Download Research on exporting to Japan

Research on exporting to Japan – Gov.co.uk – Trade
& Investment
https://www.gov.uk/government/publications/exporting-to-japan/exporting-to-japan
1. Overview
Japan is the third largest economy in the world. In 2012 it made up
8.3% of world Gross Domestic Product (GDP). Japan remains the hightech powerhouse economy of Asia.
Japan ranks second in the 2013 Global Wealth Report. Japan has:
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62 Fortune 500 companies
the highest number of millionaires in Asia
Tokyo, the city with the most millionaires worldwide in 2012
The amount of personal wealth is high, and personal financial assets
are one of the largest asset bases in the world. In 2013 £10.8 trillion in
financial assets was held by households.
Japan has the fourth highest spend worldwide on research and
development (R&D) at 3.4% of GDP. 20% of the top global R&D
spenders are based in Japan. Japan is 27th in the World Bank’s ‘Ease of
Doing Business’ rankings. You can set up a company in 14 days.
Around 450 British companies currently operate in Japan from major
FTSE 100 companies to small businesses. Visible high street names
include Lush, Topshop and Burberry as well as HSBC, GlaxoSmithKline
and Rolls-Royce.
Incentives for British businesses exporting to Japan include:
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stable place to do business
strategic stepping stone for other Asian markets
strong political, trade and social ties between the 2 countries
highly educated consumers who are early adopters of new
products and services
large and rich consumer market based in urban areas
Tokyo conurbation is the world’s largest at around 35 million
Strengths of the Japanese market include:
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a huge, open economy
a cutting edge business culture
an increasingly globalised outlook
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strong intellectual property (IP) protection
hunger for new trends and technologies
high levels of disposable income, particularly older people and
young singles living with their parents
2. Challenges
You need to adopt a strategic approach rather than an opportunistic
one when doing business in Japan. Quick success is possible, but
you’re more likely to get long-term benefits by being patient. Do as
much market research and planning as possible.
Be prepared to:
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make a longer term commitment
develop and maintain relationships
visit regularly
You can now enter the Japanese market directly due to:
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changes in business culture
recognition of the importance of cost cutting
easier communication
a rise in English speaking capable employees
However, the majority of small and medium (SME) overseas companies
enter the market with the support of local partners.
Read UKTI guidance on identifying the right partner and finding the
best route to market.
3. Growth potential
3.1 Economic growth
Despite economic issues over the past 20 years, the Japanese market
remains vast. Japan is one of the world’s largest exporters and one of
the largest overseas investors. Economic growth is heavily dependent
on exports.
The Japanese government under Prime Minister Abe has been tackling
low levels of foreign direct investment into Japan. He has done this by
implementing a wide range of economic reforms and policy initiatives
to promote growth in Japan. These include:
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introduction of a new economic stimulus package
a boosted monetary policy
making new free trade agreements
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breaking down barriers through de-regulation
Watch a short video about the recent changes in the Japanese
economy due to ‘Abenomics’.
The service sector accounts for 67% of total gross value added (GVA),
with manufacturing accounting for 22%. SME enterprises make up
99.5% of all Japanese companies.
Key challenges for the Japanese economy after 20 years of low growth
include:
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how to boost growth
reverse price deflation
deal with a high and rising public sector debt
adapt to a rapidly ageing society
3.2 Asia
Japan is well placed to serve as a hub to expand to other Asian
markets. Advanced infrastructure and transport systems mean it’s easy
doing business in many regions of Japan as well as south east Asia.
Strong trade relationships with neighbouring countries provide the
opportunity to expand your business further in this region.
3.3 Trade agreements
Negotiations are ongoing between the European Union (EU) and
Japan for a comprehensive Free Trade Agreement (FTA). The first round
of talks was held in April 2013. An EU-Japan FTA would bring together 2
trading partners responsible for a third of global output. This would
have a significant impact on UK-Japan bilateral trade, including
improved opportunities for UK exporters.
4. Trade between UK and Japan
However, on a value added basis, Japan is the 7th largest market. In
2012 UK exports to Japan were worth over £9.4 billion, almost evenly
split between good and services
The UK’s biggest visible exports are:
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chemicals, including medical and pharmaceutical products
machinery and transportation equipment, including power
generation equipment and vehicles
Together these industries account for £3.1 billion. Other successful
sectors include:
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scientific equipment
food and drink
transport, including shipping and tourism
media, including TV, film and publishing
Financial services are the UK’s largest export of services to Japan,
valued at £1.7 billion in 2012. Transportation and insurance are also
significant, with a combined value of £1 billion. Other business services
include legal, accounting, advertising and R&D.
Japan is the second biggest market in the world for the UK in royalty
and licensing income, accounting for 10% of all such earnings. In 2012
Japan received 342,796 patent applications, of which 1,654 were from
the UK.
Read more background information on UK Exports to Japan.
5. Opportunities for UK businesses in Japan
UK Trade and Investment (UKTI) publish over 1,000 business
opportunities per month across all sectors and over 100 markets. Sign
up to receive regular business opportunities alerts.
British companies are succeeding across a wide range of sectors,
including:
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manufacturing
consumer goods
high tech
services
There has been a recent influx of new companies in the life sciences
and energy sectors.
There are opportunities across all sectors in this large and developed
market. The top 5 opportunities are:
5.1 Shift towards low carbon
Securing long term energy supplies is a top priority for Japan. Growth
areas are low carbon energy generation and technological solutions
which conserve energy with Smart technologies at the forefront.
