 Good afternoon. This is Ray Tsuchiyama, your host for Business in Hawaii. We're going to talk about exporting, which is a business of making products and finding customers and consumers around the world. And, in fact, there are many people in Hawaii who really want to be exporters to Japan and other countries in the Asia Pacific. There are great consumer markets out there. And to help me really explore this topic of exporting best practices to countries in the Asia Pacific region, I have Rob Hock, who's the CEO of Insight Inter-Asia. Welcome to the show. Thank you very much for having me. Now, Rob, you've spent many years in Asia Pacific. How many years first in Japan total? Seven. Okay. In Taiwan, how many years? Three. That's 10 years. Korea? Three. That's 13. Singapore? Six. That's 19. Anywhere else? Malaysia for a year. That's 20. Hong Kong for a year. That's 21. Beijing for a year. That's 22. And that's it. But randomly roaming around living there and just selling products and working for only really a couple different companies before I started my own company. But I sold mostly technology-based products, mostly American technology throughout Asia. So it was roughly 26 years before I moved to Hawaii. Wow. That's a long period of being abroad, but interacting with the most active economies in the world. But we're here really to talk about Japan because it's unique. We were talking before the show that there's 1.8 to maybe 2 million this year. Hope so. And the peak was 2.3 in 1998, 2.3 million. And so the great interest by Japanese visitors in Hawaii is non-abating. It still continues. And we're going to see a surge next year. And it's continuing. And plus, as we know before, that Japan is unique in its interest in Hawaii, its fascination. 600, 700,000 Japanese study to hula. There's more than that studying the ukulele Hawaiian music. There are Hawaiian bars, Hawaiian products on the shelves. And of course, every export in Hawaii wants to be that company with their items on the shelves in every 7-11 for Wakkanai to Okinawa. So tell me, what's unique about, let's first talk about an area that people don't talk about, the Japanese visitor to Hawaii. Okay, that's a very interesting topic. I find that our companies here do not spend enough time focused on marketing to the visitors that are coming to Hawaii. You can, in marketing, we talk about touches, meaning when do you actually contact your customer by email, by website, or newsletter, or Instagram, or what have you. The visitors that are coming to Hawaii, you have two opportunities to talk to them. One is when they're planning their trip to come to Hawaii. Secondly is once they're already here, how do you bring them into the store, or how do you attract them to buy your product while they're walking around or doing what have you. So there's two very unique touches there that we talk about in marketing and the messaging could be different and the language that you use could be different. But generally speaking, I feel like our companies are not doing a good enough job of marketing to those visitors. And it's a fantastic test market because you can test your Japanese language that you're using in your signage. You can test the labeling, the packaging, the quality, all of that. And you can get a very strong flavor for what the Japanese consumer likes, what they're willing to pay, what the style is like, what the packaging is they prefer. And before you went to attack the Japanese market on the home territory, you could be doing a lot of work here much cheaper and getting a much better flavor for what the consumer likes. Let's look at the Japanese tour before coming to Hawaii. And the Japanese tourists, of course, is one of these that are very focused and very information-gathering kind of creature. And they have a plethora of information, not only the websites, but magazines, the best sellers like the Brutus and Hanako, and many, many other magazines that are stylish. And they give very detailed information on the burger restaurant that just opened last week in Waikiki or the new Shave Ice in Kailua, whatever. So there's a lot of information out there through print media, through commercials on TV, but also on the web. And also through their friends and neighbors and the HIS or JTB, they're also getting information from their tour groups or tour agencies. Where do you see areas for Hawaii companies to give information selectively or kind of influence them before they come to Hawaii? Well, the magazines are good, but the magazine ads are not cheap. No question about it. For a small company to invest in a magazine ad could be as much as $10,000 a month. And that's a lot of marketing for a small company. So what I encourage our smaller companies to do is reach out to bloggers. There's lots of Japanese bloggers who are writing Hawaii-file type blogs. And most of them are here. They're strong influencers. And if you can get your product highlighted in one of these blogs, it's great. Send the bloggers some of your product and let them test it out. And they can give their honest opinion about it. And I find that that can be extremely helpful and cost very, very little. Also, just having a web page with some Japanese verbiage on it, I would add it should be proofread by a real Japanese... Not a Google translator. But surprisingly, there's far too many people who do that. Instagram posts with Japanese hashtags, that's becoming extremely popular way to reach out to customers. And then I strongly suggest having a Japanese language email address that Japanese customers can contact you directly. And so let's say your website is example.com. Have an email address that's japanatexample.com. But you have to be able to answer emails and Japanese... They have to be a person who can