Breaking the domestic-demand habit: full entry into the United States (1991)

A long bet, opened with a product no one else had

At the core of this decision lay the question of what weapon a sanitary-ware maker that had lived entirely on domestic demand could carry into a large foreign market. TOTO chose neither price nor volume but its own high-technology products — the Washlet above all — and the engineering staff that could handle electronic control. Conventional sanitary ware is heavy and cheap, and freight eats the margin; an “ultimate toilet” with no equivalent anywhere else might, by contrast, win recognition across a cultural barrier. Turning the technical strength of a domestic leader toward growth abroad was a choice that anticipated the limits of relying on the home market.

The non-tariff barriers proved deep, however — different attitudes to the toilet, state-by-state standards, a distribution system dependent on dealers — and even the first year’s sales target was missed. As the American business was still “only just beginning,” this was a bet on a long horizon, waiting for recognition to accumulate, rather than on near-term profit. The plan for ¥1 trillion in group sales by 2001 rested on President Koga’s reckoning that seven-tenths would come from existing businesses and the remaining three from new markets. How far TOTO could take foreign markets into its own growth was left as a question it would spend the following decades answering.