Excellent Products, Inferior Marketing: Why Japanese Premium Brands Lose in Overseas Markets
1. Introduction: Japan's Quality Paradox
Why do excellent quality Japanese products lose in overseas markets? This question is a fundamental puzzle that many foreign companies face when considering business with Japanese brands. Throughout the world, "Made in Japan" is recognised as synonymous with quality. Precision technology, takumi craftsmanship, attention to detail—these are widely known as characteristics of Japanese products, and consumer trust in them is strong. However, an interesting phenomenon is occurring on the other hand. Japanese products, which should hold an overwhelming advantage in quality, are losing market share to similar products from other countries in overseas markets.
This phenomenon can be defined as "excellent products, inferior marketing". This refers to a situation where, whilst surpassing competitors in the essential value of products, companies lose in competition due to the skill or lack thereof in marketing strategy and market approach.
Let us look at specific figures. Japan's exports of agricultural, forestry and fishery products and food have been on an upward trend in recent years, reaching 1 trillion 450.1 billion yen (approximately 97 billion USD) in 2023. However, when we look at individual product categories, a harsh reality emerges.
Behind this lies Japan's unique quality assurance system as well. The GI system (Geographical Indication protection system) is a scheme that protects the names of agricultural, forestry and fishery products and food produced in specific regions, where the characteristics of those regions are linked to quality. Kobe beef and Uji matcha are also strictly managed in terms of quality through this system. However, this commitment to quality ironically becomes a constraining factor in overseas expansion in some cases.
In this article, we shall analyse the challenges facing Japanese brands such as these alongside concrete examples, and provide insights for foreign companies to succeed in global markets by leveraging Japan's excellent products, technology and human resources. In today's markets where high quality alone cannot win, we shall explore the answer to how true competitive advantage can be built.
2. Case Study: Kobe Beef vs Australian Wagyu - A Tale of Two Markets
2.1 Kobe Beef: Uncompromising Quality Standards
Kobe beef is Japan's premier beef brand, born from the pure bloodline of Tajima cattle with a 1,200-year history. Its quality standards are the most stringent in the world, and all of the following conditions must be met.
Kobe Beef: Uncompromising Quality Standards
| Standard Item | Kobe Beef Standards | Remarks |
|---|---|---|
| Breed | 100% Tajima cattle bloodline | Pure bloodline with 1,200-year history |
| Age in months | 28-60 months | Virgin female cattle or castrated cattle only |
| Processing location | Designated slaughterhouses in Hyogo Prefecture | Quality control through geographical restrictions |
| Meat quality grade | Grade 4 or higher out of 5 grades | Comprehensive evaluation of meat quality |
| BMS score | BMS score 6 or higher out of 12 levels | Beef Marbling Standard |
In particular, BMS (Beef Marbling Standard) is a uniquely Japanese standard that evaluates the marbling degree of meat on a 12-level scale, and Kobe beef requires a high level of at least 6. These stringent standards create a scarcity, with Kobe beef's annual export volume amounting to merely 77.8 tonnes in fiscal year 2022. The distinctive texture that "melts in the mouth" is a quality characteristic based on scientific evidence, born as a result of carefully selected genetic traits and long-term rearing management.
2.2 Australia's Strategic Market Entry
In contrast to Kobe beef's stringent quality standards, Australia entered the Wagyu market with an entirely different approach and has now become the world's largest Wagyu exporter.
Strategic Foresight of the 1990s:Australia's Wagyu industry began with a bold investment of importing 220 head of Wagyu cattle from Japan between 1990 and 1999. This forward-looking investment led to an overwhelming market advantage 30 years later.
Current Overwhelming Scale: Currently, approximately 400,000 head of Wagyu cattle are raised in Australia, which possesses the world's largest Wagyu genomic database. In 2023, it boasted a market scale of 2 billion Australian dollars (approximately 200 billion yen) (approximately 13.3 billion USD) and exports to over 40 countries.
