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FOREIGN TRADE UNIVERSITY
SCHOOL OF ECONOMICS AND INTERNATIONAL BUSINESS
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RESEARCH PAPER
Subject: INTERNATIONAL BUSINESS
CULTURAL DIFFERENCES BETWEEN THE
UK
AND JAPAN AND ITS EFFECT ON KITKAT
BUSINESS DECISIONS
Group : 5
Phạm Tùng Dương 1711140024
Nguyễn Thị Huệ 1711140036
Nguyễn Đỗ Tuệ Minh 1711140060
Hoàng Hà Phương 1711140069
Đỗ Thị Phương Thảo
1711140078
Class: Advanced Program of International Business Economics - Cohort: 56
Instructor: Ms. Nguyen Hong Hanh
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CONTENTS
I. Introduction...............................................................................................................3
II. About KitKat:...........................................................................................................4
1. Introduction about KitKat company:.....................................................................4
2. KitKat's international business background:..........................................................5
3. KitKat's expansion to Japan...................................................................................7
III. Cultural differences between KitKat’s home country - the United Kingdom and
Japan...........................................................................................................................11
1. Overview of the UK and Japan culture................................................................11
2. KitKat infused into the UK culture......................................................................12
3. Japan culture highlight and KitKat adaptation.....................................................14
IV. Implication and lessons for international business................................................18
V. Conclusion.............................................................................................................20
REFERENCES:..........................................................................................................21
GROUP CONTRIBUTION:.......................................................................................25
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I. Introduction
In this day and age, thanks to globalization and free trade, business companies are
allowed to expand across borders and the global marketplace becomes increasingly
accessible for both large and small international companies. Multinational companies,
definitely, take advantage of an increasingly diverse knowledge, labor and customer
base. Along with the benefits of new sources, global companies may unavoidably
encounter an enormous number of challenges in order to succeed when it comes to a
new market other than their home country. In particular, one of these hurdles may
come from cultural differences, which may either negatively or positively affect the
company’s performances in the local market it is targeting.
While there are several ways to define culture, yet, simply it is a set of common and
accepted norms shared by a society. As taking a closer look at cultural differences,
there can be more concepts to be taken into account, such as low-context and high-
context cultures. In low-context cultures like the United States, United Kingdom and
Canada, communication is explicit and clear while the opposite situation holds in
high-context cultures like Russia, China, Japan and France: communication is nuanced
and implicit with more hidden content. People’s cultures often shape their attitudes
and perceptions towards issues of morality and values or virtues as well as how they
interact with their environments. Therefore, normally, doing international business in
high-context culture countries may be more challenging due to its focus on underlying
context, meaning and tone in the message instead of just words themselves. Without
thorough local market research regarding local culture and well-prepared strategies
before expanding business into these complicated foreign markets, there have been
many failure experiences of international companies in the past of creating
misunderstandings in ways of marketing and communicating the message of products,
which can lead to incredible loss in their revenues and even boycott from local
customers as threat to their survival.
Nevertheless, there are also many cases of cross-cultural companies which have taken
time to address these differences and successfully had a better chance of remaining
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competitive and becoming the top brand of sales in the international business
environment. Thus, in this essay, we will make a discussion on cultural differences as
obstacles of KitKat company when it entered the hard-to-please Japan market since
the early 1970s and how it adapted to continue flourishing and finally, figure out
some lessons to succeed that might be applied to other multinational businesses.
II. About KitKat:
1. Introduction about KitKat company:
KitKat is a chocolate-covered wafer bar confection created by Rowntree's of York,
United Kingdom, and is now produced globally by Nestlé, which acquired Rowntree
in 1988, with the exception of the United States, where it is made under license by the
H. B. Reese Candy Company, a division of The Hershey Company.
a) Rowntree's
Rowntree's is a British confectionery business based in York, England. Rowntree
developed the KitKat (introduced in 1935), Aero (introduced in 1935), Fruit Pastilles
(introduced in 1881), Smarties (introduced in 1937) brands, and the Rolo and Quality
Street brands when it merged with Mackintosh's in 1969 to form Rowntree
Mackintosh Confectionery.
