Country Overview

7/29/2019 Country Overview

1/31

COUNTRY OVERVIEW

(Last updated: 23 Mar 2012)

With a population of 127 million, Japan is the third largest global economy. The

Japanese market is characterised by consumers with high levels of disposable

income, and companies with a strong global orientation and willingness to invest in

sustainable, long-term products and services.

Japanese buyers are drawn to premium, higher end goods and services offering

higher returns on trade investment. Japan has made a name for itself as a nation

of quality and innovation, and has staked its future on this value proposition. Along

with this comes a strong commitment and loyalty to business partners, once

acquired.

The mainstream of the Japanese economy remains cashed up, both in terms of

individual savings and liquidity, and in terms of corporate balance sheets. Japan is

now faced with the dilemma of how best to utilise its significant assets in uncertain

times.

As in hard times in the past, the Japanese are showing resilience and often

demonstrate a stronger predilection for change under pressure. Understanding

where and how the new changes will lead to new opportunities for Australia is both

a challenge but also a unique window of opportunity in itself.

Country facts

Capital city: Tokyo

Surface area: 378,000 sq km

Population: 127.6 million

Official language(s): Japanese


2/31

Head of State: HM Emperor Akihito

Head of Government: Prime Minister HE Mr YoshihikoNoda

Australian exports to Japan: A$46,880 million

Australian imports from Japan: A$16,685 million

Japan's principal exportdestinations:

China, USA, Republic of Korea

Japan's principal import sources: China, USA, Australia

(Source:Department of Foreign Affairs and Trade - Country economic fact sheet)

back to top

Economic climateJapan is currently experiencing an unprecedented period of political and economic

turmoil. The Global Economic Downturn has exposed Japans continuing heavy

reliance on export led growth. Net exports and corporate capital expenditure are

sharply down. Domestic consumption is less affected; however, buoyed also by

government stimulus packages, as elsewhere.

The current upheaval, which has mostly been driven by external factors, is now

starting to have far-reaching effects on certain sectors of the manufacturing

economy and society in general. Most affected are the blue-collar and technical

workers, as is common around the globe. This is likely to have a significant impactin terms of changes in social values, behaviour and consumption patterns.

The Japanese Government has spent several hundred trillion yen on economic

stimulus packages in an effort to spur a recovery. However, the success of these

packages is still in doubt as stagnation continues and Japans banks continue to

hold large non-performing loans.
http://www.dfat.gov.au/geo/fs/jap.pdfhttp://www.dfat.gov.au/geo/fs/jap.pdfhttp://www.dfat.gov.au/geo/fs/jap.pdfhttp://www.austrade.gov.au/Japan-country-overview/default.aspx#sitetophttp://www.austrade.gov.au/Japan-country-overview/default.aspx#sitetophttp://www.austrade.gov.au/Japan-country-overview/default.aspxhttp://www.austrade.gov.au/Japan-country-overview/default.aspx#sitetophttp://www.dfat.gov.au/geo/fs/jap.pdf


3/31

Changes that are evidence of the new economy emerging in Japanese business

practices include:

High interest in IT-based solutions

Demand for innovative cost effective business solutions which can include

imported product and services

Breakdown of traditional interlinked (keiretsu) business relationships

Introduction of business-to-business (B2B) and business-to-consumer (B2C) e-

commerce ventures

Speeding up of the business decision making processes

Introduction of Western management practices

Japan faces a number of challenges going forward, some economic and some

structural. Many of these longer term drivers for change also favour Australia.

Japans ongoing reliance on imported minerals and energy, and growing concernsover food safety and food security (with food self-sufficiency hovering at around 40

per cent) are priorities for them.

In addition, Japans silver generation faces challenges to preserve and grow their

substantial wealth of US$14 trillion in household savings. As the population ages,

Japan is tipped to be the worlds leading test bed for the silver market. Continuing

emphasis on increasing productivity among the declining workforce, the need to

more fully utilise women, increased reliance on technology for competitive edge

and growth in outsourced services are key social and corporate themes.

Corporations are still relatively cashed up from rich profits in recent years, despite

the alarming change in their current circumstances. The macroeconomic situation

for Japan may certainly get worse before it gets better. At the heart of this, Japans

large corporates are looking to invest their way out of the crisis. They continue to

target M & A and greenfields investment opportunities worldwide, benefiting from

low asset prices and a strong yen.

