Network in Motion

Consulting in Japan & Israel Business Development, Network in Motion ltd's Logo
Ira Prigat

Ira Prigat

Founder and President of Network in Motion Ltd.

Japan’s Aging Society Creates Investment Opportunities

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As Japan’s population ages quicker than any other developed country, the medical care market is expanding significantly in recent years and is expected to further grow thanks to the increased public awareness of health issues and the government’s implementation of supportive policies. As a result, there is a huge demand for elderly related diseases such as cardiovascular and neurosurgery, oncology and respiratory. In addition, technological solutions in the fields of early detection and disease prevention, as well as remote monitoring, AI and ICU related solutions are in high demand.

With a population of 127 million people, where about 30% are over 65 and a huge buying power, Japan is considered the 2nd largest global medical market. Yet, business communication in Japan requires a deep understanding of its unique decision making process and a lot of patients. Moreover, some of Japan’s global medical corporates such as Terumo, Canon and Olympus are starting to become actively involved in recent international M&A deals. This change is reflected in 2 manners. The first is the number of investment financial transactions Japanese corporates are involved in and the second is the growing interest in earlier stages of startups.

During the last 3-5 years the awareness of Japanese companies to Israel’s innovation power have significantly increased due to the increasing number of Japanese representative offices opened as well and the growing involvement of consulting firms who conduct ongoing scouting activities for large scale corporates. However, despite these positive developments, I still argue that Israeli Med-Tech firms are less aware of the huge business and investment opportunities that exist in Japan.

To put things in perspective, along the global Covid19 pandemic, there were 18 investment deals only in H1. 2020, yet the investment trend continues to rise with a total of 1.5 billion USD along the last decade, as reported by IVC.

Japanese companies are known for their slow decision-making process, however having a Japanese business partner is not only a token of excellence, but also a powerful financial backbone that can secure growing revenues stream, the possibility to enjoy Pan-Asian presents and even global penetration.

We do hope that the expected media attention to the Tokyo Olympic and Paralympic games should act as a reminder to Israeli companies and startups to develop their own pathway into this amazing market, while creating a significant differentiator to their competitors. 

So how should you start?

The majority of Japan business experts focus on the vast cultural gaps existing between Israel and Japan. However, I’d like to suggest here a different approach, which luckily worked well for me along the last 20 years of doing business with Japanese. 

  1. Personal relationships are more important than cultural understanding
    For sure one should be aware and respect the cultural differences, however what drives business creation in Japan are personal and trust relationship, thus if you won’t invest in creating and cultivating personal relationships with your Japanese pears it is likely that you won’t end up gaining their trust and attention.
  2. Respect to hierarchy and the decision-making process
    Japanese corporates are known for their thought hierarchy where seniority is highly important. Therefore, the need to receive the internal approval of various management levels is an essential part of any business discussion and thus takes relatively a long time. Respecting the Japanese decision-making process is a key for success, therefore trying to rush things or to ignore the communication practice may make the difference between being “big in Japan” or losing the opportunity.
  3. There are no second chances in Japan
    Israelis are in a constant rush to move forward and are sometimes impatient with long processes. The same could be attributed to Israelis’ perception of product launching saying” we are eager to start selling, so we are launching an 80% ready model, while the next generation will have the needed improvements”. Such an approach won’t work in Japan and the same could be said about the nature of communicating and negotiating with Japanese. Therefore, it is recommended to be ready on all angles of the business or to have someone communicate the differences in a way that won’t burn bridges.
  4. Respecting the Japanese need to conduct an organized process
    we are often asked by our Israeli customers to shorten the process and even to skip some milestones along the process. Yet as much as our common interest is to enjoy the fruits of a short process, we know that Japanese see a huge value in conducting a detailed and organized business process. Successful Israeli companies have demonstrated respect and patience to comply with the detailed process. It is not a secret that Japanese are using the long decision-making process to “test” the nature of their potential business partners’ reliability and professional approach, as a prediction of future partnership.
  5. Come well prepared
    Israelis are very good at improvising, can make quick decisions and solve problems “on the fly”, but don’t like to “spend money on market research. However, Japanese companies expect that you will have an initial understanding of the Japanese market’s requirements, as well as having a basic go to market strategy. Indeed, this means putting your hand in your pocket and having a business support consultant run that investigation for you, but this will allow you to manage a smart and healthy discussion with your Japanese potential partners. Don’t be cheap on learning about the key elements of this huge market.

Be Wise in Creating Strategic Opportunities in Japan

Working closely with Japan’s largest Enterprises granted us a unique opportunity to know what technology they are looking for, in which business development stage and what kind of business deal they are willing to get into and what the process looks like. We are grateful to gain their trust and we do hope to leverage these assets in creating more strategic opportunities for Israeli Med-Tech companies, as well as to set strategic alliances for VCs and accelerators in Japan.

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In doing business with Israeli startups, Japanese companies need insights into the decision-making process and importance of mutual understanding in Israel.

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