Founded in 1862, the company developed strong associations with Quaker
philanthropy. Throughout much of the 19th and 20th centuries, it was one of the big
three confectionery manufacturers in the United Kingdom, alongside Cadbury and
Fry. In 1981 it received the Queen's Award for Enterprise for outstanding contribution
to international trade. By the time the company was acquired by Nestlé in 1988, it was
the fourth-largest confectionery manufacturer in the world. The Rowntree brand
continues to be used to market Nestlé's jelly sweet brands, such as Fruit Pastilles and
Fruit Gums. b) Nestlé
Nestlé S.A. is a Swiss multinational food and drink processing conglomerate
corporation headquartered in Vevey, Vaud, Switzerland. It is the largest food company
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in the world, measured by revenues and other metrics, since 2014. It ranked No. 64 on
the Fortune Global 500 in 2017 and No. 33 on the 2016 edition of the Forbes Global
2000 list of largest public companies. The company was started in 1886 by Henri
Nestlé in Switzerland.
Nestlé's products include baby food, medical food, bottled water, breakfast cereals,
coffee and tea, confectionery, dairy products, ice cream, frozen food, pet foods, and
snacks. Twenty-nine of Nestlé's brands have annual sales of over CHF1 billion (about
US$1.1 billion), including Nespresso, Nescafé, KitKat, Smarties, Nesquik, Stouffer's,
Vittel, and Maggi. Nestlé has 447 factories, over 2000 brands in 189 countries with
339,000 employees. It is one of the main shareholders of L'Oreal, the world's largest
cosmetics company.
The company grew significantly during the First World War and again following the
Second World War, expanding its offerings beyond its early condensed milk and
infant formula products. The company has made a number of corporate acquisitions,
including
Crosse & Blackwell in 1950, Findus in 1963, Libby's in 1971, Rowntree Mackintosh
in 1988, Klim in 1998, and Gerber in 2007. Nestlé’s success with product innovations
and business acquisitions has turned it into the largest Food Company in the world.
Today, Nestlé markets a great number of products, all with one thing in common: the
high quality for which Nestlé has become renowned throughout the world. The
Company's strategy is guided by several fundamental principles and can be
summarized as: “Thinking globally - acting locally”
2. KitKat's international business background:
KitKat bars are produced in 16 countries by Nestlé: Brazil, Mexico, United Kingdom,
Canada, Australia, New Zealand, South Africa, Germany, Russia, Japan, China,
Malaysia, Thailand, India, Turkey, United Arab Emirates, Bulgaria and Algeria.
KitKat bars in the United States are produced under licence by The Hershey
Company, a Nestlé competitor, due to a prior licensing agreement with Rowntree.
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The origin of KitKat was traced back to 1935, the original four-finger bar was
developed after a worker at Rowntree's York Factory put a suggestion in a
recommendation box for a snack that "a man could take to work in his pack". The bar
launched on 29 August
1935, under the title of Rowntree's Chocolate Crisp, and was sold in London and
throughout southern England. Rowntree's Chocolate Crisp was renamed KitKat
Chocolate Crisp in 1937.
Following its success in the United Kingdom, in the 1940s KitKat was exported to
Canada, South Africa, Ireland, Australia, and New Zealand. In 1958, Donald Gilles,
the executive at JWT Orland, created the iconic advertising line "Have a Break, Have
a KitKat". The brand further expanded in the 1970s when Rowntree created a new
distribution factory in Germany to meet European demand, and established
agreements to distribute the brand in the US through the Hershey company, and in
Japan through Fujiya.
In June 1988, Swiss company Nestlé acquired KitKat through the purchase of
Rowntree's, giving Nestlé global control over the brand, except in the US, and
production and distribution increased with new facilities in Japan and additional
manufacturing operations set up in Malaysia, India and China.
Variants in the traditional chocolate bar first appeared in 1996 when KitKat Orange,
the first flavour variant, was introduced in the United Kingdom. Its success was
followed by several varieties including mint and caramel, and in 1999 KitKat Chunky
was launched and received favourably by international consumers. Variations on the
traditional KitKat have continued to be developed since then. In 2000, Nestlé acquired
Fujiya's share of the brand in Japan, and also expanded its marketplace in Japan,
Russia, Turkey, and Venezuela, in addition to markets in Eastern and Central Europe.
As dark chocolate has seen increased demand and favour worldwide because of its
purported health benefits, in September 2006 the four-finger KitKat Fine Dark was
launched in the United Kingdom as a permanent product, and packaging for the entire
brand was changed.
