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Japan Market Brief March–April 2007. John E. Peters Minister Counselor for Commercial Affairs U.S. Embassy, Tokyo. What’s Different ? . Performance Then Now Net Margins 0.2% (FY01) 4 . 8% (FY06e) Free Cashflow Y8.2trn (FY01) Y25 . 1trn (FY06e)

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japan market brief march april 2007

Japan Market Brief March–April 2007

John E. Peters

Minister Counselor for Commercial Affairs

U.S. Embassy, Tokyo

what s different
What’s Different?

PerformanceThenNow

Net Margins0.2% (FY01) 4.8% (FY06e)

Free CashflowY8.2trn (FY01)Y25.1trn (FY06e)

Non-Performing LoansY86trn (FY01)Y4.2trn (FY06e)

Valuations

Price to Earnings68 times(1990s avg) 17 times (FY06e)

Price to Cashflow15 times(1990s avg) 5.4 times (FY06e)

Price to Book2 times(1990s avg)1.4 times (FY06e)

Ownership

Crossholdings Ratio51% (FY90) 20% (FY06e)

M&A Cases 470 (per year, 1990s)1,700 (2002-2006 avg.)

Courtesy of: Jesper Koll – Merrill Lynch Japan Securities

U.S. Commercial Service - Japan

domestic structural up cycle capital investment
Domestic Structural Up-Cycle:Capital Investment

Capital Stock Vintage in Years – All Sectors

Source: Cabinet Office ; Merrill Lynch

Courtesy of: Jesper Koll – Merrill Lynch Japan Securities

U.S. Commercial Service - Japan

no lost decade here
No Lost Decade Here

Relentless Focus on Research & Development Spending

(total R&D spending by public and private sector as % of GDP)

Japan

US

Germany

France

Source: National Institute of Population and Social Security Research

Source: NIPSSR

Courtesy of: Jesper Koll – Merrill Lynch Japan Securities

U.S. Commercial Service - Japan

japan highest patent filings by national regional offices
Japan: Highest Patent Filings by National/Regional Offices

*These statistics are based on information provided by national and regional patent offices.

Source: World Intellectual Property Organization

U.S. Commercial Service - Japan

international patent filings
International Patent Filings

Source: World Intellectual Property Organization

U.S. Commercial Service - Japan

yes a trade surplus with china
Yes, A Trade Surplus with China

Japan Trade Balance With China (Peoples’ Republic + Hong Kong)

Source: Cabinet Office

Courtesy of: Jesper Koll – Merrill Lynch Japan Securities

U.S. Commercial Service - Japan

j apan is back on global scene
Japan is Back on Global Scene

Strong Balance Sheets and Profits Trigger A New Global Investment Cycle:

Outward M&A Accelerating Sharply

Source: Thomson Financial, Merrill Lynch

Courtesy of: Jesper Koll – Merrill Lynch Japan Securities

U.S. Commercial Service - Japan

toyota expects to build plants
Toyota Expects to Build Plants

Toyota Motor Corp. is studying its projected 10-year growth in the U.S. to build plants.

“All I know is compared to today it will be more,” said Jim Lentz, Executive Vice President of Toyota’s U.S. sales arms.

Toyota could build as many as five new North American assembly plants in the next 10 years.

  • Toyota’s U.S. Sales
  • 12.5% increase to $2.54 million
  • 5.5% increase to $2.68 million (projected)
  • New Tundra and Hybrids will drive the growth

Source: Detroit Free Press, January 17, 2007

U.S. Commercial Service - Japan

one of the largest oda contributors
One of the Largest ODA Contributors
  • Ranked as the world’s top ODA provider from 1991 ~ 2000

(net disbursement basis)

  • Assisted 185 countries and regions
  • Total amount disbursed until 2003: US$221 billion

Source: Ministry of Foreign Affairs, Japan

U.S. Commercial Service - Japan

cool nippon
Cool Nippon

Do You Think This Country’s Products Are “Cool”?

