The Japanese toy market is a mystery to most people in the toy business. Even people who have been working in the toy industry for a long time rarely if ever have true interaction with the Japanese toy market. Yet for a long time Japan was the 2nd biggest toy market in the world and was only recently pushed back into 3rd place behind China. However, Japan remains bigger than any toy market in Europe.
So how can such a large toy market be so enigmatic and elusive to the majority of the toy trade? There are of course some very significant cultural and language barriers which don’t make it easy to explore or enter the toy market in Japan. Both in terms of communication and product culture, understanding how things work in Japan can take some time and patience.
Japan’s powerhouse toy brands
Many people in the ‘West’ know about Japan’s toy output due to Japan unleashing some of the most massive toyetic brands on the rest of the world. From Pokémon to Power Rangers, and from Transformers to Tamagotchi, Hello Kitty and the whole sub-culture of Manga, Japan’s impact on global toy franchises is massive. These brands listed here are some of the most ever present this millennium across the entire toy business. I personally worked on Pokémon products the first-time round during my time at Hasbro. The phrase ‘phenomenon’ doesn’t even come close to describing how big and how successful Pokémon was in Europe around the turn of the millennium. It is no surprise therefore that trend spotters regularly include Japan in their analysis of what’s going on around the world due to the massive impact of these and other Japan originated toy brands.
Japan toy market structure
There are two major players in Japan’s domestic toy market: Takara Tomy and Happynet/Bandai.
Takara Tomy came about when two long time rivals merged in 2006. Both companies had long heritage in the toy business prior to this with Tomy’s original incarnation dating back to 1924, and Takara being founded back in 1955. The company has a long-term relationship with Hasbro, distributing many Hasbro products across Japan.
The other major player in the Japanese market is Happinet/Bandai. Happinet is a toy distribution company primarily, selling Bandai’s products as well as some others. Bandai owns a significant chunk of the company.
Distribution structures in Japan can be somewhat convoluted, with resellers and wholesalers adding extra margin needs and therefore driving up consumer price points. Normally an international company looking to sell into Japan needs to find a distribution deal with an importer who can then usually set up all the necessary distribution deals to find distribution. It is not easy though to get importers interested in international products due to cultural differences. This is the primary reason why most toy people have little or no dealings with Japan because it is difficult to convince relatively conservative Japanese businesspeople to take a risk on something from outside.
In terms of retailers, Toys R Us is still a force in Japan. Supermarket Seiyu has around 300 stores and also has significant toy market share (once a Walmart subsidiary, Seiyu is now majority owned by other stakeholders). Department stores also play a significant role in Japan, along with e-commerce as would be expected.
Respect the culture and take a long-term approach
Normally when we discuss the distribution opportunities in Japan with our clients, we suggest they focus elsewhere first. There are easy opportunities in other more accessible markets. But for those clients who really want to enter the Japanese market, we recommend taking some time to understand the prevailing culture and taking a long-term approach to relationship building first and selling second. One obvious step to take is to refer to someone by their last name and add the honorific ‘san’ after, this will look like you are making an effort to be respectful to Japanese people and their culture of communicating.
For those with some travel budgets, Japan’s toy trade show occurs normally (in non-covid times) in June. This is as good a place as any to meet a lot of Japanese toy people. However, it would be more effective if you already have someone among your contacts already who can perhaps be persuaded to introduce you to other people.
Perhaps the most efficient and accessible way to meet Japanese toy people of course is within the Japanese pavilion at Spielwarenmesse in Nuremberg. People from all around the world gather at the world’s biggest toy trade show, including many from Japan.
To end this look at Japan, I would like to share a personal experience. I developed a friendship from seeing a well-known Japanese export sales manager at Spielwarenmesse every year. After about 7 or 8 years, when we got to the point where we could share a beer or have dinner together, he asked me to help him find sales in some particular countries, which I was able to do. Like most good relationships, we did not actually connect to sell or buy from each other, instead we developed a real relationship based on mutual liking. Hopefully you can build business in a shorter time frame than 7 or 8 years, but nevertheless if you out the relationship first, your opportunities will be greater in the end.