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Twist by Mars, Hershey’s, Galaxy, Kinder Bueno and Time out by Cadbury are some
of KitKat’s main competitors. Despite the heavy competition, KitKat remains as one
of the UK’s bestselling chocolate bars. In 2014, Kit Kat was ranked the third best
selling chocolate bar in the United Kingdom, after Dairy Milk and Galaxy.
3. KitKat's expansion to Japan
According to the Japan Tourism Agency, in 2018, the number of foreign tourists
visiting Japan reached 31.19 million, ranked 11th in the world. International travelers
are appearing all over the country, flooding the local markets with fresh cash. One of
the souvenirs most likely to catch their attention is Japanese candies, especially the
green tea - flavoured KitKat. Nowadays, these dark green candy bars line display
windows in souvenir shops around Tokyo's train stations and airports, and there seems
to be no end to international tourists clamoring to snatch them.
However, the unusual thing about this trend is that KitKat isn’t a Japanese candy. It’s
an international brand, invented in England and now sold by Nestlé, the Swiss
megaConglomerate, the world’s biggest food corporation. Although sold in over 100
the market that a number of people in Tokyo have said that Kit Kat was a Japanese
product.countries like China, Thailand , India, Russia, the U.S., KitKat is one of the
best-selling Japanese chocolate brands, and it has gained such a unique position on: a)
History
Like Japan itself, KitKat is a confection with a long and storied history. Over 50 years
after it first came to Japan, the country has grown to become the brand’s biggest
consumer in terms of both sales and profits, with Nestle as the present-day owner.
From convenience stores to Kit Kat branded boutiques in Tokyo and Osaka, the sweet
treats can be found at practically every turn.
This chocolate was originally launched in Japan in 1973, and so there was a fair
amount of time while it was being sold in Japan without any significant flavor
changes, but it was explained that during this time they were developing the shape.
Just like the UK, the four-finger bar was the main item, but in the 1980s they
expanded to selling familytype bags which had mini two-finger bars.
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Yet the story of how Japan made the snacking staple entirely its own begins in 1990,
in Hokkaido, Japan’s northernmost main island, known for its skiing, hot springs and
beer. KitKat’s marketing team believed the island’s souvenir shops — in fact,
souvenir shops nationwide — could stand to diversify their snack offerings.
“Wherever you went, you could only find rice cakes,” said Takuya Hiramatsu, a
spokesman for Nestle Japan. “But people got kind of bored with traditional rice
cakes.” After trying different product variations of the original milk chocolate bar,
they decided to try a new strategy which could work with Japanese people’s
preference for new things. For a limited time a new flavor was sold as a trial, so in
2000, Nestlé Japan released its first non-chocolate flavor: strawberry, during
strawberry season in Hokkaido, which proved to be a hit with customers and really
flew off the shelves. Since then, Kitakat has created around 350 varieties and
embedded itself in Japanese culture, becoming a Kit Kat signature in Japan.
The reason for this variation is the demand for Japanese convenience stores to
constantly rotate items on their shelves. However, keeping up with the demand
requires a steady flow of new ideas. By producing smaller runs of flavors, the
company was better able to control its production costs. It was also economically
viable in Japan because there is no initial product fee for listing new products in
Japanese convenience stores.
The KitKat makers leveraged local products into exotic flavors. In time, exotic and
strange KitKats began appearing all over, including on Honshu, the nation’s largest
island. There, in Shizuoka prefecture, the candy-makers offered Tamaruya-Honten
brand wasabi KitKats; in the Kanto region, adzuki bean sandwich KitKats; in
Hiroshima, KitKats flavored like momiji manju, a locally produced pastry made of
rice and buckwheat.
Many Japanese prefectures even develop Kit Kats based on local specialties. This
leaves plenty of room for experimentation. An interview with Kaori Murata of Nestle
Japan, who developed around 100 of the 350+ flavors, reveals the difficulties getting
KitKats to actually taste like the flavors they’re supposed to represent. New KitKat
varieties,
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Nestle said, take about six months to develop, from idea to shelf, which makes failures
all the more disappointing. One of their greatest failures came about eight years ago
— an assortment of cola- and lemonade-flavored KitKats. In 2009, “sports drink,” a
citrusy concoction, also fell flat.
