selling american books in japan

Selling American Books in Japan

Nicholas Ingleton

Publishers who wish to participate in the Japanese market may distribute their English- language editions, sell Japanese rights to a Japanese publisher, or set up a company in Japan. This article discusses the first and third choices. It describes the U.S. companies with Japanese operations and the basic rules for success in such endeavors. The export process--especially promotion and distribution--is also described.

W hen looking at opportunities in the Japanese market, American publishers may take three approaches. The easiest is to attempt to get U.S.

editions distributed in Japan. A second is to try to sell the rights to a Japanese version of a book to a Japanese publisher. A third is to set up a company in Japan; become a Japanese-language publisher, and do your own thing. This last option is the most difficult, but potentially the most rewarding.

The ability to sell large numbers of books in the Japanese market increases by Malthusian leaps when the books are in Japanese. Some recent examples:

�9 Bill Emmot's recently published Spots on the Rising Sun has so far sold 3,000 copies in its U.S. hardcover edition (paperback is not yet available) but has sold 400,000 copies in Japanese.

�9 Sidney Sheldon's books sell about 25,000 copies of the U.S./U.K. pa- perbacks, but about 1,000,000 copies in Japanese on average.

�9 Time-Life Books sold 150,000 copies of The Best of LIFE in Japanese, but only about 4,000 in English.

The list goes on and on. The market for books in Japanese is very strong and looks as though it will continue to grow.

U.S. Publishing in Japan

There are opportunities for U.S. publishers in Japan, but very few companies have had the courage to take advantage of them. Time-Life Books, Readers Digest, Encyclopaedia Britannica, and Harlequin are, I believe, the only significant exceptions. There are some smaller joint ventures and fairly low-key publishing operations in specialist fields, but these four companies are the only ones that made a significant impact, and in the case of Britannica

Nicholas Ingleton is president of the Charles E. Tuttle Co., Inc., a book importer and distributor in Tokyo. Address for correspondence: Charles E. Turtle Co. Inc. 1-2-6, Suido Bunkyo-ku, Tokyo, 112 Japan.

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and Harlequin, continue to make an impact, as publishers of books in Jap- anese.

There are about 3,000 publishers in Tokyo. I don't know the exact number of these that have foreign capital affiliations, but I cannot imagine that there are more than ten or so, so the market is wide open, but very, very com- petitive. Time-Life Books and Readers Digest are among the very few U.S. publishers that have had significant Japanese-language book publishing operations, and both did a lot of business during the 1970s. Time-Life Books in its best year during this period had sales in excess of $80 million, and a pre-tax bottom line of about $10 million. Readers Digest also had a very active mail order business. Interestingly, both of these companies, like En- cyclopaedia Britannica, made their mark in book publishing in Japan by selling directly to the consumer, and both had extensive mail order and door- to-door operations. Readers Digest no longer has a presence in Japan, and Time-Life Books converted its wholly owned operations into a series of joint ventures.

That leaves Maxwell Macmillan, with a small group of companies operating in publishing-related areas in Tokyo, Encyclopaedia Britannica selling a Jap- anese version of its encyclopedia through TBS-Britannica, and Harlequin, publishing for the romantically minded; but apart from Tuttle there is little other obvious U.S.-owned book publishing activity in Tokyo.

The main reason for publishers" reluctance, of course, is the cost of entering the Japanese market. Establishing and staffing a Japanese publishing company is a major and costly exercise. But the real rewards in the Japanese market will come only to those who are prepared to take these steps because, in the final analysis, the main market for books in Japan has to be in the Japanese language.

Publishers who wish to contemplate following this course would be wise to observer some golden rules:

1. The most important single decision that will affect all operations in Japan is the selection of the Japanese executive to run it. That person, and the associations and relationships that person brings to the busiJ ness, will be the single largest influence on the success or failure of the business. So publishers should spend a lot of time and effort finding this person. The same is true for the selection of joint venture partners.