read that and respond in the Japanese customer service way. We found that that's a tremendous way to get the trust of Japanese customers that are coming. And back to Japanese customers. Japanese customers are different. They have a high level of quality, demand, they have a sense that it must be made in Hawaii. And we were talking about a Hawaii branding or Hawaii story that they are searching for more, I think, than other visitors and authentic experience, whether it's clothes or a chocolate or a cookie or shea vise or whatever. It's really something that they will pay a lot more if it fits that category. I feel that the Japanese consumers do a better job of us locals buying local than we do. They're very good at that. Buying here, buying made in Hawaii, made with aloha, that means a lot. So if a company can get that made in Hawaii seal from the state, I think that that goes a long way. And I know for sure that Japanese companies or Japanese consumers are reading the labels to make sure that it says made in Hawaii. But there's a tension, as you know, by the Hawaii tourist authority, HTA, and tourism leaders to attract tourists to Hawaii, but that's not necessarily will they promote Hawaii business products to sell. That's a different business of making things and selling it to Japanese visitors rather than welcoming them and having them stay in a hotel and go to a restaurant and going home. Absolutely. A lot of our clients though in my company, we do help the tourist industry by consulting with them about the expectations of Japanese tourists at hotels and restaurants and sightseeing activities and what have you. But generally speaking, you're right that there's a major division between the tourism activities of the state and the product and services selling and exporting part of the state. And there should be a balance. You know, one can synergize with the other where we can promote jobs creating export industry in Hawaii. And we have thousands. And I was overwhelmed by going to a series of workshops sponsored by the Hawaii Department of Business and Economic Development Tourism on exports. And I was amazed at how many people are really interested in making these exports in Japan. But let's put up the first slide. Next, please. So what is this all about, point of sale? Okay. Point of sale, we're talking about exporting product and services. Point of sale could be we're selling it in Japan. Right. So somebody, we could have a website and somebody's buying it and we're going to ship it to Japan or we stock inventory in Japan. And somebody buys it from there either at a store or at our warehouse and we fulfill the order and mail it to them. They're physically in Japan. Physically in Japan. Or buy it or whatever. Yeah. But the key about that type of transaction is that it's obviously going to be in Japanese yen because the customer is there paying for it in yen. Even if you were to price it in dollars on your website, it's going to be on their credit card in yen. So I recommend pricing it in yen when you can. And also you're very likely that that will be a Japanese language transaction from your website or in the shop that's in Japan. And that's different from a point of sale in Hawaii where it would be great if you could speak Japanese, but more than likely there's going to be some English involved in that transaction and it's for sure a dollar based transaction. So it's a little bit different in buying things while a customer's already in Hawaii. Much of that could be an impulse buy. Whereas when they're in Japan they had more time to research it. It can do some comparative shopping. Let's check the price here and see what's going on on amazon.co.jp. What's the price there? Oh, this is reasonable. Okay, I'll buy it. But here is part of a tourist experience, a visitor experience, and wow, it's a great product that they see it on the shelf. And they buy it right there. Then they bring it back though and they talk about it to their friends and family. We hope they do. That's part of the whole omiyage hanashi part that we'll talk about. Next slide, please. This is something I really try to consult to our export companies here about shipping. It's no secret we're on an island or a bunch of islands in the middle of the Pacific Ocean and shipping can really hamstring some of our companies. And so I try to show them what it costs to ship one product versus shipping many and how we have to get to the point where we're able to ship a pallet or several pallets. And it drastically reduces the price per unit of shipping when we're able to ship many of them by ocean. It's completely different. And so if we're shipping by ocean, the cost of each individual unit in Japan is really not that much different than if it was being sold in Hawaii. That's the idea. But we'll get back to this slide and others after this important break. Aloha. I want to invite all of you to talk story with John Wahee every other Monday here at Think Tech Hawaii. And we have special guests like Professor Colin Moore from the University of Hawaii who joins us from time to time to talk about the political happenings in this state. Please join us every other Monday. Aloha. Aloha. I am Howard Wigg. I am the proud host of Cold Green for Think Tech Hawaii. I appear every other Monday at 3 and I have really, really exciting guests on the exciting topic of energy efficiency. Hope to see you there. This is Ray Tuchiyama on business in Hawaii with Rob talking about shipping to Japan as part of a really focused discussion on logistics and the Japanese customer. Why don't we have that last slide up again that we were talking about. There it is. So your point is how to move things to Japan in an efficient manner so it becomes cost effective for the final price to Japanese