One word that often crops up in conversations about the Japanese market is "insular". Indeed, one of the hipper Tokyo agencies calls itself Tugboat purely because it sees its mission as hauling Japanese clients out into the wider world. But is it unfair to suggest that the two giant Japanese agencies - Dentsu and Hakuhodo - lack convincing global offerings? Dentsu alone is said to derive 95 per cent of its revenue from Japan.
It's easy to blame cultural differences, particularly in the US and Europe. As well as the language issue, an obvious barrier to Western markets is Japanese agencies' methodology, which generally depends more on process than creativity. Also, the Japanese had their hands full coping with growth opportunities at home until the 90s, when they embarked on a burst of overseas expansion - only to be thwarted by economic turmoil. Now, perhaps,we can expect another flurry of international activity.
Takeshi Mori, the executive officer responsible for international business at Dentsu, suggests the company is reaping benefits from its 15 per cent stake in Publicis Groupe. "If by 'worldwide network' you mean a conventional network, that's not what we're aiming for. Our strategy is to focus on important and emerging markets and to build up strong organisations worldwide in line with our clients' needs. In doing this, we are making best use of Publicis' resources," he says.
Earlier this year, Dentsu signed a "commercial accord" with the Publicis Groupe agencies Paname in Paris and BMZ+More in Germany. At the time, the Publicis Groupe boss, Maurice Levy, told the French press the agreement marked "a new stage" in "a greater co-operation" between the two companies.
Over at Hakuhodo, Matsuhiko Ozawa, the executive manager of corporate public relations, treads carefully. "No matter where we work, Hakuhodo's first priority is proposing truly effective communication activities as our clients' problem solving partner. Accordingly, we do not have any set ideas when it comes to expanding abroad. We establish offices wherever Japanese companies need our services, and also send Japanese expats when necessary, in order to offer a flexible, meticulous service."
Both agencies focus mainly on helping Japanese clients overseas. While Dentsu embarked on a joint venture with Y&R as early as 1981, it remains fairly frank about its inherent "Japanese-ness". Hakuhodo is more bullish on expansion, stressing that it handles "many international brands, not just in Japan but worldwide". The extent of the Hakuhodo network is difficult to determine, as the agency declines to provide details, but it is thought to have about 70 offices in 16 countries, with a strong bias towards Asia. Dentsu, meanwhile, says it has 93 offices outside Japan, employing 3,600 people. The China operation is the largest, with about 1,000 people across 13 offices.
Japan's relationship with China is sensitive, but both agencies recognise that cultural similarities and huge market potential make it a crucial part of their overseas strategies. Hakuhodo's first foray into China was in 1988. It now has 12 offices in the region. The most recent, a joint venture called TBWA\Hakuhodo, stirred up quite a buzz when it was created in February this year to serve the Nissan account. Hakuhodo owns 60 per cent of the new entity. The companies have worked together on Nissan since 1990, although the joint operation will also handle clients such as Adidas, Masterfoods and Haagen-Dazs - previously clients of TBWA\Tokyo. The pair will also pursue new clients together, and hint at further partnerships to come.
This is by no means the end of Hakuhodo's Chinese ambitions. In 2003 it began offering a package called Hakuho-Somei, which develops Chinese brand names. In 2005, it embarked on a project to bring "advertising culture" to China through a special course at Tongji University in Shanghai.
In this field, Hakuhodo may have trouble catching up with its rival. The Chinese Ministry of Education recently presented Dentsu with two awards (one to Dentsu Inc and the other to the group chairman, Yutaka Narita) for providing "advanced marketing and advertising education" to Chinese students.
Outside of China, both Dentsu and Hakuhodo are tentatively present in other emerging economies. Dentsu has just set up a representative office in Moscow, while Hakuhodo has "a business alliance with an independent Russian agency". Both networks are stronger in India: Dentsu has two companies there, while Hakuhodo claims to have no fewer than 17 offices.
Of all the Western markets, the US is clearly the most covetable. Dentsu seems intent on raising its profile there, having recently changed the name of its subsidiary to Dentsu America, from the rather lacklustre DCA Advertising. According to a press release, it has 85 employees and a capitalisation of $10.24 million.
But what about the UK? Hakuhodo has a tie-up with Mustoes, and talks about other local collaborations, but fails to offer anything concrete. Dentsu has cdp-travissully, the ghost of CDP - once a great British agency - and says it is "in the process of strategising for a prominent presence in this important market".
Japanese agencies, then, are once again extending tentative feelers abroad. But compared with the expansion achievements of US - or even British - networks over the past couple of decades, they have so far singularly failed to make a satisfactory impact on the world beyond their borders.