Network Marketing in Japan

Japan is one of the most economically developed countries with a high standard of living. Obviously, the style of doing business in this country significantly differs from what we are used to. In this article, we will talk more about the Japanese economy and the role of MLM in its development.

FACTS ABOUT THE JAPANESE ECONOMY

From a business perspective, Japan is one of the most successful markets in the world. The statistics speak for themselves, as the economy of this country holds:

- 3rd place in the world in nominal GDP ($4.601 billion);

- 4th place in terms of purchasing power parity;

- 2nd place in the world in terms of development.

In 2010, Japan held 13.7% of the world's private financial assets (2nd place in the world), valued at $1460 billion. As of 2013, 62 companies from the Fortune Global 500 list were based in Japan.

And all this is happening despite the fact that the territory of Japan itself is islands, the total area of which is 45 times smaller than that of Russia. The country has practically no mineral resources, but its geographical location has enabled active participation in global trade since ancient times. All these factors have also contributed to increased business activity and readiness to adopt innovations, including in the field of organizing trading structures such as network marketing.

MLM STATISTICS IN JAPAN

The network marketing industry makes a significant contribution to the Japanese GDP. To illustrate the impact of multi-level marketing on the country's economy, the following facts can be cited:

- it is the third country in the world in terms of network marketing industry development;

- the first in terms of the number of product names sold by MLM companies;

- over 3.3 million people are involved in direct sales (2014 data).

The Japanese market has many small and large MLM companies, both foreign and local. About 60% of sales are in the beauty and health products niche.

61% of partner companies worldwide are in the Health-Beauty niche. The Japanese market confirms this distribution.

The main feature of network marketing in Japan is the stable, but not too rapid growth of the industry. Unlike China or Indonesia, Japanese companies do not scale up as quickly. However, thanks to the excellent image and quality of Japanese products, they steadily expand their influence throughout the Asia-Pacific region and attract the attention of international investors.

HOW NETWORKERS' RIGHTS ARE PROTECTED

Japan adheres to fairly clear rules regarding the MLM industry. In 1980, the Ministry of Economy, Trade, and Industry (METI), with the support of foreign and local MLM companies, established the Direct Selling Association or JDSA (organization's website - jsda.or.jp). The association provides for and monitors the legality of MLM companies' operations - from document circulation and analytics collection conditions to the rules for conducting qualification exams for sales representatives.

Under certain conditions, processes in network companies may also be subject to control under the "Law on Specific Commercial Transactions".

For example, when a Japanese person enters into cooperation with a foreign company and, when signing a contract, did not fully understand the translation of the contract into Japanese. If the language barrier triggers a conflict and technical support in Japan is not provided by the company, the individual may attempt to terminate the contract in accordance with the "Law on Specific Commercial Transactions".

HOW THE PANDEMIC HAS AFFECTED JAPANESE MLM COMPANIES

On the one hand, during the pandemic, people became more interested in alternative ways of earning money and the number of distributors in companies increased. On the other hand, in 2020, the overall sales volume decreased. The projects most affected were those related to the sale of clothing, footwear, and personal accessories.

Objectively, the network marketing industry, like traditional sales, has significantly suffered from the consequences of the pandemic. However, some players promptly reviewed their business processes and offered consumers ways to solve new problems that arose during the epidemic.

For example, Yakult Honsha Co Ltd was one of the first to offer customers a new "contactless" delivery method to their door. Many other projects followed their example.

TOP NETWORK COMPANIES IN JAPAN

Despite a decline in sales volumes, there are no signs that network marketing will lose its positions. As before, new projects are emerging in the market, and those created earlier are only scaling up. Check out the list of the best Japanese companies using network marketing methods: