# Why you need a local partner in Japan

- Author: Joichi Ito
- Date: 2008-07-25T20:51:39Z


Recently I was quoted in the Japan Times in an article about Facebook's Japan launch saying:

The Japan Times
Wednesday, June 25, 2008

Japanese Facebook takes Model T approach
By LISA KATAYAMA

[...]

Joi Ito, a venture capitalist and CEO of Creative Commons, points out the importance of staying humble and of maintaining the mind-set of a startup. "You need to assume your brand in the U.S. means diddly squat in Japan," he says. "You also need a local partner with an equity stake, unless you're Google and you're willing to spend years and years becoming relevant." 

It is REALLY hard to launch in Japan without a local partner. There are many reasons. Foreign brands have very little value in Japan without local promotion.

It is very hard to hire people into fully-owned subsidiaries. Many foreign companies pull out of the market. Japanese companies tend to go public more quickly than US companies. Even when US companies do, often they don't give subsidiary team member any or as much upside incentive. Local partners tend to incentivize local teams and push for local IPOs. Everyone knows this. Even Google had a tough time and are finally getting traction.

Business in Japan, as the stereotype suggests, is fairly closed. Business development in Japan is very difficult without a local partner.

eBay went it alone and had to leave and now don't exist in Japan having lost net auctions to Yahoo Japan and Rakuten. Friendster and now Facebook who have launched "localized versions" are not getting traction. Mixi, the Orkut knockoff with arguably a much clunkier interface, has 10M users and is public.

Infoseek, Technorati, Twitter, Six Apart/TypePad/Vox/Movable Type and other brands that we've helped launch are all doing pretty good in Japan IMHO.

I think the only two non-joint ventured web companies that are doing well in Japan right now are Google and Amazon and both took years and lots of investment to get there.

Spike in Facebook mentions on blogs after localization, but flat again after that


I realize this is tooting my own horn since what I do is set up joint ventures in Japan but I though this chart was interesting in this context.