MES-Sim Corporation: Entering The Japanese Market

Executive Summary

Project Summary

MES-Sim Corporation has been tasked with entering the Japanese market with its new video gaming system, the M-Box. This project examines various critical aspects of the country’s policy, legislation, business customs, practices, and social structure that may affect the promotion of the product. Furthermore, an in-depth exploration of Japan’s import and export prospects as an island nation is conducted to justify the establishment of a new base of operations centered within the country. Ultimately, the paper provides various recommendations on how to use Japan’s opportunities for successfully introducing the M-Box to the market. These opportunities shape the marketing strategy that MES-Sim Corporation will utilize to create and identify with its target market. Thus, the concepts of conducting international trade are considered to provide MES-Sim Corporation with opportunities to develop its activities in Japan effectively.


Japan is not a significant transport corridor; however, the nation conducts an extremely balanced foreign trade policy, using the advantages of the international division of labor to develop its economy and maintain the population’s living standard. The Japanese market wholly possesses high purchasing power in the global market and is recognized as a technological hub. Similarly, the Japanese domestic market is already saturated with diverse offers, and therefore the competition is very high. Manufacturing and processing industries vie for financial dominance and aggressively market to their target audience through flashy mediums meant to capture a diverse demographic. In addition, domestic production, such as food products, has developed remarkably well, allowing the government to export Japanese goods to international consumers and adequately satisfy its domestic needs.


The first step in determining whether the MES-Sim Corporation should develop Japan is collecting data on the country’s government, people, economy, and technological status. Culture plays a significant role in Japanese business transactions, necessitating focused attention to the impact on sales upon entry into a new market. The second step is the business situation in the country. The principal point is the study of various legislative, political, social, and cultural aspects. Understanding the specifics of doing business in Japan is necessary to avoid possible misunderstandings and failures. The third step is to analyze the country’s import and export opportunities. At this stage, it is necessary to consider how to implement the company’s operational activities inside and outside the country. The fourth step focuses directly on the market entry strategy. Technical and transport capabilities are determined at this stage to create logistics supply chains and product sales.

Results and Conclusions

Based on the results obtained, prospective investors should focus heavily on market development since the capacity for growth is immense. Japan’s legislation is relatively complex and requires careful study and support from potential Japanese partners who can directly become intermediaries in business processes within the country. In addition, because the Japanese gaming industry is quite popular, the competition is relatively high. Therefore, it is necessary to consider the specifics of Japanese consumers’ behavior. Their trends are reflected in the country’s cultural characteristics, so the product’s technical features must also meet their needs and requirements. The positive sides are the country’s high level of technical development, which will allow MES-Sim to create an effective chain of communication between all parties involved. In addition, there is a developed transport system, which significantly simplifies all logistics.


Legal regulation of business relations in Japan is carried out under the guidance of numerous legislative act governing incentives, tax laws and subsidies. Opening a representative office in the country’s capital, Tokyo, is the most recommended way to start activities in the Japanese market. Subsequently, this will serve as a solid basis for conducting commercial activities when deciding to open a company branch or create a subsidiary in other parts of Japan. The main recommendation is to initiate close cooperation with Japanese partners since the characteristic features of the market are unique and averse to foreigners. Utilizing constant support from specialists who understand the specifics of conducting business within the borders is required.

When developing logistics routes, it is also necessary to rely on the expansive geography of stores opened in the country since access to various localities can be seriously limited. Large network retail operators have managed in a relatively short time not only to produce significant trade turnover in the country, changing the industry’s structure in terms of sales but also to positively influence the distribution channel system. Before entering the market, it is necessary to acquaint the company with comprehensive legislation for importers to avoid possible problems.

MES-Sim Corporation is an internationally traded company and the M-Box will get significant demand from Japanese consumers who are intense video game players. Establishing routes for market entry will mostly depend on identification of a willing target market in addition to incorporating export and import trade options with Japan’s neighbors. Ultimately the transportation and distribution channels will determine the company’s profit margin especially considering the cultural impact and significance of Japan’s society on marketing strategies.


