Misconception to Missteps

3 Crucial Clarifications
about
Japanese NFR Programs

By
Kurt Haug
Access Technology Solutions

Let's start by just laying some groundwork about Not-For-Resale programs in general, and the Japanese market overall.

• Japanese Market.  As everyone knows, the Japanese market a HUGE nut to crack.  Potentially confusing, mysterious—even frightening—but HUGE, just the same.  There are many successful local Japanese network marketing companies, but even so, Japan is probably the single most important non-U.S. market for a network marketing company to penetrate if they have any hope whatsoever of becoming a truly global powerhouse in their respective fields.  We all know of several of the largest, most successful companies that have been built largely on the backs of their Japanese operations and continue to get the majority of their sales in Japan.

• Not-For-Resale (NFR).  That's exactly what it is—NOT FOR RESALE.  If anyone tells you that you can set up a NFR or personal import program just to get goods into Japan (or any other country for that matter) but that once the goods are received customers can do whatever they want with those goods, THEY'RE WRONG.  These goods cannot be resold and are for personal consumption only.  But that doesn't mean you can't build a multi-level recruiting organization.  More about this later.

• On the Ground (OTG).  This is the where you have complete local Japanese operations that probably include full product localization (potentially including reformulization, etc.) and registration, customer service, warehousing, marketing support and potentially even manufacturing in country. 

So what are the biggest misconceptions about Japanese NFR programs?

MISCONCEPTION  #1-- In the long run, OTG is “better” than NFR.

At first blush, on the ground manufacturing, distribution and logistics may sound like the cheapest and most efficient way to supply and even dominate the Japanese market.  But consider the following:

• Huge capital investment.  Expect nearly every aspect of OTG Japanese operations to cost 3-5 times what you would pay for the same services in the U.S.  Now double it again.  And maybe again.  NOW you're looking at a realistic estimate of your REAL hard costs.  Seriously question anyone who tells you otherwise.

• Slow ramp-up and response.  If time is money, building a Japanese OTG operation is even MORE expensive than the money you will spend.  At a recent international conference, I heard the leading international executive for one of the world's biggest direct selling companies say that they expect to spend about 3 months to “enter” a new international market.  I'm not sure what countries he's referring to, but it's definitely not Japan.  If you're starting from scratch, expect to spend 12-18 months to really launch your Japanese operations.  Just registering your product can take 9-12 months alone!  Again, take your time estimates for roll-out and double them.  Yes, and maybe again.

Got a hot new product that you'd like to test in Japan?  With an NFR program, you can start market testing and even promoting that product almost overnight.  If you are exclusively OTG, you are still several months and lots of money away from testing the market due to all of the registration, manufacturing and other support issues.

MISCONCEPTION #2-- NFR is nothing more than a stepping stone to eventually going OTG. 

In most cases, NFR is indeed the safest and most logical “first step” to Japanese market entry.  Compared to launching a full-blown OTG operation right out of the gate, NFR is a fast, inexpensive and relatively simple way to begin building the foundation for your Japanese logistics.  However, even after many years as dominant forces in the marketplace, many of Japan's most successful direct sales companies maintain BOTH NFR and OTG businesses.  And in fact, unfortunately some major direct sales companies that actually seen a significant decrease in their overall sales and organizational development when they abandoned NFR and went to a solely OTG model.  With a truly efficient NFR program that is truly transparent for your distributors and customers (more on that another time), you may never feel the need to establish an OTG operation.  And if you do, you'll find that continuing your NFR as well gives both you and your customers additional flexibility with very little effort. 

And now the BIGGEST misconception of all:

BIG MISCONCEPTION  #3-- Japanese NFR programs are somehow “shady” and not really “legitimate.” 

Patently not true.  A properly configured NFR program is based firmly on Japanese personal import law that provides for Japanese citizens in Japan to import goods from overseas for personal use.

I was shocked to hear this repeated recently by an otherwise extremely well-informed and highly respected industry figure at a recent conference.  It just illustrates how deeply some of these misconceptions are held. 

For half a dozen years “rumors” have circulated that the Japanese government is going to change the personal import laws.  Nothing could be further from the truth.  Most of the people who perpetuate this misinformation have a vested interest in getting you to spend a lot of money with little immediate return.  Again, buyer beware.  The fact is, many large retailers in Japan (both foreign and domestic) are seriously looking at expanding personal import programs to create greater value and selection options for their customers. 

Bottom line.  A high quality Japanese NFR program is almost always the fastest, easiest, most flexible, least expensive and SAFEST way to enter the Japanese market and can remain a crucial part of your overall Japanese strategy even after you've established an OTG organization. 

Kurt Haug is COO of Access Technology Solutions, the largest single provider of international logistics and shipping services to the direct selling focused exclusively on international operations.

Website: http://www.accessts.com
E-Mail: khaug@accessts.com