Case Study: Karalit: An Italian SME

KARALIT - FROM IT

Karalit was founded in 2007 as a spin-off from a major research centre in Sardinia, Italy. The company has quickly grown and its CFD software is now being sold in Europe, North America and Asia. To better understand Japan, one of its main target markets, Karalit’s Chief Operating Officer participated in HRTP 48, and the company has since been able to start up activities in Japan.

ABOUT KARALIT

Karalit has developed Computational Fluid Dynamics (CFD) software based on an innovative theoretical approach called the immersed boundary approach. Its target industries are all engineering and CFD design driven industries, such as automotive, electronics, aerospace and energy. Established as a spin-off in 2007, the company has since established sales and operational offices in Milan, Frankfurt and London. Karalit commercially launched its software in 2014. 

WHY JAPAN?

Responsible for over 15% of the global market, Japan is the second largest market in the world for CFD software, after the USA and before Germany. Its widely developed automotive and electronic industries make IT a very mature market. 

STEPS TAKEN

Although several product development activities had been undertaken in Asia in 2012, Karalit’s software was commercially launched in 2014. Before joining HRTP in 2012, Karalit was already in contact with a potential distributor as well as several Japanese universities. They joined HRTP to acquire the instruments to evaluate and implement sales and distribution strategies for Japan.

CHALLENGES

Karalit experienced that potential Japanese partners set very high standards, both for the products themselves as the service that comes with them. Having used this type of product for twenty years already they are used to high quality, and it takes some time to prove that your company is a trustworthy partner. However, the customers made very clear what they were looking for, and Karalit was assured that the relationship would continue if their products passed the tests.

Meeting these requirements was a challenge for Karalit, but they did experience that, as an SME, they were more flexible to act quickly on customers’ requests and develop customisations.

CURRENT STATUS – NEXT STEPS

After HRTP, Karalit realised that they could not just send emails to potential partners and start negotiations that way. Instead, they took part in some trade shows in Japan. Having met the potential partners in person, negotiations went smoothly and Karalit reached agreements with two companies. During a trip to Japan earlier this year, the company contracted a distributor for their products, and negotiations are ongoing with other potential partners. Through their distributor, they are in touch with potential customers, who are currently trying out the product. As a very young company and having just started on the Japanese market, Karalit is looking forward to seeing how their position will evolve and how their company will grow. If the situation allows for it, the possibility exists that the company may open a local office in the future.

RECOMMENTADIONS

• Before you do anything, it is important to conduct thorough market research – to find out if there is a market in Japan for your product and, if there is, how it works. For this purpose, use the resources available through the EU-Japan Centre, JETRO, etc.
• Go to Japan to meet your contacts in person, but try to acquire some understanding of the culture (alternatively, bring someone who knows it).
• Try not to push too much, this can actually be counterproductive. 

Interview made with Marta Sanna