How To Evaluate Japanese Distributors

When evaluating Japanese distributors, it’s easy to ignore companies that don’t have much English on their websites.

This is a big mistake!

In my experience, there is NO relationship between having an English-language site and being an effective distributor.

This is because the best distributors are focused on their Japanese customers, not on attracting foreign companies who want to do business with them.

And, as I discussed yesterday, if a company is already distributing one or more non-Japanese products, they will have staff who can speak English and who are accustomed to doing business with foreign companies, regardless of whether or not their website is in English.

Let me give you an example from a recent client project that focused on the market for contractor tools in Japan.

One of the best prospects we identified for this client was a company called The Kiichi Tool Company. We found Kiichi by identifying foreign brands of hand tools common in the Japanese market and seeing who distributes them.

We soon determined that Kiichi is one of the top distributors of imported hand tools in Japan. But you wouldn’t know this by looking at the English-language pages on their site. These pages provide no listing of the foreign brands they carry and little information on their distribution business.

Instead their English-languages focuses almost entirely on their export activities, leading one to believe that this is the main focus of their business. Only by looking at their Japanese-language site can you see the whole picture.

So how should you evaluate potential Japanese distributors?

Here are some things that you should look at:

1. Company size

Even if they are privately held, many Japanese distributors will indicate on their website how many employees they have or give their annual turnover.

I suggest that you consider companies that aren’t too small or too large. If the company is too small, they probably won’t have the sales and marketing muscle needed to get your products into the right channels. If too large, your products may not get the attention they deserve.

2. Location

In almost all cases, your best bet will be a distributor located in either the Tokyo or Osaka metropolitan area. Be wary of potential distributors located in outlying prefectures. These are usually small companies lacking the resources to open an office in Tokyo or who are only doing business in their local area.

I have come across manufacturers enjoying limited success through an agency or distributor located outside Japan. Such agencies are usually run by Japanese nationals living abroad who have connections back to companies located in Japan.

These firms may provide an initial path into Japanese market but often just add another layer to the distribution chain making the price in Japan higher than it needs to be.

I’m sometimes asked whether it’s possible to find a distributor who can cover all of Asia, including Japan.

There may be such distributors out there but, in 30 years of doing business internationally, I’ve never come across one.

I have seen distributors that handle limited parts of Asia though.

Singapore, Malaysia, and perhaps Indonesia is a common combination. Hong Kong and China is another. But I’ve never seen a Pan-Asian distributor doing substantial business in Japan.

3. Other products handled

The other imported products that the distributor carries is one of the best ways to determine whether the distributor will be a good fit for your products.

We like to see five to ten complementary (not competing) brands of products that are purchased by the same endusers that purchase our client’s products.

Remember the best distributors specialize in serving the needs of a specific market and are always interesting increasing their sales by adding additional products that these end users can purchase.

4. Who they do business with

Many distributors will list their main customers on their website. Ideally you want to see end users, wholesalers, and retailers listed that make sense for your products.

For example if you sell consumer electronics, your ideal distributor will have existing relationships with large retail chains like Yodobashi Camera, Yamada Denki, and Bic Camera.

Next article: The best way to contact potential distributors if you don’t speak Japanese.