Celoxica needed to be in Japan...  jap1

 

  • But.. would Celoxica achieve penetration at the right level in the technology companies it was approaching?
  • What bureaucratic and other non-tariff barriers would stand in the way?

ColinMasonCeloxica

Thorough preparation the key to success...  jap2


INTRODUCTION

The beginning of the 21st century saw Japanese electronics manufacturers start to shift much of their production to China and other locations in Asia. However, their design bases largely remained in Japan, prompting University of Oxford spin-out Celoxica to identify a significant business opportunity for its electronic system level design tools.

  • But would Celoxica achieve penetration at the right level in the technology companies it was approaching?
  • How would investors react to the financial restrictions of the Japanese commercial cycle?
  • And what bureaucratic and other non-tariff barriers would stand in the way?

FIRST STEPS

In order to achieve commercial success worldwide, Celoxica knew it would have to establish a presence in Asia. It had already done some exploratory work in Singapore. When Colin Mason joined the company, his first task was to assess the market and deliver a business plan for the APAC region including  market entry to Japan. When this was approved, he knew he would need to establish links at the right levels among the Japanese electronics manufacturers and to deal with the bureaucracy, business protocol and commercial cycle times, all of which could have been potential stumbling blocks had they not been understood and respected.

   “One of our first moves was to put a contract in place with Electronics Link Asia (ELA),” explains Colin. “I was coming out to Japan on a regular basis during the second half of 2000, using all the possible support services  I could access at the time. Using ELA’s expertise and contacts, we were able to meet executives at the right level in electronics giant OMRON and were pre-selling our design tools there from September 2000, even though we did not formally establish Celoxica Japan until the beginning of 2001.

   “The person leading the research and development side of OMRON was quick to see the benefits of our design tools, so that by the time the company was up and running, we were very close to finalising the first order for a commercial licence.”

 

UNDERSTANDING THE JAPANESE PROCESS

According to Colin Mason, it is important for any would-be exporter to appreciate how the Japanese commercial cycle works. “We knew that our sales efforts could continue through to the end of 2000, and that we could expect budgetary discussions in January, February and March, for release of the budget in April, the start of the new financial year,” he says.

   “It was also vital to ensure that head office was aware of this cycle. Japan budget cycles run from April to March, so we would not have a continuous sales flow. To optimise our chances of being included in the big client budgets, we had to start selling in September, then continue to sell through last quarter in order to get the money in April.

   “Outside of that, we quickly appreciated that it would be very difficult to build momentum quarter by quarter in the way that investors might like to have seen. There was – naturally enough - high pressure from the board to see month-by-month performance improvements. ”

   There are clear definition points in product manufacturing. For example, in the television industry, there is a model release in December, but planning for this starts 18 months before. The summer release has a similar planning cycle. “If you want to sell into these, you have to be planning a long time ahead,” says Colin. “It’s also true to say that Japan does not move by rapid fire; it’s a much longer term relationship and a longer sales cycle. ”

   Colin says he was determined to meet any potential  barriers fairly and squarely. “We came to know that a lot of business works on networks and relationships in Japan. If you don’t have those, then your progress can be slowed down. This was particularly where ELA came into its own, along with advising us on how to deal with any barriers step by step,” he says.

   “Another part of our strategy was that from the beginning we recognised the importance of establishing an office in Japan. Perhaps if you’re only providing standard components, then all you need is a distributor who can warehouse and sell the products. But if, like us, you have high end and complex products to sell, then a distribution channel in itself is not enough. You need people on the ground dedicated to the success of the company. We recognised that we needed our own capability there, with people of our own focused on selling and supporting our  solutions. ”

  

SOWING THE SEEDS OF LONGER-TERM SUCCESS

Colin admits that the early months were extremely hectic, but he also knows that getting it right then was so important for Celoxica’s future. This is endorsed by ELA’s Peter Bacon. “It may seem a daunting prospect to set up from scratch and ensure the success of a business like Celoxica in Japan, but we helped Colin ensure he was not hampered by any specific barriers during the process, and he showed great determination in ensuring that any possible obstructions would be dealt with properly and removed from the process” .

   “We were therefore not surprised to see that, just two years later, Celoxica Japan accounted for an impressive 45% of the sales of the entire Celoxica group. Colin set out with the expectation that this was going to be a successful venture. His hard work and thorough planning in those early months ensured these expectations would become reality. ”

 

TOP TIPS:

Colin Mason offers his personal advice for others considering doing business in Japan:

  • Don’t be put off by people who make the whole export process look complicated. Yes, you need a good deal of patience, but with proper planning, you can deal effectively with the hurdles. Yes, Japan has differences, at least at a superficial level, but they are not that many and underneath the surface business execution is as straightforward as in any other place in the world.
  • Have patience and plan the whole operation thoroughly.
  • Understanding and respecting the business etiquette is vital. That does not mean accepting everything you are told but it does mean not reacting and shooting from the hip. At the beginning, be polite and careful. Try to understand properly the motives of a counterparty before taking any particular course of action. Knowledge of the culture is initially more important than understanding the language, but having Japanese-speaking staff will help smooth the process .

Time Line  jap3


 

2000 First Visit to Japan

2000 set up contract with ELA

2000 met Omron at senior level

2000 utilized JETRO business incubator facilities

2001 first order from Omron

2001 incorporated Celoxica Japan KK and opened office

2003 Japan comprised 45% of Celoxica's worldwide sales