Use agent and distributor: For many companies, establishing a company directly in Japan is the best way to enter the Japanese market. But for many small and medium-sized companies, a more realistic first step is to use an agent and distributor. Great care must be taken in choosing an agent and negotiating the terms of the contract. It is not appropriate for companies to use the method of cold calling with potential agents in Japan. Most Japanese businessmen prefer to do business with someone they know very well, have met face-to-face, usually through a trusted intermediary. Suitable third parties for such introductions include other Japanese companies, (Mongolian) companies doing successful business in Japan, banks, trade associations and chambers, the Japan External Trade Organization (JETRO), and representative offices of that country (Mongolia) in Japan.
As in any country, companies in the country (Mongolia) should do extensive due diligence before choosing a partner. The common issues of the agreement should be whether the country’s (Mongolian) products will be sold and promoted compared to other products, compete directly with Japanese products, and whether sufficient attention will be paid to market recognition.
Japanese distributors usually cover specific territories and industries. Importers usually choose one agent for all countries. Sometimes exclusive contracts require strong efforts to expand sales through Japanese agents. However, if the capacity and willingness of the Japanese agents to develop the relevant market is in doubt, the conclusion of an exclusive contract is not a condition.
With an agent contract, suppliers send invoices to agent customers for the amount sold (“back-to-back”). After that, the percentage of the sale is paid to the agent in the percentage specified in the agent’s contract. According to the distributor contract, the supplier buys the goods from the distributor and determines the price to be sold to the end user, and the percentage of additional sales is a matter of the distributor’s authority. Sales percentages vary by product and contract terms. In general, the percentage of sales is 10-20% for “one-time” (irregular) transactions, and 5-10% for regular and regular business transactions. In the case of abundant raw materials (for example, iron ore, coal), it is relatively low, around 1-3%. Due to the complexity of the product, the percentage of sales for medical, laboratory and scientific test equipment is often high, 20% or more.
Once an agent or distributor agreement is drawn up and the country’s (Mongolian) products are firmly established in the Japanese market, the country’s (Mongolian) company may want to establish a representative office to support the distributor’s sales and marketing activities and communication with the country’s (Mongolian) head office.
Open a branch: Starting a branch is relatively easy. According to the World Bank’s Ease of Doing Business report, it takes about 11 days to set up a business, and in addition to the company stamp and registration fees, it costs 0.7% of the investment amount (or ¥60,000 or more). There may be other options for opening a branch or representative office, both of which are easier and less expensive. However, there are some restrictions in terms of activities. A ‘shared’ office (i.e., private or semi-private office space plus secretarial and IT staff services) may also be an option for companies operating in major Japanese cities.
Before opening a branch in Japan, companies from the country (Mongolia) must register with the Japanese Ministry of Economy, Trade and Industry (METI) () You can familiarize yourself with foreign investment support programs. These programs include the Japan Bank for International Cooperation and the Development Bank of Japan. Market entry level business support programs are implemented by the Japan External Trade Organization (JETRO) and some city and prefectural governments.
Franchising: US franchising has had a strong influence on the development of the Japanese franchising industry since the early 1970s. Although Japanese consumers are generally receptive to the US franchising concept, in order to be successful, products and services need to be adapted to local needs and expectations in Japan. Mongolia’s franchising business has relatively little opportunity to develop and enter other countries, but this type of business should be considered. There are several forms of franchising to enter the Japanese market. For example, signing a contract with a master franchisee, establishing a wholly-owned branch as a master franchise with a boutique or service center, or establishing a joint partnership. Finding the right partner in Japan takes time and effort. It is difficult to find a company willing to invest in a master franchise or a business that does not have a clear market or strong growth potential in Japan. Therefore, continuous market research and long-term efforts are necessary for companies considering opening a franchise business in Japan.For more information visit the Japan Franchise Association website (https://www.jfa-fc.or.jp.e.ek.hp.transer.com/)).
Joint venture/Licensing): For the most up-to-date information on the regulations for starting this type of activity in Japan, please visit JETRO’s website or consult with an experienced and reputable legal or tax advisor. License agreements may cover copyrights, know-how, patents, service marks, trademarks, and trade secrets..
Express delivery service: Japan’s postal system, with nearly 24,000 post offices nationwide, has consistently been ranked among the best in the world for service and accessibility. Due to the density of Japan, most domestic packages are delivered within 1-2 days. Special same-day express delivery services start at ¥800 and are available in 5 major cities in Japan. Postage fees for international packages using Japan Post are based on size, weight, and distance, and start at around ¥1,400.
