Working with JETRO translates to Success in Japan for Elanex

April 2005 (See the August 2008 update below)

Opportunities in Japan
Elanex is a translation company that uses a proprietary technology platform and set of algorithms to provide document translation.   The software compares incoming documents to past work and is able to identify patterns and repeated paragraphs in order to automate that part of the process. Human translators and editors complete the work. Elanex's largest clients include financial services firms (because they often produce documents like equity research reports that contain repeated information from one month to the next), legal firms (where the software helps to identify small but crucial differences from document to document), and technology firms (whose structured data is ideally suited to the Elanex approach).  Right away Jonathan Kirk, CEO of Elanex, recognized significant opportunities to profit in Japan.  "Japan," Mr. Kirk says, "is the largest single-language market for translation in the world.  If you want to start out with a translation company that deals with English and one other language, Japanese is the best one. In addition, the structure of Japanese industry maps well to our market focus -- the biggest Japanese firms have translation needs which our systems are ideally suited to address."

Market Entry
Elanex needed to enter the Japanese market, but needed advice and connections to ensure solid returns upon office set-up.  In addition, Elanex needed to gain a more thorough understanding of the costs and benefits of different types of offices in Japan.  As Elanex was relatively small at this point, they were looking for alternative to setting up a K.K., which is the most popular method of opening a Japan office.   JETRO advisors met with Mr. Kirk to explain the options available to the company, and provided him with the current regulatory information and advice on the distinctions of opening different types of offices. After meeting and discussions with the JETRO advisors, Mr. Kirk understood the options available to Elanex, and determined that the best approach for Elanex was not the one that many advisors recommend based on a superficial analysis. In May 2003 Elanex set up a branch office in the Roppongi Hills complex in downtown Tokyo.

Results and Outlook
Since opening its branch office in Japan, Elanex has enjoyed great success, and continues to build its network in Japan.   "People love to talk about how doing business in Japan is different than anywhere else in the world. But they're missing the point," says Mr. Kirk. "The key thing is not learning the customs, it's finding out how you need to build relationships with Japanese people. JETRO is very good at creating forums for people to build relationships with each other and making introductions. You should never underestimate how important that is." Elanex plans to grow its business in Japan further with an additional office in Osaka or by acquiring or merging with a local translation company in the near future.
 

 
UPDATE

Translation Company Elanex, Second-time JETRO Client, Reaches Several Millions in Sales in Japan, Plans to Open Third Japan Office

August 2008 -- Since our first interview with Elanex CEO Jonathan Kirk in April 2005 (see above), the company has grown tremendously, both in Japan and worldwide. We caught up with Mr. Kirk again to get an update on the business and to gain further insight from his experience in Japan. Mr. Kirk spoke about working with JETRO for the second time to set up the company's second office in Japan, described the biggest lesson he has learned so far, and discussed some adjustments Elanex has had to make to its mostly virtual business model.

Business is Booming
Since the last time we spoke with Mr. Kirk, Elanex Japan now generates several millions of dollars in sales and has extended its client base to include some of Japan's largest companies. The company has also opened a second office in Fukuoka and plans to open a third within the next few months. Globally, Elanex operates 10 offices in six countries and plans to open several more by year's end.

Working With JETRO Again
Having worked with JETRO to set up Elanex's first office in Tokyo, Mr. Kirk worked with JETRO again to open an office in Fukuoka, where many potential customers are based, and plans to do the same for the company's third office in Japan. "Basically, each time we're considering a new location, we're doing the same thing: Approaching the JETRO team and getting local introductions to help set something up locally," said Mr. Kirk.

In establishing the Fukuoka office, Elanex worked with both JETRO and the Fukuoka Prefecture Local Government, whose Invest Fukuoka Program provides services similar to those of JETRO but specifically for the Fukuoka prefecture. "They set up office space, made introductions, and set up a mini-PR campaign for us which included publicity on a local TV station and some press releases," recalled Mr. Kirk. "That really helped because in Fukuoka, there are a lot of companies there, but there are several major companies that are collectively known as the "Big Seven," and we've now begun work with three of them. So we've made quite a splash, and that had a lot to do with JETRO's help." By using local support provided by one of Japan's many prefectural governments, Elanex was able to garner the attention of several large customers in the area.