Japanese investors are there for the long-haul. They are looking for environmental

technology, agribusiness, infrastructure and renewable energy opportunities in

Australia alongside more traditional resource investments. Increasingly Japanese

investments in Australia are targeted at the Australian domestic market itself, or

aimed at using Australia as a springboard into Asia.

The prolonged economic slow-down is causing fundamental changes in Japanese

business practice, which will ultimately have a positive impact on demand for

Australian goods and services. These changes are evidence of a new economy

emerging in Japan where companies are being forced by market pressures,

including government deregulation measures, to change traditional business

practices. Despite economic growth stagnation, the sheer tremendous size of the

Japan economy and its regional markets will always present opportunity for


4/31

Australia.

Please also see DFAT's'Great East Japan Earthquake: economic and trade

impact' publication

For the latest key economic indicators and statistics, please see theDepartment of

Foreign Affairs and Trade country economic fact sheet.

back to top

Political climateAlthough the Japanese Government has little direct involvement in the operation of

the private sector, through its ministerial bureaucracies it maintains tight

supervision of firms via regulation and mandatory administrative guidance. It

manages industrial policy by directing various sectors into suggested areas of

enterprise and facilitating their entry by providing seed money and research,

technical and regulatory support.

Under the revised post-war Constitution of 1947, Japan adopted a Westminster

form of government. The Diet (Parliament) consists of a popularly elected House of

Representatives (Lower House 500 seats) and a House of Councillors (Upper

House 252 seats).

There are three tiers of government National, Prefectural (State) and Local. The

key political parties are the:

Liberal Democratic Party

New Komeito

New Conservative Party

Democratic Party of Japan

Social Democratic Party of Japan

Japanese Communist Party

back to top

Trade relations and statisticsAs a world economic power, second only to the USA, Japan remains an important

and influential player in global and regional affairs.Japans foreign policyis

administered by the Ministry of Foreign Affairs.

Japan is an active member of the Asia Pacific Economic Cooperation (APEC) and

the United Nations.

As the largest creditor nation in the world, Japan supplies Overseas Development

Assistance (ODA) to many developing countries and actively participates in
http://www.dfat.gov.au/publications/stats-pubs/great-east-japan-earthquake-economic-and-trade-impact.pdfhttp://www.dfat.gov.au/publications/stats-pubs/great-east-japan-earthquake-economic-and-trade-impact.pdfhttp://www.dfat.gov.au/publications/stats-pubs/great-east-japan-earthquake-economic-and-trade-impact.pdfhttp://www.dfat.gov.au/publications/stats-pubs/great-east-japan-earthquake-economic-and-trade-impact.pdfhttp://www.dfat.gov.au/geo/fs/jap.pdfhttp://www.dfat.gov.au/geo/fs/jap.pdfhttp://www.dfat.gov.au/geo/fs/jap.pdfhttp://www.dfat.gov.au/geo/fs/jap.pdfhttp://www.austrade.gov.au/Japan-country-overview/default.aspx#sitetophttp://www.austrade.gov.au/Japan-country-overview/default.aspx#sitetophttp://www.austrade.gov.au/Japan-country-overview/default.aspx#sitetophttp://www.austrade.gov.au/Japan-country-overview/default.aspx#sitetophttp://www.mofa.go.jp/policy/other/bluebook/2000/index.htmlhttp://www.mofa.go.jp/policy/other/bluebook/2000/index.htmlhttp://www.mofa.go.jp/policy/other/bluebook/2000/index.htmlhttp://www.austrade.gov.au/Japan-country-overview/default.aspxhttp://www.austrade.gov.au/Japan-country-overview/default.aspxhttp://www.austrade.gov.au/Japan-country-overview/default.aspxhttp://www.austrade.gov.au/Japan-country-overview/default.aspxhttp://www.mofa.go.jp/policy/other/bluebook/2000/index.htmlhttp://www.austrade.gov.au/Japan-country-overview/default.aspx#sitetophttp://www.austrade.gov.au/Japan-country-overview/default.aspx#sitetophttp://www.dfat.gov.au/geo/fs/jap.pdfhttp://www.dfat.gov.au/geo/fs/jap.pdfhttp://www.dfat.gov.au/publications/stats-pubs/great-east-japan-earthquake-economic-and-trade-impact.pdfhttp://www.dfat.gov.au/publications/stats-pubs/great-east-japan-earthquake-economic-and-trade-impact.pdf


5/31

humanitarian programs worldwide.

