Rudlin Consulting

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The spring 2022 Santander Bank Trade Barometer survey showed that 33% of UK businesses who were only domestic in focus up until now have ambitions to internationalise in the next three years – a greater proportion than in any previous survey. It was also the first time that overseas markets were seen as the most important driver of business recovery from the pandemic.

With growth prospects looking dim in the UK and trade with the EU having become more difficult thanks to Brexit, British companies are seeing overseas markets as their main source of growth, just as Japanese businesses did when the economic bubble burst.  

This conclusion is illustrated in the Santander report with a photograph of a geisha in a taxi, looking at a mobile phone, but according to the survey, the main non-EU overseas markets that British companies are interested in are the US and Australia, EU countries such as Germany and France, and then India and China – ahead of Japan. 

The survey was of around 1000 UK businesses with a minimum £1m turnover. Those companies who already had business overseas said they are selling more into non-EU markets than before Brexit.  They saw the main operational challenges in most markets as shipping costs and bureaucracy. It was only for Japan that language and culture and having to adapt products and services accordingly were seen as the primary challenges. Perhaps deregulation in Japan and smoothing of inward investment has had an impact – bureaucracy in Japan was far less of a concern than for China, USA, India, Germany, UAE, Spain, Italy and France.  

Of those British business who are currently domestic only, 42% are expecting to use online marketplaces and 40% are expecting use their own ecommerce site to sell their products. They will no doubt find that language and culture will indeed be an issue, even virtually, if they want to do business with Japanese customers. Their website will not only have to be translated, but their offering needs to be adapted to Japanese customer preferences. My belief is that physical presence in Japan is necessary for success, but only 20% are considering physical presence in the overseas markets.

Those businesses who are UK domestic but are now looking overseas also say their primary source of advice on overseas business is the internet. Whereas those who already have experience of overseas business say their main source of advice is a business partner in the target market.

I suspect many of these internet searches for advice will end up on our Japan Intercultural Consulting website, but it is notable that the only serious consulting enquiries we get are from companies who already have a physical presence or are about to set up an office in Japan. They have all been service sector companies – in recruiting, IT, advertising and financial services.

For them, the key challenge in Japan is recruiting, managing and retaining good quality employees – which may be why partnering with a Japanese company is still a preferred route.

This article by Pernille Rudlin first appeared in the Teikoku Databank News on 10th August 2022