Meet the new paradigm: network marketing in Japan; Can American-style marketing work in Japan?

Japan, Inc., Nov, 2004 by Yusuke Imura

Network marketing in the US has also become an increasingly big business, with over 20 network marketing companies now traded publicly on the US NASDAQ and New York Stock Exchange, and many others planning IPOs. A number of Fortune 500 companies own network marketing subsidiaries as alternate sales channels for their products.

Network marketing on a whole new level

Convinced that the business structure was sound, and the industry itself viable, we then proceeded to the next logical step: identifying those who were successful in the business. While more than 90 percent of distributors for various companies operate their businesses part-time, according to the DSA, a major factor promoting the success of network marketing companies in the US since the mid-90s has been the involvement of a class of professional and entrepreneurial owner/distributors, taking NM success to a whole new level.

Many of these individuals have achieved millionaire status, consistently earning six-figure incomes with the help of their large organizations numbering in the tens of thousands. A number of high-profile motivational speakers, coaching professionals and businesspersons (or their spouses) have all found network marketing to be a "business of choice," attracted by its low risk, low initial investment and virtually limitless earning potential.

Looking home: network marketing in Japan

Having found our chosen business vehicle, industry and model for success, we then looked homeward. How did network marketing look in Japan?

The launch of Tupperware home parties in Japan in 1963 marked the start of network marketing in Japan. During the 90s, a number of large American companies entered the Japanese market with some success, including NuSkin, Herbalife and others.

The Japan Direct Sales Association shows industry sales of [yen]28.75 trillion for 2002, with the top sales categories including cosmetics, nutritional products, cleaning supplies and underwear. Despite these successes, network marketing as a whole remains less well known and has a smaller market scale compared to the United States.

In the unique, salaryman-dominated culture of postwar Japan, a stable corporate job is viewed more favorably by the middle class than small business ownership. Entrepreneurship still has along way to go in Japan.

That said, Japan is our home, and the launching ground for our business. While challenges may exist, we resolved to press forward, hoping the right combination of business and mentor might make the difference.

A vehicle and mentor found

Having found our chosen vehicle, industry and target market, we were then faced with the challenging decision of choosing a company to represent. After examining a number of opportunities (from single-product distributorships of faddish health drinks to a discounted telephone service distributorship), a friend from Canada introduced us to Nikken. Immediately, we recognized Nikken as something unique and promising.

First, Nikken has a strong bilateral US-Japan connection, a very attractive element for us. A Japanese company founded in 1975 in Kyushu, Nikken distributed its magnetic health-care products through a traditional wholesale dealership network in Japan until the late 80s. The company branched overseas, but had limited success through traditional sales routes, and turned in desperation to network marketing.