If you are a UK-based blockchain start-up seeking to raise funds, add users and accelerate the adoption of your cryptocurrency token, Japan can seem quite appealing. After all, it is the world’s third-largest economy and the government has been taking a generally positive stance towards cryptocurrencies. Plus, the longer you wait, the more likely it is that one of your competitors will enter the market ahead of you or a local firm will take over your niche.
When it comes to the Japanese market, it is easy to slide into obsession fuelled by FOMO—the fear of missing out. However, success here is not easy, and there are various pitfalls to be aware of before you commit to entering.
Following is a summary of the challenges I saw UK-based blockchain start-ups encountering during my 10-month stint at one of the country’s best-known cryptocurrency start-ups.
As of the time of writing, we’ve been in a prolonged bear cycle and it’s unclear when the market will recover. If your team is still standing, then you’re probably not ready to rush into Japan. However, once we enter another bull run, I hope you will revisit this article for a sober perspective.
1. Forget retail investors
When it comes to cryptocurrencies, even the most enthusiastic of Japanese retail investors tend to be relatively conservative and stick to the top 10 (if not the top five) coins. Rather than blowing lots of money on marketing efforts to win over Japanese retail investors, I suggest you focus on institutional or strategic investors. However, know that their decision-making process will be relatively slow and laborious.
2. Translation isn’t enough
If you insist on targeting retail investors, then be prepared to go beyond translation and invest in localisation. Doing it properly is difficult. You can’t just slap a Google Translate widget on your site and hope for the best. And hiring a native speaker to translate your site is likely to result in something that feels stiff and awkward to locals because English and Japanese are so different, and the translator will have been trying to be faithful to the original wording. You’ll need a second—and likely third—person to massage the messaging until it resonates with locals.
3. Local influencers lack influence
If I still haven’t swayed you from going after retail investors, the next question you’ll ask is about local influencers and how to get hooked up with one.
First of all, Japanese influencers in the crypto space are far fewer in number and have much smaller followings compared with the top influencers who serve the global English-speaking crypto community. It is also difficult to get in contact with them due to the language barrier and the fact that they are being bombarded with requests.
On the one hand, they don’t want to work on projects they haven’t properly vetted. On the other hand, they are highly unlikely to have time to sit down and read your white paper—especially if it’s only available in English.
Rather than waste time and money on “influencer agencies,” I recommend attending local events and trying to make a face-to-face connection.
3. Illegal sales of marketing tokens
It is illegal to market investments in Japan without the requisite licences. This includes tokens, the units of a blockchain account, and is the case even for projects and cryptocurrency exchanges incorporated outside Japan which do their promotion directly. It also applies to firms or individuals offering promotional services. These people or organisations can only function in the role of “providing information” about blockchain projects.
The way around this is to focus your Japan marketing efforts on telling the story behind your technology, business model, team and other attractive features . In other words, just providing information. Then, when people arrive at your website, join your group on the private messaging app Telegram or follow one of your social media accounts, they can organically discover your token sale.
4. You’ll struggle with service providers
As with any country, there are currently few Japanese lawyers and accountants with expertise in cryptocurrencies. Our Japanese chief operations officer (COO) would joke that there were about five of each in the whole country. And, of course, if you’re seeking ones who can communicate in English, the pool shrinks dramatically.
It’s a similar situation for any other kind of service provider you may need to hire to achieve your objectives, including marketing agencies, influencers, translators, localisation specialists and online community managers. I’m not saying you can’t get things done or that these people won’t be diligent—just that you’re going to have to be patient and work with them.
5. Gangsters and scammers are waiting
Because I was in charge of the international business, I didn’t deal much with locals outside our firm. And, during my 22 years here, I’ve encountered few problems in business.
So, I was shocked when our Japanese COO told us that, as a rule, he avoids exchanging business cards with Japanese people he meets at cryptocurrency events unless he knows their background, or they have been vouched for by someone he trusts. He said that, to be safe, unless proven otherwise, he assumes they are scammers, are operating businesses in violation of one or more regulations (whether through ignorance, carelessness, or recklessness), or are affiliated with organised crime syndicates.
6. Airdrops are useless—even if localised
The firm I worked for ran localised airdrops on behalf of clients, but I never saw any achieve substantial return on investment. An airdrop is the distribution of a cryptocurrency token or coin, usually for free, to a large number of wallet addresses to gain attention and new followers. The intended result is a larger user-base and a wider disbursement of coins. What I saw was that all the free tokens were claimed, but they didn’t result in any legitimate token investments. Those carrying out these airdrops also failed to achieve any significant increase in the number of social media followers or growth in Telegram group membership. This was due to the language barrier—they had failed to localise everything beforehand properly—and the overall low appetite for investment risk.
7. Nobody wants to attend your event
Tokyo has an overabundance of blockchain and cryptocurrency related events ranging from large conferences in five-star hotels to casual meetups and hackathons. Unless your brand is already well known or you have someone particularly influential behind it, you will find it hard to attract participants.
I, therefore, recommend joining established events and just doing your best to network. Trust me, it’s going to be a lot easier and less stressful. However, one thing to keep in mind when you see a Japanese man wearing a suit at such an event is that—according to our Japanese COO—some are likely to have full-body tattoos underneath (meaning they are yakuza). People in the crypto and start-up scenes tend not to wear suits.
What to do?
If you are still eager to jump in, do your homework and ask yourself if your project is ready to be making the necessary investments to succeed in the Japanese market. If not, the entry attempt can be a tremendous distraction and drain on resources. It often pays to wait until you have achieved a solid footing in the greater global English-speaking market.