6 Pitfalls for Chinese Brands Entering Japan's DTC Market by Replicating Western Playbooks

Many Chinese brands that have implemented DTC (Direct-to-Consumer via independent e-commerce sites) strategies in Europe and the US often wish to apply the same approach when entering Japan. However, the channels, payment methods, regulations, and consumer habits in the Japanese market are distinct. Directly replicating strategies often results in wasted expenditure with no orders, or the discovery of compliance issues only after launch. Below are 6 points we most frequently encounter in our practical work.

1. **Do not start solely with an independent e-commerce site.** Online shopping traffic in Japan is concentrated on Rakuten, Amazon, and Yahoo! Shopping. For new brands relying solely on an independent site, customer acquisition costs from scratch are very high. A more realistic sequence is to first test the market on platforms to confirm demand, then use an independent site and LINE to retain customers. Furthermore, Japanese distributors, wholesalers, and physical store channels remain highly important; it is not advisable to completely abandon intermediary channels from the outset.

2. **Use LINE for private domain operations, not WhatsApp.** In Japan, WhatsApp and Discord are rarely used. The core of private domain operations is the LINE Official Account, supplemented by Instagram and email.

3. **Supporting only credit cards will lead to lost orders.** Japanese consumers frequently use convenience store payments, deferred payments, PayPay, and other methods. A limited number of payment options will directly impact your conversion rate.

4. **Japanese regulations differ from those in Europe and the US.** * Online stores must disclose the business operator's name, address, phone number, and return conditions in accordance with the Act on Specified Commercial Transactions. * Promotions by Key Opinion Leaders (KOLs) must be clearly labeled as advertisements (regulations on undisclosed marketing effective October 2023). * Electrical appliances require the PSE Mark, and wireless products need the Giteki Mark (Technical Conformity Mark). * Cosmetics are subject to the Pharmaceuticals and Medical Devices Act (PMD Act), requiring relevant licenses or collaboration with licensed companies. * Food and food-contact utensils are subject to the Food Sanitation Act. * Consumption tax and the invoice system (インボイス). The CE Mark, FCC certification, and GDPR from Europe and the US cannot substitute these Japanese requirements.

5. **First, determine "who is responsible."** Who will be the importer of record, who will bear responsibility if product issues arise (Product Liability (PL) insurance is recommended), whether the trademark is registered in Japan, whether to establish a Japanese legal entity, and whether the person in charge needs a visa. Failing to settle these questions upfront will affect subsequent store setup, contracts, and payment collection.

6. **Localization is more than just translation.** Japanese consumers have high expectations for Japanese-speaking customer service, shipping speed, packaging, and return processing. Without domestic inventory and Japanese customer service, it is difficult to receive positive reviews.

**What Toyo Shōji Can Do** We operate our own stores on Rakuten, Amazon, TikTok Shop, and independent e-commerce sites, allowing us to directly assist clients with test sales. From market research, product adaptation for Japan, compliance confirmation, and channel development, to customer service and after-sales support, all operations are executed from our Tokyo office. The establishment of legal entities, permits, and visas are handled by our affiliated administrative scrivener's office, while tax matters are managed in cooperation with our partner tax accountants.

For product sales in Japan, we conduct a 6-month trial sales period, then jointly assess with the client whether to continue based on actual sales data.

If you wish to know if your product is suitable for the Japanese market, please feel free to contact us.