customer. Yeah, absolutely. This is a real world model that I took from a company that I was consulting to and they were selling a $25 product and once they sold it on their website they found that the minimum shipping they had was $31. So $25 unit, $31 shipping price, roughly $70 product by the time it gets to Japan, right? And as you find if you can consolidate and ship many more products in a flat rate package you can get down to about $3.58 of shipping and so we see that quite often but where they are really saving the money is when they can ship 2,500 of those on a pallet and the cost of shipping is then about 20 cents. That's unbelievable. When you see the 2,500 yen price but it becomes a 7,000-year price it's no longer an impulse buy. Exactly. It's very complicated topic but we really are trying to force companies to get to the point where they can ship by ocean. Right. Okay, next slide please. Go ahead. We alluded to this slightly towards the beginning of our conversation today but I consult to the companies here that made in Hawaii, made with aloha, means so much that I've used this example before Hawaii, the word Hawaii is doing so much free marketing for our companies and the example I use the counter example is if you're a company in Transylvania and you need to export your product the word Transylvania is not out working for you. No, no. And so they have things to overcome just by that but Hawaii on the other hand is universally accepted as clean healthy sunshine wonderful very positive very positive globally and with the aloha spirit it means so good so much good and people and as you said earlier Ray the Japanese customer takes that to even another level they're very excited about Japan about coming to Hawaii very excited about Hawaii products so our companies need to really play that out more and some of the companies I meet may I meet most of the companies are a little too shy to do that and we need to get over that and we really need to pay it back you know you can price it a premium if it's really really you know natural and wholesome and so forth well truthfully the companies that are doing the best at exporting are the companies that are selling premium products because the premium price can allow for some shipping costs to be built in there but also the customers are much more willing to take that price on they know that what they're getting is going to be quality it's going to be clean it gives them the feeling of being in Hawaii which they loved it's uh it's it's a fantastic method to sell and we have to do more of it so you have to leverage next one please next slide oh miyage there's that word again and it's such a interesting word because uh you know before hawaii ended the picture um oh miyage was part of japanese culture for hundreds of years and of course it's a souvenir but it's much more than that it must bring forth that you shared the experience of going on a trip with with with the family of friends they shared and that you were part of that although you didn't come we want you to really have a product that brings back that feeling or that environment or that experience which is really positive so we are family back together again in japan that's a really good way to put it and what i think our our local companies don't really recognize is that when they see a japanese tourist here the amount of brain power that's being invested by that tourist to calculate who they have to take oh miyage back to and the politics involved i have i have co-workers i have a mother-in-law sister a friend it's all different too it's all different it's a google algorithm that has to be developed for that you're right it's a fantastic calculation bukkai and senpai and you know kohai people who are your boss or uh supporting it very different exactly you can't just go back to japan with a t-shirt that says i my my colleague went to japan and all i got was this lousy t-shirt right there has to be some thought that goes into it like i like for example i know my boss's wife really loves dark chocolate so i'm going to take back some made in hawai dark chocolate and give it to him as the omiyage from hawai i mean there's definitely thought it has to be larger than the one given to us exactly exactly but there's so the key point though is that they're spending a lot of time and energy thinking about this but but more importantly they're spending a lot of money to get this right and take it back and um it it alludes to another key point that our companies need to focus on is packaging and bags as you know you can never just go back to japan without and give an omiyage present without a nice bag and we we need to do much better at that and we consult to a lot of companies here and explain that and once they get it i think it works very well for them and their sales drastically increased because they've taken away some of that burden from the tourists and help them with the packaging help them with the bags help them with the omiyage and it makes their life much easier okay well next next slide please seasonal sales this is a very important you know kind of marketing kind of kind of strategy well what does what does this mean to export it from hawaii though okay in japan walmarts had a difficult time in japan it's no secret because japan doesn't really operate on the everyday low price model japan loves sales i mean who doesn't right but japan really does and much of the economic activity domestically in japan is driven by sales throughout the year and the japanese are very proud of their four season uh weather but it's really a four season economy too and sales are driven by changing of clothes and also winter gang and so forth you know you have to give a gift during the winter and after the summer for example