2. The second golden rule is, after spending all that time and effort finding a strong leader for a Japanese business, the publisher should listen to and be guided by that person. The manager must have a complete understanding of the publisher's U.S. business and product lines, but the Japanese manager must make the operating decisions in Japan.

3. The third golden rule is, do not expect things to happen quickly.

56 Publishing Research Quarterly / Spring 1991

Patience, in Japan, really is a virtue. Not only that, impatience can put a publisher out of business.

Financing a startup in Japan is not usually difficult. Debt-to-equity ratios of 10 to 1 are not uncommon in startup situations, and currently local finance is still available. Minimum capitalizations are normal in Japan. For instance, a paid-in capitalization say of 30 million yen, and bank borrowings of up to 200 million yen, would not be an uncommon situation for a medium-sized publisher.

So, for the publisher with a line of products that might fly in Japan who is not enamored of the profits from selling rights to Japanese publishers or exporting U.S. editions into Japan, setting up shop in Tokyo is a realistic and feasible alternative. However, it is probably one to be undertaken only after a very thorough market study. Fortunately, as in all other fields, Japan is amply endowed with companies that specialize in these kinds of studies. A Japanese company can do a thorough job of omnibus testing, focus group testing, or any other kind of testing in the Japanese market.

Companies that want to survive and prosper in the Japanese market cannot afford to forget the old business axiom: the marketplace is the master; unless you are customer-driven, you are out of business. And in this case, the customer is Japanese, not American! Japanese customers are a very, very demanding group of people, and generally unforgiving of companies that do not give them what they want. They are prepared to pay for quality and for products that exactly meet their requirements, and foreign brands and names continue to be a very popular; but companies that don ' t keep their eye on the ball and on changing consumer needs are in trouble.

Exporting to Japan

Some American publishers will take the plunge and set up their own operations in Japan; many more will be successful to varying degrees in selling rights to their books in Japan; but exporting your own U.S. editions to Japan is open to everybody, large and small, and some of the smallest U.S. publishers have found Japan to be a very healthy outlet for some of their books. Japan is a very "supplier-friendly" market for U.S. publishers, and publishers can take advantage of the very elaborate infrastructure that is available.

There are essentially two levels of activity in the process by which U.S. books are sold into Japan in their original editions. The first has to do with promotion. In the case of trade books, that means promotion to distributors and key outlets, and in the case of academic books, it generally means their promotion to institutions, teachers, and professionals, but also to certain distributors. I will focus on trade books. The second level of activity is the actual logistical job of getting a book out of the U.S. warehouse, shipped or flown to Japan, cleared through Japanese customs, transported into a Japa-

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nese warehouse, and then merchandised either to a bookstore shelf or to the purchasing office of an institution.

Promotion

Getting the attention of distributors and key outlets is the critical first step in selling books to the trade in Japan. This can be done in a number of ways. All distributors and major book chains in Tokyo are inundated with catalogues and other printed materials with forthcoming lists, and the challenge for a publisher is to make sure that its w)ice is heard amid all this babble. But two things will always catch a Japanese distributor's attention:

1. Movie, television, radio, and video tie-ins. Tuttle has sold nearly 30,000 copies of 7"o12 Gun in Japan because of the success of the movie. Back to tile Future I and 11 are two further very successful movie tie- ins. Love Story continues to sell 3,000 copies a year merely from residual video sales. These are just a few examples.

2. The original editions always get a lift from the publication of a Jap- anese-language edition. Some obvious examples: Sidney Sheldon, Jeffrey Archer, Tom Clancy.

Tile message here: a publisher with a book on which a movie or TV series is being based, or vice-versa, with a release scheduled in Japan, should make this information known to the distributor. If the Japanese rights to a book have been sold, make sure the details get to the distributor.