Response By Consumers In Different Cities

Source: Nikkei

Note: China=Beijin, Shanghai, Guangzhou

Courtesy of: Jesper Koll – Merrill Lynch Japan Securities

U.S. Commercial Service - Japan

declining population
Declining Population

Population:

2006: 127.7 million (2006)

2030: 117.6 million (2030)

Source: Ministry of Public Management, Home Affairs, Posts and Telecommunications, Japan

Ministry of Health, Labor and Welfare, Japan

U.S. Commercial Service - Japan

the most aged society
The Most Aged Society

65 yrs old and over

2005 26.82 million (21%)

2040 35.0 million (35%)

Total Population

2005: 126 million

2040: 100 million

Source: Japan Aging Research Center

U.S. Commercial Service - Japan

consumer confidence index excluding one person households original series
Consumer Confidence Index(excluding one-person households, original series)

Source: Economic and Social Research Institute, Cabinet Office, Japan

U.S. Commercial Service - Japan

u s top trading partners
U.S. Top Trading Partners

CY2006 Exports (Goods)

CY006 Imports (Goods)

Total U.S. Imports: $1,855.4 billion

U.S. Imports from:

Canada: $303.4 billion (16.4%)

China: $287.8 billion (15.5%)

Mexico: $198.3 billion (10.7%)

Japan: $148.1 billion (8.0%)

Germany: $89.1 billion (4.8%)

Total U.S. Exports: $1,037.3 billion

U.S. Exports to:

Canada: $230.6 billion (22.2%)

Mexico: $134.2 billion (12.9%)

Japan: $59.6 billion (5.8%)

China: $55.2 billion (5.3%)

UK: $45.4 billion (4.4%)

Source: U.S. Census Bureau

U.S. Commercial Service - Japan

japan s economy
Japan’s Economy

World GDP (CY2005)

Real GDP Growth Rate

  • World’s 2nd largest economy
  • 2006 GDP: $4,712 billion
  • Longest boom in postwar period:

- 60 months ~ (Feb. 2002 ~ current)

- 57 months (Nov. 1965 ~ July 1970)

Source: World Bank

Source: Japanese Cabinet Office

U.S. Commercial Service - Japan

japan s top trading partners
Japan’s Top Trading Partners

Total Japanese Imports: $ 577.8 billion

Total Japanese Exports: $647.4 billion

(December 2006 Data - Provisional)

Source: Japan External Trade Organization

U.S. Commercial Service - Japan

u s trade in goods with japan
U.S. Trade in Goods with Japan

Number of U.S. exporters to Japan (2005): 26,933

Source: U.S. Census Bureau

U.S. Commercial Service - Japan

top 10 u s exports to japan
Top 10 U.S. Exports to Japan

Source: U.S. Census Bureau

U.S. Commercial Service - Japan

cy2005 service exports surplus 19 5 billion
CY2005 Service Exports Surplus$19.5 Billion

2005 Surplus:

$19.5 billion

Exports Up 17.6%

2005: $41.8 billion

2004: $35.6 billion

Imports Up 14.4%

2005: $22.3 billion

2004: $19.5 billion

Source: Bureau of Economic Analysis, U.S. Department of Commerce

U.S. Commercial Service - Japan

major u s service exports to japan
Major U.S. Service Exportsto Japan

Source: Bureau of Economic Analysis, U.S. Department of Commerce

U.S. Commercial Service - Japan

u s private services trade balance with japan
U.S. Private Services Trade Balance with Japan

Source: Bureau of Economic Analysis, U.S. Department of Commerce

U.S. Commercial Service - Japan

japan s inward fdi cumulative from end of 1996 through end of 2005
Japan's Inward FDI*Cumulative (from end of 1996 through end of 2005)

*net international investment position

US leads at 251,676 million US$, followed by France and the Netherlands

at 61,225 million US$ and 57,635 million US$, respectively.

Source: Japan External Trade Organization

U.S. Commercial Service - Japan

u s firms in japan
U.S. Firms in Japan

1,554 U.S. affiliated firms in Japan

1,554

1,451

390

83

(As of December 2005)

Source: “Foreign Affiliated Companies in Japan 2006” published in May 2006 by Toyo Keizai

U.S. Commercial Service - Japan

u s firms in japan by industry
U.S. Firms in Japan by Industry

Manufacturing

Total 381 U.S. firms

Non-Manufacturing

Total 1,173 firms

80

169

118

126

107

77

102

608

19

70

22

57

(As of December 2005)

(As of December 2005)

Source: “Foreign Affiliated Companies in Japan 2006” published in May 2006 by Toyo Keizai

