New markets mean facing new challenges

SPOTLIGHT: GOING GLOBAL

Bringing products to u.S. is tough task for even the biggest global companies

Harris Soejima, general manager of the global communication group for Panasonic, described a complicated issue in the simplest of phrases.

"We need to be above the noise," he said.

Soejima could have just as easily been talking about the roar of the party boat he was on during a Panasonic media tour last month in Tokyo.

Instead, he was describing the complexity of introducing products in the United States - even for a company with as strong a brand name as Panasonic.

The tour, which attracted roughly two dozen journalists from around the globe, was a way for the company to introduce some of its products to a worldwide media audience.

Making these products, some of which are already selling in Japan, available to businesses and consumers worldwide is another issue.

The need for the product is just one issue.

Introducing the brand is another. As is finding the perfect partner to help.

And timing, of course, is everything.

Just ask APA Hotel Group.

Despite being the largest hotel chain in Japan, APA has no brand recognition in the United States. And no local employees to lean on.

For APA, its recently announced plan to enter the U.S. market is an expansion project unlike any other it has faced.

NJBIZ talked with these two Japanese-based companies about what "Going Global" means when it means coming to the United States.

Each company approaches the issue from a different angle.

Fumiko Motoya, the president of APA Hotel Group, was gushing at a news conference earlier this month in Woodbridge.

It was not lost in translation.

She was thrilled to fulfill a lifelong dream of bringing her business to the United States.

"I am very grateful for this wonderful fortune," she said through a translator at the opening of the APA hotel in Woodbridge, the company's first in the United States.

And while doing so may seem like a natural progression for APA Group, which has seen its profit jump nearly 300 percent since 2012, deciding to compete in the world's biggest market is no easy move.

Being a household name in Japan doesn't help when coming to the United States.

The company's first media event, held in New York City, drew mostly members ofthe Asian press. The Woodbridge event attracted just a handful of reporters and little coverage.

Clearly, the brand is not well known here.

But APA Group is not worried about name recognition just yet.

It is confident it has the right product; it felt finding the right partner to help it come to the U.S. was its most important need.

Motoya said it wasn't until APA was connected with the Edison-based Friendwell Group that she and her husband, CEO and founder Toshio Motoya, felt ready to take on the challenge.

"In the past, we have been offered so many joint venture proposals," she said. "Today, we are joining this one due to the wonderful hearts and personalities of (Edison-based Friendwell Group).

"We were so impressed with their hearts and integrity, we decided to proceed with this joint venture."

Toshio Motoya agreed.

"We feel it is a match made in heaven," he said. "If another company came to us with a joint venture, this would not have happened."

It would be hard to find anyone in the U.S. who doesn't know Panasonic.

So Soejima said don't expect a global campaign touting the electronics giant.

But when it comes to some products and services, Panasonic will need to reintroduce the brand. Soejima said that's a matter of getting the right message to the right people, especially when it comes to B2B products.

Avoiding the business-to-consumer connection is just one of the issues.

Joe Taylor, chairman and CEO of Panasonic North America, said the company's reputation as a creator of consumer products undersells its true identity.

"People have confidence in the brand, the products and our engineering strength," Taylor said from his Newark office. "The only downside of our very wide consumer recognition is that it tends to hide the technology strength that we have in so many other industrial areas in which we have been participating as long as we have been participating in consumer products."

In Japan, Panasonic is making a strong push to dominate the household and health care market in accordance with its "A Better Life, A Better World" slogan.

Panasonic has created high-tech help for the home: Imagine stovetops that only heat where a pot is placed, images of books or movies that can be projected onto living room walls with the flick of a wrist, or bedrooms where lights, sounds and temperature are adjusted throughout the night to help lull consumers into a deep sleep and then slowing bring them out of it.

Panasonic is developing hundreds of such products for the home (yes, shelving and furniture, too) that not only can be purchased in IKEA-like stores but assembled by Panasonic in your home.

It is also taking health care a step further.

Panasonic not only is on the cusp of creating products such as a bed that converts into a wheelchair or a walker that understands just how much robotic help it needs to give to its user; it is opening nursing homes and elderly day care facilities throughout the country.

Who knew Panasonic was in the business of delivering health care?