About the success of KitKat in Japan, Nestle says their sales in this country have risen
50% between 2010 and 2016. The KitKat brand took the number one sales position
from Meiji chocolate in 2012, though Meiji remains the leading confection company
in
Japan overall. In 2014, KitKat retail sales in Japan reached 17 billion yen, equivalent
to 96 million pounds, although still less than 243 million pounds in sales in the UK,
but sales increased continuously since 2011. In contrast, UK KitKat sales have fallen
for 4 consecutive years due to the fear of obesity and diabetes. From 2014, to now,
KitKat was the top-selling confection in the country.
More recently, in 2017, the company opened its second manufacturing plant in Japan
to keep up with local demand. Also in this year, a new KitKat specialty store in
Tokyo’s ritzy Ginza district — called Chocolatory — established the chocolate bar as
a premium brand. Chocolatory has sold “orange cocktail noir” and “Sakura green tea,”
containing cherry leaf extract. The store, which also sold gold leaf bars, once offered a
limitededition that was distinctively Japanese — sushi KitKats. No tuna, no mackerel.
Just funsized bars with KitKats (pumpkin pudding, Hokkaido melon, raspberry) laid
on puffed rice and wrapped in seaweed.
During 50 years of development in Japan, KitKat has made some smart partnerships.
In 2009, the company created ‘KitKat Mail,’ a partnership with Japan’s postal service
that allowed students to send KitKats as good luck charms before the country’s
highpressure January university entrance examination. Some KitKat wrappers contain
blank spaces for students to scribble in heartwarming messages The promotional
packages were sold out within a month.
In March 2011, after an earthquake, tsunami and nuclear disaster devastated a swath of
Japan’s Pacific coast, people sent KitKats to the region, appending the message: kitto
fukkyu kanau, or, ‘you’ll surely recover.’ Nestle Japan threw its support behind the
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damaged Sanriku Railway — it released a special line of KitKats and donated some of
the proceeds to reconstruction. It decorated two rail cars and in 2014, to celebrate the
rail’s return to full operations, allowed riders to use some limited edition KitKats as
tickets.
Nestlé also develops flavors in collaboration with famous local companies and
retailers. One example of this is the popular “Kit Kat Itoh-Kyuemon Uji-Matcha”
flavor, named for a famous Uji tea seller founded in Kyoto in 1832. Recently, candies
flavored with
Uji matcha have gained a lot of traction in the market, and Itoh-Kyuemon is seen as a
definitive example of the best-known tea sellers in Uji. When they hear the name
“ItohKyuemon,” customers can instantly visualize the legendary tea growers and the
famous shops that to this day exist as the “face” of Uji.
b) Product
KitKats are now produced at Nestlé-owned factories in Himeji and Kasumigaura. The
milk chocolate used for KitKats is made from whole-milk powder and Nestlé buys
most of its cacao beans from West Africa.
The most popular kind of Kit Kat in Japan is the mini — a bite-size package of two
ingots — and Nestlé estimates that it sells about four million of these each day. KitKat
is multicolored, multilayered, sometimes so difficult to find. In any given year, there
are about 40 flavors available, including the core flavors — plain milk chocolate,
strawberry, sake, wasabi, matcha, Tokyo Banana and a dark-chocolate variety called
“sweetness for adults”. The company develops 20 new flavors every year, and
replaces flavors on convenience store shelves every two months. “That’s how the
cycle has been ever since strawberry".
Some of these flavors can only be found in regions in the country in which a sense of
uniqueness and collectivity is encouraged. The company claims that seasonally limited
edition versions provide consumers with "rare and scarce value."
However, while they are developing products according to the market and customer
needs, they feel the most important thing is in fact the quality of the original KitKat.
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That is the key product, and like other brands the key product creates the brand’s
value.
They explained that if they just focused on developing new flavors, that is something
that any company could just copy and do. They want to improve the evaluation of the
brand as a whole, as well as its core products.
III. Cultural differences between KitKat’s home country - the
United Kingdom and Japan
1. Overview of the UK and Japan culture
As mentioned above, KitKat was first delivered as a fresh, four-finger chocolate wafer
bar during the 1930s, in the UK, by the chocolate maker Rowntree's. In the 84 years
since then, the brand has become a global phenomenon in Japan where KitKat is
considered a lucky charm, and has been made available in more than 300 weird and
wonderful flavours including sweet potato, cherry blossom, wasabi and sake. In this
report, we will go together to investigate and discover what is comparative and diverse
between Kitkat in its original nation - the UK and Japan. There are exceptional
highlights that make Kitkat so popular and loved in Japan.