U.S. Commercial Service - Japan

regulatory reform steady and on track with significant progress
Regulatory Reform: Steady and On-track with Significant Progress
  • U.S.-Japan Regulatory Reform Initiative (RRI) established in 2001

as key component of U.S.-Japan Economic Partnership for Growth

  • The 5th RRI report (June 2006) noted 85 points of significant Japanese progress in the ten areas under discussion: Telecom, IT, Med/Pharm, Financial Services, Competition Policy, Transparency, Privatization,

Legal Systems Reform, Commercial Law, and Distribution

But there are still some lingering bilateral issues

  • The 5th RRI report underscores the need for continued efforts and progress in all areas
  • Extreme concern about postal privatization, and triangular mergers
  • U.S. beef imports: a major bilateral issue
  • Some of Japan's acknowledged critical challenges are:

- huge public debt

- low birth rate; rapidly aging population; and projected labor shortages

- income disparities; protracted lack of income growth and weak consumer spending

- agricultural reform

U.S. Commercial Service - Japan

major obstacles faced by foreign firms in japan
Major Obstacles Faced by Foreign Firms in Japan

Source: Invest Japan Department, Japan External Trade Organization

U.S. Commercial Service - Japan

insurance market in japan
Insurance Market in Japan
  • Japan is the second largest market for insurance in the world after the United States.
    • $340 billion in JFY 2005 – direct net premiums
    • U.S. insurance companies earned over $40 billion in life and $2 billion in non-life premium income – a major portion of revenues outside U.S.

Changes in Japan’s Insurance Market

  • Japan’s financial “Big Bang”: Removal of “convoy system” (maximum control, industry protection, administrative guidance, and before-the-fact adjustment); U.S.-Japan insurance agreements.

2. Establishment of Financial Service Agency: Rules-based regulatory approach, self-responsibility principle and ex-post checking.

3. Changes in consumer purchasing trend: Emerging focus on living-benefit products vs. death-coverage due to demographic changes in Japan.

4. Increasing sales of variable annuities and third-sector products, led by U.S. insurance companies.

5. Partial liberalization of bank sales - fueled variable annuity market.

6. Growth of the U.S. share through purchases of Japanese life insurance companies in the late 1990s.

Major U.S. Players in Japan

Aflac, AIG, Hartford, Prudential

Sources: USTR National Trade Estimate, Life Insurance Association of Japan, Insurance Research Institute, industry sources

U.S. Commercial Service - Japan

japan s environmental market to reach 560 billion by 2010 meti forecast
Japan’s Environmental Market to Reach $560 billion by 2010 (METI forecast)
  • Current Market: $500 billion
  • Outstanding commercial opportunities in:

- Asbestos abatement equipment and services:

40 million tons in older building;

Japan plans removing a million tons/year

- Soil remediation equipment and services

- Industrial wastewater treatment technology

- Renewable energy, including biomass technologies

  • US passed the “Superfund Act” in 1980
  • Japan enacted a similar act:

“Soil Contamination Countermeasures Law” in 2002

Source: Ministry of Economy Trade and Industry (METI), Japan

Environment Information & Communication Network, Japan

U.S. Commercial Service - Japan

major projects in japan
Major Projects in Japan

In a horizon that stretches from the spring of 2007 over the next ten years, U.S. companies will have an opportunity to bid on construction projects with an aggregate value approximating $5.4 billion and on the supply of goods, equipment, or services in response to non-construction procurements valued at an aggregate of $18.16 billion.  The following summary highlights this $23.56 billon in aggregate opportunities for U.S. firms.

U.S. Commercial Service - Japan

major projects recent news
Major Projects – recent news

Govt To Seek Competitive Bids On 60% Of DiscretionaryContracts

  • Employ competitive bidding for some 60% of its discretionary contracts, or about 2.1 trillion yen (approx. $18 billion)
  • To raise the percentage of contested public contracts to about

80% in terms of value

  • With plans to fully implement the change in fiscal 2007
  • For transparency of the process, the government is requiring ministries to disclose all contracts on their respective Web sites, as well as provide explanations for retaining discretionary contracts.
  • Nikkei News
  • January 27, 2007

U.S. Commercial Service - Japan

world s 2 nd largest medical device market
World’s 2nd Largest Medical Device Market
  • The most important export destination for American medical devices
  • The sector has consistently enjoyed a sizable (approximately $4 billion) trade surplus with Japan
  • Approximately $5 billion worth of U.S. medical devices and supplies are sold in this market
  • American products have approximately 60% share of the total imports
  • The market for medical equipment in Japan remains strong, but
  • American companies will continue facing severe challenges in both pricing and regulatory matters

