Japan and South Korea have been important markets for British tech companies for a long time, but why should you be thinking about them now? The simple answer is – because the opportunity has never been greater.
Both are top 10 global economies: Japan continues to be the world’s third largest economy, and South Korea, in 14th place ten years ago, is now ranked tenth. And while not unaffected by the pandemic, both have managed the crisis better than many western countries.
Open to collaboration
But it’s not just these countries’ domestic markets that you should be interested in. Japan and Korea are export-driven economies with the most extraordinary concentration of large corporates that sell their products around the world – and in almost every sector imaginable. So a foothold in Northeast Asia can give you access to lucrative global markets.
And then there are the modern-day challenges the countries face, and the opportunities these are creating for UK tech firms: ageing and shrinking populations; the need to digitalise products and processes in response to changing lifestyles and rising regional competition (mostly from China); the necessity of rapid decarbonisation; and the explosion of venture capital and tech startups which has resulted in the unprecedented growth of innovation outside the corporate R&D lab.
What all this means is that, more than ever, Asian corporates are open to collaboration. They need to work with international tech firms to solve today’s and tomorrow’s challenges. Indeed, for many, their long-term survival will depend on their ability to work with external sources of innovation – like forward-thinking British startups – to develop successful new products and ‘future-proof’ their businesses.
So, what’s hot in Northeast Asia?
Well, lots, especially in the area of B2B tech.
As in other countries, sustainability is the ‘biggie’ and will be for the next 10 to 20 years: new technologies and modi operandi that can help Northeast Asian corporates transition to cleaner, greener businesses.
Both Japan and Korea have committed to achieving net zero carbon, so opportunities abound in energy – in hydrogen technologies for mobility and stationary power generation; in systems to manage, trade and transmit energy; and in innovations to recycle our waste, produce biodegradable materials, and clean up contaminated air, soil and water.
Automation is another important focus area in these countries, where the workforces are diminishing and populations getting older. Robots are no longer the preserve of manufacturing but are becoming a common sight in logistics, hospitality and even the home, not to mention drones for a range of unmanned security and surveillance applications. And many British companies produce the enabling technologies – hardware and software – that make these robots and drones work.
In healthcare, Japan and Korea are eagerly adopting digital devices that can continuously measure and store patient data, as well as point of care technologies that reduce the need for hospital visits and Big Data and AI systems that improve the treatment of cancer and other diseases. And with high personal health awareness, there’s growing demand for wellness solutions that allow individuals to track their own physical conditions.
There are other hot areas, too. In mobility, huge investments in CASE (Connected, Autonomous, Shared and Electric) solutions are being made by car makers including Toyota, Honda and Hyundai; and in the so-called ‘metaverse’, excellent internet infrastructure is driving the rapid growth of interactive, virtual worlds.
In all these and many other sectors, there’s high demand for the cutting-edge technologies for which the UK’s tech industry has become world-famous.
How to unlock the opportunities
The good news is it’s not as hard as it was! The opportunity is bigger than ever, and Japanese and Korean corporates have come to embrace the concept of collaboration, meaning that, in many cases, you’ll be pushing against open doors.
But that’s not to say you shouldn’t do your homework. Most tech companies can’t afford the risk of investing in people and infrastructure upfront, so it pays to understand the market and validate your opportunity before you go diving in. Some of that you may be able to do yourself, but there are plenty of public and private-sector organisations which can help you – Tech Nation and Intralink amongst them.
Once you’ve validated your market opportunity – by looking at factors like market characteristics, key trends, competition and regulation – then it’s time to start door-knocking. But how do you do that when your target customers are large, complex organisations headquartered 6,000 miles away?
Japanese and Korean corporates are not the hideaway fortresses they once were: on the contrary, many have become truly international in their outlook. It’s now possible to connect with key people through channels such as LinkedIn or via the innovation labs and accelerator programmes that many have set up in cities like London, Paris and Berlin. And while once you had to get on a plane to meet senior managers in Tokyo or Seoul, you can now do that easily via Zoom or Teams.
But it’s not without its challenges. Language and culture barriers persist. And it’s always easier to gain access to your target customer via an introduction than a cold call. So working with an organisation that has the connections and knows the lay of the land – ideally by being physically present in the market – can accelerate your progress and ultimately reduce your market development costs.
Japanese and Korean companies are also known for their exactitude, so don’t try to wing it! You need to be well prepared – with customised and ‘localised’ sales and marketing collateral – and adequately resourced to stay the course: the lengthy process of having your technology evaluated and validated for its intended application. You must be patient and supportive, ready to build the relationship to the point where trust takes over and both sides feel comfortable to commit.
Opportunities like none other
In the almost 30 years that I’ve been working in and with Northeast Asia, I’ve never seen Japanese and Korean corporates so eager and able to work with tech companies from the UK.
Certainly, you must be well-prepared and well-resourced. But, provided you’re up for it and ready to meet the inevitable challenges, these markets offer opportunities like none other.
Can you really afford to ignore them?
Greg Sutch is CEO of Intralink, an international business development and innovation consultancy specialising in helping western tech firms expand in Northeast Asia. Fluent in Japanese, Greg joined the company in 1996, having previously been employed in local government in Japan and a marketing role for Japan Airlines.
Tech Nation International is helping UK scaleups de-risk and accelerate international growth – with a current focus on Asia Pacific markets. Through a range of activities, UK scaleups have the opportunity to accelerate access to capital, customers and talent, so that you can land and expand successfully in Japan and South Korea.
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