British culture is influenced by the combined nations' history; its historically Christian
religious life, its interaction with the cultures of Europe, the traditions of England,
Wales and Scotland, and the impact of the British Empire. First spoken in early
medieval England, English is the official language of the UK, and is spoken
monolingually by an estimated 95% of the British population. The British culture of
eating is very different from the world. The British take tea making as an art form, and
they take it very, very seriously. Everyone's opinion on how to make a good cup of tea
is very different, so they have a lot of respect for how each person brews tea. Beside
drinking tea, the British also love eating chocolate. Britain has been a nation of
chocoholics since the 19th century. If you are invited to the home of a native British
person, it is normal to bring along a gift, such as chocolate, wine, or flowers to say
thank you. In the UK, Kitkat positions themself as the best snack for people who love
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to indulge in chocolate. It climbed to national favorite with its endorsement by
Churchill's wartime government as healthy, cheap food. With their famous tagline
“Have a Break, Have a Kit Kat”, KitKat has became a go-to cheap chocolate snack for
everyone when they need to “have a break”.
On the other hand, early Japanese culture was intensely impacted by China. During the
Edo period, Japan practiced a severe neutralist strategy, shutting its ways to all
associations with the rest of the world. Being isolated for thousands of years had
allowed Japan to experience different cultural evolutions in solitude, creating a truly
unique traditional culture. After the fall of that time in 1868, Japan turned around this
work on, receiving social practices from everywhere the world and blending them in
with what was set up during the Edo period. Throughout the long term, Western
culture has impacted all parts of Japanese culture including craftsmanship, way of life
and food.
The Japanese care a lot about mutual respect and politeness in the way they
communicate. Manners are very important amongst the Japanese and you should make
sure you are aware of the basic rules. The Japanese are also very proud of their
language and they have their very distinctive expressions. Japanese culture and
traditions are incredibly unique, making it a dream destination for a lot of travelers.
That said, the fact is that Japan can be an intimidating country for first-time visitors,
and not just because of the language barrier. In Japan, giving Kitkat is a sign of
exchanging luck and giving each other best wishes. This is also a gift of the culture of
giving gifts to each other. There are additionally painstakingly picked joint efforts that
gain by Japan's way of life of omiyage, which can be inexactly characterized as
coming back from movements with presents for companions, family and partners.
2. KitKat infused into the UK culture
Since its launch in 1935, KitKat has established itself in British culture and continues
to be one of the biggest confectionery brands in the world, spreading its chocolate
fingers far and wide that is sold in more countries than any other chocolate brand
(KitKat website)
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Britain has been a nation of chocoholics since the 19th century. According to the
Guardian, “sweet is part of our daily diet, contributing to the 30kg (66lb) a year or
more of sugars consumed by the average UK adult. Some of our sugar consumption is
obvious
–, in our fondness for confectionery, cakes and puddings, for instance. The UK tops
the European league table in sales of sweets, cakes and biscuits”. The popularity of
sugar and sweets in the UK can be traced back to the wartime, when slavery made
sugar cheaper, and the cheaper it grew the more central it became to the British diet.
When tea and coffee, both naturally bitter, became popular in the 18th century, sugar
was their indispensable sweetener. During the war, it was something of a luxury like
other chocolate, but the way the bars could be divided up among children made it
tremendously popular. Its advertising during wartime suggested it was 'What active
people need'. The Kit Kat logo looks almost exactly as it did when the name first
appeared, making it a common and familiar choice when it comes to chocolate bars.
Tea is still a big part of daily life in the UK. The British are known for their habits of
drinking tea. According to the Tea and Infusions Organisation, the British consume 60
billion cups per year. That’s more than 900 cups a year for every citizen. Tea has
become entrenched in the British way of life. In the UK, KitKat makes many special
edition flavours that are extremely familiar and dear-to-heart to the British like Earl
Grey tea, marmalade, the mix chocolate and orange, whisky with ginger...
Overall, in the UK, people love to indulge themselves with cheap chocolate snacks
and KitKat has smartly used this to portray themselves as a delicious, go-to chocolate
confection. Kit Kat is a brand with one of the longest-running and most famous
slogans in British advertising. It's also Britain's chocolate bar of choice, with 47 sold
every second. What draws consumers to this brand is also its association with “breaks”
due to its tag line “Have a Break, Have a Kit Kat”. The advertising slogan, created by
J Walter
Thompson, first appeared on television in 195 and it is a theme that continues to this
day. It's not just the advertising that has remained consistent over many years. The
packaging has a history too. Kit Kat's wrapper and packaging has remained essentially
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the same for decades, that is why it is very easy to recognize a KitKat bar in a
convenience store or at the supermarket.
