How to Bring Your SaaS Business to Japan: Key Concerns to Consider
Thinking of bringing your software as a service (SaaS) business to Japan?
Today, we take a brief look at key concerns when considering entry into Japan’s SaaS marketplace.
1. Fully remote vs. going local?
There are no particular regulations on selling software in Japan or to a Japanese audience. But the usual incorporation procedures apply for opening either a Kabushiki-Kaisha (KK) or a Godo-Kaisha (GK). Yet, some experts caution against setting up a physical office in Japan, pointing to the financial risks of doing so.
“Opening a Japan office is obviously a significant undertaking and can be a distraction from your core business. If you can find native speakers of Japanese in your area and have them join your team, that would be ideal. However, you may want to consider having them on a contract that is somewhat flexible in nature in case you later need to pull out of Japan to save costs. This has happened to several SaaS vendors in times of financial crises. The ones who survived often came back to the Japanese market years later to resume the process.” (Source: “Localizing Your SaaS into Japanese: A Primer,” Xtra)
Instead, they propose you hire freelancers who can understand the Japanese market, speak Japanese, and serve as your proxy in marketing and sales. Since you are selling a digital product, you won’t have warehousing needs. You will be able to operate with a fully remote freelance workforce, keeping costs minimal and pushing investment toward other essentials, such as localization and marketing—the two primary issues facing selling your software in Japan.
Still, if you are creating or have created software that addresses a Japan-specific need, then there’s a strong case to incorporate a company here. MakeLeaps co-founder Jay Winder writes about his journey doing so in this article, “Everything I’ve Learned about Selling SaaS in Japan.” MakeLeaps, an invoice software tool that helps businesses in Japan, won the Good Design Award in 2019.
Winder summarizes his experience as follows: “[Much] of what we’ve learned has only been possible because we’re on the ground and able to directly contact and interact with our customers. For a SaaS product targeting the Japanese market, you will absolutely need a team on the ground to get you the information you need for your build/measure/learn cycle. Success in Japan is very rarely achieved accidentally. In our experience, your realistic options are either to build a team in Japan, or to partner with a company in Japan experienced in market entry.”
Whether you establish a company here yourself or hire a remote team that will be your eyes and ears on the ground—building a competent bilingual team will be a definite challenge in either case, which we cover further below.
2. Localization and marketing considerations
Localizing your software will be one of the primary goals you must initially tackle. The difference between translation and localization is as follows: translation finds an equivalent meaning from one language to the next; localization addresses cultural and non-textual aspects to provide messaging that is meaningful to a local audience.
Machine translations might be sufficient for some aspects of your software as a service. Still, for marketing endeavors that aim to clinch sales—such as advertising, website copy, social media posts, direct sales letters, etc.—you will need to localize to suit Japanese business and consumer needs. Some localization sites to consider are LingoHub and Crowdin.
Marketing is another crucial consideration, and you may wish to hire an agency to help you with running ads or a social media campaign. If you are attempting to remain light on your feet, then consider hiring contractors in the copywriting, graphic design, and marketing fields, selecting those who are bilingual in English and Japanese.
Take note: Top-talent contractors who are also bilingual are rare because individuals with English and Japanese fluency get snapped up quickly into full-time positions.
Of course, if you are willing to hire full-time, pay industry-average salaries, and are prepared to incorporate your business in Japan, then your chances of finding and hiring bilingual top talent will further improve. In either case, establishing a strong team in Japan—full time or as contractors—is essential to winning sales and making sure that your service is meeting consumer needs.
An alternative solution to staffing issues is to use a bilingual virtual assistant service as a liaison point between your needs—as you direct from overseas—and your Japanese contractors. This setup will widen your talent pool considerably.
3. Understanding SaaS sales techniques for Japan
“In Japan, due to the long history of custom-made systems, and the existence of a large number of System Integrators who also do contract developments for smaller IT projects, many B2B customers in Japan expect some form of customization to fit their particular needs from SaaS vendors as well,” says Fuminori Gunji, TokyoMate’s CEO.
In a podcast-turned-3-part-article series, “Your Indispensable Guide to B2B Sales in Japan,” Gunji provides an in-depth look at B2B sales that draws from his prior experience running a SaaS as COO, as well as working adjacent to SaaS sales teams at Softbank Robotics and Ricoh.
"Decision-making in Japanese companies, especially if it’s mid-sized or bigger, is based on a collective decision-making process. For example, say you’re sitting across from a person in a room. You might be tempted to think, ‘This is the person who is in charge of the buying decision.’ That may appear to be the case based on the company’s organization chart, but the truth is, that person then goes back to the company and talks with their bosses and also the employees to reach a common agreement to make that decision. Therefore, even if you convince that person in the meeting room, your sales deal is still far from done. It’s not enough to impress only that person in the room.”
Gunji proposes you know and master the following steps for a successful sales call:
Show that you have common sense + that you understand the customer. Make it sound like what you provide is the new de facto standard of the industry because Japanese companies don’t want to fall behind.
Show cases of companies in the same industry. And if you can’t, create a case study and say, “Here’s a user case in a different industry with exactly the same problems that you have."
Find out the KPIs that their company cares about. Help provide the info they need to convince their bosses or subordinates and facilitate the collective decision-making in their company.
Offer to put on a sales demo. Conduct a presentation for the other stakeholders so that everyone gets the most powerful sales pitch directly from you, and not secondhand.
Pick a date for your next sales meeting at the end of each sales meeting. Say, “Let’s set up our next meeting where I will come back with the information you need.”
Further reading resources
Localizing Your SaaS into Japanese: A Primer, Xtra.global
Cloud computing in Japan (Regulations), Lexology
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