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Japan Entering the market

Thinking of Japan evokes images of exotic temples, sushi, video games, cars, and ultra modern gadgets; examples of the variety and extent to which the Easts economic powerhouse permeates cultures throughout the world are everywhere. Stereotypes of the strong Japanese work ethic and an unwavering dedication to productivity are well known and the impact of its economy can be recognized instantly through the sheer number of huge Japanese brands in our own markets. Having embraced western economic models, the country has a largely deregulated economy with a huge variety of openings for potential investors interested in setting up, licensing or incorporating a business in Japan, from fashion to healthcare.

Why Expand to Japan?

With a reputation as an expensive and difficult country to operate in, Japan arguably suffers from an unfair reputation. Long-term commitment and planning have seen foreign businesses reaping the benefits of the market and many British firms have found huge rewards. Enterprises with existing Japanese customers can strengthen their client relationships and build new customers with a lucrative presence in the country. The Japanese government has recognized the lack of FDI (foreign direct investment) in the nation's economy and offices have become more supportive of overseas investors interested in starting a business in Japan. There is also a growing perception that foreign companies have a more performance-orientated culture and subsequently the labour market has become more mobile, with high caliber employees now easier to source. Costs such as office rental have also fallen, with prices around half of what they were in the economic boom of the 1980s.

Main industrial growth sectors

• Automotive Parts - Japan is the world's biggest producer of cars with 20million units produced worldwide. This makes the country the largest market for automotive parts, technology and expertise.
• Retail - Japan is home to the worlds second largest consumer market, with a US$1,124 billion turnover last year. Japans consumer market is also known for its profile and influence in other markets, particularly in Asia, with Japan regarded as an indicator of future trends. Offering a massive array of possibilities, there are numerous avenues to explore, from fashion to high end, luxury goods.
• Biotechnology and healthcare - It is a well-known statistic that Japan has the most rapidly aging population in the world. It is second only to the US in the world biotechnology market, as a result of Japan's continued focus on healthcare and the related technologies.
  With the country also keen to maintain its dominance of technology in the sector, protein engineering, glyco-engineering are among the numerous areas of Japanese investment.
• Information Technology - With the continuing developments of information technology, such as digital media, Japan has a vibrant market. Japan also has an abundance of IT clusters, where IT companies are concentrated in groups. Left to develop organically, independently from government direction, local and national government incentives are offered for investing in these areas.
• Environment - Japan is a society based on the mass production, consumption and disposal of goods. The country faces the same environmental problems as other large economies. With a high number of patents existing on environmental technologies in Japan, the countrys dedication to the investing in this market is further evidence of their commitment to eco-business. With local authorities and industry cooperating across the nation on Eco-town projects, such opportunities are nationwide.

Challenges Foreign Companies Face in Japan

One of the traditional problems for UK businesses looking to incorporate or expand a business in Japan has been the problem surrounding the recruitment of high caliber Japanese employees. Historically, the most successful Japanese graduates join the biggest trading houses, corporations and banks. However, the situation is improving, with foreign companies perceived as having a more performance-orientated culture in contrast to the traditional seniority based Japanese corporate culture.

It is also worth remembering that common Japanese complaints about British products relate to service, quality control, delivery times and inflexibility.

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