3. Japan culture highlight and KitKat adaptation
Having such a distinctive culture, many enterprises admitted encountering a lot of
difficulties in culture differences coming to this “land of rising sun”. KitKat is one of
those who has successfully adopted the uniqueness in Japan’s culture and turns them
into their advantages. They have truly embedded themselves in Japanese culture. The
following are our analysis on the main differences in the Japanese culture and how
KitKat has relied on this to make their brand stand out:
a) A play on national language
The Japanese have always taken pride in the supposed native purity of their culture
and especially their language, but in actuality the language ever since it was first
committed to writing has been decidedly a bastard tongue like English (Yoshio, 2004).
The Japanese language consists of three written alphabets: Kanji (containing several
thousands of Chinese characters), Hiragana (a phonetic Japanese alphabet) and
Katakana (a phonetic alphabet used for foreign words).
The Japanese is known for importing, borrowing, and then adapting the international
concepts by putting a unique Japanese-English twist on it. Those words are called
katakana words, spelled with the syllabary for foreign terms and have become a
natural part of the Japanese language. For example, the omelet in Japanese turns into
omurice, television becomes terebi or apple can be referred to as appuru.
On KitKat website in Japan, their name changed into “Kitto Katto” (キットカット),
which is something phonetically similar to “kitto katsu” - a common Japanese
expression of good luck. In Japanese, the word “kitto” means “surely” or “absolutely.”
and “katsu” is “to win.” So, in combination, this makes a Japanese wordplay possible:
kitto katsu means “You’re bound to win” or even, “Never fail.”
As a result, Kit Kat began marketing itself as a good luck charm in all areas of
Japanese society. Many Western countries may think of KitKat as a cheap and quick
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“snack” by their famous tagline “Have a break, have a KitKat”. However, in Japan,
KitKat is considered to be a lucky charm and has become particularly popular gifts
around exam periods for students. Statistically, today, one in three Japanese students
purchases Kit Kats before an entrance examination and one in five reportedly brings
Kit Kats to where they take the test. Quickly capturing the consumer insight in Japan,
KitKat now even comes packaged with specific encouraging phrases like “do your
best” and “believe in yourself.” This positioning strategy has helped KitKat to double
or triple their sales during examination seasons.
b) Omiyage: Japanese’s gift-giving culture
Japan runs a communal society that highly values empathy and respect. When you are
invited to a meeting with business associates or to have dinner at someone's home, it's
especially important to show appreciation and gratitude by offering a gift - or an
“omiyage” to your hosts. The origin of omiyage is said to be unclear, but it is believed
to begin with those sacred trips to the shrines. People who have visited the shrine were
expected to bring back something like charms, rice wine cups or anything religious as
a way to transfer the luck and positive energy from the shrine to people who receive
the items.
Omiyage is a common way to show gratitude or good intentions to someone who you
are in a relationship with, including family, friends, co-workers, business partners...
The term can be translated into ‘souvenir’ in English, but it is much more complicated
than that. In a simple definition, omiyage is the gift that you bring back to your family,
friends, and co-workers upon returning from a trip. Japanese omiyage typically
consists of food items produced in the local area the trip was taken in. The "local"
aspect is very important to an omiyage, and one that separates it from "souvenirs"
given in other countries: omiyage should always be products locally made in the place
you visit. For example, if you travel from Kyoto to Tokyo, your omiyage should be
something made in Tokyo (like the popular Tokyo Banana, a cream-filled sponge cake
shaped like a banana). Omiyage is also a cultural obligation - that is how serious this
practice is to the Japanese. As omiyage is expected when you return from a trip, it
could be seen as rude when you show up with nothing on the next day to work.
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Not only is the content important, how the gift is wrapped is also essential. Omiyage is
usually found in the form of carefully-wrapped boxes of local goods. If you have ever
traveled to Japan or watched documentaries about trips to this country, you've
probably seen all the colorful, neatly wrapped packages perfectly portioned for sharing
everywhere in Japan. Many tourists may wonder why so many boxed sets of sweets at
train stations, airports, and gift shops always come in little individual packets. This is
actually an underlying intention of the Japanese. Omiyage is for everyone and it’s vital
not to leave anyone out. Normally, an omiyage would be brought to work and put on
the table or any common workplace so that everyone could come and grab a piece.