Japan is the third economy in the world after China and the United States in terms of GDP, the world’s leading investor, and a significant technology hub. Similarly, the prolonged stagnation of the nation’s economy and the consequences of coronavirus pandemics continue to reduce the country’s share in the global economy. A reduction in manpower in addition to rocketing fuel prices constantly impede the nation’s industries from producing at levels previously recorded. The leading sectors of the Japanese economy are mechanical engineering, automotive, pharmaceutical, medical, and robotics. These same industries form the export base of the Japanese economy. The quantitative predominance of the small format in the industry, which has developed historically, remains noticeable in modern retail trade in Japan. Legislation in trade is regularly changed and supplemented, considering economic and political realities. In particular, the export control rules are constantly being supplemented, and sanctions restrictions are being introduced and clarified.

When doing business in Japan, it is necessary to consider various regulatory regulations. MES-Sim Corporation has many opportunities to develop its product in the Japanese market. The M-Box video game system can integrate into the interests of the population of a given country. Japan’s strong gaming culture can affect the success of promoting this product on the market. However, investors must consider the financial ramifications of a product launch since the Asian market is quite complex regarding legislation and various social aspects. Based on the financial, legal, environmental, and social data from the country, it follows that there are many positive aspects that create a conducive work environment. Therefore, MES-Sim Corporation must endeavor to secure a loyal market base before introducing a new video game system. Distinctly, the M-Box will be subject to the various political, economic, social, and cultural aspects of the incredibly diverse Japanese market.

Marketing Intelligence Report (MIR)

The approach of Japanese developers to creating video games is fundamentally different from Western industry representatives, indicating a different technological and cultural approach to work. Their growth and approach were facilitated by many factors: historical, socio-economic, and political-cultural characteristics and the transformation of the national consciousness of the Japanese. The conjuncture of both the global and Japanese markets has allowed expanding the potential audience. If earlier products were developed mainly for children and youth, then attracting a more adult audience through the development of a universal category of games has become an essential vector for the Japanese industry in further development.

Japan’s government is receptive to investors and encourages international traders to set up bases of operations within its environs. The government offers guarantees on loans, reduces taxes to incentivize companies, and genuinely welcomes overseas investors (“Japan – Trade Standards,” 2022). Similarly, the Japanese people are technology-conscious and form an aggressive game market which has further formed a specific structure of the video game industry in Japan. The creativity of game developers in the nation has led to successful brands such as Pokémon, Pac-Man, and Space Invaders (Day Translations, 2019). The success of these companies indicates the economic success and reception of video games in the country.

However, over the past few years, the country’s role in the development of the world economy has somewhat weakened, which is especially noticeable against the background of the rapid growth of the economy of the People’s Republic of China and several other developing countries. Japan’s share in world commodity imports is also declining: in 1985, it was 6.5%, in 1995 – 6.4%, and 2005 – 4.7% (Cordioli, n.d.). In 2021, according to this indicator, Japan ranked fourth in the world (3.7%) after the United States (13.9%), China (9.8%), and Germany (6.5%) (Cordioli, n.d.). Japan’s Ministry of Economy, Trade, and Industry is the leading government body entrusted with practically implementing economic, industrial, and foreign trade policies.

It builds its activities based on administrative and economic measures to influence the Japanese private sector to ensure the stable and dynamic development of the country’s economy. According to Zhao (2022), Japan, during the second half of the XX century and now in the XXI century, rightly bears the title of an ultra-modern power. Today, Japan’s technologies make the country one of the most advanced in the economy and have also become an integral part of its culture (Zhao, 2022). The love of technology is reflected in the gaming systems industry, which is quite popular among various segments of the Japanese population due to its flexibility and malleability to new technologies.

It is worth highlighting several features of the country’s market in which the company is directly involved. Japan is an island technologically developed country with a population of 127 million people (Worldometer, n.d.). Tokyo, with its suburbs, is the world’s largest agglomeration, with more than 30 million people living in it (Worldometer, n.d.). The Japanese gaming market is considered mature, if not stagnant, and it is difficult to predict its rapid growth in the coming years by tens of percent.

The average annual growth of the market is estimated at 3% until 2020 (Zhao, 2022). The Japanese spend the most on in-game purchases worldwide: $105 per year from the average player (Fukugawa, 2018). It is worth noting that the Japanese population has some preferences regarding game consoles. First, they should be focused on sportiness since most of the time; people play on their way to or from work (Fukugawa, 2018). This cultural aspect must be considered, as it can significantly affect M-Box distribution, as there is serious competition.

