Sereppu's Footwear Brand: Market Entry Analysis for Japanese Market

This report analyzes the market entry strategy of Sereppu, a Sri Lankan footwear brand, into the Japanese market. It begins with an introduction to Sereppu and its objectives, followed by a PEST (Political, Economic, Social, Technological) analysis of the Japanese market. The political section examines trade regulations, government policies, and risk assessments. The economic analysis covers GDP, imports, exports, and economic indicators. The social and cultural aspects explore collectivism, long-term orientation, and cultural dimensions. The technological section assesses Japan's advanced telecommunications and innovation. Ethical practices in Japanese business culture are also discussed. The report then explores Sereppu's chosen market entry strategy, which is exporting, and details the steps involved, such as trademark registration. Finally, it addresses the risks associated with exporting to Japan, providing a comprehensive overview of the challenges and opportunities for Sereppu in the Japanese market.

Table of Contents
Introduction...............................................................................................................................................2
Question 01................................................................................................................................................3
Political...................................................................................................................................................3
Economic................................................................................................................................................5
Social and Cultural................................................................................................................................7
Technological.........................................................................................................................................8
Ethical Practices........................................................................................................................................9
Question 02...............................................................................................................................................10
Risks in Exporting to Japan................................................................................................................11
References................................................................................................................................................13

Introduction
Sereppu seems to be a well Sri Lankan women's fashion footwear brand founded in 2012 by a
young woman named Cordwainer. Sereppu's mission is to give a range of must-have sandals,
heels, platforms, and wedges designed to add instant flare to any outfit, among all aspects
feminine and on-trend. Ever since start, Sereppu has evolved towards a one-stop store including
all categories of footwear and accessories. Through establishing retail outlets across the country,
Sereppu hopes to provide each fashion-conscious female with a fun, affordable, and addictive
spot to purchase across all shoe lovers.
Because of its original, creative flare and timeless classic designs, the brand has swiftly become
the go-to location for game-changing styles and legendary level patterns. The company tries to
expand the fashion edge and dominate the Sri Lankan footwear industry using high-end design
spanning with high-impact trends to must-have basics. Sereppu is a one-stop shop including all
occasions, with an intense development of core fundamentals as well as the most recent trends.
Sereppu is confidently wholly owned by Sri Lankans, and it has two standalone stores in the
country as well as stock on a few global digital sites (Sereppu, n.d).
Based on the strengths they have, Sereppu has decided to enter to the international market in
Asia and the selected country is Japan. Following sections will analyze whether entering to the
relevant market is healthy or not. Below sections will discuss about the PEST factors and the
market entry strategies which Sereppu can use.

Question 01
Political
Despite the fact that distant commerce is a major component of the Japanese economy, the
government is indeed not entirely open and levies various non-tax obstacles, notably in the
agricultural industry. Japan has been the fourth-largest shipper and exporter of products in the
world, having foreign exchange accounting for 31.3 percent of the country's GDP (World Bank,
2016). The broad sections in Japan are engine vehicles (13.4 percent), automotive components
and embellishments (4.9 percent), electronic coordinated circuits and micro assemblies (3.8
percent), machines and mechanical apparatuses (3.2 percent), and ships and pontoons (3.2
percent) (1.7 percent). Among the country's important imports are oil oils (9.5 percent), oil gas
and other vaporous hydrocarbons (6.0 percent), transmit mechanical assembly for radio-
communication (3.7 percent), coal and analogous strong powers (3.4 percent), and electronic
coordinated circuits as well as micro assemblies (2.9 percent).
The country's primary partners are the United States, China, South Korea, Hong Kong, Thailand,
Australia, and Saudi Arabia. Japan has presently negotiating a number of free trade treaties. In
2018, Japan as well as the EU inked an EPA, bringing them one step forward towards creating a
financial relationship which might represent to about 33% of world commerce. Almost at the
same time, followed by The United States' withdrawal from of the Trans-Pacific Partnership,
Japan led attempts in revise the deal among the remaining 10 countries. The restructured deal,
the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), was
already finalized and member nations are ratifying it.
Because of a significant decrease throughout the country's imports, the country has a large
foreign surplus, that reached USD 44,23 billion in 2017. Prices in Japan, that had been down
from 2013, increased in 2016 and proceeded to rise in 2017. For any event, the ongoing
exchange war between China and the United States has impacted Japanese fares, and the
Japanese government has announced a typical drop in pricing from 2019.

