Five steps for SMEs wanting to export to Japan

Australia’s strong relationship with Japan has led to a broad range of opportunities for Australian SMEs wanting to export there, where consumer demand for Australian products is strong.

Australian SMEs with international aspirations that are looking to take advantage of the export opportunities available in Japan may find entering a new market can be a daunting process. But there are several steps SMEs can take to ensure their transition into the Japanese market is as smooth as possible.

1. Know the market opportunities

There is strong demand in Japan for what is produced by Australia’s mining, agriculture and services industries, providing great export opportunities for Australian exporters in these industries.

Japanese demand for Australian agricultural products has steadily increased over recent years. In 2014 alone, Japan imported $4.2 billion worth of Australian agricultural produce.  

Australian agricultural exporters are leveraging their strong reputation for quality, environmental sustainability and food safety, as well as the Japanese market’s demand for premium goods, to expand their export operations.

Mining is another industry offering great opportunities for Australian exporters. With Japan possessing few natural resources of its own, Australia’s mining industry has become an important supplier of minerals and energy to the country. In 2014, Australia’s exports to Japan included liquefied natural gas (approximately $14 billion), coal ($8.4 billion) and iron ore and concentrates ($1.6 billion).

2. Develop strong relationships

Seeking to establish relationships with potential customers is one of the first hurdles when entering a new market.

Taking the time to establish strong relationships with potential Japanese clients and partners is crucial for SMEs looking to succeed in this market. In Japan, committing to a valued partnership is just as important as a legal contract in establishing a successful export relationship.

3. Understand the cultural differences

When exporting to Japan, it is paramount to understand the local business culture and social customs to ensure you start your export relationship is off on the right foot.

When doing business, Japanese firms often place particular emphasis on business etiquette, respect and social rank. One such custom is the seating arrangements used in formal business meetings. The most important guests usually sit furthest from the door while the host sits closest to the door.

4. Tap into expert support

Receiving good quality advice is key to understanding any potential export barriers around entering the Japanese market and how to mitigate them.

Trade advisers can provide advice and support to Australian businesses operating in Japan on a broad range of export topics.

Austrade, the Australian Government’s trade and investment agency, provides a range of services for Australian companies seeking to grow their business in Japan.

Austrade’s advisers can provide Australian SMEs with support to identify possible partners and clients in Japan through its broad network of contacts.

5. Build a local network

According to the Australian international Business Survey 2015, sponsored by the Export Finance and Insurance Corporation, 61% of Australian SMEs are most likely to service the Japan market directly from Australia.

This model of going to market directly ensures you can retain complete control over your domestic export operation but does mean you may need ‘in-country’ partners to provide support.

Establishing a local network of partners can be an invaluable source of support when you need people on the ground to assist with challenges that may arise.

Australian SMEs looking to export to Japan will do well to take into consideration these steps to help make their transition into the market as easy as possible.

With the right research and preparation, Australian SMEs are well-positioned to take advantage of the many exciting export opportunities available in Japan.

For more information on exporting to Japan and further information about export-related finance, please visit Efic’s website to download a free eBook for SMEs on this topic, Exporting to Japan.

Andrew Watson is the executive director of export finance at the Export Finance and Insurance Corporation.