Arcade gaming devices are also prevalent, reducing people’s interest in home consoles. One of the problems is a vast public debt, which exceeds the country’s GDP by 2.5 times (250%) (Nishizawa, 2022). However, this debt is almost all internal. Unlike the United States, where a third of the debt belongs to foreigners, in Japan, 95% of loans are distributed among citizens (Nishizawa, 2022). Large corporations within the nation’s borders shouldered most of the debt, providing the government with financial flexibility. However, the amount of debt still poses a threat and puts pressure on the budget (Nishizawa, 2022). The second problem of Japan is in the field of demography. The number of older people due to life expectancy is too large compared to the able-bodied population (Nishizawa, 2022). All this makes the further development of the country quite difficult. The government is trying to solve the problem of high production costs by devaluing the currency.

Japan is primarily integrated into the global economy, but the scale of its involvement is gradually decreasing, mainly due to the increasing weight of other countries in the global trade and investment processes. The nation’s economic system is built so that there is a constant opportunity to invest and develop high technologies (World Bank Group, 2020). The type of entrepreneurship in the country is mainly corporate-collective; the integration of firms is vertical. Moreover, companies within the nation share economic debt in contrast to most civilized countries. The system of collective responsibility is apparent from personal relationships to the preferences that consumers have regarding technology. A distinctive feature is long-term contracts and permanent partnerships (World Bank Group, 2020). Labor legislation is structured so that the company is considered a typical home. Japanese products’ high level of competitiveness is achieved due to the relatively low average wages.

Business Environment Analysis Report (BEAR)

Political and Regulatory Stability

In Japan, the state is actively involved in the process of economic development of the country. State intervention meets the urgent tasks of the Japanese economy at all stages of its development. The state develops development strategies, determines industry priorities, and widely applies in practice measures to stimulate exports and protect against foreign competitors (, n.d.). Government economic plans containing a program of public investment expenditures broken down by industry significantly impact the Japanese economy at both the macro and micro levels, encouraging corporations to carry out strategic planning of their development. In most cases, especially at the stage of company registration, entrepreneurs require the services of local specialists, including lawyers, accountants, and auditors. Many initially set up to do business in Japan with Japanese partners (, n.d.). The country has considerable research and innovation potential, a large-scale consumer market, and a high global competitiveness rating.

Legal System

Japan has a very complex taxation system, which is divided into several levels and depends on the size and turnover of the organization. In Japan, there is a local analog of the European VAT – consumption tax with a rate of 8% (Sekiguchi et al., 2021). state registration is required to become a VAT payer in the country. It is not required if the company’s capital and turnover during the first two years are less than 10 million Yen (Sekiguchi et al., 2021).

Japan’s main regulatory legal acts regulating business activities include the Antimonopoly Law and the Commercial Code. As for the content of the law, it states that administrative management should not go beyond the scope of activity and the legislated terms of reference of a public administration body. Consequently, any infringement of the interests of the objects of administrative management is not allowed due to their disobedience to the administration’s requirements. State departments are obliged to give their instructions in writing that the content of the administrative management should be open and accessible to everyone (Sekiguchi et al., 2021). The Law on Administrative Procedure remains one of the most effective tools for coordinating the actions of private enterprises with the tasks set by the state.

Business Customs and Practice

Japan is among the most active participants in international environmental cooperation at the regional and global levels. According to diverse research documents, the fourth industrial revolution should create sustainable solutions to environmental problems through the implementation of social programs (Japan’s Regulations and Environmental Law, n.d.). They are the development of agriculture while reducing the necessary human participation, the development of automation of organic farming and animal husbandry, and the rational development of energy.

Notably, environmental human rights have not been enshrined in the Constitution of this country (Japan’s Regulations and Environmental Law, n.d.). The legal policy is expressed in the regulation of reducing greenhouse gas emissions at the international level and introducing technologies that minimize environmental damage. Japan ranks third in the world regarding the number of discoveries in the field of environmental protection. All State institutions and laws are based on the idea of the dignity and value of the human person.

