The U.S. Commercial Service provides guidance on doing business in Japan and offers valuable assistance to help U.S. businesses exporting to Japan.
Please take a look at our annual Country Commercial Guide for Japan (CCG 2015) and find information about key market opportunities, entry strategies, technical requirements for products, and other advice on doing business in Japan.
Why doing business in Japan?
As the world’s fourth-largest buyer of American products, Japan is a market that American companies should not overlook, but approach with a thoughtful strategy. Japan is a technology powerhouse, a “proving ground” for consumer requirements, and stands in the vanguard with respect to the sweeping changes recently seen in developed market demographics. Most U.S. state economic development agencies are also well aware of the important foreign investment coming into their communities from Japan. While the reasons U.S. firms engage with Japan are diverse, savvy firms recognize that underestimating the strategic and tactical importance of the Japanese market may disadvantage them not only in Japan, but in the United States and third-country markets as well.
Two years have passed since “Abenomics”- a three pronged strategy of monetary loosening, fiscal stimulus and growth-oriented structural reform- was launched, drawing considerable attention from U.S. businesses. Abenomics has had a positive effect particularly on the unemployment rate in Japan, recording an unemployment rate of 3.1% in October, 2015. Japan’s nominal GDP growth is also impressive, achieving $4.06 trillion (500 trillion yen) this year for the first time since the financial crisis in 2008.
Japan is among the 12 member countries of the Trans-Pacific Partnership (TPP). With its participation in the TPP, its members account for nearly 40% of the World’s GDP. The liberalization required as part of being a TPP member country is seen to play a crucial role in promoting domestic economic reforms in Japan. Moreover, the most recent agreement made on October 5, 2015 is predicted to have significant strategic and economic advantage, as Japan is officially able to benefit from being part of the free and fair economic zone.
Japan remains the world’s third-largest economy, after the United States and China. Japan is the fourth-largest export market for U.S. goods and services, exporting over $66.5 billion (8 billion yen) worth of goods to Japan. The top 5 US exports to Japan in 2014 were in the following industries: civilian aircraft, engines, equipment and parts ($6.5 million), medicinal equipment ($3.75 million), pharmaceutical preparations ($3.69 million), meat and poultry ($3.69 million) and corn ($2.7 million).
According to the most recent report written in 2014, Japan became the largest- foreign direct investor (FDI) in the United States, at nearly $45 billion. Japanese investment constituted nearly one-fifth of all foreign investment in the United States in 2013.
In the 2015 fiscal year, the national debt in Japan is expected to reach $9.469 trillion (1,167 trillion yen), accounting for more than 240% of its GDP. On top of this, the aging and shrinking population is a major challenge confronting the economy. On average, Japanese women only gave birth to 1.4 children in 2014, whereas the percentage of people over 65 years of age accounted for 25.1% of the entire population in 2013.
The U.S.-Japan alliance is a cornerstone of U.S. security interests in Asia and is fundamental to regional stability and prosperity. The united States-Japan alliance continues to be based on shared vital interests and values. These include stability in the Asia-Pacific region, the preservation and promotion of political and economic freedoms, support for human rights and democratic institutions, and securing of prosperity for the people of both countries and international community as a whole. Japan is one of the world’s most prosperous and stable democracies.