Figure 01: Sector Risk in Japan (Cofacecom, 2019)
Japan got an A1 within the World Exchange Association's latest current risk analysis. The higher
the rating, the lesser the risk. As per Coface, Japan's political and practical environment is solid.
Their favorable business condition influences commercial financing conduct, as well as the
likelihood of industrial failure seems typically low. The A1 score implies that its company's
financial data is easily available and dependable, but also that the threat level is low. The
legislative structure ensures adequate and effective loan management security, and the country's
legal framework is advantageous to companies.
Laws affecting the product
Foreign Exchange and Foreign Trade Law: means of payments
Import Trade Order
Foreign Exchange Order: means of payment

Trade Barriers
 Import Ban and Restrictions: Certain imported goods might have a detrimental impact
upon Japan's industry, industry, and sanitation, as well as public health and ethics. These
items were subject to "import restrictions" imposed by various domestic laws and
regulations. For research or other purposes, an import permit or prior approval for certain
items is necessary.
 Customs Tariffs and Taxes: Japan's taxation has been by far the one of the lowest in the
globe, at approximately 2% for agricultural products. A utilization evaluation around 8%
is necessary on a broad range of products and initiatives, despite traditional
responsibilities. By October 2019, the operating expenditure rate is expected to increase
to 10%.
Economic
Research reveal that since World War II, the country has exploited raw resources of various
countries to create value-added goods that are then sold to several other countries. Footwear is in
high demand in Japan, as it is in many other Asian nations. Exports and imports together account
for 31.3 percent of GDP. The economy in the nation is depicted in the Figure 02 below. Japan's
major concentration would be on the production of high-tech and precise items.
Although there is a high demand for foot ware in Japan, the country may not generate more of
them itself. Moreover, overseas tourists to the country want to experience the country's
particular fashion, which creates need for items that the country cannot offer, therefore offering a
service to foot ware exporting nations to seek out again to Japan. Figure 03 depicts an economic
study of the country, including GDP, imports and exports, foreign exchange rates, and so forth.

Figure 03: Economic Analysis in Japan
Figure 04: Macro and Microeconomic indicators in Japan (Cofacecom, 2019)

Social and Cultural
Within social context of individuality vs. collectivism, Japan leans more toward collectivism
than individualism. It happens in a monthly basis since Japanese culture possesses stronger
collectivist tendencies, like emphasizing peace and harmony over the expression of individual
views in a group. Furthermore, Japanese people are genetically programmed to be loyal to their
inner circle for the benefit of their wider family in the loyal society. This has been discovered
that Japanese people are interpreted to be collectivistic by Western standards and therefore
individualistic through Asian standards (Globalization Partners International, 2019).
In terms of the cultural component of long term vs. short term orientation, Japanese culture
favors long term orientation over short-term orientation. Japan is also recognized for being one
of the most long-term oriented cultures in the world. People in Japan see their life as a small
episode in the vast heritage of mankind. People in Japan earn a career by providing a pleasant,
positive, great, and realistic instance to the rest of the world, where values, traditions, customs,
beliefs, honesty, and simplicity are highly affected. The bulk of Japanese firms make significant
investments in research and innovation. They are also helping their investors and community
through a significant and effective manner throughout several future generations, rather than
merely making money for their stockholders each quarter. This highlights the need of long-term
development across Japan (Bookmundi.com, 2019).

Figure 05: Cultural Dimensions in Japan (Hofstede-insightscom, 2019)
Technological
Japan is among the most advanced telecommunication networks in the world, particularly in
terms of mobile phones. They depend heavily on texting since data is dominated as well as
limited throughout the West. By contrary, Japan has made it possible to link to Wi-Fi nearly
anywhere in densely populated areas. Rather than texting, the Japanese utilize the phones to send
emails and wirelessly share contact details.
They've always been at the forefront of VoIP growth and other technological advancements. In
fact, automated solutions are employed in a wide range of significant Japanese institutions,
including hospitals, airports, and cafes. They are also more advanced in robotics unlike other
nations (Frue, 2016).
Japan is known across the world for its ingenuity and inventiveness. Over time, the country has
produced cutting-edge technologies. Its ingenuity is evident inside a variety of disciplines,
including robotic technology, particularly industrial robots, and the use of automation systems in
airports and the hospitality business. Japan is already utilizing the internet payment system for a
long time, long after many other nations were indeed aware of it. It has achieved great progress
in a variety of fields, including semiconductors, rail transportation, optics, chemicals, and R&D.
This rise has opened doors to Japan and the rest of the globe (Shaw, 2021a).

Ethical Practices
Japan is a truly one-of-a-kind country. Although it is common among Japanese experts often
attempt in communicate the complexity behind the concept to their international colleagues, that
fact remains that Japan has become so distinct on several dimensions, one of which is ethics.
Ethics being measured and assessed separately within Japanese society, as it does in business
culture here; in the different appeal, it is no wonder that there has been uncertainty,
bewilderment, and a slew of mistakes (ACCJ Journal, 2020).
Whenever it refers to finding that fine compromise among Western ideals and Japanese
corporate ethics, foreign businesses functioning in Japan are in a particularly perilous position.
The fundamental topic is the constant tension between expediency and “doing the right thing.”
Executives leading a foreign corporation in Japan must be aware of the unexpected disclosure or
brand damage that will almost certainly occur if standard business ethics are not observed.
Among Japan, reputation is everything when it comes to doing business. Human relationships
are the foundation of trust, and all these ties are based on ethics. All focuses upon human
relations here: the most important element, the consistent aspect in determining those you do
business with, is PEOPLE. By displaying standards and ethical leadership, you earn the trust of
the community and your customers. Therefore, it is more common among international
corporations. While business is prioritized before ethics, new, untested CEOs are prone to ethical
values violations. Although striving to set themselves apart, their overzealousness can, of course,
be harmful to the company and image.

