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Saturday, Feb. 4, 2006

The 'ultimate challenge,' the ultimate reward

Continued from Page 1

Among Canadians who have succeeded in Japan, there is unanimous agreement that nobody should expect a rapid path to profitability. "Investing in Japan is certainly not for those who are seeking to make a quick buck," said Patrick Bothwell, director of the Japan office of EHC, a company based in Oshawa, Ont., that has become the world's leading manufacturer of escalator handrails.

His office has encountered long delays in getting patents approved for some of EHC's products in Japan. "If you have a quality product or service that is appealing to the Japanese, you will eventually see profitability at the end of the rainbow," he said. "But it is generally a long haul -- like three to five years."

Neil Moody, executive director of the Canadian Chamber of Commerce in Japan, agrees with this assessment.

"Five years is a minimum to expect a reward or a payback," he says. "But once you are established, the returns are very strong. This is a hugely rich country, and it's very receptive to innovative products."


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It remains true that Japanese customers often need a lengthy process of cultivation -- sometimes over five-hour dinners, karaoke sessions at nightclubs, or rounds of golf. Foreigners still need to develop personal connections with their Japanese clients, and this can be time-consuming.

"The Japanese are straight and uptight in the daytime, but they want to know what you are like when you let your hair down," said Mr. Yellowlees, who has served as a business consultant to many Canadian investors in Japan.

Dogged persistence is equally important. When he wanted the Osaka city government to host a Canadian education fair, for example, it took 16 visits over an eight-year period before Mr. Yellowlees finally won permission. "It's symbolic of the tenacity that is required sometimes," he said. "They respect that."

Canadians often fail to understand how much time and preparation they must invest in business deals with Japanese clients, who normally conduct a lengthy analysis of reports and studies before approving any deal with a foreign partner.

"A lot of Canadians will come to Japan once or twice and not get a positive response and then give up," Mr. Yellowlees said. "They're not aggressive enough and not committed enough to the market. They look for results in six months. I'm disappointed that many of them don't make enough effort."

Pierre Pariseau, a Canadian who owns a small café in Tokyo, warns that a persistent effort is not always enough. This is a country that still sometimes discriminates against foreigners, and his experience is an example. After a dispute with his landlord, his café was demolished while police stood by. He rebuilt the café, but his electricity was cut off, he received visits from gangsters, and health officials tried to shut down the café -- without giving any specific reasons.

Mr. Pariseau, who has lived in Japan for 15 years, says many landlords refuse to rent apartments or shops to foreigners.

"Finding a small shop has been a huge problem," he says. "I've been rejected at least a hundred times. This is still a very closed society."

Others, however, have had better experiences.

Alias Systems Corp. of Toronto, which makes 3D graphics software for films and computer games, employs more than 50 people at its Tokyo office, which it opened in 1992. Japan has emerged as its second-biggest market in the world.

"In many ways, Japanese companies are world leaders, and we want to be close to the action," said Alex Kelley, head of the company's Japan office. "We're continuing to have very good growth in Japan. But you have to be patient. You have to convince your customers that you're worthy, and you can't do that in one meeting. It's very time-consuming. Localization is crucial. You can't throw an English-language contract at a Japanese customer -- they'll throw it right back at you."

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