Flexible Definition Strategy:The key to Australia's success lies in the "50% genetic threshold". Whilst Japan's Kobe beef requires 100% purebred Tajima cattle, by defining cattle with 50% or more Wagyu genes as "Wagyu", Australia achieved improvements in production efficiency, cost optimisation and supply stability.
2.3 Current Market Dynamics: Confronting Reality
The market comparison between Kobe beef and Australian Wagyu reveals the harsh reality that superiority in quality and success in the market do not necessarily align.
Current Market Dynamics: Confronting Reality
| Item | Kobe Beef (2022) | Australian Wagyu (2023) |
|---|---|---|
| Annual export volume | 77.8 tonnes | 30,000-40,000 tonnes |
| Export destinations | Centred on high-end restaurants | Diverse markets in over 40 countries |
| Market scale | Several billion yen | 2 billion Australian dollars (approx. 200 billion yen) (13.3 billion USD) |
| Price range (per 100g) | 8,000-15,000 yen (53-100 USD) | 3,000-6,000 yen (20-40 USD) |
| Production efficiency | Long-term rearing of 28-60 months | Efficient rearing of 18-24 months |
| Brand recognition | Limited luxury ingredient | Widely recognised as premium beef |
In the American market, "Wagyu = Australian product" is often the perception, and approximately 80% of Wagyu at high-end steakhouses is Australian. In the European market as well, the current situation is that many consumers do not perceive a quality difference commensurate with the price difference, and Australia has established a market scale difference of more than 500 times.
3. Five Common Pitfalls for Japanese Brands
3.1 Reactive Brand Protection
One of the most serious problems in the international expansion of Japanese brands is the reactive response to intellectual property rights protection. Many Japanese companies and organisations have been satisfied with domestic success and have underestimated overseas trademark registration and counterfeit product measures.
Delayed Response: Reactive Approach to International Trademark Registration
Kobe beef has faced complex legal issues surrounding trademark rights in the United States for many years. In the United States, the name "Kobe Beef" has been used by multiple businesses, and the situation where it is difficult to distinguish from authentic Kobe beef has continued. It was not until 2012 that the Kobe Beef Marketing & Distribution Promotion Association finally completed trademark registration in the United States, but confusion had already arisen in the market.
Uji Matcha Case: Spread of Counterfeit Products Through 191 Trademark Registrations in China
Even more serious is the case of Uji matcha. In China, as many as 191 trademarks related to "Uji matcha" have been registered since the early 2000s, and most of these were by third parties unrelated to legitimate Japanese producers. As a result, in the Chinese market it has become difficult for consumers to distinguish between authentic Uji matcha and counterfeit products, and brand dilution has progressed. The Uji Tea Merchants and Manufacturers Cooperative finally intensified brand protection activities in China in 2018, but confusion in the market had already become established.
3.2 Fragmented Marketing Approach
Another major factor behind Japanese brands struggling in international markets is the fragmentation of marketing activities. Each production region and producer organisation develops marketing independently, undermining overall brand power and market impact.
Fragmentation Problem: Individual Promotions at Each Production Region Level
In Japan, each production region develops its own brand strategy, such as Kobe beef, Matsusaka beef and Omi beef. However, it is difficult for overseas consumers to understand these subtle differences, and as a result, a unified brand recognition as "Japanese premium beef" has not been established. The annual marketing budget of each production region remains at the scale of several hundred million yen, which is insufficient to demonstrate presence in the global market.
Resource Inefficiency: Lack of Unified Message
This fragmentation subdivides limited marketing budgets, making effective market penetration difficult. Each production region uses different messages, different visual identities and different distribution channels, resulting in confusion for consumers.
Comparison: Australian Wagyu Association's Unified Strategy
On the other hand, the Australian Wagyu Association has a unified marketing budget of approximately 5 billion yen (approximately 330 million USD) per year and deploys large-scale campaigns in the global market as a national brand. Under a single "Australian Wagyu" brand, it has established strong brand recognition by deploying consistent messages and visual identity in over 40 countries worldwide.