Source: Country Commercial Guide

Source: Ministry of Health, Labor and Welfare

U.S. Commercial Service Japan

world s 2 nd largest pharmaceutical market
World’s 2nd Largest Pharmaceutical Market
  • The most important export destination for American pharmaceuticals
  • The value of Japanese pharmaceutical market is approximately $60 billion
  • The market share of American companies is estimated to be

15-20%

  • Of the 99 leading global medicines, only 60 are available in Japan
  • GOJ intends to accelerate the drug approval process and to offer incentives to develop innovative drugs
  • Japanese market is increasingly promising for innovative pharmaceuticals, although American companies will continue facing severe challenges in both pricing and regulatory matters

Source: IMH Health

31% still not available in Japan

Average 5.2 years of delay

Source:PhRMA

U.S. Commercial Service - Japan

u s machine tools forge ahead of swiss products reclaiming lost ground
U.S. Machine Tools Forge Ahead of Swiss Products, Reclaiming Lost Ground

Source: Ministry of Finance, Japan

U.S. Commercial Service - Japan

strong exports of u s aircraft and aerospace components
Strong Exports of U.S. Aircraft and Aerospace Components

Overwhelming U.S. presence attests to long-term partnerships

(in million $)

2003 2004 2005 2006

Total

Imports 7,573 7,637 8,618 9,652

(% CHG) 1% 13% 12%

USA: 6,629 6,696 7,416 8,226

(% CHG) 1% 11% 11%

U.S. 88% 88% 86% 85%

Market

Share:

Source: The Society of Japanese Aerospace Companies (SJAC), Ministry of Finance, Japan

U.S. Commercial Service - Japan

boeing country
Boeing Country
  • 80% civil aircraft orders for the past 10 years went to Boeing.
  • ANA & JAL, first customers for Boeing 787s. 50 and 30 each beginning in 2008 (approx. $9.6 billion in total).
  • Boeing forecasts Japanese demand at 1,176 aircraft (approx. $147 billion) for the next 20 years.

Airframes ($3,459 mil): USA, 90%; EU, 3%

Afrm Parts ($1,427 mil): USA, 82%, EU, 13%

Engines ($1,201 mil): USA, 92%; EU, 5%

Egn Parts ($1,964 mil): USA, 90%; EU, 9%

Source: The Society of Japanese Aerospace Companies (SJAC), 2005

Source: Boeing Japan

U.S. Commercial Service - Japan

biotechnology

Biotechnology

(Million US$)

(+3.0%)

(+3.1%)

Key Market Segments in Japan

Pharmaceuticals (antibody therapeutics) and Diagnostics

Functional Food

Agriculture

Bio-informatics

Equipment for Biotech Research (DNA chips; reagents, etc.)

Source: Nikkei Bio Nenkan 2007

U.S. Commercial Service - Japan

opportunity in japan
Opportunity in Japan

Event: USA Pavilion at BioJapan 2007

Dates: September 19-21, 2007

Venue: Pacifico Yokohama (Kanagawa)

http://expo.nikkeibp.co.jp/biojapan/eng/

CS Contact: Tamami Honda, Commercial Specialist

U.S. Embassy, Tokyo

Phone: 81-3-3224-5876

Fax: 81-3-3589-4235

E-mail: tamami.honda@mail.doc.gov

U.S. Commercial Service - Japan

u s chemical business in japan
U.S. Chemical Business in Japan
  • U.S. chemical exports to Japan recovering
    • USD 5.3 billion in 2006
  • Sales of Japan-based U.S. firms show underlying strength
    • USD 1.5 billion in 2005

Source: Dow Chemical Japan, Dupont Japan

Source: Japan Tariff Association

U.S. Commercial Service Japan

education international students in the united states
Education: International Students in the United States

Contribution of international

students to

US economy:

$13.5 billion or

$24K per student

(Source: Institute of International Education http://opendoors.iienetwork.org)

U.S. University Fair (IIE Fair in Japan ) for regionally-accredited U.S. colleges and universities:

2006 Fairs Tokyo: Nagoya:

76 schools 32 schools

1,328 visitors 308 visitors

2007 Fairs October 21 October 20

For details and on-line registration: http://www.iiehongkong.org/fair/ufair/index.htm