The Japanese corporate trade network, particularly throughout Asia, is extensive

and these connections potentially hold great opportunities for Australian exporters

particularly linked to Japans ODA program.

Japan has traditionally been seen as a closed or difficult market to enter for foreigncompanies, and during the 1980s it was under considerable pressure (from the

USA particularly), to open up its markets to foreign competition.

Acceptance of foreign imports is increasing as Japanese consumers demand

greater variety and value for money.

At times, Japans bi-lateral relationships with several Asian nations have been

strained for historical reasons. However, as the economies of many Asian

countries are closely linked to their growing trade with Japan, concerted efforts by

each government are assisting in building strong relationships for the new century

in the Asian region.

Australia and Japan enjoy excellent relations built on more than 100 years ofbi-

lateral tradeand exchange.

Japan signed a bilateral trade agreement - a Free Trade Agreement (FTA) with

Singapore in October 2000.

Over the past decade, opportunities for Australian exports to Japan are heading

increasingly through the massive regional markets of the Japanese economic -

including the Kansai (Osaka area), as far north as Hokkaido, and the southern

island of Kyushu.

Australia is one of only a handful of countries in the world that enjoys a tradesurplus with Japan.

Commodities dominate Australias exports to Japan but the mix is becoming

increasingly diversified with processed foods and beverages, ICT-related products

and services and other manufactures increasing.

Austrade Japan has predicated its trade and investment strategy on four pillars

underpinning the medium-term needs of the Japanese economy. These are food

security and safety, energy security, the needs of an ageing society and a strong

reliance on technology as a major driver of intellectual property and competitive

edge.

Austrade in Japan pursues its business plan through the use of six industry teams

with national coverage of priority sectors. These teams are Food and Beverage,

Agribusiness and Clean Energy, Services, Consumer Products, Technology, and

the Creative Arts.

Please see theDepartment of Foreign Affairs and Trade country economic fact

sheetfor key trade statistics.
http://www.dfat.gov.au/geo/japan/japan_brief_bilateral.htmlhttp://www.dfat.gov.au/geo/japan/japan_brief_bilateral.htmlhttp://www.dfat.gov.au/geo/japan/japan_brief_bilateral.htmlhttp://www.dfat.gov.au/geo/japan/japan_brief_bilateral.htmlhttp://www.dfat.gov.au/geo/fs/jap.pdfhttp://www.dfat.gov.au/geo/fs/jap.pdfhttp://www.dfat.gov.au/geo/fs/jap.pdfhttp://www.dfat.gov.au/geo/fs/jap.pdfhttp://www.dfat.gov.au/geo/fs/jap.pdfhttp://www.dfat.gov.au/geo/fs/jap.pdfhttp://www.dfat.gov.au/geo/japan/japan_brief_bilateral.htmlhttp://www.dfat.gov.au/geo/japan/japan_brief_bilateral.html


6/31

Business opportunitiesJapan, a key strategic international business partner for Australia

This section is aimed at giving Australian businesses comprehensive insights into

trade and investment opportunities in Japan, and how to make the most of them.

Its almost impossible to overstate the importance of Japan for Australia, in so

many ways. Japan is one of Australias most important and strategic international

business partners with an ever-evolving partnership that extends over 50 years.

With a population of 127 million, the Japanese market is characterised by

consumers with high levels of disposable income, and companies with a strong

global orientation and willingness to invest in sustainable, long-term products and

services. Japan is an active investor in an increasingly diverse range of Australian

industries. These days the Japanese economy is no longer confined to Japan

alone, as their business interests and activities expand globally, especially

throughout the Asia-Pacific region, Japan offers a multitude of partnering

opportunities for savvy Australian companies.

Austrade covers Japan with a network of four offices extending from Sapporo in

the north through to Tokyo, and Osaka and Fukuoka in the south. Staffed by a total

of 47 Australian and Japanese professionals, they deliver a comprehensive range

of in-market services, tailored carefully to your needs.

