Japan's IT Market: An Opportunity for New Market Entrants

Many may forget, but Japan used to be the world's second-largest market for information technology (IT). However, in recent years, most of Japan’s industries have fallen behind in terms of adopting new technologies. A significant driver of this has been economic stagnation caused by Japan’s “bubble economy” bursting in the 1990s, resulting in businesses being reluctant to change and sticking with legacy systems as they weathered uncertain times.

But there are signs that things are starting to change. Perhaps a “wake-up call” due to the COVID-19 pandemic, a 2022 survey by Gartner found that 30% of software buyers are looking to invest in new technologies to support business expansion or productivity improvements. And that 25% of Japanese businesses utilizing software are using outdated technologies or have outgrown their current systems.

This suggests that there is an opportunity for new market entrants in Japan's IT market. However, there are a number of challenges that solution providers will need to overcome in order to be successful.

Generally speaking, the Japanese B2B market is very relationship-based. This means that businesses will need to build relationships with potential customers before they can make a sale. Additionally, businesses in Japan are often risk-averse, so they will need to be convinced that the new technology is a good investment.

Furthermore, businesses will need to localize their products and services for the market. This means that they will need to translate their products and services into Japanese as well as adapt them to the local cultural context.

And finally, businesses will need to be patient. It can take time to build relationships with customers and convince them to adopt new technologies.

Obviously, the aforementioned challenges are only the “tip of the iceberg” when it comes to new market entry considerations. But when looking at capitalizing on the opportunities in Japan’s IT market, the key takeaways remain the same:

• Build real relationships with potential and existing customers.

• Invest in localizing your products and services for the market.

• Demonstrate the value of your products and services through a tailored experience.

• Be patient.

If you are interested in learning more about the opportunities in Japan, please contact Litmus. We offer a range of services that help businesses enter the Japanese market, including marketing, business consulting, and localization services.

Disclosure: This article was written with assistance from AI tools.