U.S. Commercial Service - Japan

education japanese higher education abroad

2005/06 Total

Int’l students

564,766

= 100%

1

India

76,503

13.5%

2

China

62,582

11.1

3

Korea

58,847

10.4

4

Japan

38,712

6.9

5

Canada

28,202

5.0

6

Taiwan

27,876

4.9

7

Mexico

13,931

2.5

Education: Japanese Higher Education Abroad

(Source: Diplomatic Missions in Japan)

Note: US – F-visa, Australia-new enrollments on student visa, Canada-study permits for college/university/ESL

(no permit required if duration is 6 mos or shorter)

Source: Institute of International Education (http://opendoors.iienetwork.org)

U.S. Commercial Service - Japan

education american students at japanese universities
Education: American Students at Japanese Universities

Source: Institute of International Education, Open Doors (http://opendoors.iienetwork.org)

U.S. Commercial Service - Japan

japanese outbound travel
Japanese Outbound Travel

17,819

17,535

(+0.8%)

5,368

3,672

(-5.4%)

Source: Office of Travel and Tourism Industries, U.S. Department of Commerce

Japan National Tourist Organization

U.S. Commercial Service - Japan

japanese travel to the u s
Japanese Travel to the U.S.

5,368

3,672 (-5.4%)

2,217

1,374 (-9%)

Source: Office of Travel and Tourism Industries, U.S. Department of Commerce

State of Hawaii

U.S. Commercial Service - Japan

japan u s outbound travel
Japan & U.S. Outbound Travel

5,368

3,672

(-5.4%)

1,287

1,497

(+40%)

Source: Office of Travel and Tourism Industries, U.S. Department of Commerce

U.S. Commercial Service - Japan

u s japan telecommunications equipment mutual recognition agreement mra signed on feb 16 2007

U.S. – Japan Telecommunications Equipment Mutual Recognition Agreement (MRA) Signed on Feb. 16, 2007

Telecom MRA will lower costs and speed up the marketing in Japan of innovative U.S. telecom products, which is the fifth largest export market for the U.S.

U.S. Export

U.S. Import

Scope: Telecommunications terminal equipment and radio equipment subject to certification in Japan regardless of location of the supplier or country of origin of the equipment

Source: U.S. Department of Commerce, U.S. International Trade Commission

U.S. Commercial Service - Japan

software market in japan

Software Market in Japan

  • Market Growth:
  • Strong at 4% and projected to reach
  • US$173 billion by 2010
  • The amount of imported software was US$3.2 billion in 2005.
  • Within imported software, the share of U.S. products is
  • 90.3% and the amount has reached US$2.9 billion

Software Market in Japan

Includes customized software, packaged software, game software, data services, etc.

(Billion US$)

US$ 173

  • Market Trends:
  • Enactment of Japanese SOX (Sarbanes‐Oxley act)
  • Growing corporate IT-related budgets
  • *46% of Japanese firms will increase IT
  • spending
  • *34.5% will increase their spending by more
  • than 20%

US$ 147

Percentage of Software sales in Japan

Others 2%

Data Services

8%

Game Software

8%

2005

2010

Packaged

Software

(Source: MIC Research Institute and

Japan Information Technology Services Industry Association)

8%

  • Security Software Market:
  • Rising awareness of the importance of IT
  • security and related software
  • Tremendous growth at 21.9%
  • Current market size is $1.2 billion
  • Projected to reach $2 billion by 2010 at 11.2% growth

Customized Software

74%

(Source: METI/ Ministry of Economy, Trade and Industry)

U.S. Commercial Service - Japan

electronic devices market in japan
Electronic Devices Market in Japan

(million US$)

  • U.S. plays a leading role in the
  • Japanese semiconductor industry.
  • Market share of U.S. electronic
  • devices in Japan has grown to 26%
  • and reached US$ 5.4 billion in 2005,
  • compared to 17% and $1.7 billion
  • in 1995.
  • Total amount of imported electronic
  • devices is US$23 billion.
  • Demand for electronic devices in
  • wireless applications, such as 
  • WiMAX, UWB/Wireless USB, WiFi
  • and ZigBee is growing rapidly.
  • WiMAX, in particular, is projected
  • to reach US$827 million by 2010
  • from less than US$1 million in 2006.