Whether youd like to tackle Japan for the first time, or take a fresh look at

revitalising your existing business plans, Austrades complete coverage of the

archipelago and inside access to key decision-makers puts you well ahead of the

pack.

Japan has made a name for itself as a nation of quality and innovation, and has

staked its future on this value proposition. With a free trade agreement on the

cards, and with Japans determination to emerge strongly from the economic

downturn, I invite you to take another look at the rapidly changing Japanese

market - you may be pleasantly surprised...

Austrades business development specialists have prepared a range of market

profiles that offer potential to assist in your exporting investigations.Austrades in-

market teams have identified opportunities for Australian exporters in various

industries (see 'Profiled industries in this market' on the left side of this page).

back to top

Business etiquetteBusiness tips

Business etiquette and practices are important in Japan. The Japanese are

extremely polite and place importance on respect and social rank. You will be
http://www.austrade.gov.au/Doing-business-in-Japan/default.aspx#sitetophttp://www.austrade.gov.au/Doing-business-in-Japan/default.aspx#sitetophttp://www.austrade.gov.au/Doing-business-in-Japan/default.aspxhttp://www.austrade.gov.au/Doing-business-in-Japan/default.aspx#sitetop


7/31

showered with elaborate compliments while your host remains humble and plays

down their achievements. Australians who show modesty will be well regarded by

Japanese people.

While business meetings during the day can seem to be slow and often skirting

key issues, night time drinking and dinners are often the time when more useful

information is fed back to you. The Japanese equate being indirect with being

polite. Thus being indirect, such as starting a business meeting with small talk will

help to get the meeting off to a good start. Australians can misunderstand this

indirectness and interpret it as indecisiveness or non-commitment from the

Japanese side. In these situations, it pays to be patient.

English is not widely spoken in business and government , with some

exceptions, such as in trading companies. If a meeting is conducted in English, be

sure to speak slowly and clearly, and do not use Australian idiomatic expressions

or humour. Meetings in English are rare and an interpreter is generally required.

Punctuality is a must in Japan. It is usual to arrive at a meeting at least fiveminutes before the appointed time. In the event that you are running late, it is polite

to call ahead to advise of when approximately you will be arriving. All appointments

should be arranged with companies prior to your arrival in Japan.

Partners - it is inappropriate to take friends, spouses, or children to business

meetings in Japan. It is also not common for spouses to be invited out for business

dinners.

Product brochures and a company profile should be taken with you when you visit

a Japanese company for the first time.

Business cards are handled in both hands and laid carefully on the table. You willneed to bring at least 100 business cards with you to Japan. Business meetings

invariably begin with the exchange of business cards. Don't place the card in your

pocket or write on it. If time allows, have your business cards printed with your

company name and name in Japanese. Don't have your business address

translated to Japanese as this renders it meaningless.

Seating arrangements are used in formal business meetings. The most important

guest sits furthest from the door and the host sits closest to the door. If in doubt,

wait to be seated or ask where you should sit.

Gifts are not necessary and it is inappropriate to offer expensive gifts, particularly

on first meetings. Small gifts, such as company pens or ties, etc. can be presented,once business is ready to commence or has commenced. It is generally

considered impolite to open gifts in front of the giver.

Resolving conflict Japanese people also try hard to avoid open conflict and so

may answer ambiguously or even agree to an offer that they have no intention of

accepting. One productive way of solving this problem is to prepare a brief but

clear memo describing the situation and obligations of both parties and present it


8/31

to the Japanese side as a record of the meeting. This will test the Japanese sides

position on the issue as they will be forced to respond.

back to top

Tariffs and non-tariff barriersTariff

Tariffs are based on the Harmonised System - most duties are ad valorem (per

cent) based on the GATT valuation system approximately cost, insurance and

freight (CIF) value (Incoterms 1990).

Japan has low or zerotariffson most industrial products.

Japan maintains tariffs and restrictions on some agricultural items, which are

relevant to some Australian exporters.

Australian products are entered at the lowest rate notified (preferential ratesexcepted).

Generalised preferences are granted to developing countries.

A self assessment system designed to expedite customs clearance allows prior

calculation of duty by importers.