3.3 Cost-Plus Pricing Strategy
Many Japanese companies rely on a "cost-plus pricing strategy" and determine prices based on production costs rather than the price the market is actually willing to pay.
Structure of the Problem: Price Setting as "Result of Costs Incurred"
In the case of Kobe beef, high-cost factors such as the long rearing period of 28-60 months, stringent quality control systems and limited production volume are directly passed on to the price. As a result, it is not uncommon for Kobe beef to be sold in international markets at prices exceeding 100,000 yen (approximately 670 USD) per kilogramme.
Disregard for Market Value: Lack of Value-Based Pricing Strategy
This pricing method does not consider the value consumers actually perceive or their willingness to pay. Whilst it is certainly high quality, the reality is that the quality difference is not recognised by consumers to the extent that it can justify the price difference.
Access Restrictions: Market Opportunity Loss Due to High Prices
Extremely high pricing limits reach to potential consumer segments, missing opportunities for market expansion. Australia's Wagyu industry adopts a "value-based pricing strategy", setting appropriate prices in target markets and constructing production systems in reverse to secure profits at those prices.
3.4 Rigid Interpretation of Tradition
As a factor hindering the international expansion of Japanese brands, there is an excessive commitment to tradition and purity. This "perfectionist" approach actually undermines market adaptability.
Commitment to Pure Bloodline: 100% Purity Requirement
Whilst Kobe beef requires 100% purebred Tajima cattle, Australia defines cattle with 50% or more Wagyu genes as "Wagyu". Through this flexibility, Australia has succeeded in providing products sufficiently attractive to consumers whilst improving production efficiency.
Cultural Integrity Requirement: Demand for Complete Cultural Authenticity
Many Japanese brands demand the same level of "cultural authenticity" in overseas expansion as in the domestic Japanese market. However, this hinders adaptation to local food culture and consumption habits, becoming a barrier to market penetration.
Lack of Adaptability: Insufficient Flexibility for Overseas Market Adaptation
Adaptation to local preferences, distribution systems and regulatory environments is inadequate, and there are many cases where market opportunities are lost by insisting on "the Japanese way". Successful global brands demonstrate adaptability to local markets whilst maintaining core values.
3.5 Digital Marketing Lag
In today's global market, digital marketing is an essential strategic element, but many Japanese brands lag significantly behind in this area.
Insufficient SNS Utilisation: Limited Social Media Utilisation
Whilst official Instagram accounts related to Kobe beef have only tens of thousands of followers, the Australian Wagyu Association has over 300,000 followers and regularly disseminates attractive content. Most Japanese brands perceive social media merely as an information dissemination tool and have not utilised it for two-way communication or community building.
Storytelling Weakness: Weakness in Narrative Marketing
Whilst they abundantly disseminate technical quality information and production process details, there is insufficient narrative marketing that appeals to consumer emotions. Australia's Wagyu industry has constructed an attractive story of "the fusion of Japanese tradition and Australian innovation" and appeals to consumers worldwide.
Lack of Influencer Collaboration: Loss of Influencer Cooperation Opportunities
Collaboration with overseas culinary influencers and chefs is limited, and opportunities for word-of-mouth marketing have not been utilised. On the other hand, Australia's Wagyu industry actively collaborates with famous chefs and food influencers in countries around the world, achieving organic recognition expansion.
4. Competitive Success Strategies: Learning from Global Rivals
4.1 Australia's Strategic Advantages
The reason Australia overwhelms Japan in the Wagyu market lies in four strategic approaches.
✓ Flexible Definition Strategy
Australian-style Wagyu adopts genetic standards from 50% to 100% and crossbreeds Wagyu with Angus cattle to achieve "best of both worlds", realising Angus flavour and Wagyu marbling. Whilst Japan insists on 100% pure bloodline, Australia has dramatically expanded production scale whilst maintaining quality perception. Through this flexibility, grain-based rearing periods have also been shortened to 250-450 days compared to Japan's 600-700 days, achieving cost efficiency.
