How to Avoid “Zombie” Japanese Distributors

In the previous article, we looked at how foreign products are distributed in the Japanese market. In this article, I’m going to talk about another common mistake that foreign companies often make in Japan. This is the mistake of going with the first distributor that shows interest in their product. Let me share with you part of an email I received from a company in Europe:
XYZ has been been our rep in Japan for three years but so far has sold nothing. I think it’s time to move on.

It turned out that their “Japanese” distributor was actually based in South Korea and didn’t even have an office in Japan.

They did have employees who could speak Japanese and visited Japan from time to time though.

While the Korean distributor did have employees who could speak Japanese and these employees did visit Japan from time to time, this wasn’t enough to help this European company get their products into the Japanese market. Instead, they needed someone in Japan with access to the right distribution channels who could represent their products on a full-time basis.

This Korean company is an example of what I call a “zombie” distributor.

Zombie distributors are distributors who represent one or more foreign brands but lack the ability to effectively sell these products in the Japanese market. They may list dozens of imported products on their sites but in reality almost all of their sales come from just one or two products. The rest are just window dressing intended to make the company look more substantial to potential customers and business partners.

Unfortunately, foreign companies new to the Japanese market sometimes end up with one of these “zombie” companies and later seek our help in finding a replacement. In fact, over half of our distributor searches are for clients unhappy with their current Japanese distributor.

Why does this happen?

It’s because companies fall into the trap of assuming that any distributor in Japan is better than none at all. This leads many to go with the first Japanese firm that shows interest in carrying their products.

I don’t agree with this strategy.

In fact I believe that an underperforming distributor is worse than having no distributor at all because…

  • This distribution relationship will discourage better-qualified Japanese companies from approaching you.

  • You will spend valuable time and resources trying to fix something that can’t be repaired.

  • You start to believe that your products aren’t right for the Japanese market when the real problem is actually your distributor. I have seen companies with great products give up on the Japanese market entirely after being burnt by a bad distributor.

  • Finally, there’s the danger that your reputation may be tarnished by association with the wrong company or that your distributor will dump your products on the market at rock bottom prices when the relationship ends.

So what’s the solution?

1. Do your due diligence on potential partners.

Don’t jump into a relationship with the first company that approaches you or that you find on the Internet. Check out the company first.

I’ll be talking about how to do this in the next article.

We can also help. We have access to Japanese-language sources that provide detailed company information that isn’t available in English.

2. Create a strong list of candidates.

You probably have more options that you think. As I mentioned in the last article, there are typically 20 to 40 companies actively importing and distributing foreign products in any given product category.

In the next article, I’ll look at some methods for finding Japanese distributors.

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