Customs authority contact details:

Director General

Customs and Tariff Bureau

Ministry of Finance

3-1-1 Kasumigaseki

Chiyoda-ku

Tokyo 100

Tel: +81 3 3581 4111

Fax: +81 3 5251 2122

Non-tariff barriers

Potential exporters to Japan should not be deterred by a widely perceived view

that the Japanese market is closed and heavily regulated. Barriers to market

access for merchandised and value added goods are mainly informal. Examples

of informal barriers include, successful entrance into business networks,maintenance of market presence and product quality assurance.

Formal restrictions - mostly on agricultural produce - do exist, and the Australian

Government has a range of market access issues, which it continues to work on

with the Japanese Government on behalf of Australian industry. Like

Australia,customs laws and regulations, and import processes are strict and need

to be clearly understood by exporters.
http://www.austrade.gov.au/Doing-business-in-Japan/default.aspx#sitetophttp://www.austrade.gov.au/Doing-business-in-Japan/default.aspx#sitetophttp://www.mof.go.jp/english/tariff/tariff.htmhttp://www.mof.go.jp/english/tariff/tariff.htmhttp://www.mof.go.jp/english/tariff/tariff.htmhttp://www.mof.go.jp/english/tariff/tariff.htmhttp://www.mof.go.jp/english/tariff/tariff.htmhttp://www.mof.go.jp/english/tariff/tariff.htmhttp://www.austrade.gov.au/Doing-business-in-Japan/default.aspxhttp://www.mof.go.jp/english/tariff/tariff.htmhttp://www.mof.go.jp/english/tariff/tariff.htmhttp://www.austrade.gov.au/Doing-business-in-Japan/default.aspx#sitetop


9/31

Import licensing may be required for some imports. Two categories exist:

1. Import Quota (IQ): Quotas set by Ministry of Economy, Trade and Industry

(METI), range from moderately to severely restrictive. Quotas are imposed

on a variety of foods including some dairy products, seafood, cereals and

grains. Importers must obtain an import quota allocation certificate fromMETI, which entitles the importer to receive an import licence on

application to a foreign exchange bank.

2. Import Declaration (ID): a wide range of raw materials, semi-finished

products and manufactured goods can be imported without prior approval

from METI. Completed ID forms are freely verified by authorised foreign

exchange banks on application, prior to import.

Goods must be cleared through customs within the validity period of the licence

(usually six months).

Imports from Australia, which includes most fresh fruits (excluding certain oranges,mangoes, blueberries, Fuji apples, pineapples and green bananas) are subject to

restrictions (see also 'Public health requirements).

back to top

Product certification, labelling and packagingLabelling

Foodstuffs must have a sticker attached to each package after importation showing

a detailed description of contents, including artificial colourings or preservatives,

name and address of importer and date of import or manufacture in Japanese.

Many food products and consumer products are subject to very specific labelling

requirements and importers should always be consulted on proposed labelling.

Containers of canned and bottled goods, soft drinks, small goods, frozen foods and

prepacked foods must be marked and labelled solely in metric measurement by

the Australian exporter, even though responsibility for metric measuring rests with

the Japanese distributor.

Drug usage directions should be printed in Japanese.

Special labelling regulations apply to electrical appliances, soap, aluminium foil,some kitchen utensils, cleaning materials, toilet and bath fittings, plastic film,

certain furniture, hot water bottles and cosmetics.

Packaging

Use of straw packing materials is prohibited.

Proposed packaging should be cleared with importers as they have definite
http://www.austrade.gov.au/Doing-business-in-Japan/default.aspx#sitetophttp://www.austrade.gov.au/Doing-business-in-Japan/default.aspx#sitetophttp://www.austrade.gov.au/Doing-business-in-Japan/default.aspxhttp://www.austrade.gov.au/Doing-business-in-Japan/default.aspx#sitetop


10/31

preferences.

Goods should be marked according to normal commercial practice.

Special certificates

Animals, plants and their products require health certificates issued by an

approved authority in the country of origin.

Frozen vegetables and fruit must be accompanied by a certificate of condition

(Form E46) instead of a phytosanitary certificate.

Meat for human consumption require an additional certificate, issued by an

approved authority in the country of origin, stating that the animals were free from

designated infectious diseases prior to slaughtering and that subsequent

processing was under hygienic conditions.

Imports of food require a food import permit issued by the Ministry of Health and

Welfare.

Spirituous beverages may require a certificate of age.

Electrical appliances must conform with the Electric Appliance Control Law, with

certain goods requiring type approval before being permitted to be offered for sale

in Japan.