Contact Matthew Matsumoto-Prouten, Head of Manufacturing and
Industrial Team for more information on advanced engineering.
Contact Etsuo Watanabe, Head Technology Team for more
information on smart technologies.
5.2 Globalising business environment
Japanese companies are looking to expand their operations in
overseas markets due to a shrinking domestic market. Developing
talent, use of English, managing risks and a global workforce are the
main challenges. There are long term opportunities for UK providers in:
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education and training
human resources
project management
consultancy
finance
Contact Naomi Takegoshi, Head Consultancy and Services Team for
more information on Japan’s globalising business environment.
5.3 High-spending consumers
Japanese consumers demand quality, and spend more of their
disposable income on consumer goods than other comparable
markets. Companies with heritage, authenticity and originality built in
to the company or product brand are well received. It’s a highly
competitive market and you should be ready to adapt your products
to suit local tastes.
Specific opportunities exist for UK companies in:
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fashion
design
food and drink
Contact Akiko Yanagisawa, Head Creative and Lifestyle Team for more
information on consumer goods.
5.4 Ageing society
Japan has one of the fastest ageing societies on the world. In 2010,
approximately 23% of Japan’s population were over 65 and is
predicted to increase to 40% by 2055. This is creating opportunities in:
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healthcare
pharmaceuticals
medical devices
Contact Kaori Arai, Head Life Sciences and Chemicals Team for more
information on opportunities.
5.5 2020 Olympics in Tokyo
Japan has a strong domestic industry and previous experience in
hosting sports events. However the success of the 2012 Olympic and
Paralympic Games in London means Japanese firms are looking to UK
companies for their experience and expertise in range of areas. These
include:
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safety and security, including cyber
sustainability
communications
design
training
Watch our short video for more information on the Tokyo 2020 Olympic
opportunities.
Contact Tim Johnson, Head of Olympics Team for more information on
opportunities.
6. Start-up considerations
Make sure you thoroughly research the market. Background work
includes:
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research into products, competitors, market strategy
testing your products
speaking to Japanese buyers at international trade shows
getting an initial market assessment from experts
UK companies considering entry into the Japanese market have a
variety of options including:
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establishing a representative office, Japan branch office,
Japanese subsidiary or Limited liability partnership (LLP)
entering into a joint venture or strategic alliance with an existing
Japanese business
buying an existing Japanese business.
The Japanese government lowered the required capital for setting up
a joint stock company (KK) to 1 yen from 10 million yen in 2003 to
promote start-ups. It is possible to set up a company in 14 days.
When setting up a business in Japan, a good understanding of
Japanese business law is essential. Japanese laws can differ
considerably from what you may be used to in the UK.
Read more detailed information on setting up a business in Japan and
finding the right partner and best route to market.
7. Legal considerations
You should seek legal advice from English speaking lawyers in Japan
before entering into a joint venture or similar type of partnership. Lists of
English speaking local lawyers and chartered accountants are
available on request from the UKTI team in Japan.
The Japan External Trade Organisation (JETRO) produces a guide on
‘Laws and regulations on setting up business in Japan’.
7.1 Standards and technical regulations
Japanese domestic standards often differ from international norms.
The Japanese Standards Association has responsibility for Japanese
industrial standards covering a wide range of business areas and
topics.
7.2 Intellectual property
There are Japanese laws governing the registration and protection of
IP rights relating to patents, utility models, trademarks and copyright.
Japan’s trademark law offers equal protection for Japanese and
foreign nationals. UK companies with an intention to develop business
in Japan can register their trademarks with the Japan Patent Office
(JPO). Companies can do this even if they don’t have an office in
Japan.
Japan operates a ‘first-to-file’ system, which means that a trademark
can be registered even if it’s not yet in use. Once registered, a
trademark is protected for 10 years. ‘First-to-file’ applies also to patents
and you’re advised not to publicise an invention until it has been
registered. The protection period for patents is 20 years.
You can find details on the registration procedures and the fees
involved on the JPO website.
8. Tax and customs considerations
8.1 Tax
You can find information on tax in Japan for businesses in JETRO’s
‘Taxes in Japan guide’.
8.2 Customs
The Japan Customs website introduces the customs system and trade
procedures. It also provides links to regional offices.
You can find more information on import tariffs in non-EU markets on
the Market Access Database.
9. Business behaviour
Japanese is the only official language. English is spoken by growing
numbers, but many Japanese are sometimes too polite to let you know
when they don’t fully understand. Keep what you say simple and
straightforward. Repeat key points if you’re not clear on what has been
agreed.
Contact UKTI Japan for details of local translators and interpreters.
Small details can have a positive impact:
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give out and accept business cards with both hands
supply hard copies of your company literature
professionally wrap gifts
accept social invitations
Read UKTI Japan’s Business Etiquette guide for more details on business
behaviour in Japan.
10. Entry requirements
British nationals can visit Japan for up to 3 months without a visa. Your
passport should be valid for the duration of your stay.
10.1 Travel advice
If you’re travelling to Japan for business, check the Foreign and
Commonwealth Office (FCO) travel advice page beforehand.
11. Contacts
Contact a UKTI market specialist at the British Embassy in Tokyo or British
Consulate General in Osaka.
Visit Export to Japan for the latest Japan market information, events,
opportunities and exclusive offers for UK exporters.