“Localize” to Make the Most of Opportunities in Japan

Timothy Paul Kennedy, Edmund Optics

Like the rest of the world, Japan is experiencing its share of economic setbacks. Despite the recent announcement of a fourth-quarter 2008 decline in gross domestic product at a 12.7 percent annual rate, however, certain segments of the photonics industry appear to be weathering the storm better than most. The key to making the most of these opportunities is to establish a strong local presence in Japan.

Edmund Optics (EO) already has been in Tokyo – the company’s oldest international sales office – for 15 years, which has established a strong foothold for EO in the Asian market, where it is highly regarded as a service company in every country it does business. And business is still good. As a result, EO will be announcing an increase in its presence in Japan in early 2009.

True, many of the Japanese markets are in flux. The huge semiconductor market in Japan is experiencing waves as the economy recedes from former projected increases in sales. But companies that service a multitude of market segments aren’t being hit nearly as hard. The flat panel display market is down, for instance, but the solar market is looking very healthy, with continued growth in production of photovoltaic panels.

For example, Toyota is planning to install solar panels on its high-end, third-generation Prius hybrids, which should be released next year. This makes Toyota the first major car manufacturer to incorporate a solar power generation system into a mass-produced car. These solar panels, in turn, will be supplied by Kyocera, which plans, in two years, to open a large-scale solar cell manufacturing facility in Yasu City. It will be the Kyocera Group’s largest manufacturing facility in Japan.

Biomedical applications in Japan also are on the rise, as are new automotive technologies that use such things as fiber optics in engine and electronics development. Most of this activity is on the development side for improving efficiency in automotive manufacturing. In both application areas, photonics technology has helped generate interest and growth, particularly in the optics used in inspection equipment for the manufacturing process.

And it’s not just manufacturing companies that are fueling Japan’s growing interest in photonics. Research and development facilities, educational institutes and universities have all multiplied throughout the country. They are also key customers for photonics components and equipment. Both government and universities continue to make investments in photonics technology and research.

Taking advantage of these growth opportunities, however, will require “localization.” To effectively do business in Asia – and in Japan in particular – a company will need a strong sales and marketing presence as well as a manufacturing presence throughout Asia. Having this local presence will allow a company to effectively relate to its customers while providing them with world-class service.

Localization can be an enormously successful international strategy. Even if a company’s Asian customers are English-speaking, the fact is they feel much more comfortable communicating in their local language. In EO’s experience, for instance, some of its strongest sales tools have been the multiple translations of its catalog and web site.

Finally, establishing a physical presence in Japan allows a company to keep inventory readily available for quick delivery so it can effectively compete with strong companies already based there. Unlike many Western countries, Japanese customers often require on-site availability of both sales and technical staff, and a local presence helps a company offer the better and faster service that can give it that competitive edge. As we all know, the faster you can deliver a product or service, the more successful you will become. Especially in the Asian markets, localization is the key.

Meet the author

Timothy Kennedy is Edmund Optics’ vice president of sales in Tokyo.