Adapting to local culture key to success of foreign companies

TOKYO >>

Adjusting to culture in Japan is often a challenge for foreign residents. The same goes for foreign companies.

Some global retailers have entered the Japanese market and established themselves as beloved brands by adapting to the local culture, while others struggle to win the hearts and minds of discerning customers.

McDonald’s and Starbucks are two examples of global retailers that have successfully taken root in the Japanese market by adapting their services to the consumer mindset, said Michiaki Tanaka, business administration professor at Rikkyo University in Tokyo.

“These companies are so deeply rooted in the Japanese market that some customers may go to their stores without noticing they are actually foreign companies,” he said.

McDonald’s has tasted both sweet success and bitter setbacks in Japan. The U.S.-based hamburger chain in Japan opened its first outlet in Tokyo’s posh Ginza district in July 1971. Since then, the company has grown to become the country’s largest burger chain with nearly 2,900 stores as of August.

But during its 46-year history in Japan, the company had it share of trouble.

In 2014, McDonald’s made headlines after a supplier in China was found to have shipped expired meat used for chicken nuggets. And in 2015, the company sold food that reportedly contained foreign objects, including human teeth in an order of french fries.

The string of food safety scandals tarnished McDonald’s once-glowing image in the eyes of Japanese consumers.

The result was a $308.42 million net loss in 2015, the largest loss since McDonald’s Holdings Co. (Japan) went public in 2001.

Kenji Kaniya, a director of McDonald’s Japan’s PR department, admitted that the company’s response during the time of crisis was “not sincere enough” to give customers peace of mind. “It is regrettable that we did not listen to our customers’ voice more closely,” he said. “I think we might have been arrogant at that time.”

After the scandals, McDonald’s Japan created a revitalization plan and tried to create a system to better respond to customers. The effort included the company’s Kodo smartphone app, which enables customers to post positive and negative feedback and receive a discount coupon for the effort, he said.

Thanks to its reconstructing, the company bounced back in 2016 by earning a $47.39 million profit. It expects profit will grow to a record $176.5 million by the end of 2017.

Starbucks is another foreign company that has gained enormous popularity in Japan. Starbucks opened an outlet in Tokyo’s Ginza district in August 1996 — making it not only the first Starbucks in Japan but also the first outside North America. Now with nearly 1,300 outlets in all 47 prefectures as of August, Starbucks’ brand has become virtually synonymous in Japan with fast-casual coffee shops.

The key to Starbucks’ long-term success in the country has been “respect for the culture of the local community,” said Norio Adachi, a director at Starbucks Coffee Japan Ltd.’s corporate affairs department.

“Japanese consumers like to try new things … so when something new comes from a foreign country, it often gets attention on TV. And people will stand in a long line in front of the store without hesitation,” Adachi said.

Adachi said the key to long-term success is to gain acceptance as a part of the community by respecting the local culture.

In a change from its standard-issue decor, Starbucks opened a Japanese-style coffeehouse in the ancient capital of Kyoto in June. Housed in a century-old two-story townhouse in Ninenzaka near Kiyomizu Temple, the store features a tatami-floored room, the company said.