Total Local Production

Total Export

Total Import

Source: JEITA/ Japan Electronics and Information,

     Technology Industries Association

U.S. Commercial Service - Japan

japan market safety security

Chart 2

Source: Mainichi Economist

Current Status

Chart 1

The market size of the Japanese security industry has been increasing over the years. The overall market (Chart 1) includes the sales and installation of security equipment and security services, such as guards. The total sales figures do not show a sharp increase as unit prices in general have decreased over the past few years due to stronger competition in the market. In security service contracts, there has been a tremendous increase (Chart 2). According to the National Police Agency the total sales of security service alone amounts to US $27 billion.

Japan Market – Safety & Security

$1=110.11 (ex.rate as of 2005)

Source: Japan Security Systems Association

Future Prospect

According to a May 2006 Fuji Keizai survey, trends in the security industry are:

  • A projected market size of US $ 4.8 billion for security equipment by 2008 - a 34% increase since 2005.
  • Emerging new sub-sectors demonstrating drastic growth:
  • *School security US$ 57 million (350% increase since 2005)
  • *Town security 18 million (125% increase since 2005)
  • **Regional safety 22 million (5% increase since 2005 )
  • (*Emergency alert system; ** Mass notification system)

Sub-sectors expected to grow and

2008 projections:

Home Security Unit US$ 78.6 million

(50% up from 2005)

Home Security Service 418 million (20%up) School Commuting Service 25.6 million (160%up) Community Security Service 4.3 million (600%up) Biometrics by Vein 132 million (300%up) on-Vehicle DVR 38 million (200%up)

2008 Projection for sub-markets by equipment type: Image/monitoring market US$ 1.2 billion (35% up from 2005) Sensor 1.36 billion (71%up) Home security (equip.& service) 755 million (17%up) Access control 920 million (11%up) Residential security service 464 million (19%up)

U.S. Commercial Service - Japan

japan market safety security1
Japan Market – Safety & Security

Chart 3

Chart 4

Kidnapping, killing of a girl in Nara Prefecture

Sharp rise in break-ins by lock picking

Ikeda Elementary School slayings

Setagaya family slayings

$1=108.15 (ex.rate as of 2004)

Source: National Police Agency

Source: Asahi News Paper(June 8th, 2006)

Chart 5

Source: Nihon Keizai Shimbun, Research conducted by Macromill(July 18th, 2005)

Market Growth

  • Recent market growth is attributed to increased public concern for security:
  • Crime related
  • Sky-rocketing crime rate including burglaries, arson, and child murders (Chart 3).
  • New types of crime such as credit card and e-mail scams, and identity theft.

There is a direct relation between major crimes and the number of security cameras installed (Chart 4).

  • Terror related
  • Fear of terrorist attacks is pervasive (Chart 5) while Mass Transportation Authorities respond by installing more cameras (Chart 6).

Chart 6

-Safety and security has become an important factor in selecting products or services; -Central and local governments are making full efforts towards a safer society in response to public concerns.

Source: Ministry of Land, Infrastructure and Transport

U.S. Commercial Service - Japan

japan s food service market opportunities remain for innovative themes and superior know how
Japan’s Food Service Market: Opportunities Remain for Innovative Themes and Superior Know-How

Market Trends

  • Food service viewed as time-saving and a leisure activity
  • Demand for value-added service and unique concepts
  • Consolidation and diversification
  • Orientation toward healthy and safe food
  • Best Prospects
  • Fast casual
  • Alternate meal solutions (deli, takeout, etc)

Source: Food Service Industry Research Center

U.S. Commercial Service - Japan

opportunities in japan s cosmetics market
Opportunities in Japan's Cosmetics Market

Source: Shukan Shogyo Co., Ltd., Fuji Keizai Co., Ltd, Cosmetics Importers Association of JapanNotes: *1: Depilatories and other perfumery, cosmetic or toilet preparations (with a basis of oil, fat or wax) *2: Depilatories and other perfumery, cosmetic or toilet preparations, n.e.s.

U.S. Commercial Service - Japan

growth of 2x4 housing starts in japan annual 1997 2006
Growth of 2x4 Housing Starts in Japan Annual (1997 – 2006)

(105,390 units)

Houses based on North American 2x4 construction methods were first introduced into Japan in 1974. Over the past 10 years, 2x4 housing starts have shown significant growth and exceeded 100,000 units for the first time in 2006. Exports of U.S. building construction materials to Japan have supported this growth, exceeding USD $1 billion in 2005.