With omiyage divided into smaller proportions, everyone gets to experience a small
piece of the joy you did on your trip.
Learning from this tradition, KitKat has developed over 350 flavors customized to
each region and city in Japan using local ingredients to satisfy the buying needs of the
visitors. Aside from the flavors, KitKat makes sure the packaging was adapted to the
Japanese culture of gift-giving. They come in a large packaging filled with smaller,
individually wrapped bars and they are often sold as gifts customized in different
regions for people to bring back home. They even made Kit Kats found in airports and
train stations packaged in a large multi-box gift packaging, which made them perfect
gifts for sharing.
c) A deep pride in its local culinary traditions and industries
In 2000, KitKat released its first non-chocolate flavor: strawberry, which proved to be
a hit with customers and really flew off the shelves. Since then, KitKat has created
over 350 varieties and embedded itself in Japanese culture. Home to the best varieties
of Kit Kat on the planet, Japan is the only place where one can find unique flavors
ranging from baked goods (Cinnamon Cookie, Strawberry Cheesecake) to beverages
(MatchaGreen Tea, Hojicha Roasted Tea), fruits (Shinshu Apple, Banana) and
vegetables ( Purple Sweet Potato, Hot Japanese Chili).
The Japanese take pride in their culinary traditions and they love to support their
neighboring localities. Each region in Japan has their own local specialties, for
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instance, banana cake - the popular treat in Tokyo, “hojicha” - the roasted green tea in
Kyoto, “ogura” - red bean from Tokai or “shinshu apple” from Shinshu. As mentioned
above, it is also traditional to bring back small local gifts known as omiyage for
colleagues, friends and family back home.
Japan is well-known for so many unique ingredients for cooking like matcha green
tea, red bean, wasabi, sake or even cherry blossom. These are not just plain food, but
they are also associated with some part of Japan culture. For example, in Japan, there
is a deep-rooted culture relating to tea ceremony, called omotenashi, meaning to
wholeheartedly look after guests. The tea culture in the Japanese mindset represents
hospitality and care, thus, matcha green tea or hojicha green tea are widely used for
Japanese culinary products. Cherry blossom is much more than just a flower, but
rather a part of an age-old philosophy and the emblem of an entire nation. Cherry
blossoms are a symbolic flower of the spring, a time of renewal, and the fleeting
nature of life and during this season in Japan, people like to have cherry blossom
parties with colleagues, friends, and family.
The strategy KitKat takes on by using local ingredients for products proves to be a
huge success as most of the best-selling flavors in Japan are those that are very
familiar and unique to the Japanese like wasabi, sake, matcha, miso soup, red bean or
soy sauce. KitKat makes sure to sell many of the flavors only in specific areas of
Japan to highlight the uniqueness of each region. The Eastern Japan Assort of KitKats
has sweet red bean, apple, wasabi, sunda mochi (edamame rice cake), cheese cake,
and togarashi (spicy pepper). The Western Japan Assort of KitKats has citrus, sweet
potato, Kyoto hojicha (roasted tea), yatsuhashi (cinnamon), Kyoto matcha (green tea),
and strawberry. These regional flavors are often produced and sold to coincide with
food seasons in limited edition boxes. The regional nature of each original variety
made Kit Kat even more giftable to colleagues, friends, and family.
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IV. Implication and lessons for international business
For the international business, the culture, especially the connection between culture
and competitive advantage, does play a key role in contributing to the company’s
success. In other words, from the external side, the culture includes the market
environment and customers’ shopping beliefs or behaviors. As in the case of KitKat in
Japan, Nestlé company has attached importance to doing market research and realized
the national pride in each Japanese person, which affects their shopping behavior,
especially their preference toward particular products in the purchase step. Not only
the marketing strategies, it is also the association of Nestlé products with Japanese
regional culture that makes KitKat outstanding and on top of sales in the foreign
market. From the internal side, the culture, or value systems and norms of a country,
can have an impact on the costs of doing business in that country, including all
stakeholders related to the business such as the labor, working environment, location
of production facilities and even partners and competitors. Culture’s influence on the
internal environment of the business is huge. A system from managers, employees to
production machines, if they are allowed to work smoothly in a unified, open,
communicative and fair in promotion opportunities environment, will certainly be
more productive than a stricter environment, with potentially cultural conflicts.
