 Aloha. I'm Rob Hack and this is another episode of Exporting from Hawaii. Today I'm starting a new series on specific topics about exporting such as marketing, finance, logistics, trade shows, what have you. And today's episode will focus on marketing. In particular, we're going to focus on marketing in Japan. Most Hawaii companies are interested in Japan as their first export market. I don't always agree with that because I think Japan is a difficult market. There's others that are easier, such as Canada or Mexico with our free trade agreements there. But nonetheless, because of cultural similarities and lots of visitors from Japan to Hawaii every year, our companies focus on Japan. So that's what we'll do generally on this show, Exporting from Hawaii. So when we're talking about exporting from Hawaii to Japan and marketing to Japan, I also want our companies here in Hawaii to focus on marketing to Japanese visitors. And we'll talk a lot about that today. Next slide, please. Next, these are four areas of marketing activity that I'd like our companies to focus on. We market to our local Hawaii based customers. We market to the mainland. Those are generally English based marketing messaging, social media, website, signage, what have you. But I would also like our companies to focus on marketing in the Japanese language. That's not always easy, but it's very doable. There's a lot of natural Japanese speakers here by which we can utilize them for translation and what have you to get perfect translations in Japanese. So I've created this model where we have local marketing, mainland marketing, then Hawaii based Japanese marketing and Japan based Japanese marketing. And the modern marketing plan needs to be based on all four of these pillars. And I use this overlapping model of concentric circles here where in the middle, you could have very core messaging that's common to your products or services. But as you start to focus and target the segments of your local market, your mainland market, your Hawaii Japanese visitor market or your Japan domestic market, your messaging could alter somewhat from your core messaging in order to address that target market specifically. Next slide please. Let's focus for a second on the Japanese customer. Japanese customers to a Hawaii company will be of two types in my opinion. The point of sale is in Japan where you are trying to get companies in or consumers or companies in Japan to learn about your product, buy your product directly or perhaps they're planning for a trip to Hawaii and they're doing pre-trip research on what they'd like to do and what they'd like to buy. And so you're marketing to them in Japan in the Japanese language. If a customer in Japan buys from you via a local distributor in Japan or online sales, it's very likely to be a Japanese yen based transaction. The second type of customer that you'll have is where the point of sale is in Hawaii. More than likely that's a US dollar transaction. Just because of our local prevalence of English, there's likely to be a mixed language message to them in terms of Japanese and English, but we should try to have as much Japanese in the transaction as is possible. It's important to note that we have approximately 1.8 million Japanese visitors will come to Hawaii this year. Most of them come through Honolulu Airport and the majority of them also come through and do some tourism activity on Oahu and hopefully more and more are going to neighbor island visits to the Big Island, Kauai, Maui, Molokai and beyond. But we know for sure that roughly 1.5 to 1.6 million of the 1.8 total are coming through Oahu, coming through Honolulu and even more specifically through Waikiki. So we must message to them correctly. One of the things I'm continually surprised about when working with potential exporters and companies who want to export to Japan or sell to Japanese visitors to the islands is that we are not marketing Hawaii and Aloha enough in our messaging and we really need to play that up much more. The state of Hawaii, both in terms of dollars coming from Debet but also just the general existence of Hawaii is doing 24-7 marketing for our customers here, our companies in Hawaii and we have a tremendous word association value with the words Hawaii and Aloha. Meaning customers in Japan or anywhere in the world when they hear the word Hawaii and they hear the word Aloha, they get a wonderful feeling about that. It's much different than some other words that you can imagine when there's word association. So when customers in Japan hear the words Hawaii, hear the words Aloha, similar words like that in Hawaii, they automatically think of blue sky, clean ocean, palm trees, sandy beaches, good temperature, those types of things. So there's a natural association for natural products, products that are clean, products that are fresh, made with fresh ingredients, organic. Products like that have a natural follow-on to the words Hawaii and Aloha in terms of marketing, wordage, verbiage and usage. So our companies need to really focus on that and market that as much as possible in their products and just have it baked into their marketing plan. Next please. Another common mistake that our companies here in Hawaii make is that we tend to believe that English is usable when dealing with Japanese and it's not. It simply is not possible to have a good marketing strategy to the Japanese mainland or to Japanese visitors here based on English, either spoken or written English. And so we need to use proper Japanese in our verbiage on signage, on websites, in emails and social media. And as I said earlier, it's not hard to do. There's