Series :The Power of Japan—Small and Medium Enterprises Go Global (Part 3)
Shiga University—Building a Business Model for Overseas Expansion by Small Firms
Shiga University—Building a Business Model for Overseas Expansion by Small Firms
Professor by Special Appointment
Research Center for Cooperation with Society
Shiga University is working with international students and Hong Kong universities to develop a model that will enable small firms to develop overseas sales channels, including holding business talks in Hong Kong—a rather unique initiative that speaks to our capacities as a university.
Many people might wonder why a university is holding business talks overseas.
Shiga University is a national university comprising three faculties—economics, education, and data science (which just opened this year). The Research Center for Cooperation with Society serves the role of linking the university and the community in the three areas of industrial revitalization, lifelong learning, and public management. We began conducting overseas business talks in 2015 as an industrial revitalization project aimed at using overseas markets to cover the drop in the sales of Shiga Prefecture’s small businesses which is being caused by population decline and the graying of society.
While universities are often involved in product manufacturing, it’s rare for them to support the development of sales channels, but this is an area where companies do actually want support. A group of international students from our economics faculty who are studying marketing, etc., have accordingly been developing a business model for low-cost, low-risk overseas expansion for small businesses as a vehicle for exploiting their knowledge in business.
1. Targeting Hong Kong
Their first effort entailed introducing Shiga Prefecture food specialties to the Hong Kong market. As the top destination for Japan’s food exports, Hong Kong is overflowing with Japanese food. Many products are tariff-free, conditions imposed on food exports are limited, and the transportation distance is short, making it an easy starting point for small businesses looking to develop overseas sales channels. However, because of the competition with other food products from Japan, research was needed to identify and develop products that would appeal to the people of Hong Kong.
Right from the start of this project, the Fujii Honke sake brewery, headed by Tetsuya Fujii, expressed an interest in creating new sales channels offshore, but with hundreds of different types of Japanese sake exported to Hong Kong, only distinctive, luxury sake varieties manage to corner a market there. Our Asian students sampled numerous different Fujii Honke sake varieties and offered their opinions on the taste, bottle color, packaging, and other elements, on top of which our Chinese students interviewed around 200 visitors to Japan from China, Hong Kong, and Taiwan.
Sake is created in line with Japanese tastes, which in turn emerge from Japanese lifestyles, but other Asian countries do not necessarily have the same lifestyle customs, climates, meals, or tastes as in Japan. The students’ research revealed that around 80 percent of visitors to Japan drink sake during their visit, and that, for example, they prefer sweet sake, and find sake weaker than baijiu (a Chinese alcoholic beverage distilled from sorghum and rice). Based on that data, Chinese, Taiwanese, and Vietnamese students also took part in the brewery’s sake preparation, resulting in the development of the Biwa-no-mai (Dance of Lake Biwa) sake for the Asian market.
The new sake will be sold in Hong Kong through a Hong Kong trading company, and it has already been featured by various newspapers and NHK World. Japanese sake has traditionally been designed to suit Japanese cuisine, but the plan is to offer Biwa-no-mai as a new way of enjoying Japanese sake—one that complements Chinese cuisine and can be drunk on the rocks.
2. Low-cost, low-risk overseas expansion business model
Most companies participating in our business talks are family-operated. The Hong Kong Convention and Exhibition Center hosts dozens of trade fairs every year, in which many Japanese firms also participate. Exhibiting at trade fairs like these is one method of establishing an offshore presence, but for small companies that are unfamiliar with how to exhibit and how to engage in business talks, the cost burden is considerable, and even if they do conclude a business deal, they then face the hurdles of export procedures, transportation methods, and recovery of the proceeds.
Rents are high in Hong Kong, so stores and restaurants try to maximize customer seating. This results in tiny storage areas with little space for inventory, so orders too are usually made in small lots. For small companies, then, the best course is to find one customer and export to them in small lots. Small lots mean low risk, and companies can gradually grow their customer base, while also even expanding their exports to other countries as they acquire more trade knowhow.
While Shiga University doesn’t have the knowhow or capital to stage big trade fairs or business talks, it does have the ability to support a number of companies a year. We offer the options of visits to local department stores and supermarkets, etc., and to trade fairs for market research purposes, as well as business talks with Hong Kong trading companies and other local businesses, with companies able to meet us in Hong Kong and also make their own way home from there. The idea is that by enabling firms to take part in different programs for different lengths of time, market research and sales channels investigations can be fitted in around their usual work schedules while also not costing too much. At business talks, we ensure that companies also have the opportunity to ask the other party to evaluate their products and identify possible improvements, so that even if a deal is not struck on that occasion, they will be better positioned next time.
For our business talks, we list up Hong Kong trading companies and supermarkets, etc., that have participated in business talks, etc., in Japan in the past, and our international students e-mail them to ask if they would take part in business talks with our companies. We then rent a small space in Hong Kong and have postgraduate students studying Japanese in Hong Kong help out with the interpreting. Because these rather handmade business talks have been a process of trial and error, they have yet to produce much in the way of results, but both Shiga University and the companies taking part have learned a lot along the way.
3. Working with Hong Kong universities
People eat out a lot in Hong Kong, with some apartments not even equipped with kitchens. Research into what foods the locals like to buy and prepare is therefore essential in determining what products will sell. In 2016, 60 students studying Japanese at the Hong Kong Community College of City University (CCCU) and companies from Shiga Prefecture co-hosted a workshop entitled “Marketing Cafe in Hong Kong.” The companies introduced their products and provided tasting opportunities, while the students and companies together discussed what flavors and packaging, etc., were needed to sell in Hong Kong. This program was very effective in terms of enabling companies that want to sell their products in Hong Kong to gather information and ideas from young consumers, and for young people from Hong Kong to learn about Japan, and we plan to repeat it on a regular basis.
4. Looking ahead
Because different lifestyles and tastes mean that many products which sell in Japan do not sell overseas, we want to help companies research and manufacture products geared to local needs that will succeed in local markets.
In addition to market research, business talks, and workshops, we are also looking at launching new initiatives as of next year, such as a program in which Hong Kong design students work on product development together with Japanese companies operating in traditional industries, tasting events at Hong Kong restaurants, and test sales.
Our business model for low-cost, low-risk overseas expansion for small businesses makes great use of our particular capacities as a university by enabling Shiga University students and Hong Kong students to exploit the knowledge they are acquiring through their studies to support companies’ efforts to establish an overseas presence, and we are excited to watch it grow.
(original article : Japanese)