However, the Constitution emphasizes that the people must refrain from abusing freedoms and rights and is constantly responsible for using them in the interests of public welfare. The Japanese Constitution reflects all citizens’ rights, freedoms, and duties: personal (civil), political and economic, social, and cultural (Japan, 2020). Understanding socio-economic rights and freedoms are closely related to a social state (Japan, 2020). The core of which is the principle of State responsibility for ensuring the development of public welfare, social security, and public health.

Religion and Culture

The essential element of culture that plays a significant role in the practice of doing business in Japan is the hierarchical structure of Japanese society. The system of social hierarchy sets the exact model of interaction between members of society (Japanese Culture, 2021). A person is identified as a group member rather than as a separate individual. The third element of Japanese culture is social harmony. Each group member’s task is to promote agreement, or consensus, within the group (Japanese Culture, 2021). In Japanese companies, decisions are not made at the highest levels of the management system. Instead, the partners should discuss the problem and find ways to solve it until a consensus is reached (Japanese Culture, 2021). The approach of Japanese businesspeople to negotiations also has several specific features. In the preliminary stage, they pay too much attention to problems of secondary importance, avoid direct answers to the questions posed and delay making a decision.

Economic Analysis of Key Indicators

Japan has a population of 124,840,000, with a low birth rate of approximately 6.95 births per 1,000. These numbers are primarily limited to the nation’s small size and improve MES-Sim Corporation’s chance to conquer and dominate the current market. Furthermore, some of Japan’s main export products are automobiles, consumer electronics, computers, semiconductors, iron and steel, and consumer electronics (Japan Indicators, n.d.). As an industry-based nation, Japan will be ideal for manufacturing the M-Box at a cost-effective rate with a skilled labor market.

Report on Opportunities for Market Entry (ROME)

The Japanese video game market is robust and appears exotic and incomprehensible to most foreigners. Japan is the world’s third largest video game market, worth $22 billion (Kuzuhara, 2021). In addition, it is worth noting that the share of users playing on game consoles is more significant than those playing on PCs. Today in Japan, most innovations are created in large corporations with research departments (Kuzuhara, 2021). That is why it is challenging for any organization to enter the market with its development or to receive investments from an extensive business (Kuzuhara, 2021). These limitations occur due to some conservatism of the Japanese business model, which is to avoid risk. Thus, companies will do their best to avoid a situation that could put their well-being at the slightest risk. Consequently, the game console market is also quite specific since it is necessary to meet several conditions for opening MES-Sim’s own representative office. Knowing the language is still extremely important to enter the market, as this is crucial when entering the Japanese market.

It is worth noting that the presence of Japanese among the founders of a startup is an advantage in developing the company in the country. Thus, to be successful, it is necessary to speak Japanese or have a Japanese-speaking manager who understands and knows the Japanese market (Japan – Market Entry Strategy, n.d.). Moreover, hiring Japanese employees can help to gain more knowledge about the market and an understanding of the business processes and structure of the Japanese market (Japan – Market Entry Strategy, n.d.). The product must have a high standard and exclude inaccuracies and shortcomings. Pricing policy is essential to foreign companies’ exit and business activities.

In Japan, there are high prices for gaming products and, consequently, high activity margins. Deflation should be considered, but if a company wants to profit in the market, it is best to set a price suitable for its image (Japan – Market Entry Strategy, n.d.). The price should reflect the quality and value of the product. Therefore, the right pricing strategy will be skimming pricing (lowering the price from high to low). Japan is not priced sensitive, and customers interested in gaming consoles prefer high-quality products, while price is not the main priority when making purchase decisions (Japan – Market Entry Strategy, n.d.). The critical goal for MES-Sim is to find a corporate client. However, in the Japanese market, there is challenging to find and enter large corporations, as well as attract investments for scaling, because even Japanese startups have problems in these areas.

There are two trends regarding standards in Japan. One is the transition to standards reform, and the other is harmonizing Japanese standards with prevailing international standards. Despite the reform underway, numerous laws still require compliance with mandatory standards specific to Japan, most of which have not been translated into English (Japan – Market Entry Strategy, n.d.). Therefore, the Japanese agent or partner must be fully aware of the various standards that may affect the sale of the imported product (Japan – Market Entry Strategy, n.d.). Product requirements in Japan are divided into two categories: mandatory, contained in technical regulations, and optional — in voluntary standards.