✓ National-Level Branding
The Australian Wagyu Association (AWA) maintains the largest Wagyu cattle registry organisation outside Japan and is developing the world's luxury beef. Under the unified corporate mission of "Support, Promote and Advance Wagyu Production", the association positions Wagyu as "advancing the world's luxury beef". Through this unified strategy, it disseminates consistent messages across all markets, achieving effects in contrast to Japan's fragmented approach.
✓ Reverse-Engineered Pricing
Australia reverse-engineers cost structures from target export prices, such as Walmart offering American Wagyu at relatively affordable prices through its private label "Marketside Butcher". This is a market-driven approach fundamentally different from Japan's price setting as "result of costs incurred".
✓ Sophisticated Digital Strategy
AWA produces a podcast called "Beyond the Marbling", raising awareness about the Wagyu industry, supply chain, history and future. Furthermore, with 1,294 followers on LinkedIn and 2,095 followers on Instagram, it has established a professional brand identity and digital presence.
4.2 Success Factor Analysis
First-Mover Advantage: Through strategic genetic acquisition in the 1990s, it secured an advantageous position in the growing market of the global Wagyu market worth 25.34 billion USD in 2024.
Cost Efficiency:Through efficient production systems, from feedlots to processing facilities, it achieves stringent management utilising advanced knowledge and cutting-edge technology.
Export Network: In 2024, Australian beef exports reached record highs, establishing a distribution network to over 40 countries.
Brand Clarity: Through the annually held Wagyu Branded Beef Competition (WBBC), 58 world-class entries are judged by 36 experts, maintaining clear quality standards and brand identity. Through this system, it has established its position as "world's luxury beef", becoming a success story where Japan's traditional approach is enveloped in modern marketing strategy.
5. Marketing Tactics in the Digital Age
5.1 Storytelling and Content Strategy Framework
In the digital age, quality visualisation is essential for Japanese brands to succeed in overseas markets.
Quality Visualisation Methods:
Certification Systems: Through internet-based systems linked with QR codes, it is now possible to confirm detailed production locations, work logs, chemical usage records, farm field photos and even producers' face photographs. DENSO's "QR in QR code" technology embeds information from two types of QR codes within one QR code, enabling the addition of traceability information without changing existing infrastructure systems.
Ensuring Transparency:In the export of Japanese vegetables to Singapore, a proof-of-concept trial was conducted to confirm traceability through videos and cultivation information from QR codes. However, Japanese lettuce costs more than four times that of American and Australian produce, exposing the reality that traceability alone cannot cover the price difference.
Craftsmanship Visualisation: The production or manufacturing process itself becomes a motivation for purchase and an opportunity to raise brand value. For businesses thoroughly committed to sincere manufacturing, transparency of processes brings competitive advantage.
5.2 Social Media and Influencer Strategy (Recommended/Not Recommended Format)
The social media marketing market in 2024 is 1 trillion 203.8 billion yen (approximately 80.3 billion USD), 113% year-on-year, and influencer marketing recorded high growth of 86 billion yen (approximately 5.7 billion USD), 116% year-on-year.
Recommended Actions:
✓ Utilise Instagram/YouTube/TikTok for visual appeal
In 2025, brands are strengthening connections with audiences through immersive in-person events. Localised events have gained over 5.24 million mentions, with 67% showing positive reactions.
✓ Collaborate with local influencers
COHINA gained 120,000 followers through live streaming continued for 400 days and has grown to a scale exceeding 100 million yen (approximately 6.7 million USD per month) in monthly sales. CLANE increased e-commerce sales approximately threefold in one year through YouTube dissemination.
✓ Create cultural bridge content for local context
36% of marketers place importance on unexpected brand collaborations, and 75% of related social media posts receive positive reactions.
Not Recommended Actions:
✗ Literal translation of Japanese cultural concepts
Direct translation ignoring local cultural context leads to brand message dilution.
