MONEY TALKS
Foreign invasion
Major overseas
retailers are advancing into Japan. Will Japanese consumers welcome the influx of foreign
capital? Melanie C.
Redmond finds out.
With Thanksgiving, Christmas, Hannukah and
New Year’s Day fast approaching, people are gearing up for the shopping season.
Whether you’re in the market for an American turkey small enough to fit in your tiny
Japanese oven, or books to give as a Christmas gift, a deluge of foreign companies that
are ready to take your order have recently taken up residency in Japan. Annual sales of
large-scale retail shops in Japan topped JY23 trillion last year, which means that setting
up shop on Nippon soil can be a very profitable move for a foreign company.
In December 2000, French supermarket chain operator Carrefour will open its first branch
in Chiba's Makuhari district, and America's Costco, a wholesaling company which opened its
first outlet in Fukuoka Prefecture last April, has plans to open a second store in
Makuhari, Chiba Prefecture on December 13. What is the motivation for all of these foreign
invasions? For Carrefour and Costco, the incoming deluge of foreign interests comes on the
heels of the successes in Taiwan, China, and South Korea in the late 1980s and 1990s.
Acknowledgement of the real power of foreign firms such as Carrefour and Costco and
attempts to meet their challenge by Japanese supermarket chains has come only very
recently. For Internet book mavens amazon.com and bol.com, the motivation lies with
Japan’s estimated JY350 billion market for e-commerce.
Amazon.com started its first retailing venture in Asia two weeks ago when it created a new
Japan-based site, www.amazon.co.jp The new site
(written in Japanese, prices in US$ and JY) will offer 1.7 million titles in Japanese and
English, and a few thousand in other tongues. Junichi Hasegawa, a former manager at
PeopleSoft Inc.’s Japan unit, will lead local operations. It doesn’t offer
everything the US version does - the books are the main draw - but the company insists
that it will expand its product line (likely beginning with CDs and videos) some time in
2001. The website is easier to navigate and somewhat more attractive than other online
Japanese bookstores, and that is what Amazon is hoping for. Another way to lure customers
in is through discounts, and until the end of the year Amazon will offer a 30 percent
discount on all English and foreign language books and offer free delivery.
Another recent invader into Japan’s consumer market from the Internet is the media
and entertainment company Bol. The Japanese site (www.jp.bol.com)
was launched in June 2000 and offers 500,000 Japanese book titles, and will soon
expand to include an assortment of videos, DVDs, and games. Bol Japan is based in Tokyo,
and operates as a joint venture with Kadokawa Shoten, a leading publishing house here in
Japan. Managing Director Isao Tanaka will head up operations. Bol has many other sites in
Europe and Asia, and all US dealings are handled by sister company Barnes and Noble (www.bn.com). With Japan being the world’s second
largest book market, more foreign retailers are sure to follow Amazon and Bol’s lead.
Certainly, major advances by Western companies have experienced difficulty in Asia, but
overall their story has been one of success. Here, checks and balances are provided by the
ever-present Japanese partner or stockholder, but since they are thought to pose a threat
to Japanese firms, domestic players still need to be vigilant. However, regardless of
product, foreign retailers have an important role to play in Japan - increasing
competition and raising the nation’s standard of living by promoting the economy.
They do this by offering new technologies, products and services and investing, which
helps internationalize the Japanese economy and promote structural reform.
If you’re interested in the dealings of non-Japanese companies in Japan, a trip to
the homepage of the Success Stories: Japan newsletter (www.successstories.com/current.htm)
will quench your thirst. It is self-professed as the world’s only publication
exclusively dedicated to helping non-Japanese companies and executives in any industry
compete more effectively in Japan.
Money Talks was compiled using CNNfn.com, Reuters and the Economist (November 7,
2000). |
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