A conformity assessment is usually required before a product can be sold on the market or even presented at an exhibition. Thus, MES-Sim requires preliminary market development since various specific features may affect M-Box distribution. Products requiring mandatory conformity assessment must be marked before being shipped to Japan so that the cargo can pass customs (“Japan – Trade Standards,” 2022). It should be borne in mind that the rules can be applied not only to the product itself but also to the packaging, method of transportation, and installation. Compliance with voluntary standards and obtaining appropriate markings will not affect customs clearance. Their goal is to increase consumer confidence in products.

Regarding currency, Japan utilizes the Yen, whose interest rate is at 0.1% and an annual inflation rate of approximately 2.6% (Japan Indicators, n.d.). The country’s financial stability presents the corporation with a population willing to spend more on quality game consoles. Moreover, international trade patterns indicate that China (22%), the United States (18.5%), South Korea (7%), Hong Kong (5%), and Thailand (4%) are Japan’s top trading partners (Japan Indicators, n.d.). Therefore, Japan has established international trade partners, and with a labor force of 68.6 million people, it makes for a suitable development site (Japan Indicators, n.d.).

Japan’s logistics and transport systems are well developed and occupy one of the leading places in the world. The total annual volume of cargo transportation by freight in 2021 is approximately 324 million tons (“Japan: Coastal Shipping Freight Volume,” 2021). Sea transport is the most crucial segment of Japanese logistics in foreign economic activity. The intensity of railway use in Japan is one of the highest in the world due to the extensive network of tracks, ease of use, accuracy of the schedule of trains (controlled by the latest information systems of national production), modern rolling stock, and a high level of safety. Japan’s port infrastructure and maritime transport play a key role in regional logistics and the state’s foreign economic activity. The island position of the country attaches importance to sea transport. Thus, MES-Sim can use various logistics routes for the subsequent and sequential export of the game console to Japan.

Japan’s primary benefit lies in its transportation infrastructure that encompasses sea, air, and land. The dependability of its commuter and freight vehicles ensure people get to work on time and are similarly able to arrive home quickly. This uniquely intricate system provides Japanese workers with the opportunity to create a work-life balance in addition to dedicating more time on the M-Box. Thus, MES-Sim Corporation will obtain and nurture a target audience with the time and facilities to enjoy their video gaming experience.

Market Entry Strategy Assignment (MESA)

Transportation and Telecommunications Infrastructure

Currently, the most important means of cargo transportation in Japan are road transport routes and coastal shipping. Since Japanese logistics companies have a well-developed system of warehouses and distribution centers not only in Japan but also abroad, this allows MES-Sim to cover and meet a wide range of logistics needs through full integration of warehouse storage, transportation, and delivery. Speaking of air transportation, it is worth noting that they guarantee a fast delivery method (The Government of Japan, 2022). Moreover, thanks to the interaction of companies, it becomes possible to choose the most profitable and inexpensive delivery method with a combination of air and sea transportation. A comprehensive package of logistics services, from departure and delivery to rapid customs clearance and packaging, may also include warehousing services (The Government of Japan, 2022). Air cargo transportation in Japan is carried out on specialized aircraft designed for international and domestic air cargo transportation of products of various sizes and purposes (The Government of Japan, 2022). High speed is among the advantages of air cargo transportation in the foreground. It is the fastest way to transport goods from the country of manufacture of MES-Sim to local warehouses.

In addition, another advantage is the carrying capacity and capacity for the transportation of bulk cargo, urgent cargo, or cargo with a high cost. As a third advantage, it is essential to mention the vast geography of delivery, which allows for the transportation of goods by air to hard-to-reach destinations where other types of transport are impossible (The Government of Japan, 2022). Developed infrastructure allows for optimizing distribution and warehouse management systems and reducing transportation costs. At the same time, it becomes possible to achieve the maximum reduction of the negative impact on the environment.

