Opening a Gymboree in Tokyo

Though Japan hardly caters to small business, one U.S. entrepreneur has started up a working franchise in the world's most expensive city

By Zoe Galland

Americans who want to open a business overseas face many difficulties, no matter what country they settle in. But starting a small business or franchise in Japan, a country where entrepreneurs don't receive the same kind of support as they do in the U.S., requires a special kind of determination.

To get a sense of the challenges as well as the opportunities available in Japan, editor Zoe Galland interviewed Nicole Yamada, an American entrepreneur who opened a franchise of the Gymboree kids' store in Tokyo in May, 2006. Edited excerpts from their conversation follow:

Why Japan?

My major in college was Japanese studies, and I first came to Japan as a study-abroad student during my junior year of college. I fell in love with the culture, lifestyle, and people, and knew that I wanted to spend more time living here.

After I graduated from college I spent two years working with the JET program, which is run by the Japanese government. The main purpose of JET is to help all Japanese students to learn English. I was placed in a tiny village called Shichigahama — which means "Seven Beaches" — where my responsibilities included teaching English to children, acting as interpreter for the mayor, and supervising a group of junior-high students on a trip to Plymouth, Mass., Shichigahama's "sister city."

Later, I taught English to adults at a private school in Tokyo, then decided to return to the U.S. for business school. I got my MBA from Thunderbird, in Glendale, Ariz., which specializes in international business. That's where I met my husband, Shinji, who was born and raised in Tokyo. After graduation, Shinji and I found corporate jobs in Tokyo, and we've been here ever since.

When did you open and how did you come up with the idea of starting Gymboree in Japan?

We opened our first Gymboree site officially on May 8, 2006. We are currently working in Tokyo — the most expensive city in the world.

We were looking for a U.S. franchise business to bring to Japan and my parents suggested Gymboree. We wanted something that wasn't food related, and since I have teaching experience in Japan, we thought Gymboree might be a good option. We also felt strongly that there's a need for parent-child classes in Japan.

Are your employees at your Gymboree franchise mainly American or Japanese?

Actually, besides me, we have no American employees. We currently only have eight employees. Seven of them are Japanese, and one is Russian. All of our employees are required to speak both English and Japanese. Most of our classes are given in English because that's what the population wants their young children to learn. On the other hand, the parents often need to be spoken to in Japanese.

Who do you run the business with, and where do you look for support when you need it (banks, government, etc.)? Are there many other foreign small-business owners in Tokyo?

I run the business with my husband…. As I mentioned before, the number of small-business owners in Japan is limited, partly because Japanese banks are reluctant to finance a startup. They prefer to lend to businesses that already have a track record in Japan.

The number of foreign small-business owners is even more limited. As far as I know, there are no small-business loans available from the Japanese government, so entrepreneurs often must take personal loans or turn to private investors to secure financing. There is, however, an American Chamber of Commerce and a government organization called JETRO that can give us advice if we need it.

What have you changed about Gymboree to adapt to Japanese culture and the preferences of its consumers?

Currently, we're offering the same program that's offered at Gymboree sites in the U.S. The majority of our classes are offered in English, but our staff is prepared to interpret the important parts into Japanese if necessary. The only classes which we're currently separating into English and Japanese are our baby-signs classes.

Who are your competitors in Japan?

In the zero- to 22-month age range we actually have few direct competitors. However, once the kids are two and a half, we have to compete with English conversation schools, Gymboree copycat programs, international preschools, and cram schools [which prepare students for their high-school and university examinations].

Is there a lot of franchising in Japan (besides fast food)?

There's actually limited opportunity for franchising in Japan. The most common franchise businesses are fast food and regular restaurants and convenience stores. However, new franchise-type businesses, such as fitness gyms and English-language schools, are popping up every day.

What businesses would you suggest Americans open in Japan? What opportunities are there?

Japanese people love American food and products, so there are still a lot of opportunities for U.S. food and retail import businesses here. The number of people who shop online is also increasing at a fast rate so online businesses do well here — especially those involving gourmet food, drinks, and clothing.

What's one thing you wish you knew when you started?

I feel that I was pretty prepared for starting this business, since I received a lot of advice from friends and family and have a business-school degree. But I wish I knew more about Japanese customs laws and shipping costs before I began ordering my equipment and products from the U.S.

How is small business seen in Japan?

There isn't as much support for small-business owners in Japan as there is in the U.S. The number of small businesses in Tokyo, and Japan in general, is still limited. There are a lot of family businesses but few new startups (except in the areas of Internet and technology).

Japanese people are risk-averse so although many people have ideas, they are hesitant to take the risk and become entrepreneurs. Until very recently there were few graduate business schools in Japan, but this number has been increasing in recent years.

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