Yet despite the ubiquitous nature of its brand - and a need for such products in the U.S. - Panasonic is not ready to bring these items here.

Soejima says it's a long process.

"Within Panasonic Group, product divisions are in charge of global strategy for each product from development, production to sales," he said. "Regional business strategies are being conducted in each local regions."

Tak Yoshikawa, a leader of Panasonic's age-free business solutions in its eco solutions division of the company, agreed.

"There are a lot of things that need to be analyzed as we take some of these technologies to other countries," he said at a trade show earlier this fall in Japan.

And while many of the products are still under development - imagine a computer-generated program that could help patients learn proper balance - the idea of Panasonic competing in this space in Japan is nothing new.

"Right now, we've been in the business for 17 years, working almost strictly in the Japanese market," he said.

The timing to bring these products overseas, he said, is not there yet.

Toshio Motoya wasn't planning on coming to the U.S. until 2017.

He wanted to conquer Japan first.

"The reasons why we actually launched two years earlier (than expected) is because we confirmed that we became No. 1 in Japan and our profitability became 30 percent, which is unprecedented in the world," he said.

The Woodbridge hotel is just the first of 100 properties APA plans to acquire or build in the next five years. Such growth would help them become as much of a household name in the U.S. as it is in Japan.

And while the company is here two years ahead of schedule, it admits it is slowing down the process.

"The initial two years are the preparatory years and the growth rate will be slow," Motoya said.

A lot of time will be spent on its first property.

The lobby and registration area will get the first facelift, including a user-friendly kiosk that will speed the check-out process. A Japanese restaurant also will be added.

The company hopes all of these improvements will be ready for a more formal grand opening next May. By 2017, it expects all of the rooms to be updated to fit the company's "new urban style hotels" that are as much about being consumerdriven as ecologically friendly.

The company announced its next property will be in New York City. After that, it's still wait and see.

A company spokesman said APA will look for opportunities to both take over and build new hotels in urban centers around the country.

And while he would not target specific areas, he said it only made sense that APA will look to cities that have nonstop plane service from Japan.

Working with the Friendwell Group on the venture will be a key. In fact, it will use Friendwell's office as a base of operations in the coming years.

Friendwell Chairman Tsun-Jen Cheng, a native of Taiwan, said the cultures of their home countries will make it easier for APA Group to succeed in the United States.

"With APA Group's Japanese culture strength of being tolerant and refined combined with Friendwell's U.S. attitude of being courageous and passionate, as well as the Taiwanese attitude of being hardworking, the three cultures can combine their strengths together to create the perfect culture for this new joint venture," he said.

Panasonic obviously doesn't need a partner in the U.S.

Taylor is one of the starting points when Panasonic talks about bringing more products and services to the United States.

But even though the health care market has never been hotter in the United States, Panasonic officials say they aren't quite ready to bring more of the services it has in Japan to the U.S.

Why?

Right now, Panasonic has greater opportunities for growth in Japan.

Japan's population is older than in the United States - a problem exacerbated by a declining birth rate. By 2050, it is estimated that 40 percent of the population will be seniors.

The government has recognized the issue for years and agreed to begin heavily subsidizing long-term care insurance in 2000.

And while Yoshikawa is quick to point out that his age-free business was started in 1998, the government subsidies are a part of the business model.

"In some cases, they cover up to 90 percent of the costs," he said.

That, however, is changing.

Yoshikawa said the government, fearing the escalating costs, has begun reworking some of the reimbursement payment structures.

His division is not changing its strategy yet, though it is aware of which products produce enough return on investment that they can stand on their own. (The bed-toa-wheelchair product has been shown to reduce staffing needs 30 percent.)

The changing reimbursement also may mean bringing some products overseas sooner than expected.

"I not only work in R&D developing new products for senior care, I have to look at how are we going to expand overseas, what countries should we target and what businesses should we start with," Yoshikawa said. "I'm looking at that right now."

And while he wouldn't tip his hand on where Panasonic may go first (other Far East countries and some parts of Europe figure to have both the need for the products and the ability to pay for them), he is very familiar with the United States market.

And New Jersey.

A graduate of Bridgewater High School, Yoshikawa joked about where Panasonic will head when it decides his division is coming to America.

"We're going to start in Somerset County," he said.

E-mail to: [email protected]