Joi Ito in his blog suggested strongly that, to succeed, foreign companies need to get a Japanese local partner.

It is REALLY hard to launch in Japan without a local partner. There are many reasons. Foreign brands have very little value in Japan without local promotion.

It is very hard to hire people into fully-owned subsidiaries. Many foreign companies pull out of the market. Japanese companies tend to go public more quickly than US companies. Even when US companies do, often they don’t give subsidiary team member any or as much upside incentive. Local partners tend to incentivize local teams and push for local IPOs. Everyone knows this. Even Google had a tough time and are finally getting traction.

I am particular interested in the statement foreign brands have very little value in Japan without local promotion. I wonder if this only applies to web/tech companies, or across-the-board in Japan?

In China, I can concur that western brands appeal to consumer strongly. Clothes that sounds Italian, wine that smells French are indications that the locals regard Western brand highly. However conventional wisdom does not work quite right for web branding. Even with greater experience and money, google became baidu’s victim, ebay was slayed by alibaba , and bertelsmann lost to dangdang. Therefore, you need a local partner in China too.

A big reason a foreign web company might worry about partnering a local company is plagiarism. There are horror stories that a company’s country manager resigns and open shop across the street. Starbucks(XinBaKe), Chery(Chevy),Roewe(Rover) have imitations all over China. Bring your brand into China and see it’s long lost evil twin haunt you.

However, to put things into perspective, whether or not you have a local partner, your brand will still be copied. This is especially true for web companies where an identical website can crop up overnight.

There are good reasons to have a local partner – the most quoted ones are cultural sensitivity and market understanding. For example, a friend used to ask me why Chinese web links almost always fire up in new tabs. The reason is China’s Internet speed. You do not click BACK when it takes another three seconds to load the previously browsed page. Instead you surfed between tabbed pages.

Now, what do you guys think about Chinese companies getting a local partner overseas? Is the logic equally true?

Gang Lu

Dr. Gang Lu - Founder of TechNode. He's a Blogger, a Geek, a PhD and a Speaker, with passion in Tech, Internet and R'N'R.

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