Openly closed: Japan's resistance against foreign tide

Mixi: the Japanese version of Facebook

In an era of rapid globalization, it is somewhat shocking to note the exclusive nature of the Japanese economy, and to a larger extent, the Japanese society as a whole. The other day I was talking to a local and I asked her if she has a facebook account, she fawned and asked "What is Facebook?" I am trying my best not to sound like a presumptuous American who thinks everyone around the world should adopt to the American standard but FB by now has achieved an almost ubiquitous popularity around the globe. The local is in her 20s, university-educated, and is working for a large Japanese corporation in Tokyo. If anyone in the population knows/uses FB, she should be in that group. I was quite taken aback. This is Japan, not North Korea after all.  Take another example - On TV, there are quite a few number of shows on sightseeing and with almost no exception, it is a domestic destination featuring the same formula over and over again: breathtaking scenery in some remote area of Japan, onsen, and exquisite food. It was interesting to watch in the beginning but afterwards, I got bored by the “おいしいいい〜”,　“うっまい” exclaimed by the hosts when they send the food to their mouth.

Nitori: the Japanese version of IKEA

On paper, Japan's markets are fairly open. Aside from agricultural goods, the tariff rates are about the same as those of other industrial countries and there are only few import quotas established. However, the truth is also that Japan spends less than half as much as of its income on imports of manufactured goods as any advanced nation. It is no secret that foreign companies find it extremely hard, if not impossible to penetrate to the Japanese market even though they might be able to offer a cheaper, better alternative. For all foreign companies which otherwise do very well in the rest of the world, there is a Japanese shadow version that counteracts this foreign influence.  Mixi vs Facebook, MOS burger vs McDonalds, Nitori vs IKEA, Raketen vs Amazon.co... and the list goes on. According to a paper written by Paul Krugman, the limit of Japanese import is severely restricted by the web of implicit business relations guaranteed among firms. Using Krugman's words, "Japan hands point to the interlocking structure of ownership within Japan; to the long-term relationships between suppliers, distributors, and banks; to an economy that resembles an elaborate old boys' network more than the free-wheeling markets of America". My professor further pointed out that foreign companies are reluctant to invest in Japan because rules are not clearly spelled out and they feel that they are not playing by the same rules as their Japanese counterparts.

Rakuten: the Japanese version of Amazon.com

Unlike China, there is no central planning of the economy by the government and yet, the local economy is able to fend off most foreign competitions. In addition to the reasons on the supply side of the equation mentioned above, the demand side also paints an unwelcoming picture for the potential foreign investors.

Japanese products are known for their quality and their "優しさ” (customer-oriented) and the Japanese citizens are very well-awared of that. Japanese's pride in their craftsmanship (職人精神) and their utmost focus on details is reflected directly on the design of products and services. The view that the Japanese made products are better and therefore worth more extends beyond manufactured goods to just about everything that is Japanese-managed or owned. People are more comfortable with Japanese made products not because they are tailored to Japanese only, but also because the Japanese interface alone provides comfort to the users, who seem to naturally repel foreign looking goods and deem them subpar. How much of this biased-ness against foreign goods can be corrected by competitive pricing is unknown but foreign companies wishing to enter the Japanese market should probably put in some serious marketing efforts. What Japanese consumers are happy to buy are products that are made 'from heart' and are made to 'touch peoples' heart'.