✗ Ignoring local social media platform settings
Distributing uniform content without understanding the characteristics and algorithms of each platform halves effectiveness.
✗ Underestimating the importance of visual storytelling
In an era where AI-powered real-time communication with consumers and personalised content and ad delivery are important, disregarding visual impact is fatal.
5.3 D2C (Direct-to-Consumer) Model Implementation
The domestic market scale for digital D2C was 2 trillion 770 billion yen (approximately 185 billion USD) in 2023 and is predicted to reach 3 trillion yen (approximately 200 billion USD) in 2025.
Eliminating Intermediary Margins: As there is no need to go through retail shops or wholesalers, there is an effect of increased profit margins. FABRIC TOKYO raised approximately 1.35 billion yen (approximately 90 million USD) in funding, and FUJIMI, with monthly sales of approximately 200 million yen (approximately 13.3 million USD per month), was acquired by POLA ORBIS Holdings for 3.8 billion yen (approximately 253 million USD), attracting attention from major corporations.
Customer Relationship Building: Successful D2C brands easily reflect user voices and market trends, conducting product development and sales with emphasis on communication with consumers. BASE FOOD employs "customer-centric operational marketing", driving improvements from product development to advertising based on customer voices.
Real-Time Feedback:Brands that establish mechanisms to provide products matching customers and customisation capabilities, offering personalised products based on diagnostic results, are succeeding. Through this two-way communication, product provision suited to consumer lifestyles is realised, moving away from traditional mass production and mass consumption.
6. FAQ - Frequently Asked Questions
Q1: What is the most important point when collaborating with Japanese companies through TRAVESIA?
A: It is essential to understand each other's business cultures and build long-term trust relationships. Japanese suppliers tend to take time for consensus building, but once a partnership is established, a very stable relationship continues. TRAVESIA, as a local contact point, supports project visualisation, expectation management and serves as a cultural and communication bridge to realise smooth collaboration.
Q2: How much initial investment is required for cross-border projects using TRAVESIA?
A: Whilst it varies depending on the scale and content of the project, generally 500,000-2,000,000 USD is the guideline, including research, supplier selection, prototyping and logistics. TRAVESIA conducts research and supplier coordination in the initial stages, minimising risks through a phased approach before full-scale investment.
Q3: How does TRAVESIA support intellectual property protection?
A: Japan has a very well-developed legal system for intellectual property (IP) protection. TRAVESIA has its origins in the consulting division of Kano Law Office and has strengths in corporate legal affairs, contracts and rights protection. It protects the safety of intellectual property throughout the entire collaboration, including contract drafting and protection of technology and know-how.
Q4: How do you resolve language and communication barriers?
A: Many Japanese manufacturers prefer communication in Japanese and may be unfamiliar with international business practices. TRAVESIA's bilingual liaison staff accurately and culturally appropriately bridges technical documentation, contracts and daily communications, utilising tools such as video conferences, Airtable and machine translation.
Q5: When using TRAVESIA, how long does it take to see results?
A: Whilst it depends on the project, 12-18 months from initial contact to initial shipment and sales, and 2-3 years to full-scale commercialisation are typical guidelines. As TRAVESIA proceeds step by step through research, supplier coordination, prototyping, negotiation and logistics, you can aim for steady results on a realistic timeline.
Q6: What is different about TRAVESIA from other matching or procurement platforms?
A: TRAVESIA does not stop at mere matching but conducts thorough research, workflow design and management of the entire procurement and development process. Leveraging import/export operational experience and legal expertise, it consistently supports Japan-specific distribution systems, regulations and cultural barriers. Even after project launch, it continues to be involved as a local operations partner.
Q7: Can TRAVESIA handle not only tangible products but also intangible assets?**
A: Yes. It can handle not only tangible goods such as products and raw materials but also intangible assets such as intellectual property and brand concepts. From local subsidiary establishment to one-time procurement, it provides flexible support according to business needs.