Machine tools under a year old must be accompanied by a certificate of date of

manufacture.

back to top

Methods of quoting and paymentNo legislative requirements.

Quotations in Australian dollars are common.

Methods of quoting and payment depend on type of product, quantity and

relationship established between exporter and importer.

Advance payments may be made for some imports.

back to top

Documentary requirementsFax signatures are not permitted. Note: Even minor typing and other errors in

documentation often result in serious delays and complications at point of entry.

Pro-forma invoice
http://www.austrade.gov.au/Doing-business-in-Japan/default.aspx#sitetophttp://www.austrade.gov.au/Doing-business-in-Japan/default.aspx#sitetophttp://www.austrade.gov.au/Doing-business-in-Japan/default.aspx#sitetophttp://www.austrade.gov.au/Doing-business-in-Japan/default.aspx#sitetophttp://www.austrade.gov.au/Doing-business-in-Japan/default.aspxhttp://www.austrade.gov.au/Doing-business-in-Japan/default.aspxhttp://www.austrade.gov.au/Doing-business-in-Japan/default.aspxhttp://www.austrade.gov.au/Doing-business-in-Japan/default.aspxhttp://www.austrade.gov.au/Doing-business-in-Japan/default.aspx#sitetophttp://www.austrade.gov.au/Doing-business-in-Japan/default.aspx#sitetop


11/31

No special requirements.

Commercial invoice

A minimum of three copies are required. Invoices must be signed by the supplier

and should include the following details:

marks and serial numbers of packages

description and quantity of goods

CIF value (Incoterms 1990)

place and date of preparation

destination and consignee

name of vessel

import licence number

conditions of contract relating to determination of the value

It is strongly recommended, whenever possible, to include the HS Commodity

Classification of the goods to be imported. Complete invoices and packing lists

should be forwarded promptly to the importer by airmail, (see also 'Tariff' - self

assessment system, above).

Insurance

Normal commercial practice.

A certificate may be required if customs clearance without invoice is requested (to

assist in appraisal of taxable value/quantity). In such circumstances other

documents covering transportation cost, premium specifications and price list etc.,

may be required.

Bill of lading

For goods dispatched by sea, minimum of three signed originals and two unsigned

copies are required.

For goods sent by air, standard sets of 10 are available (original plus nine copies)

but no strict rules apply.

If made out To Order, it should indicate the name and address of the person to be

notified.

Information required is usually specified in importer's letter of credit but should

include name of shipper, ultimate and intermediate consignees, marking and

number of packages, and description of goods with gross weights and

measurements in metric terms.

Packing list


12/31

Two copies recommended, indicating details of goods, including the weight and

measurement of each package.

Certificate of origin

Required for goods eligible for concessions granted under GATT.

Normally issued by Japanese consular or diplomatic officer at place of production,

purchase or shipment. Certificates issued by Customs, other government agencies

or an approved authority (see 'Guidelines', section 2.3) are acceptable. These

must also be signed by the exporter.

Certificate must show origin, marks and/or numbers of commodities, description

and number of packages and must certify that commodities were produced in

stated country of origin.

Public health requirements

Strict controls govern the manufacture and sale of both fresh and preserved

foodstuffs.

All imports of food must be accompanied by a food import permit, issued by the

Food Sanitary Inspection Service of the Ministry of Health and Welfare. Foods may

also be subject to inspection on arrival.

When imported for the first time, a description of all ingredients and the

manufacturing processes involved will be required for application, along with any

other requested documents, eg. health certificates from the country of origin.

The use of certain substances such as food additives are either strictly controlled

or prohibited.

The use of other food additives is strictly controlled.

The use of chemicals whose residue remains in crops or soil or pollutes water is

strictly controlled.

Imports of animals and plants and their products require health certification issued

by an approved authority in the country of origin. In Australia, this is usually the

Australian Quarantine and Inspection Service (AQIS), Agriculture, Fisheries and

Forestry-Australia (AFFA) or the relevant state department of agriculture.

Under Japanese quarantine regulations Australia can supply green bananas,

mangoes, lemons, pineapples and certain oranges and many vegetables (basically

those which do not contain seeds). Recently, blueberries and Fuji apples from

Tasmania have been approved for export to Japan.