many, many locals that are here in Hawaii that are visiting from Japan that live here, have lived here a long time, are going to school here, what have you. And it's very easy to get good, simple translations for marketing messages. Do not rely on Google Translate or similar services. And here I highlight a couple of places where you can get some simple words, but I certainly would not focus just on Google Translate. And also we have to be sensitive of the fonts that we're using. As in English, you can imagine if you have a website or you have a pamphlet and you're using fonts such as New Times Roman versus Ariel versus Helvetica versus Myriad literally hundreds of thousands of different fonts. Each one of those fonts has a slightly different message about your product, your company, your company culture, the service that you provide. So we have to think about that in Japanese as well, that there's many fonts. Thankfully there's not as many as there are based in English language, but there are several fonts that we have to look at. So depending on whether you're trying to convey that your company is a young, energetic or you're sort of an older company that's very fixed and proud or what have you, the font can say a lot about that. So we have to be sensitive to that. So please look out for that. Next slide please. A major concept for a marketing to Japanese and to Japanese visitors to Hawaii is the concept of omiyage. And I think most listeners of this show will be somewhat familiar with the term, but I think most people who try to translate it quickly into English will use the word souvenir. And that's not exactly a good translation. Omiyage is much more complicated than just a souvenir. So omiyage would be you're trying to, as a visitor to Japan, as a visitor from Japan to Hawaii, you're trying to take back to Japan a piece of your trip and share it with your family or colleagues, your friends, what have you. And there's certainly different levels of omiyage. So if you're taking something back to your boss, it might be different than say to your secretary or something to your taking something to your mother-in-law would be more complicated than say to your niece. Let's put it that way. So the average Japanese tourist spends a lot of time and energy and money working on calculating this omiyage and what they're taking back. And you'll often see them buy lots and lots of things. Of course there's standard chocolate macadamia nuts and that sort of thing, but generally I think the better omiyage practice is selling to the customer pre-packaged omiyage that they can buy quite easily and that their decision process is relatively short and you can have different levels of omiyage available. So say for example $100 package and a $50 package and a $10 package that would allow the customer to buy things very quickly and not have to decide very much. Can we go to the next slide please because I think our companies here in Hawaii are not generally speaking doing a good enough job of packaging in that the package that Japanese tourists is going to take back to Japan has to be packaged nicely so that they are able to give it to their colleague or family member or friend directly. And usually that means wrapped and more often than that that means in a bag, a small two-strap bag like this girl in the picture here has that type of package she could hand to somebody directly. In Japan it's sort of verboten to just hand somebody a gift that's not wrapped and not in a bag. So if you're as a Hawaii company able to provide that bag and a nice looking packaging it makes it so much easier for your customers to buy from you and take that back to Japan. The decision process for them to purchase is very very simple and clean. I would also say that Japan uses a tremendous amount of packaging. The U.S. in general uses more packaging materials than Japan does but that's largely because it's a bigger country with more people but on a per capita basis Japan uses the most packaging materials by far of any other country in the world. So please keep that in mind. Next slide please. The other thing I am constantly telling our local companies is we have to segment the market and find out who really is your target market segment. As I said earlier there's roughly 1.8 million Japanese tourists will visit Hawaii this year. Not all 1.8 million are likely candidates to buy your product or service but there is a certain segment of that 1.8 million who assuredly are your target market segment and this is in segmentation is a key component of marketing and this is where we're talking about trying to find hypothetically your customer would be a female aged 26 to 35 with an income of x yen per month and an education of such and such and probably lives in a metropolitan area what have you. Every product will have a different target market segment but nonetheless that's for you to try to figure out and you should be spending lots and lots of energy trying to figure out exactly who is your customer and then your messaging should sing to that target market segment. So if you are posting to social media you're posting information to your website you're writing pamphlets you're putting signs out of your shop or your booth that the messaging that you're putting there will seem very important to that target market segment and it's particularly critical if you start sending email newsletters because if you're sending email newsletters to a target market segment and your verbiage is correct that target market segment will be very likely to open that email at least glance at it whereas if you're sending messages to just everybody you're