Termite Control Technologies in Japan: A Strategic Reference, 2006
ICON Group International, July 2007, Pages: 75
How to Strategically Evaluate Japan
Perhaps the most efficient way of evaluating Japan is to consider key dimensions which themselves are composites of multiple factors. Composite portfolio approaches have long been used by strategic planners. The biggest challenge in this approach is to choose the appropriate factors that are the most relevant to international planning. The two measures of greatest relevance to termite control technologies are “latent demand” and “market accessibility”. The figure below summarizes the key dimensions and recommendations of such an approach. Using these two composites, one can prioritize all countries of the world. Countries of high latent demand and high relative accessibility (e.g. easier entry for one firm compared to other firms) are given highest priority. The figure below shows two different scenarios. Accessibility is defined as a firm’s ease of entering or supplying from or to a market (the “supply side”), and latent demand is an indicator of the potential in serving from or to the market (the “demand side”).
Framework for Prioritizing Countries
Demand/Market Potential Driven Firm
Relative Accessibility
Accessibility/Supply Averse Firm
In the top figure, the firm is driven by market potential, whereas the bottom figure represents a firm that is driven by costs or by an aversion to difficult markets. This report treats the reader as coming from a “generic firm” approaching the global market - neither a market-driven nor a cost-driven company. Planners must therefore augment this report with their own company-specific factors that might change the priorities (e.g. a Canadian firm may have higher accessibility in Canada than a German firm).
Latent Demand and Accessibility in Japan
This report provides a detailed overview of factors driving latent demand and accessibility for termite control technologies in Japan. Latent demand is largely driven by economic fundamentals specific to termite control technologies. This topic is discussed in Chapter 2 using work carried out in Japan on behalf of American firms and authored by the United States government (typically commercial attachés or similar persons in local offices of the U.S. Department of State). I have included a number of edits to clarify the information provided. Latent demand only represents half of the picture. Chapter 2 also deals with micro-accessibility for termite control technologies in Japan. I use the term “micro” since the discussion is focused specifically on termite control technologies.
Chapter 3 deals with macro-accessibility and covers factors that go beyond termite control technologies. A country may at first sight appear to be attractive due to a high latent demand, but it is often less attractive when one considers at the macro level how easy it might be to serve that entire potential and/or general business risks. While accessibility will always vary from one company to another for a given country, the following domains are typically considered when evaluating macro-accessibility in Japan:
Openness to Trade in Japan
Openness to Direct Investment in Japan
Local Marketing and Entry Strategy Alternatives
Local Human Resources
Local Risks
Across these domains, a number of not-so-obvious factors can affect accessibility and risk. These are covered in Chapter 3, which is a general overview of investment and business conditions in Japan. Chapter 3 is also presented from the perspective of an American firm, though is equally applicable to most firms entering Japan. This chapter is also authored by local offices of the U.S. government, as is Chapter 2. Likewise, I have included a number of edits to clarify the provided information as it relates to the general strategic framework mentioned earlier.
1 INTRODUCTION & METHODOLOGY 1
1.1 What Does This Report Cover? 1
1.2 How to Strategically Evaluate Japan 1
1.3 Latent Demand and Accessibility in Japan 3
2 TERMITE CONTROL TECHNOLOGIES IN JAPAN 4
2.1 Latent Demand and Accessibility: Background 4
2.2 Latent Demand: Market Composition 4
2.3 Market Data 4
2.4 Latent Demand: Leading Segments 4
2.5 Key Suppliers 5
2.6 Prospective Buyers 5
2.7 Accessibility: Market Entry 5
2.8 Market Issues and Obstacles 6
2.9 Accessibility: Trade Event 6
2.10 Key Contacts 6
3 MACRO-ACCESSIBILITY IN JAPAN 8
3.1 Executive Summary 8
3.2 Economic Trends and Outlook 9
3.2.1 Dynamic Markets 10
3.2.2 Agricultural Production 15
3.2.3 Government Intervention Risks 15
3.2.4 Infrastructure Development 16
3.3 Political Environment 17
3.3.1 Economic Relationship with the U.S. 17
3.4 Marketing Products and Services 18
3.4.1 Distribution Channel Options 18
3.4.2 Pricing Issues 19
3.4.3 Use of Agents/Distributors and Finding a Partner 19
3.4.4 Franchising Activities 20
3.4.5 Direct Marketing Options 21
3.4.6 Joint Ventures and Licensing Options 21
3.4.7 Creating a Sales Office 23
3.4.8 Selling Strategies 24
3.4.9 Advertising and Trade Promotion 24
3.4.10 Public Sector Marketing 26
3.4.11 Hiring Local Counsel 27
3.4.12 Due Diligence and Checking Bona Fides 27
3.5 Trade Regulations, Customs, and Standards 28
3.5.1 Customs Regulations 28
3.5.2 Controls on Exports 31
3.5.3 Local Standards 31
3.5.4 Technical Regulations 32
3.5.5 Product Liability Law 34
3.5.6 Free Trade Zone Options 34
3.5.7 Adherence to Free Trade Agreements 34
3.5.8 Additional Trade Issues 34
3.6 Investment Climate 35
3.6.1 Liberalization of Investment Restrictions 37
3.6.2 Limitations on Facility Development and Availability of Investment Real Estate 37
3.6.3 Corporate Tax Treatment 38
3.6.4 Investment Incentives 38
3.6.5 Conversion and Transfer Policies 39
3.6.6 Expropriation and Compensation 39
3.6.7 Dispute Settlement 39
3.6.8 Performance Requirements and Incentives 40
3.6.9 Right to Private Ownership and Establishment 40
3.6.10 Protection of Intellectual Property Rights 40
3.7 Transparency of the Regulatory System 41
3.7.1 Capital Markets and Portfolio Investment 42
3.7.2 Environment for Mergers and Acquisitions 42
3.7.3 Bankruptcy Laws 45
3.7.4 Credit Markets 45
3.7.5 Political Violence 45
3.7.6 Corruption 45
3.7.7 Bilateral Investment Agreements 46
3.7.8 OPIC and Other Investment Insurance Programs 47
3.7.9 Labor 47
3.7.10 Free Trade Zone Options 47
3.7.11 Major Foreign Direct Investments by Foreign Companies 48
3.8 Trade and Project Financing 49
3.8.1 The Banking System 49
3.8.2 Foreign Exchange Control Risks 50
3.8.3 Financing Exports 51
3.8.4 Types of Available Export Financing and Insurance 51
3.8.5 Availability of Project Financing 52
3.8.6 Project Financing Options 53
3.8.7 Banks with Correspondent Banking Arrangements 53
3.9 Travel Risks 54
3.9.1 Travel Advisory and Visas 56
3.9.2 Work Week 56
3.9.3 Infrastructure for Conducting Business 56
3.9.4 Entering Temporary Imports 56
3.9.5 Country Data 56
3.10 Key Contacts 57
3.10.1 U.S. Embassy Trade Personnel 57
3.10.2 Contacts in Washington D.C. 59
3.10.3 Japanese Trade Associations/Chambers of Commerce 60
3.10.4 Agricultural Trade Associations 62
3.10.5 Japanese Government Agencies 63
3.10.6 Market Research Firms 64
3.10.7 U.S. Federal Government 65
4 DISCLAIMERS, WARRANTEES, AND USER AGREEMENT PROVISIONS 67
4.1 Disclaimers & Safe Harbor 67
4.2 Icon Group International, Inc. User Agreement Provisions 68
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