International expansion is essential, especially for startups with unicorn ambition. There is usually a level of predictability to which modern innovators tend to focus on when planning to go global. Kavan Choksi mentions that Europe, the US, and China are popular markets due to their high purchasing power and sheer market. In the recent years, the prominence of Japan as a destination for business expansion has also gone up.
Kavan Choksi discusses how it can be a smart move to expand startup operations in Japan
Japan is a pretty stable economy with good purchasing power. In 2021, it had a population of 127 million enjoys a per capita GDP of around $41,000, which was just a bit below than the UK’s $44,000. The Japanese are additionally quite technologically advanced as a society and tend to be keen to adopt new innovations. At the same time, there are many areas where Japan is behind the digital curve, which presents incredible opportunities for international innovations. One of these examples would be payment, as around 80% of transactions are still made in cash in Japan. Fintech is another domain where there is a large scope of innovation. While Japan’s megabanks dominate the financial services, they do lag in digital services.
The willingness of Japanese companies to consider international solutions has grown quite a bit over the years. Traditionally, they used to have a mentality of always trying to develop and build everything in-house. But these businesses have woken up to realizing that they cannot continue to with that strategy as the rest of the world would otherwise pass by them. The Japanese society has also become more open to startup culture in the recent years, which makes it simpler for them to hire local talent. The lack of risk taking was the primary view in Japan up to a decade ago, with young talent prioritizing job security over taking a career risk by joining a startup. Moreover, it also used to be difficult to find entrepreneurial talent with international experience in the nation. Local entrepreneurs in the country predominantly stuck to business within Japan, and benefited from it are from its notable market size. But things have changed quite a bit in recent years. For ambitious startups today, there are many partnerships to forge, opportunities to explore, and profits to be made in Japan.
However, before gearing up to expand the operations of a startup in Japan, it is important to take time to understand Japanese markets and consumers. Proper research and preparation are extremely important when entering any new market, including Japan. Japanese consumers have high standards in regard to the services and products used by them. Moreover, their needs and taste can be quite different from the ones in the Western nations. Therefore, as suggested by Kavan Choksi people need to properly understand the segment they are trying to serve, what works and what doesn’t, and the preferences of the target audience, prior to making any plans for business expansion. Choksi is an experienced and knowledgeable business expert.