going to get a lot of spam complaints and what have you because you're sending messages and targeting people who simply are not interested in your product and never will be. So we don't want to waste time energy and precious money going after those types of customers. Next slide please. I talk about Japan as a very interesting demographic in that roughly now there's 126 million people in Japan so it's obviously a much larger market than just selling in Hawaii. Japan is getting older the population is actually shrinking but I think this older population that's focused on healthy natural products is a great opportunity for our Hawaii customers. In Japan they call it QOL they actually use that English acronym for quality of life and that's for the elderly geriatric population and developing technologies and products and transportation services and a whole myriad of societal issues that are based upon this aging population. But just some simple data here is 30 percent or over 65 that's actually rather incredible and more than 100,000 people are 100 years old or more which is also quite incredible. So it's a fantastic opportunity for our companies to focus in on that target market segment and many of these elderly customers are visiting Japan also I'm sorry visiting Hawaii also so it's important to think about if that is a target market segment for you then we want to develop some messaging for that particular target market segment. Next please pricing if you're pricing product for the Japanese market or for Japanese tourists that are visiting Hawaii there's a few more issues you have to look at when you're trying to determine what is your street price for your products and services particularly in Japan you have to look at Japanese packaging Japanese language on the packaging and labeling if you're shipping product to Japan which is a very big issue that we'll talk about it soon. Shipping is quite expensive from Hawaii to anywhere the mainland included but shipping to Japan you may have some tariffs depending on what your product is inbound taxes then you certainly might have domestic shipping so if you're shipping by air by ocean they'll land at an airport or at a port say Yokosuka for example by ship and then from that port the product has to be transported somewhere else in Japan and the Japanese domestic transportation system is quite efficient and cost effective but nonetheless you have to understand that price very clearly when you're setting your complete price for the product. Don't forget about commissions for agents or distributors or what type of system you're using to actually get the the products to your end users. Another topic that could be complicated depending apart what types of products you're selling is are there warranty claims after the fact so for example if you sell something to Japan and it turns out to be a mislabeled or the wrong product or what have you and the customer has to ship it back to Hawaii who pays for that shipping and then you're going to you have to turn around and send them a new product so there's another amount of shipping there so all of that has to be amortized over time and built into your pricing similarly for spare parts. There's some products that we're making in Hawaii that are excellent excellent products and are coveted by Japanese consumers however those products need to be tested by the Japanese authorities let's say for analogous to the FDA in the US and the process for getting those products tested is not arduous and not extremely expensive but nonetheless it needs to be done and that entire process is in Japanese there's there's almost no English involved so you really need somebody on your side to help you get those products tested in Japan and eventually you have to build in the price of that testing back into you and labeling back into the price of the product. Generally speaking over time selling in Japan shouldn't be more expensive than selling here locally in Hawaii at first it may seem that way because of shipping and what have you but as your volumes go up your price per unit in Japan the street price in Tokyo shouldn't be different than the street price here in Honolulu or on Maui or wherever you are in Hawaii. Another similar issue that you have to follow closely are the foreign exchange rates between the Japanese yen and the US dollar. Right now in terms of historical levels history being let's say the past 25 30 years the Japanese yen is rather weak against the US dollar I'd suggest today it's around 114 yen per dollar what that means is that for Japanese customers who are buying your product in Japan or Japanese visitors to Hawaii who are buying your product street price in Honolulu the products seem rather expensive to them compared to the past 25-ish years where the dollar was weaker against the yen so that when tourists would come here they would think that the products were quite cheap hotel rooms were rather inexpensive flights were felt more inexpensive however now because of the weak yen the customer that's coming to Hawaii feels like things are expensive and so we need to understand that and we need to follow the foreign exchange trends to to fully appreciate what our customers think the product pricing feels like to them in Japanese yen so it can go up and it can go down there can be long-term trends of course but there can be short-term trends for whatever reason could be caused by weather and earthquakes or other acts of God but also political reasons and what have you and if for some reason it felt extremely expensive at the yen weakened tremendously very quickly it might be a good opportunity to lower your