U.S. Commercial Service - Japan

slide54

Jewelry Market

  • Jewelry retail market was $11.3 billion in 2005.
  • Japan is the 2nd largest overall jewelry retail market after the United States.
  • 1/3 of retail sales are brand jewelry.
  • Import brand Jewelry share:
      • 1995 7.9% ($1.7 bill)
      • 2004 21.4% ($2.4 bill)
  • US is the top supplier of precious metal jewelry with a 24.3% share in 2006.
    • 1995 12.5% ($137 mill)
    • 2005 21.7% ($320 mill)
    • 2006 24.3% ($385 mill)

Source: Retail market size – Yano Research Institute;

Brand retail sales – Japan Precious magazine;

US imports – Japan Tariff Association

(Source: Japan Tariff Association)

U.S. Commercial Service - Japan

six commercial offices in japan well positioned to assist american exporters
Six Commercial Offices in Japan -- well-positioned to assist American exporters
  • Over 40 professional staff and industry specialists in six locations
  • From FY 2005 until present [30 months] the Commercial Service in Japan has:

- logged 3,700 consulting sessions with 2,300 clients

- provided successful regulatory, policy, and bid advocacy on behalf of U.S. trade and investment interests

- and facilitated over 800 transactions worth $230 million for American firms from 42 states

Sapporo

Tokyo

Fukuoka

Nagoya

Osaka

Naha

U.S. Commercial Service - Japan

how the commercial service in japan can help u s companies
How the Commercial Service in Japan can help U.S. Companies
  • Market Research & Due Diligence
  • Product Launches & Distribution Strategy
  • Partner Match Making
  • Trade Events
  • Trade Policy Advice
  • Web Postings
  • Government Procurement Advocacy
  • Industry Expertise/Business Counseling
  • Intellectual Property Protection Advice
  • Market Access Issues

U.S. Commercial Service - Japan

osaka kansai shikoku and surrounding prefectures
Osaka-Kansai, Shikoku and Surrounding Prefectures

Commercial Service Osaka covers 14 prefectures:

Osaka, Hyogo, Kyoto, Shiga, Nara, Wakayama, Tokushima, Kagawa, Ehime, Kochi, Hiroshima, Shimane, Tottori and Okayama.

  • GDP $980 billion, larger than Brazil, Korea, India, Mexico, Russia, or Australia
  • 9-prefecture Kansai region is Japan's 2nd largest industrial, financial, and commercial area
  • Also the 2nd largest population center with over 24 million people
  • Home to firms like Panasonic, Nintendo, Kyocera, and some of the world's largest banks
  • U.S. exports to the region up about 15% over 2005
  • Much expansion and production abroad with over 5,600 firms having overseas subsidiaries  

U.S. Commercial Service Japan

nagoya chubu
Nagoya-Chubu

The Commercial Service Nagoya covers 9 prefectures: Aichi, Gifu, Mie, Shizuoka, Yamanashi, Nagano, Toyama, Ishikawa, and Fukui

  • At over 8.7 million people, Japan's third largest metropolis
  • Nagoya (population 2.2 million) is Japan's fourth largest city
  • GDP $770 billion, over 25% of Japan's GDP - about the size of Brazil, Korea, India, Mexico, Russia, or Australia
  • 18% of GDP: has ranked number one in shipments from Japan for 28 consecutive years
  • Manufacturing heartland; center for aerospace, automotive, ceramics, and machine tool industries
  • Massive plant expansion and new investment
  • MHI, FHI, KHI key players in Boeing 787 Dream-liner production
  • Toyota recently moved 3000 international sales stafffrom Tokyo

to Nagoya

  • Projected to soon exceed Kansai in industrial production

U.S. Commercial Service Japan

fukuoka kyushu and yamaguchi
Fukuoka-Kyushu and Yamaguchi

The Commercial Service Fukuoka covers 7 Kyushu prefectures: Fukuoka, Oita, Saga, Nagasaki, Kumamoto, Miyazaki, Kagoshima, and Yamaguchi prefecture

