Illustration for the ACCJ Journal by Eric Kim
Why Foreign Firms Fail How not to do business in Japan.
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hat do the following companies have in common: Sephora, Dunkin Donuts, Marks & Spencer, Boots, Vodafone, IKEA, Burger King, eBay, Gateway 2000, Ogilvy & Mather, KFC, Pret a Manger and Agfa Japan? All of these global businesses have exited the Japanese market at one time or another — some with the proverbial tail between their legs. Others — including Ogilvy & Mather, IKEA and Burger King — have returned from the dead and gone on to be extraordinarily successful, the second- and, in some cases, thirdtime around. Yet, these and many more businesses — some equally well known; others, smaller startups — were launched on
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the Japanese market with high hopes of conquering the world’s second-largest economy. In reality, though, they exited, sometimes ungracefully, burnt and with reputations in tatters and millions of dollars written off. Such measurements of failure do not take into account the human cost, of jobs lost and the enormous stress for the foreign executives appointed to run the equivalent of a Titanic, answering to overseas head offices with little or no comprehension of the Japanese market, or why business should be less than peachy. With this in mind, when Tommy Kullberg, former IKEA president and now chairman and representative director at Kullberg & Partners K.K., gave a talk on June 3 for ACCJ members on
“Eight Successful Ways to Mess Up Your Business in Japan,” a packed room including managers and presidents of leading brands not surprisingly clung to his every word. Here was a man who understands failure in Japan better than anyone, leading the formerly defunct IKEA brand in Japan to what now seems like an overnight success. A fairly impressive achievement, considering the last time the Japanese public had heard about IKEA was when it was involved in a nasty court case; the next, when its launch store was so successful that the majority of products sold out in days and Japan became IKEA’s most successful worldwide market at the time. Kullberg has been involved in about 100 market entries