Apical's Success in Japan  jap1

While it took 20 meetings before the first big order in Japan, this was the making of the company.

Michael Tusch says, "If your'e going to do business , then definitely go to Japan"  

Mike Tusch Apical logo

The Apical Japan Story


Introducing a revolutionary British image-processing technology into Japan’s commercial environment was never going to be easy for Apical’s Michael Tusch.

  • However good his product offering, what chance did he have of being taken seriously in a country perceived as the most high-tech on earth?
  • How would he reach the right potential customers?
  • What commitments could he expect or request from them?

   So, how did Apical achieve export success in such challenging circumstances? Michael Tusch explains the challenges he faced, and the assistance he received to explore and conclude deals with many of the world’s best-known digital camera manufacturers.

 

INTRODUCTION

Apical was founded by Dr Michael Tusch in 2001 based on some breakthrough processing technology developed by a Russian scientist, Dr V.N.Chesnokov, who became Apical's CTO.  The technology improves dynamic range capability, allowing a camera to render extremes of light and dark in the way the human eye interprets them, and thus to produce the most natural images in all lighting conditions.

   Discovery of the technology coincided with the start of the digital camera boom, and it was to the digital camera sector that Apical first turned its attention. It stood to reason, therefore, that the key market for the company’s technology would be Japan.

 

THE CHALLENGE

The first four years of the company’s existence saw 100% of its business activities focused on the Japan market. But it was not a market known to Michael Tusch, whose background had by and large been in the academic world.

   “We had almost no knowledge of Japan. Our mental image was of Japan being the most high-tech place on earth. We may not be taken seriously by the well-known Japanese brands, and we were warned that 'they would simply take our discovery and implement it in their digital camera manufacture', ” he said.

   “We were also aware that Japan had a completely different etiquette and business culture. There was a lot of confusing information coming at us from all sides about how business in Japan was done. But there appeared to be no clear picture.”

 

A LONG-TERM STRATEGY

Michael Tusch’s business plan was based on long-term thinking. He knew there were unlikely to be ‘quick wins’, but he knew he would improve his chances of success in the Japanese market by making sure he came to understand as much about it as possible before trying to push open the doors to the manufacturers.

   “We contacted our local Business Link office and talked about what we should do to get into the Japan market. The Business Link adviser turned out to be very proactive, and encouraged us to commission an Overseas Market Introduction Service (OMIS) analysis of the market. We obtained this at an excellent price.”

   The next step was to establish a presence at CEATEC, an annual Japanese IT and electronics exhibition. There was money available from the Department of Trade and Industry to help fund Apical’s involvement. “We wanted to go to Japan, meet the market, and take advantage of the financial help on offer,” continued Michael Tusch. “Our biggest concern was how we would actually get to talk to our target Japanese manufacturers, but we also knew we would have to take some risks by revealing some elements of our technology to them. It was at this point that we came into contact with Peter Bacon, a highly experienced consultant from Electronics Link Asia (ELA), who gave us a lot of excellent advice on penetrating the Japanese market.

   Apical’s first visit to Japan involved meeting visitors at CEATEC as well as following a busy schedule of initial appointments which had been organised by the British Embassy Tokyo and Consulate General in Osaka as part of the previously-commissioned OMIS analysis. Michael Tusch was encouraged by the interest shown by some manufacturers, and he came away with some very useful contacts.

   “The interest from manufacturers gave us confidence that we would get somewhere if we came back,” said Michael Tusch. “We then made a formal agreement to appoint ELA as our partner. They followed up on the leads we had generated in that first week, and helped us make rapid progress with companies such as Nikon and Olympus.

   “It became clear that trusted introductions proved to be much more useful than mass marketing and mailshots. The combination of our interesting technology, our presence at CEATEC and the support of the DTI, British Embassy and ELA gave us validity and did a lot more for us than had we made an independent approach.”

   One of the manufacturers to show obvious interest was Nikon. Meetings with them always included their business and technical experts, so the Apical team picked up a sense that they were keen to do a deal, even though the onus was on Michael Tusch and his team to maintain the momentum.

 

RESULTS

Technical experts from Nikon eventually requested to import the Apical technology into one of their prototype cameras, a good sign that they were ready to go beyond evaluation and benchmarking. Apical followed this with a proposal for commercial licensing. The first order followed soon afterwards, with an additional agreement that Apical branding would feature on Nikon’s packaging. Although modest in size to start with, the Nikon deal gave the Apical team confidence that more would follow.

   “Nikon were never explicit about their intentions but, by understanding their behaviour, it was possible to work out their intentions,” said Michael Tusch. “It would simply not have been appropriate to ask them directly to outline their plans or to offer any sort of commitment.

   “In all, it took 20 meetings to get to the first order from Nikon, but we soon realised that this was a significant milestone, because a number of other orders followed soon afterwards. We soon realised that the Nikon order marked the beginning of our ongoing, long-term success in Japan.”

   Apical technology went into all Nikon Coolpix cameras, with Olympus and Sony Ericsson also becoming customers soon after. This gave a further boost to Apical’s reputation.

   The initial assistance of Business Link and the DTI was important for Apical to establish the right connections in Japan, while the ongoing support from ELA and its Japanese consultants helped turn the exploratory discussions into meaningful negotiations – and finally, commercial deals. These consultants were not part of the business negotiations, but their liaison, translation and feedback proved vital.

 

CONCLUSION

   “There were many learning points for us from working with Japan,” concluded Michael Tusch.  “It’s clear that you should not expect to do quick business in Japan. As a technology start-up from the UK, we realised we had to show that we were in it for the long haul and that we would be available for as many meetings as were necessary.

   “We appreciate that there are business questions you cannot ask in Japan which may be seen as perfectly acceptable in other countries.

   “We also understand now that a decision to work with us was probably made by Nikon quite early in the process, but it was only once we had engineered our software product to get it to work in their cameras that they could give us any commitment.

   “More than anything, however, we learnt a lot about quality. Working with their Japanese engineers and seeing the specifications helped us tremendously. Their feedback was very straightforward and let us fix anything that wasn’t quite right. If we can satisfy their engineers and researchers, then we can probably satisfy anyone in the world.”

   Commenting on Apical’s penetration of the Japanese market, ELA’s Peter Bacon said: “A key contributory factor to the company’s success was that Michael and the team took the trouble to listen to, and to understand, the needs of the Japanese firms. Letting them lead the way, rather than being too pushy, was a smart move that won them allies during the process of discussion and negotiation.

   “The fact that Michael was willing to move forward without insisting on every t being crossed and every i dotted definitely worked in his favour to secure the long-term outcome he wanted.”

 

TOP TIPS:

Michael Tusch offers his personal advice for others considering doing business in Japan:

  • Don’t worry about formalities. Provided you are decent and respectful, it’s easy to form relationships with Japanese people. Japan is less ‘foreign’ than people make it out to be.
  • The exchange of business cards is the only important ritual, in my experience. It really does matter.
  • Listen to what the customers are telling you. They will tell you what they want but it may not be as direct as you would want it to be.
  • Japan is a wonderful place. If you’re going to do business anywhere, then definitely go to Japan.
Timeline

February, 2001: Apical founded

Early 2002: First product ready, website launched and marketing begins

Summer 2002: Actively preparing for market entry

October 2002: Document back from DTI, CEATEC takes place and Apical engages Electronics Link Asia

Mid 2003: Start actively working on integration projects

16 Sept 2004: Press release announces launch of first Nikon camera using Apical technology

Jan 2005: First Olympus and Sony Ericsson product announcements

March 2005: Deal concluded with Dai Nippon Printing

November 2006: Sony deal completed