Because of that, integrating the culture of the working environment between that in
home country and overseas is a truly difficult aspect that many multinational
companies are afraid of. In addition, cultural differences can also affect a company in
finding local workforce and supply chain partners to optimize the business cost
compared to other domestic competitors existing in the market.
Culture differences between home country and foreign country while doing global
business are unavoidable and are among the greatest challenges an international
company has to encounter. Any cultural difference and its possible effect, indeed,
always exist and an international company must accept and confront it if they are to
thrive and compete in the global market. International businesses going abroad for the
first time may face up with the biggest danger that is being ill-informed and
overwhelmed about the practices of foreign culture in their targeting market, which
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make them likely to fail. On the other hand, if the company knows how to take
advantage of these distinguished points of the culture, the weakness may become the
strength to boost up the position of brands in the targeting market.
The success of KitKat in the Japan market does really inspire and motivate other
multinational enterprises to make an attempt to expand into these intriguing markets.
To jump over hurdles, however, a number of lessons from KitKat should be
attentively taken into consideration:
Firstly, respect cultural differences of the local market: Awareness and respect of
differences in culture is an important and critical step toward understanding and
surviving the local market, as well as avoid the phenomenon of Ethnocentrism – a
belief in the superiority of one’s own ethnic group or culture leading to disregard or
contempt for other cultures. Respect for diversity and cultural identity is extremely
essential when multinational companies target countries or markets with high-context
culture background and long cultural histories such as China and Japan. The people of
these countries have a deep national pride and are particularly fond of local products
or products that are associated with specialties and bearing the distinguished signs of
their homeland. Therefore, instead of deliberately propagating and communicating the
image of new and unfamiliar products, these international companies should attach
great importance to embracing their product image with the local culture, which at
first attracts and then step by step spreads in the market and in the mind of each
customer.
Secondly, harness the power of diversity of culture: The strategic competitive
advantage can be found in the cultural difference context by seeking to leverage,
rather than diminish, opposite forces. A core principle of business success that is often
ignored or overlooked is that integrating opposites, instead of identifying them as
separate or inconsistencies and driving them out, releases power. In the case of KitKat,
for example, Nestlé has enhanced the diversity of Japanese culture by creating
different candy flavors that match regional specialties, which makes not only the
Japanese but also foreign tourists visiting the country wanting to buy the candy as
souvenirs instead of rice cakes, extremely excited. Similarly, the diversity of regions
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and cultures sometimes contributes to the development that companies can take
advantage of diversifying their products and services to be appropriate and able to
satisfy the local market, thereby expanding production scale and market share as well
as improving competitive advantages against other competitors.
Last but not least, for the internal operation’s benefit, utilize the local people and
optimize the cost of business: To combat the danger of being ill-informed by making
thorough research regarding cultures of the new market, international businesses
might consider employing local citizens to support them in work in a particular
culture. Most notably, not only will local people have a deeper insight into their own
culture, the use of local residents for market research and development, hiring local
employees and even partially recruiting local managers instead of transferring all
executives overseas makes sense in terms of reducing costs for businesses when
exposing to a different culture. Home-country executives, however, must be
cosmopolitan enough to understand how differences in cultures affect the practice of
business. In addition, available domestic partners such as in logistics or retailing parts
with existing advantages in understanding the culture, customers and the market will
also facilitate the company to gain many advantages in supply chain management.
V. Conclusion
To sum up the case study of KitKat - a chocolate-covered wafer bar confection of the
United Kingdoms, it is noticeable that KitKat appeared in Japan in the 1970s, although
anticipating the trend of loving foreign confectionery of domestic customers at that
time, the sales of KitKat were not very distinguished. Japan, undoubtedly, is a
potential and attractive but tough market, especially for a foreign company producing
chocolate confection like KitKat, due to its national pride of long-lasting unique
traditional culture and the fact that tea and domestically produced products are much
more prefered to those from foreign countries. The brand, however, changed the
marketing strategies to reposition itself as a "rice cake substitute" by associating the
image of its products with the Japanese culture, continuously introducing a wide
range of new flavors specific to each region and distributing widely at souvenir shops,
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