2018 | 2019 | 2020 | 2021 | |
|---|---|---|---|---|
Trademark applications – total | 4,374 | 4,603 | 4,190 | 4,642 |
Domestic applications | 1,431 | 1,581 | 1,663 | 2,222 |
Foreign applications | 576 | 619 | 529 | 502 |
International applications filed under the Madrid Agreement and Protocol | 2,367 | 2,403 | 1,998 | 1,918 |
Trademarks with protection certificates – total | 3,505 | 3,927 | 4,028 | 3,308 |
Valid trademarks | 45,696 | 47,983 | 50,809 | 51,784 |
Law on Intellectual Property
5.1. The following intellectual property rights shall be protected
5.1.1. copyright and related rights;
5.1.2. Industrial property rights.
7.1. Industrial property rights include:
7.1.1. invention;
7.1.2. innovation;
7.1.3. industrial design;
7.1.4. trademark;
7.1.5. geographical indication.
7.3. The state administrative body in charge of intellectual property matters shall register the items specified in Articles 7.1.1, 7.1.2 and 7.1.3 of this Law and issue a patent, items specified in Articles 7.1.4 and 7.1.5 and issue a certificate in accordance with relevant procedures.
Patent LAW
3.1.2. “industrial design” means a new and original solution related to the shape, pattern or color, or a combination of colors in an article;
3.1.4. “patent” means a document granted by a responsible government authority certifying the recognition of the given solution as an invention or industrial design, and granting the exclusive right to own the invention or industrial design to the creator for a fixed period of time;
3.1.6. “creator” means a person who devised an invention, industrial design or utility model by his mental creativity;
2018 | 2019 | 2020 | 2021 | |
|---|---|---|---|---|
Industrial design applications – total | 269 | 300 | 293 | 365 |
Domestic applications | 140 | 180 | 167 | 249 |
Foreign applications | 38 | 3 | 4 | 3 |
International applications filed under the Hague Convention | 91 | 117 | 122 | 113 |
Granted industrial design patents – total | 271 | 215 | 225 | 221 |
Domestic applications | 143 | 95 | 102 | 104 |
Foreign applications | 40 | 3 | 1 | 4 |
International applications filed under the Hague Convention | 88 | 117 | 122 | 113 |
Valid industrial design patents | 3,742 | 3,279 | 2,643 | 2,786 |
According to the “World Intellectual Property Indicators 2021” by the World Intellectual Property Office (WIPO), in 2020, 1.1 million applications of 1.4 million industrial designs were received through 154 intellectual property agents worldwide, representing a 2% increase in the number of industrial designs and a 5.6% increase in the number of applications from 2019. China, the European Union, the Republic of Korea, the United States, and Turkey are leading in terms of the number of industrial design applications.
Nowadays, export market opportunities are developed based on the Trade map database of the ITC. To conduct this type of research, the Relative Advantage Index or RCI (Revealed comparative advantage indices) of export/import is used.
Searching for information on foreign trade requires knowledge of classifications and codes used in international trade and customs statistics, such as the Harmonized System.
(https://intracen.org/ )
(https://www.trademap.org/Index.aspx)
Statistics of China can be obtained from the website of the National Bureau of Statistics of China. You can view the annual statistical data (China Statistical Yearbook) online by clicking on the Annual Data section in the Data menu of the website. Information (tables and data) is available for all of China and regions of interest by province (Inner Mongolia, Hebei, Shanxi, etc.), by city (Hohhot, Urumqi, Baotou, Harbin, etc.) and by industry and topic (price data, retail and food industry).
http://www.stats.gov.cn/english/Statisticaldata/AnnualData/
Statistics of the Russian Federation (RUS) can be found on the website of the Federal Statistical Service (Федеральная служба государственной статистики – Росстат) statistic for annual statistical compilations (статистический ежегодник) and regional socio-economic indicators.
As for Korea, the Korean Statistical Information Service (KOSIS ) provides statistical information to users, similar to the Mongolian Statistical Database
As for Japan, statistical information published by the Statistics Bureau of Japan can be obtained from the organization’s website. https://www.stat.go.jp/english/
Mongolia’s main export countries, such as Russia, Korea, China, and Japan, are producing and exporting countries themselves, so ministries and government agencies do not usually publish reports and information about domestic production, trade, and consumer markets. However, it would be more effective to collect and use data from government organizations, agencies, and institutes that support foreign trade and small and medium-sized industries (SMEs). For Mongolian manufacturers who intend to export their products, it will be possible to establish contact with these organizations, supply semi-finished products and raw materials, cooperate with manufacturers and traders of the country and region, and obtain information and research about the market of the region. For example, through the Russian Export Center, it is possible to contact the entrepreneurs of the Republic of Buriat.
https://www.exportcenter.ru/en/
