29

Doing Business 2020 ranking

1,5

days needed to export

39k

GDP per capita in USD

JAPAN’S EXPORT

4th largest economy of the world

Japan, due to its GDP and purchasing power parity, is among the global economic leaders..Its population is relatively richer than in France, Italy or Spain.

Japanese economy  is tied to the services (70%) and industry (29%). Its agriculture amounts to less than 1% of GDP. Services are the most dynamic sector, although during the last 5 years we can see a substantial growth in the industry.

Although Japan is a home to the big corporations such as Toyota, Honda, Subaru, Sony, Hitachi or Toshiba, 99.5% of its companies are small or medium enterprises. Japanese economy is fuelled by the domestic consumption. The rate of the international trade to GDP equals roughly 32%, which is below the European and global average.

Opportunities and key sectors

Production of automobiles and other motor vehicles, electronics, machinery are listed among the most crucial  sectors of Japanese economy. są sektory produkcji pojazdów silnikowych, wyposażenia elektrycznego, narzędzi maszynowych czy przetwórstwa stali i innych metali niezależnych.Substantial opportunities  are also present in the energy, telecommunication, finance, food and design, as well as in fashion, medical supplies and pharmacy. As Japanese society ages, the healthcare sector is becoming more and more profitable.

Due to its geographical location and a population of more than 126.5 million people, Japan relies on the imports of food. 60% of all of its needs is being imported, which creates a major opening for the European companies, especially after the Free Trade Agreement with the EU from 2015.
Although its infrastructure, legal systems and taxation are similar to those in the European countries, Japan is commonly perceived as a challenging market due to its specific customer preferences, business culture and requirements concerning customer service and quality of goods and services. It is generally recommended to seek support from the consulting specialists. If you have any questions about your business and the opportunities awaiting in Japan, contact us here.

Japanese trade

Japanese trade


 Japanese trade is varied. NThe largest group of goods purchased by the Japanese is oil (8.7%), gas (5.9%) and coal in briskets (2.6%). Japan imports a lot of machinery, notably electric and non-electric equipment such as the computers (2.7%), radio and video transmitters (2.6%), microchips and phones. Other than that the statistics of sales of medicaments, textiles, medical equipment, automobiles and food groups are also high.

Japan is the 5th biggest importer and the 4th biggest exporter in the world. In 2018 the worth of its trade was reported at 1200 billion USD. Trade balance remains positive, but the exports are not worth much more than the imports. Its biggest business partners are US, China, South Korea, Australia, Germany, Thailand and Vietnam.

JAPAN’S ECONOMY

0%
Services
0%
Industry
0%
Agroculture

Medical equipment sector

Aging society and the most recent governmental actions strengthening the international trade can be promising for the companies interested in foreign expansion. In 2050, 1/3 of Japanese people will be over 65. Medical, orthopedical, pharmaceutic and healthcare sectors will be among most dynamic ones.

Japanese currency, yen, is stable and is worth around 110 YEN to 1 USD. Although the fight with deflation is partially successful, it is far from over. On the other hand, since 2009, Japan is lowering the statistics of unemployment. In 2009 International Wok Agency estimated, that it was around 5.1%, and in 2017 – 2.9%. Japan was also able to avoid the explosion of unemployment following the Covid-19 lockdown. In May 2020 the statistics were around 2.9%, 0.3% higher than in 2019.

Japanese economy is still in need of major structural reforms. Agriculture, which employs 3,7% of Japanese citizens, accounts for less than 1% GDP. The government aims to broaden the international cooperation and implement high technologies.

International trade

In the last years Japan signed a few agreements on the international trade, and is negotiating other ones. In 2014 the free trade agreement with Australia was implemented, in 2015 – with Mongolia. Recently the talks about a free trade agreement with the GCC countries, South Korea and ASEAN are also in session.

Challenges

Even countries and institutions that have free trade agreements signed can face various obstacles that make international trade progressively harder in japan. Japan is generally perceived as a country that has a good business environment. Every company that deals with financial transfers in Japan needs to be registered and licensed. Oftentimes the establishment of the local branch is also needed.
Signed agreements give Japan a status of an authorised economic operator (AEO) which allows simplified customs and transportation of the imported goods. Okinawa Prefecture has a free trade zone in the Naha Airport area. Other than that there are 22 Foreign Access Zones, located on the coast and at the airports. Various lures are offered to the foreign investors, such as tax reliefs. Every zone offers different sets of incentives.
European Union acknowledges, that there are 5 major challenges that make the trade with Japan harder for the foreign companies, connected with the aviation, construction, cosmetic and food sectors, especially the add-ins.
Japan, one of the global economic leaders, is working towards broadening the international cooperation. The competitiveness is becoming larger and larger and foreign companies need to consider specific business culture and local preferences to be successful.

JAPAN – OPPORTUNITIES AND CHALLENGES

Opportunities

  • Diversified international trade,
  • Free trade agreement with the EU,
  • Stable currency policy,
  • Reliance on the import of food,
  • Aging society, which increases the need for medical technologies,

Challenges

  • Specific customer preferences,
  • Business culture,
  • High competitiveness.
Are you planning on doing business in Japan?