Entering the Japanese Market for SaaS Companies – Key Points and Practical Steps

Japan is a highly mature economic superpower, yet the language and cultural differences pose significant entry barriers for foreign B2B companies, including SaaS providers. However, the allure of the domestic market is immense, and with proper preparation and the right approach, this challenging market can be conquered.

Despite being the fourth-largest economy globally, Japan faces a delay in digital transformation (DX). According to a Ministry of Internal Affairs and Communications survey, approximately 60% of Japanese companies need to catch up in DX, with slow adoption of advanced technologies like SaaS. Moreover, the country's rapidly ageing population exacerbates the chronic labour shortage. As a result, improving operational efficiency and productivity has become a common challenge for businesses, driving up the demand for SaaS solutions.

On the other hand, the government is implementing robust measures to promote digitalisation, including establishing the Digital Agency and allocating substantial budgets for DX initiatives. This environment has created significant business opportunities in cutting-edge technology fields such as AI, cloud, and SaaS.

With the convergence of Japan's DX delay and the government's strong support measures, the Japanese B2B market presents allure and challenges for foreign IT/technology companies, including SaaS providers. This article outlines practical tips for entering the Japanese market based on insights from Yuichi Ishino, the managing director of TAMLO, a content marketing agency.

Step 1: Communicate Concrete Value

"Japanese companies are highly pragmatic and cautious when adopting new solutions. Therefore, it's crucial to offer specific solutions to their actual challenges." (Yuichi Ishino)

For example, manufacturers struggling with labour shortages could benefit from SaaS solutions leveraging AI and RPA for business automation. Simulations can demonstrate potential cost savings and productivity improvements, and quantifying the benefits adds credibility.

For the financial industry, emphasising the high level of security compliance by presenting certifications demonstrating adherence to industry-standard cloud security regulations can be compelling. Additionally, sharing real-world implementation case studies and pilot quantitative results can be highly effective.

Step 2: Build a Reliable Ecosystem

"In Japan, system integrators and IT vendors, including SaaS, often play a crucial role in implementing solutions. While partnering with large enterprises is essential, selecting the right partners aligned with your business model is equally important." (Yuichi Ishino)

When choosing system integrators, evaluate their understanding of your SaaS solution, commitment to sales support, and industry expertise. When selecting IT vendors, ensure their service products complement yours without overlap and build relationships with their executive team.

Invest in technical validation, mutual staff development, and information-sharing mechanisms related to SaaS. Committing resources transparently on both sides is crucial.

Step 3: Acquire Top Talent and Localise Thoroughly

"Securing top Japanese talent can make or break your success. Offering a career path as full-time employees, rather than relying on temporary or contract workers, is essential."(Yuichi Ishino)

During recruitment, prioritise not only language skills but also industry knowledge and an understanding of business culture in IT, including SaaS. Practical localization training beyond language lessons, such as role-playing scenarios and meetings with local companies, is indispensable for foreign staff.

Moreover, actively pursue new graduate hiring and internship programs to attract promising students and ensure a continuous talent pipeline. Training programs and improved compensation should also be invested in to retain talent.

Step 4: Build a Local User Community

"Cultivating a local user community and fostering engagement is crucial in the SaaS business. When establishing a foothold in Japan, strategically organise user events, manage social media communities, publish vendor-independent content, and more." (Yuichi Ishino)

Host case study seminars and events involving practitioners from user companies and influential partners. Employing community management staff or influencer marketing can also be effective. Such approaches build trust and brand recognition, ultimately leading to adoptions.

While localising the business heavily relies on human resources, building a user community is an equally important step. Companies must commit their resources to this effort.

Long-Term Commitment Is Key

As outlined above, entering the Japanese market requires a multi-faceted and persistent approach. Considering the cautious nature of Japanese companies, continuous efforts to establish roots in Japan from all angles are the key to success.

Ultimately, conquering the Japanese market requires demonstrating a long-term commitment to the business rather than prioritising short-term profits.

At TAMLO, we support the marketing efforts of B2B companies already in or planning to enter Japan. We hope to contribute to your business success through our content. From strategy development to content creation, we offer one-stop support. Please feel free to reach out to us.