Question 02
Nowadays, in the age of globalization, with numerous opportunities and so much competition, it
is advantageous for global corporations to approach new markets in order to develop their
company. The global market entering method, often referred as the international market entry
method, was simply a contract among organizations that permits a firm to enter a foreign market
with new technology, management, people skills, advancement, or other resources. This is a vital
decision for organizations to choose whether or not to expand into new markets and, so then,
what is the most effective approach to do so would be.
In order to enter into Japan, Sereppu has been chosen the market entry strategy as Exporting.
Following will analyze how it works and the potential risks associated with exporting to China.
Registering the trademark in Japan
When obtaining a trademark, both foreign and Japanese firms follow the same processes and
criteria. If we want to sell to Japan in the next, there are no barriers to registering our trademark
presently. However, unless the trademark isn't really utilized during three years, the license
would be cancelled.
Keep in mind that Japan follows the first-to-file rule (same as China). The trademark rights
would be owned by the firm that registers the trademark initially. As a result, registering your
trademark in Japan when we begin exporting is critical. The procedure of registering a trademark
may be lengthy and difficult. When we are unsure that we can handle the procedure on our own,
hiring a lawyer or agent may be a smart choice. That's important to note that a supplier could
assist business obtain trademark applications (Editorial Team, 2020).

Japan is one of the world's most important fashion markets, having fashion-conscious and
sophisticated customers fueling need for patterns. Tokyo is Asia's creative fashion center,
featuring Japanese and foreign manufacturers coexisting inside the ultra-trendy areas of
Harajuku, Shibuya, Daikanyama, and beyond (Department for International Trade, n.d.).
Risks in Exporting to Japan
Following table will highlight the potential risks when exporting to Japan.
Risks Description
Economic Japan's public sector debt is now more than 245 percent of GDP,
creating this the world's greatest. The tax structure is expected to
rise from 8% to 10% in October 2019, upon rising from 5% to
8% in 2014. Framework reforms, like deregulation of the energy
market, cooperatives, and governance, have achieved some
progress. In fact, Currency has been successful in maintaining
the Japanese economy, but this has struggled to meet their
headline inflation target of 2%. As for Prime Minister Abe
expected to continue in office till 2021, the fundamentals are
likely to persist in place, albeit as a low-key effort rather than an
elevated effort.
Japan is reliant on imports, particularly oil and gas, food, and
raw materials for industrial production, due to its limited natural
resources. Following the 2011 tsunami, which resulted in the
shutdown of all nuclear reactors in Japan, causing a significant
rise in energy imports, this dependency became even further.
Some nuclear reactors have subsequently been reactivated, with
nine in total.
Human rights, Personal liberty is highly respected in Japan. Japan is committed

transparency and
corruption
to the rule of law and has an independent judiciary. Despite
periodic reports by the UN Human Rights Committee, among
others, raising concerns regarding issues such as gender equality,
hate speech and racial discrimination, media freedom, Japan's
use of the death penalty, extremely high conviction rates, and
accusations of forced confessions, Japan meets the vast majority
of international civil and political rights principles (Foreign &
Commonwealth Office, 2016)
Changes in Political
Environment
In Japan, governance would be a negotiation among politicians
and bureaucracy. New law is submitted in the Diet, the
parliament, and debated in an open and transparent manner. In
reality, however, most legislation is drafted behind closed doors
in ministries. Bills are sometimes finalized by special-interest or
issue-specific parliamentary groupings until they are ever
considered in the Diet. The Liberal Democratic Party (LDP),
which includes cabinet ministers, the prime minister, and party-
faction leaders, rules a power triangle with the government and
industry and union groups (IHS COUNTRY RISK, 2018)
Technological Threats Considering cybercrime upon on increase, cyber risk continues
to be amongst the top hazards for doing business in Japan in
2018-2019. An increasing number of cyberattacks were
recorded, including some particularly significant intrusions, like
the $530 million bitcoin theft from Coincheck. Aside from
numerous cryptocurrency fraud confirmed cases, Japan's
National Police Agency also discovered over 20,000 fake
shopping sites in operation, all of which are developed to
defraud buyers (Lee, 2019). To strengthen Japan's cyber
resilience, the government had ramped up its cyber security by
enacting stronger legislation and establishing a cybersecurity
working group and training center. Nevertheless, the continued
presence in cyber risks on CEOs' priority lists exposes flaws in

previously adopted cybersecurity controls and highlights voids
within regulation in developing technology.
Table 01: Potential Risks in Exporting to China (Source: Author Created)
References
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Lee, S. Y. (2019, January 14). Prioritizing Business Risks in Japan. Brink – the Edge of Risk.
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