Personal relationships are critical. Publishers are, after all, in a business of people. And even though I have been told many times that distribution is the least cerebral part of the publishing process, we still like to see a friendly face. The larger publishers--Harper/Collins, Bantam/Doubleday/Dell, Simon & Schuster, and McGraw Hill, among o the r s - -have local represent- atives in Tokyo directly promoting their books to distributors. Others make regular visits to Japan. John Beauchamp of Random House, Bob Michel and Seth Russo of Bantam, Sandy Friedman and Margaret Laurens of Viking, Allan Eady of Crown, Paul Feffer of Baker and Taylor, and many others have been traveling to Japan for a long time and know the market well. Their personal visits help them to maintain a high profile in the marketplace. But whether a publisher has enough turnover to maintain a local promotional office or decides to make regular visits, personal contact and regular pres- entations of new lists are vital. All distributors welcome visits from U.S. publishers. People who push their products consistently over a long period of time in Japan and who are able to start developing a sense for what does and doesn' t sell in this market will, by and large, be successful in promoting their books to the Japanese.

I have lived in Japan for nearly forty years and read Japanese, but reading


another language is a real burden. The same applies to the Japanese who have to read U.S. catalogues and lists--it 's a chore. So publishers who have a book that has a real chance in Japan should send a sample. In particular, the big visual and graphic design books that do well in the Japanese market need to be seen to be effectively promoted. So do children's books which are also read by adults.

Publishers who cannot afford the time to get to Japan have alternatives to help promote lists: medium-sized operators like Rockport Associates, big operators like Baker & Taylor, and multipublisher reps like Ralph and Sheila Summers of the company of the same name, and Roger Ahlberg, who is located in Tokyo. These people all know the Japanese market intimately, and know the Japanese distributors.

Publishers who decide to use a rep should use somebody who is inde- pendent and not associated with a Japanese distributor, because publishers get more attention by dealing directly with the Japanese trade. People like to deal with employees of the U.S. publisher, distributor, or independents, not somebody with whom they normally compete.

Tokyo has an active English-language press, and The Japan Times, The Tokyo Weekender, and the Asahi Evening News are among the prestigious publications serving the foreign community. The Pacific Stars & Stripes serves the important military presence. But Japanese papers such as the Asahi Shimbun are also interested in foreign publications, and all of these should be cultivated by U.S. publishers as a potential PR outlet for books, through reviews, through author interviews, or for general press releases. This is an area that U.S. publishers have been slow to exploit, and publicity in the press or on television will have truly dramatic effects on sales.

Distribution

There are two primary importers and distributors of general trade books into Japan: Yohan and Tuttle. Both buy books from U.S. publishers with some rights of returns. Both companies look after the complete distribution cycle.

Tuttle has a large group of very experienced employees who merchandise the books we sell in all the key outlets in the two major metropolises in Japan (the greater Tokyo/Yokohama area, and the greater Osaka/Kyoto/Kobe area) and in the next two largest markets (Hiroshima and Nagoya). Every book we deliver is with a full right of return. At any time, we are therefore liable to have all of our books come back to our warehouse. That doesn't happen, of course, but it makes us very careful.

Our salespeople call on about two hundred foreign bookstore accounts in these markets, about 85 percent of the foreign book sales outlets in Japan. These men and women have built up a relationship with the staffs in the bookstores over the years, and their collaboration is aimed at making a large array of books available and at maximizing turnover on each square meter

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of floor space. The cost of space in any premium location in Japan is enor- mous, and a very high sales velocity is needed to sustain these costs.

In addition to this core market of about two hundred bookstores selling foreign books in Japan, another roughly one thousand outlets take some foreign books. In reaching these bookstores, Tuttle takes advantage of the nationwide services of the very large Japanese distributors, Nippan and Tohan, which together control about 70 percent of all Japanese book and magazine distribution, and some regional distributors, which are also very large distributors in their own right.

Timing is critical in Japan, which is both an open market and very conscious of what is happening in publishing in other countries. Tuttle airfreights into Japan nearly all of the books we now import. If there are competing U.S. and U.K. editions, we need to be sure that the one we are selling is priced competitively, and is sitting on the bookshelves in the right place, before the other edition. So we are always pushing our publisher-suppliers to get us books quickly. This aspect of the relationship between the U.S. publisher and the Japanese distributor is critical; you need to have excellent commu- nicators who respond promptly to queries from your Japanese distributors, and who are able to get books out of your system and to the international airfreighters fast.

