|
|
 |
|
|
|
|
Determining your business model |
|
|
|
|
|
|
|
As indicated earlier, here are some of the popular business models used in Japan by foreign companies: |
|
|
|
|
|
|
Cost-plus model |
|
|
|
Under this arrangement, JPCO's primary purpose is to provide support services on behalf of the parent. The JPCO would periodically bill the parent for the costs incurred, plus a reasonable markup depending on the nature of service(s) provided. The primary purpose of Japan's services is to support the parent, therefore activities of the JPCO will be restricted. Normally, to implement this successfully, relationships with distributors in Japan are necessary to consummate a sale in Japan. |
|
|
|
|
|
|
Commissionaire model |
|
|
|
Under this arrangement, JPCO's primary purpose is to act as a sales agent on behalf of the parent. Japanese distributors and customers will buy goods and/or services from the parent and then remit the appropriate funds to the parent directly. However, sales activities, which were in the previous model prohibited, are permitted in this model. The JPCO would periodically bill a certain percentage of the sales in Japan as a sales commission for its services rendered. |
|
|
|
|
|
|
Buy-sell model |
|
|
|
Under this arrangement, JPCO will accept orders from distributors and customers. If the JPCO carries inventory, the goods will be shipped and subsequently billed directly to the Japanese customer. If the entity does not carry inventory, a purchase order is placed with the parent or affiliate and the goods will then be shipped to the customer/distributor. The JPCO generates profits from the profit margins of buying and subsequent selling.
The cost-plus model is generally popular for companies that have fewer than five employees and have a distributor(s) to support its sales activities in Japan. The Buy-sell model will become feasible once the JPCO has sufficient orders to carry inventory and has the capability to make timely deliveries. |
|
|
|
|
|
|
The cost-plus model is generally popular for companies that have fewer than five employees and have a distributor(s) to support its sales activities in Japan. The Buy-sell model will become feasible once the JPCO has sufficient orders to carry inventory and has the capability to make timely deliveries. |
|
|
 |