Currently, the Japanese government pays priority attention to the development of information technologies, including them in the list of the four most priority areas for the development of science and technology and considering them one of the main factors of continuous economic growth and increasing the international competitiveness of the Japanese industry (The Government of Japan, 2022). Legislation is being reformed to more fully disclose the possibilities of new technologies and further liberalize the market, taking into account the reduction of the role of traditional telecom operators and an increase in the share of alternative digital technologies (The Government of Japan, 2022). Thus, Japan has a relatively severe telecommunications potential, allowing MES-Sim to establish effective communication between all supply chain links and product sales.

Methods of Distribution Within the Country

The main feature of the infrastructure designed for Japanese road transport is a high degree of mutual integration of road systems of various levels and purposes, which contributes to the growth of the share of motor transport in the total volume of cargo transportation. A unified system of expressways connects the major settlements of the Honshu, Shikoku, and Kyushu islands (The Government of Japan, 2022). Regional high-speed road networks have been created on the islands of Hokkaido and Okinawa. Japan is characterized by many toll roads, which private management companies maintain (The Government of Japan, 2022). MES-Sim can contract with the road administration and use the data collected by the road administration center to coordinate and create routes for customers. As for inland shipping, this delivery method provides domestic transportation employing coastal vessels, which is also currently one of the environmentally friendly delivery methods due to minimal environmental impact and reduces the delivery cost relative to road transportation.

Points of Sale Issues

The culture of shopping that has formed among the Japanese requires high-level services. Pointing to the low productivity of the Japanese retail trade, Western researchers nevertheless recognize that the variety of goods and services it offers significantly exceeds European and American standards (Mobility Foresights, 2022). High-class service, in turn, requires more workers who produce services that differ qualitatively from European ones (Mobility Foresights, 2022). Thus, despite the low productivity according to quantitative criteria of sales volume and added value, retail trade in Japan is characterized by a high quality of services provided, which must be taken into account when calculating productivity.

The high level of their quality in the Japanese retail trade reflects the social and cultural norms of the Japanese consumer and explains the increase in the level of employment in the industry. All member enterprises of the Japanese Association of Shopping Centers currently operate within a single concept called “Innovation through Cooperation” (Mobility Foresights, 2022). The whole country is divided into regions, within each of which, by mutual agreement, the same company dominates; therefore, within this format, the level of competition is comparatively low (Mobility Foresights, 2022). Specialty stores in ownership also come in two types: large chain stores and independent retail operators.

Moreover, despite the unification within the same classification grouping, they represent two different formats. Among the disadvantages of the work of chain specialty stores, experts call unbalanced purchases, expressed in the desire to saturate the assortment as much as possible. Companies form an offer from many goods and burden themselves with excessive stocks, which they then must get rid of with the help of clearance sales (Mobility Foresights, 2022). Surprisingly, this behavioral trait is inherent in almost all major retail formats in Japan.


Japan’s political stability, immense market potential, and impactful culture provide an ideal market that MES-Sim Corporation should develop. The country’s culture undeniably shapes the way business is done and the manner of conflict resolution in the workplace, which abandons a traditional top-down structure for democratic problem-solving. However, controlling vital economic indicators such as financial growth, industrial prowess, and interest rates necessitates an in-depth understanding of the country’s language. Nonetheless, the complex and dependable rail and sea transportation systems will aid in establishing distribution channels for domestic and international consumers. Adequate infrastructure ensures that the import and export prospects of MES-Sim Corporation maintain a profitable margin upon market entry to its shareholders and investors.

Crucially, Japan’s gaming culture is deeply rooted in console-based games in contrast to pc-games. It establishes a dominant and ready market for the M-Box, whose specifications can be tailor-made to the sensibilities of the Japanese community. Furthermore, as an island country, Japan’s ability to handle freight through either air or sea travel makes it a dependable base of operations. The people’s social and cultural norms are ever-present in their business transactions. Moreover, the nation’s strict laws on copyright infringement will maintain the M-Box’s originality, which is crucial if one intends to connect with the target audience.

In conclusion, Japan’s economy is robust despite a reduction in global dominance due to the Covid-19 pandemic. Nonetheless, the nation’s people are technology-conscious, and their afore-knowledge of their culture will positively impact market entry strategies. The country has enjoyed political stability for decades based on a dependable system that protects individual and intellectual rights. The MES-Sim Corporation should develop the market for its intricate transportation systems and effective international trade and distribution methods.


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