price in Hawaii so that customers are not put off by the short-term high price that they feel the product is next please this is a quick trending graph of what the yen has looked like since roughly 1970 um there was a time in the late 80s early 90s mid 90s when you can see I think even in 90 1994 the yen got down into the 70s around 78 yen per dollar what that meant was that it felt incredibly cheap for Japanese to visit the US and vice versa it felt that incredibly cheap the US products in the Japan domestic market but now things have appreciated more in terms of US dollar side and the the products generally from the US now feel somewhat expensive to them next please a critical part of marketing in Japan is building into the marketing plan what we'll call after-sales service of course not many of our companies in Hawaii are building machinery or that type of product where we have to have on-site um renters uh doing preventive maintenance and changing parts and and doing these types of things but nonetheless we need to be able to contact our customers after the sale follow up with them how is everything how's how is the product quality would you recommend it to other uh your friends and colleagues we have to do a much better job of that rather than just making a sale and moving on some of this is a language barrier but it doesn't need to be as I said earlier if you if we're going to do business with the Japanese we must get accommodated to doing that in the Japanese language as much as is possible and we really don't have any good reason to back away from that in Hawaii there's plenty of opportunity to find qualified Japanese speakers readers and writers who can help with follow-up messaging after the sale be it by email or social media or text message or written notes handwritten notes that you mail to customers I think that that's extremely important in the Japanese market and we just simply don't do enough of that here in Hawaii next please shipping from Hawaii to Japan this is an extremely can be an extremely complicated topic by which we could have an entire episode of the show exporting from Hawaii just focused on shipping nonetheless it's an important topic I think what we should do is bring this up after the break so right now let's take a quick break from exporting from Hawaii when we return we'll pick up with shipping from Hawaii I'm Yukari Kunisue the host of Konnichiwa Hawaii Japanese talk show on Think Tech Hawaii Konnichiwa Hawaii is all Japanese broadcast show and is streamed live on Think Tech at 2 p.m every other Monday thank you so much for watching our show we look forward to seeing you then I'm Yukari Kunisue mahalo hello I'm Dave Stevens host of the Cyber Underground this is where we discuss everything that relates to computers that's just kind of scare you out of your mind so come join us every week here on Think Tech Hawaii dot com 1 p.m. on Friday afternoons and then you can go see all our episodes on YouTube just look up the Cyber Underground on YouTube all our shows will show up and please follow us we're always giving you current relevant information to protect you keeping you safe holo ha welcome back to exporting from Hawaii I'm Rob Hack from Inside Interasia when we left off we were talking about shipping from Hawaii to Japan and this is an extremely critical topic when trying to calculate pricing for your products shipping as we all know from some small islands in the middle of the Pacific Ocean to either the mainland or to Japan is expensive especially by air and we are trying very aggressively to get our companies here to get volumes up to the point where they can ship by ocean unfortunately you can ship by ocean directly to Japan generally to Yokosuka but there are other ports and it makes things much more cost effective next slide please I do a very brief overview that I've taken from a client these are actual numbers where if you're shipping one twenty five dollar widget from Honolulu to Tokyo it costs twenty five dollar street price here but to get it to Japan very quickly my priority mail eventually the shipping price will wind up to be thirty one dollars per that one unit so the shipping price is actually more than the value of the product itself then on the next slide I or the next line I talk about getting the shipping price down to three dollars and fifty eight cents per unit if you can pack up to twenty four items widgets in one larger priority mailbox and twenty four is a limit by which you are allowed to import something into Japan at one time and not necessarily pay a tariff it would be for personal use of that twenty four so if you were sending twenty four items to one individual customer in Japan this is one possible way to do it again a twenty five dollar product adding approximately four dollars per unit on shipping is not terrible but nonetheless it's still relatively expensive but if you look at sending twenty five hundred units on a pallet that whole pallet costs roughly five hundred dollars to ship to Japan you're getting it down to twenty cents or thereabouts per unit shipping and that's where we need our companies to get to so again shipping is an extremely complicated topic it's expensive we know that we people fully understand that here but it's something that is surmountable and I will have further episodes on export from Hawaii just talking about and addressing the shipping issue so with that I'll sign off today we'll be back with more episodes of this and even talk about marketing more in the future there's a lot to say about social media in Japanese and what have you again I'm Rob Hack thank you for watching exporting from Hawaii