The Kinokuniya, Maruzen, Sanseido, Yurindo, Bunkyodo, and Asahiya chains are our largest bookstore accounts in Japan for both Yohan and Tuttle. All six chains make full use of Tuttle and Yohan as immediate sources of salable product. If our Osaka office gets an order from the Umeda outlet of Kinokuniya today, we will have the books in their store sometime tomorrow. The Umeda store has annual sales of about $90 million and is probably the largest single outlet among Japanese bookstores, so when they ask for some- thing, they get it! Building anticipation for a forthcoming publication is an important promotional device (great success stories are Akio Morita's Made in Japan and the current House of Nomura), but once we have the demand, we need the publisher's attention to make sure we get the books. You would be surprised at how many times our suppliers run out of books at critical moments in the distribution cycle of a title!

In addition to the two key foreign book trade distributors in Japan, Ma- ruzen, Kinokuniya, and Sanseido import some general titles directly; a number of smaller trade distributors and some of the large bookstore outlets like Jena Books and Aoyama Book Center also directly take some stocks. But all of these bookstores realize that their ability to administer large and varied inventories is limited, and there has been a movement toward greater reliance upon the distributors such as Yohan and Tuttle.

Distribution is a very costly and difficult business in Japan, and one with very small margins, so it is not a business that anybody would now willingly get involved in. The existing companies are by and large operating out of facilities they own; to replicate these today given the prices of real estate in Japan would be astronomically expensive. These comments apply equally to


the big companies like Nippan and Tohan, and the specialists in foreign publications like Yohan and Tuttle. It makes sense, therefore, to use these elaborate and very expensive facilities effectively. It does not make sense for publishers to try to duplicate what a distributor can do, because, in all likelihood, they will not be able to do it as u/ell or as cheaply.

In choosing a distributor, the first question to ask, of course, is whether it makes sense to tie yourself down to a single distributor for your complete line of products. Some U.S. publishers have; many have not. This is probably the most critical choice. Ten or twenty years ago in Japan, it was a fairly easy choice. You had a book, or a list of books; somebody made you a proposition; the alternatives were limited; you accepted and started a business relationship. Today, however, the trade market in Japan is inestimably more complicated and filled with a lot of little niches that specialist bookstores and distributors have carved out for themselves. And books are being sold outside the regular trade in increasingly impressive numbers to nonbook outlets.

As U.S. publishers become aware of all of these opt ions--and those with local promotional offices in Japan are generally the most knowledgeable about the array of choices they have- - the tendency is to move away from exclusive relationships to open market policies. It is becoming increasingly common for a U.S. publisher to have an open market policy but also a special relationship with one distributor. This special relationship in many cases just takes the form of a larger trading relationship based probably on a larger number of single title exclusives. This latter device continues to be an en- during part of the distribution mechanism in Japan and makes sense both from the U.S. publisher's and the Japanese distributor's viewpoint. But even the strongest trade distributors, and I obviously include both Yohan and Turtle, lack expertise in certain areas, and it is these areas that can be exploited by a publisher with an open market policy, as opposed to one that has given blanket exclusivity.

Japan is a very volatile market. New opportunities to sell products appear constantly, sometimes in the most unexpected places. To keep options open and take advantage of these opportunities, whether in special deals with manufacturers, mail order promotions, or special mall locations for bargain books, publishers should have their antennae up and be receptive to offers.

Opportunities to learn about the Japanese book distribution system are also widening. Book fairs will become an increasingly important focal point for business by U.S. publishers in Japan, and the ABA, Frankfurt, and Bo- logna fairs will give U.S. publishers many chances to meet with the very active trade distributors in Japan. By making contact with these people, evaluating compatibility and the intensity of their interest in doing business, publishers will be able to select the best Japanese distributor. When publishers see somebody sharing their enthusiasm for their books, they know they're getting warm. As with all relationships, that chemical reaction is critical.

selling american books in japan

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