that have protected Japan against foreign entry have been crumbling away, thus making Japan more accessible to foreign business. By 1998, only about 7 percent of Japan's GDP was related to imports, one of the few countries with a figure in single digits and the lowest figure amongst industrialized nations. With such a high GDP and a deregulating economy, this presents a huge potential, for American businesses.

The options for American firms wishing to enter the Japanese market are as follows: 100 percent ownership Establish a new plant of office (wholly owned subsidiary).

100 percent buyout of a Japanese firm (takeover).

Partial ownership Establish a joint venture (subsidiary) with a Japanese firm.

Purchase a controlling stockholding in a Japanese firm.

Purchase a minority stockholding in a Japanese firm.

No ownership Establish a supply relationship with a Japanese firm (exporter).

Enter into a licensing arrangement.

The dominant form of ownership amongst American business operations located in Japan is 100 percent ownership. However, as a measure of testing the waters, many American businesses opt for a joint venture as a vehicle to entry. If this strategy proves to be successful, then there is a strong tendency for firms to strengthen control over business in Japan. When this decision is made, most firms change their business form, moving toward 100 percent ownership.

Following WWII, Japan's trade and investment laws and foreign exchange laws set limits on the establishment of foreign firms in Japan. This included the prohibition of 100 percent foreign company ownership. Through the 1990's, a combination of foreign pressures and a troubled economy resulted in the Japanese government allowing freer access in a number...