that's that's not not really connected christmas but right so what what i consult to the hawaii companies on is learn that schedule of the sales in japan and if you're selling product to japan get to know that and ship the product ahead of time and work with your distributors to make sure you're ready for the winter sale you're ready for the summer sale you're ready for uh white day you're ready for this you're ready for that but if you're a local seller here selling to tourists okay put out signs that say you know new year sale or or white day sale or summer sale you know use the words that they're using on the japanese language signs in japan and then when i understand that uh much deeply than then um then this you know daily sales exactly at a walmart you're right because the japanese eyes the tourist eyes are going to go to those signs they're just that's natural for them like if you're walking down the street in tokyo and you see a english sign there that says something about i don't know world series sale or something right your eyes will catch that but back to world series uh i used to uh follow the baseball uh schedule because if sabre one i knew there would be a sale there exactly exactly that's very funny but what a humorous giant sale whatever but you have a very good point do we have another slide oh m commerce that's that's a big one in japan that's huge yeah and many people don't realize the proliferation of smartphones and tablets and so forth in japan and and the use of m commerce m commerce is what's become the short term for mobile e-commerce meaning when you're sitting on the train or the subway in tokyo and you're playing doing something on your phone and you're shopping and what have you people are buying from the phone right and perhaps more interestingly is they're buying from the iphone android has had relatively little penetration in japan so what we're trying to consult to the companies here is get ready for that and make sure your products and your website and all of your images and what have you look good online on that little screen on an iphone but that your e-commerce is set up so people can push a button and buy it right then right 60 percent of all online transactions over 60 percent now of all online transactions in japan are done on a mobile device and that's a remarkable amount of money moving from a phone right that's fantastic well next slide and final slide best practices this is back to the beginning of our show there's what you talked about the people about to come to hawaii and how to influence them and how to influence the tourists who are in hawaii through different means yeah we we talk to the companies a lot here about what are the best practices and you can't get to the best practices in one day but there are steps you can take over time so that after a year or two you should be at what are the best practices in the international sales and marketing world and so some of those things we talked about a little i like having some japanese language on your website i like having a japan specific email address we have to we have to respond timely though right right some of our companies here can take email a little less seriously than they should and we need to be able to respond quickly that's what japanese customers are expecting and i think that japanese customers also understand that in their morning it's about one or two p.m here and we have relatively a half a business day to be able to respond to it it's doable till five five o'clock but no more than 24 hours and but we i i've seen some but but back to your step about quality and and promptness and so forth uh you would agree that i used to be in logistics and uh high tech sales in japan myself that if you can meet those standards and and exceed the customer requirements and really get them to buy your product then you can sell anywhere oh yeah i agree i my my philosophy in sales has always been make it as easy as possible for your customer to buy from you and if you can make it as easy as possible for your japanese customer to buy from you then you can like if you can make it there you can make it anywhere that's right right and it's true because they they are demanding but they're demanding in a way that will make your company better right they're not demanding just for the sake of being demanding i i totally agree with you because uh they will make um uh incremental quality you know uh suggestions and advice or what what and if you meet them or if you respond to those um advice or queries and so forth then suddenly your market and largest everybody in japan oh absolutely and and and and it's a hundred twenty five hundred thirty million uh population and third largest economy in the world but still it's it's a consumer market obsessed by hawaii absolutely let's talk about one other quick item that we talked a bit about off air is that i think hawaii companies can benefit from the fact that japan has an aging population that's right and they genetically the population lives longer anyway but from modern medicine and what have you japanese people are living very very long there's well over a hundred thousand people in japan that are over a hundred years old but the point being that uh there's a a topic in japan called quality of life for short for qol and they actually use that word that acronym qol to talk about the silver generation and making life better for them as retirees and the products that could be sold to them natural products that are good for health and longevity and skin and what have you our companies here could really do a fantastic job and we have to close on that the issue of the silver market which i think is uh would require on shore by itself this is rei tsuchiyama business in hawaii thank you very much