PPM Technologies

September 2008 - Based out of Oregon, PPM Technologies supplies capital equipment to the food processing industry. The company has been successfully selling its equipment in Japan in different forms¹ for 20 years but felt the business had more potential to realize. After opening a Japan office last October, PPM Technologies found its thoughts confirmed, having since established a complete agent network throughout Southeast Asia and expecting to increase sales this year by 50% over 2007. We spoke with company CEO Mark Eaton about setting up the Japan office and on working with JETRO.

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Opportunities in Japan
PPM Technologies saw several benefits for opening an office in Japan. The company had a customer base that has been built over 20 years of sales; with a market size of 457,234 million yen (approx. US$4,149 million) in total sales for food processing machinery in 2007,² there was great potential for increased business; its customers needed local support for servicing, sales, and engineering; and Japan was a great base to expand its Southeast Asian network.

Japan also had several very important characteristics that PPM Technologies required for an Asia base office. The company was already generating revenue within the country; its Japan agent was a prime candidate to serve as regional manager; the company had reasonably good access to English-speaking individuals in Japan; the local technical talent was at a satisfactory level for the engineering-oriented company; and the recognition of intellectual property rights within the country was stronger than some of the other countries the company was considering for an Asia office.

Market Entry
After PPM Technologies became an independent company from FMC Technologies in July of last year, Mr. Eaton and his team immediately began the process of establishing the Japan office. "We started in August, and by October we were up and functioning. It was very fast," said Eaton. The first step Eaton took to start the process was to find people to help "navigate all the nuances" of setting up an office in Japan. And for that, Eaton worked with the advisors at JETRO. "We recognized we didn't know all of the details of setting an office up," said Eaton. "So the first thing we did was to find a resource. Typically, we'd have to go out and look for an attorney to give us guidance, some accounting professional, and so on and so forth. One of the great things about JETRO was that it was all there, and they made it very easy for us to get set up. We were very, very pleased with what JETRO did for us."

Working with JETRO, Eaton and his team were able to incorporate the company, locate real estate for the office, sort out employee salaries and benefits, and set up basic accounting and banking. "They helped us with pretty much the gamut of the detail things that you would need to get the business set up, and frankly just shortened everything," said Eaton. "Another part that we were very pleased with is the contacts that they introduced us to. We continue to use some of those folks today."

Results and Outlook
Since opening the office last October, Eaton and his team have made substantial progress. From the Japan office, they have established a complete agent network throughout Southeast Asia; they now serve their customers in Japan with better response time, being in the same time zone; and they have grown in office personnel and revenue. "Our indications are that business is going to be up about 50% in the country this year from last year," said Eaton. "We're very happy with what's going on."

From this point on, Eaton and his team plan to expand the office by adding additional service and engineering personnel. "Opening the Japan office was an important step, especially for us because we're a growing company," said Eaton. "We just did our first acquisition three months ago, and our intent is to build up our portfolio of products and be able to sell more and more of those through our global network. So having these strong locations is important to us as we look to grow and build our company."

Advice
Eaton gave a few pieces of insight and advice about working in Japan and establishing an office. In regards to the payment structures, Eaton shared, "The biggest thing that we see in Japan is that the credit terms are very different on our type of business. How we get paid is very different to how we get paid in other parts of the world. But that's because we're in the capital equipment business, and the cycles are a lot longer."

Regarding gaining customers, Easton said his customers in Japan value a technical sell--one that focuses on the company's technical knowledge and knowhow--more so than customers in other countries, and that they are tough negotiators. He also said his customers in Japan value that PPM Technologies has a local office. "It's important to them to know they have support in-country being provided for them," said Eaton. "They see that we've made a commitment to the country, and to them, by putting resources in-country available to them with Japanese-speaking people that can basically support them in what they need."

On establishing an office, he said, "Every country has its nuances of requirements, and I can certainly see if we didn't have the resources and help from JETRO, we probably would have had some missteps."

¹PPM Technologies was spun off from FMC Technologies in July 2007 to focus on the food processing business.

²Source: The Japan Food Machinery Manufacture's Association