Making the Company a Bit Less Virtual
Since establishing its first Japan office in May 2003, Elanex has made adjustments to its business model to support some differences found in working in Japan. While working with most traditional translation companies entails much interaction between its staff and clients, Elanex is mostly a virtual company. The initial work is done by an automated platform and then finalized by contractors who work remotely by passing documents between one another electronically. This model has worked well in the U.S. and Europe, where Elanex's clients value the time and money able to be saved by working with such a virtual system. But Mr. Kirk has found that his Japanese clients value being able to interact with the staff at Elanex, even if doing so is more costly in time and money. "The readiness to accept a virtual environment in Japan is quite different to, say, America or Europe at the moment," Mr. Kirk observed. To account for this difference, Elanex instituted a policy that allows its contractors to work remotely as long as they are located within traveling distance to one of Elanex's offices.

Training Workers in Japan
Not only do Elanex's Japanese clients have a slightly different preference, but its contracted translators do, too. In many of Elanex's markets, the company presents its contractors with a set of ways to approach situations they many not have experienced before and gives the contractors the choice to choose their own approach. In Japan, however, Elanex has found that its contractors work better with guidance on which approach to use. Elanex has spent the past five years incorporating such customizations to its business model in Japan. "Finding ways to have a standard infrastructure that actually takes into account this flexibility in different countries has been a very interesting challenge," said Mr. Kirk.

The Biggest Lesson 
Out of all his experience working in Japan, the biggest lesson Mr. Kirk said he has learned so far pertains to conducting business internationally than specifically in Japan itself. That lesson is: "Make sure that the advisors that give you advice know more than just the local conditions." This lesson came from having to change Elanex's corporate identity, which was more suited for local business, to one that could handle high levels of international activity, including creating contracts, paying contractors, and transferring funds between entities in different countries. "The choice about what kind of entity to create in Japan and how to set up transfer pricing and some other things might sound a bit boring but make a big difference when you have several million dollars in sales going back and forth," said Mr. Kirk.

Elanex has been meeting such challenges well, as the company leads the translation market in many of the industries for which it provides services. Mr. Kirk aims to grow Elanex to be one of the largest translation companies in the world within the next few years. Expanding at this rapid pace, the company looks well on track to meet that goal.

Related Information

Translation Market
The size of the translation market in Japan was estimated in 2005 to be just under 200 billion yen. Computer related translation made up most of the market with 29.2% consisting of software and hardware translation as well as localization. This market segment is followed by translation for science and industrial technology (22.3%), patents (21.2%), business documents (10.4%), medical and biotechnology related (10.4%), publication (1.7%), and audio-visual (1.4%). Seventy-four percent of services provided were between English and Japanese (more English to Japanese than Japanese into English). This segment is followed by Chinese (6.6%), German (5.5%), and Korean (4.5%). Many companies use computer-assisted translation, with TRADOS being the most popular program by far.

Source: Japan Translation Journal No. 222, Japan Translation Federation. Much of the information in the Journal references the 2005 Translation White Paper, also published by the Japan Translation Federation.

Translation Organizations
Japan Translation Federation (JTF)
Japan Translation Association (JTA)
Japan Society of Translators
Japan Association of Translators (JAT)
Japan Society for Technical Communication (JSTC)
Nippon Intellectual Property Translation Association (NIPTA)
Asia-Pacific Association for Machine Translation (AAMT)

Elanex Japan
Level 6, Roppongi OG Building
1-3-4 Nishi Azabu
Minato-ku, Tokyo 106-0031
(tel) +81-3-5772-6679
(fax) +81-3-4496-4309 or 03.5772.6696
www.elanex.com