  • Fukuoka City – population 1.3 million, economic, educational and cultural center of Kyushu
  • Traditionally known as the "Gateway to Asia"
  • $410 billion economy; 10% of Japan's GDP
  • Japan's fourth largest economic center; greater GDP than Switzerland, Belgium, or Sweden
  • "Silicon Island" with 30% of Japanese semiconductor production
  • Japan's most advanced automotive production; 10% of national output
  • "Solar Island" as focus of Japanese solar cell activity
  • Numerous R&D facilities in biotech, nuclear fusion, robotics, ceramics, high-speed ocean transport
  • Southern Kyushu hosts Japan's two space launch centers at Uchinoura and Tanegashima
  • Two key U.S. military facilities: Sasebo Navy base in Nagasaki, and the Marine Corps Air Station in Iwakuni

U.S. Commercial Service Japan

sapporo hokkaido and tohoku
Sapporo-Hokkaido and Tohoku

Commercial Service Sapporo covers:

Aomori, Miyagi, Iwate and Akita

  • Population 5.7 million
  • GDP $ 383 billion; about same size as Belgium, Switzerland, or Sweden
  • Toyota and components firms expanding high-tech production in Hokkaido
  • Booming domestic and international tourism; 5.5 million tourists in 1988: now about 19 million tourists
  • Strong resort investment and tourism from Taiwan and Korea
  • The 90-minute intercity flight between Tokyo and Sapporo is one of the world’s busiest domestic route in terms of capacity, with more than 9 million annual passengers. Sapporo has 123 fights daily to 18 cities outside of Hokkaido, and 48 flights to and from Tokyo
  • Growing ties with the Russian Far East and Sakhalin Island
  • Tohoku regional trade with China has increased 300% since 2001

U.S. Commercial Service Japan

naha okinawa prefecture
Naha, Okinawa Prefecture
  • GDP $31 billion; population 1.37 million
  • Busy tourism destination with a record 5.64 million tourists in 2006
  • Active construction sector: opportunities for American know-how
  • Okinawa Institute of Science & Technology Project
  • A front-runner as a gaming industry destination?
  • Software development and call centers growing: employ 9,000 at 37 centers, and 2,000 at 73 IT firms
  • 25,000 American marines and airforce based on Okinawa; provide security to the region; U.S. bases are Okinawa's 2nd largest employer, contributing $3 billion annually to the economy

U.S. Commercial Service Japan

slide62
Top Ten Tips to Successfully Marketing in JapanTo Maximize your potential in the market, adhere to these Top Ten Tips.
  • Recognize the strategic importance of Japan, and be willing to invest the necessary resources to capture some of the market
  • Plan, prepare and execute an effective, long term strategy
  • Investing in professionally translated marketing material is with every "yen."
  • Visit Japan Often.....Personal contact remains key even in the age of Webinars
  • Get "on the ground" advice from professionals already engaged in the market.
  • Dedicate a "Japan Champion" in the home office. (Compassion more important that language ability.)
  • Take time to structure the deal and remember due diligence, including IPR protection
  • Networking is key. Use contacts, including CS/Japan to help you meet prospective partners/customers.
  • Cut-throat competition is a way of life in Japan. Listen to you clients for greater success here and internationally
  • Your Agent is only as good as you are to your Agent. It's a partnership. Help them help you.

U.S. Commercial Service - Japan

useful links
Useful Links
  • Web Japan (Information on Japan)

http://web-japan.org

  • U.S. Embassy Tokyo, Japan

http://japan.usembassy.gov

  • Japan External Trade Organization (JETRO)

http://www.jetro.go.jp

  • Japan Statistics Bureau & Statistics Center

http://www.stat.go.jp/english

  • American Chamber of Commerce in Japan (ACCJ)

http://www.accj.or.jp

  • American State Offices Association (ASOA)

http://www.asoajapan.org

  • Japan Federation of Economic Organizations (Keidanren)

http://www.keidanren.or.jp

  • Japanese Chamber of Commerce and Industry

http://www.jcci.or.jp/home-e.html

  • Trade Fair in Japan (by JETRO)

http://www.jetro.go.jp/en/matching/j-messe

  • The Japan Times

http://www.japantimes.co.jp

U.S. Commercial Service - Japan

u s commercial service japan
U.S. Commercial Service Japan

Website:

http://www.buyusa.gov/japan/en

Email:

Tokyo.Office.Box@mail.doc.gov

U.S. Commercial Service - Japan