A larger range of fruits and vegetables from Tasmania can now be imported into

Japan, as it is now recognised that Tasmania is free from fruit fly.

The official reference for importing and distributing drugs in Japan is the

Pharmaceutical Affairs law. Manufacturers or importers intending to manufacture


13/31

or import drugs, medical equipment, cosmetics and toiletries need to obtain

approval in accordance with the Pharmaceutical Affairs law.

If cosmetic products contain ingredients outside the Comprehensive Licensing

Standards, the approval of Minister of Health and Welfare will be required to import

those products.

back to top

TaxationYou should seek professional advice on taxation is it applies to foreign companies

and operations in Japan. The major international accounting companies operate in

Japan and have English-speaking staff. A five per cent consumption tax is levied

on all purchases in Japan including food. Some hotels charge 8-10 per cent

service tax on accommodation. Businesses operating in Japan will be subject to a

range of taxes including:corporate tax

income tax

withholding tax

local tax

residents tax

Liquor taxes, expressed in specific terms per quantity, are levied on beverages,

whether imported or domestically produced.

Excise tax is levied on tobacco imports.

back to top

Intellectual property protectionAs in Australia, there is the need to protectintellectual propertyrights and be

covered by patent, design and trademark protection. Japanese companies are

experienced international business players and understand the need for

confidentially and non-disclosure agreements when beginning business

discussions. You should act in the same manner as you would in Australia toprotect your business security interests. As discussions progresses, consulting

Australian and Japanese lawyers, with specific expertise is recommended,

particularly in hi-tech and services industries.

Generally, while the paper contract agreement for business is important,

developing and committing to a relationship is more crucial to potential Japanese

business partners. Long legal documentation can often dull the enthusiasm of
http://www.austrade.gov.au/Doing-business-in-Japan/default.aspx#sitetophttp://www.austrade.gov.au/Doing-business-in-Japan/default.aspx#sitetophttp://www.austrade.gov.au/Doing-business-in-Japan/default.aspx#sitetophttp://www.austrade.gov.au/Doing-business-in-Japan/default.aspx#sitetophttp://menuopenwnd%28%27http//www.austrade.gov.au/ArticleDocuments/2149/JapanIPfactsheet.pdf.aspx','New_Window','width=450,height=400,top=100,left=100,resizable,%20scrollbars');http://menuopenwnd%28%27http//www.austrade.gov.au/ArticleDocuments/2149/JapanIPfactsheet.pdf.aspx','New_Window','width=450,height=400,top=100,left=100,resizable,%20scrollbars');http://menuopenwnd%28%27http//www.austrade.gov.au/ArticleDocuments/2149/JapanIPfactsheet.pdf.aspx','New_Window','width=450,height=400,top=100,left=100,resizable,%20scrollbars');http://www.austrade.gov.au/Doing-business-in-Japan/default.aspxhttp://www.austrade.gov.au/Doing-business-in-Japan/default.aspxhttp://www.austrade.gov.au/Doing-business-in-Japan/default.aspxhttp://www.austrade.gov.au/Doing-business-in-Japan/default.aspxhttp://menuopenwnd%28%27http//www.austrade.gov.au/ArticleDocuments/2149/JapanIPfactsheet.pdf.aspx','New_Window','width=450,height=400,top=100,left=100,resizable,%20scrollbars');http://www.austrade.gov.au/Doing-business-in-Japan/default.aspx#sitetophttp://www.austrade.gov.au/Doing-business-in-Japan/default.aspx#sitetop


14/31

potential partners so a balance needs to be reached. Japans recent spate of

bankruptcies means that exporters should exercise due diligence on their business

partners before sending shipments to Japan. Credit service checks of Japanese

companies are available.

For further information please visitIP Australia.

Economy

links

The Japanese economy is one of the third largest in the world. Only the USA and China have ahigher GNP. The Japanese currency is theYen.

Exports: Japan's main export goods are cars, electronic devices and computers. Most importanttrade partners are China and the USA, followed by South Korea, Taiwan, Hong Kong, Singapore,Thailand and Germany.

Imports: Japan has a surplus in its export/import balance. The most important import goods are rawmaterials such as oil, foodstuffs and wood. Major supplier is China, followed by the USA, Australia,Saudia Arabia, South Korea, Indonesia and the United Arab Emirates.

