'I Don't Want to Trade with a Company I Can't Analyze Financially'—3 Financial Impressions Overseas Buyers Have

When conducting international sales, have you ever encountered a situation like this?

'The product quality and price are perfect. But for some reason, the buyer stopped replying.'

It is often the case that the root cause isn't the product itself, but the impression the company projects.

Working with our clients, I've noticed that when international negotiations stall in the early stages, a lack of financial 'readability' is frequently to blame. By looking at SoftBank Group's financial structure, we can better understand how overseas buyers perceive potential partners from a financial perspective.

---

Why a Company with '5 Trillion Yen in Profit' Isn't Valued by the Market

Some time ago, a manufacturing business owner asked me:

'SoftBank Group reports massive numbers every year, yet their stock price stays low. Why is that?'

Indeed, SoftBank Group reported a net profit of approximately 940 billion yen for the fiscal year ended March 2024, and other periods have touted profits exceeding 5 trillion yen. Yet, their market capitalization often lingers at a significant discount compared to the sum of their holding assets.

Unpacking the 'why' provides insights that are directly applicable to international sales.

At its core, SoftBank Group acts as a massive investment holding company. Their income statement reflects fluctuations in the market value of their holdings. If Alibaba or ARM stock prices rise, it records 'profit'; if they fall, it's a 'loss.' Under IFRS (International Financial Reporting Standards), this 'fair value change of investments' is recognized as profit or loss.

In other words, a large portion of that '5 trillion yen profit' is often unrealized gains on stocks that haven't been sold, meaning cash on hand hasn't necessarily increased.

Furthermore, their consolidated interest-bearing debt exceeds 18 trillion yen. Even with massive assets, the high debt and complex structure make it difficult for outsiders to grasp the full picture.

This is why the market applies a 'discount.'

• Low certainty that profit will be realized as cash
• A complex structure that is difficult for outsiders to understand
• Decision-making concentrated heavily in one individual

This is known as an 'NAV (Net Asset Value) discount.' For years, SoftBank Group has seen this discount range from 30% to 50%.

While the scale is vastly different, the underlying mechanism applies to SME international trading as well.

---

3 Financial Impressions That Make Overseas Buyers Want to Avoid You

Impression 1: 'They seem profitable but short on cash'

We worked with a food processing manufacturer negotiating with a Southeast Asian buyer. Sample feedback was excellent. However, when the buyer requested tighter payment terms and the client said it would be difficult, the negotiation momentum died instantly.

We later realized the buyer suspected, 'This company might not have enough cash flow.'

Accounting profit and actual cash on hand are different. A heavy backlog of accounts receivable or a long cash conversion cycle makes cash flow tight, even if the company is in the black. This is structurally similar to the 'high unrealized gains, low cash' issue.

International buyers, especially wholesalers in Asia, often evaluate their partners' cash positions subconsciously.

Impression 2: 'The corporate structure is opaque'

I often see Japanese companies with multiple parent, subsidiary, and associated companies where it's unclear who holds actual decision-making power. In Japan, we often assume 'everyone knows,' but overseas buyers do not have this context. If your company profile or initial communications make them think, 'This structure is confusing,' they will naturally become wary.

Just as lack of transparency contributes to SoftBank's NAV discount, a structure that is hard to comprehend lowers your perceived value.

Impression 3: 'If the contact changes, everything will change'

We had a client negotiating a long-term contract with a prospective distributor in the Middle East. As negotiations progressed, the buyer repeatedly asked, 'Will these terms hold if the manager changes?'

It is well known that Japanese companies rotate staff frequently. To an overseas buyer, a company heavily dependent on a single individual (such as the president or a specific manager) represents a risk to long-term stability. The 'Key Person Risk' seen in SoftBank (where Masayoshi Son’s personal judgment drives everything) is a direct lesson here: the impression that your service levels are company-standard, not manager-dependent, is crucial for long-term relationships.

---

'Financial Transparency' Is Your Weapon in International Sales

What overseas buyers judge in the early stages isn't just the product quality:

• Do they have healthy cash flow?
• Is the corporate structure easy to understand?
• Is the service level stable regardless of who is in charge?

These points relate to the 'readability of your company' rather than just financial literacy.

Try looking at your company profile or initial outreach email from the perspective of an overseas buyer:

• Is it clear who has the authority to make decisions?
• If there are multiple related companies, is the relationship explained clearly and concisely?
• Do you have company-wide standards for payments, lead times, and terms that aren't dependent on a specific individual?

This is an often overlooked aspect of international sales preparation.

Some companies are not valued despite large numbers, while others are highly regarded at a smaller scale. That difference comes down to the 'quality of profit' and 'transparency of structure.' That is the lesson we can learn from the SoftBank example, regardless of scale.

---

If you need help creating an initial connection with overseas buyers or polishing your company materials before negotiations, leave a comment below.

RINDA Japan Market Desk

---

Get started with Rinda today!

Rinda | B2B Global Sales AI Agent for International Expansion

For consultations or inquiries, feel free to contact us anytime via LINE.

Add LINE friend

---

#InternationalSales #ExportBusiness #MarketEntry #BuyerDiscovery #CrossBorderEC #B2BExports #SMEManagement #GlobalExpansion #BuyerAcquisition #FinancialTransparency #SEAsiaExpansion #InternationalTrade