Vol.2  - Why “Trust” Becomes the Starting Point of Business in JapanLocalization and Partner Strategy

In Vol.1, we discussed Market Creation as the first phase of entering the Japanese market. 
However, even with a strong understanding of the market, business expansion does not necessarily follow automatically. When Japanese companies consider adopting a new vendor, trust becomes a critical factor in their decision-making process. 
In this article, we explore how trust is built in the Japanese market and the structural elements behind it.

The Essence of Localization

Q: Localization is often described as critical in Japan. How should companies understand it?

Kawaminami: In the Japanese market, localization is not simply about translation. It means adapting the entire customer experience to fit the market.
Many companies start by translating their UI and documentation into Japanese. However, that alone is not sufficient.
When Japanese companies evaluate a new product, they also look closely at factors such as:

・Contract terms
・Support structures
・Implementation processes
・Security compliance

In other words, the essence of localization in Japan is creating an environment where customers feel confident adopting the product.
For example, localization may involve coordinating with headquarters’ legal teams to ensure that Japanese governing law and jurisdiction can be applied to contracts. It may also include working with operations and product teams to adapt CRM data structures to support multilingual data fields reflecting Japan’s business card culture.
Over time, I came to see that responding to these seemingly small needs is also an important part of localization in a broader sense.

Why Trust Matters So Much in Japan

Q: Why is trust such an important factor in the Japanese market?

Kawaminami: When Japanese companies adopt new technologies, they tend to evaluate the credibility of the vendor very carefully.
This is particularly true for enterprise systems. Once implemented, these systems are often used for many years. As a result, companies evaluate not only the product’s functionality but also factors such as:

・The long-term stability of the vendor
・The vendor’s support capabilities

Customers also look beyond which companies have adopted the product. They want to understand what operational improvements or measurable results were achieved after implementation.
For this reason, presenting customer-centered use cases and real business outcomes plays an important role in building trust.

Building Market Awareness

Q: What types of activities are effective for building awareness in the Japanese market?

Kawaminami: Building market awareness requires a combination of multiple approaches.
For example:
・CxO events designed to build relationships with senior executives
・Community activities that encourage interaction among users
・Event marketing, such as exhibitions and industry conferences

The key is selecting the right channels based on the customer’s stage of engagement.
In Japan, user communities and word-of-mouth recommendations can have a strong influence. Continuous awareness-building activities can therefore play an important role in strengthening trust.
Personally, I don’t believe there is a single “correct” tactic for building awareness.
One common mistake I see among overseas vendors is focusing too heavily on constantly introducing “what’s new.” When short-term results do not appear, they quickly move on to another initiative. As a result, activities lack continuity, which can create uncertainty among customers and eventually lead them to lose interest.
What’s important is consistency.
Just as many Japanese companies operate their purchasing decisions on an annual cycle, it is essential for vendors to maintain consistent engagement and visibility over a similar annual cycle.

Partners and the Formation of Trust

Q: How important are partners in the Japanese market?

Kawaminami: In Japan, partners are not simply a sales channel. They play a critical role in building customer trust.
In many IT implementation projects, not only the product vendor but also system integrators (SIs) and IT consulting firms are involved. Customer companies often evaluate new technologies through their existing relationships with these partners.
In particular, when a trusted SI or consulting firm handles technical evaluation or implementation support, it creates a greater sense of confidence in adopting a new product.
There are also practical barriers that overseas vendors may encounter when entering Japan. For example:

・Credit terms in procurement processes
・Transactions conducted in USD rather than JPY

In such cases, domestic partners can act as the contracting entity or support interface, helping reduce the barriers to adoption for customer organizations.
In this sense, partners in Japan do more than expand customer access. They also help support what could be described as the “Trust Architecture” of the market.

The Role of a Local Japanese Entity

Q: How important is having a legal entity in Japan?

Kawaminami: For some Japanese companies, the presence of a local Japanese entity serves as one indicator of a vendor’s credibility.
This is particularly relevant for long-term system implementations, where local support capabilities and contractual stability become important considerations.
However, the timing of establishing a Japanese entity varies depending on the company.

Some companies initially explore the market through a Japan branch office without immediately establishing a legal entity. Others may use Employer of Record (EOR) services to conduct early-stage market validation before later establishing a Japanese subsidiary, such as a Godo Kaisha (GK).
In other cases, companies work with partners or investors to establish a Kabushiki Kaisha (KK) early in the market entry process.
Establishing a local entity is not only important for customer trust. From an operational perspective—such as providing proper social insurance coverage for employees—it is also something that companies should consider relatively early.
Ultimately, the decision about establishing a Japanese entity should be considered as part of the overall GTM strategy.
 

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