TOKYO -- Tai-Young Lee left Japan yesterday for Baltimore after spending 10 days on what is often portrayed as the business equivalent of mission impossible -- cracking the Japanese market.
His Inner Harbor-based marketing company, PTC International Inc., sells several million dollars a year of diversified products in other Asian countries such as Korea, Singapore and Malaysia as well as Hong Kong, but sales to Japan remain stuck in the tens of thousands of dollars range.
"We're here to learn more," Mr. Lee says. "We realize it is not easy."
Paving his way, at least temporarily, is the semi-governmental agency, Japan's External Trade Organization -- originally given the English acronym JETRO -- to promote exports. More recently, though, it's been charged with reducing Japan's controversial trade surplus by encouraging external trade, or in more common language, imports.
Because of his wide experience throughout Asia, Maryland nominated Mr. Lee to fill one of 10 slots in the program offered to Americans, and the request was accepted.
JETRO takes care of the rest, providing a $20,000 gold-plated invitation including an all-expense paid flight, a room at the posh ANA Hotel, and a slate of introductions to important government ministers, business people and market experts. Equally important, JETRO arranged introductions to companies Mr. Lee indicated a desire to see.
"It is a little embarrassing that Japan's taxpayers are financing all this," he said, adding that the entire education thrust is in sharp contrast to the methods employed by America to help businesses break into the Japanese market.
"They pump all their resources into sending Washington lawyers to pressure Japan," he said. "If the U.S. government wants to promote trade, they should do more informing us about the Japanese market."
"No one" on the U.S. side, he adds, "who is in a position to tell me what the Japanese market is like has told me what the Japanese market is like, so I assume they don't know."
There is an extraordinary amount to learn. It is no news that the Japanese market is demanding and complex. Mr. Lee reckons that the filling station equipment, foods and medical equipment he sells are easily 30 percent to 40 percent cheaper than what is available here, and perhaps even 70 percent cheaper. But in his initial meetings he has already confronted the tight web of relationships tying together corporate buyers and suppliers.
"I tell them it is in their interest to buy from us," he said. Whether that will be enough is unclear.
With Japan buffeted by its most severe post-World War II recession, businesses are suddenly searching for cost savings. That should, theoretically, create an opening for efficient U.S. producers. Should. Interviews over recent weeks with many Japanese businesses suggest that the openings may not come easily. Undermining long-term relationships because of what may be short-term pain is not looked at as a good solution. Moreover, there is a willingness for industrial partners to share pain.
Mr. Lee doesn't view these barriers as a conspiracy, nor impregnable, nor even irrational. "We have to convince them [Japanese customers] we are providing valuable services, not just products."
Doing so will take time. Sales that would take 6 months in Korea and Hong Kong, Mr. Lee reckons, may take two to three years in Japan. And his optimism is muted. Companies trying to sell in Japan need either relationships or money, and preferably both. An office would be good, but a consultant hired by JETRO told the 30 business executives attending the program that $1 million might not last long in such a high-cost country. To justify expenditures like that, Mr. Lee believes he would have to generate about $2 million to $3 million in sales -- too big a risk.
Instead, he'll remain in contact with perhaps a dozen contacts made on this trip, in addition to the three active buyers he has in the market now. A health food distributor interested in food for diabetics that Mr. Lee distributes made a late night call and sales prospects are good; a few other solid leads have emerged.
Inefficiency pervades the Japanese business systems, Mr. Lee said, a consequence of the tremendous efforts to achieve perfection.
Perhaps some lower cost, but still high quality, parts will be attractive to the Japanese because it will enhance prospects of selling the entire unit to a third country. But a crucial lesson from the trip was how refined his products have to be -- from the fold in a manual to precision in a promise.
Most importantly, Mr. Lee said relationships will have to be cultivated to a far larger degree than anywhere else in Asia. "The big difference is in group behavior," he says. "The longer term human bonds are stronger".