Industries: Manufacturing, construction, distribution, real estate, services, and communication are

Japan's major industries today. Agriculture makes up only about two percent of the GNP. Mostimportant agricultural product isrice. Resources of raw materials are very limited and the miningindustry rather small.
http://www.ipaustralia.gov.au/understanding-intellectual-property/ip-for-business/doing-business-overseas/ip-protection-in-japan/http://www.ipaustralia.gov.au/understanding-intellectual-property/ip-for-business/doing-business-overseas/ip-protection-in-japan/http://www.ipaustralia.gov.au/understanding-intellectual-property/ip-for-business/doing-business-overseas/ip-protection-in-japan/http://www.japan-guide.com/e/e644.html#jump_linkhttp://www.japan-guide.com/e/e644.html#jump_linkhttp://www.japan-guide.com/e/e2196.htmlhttp://www.japan-guide.com/e/e2196.htmlhttp://www.japan-guide.com/e/e2196.htmlhttp://www.japan-guide.com/e/e2043.htmlhttp://www.japan-guide.com/e/e2043.htmlhttp://www.japan-guide.com/e/e2043.htmlhttp://www.japan-guide.com/e/e2043.htmlhttp://www.japan-guide.com/e/e2196.htmlhttp://www.japan-guide.com/e/e644.html#jump_linkhttp://www.ipaustralia.gov.au/understanding-intellectual-property/ip-for-business/doing-business-overseas/ip-protection-in-japan/


15/31

Rice

Rice is Japan's most important crop, and has been cultivated across the country for over2000 years.It is the primary staple food of theJapanese dietand of such fundamental importance to theJapanese culture that it was once used as currency, and the word for cooked rice (gohan) hasbecome synonymous with the general meaning of "meal".

A bowl of cooked rice is a central part of traditionalJapanese meals, but the grain is also processedinto several different types of products including alcohol, vinegar and flour. The following are somecommon rice products and a list of common rice dishes that can be found across the country.

Common types of rice

White Rice (Hakumai)Japanese rice is short grain and becomes sticky when cooked. Themajority of Japanese rice is polished to remove the hard outer skin(rice bran) and consumed as hakumai ("white rice"). White rice is thefoundation of Japanese cooking and is served with most meals.Brown Rice (Genmai)Unpolished rice (genmai) is less commonly sold as it is notconsidered to be as delicious as white rice. However, it has beenrecently gaining popularity as a health food because it is morenutritious than white rice. The outer bran retains much of the vitaminsand minerals that are removed by polishing.
http://www.japan-guide.com/e/e2131.htmlhttp://www.japan-guide.com/e/e2131.htmlhttp://www.japan-guide.com/e/e2131.htmlhttp://www.japan-guide.com/e/e620.htmlhttp://www.japan-guide.com/e/e620.htmlhttp://www.japan-guide.com/e/e620.htmlhttp://www.japan-guide.com/e/e2035.htmlhttp://www.japan-guide.com/e/e2035.htmlhttp://www.japan-guide.com/e/e2035.htmlhttp://www.japan-guide.com/e/e2035.htmlhttp://www.japan-guide.com/e/e620.htmlhttp://www.japan-guide.com/e/e2131.html


16/31

Multigrain RiceOther grains and seeds may be added to white rice to add flavor andnutrients. One variation simply adds barley (resulting in mugi gohan),but more elaborate varieties may include more than a dozen differentadditions. Multigrain rice is usually called by the number of different

grains that are added (e.g. juhachikoku), and is served at somehealth food restaurants andryokan.Glutinous Rice (Mochigome)Glutinous Rice (also known as mochi rice or sticky rice) is the secondmost common variety of Japanese rice. When cooked it is evenstickier than regular Japanese rice and is commonly poundedintorice cakes, made into sweets, or used in rice dishes such assekihan (glutinous rice with red beans).

Common rice products

Rice Wine (Nihonshu or Sake)(more info)Rice wine, commonly known as nihonshu orsake(sake also beingused as a general term foralcohol), is an alcoholic drink made byfermenting rice. Sake comes in several varieties and may be servedhot or cold. It is not traditionally drunk together with rice dishes as itis considered to be rice itself. Produced in a similar way, mirin is asweet rice wine that is widely used in cooking. Rice VinegarVinegar can also be produced from rice, and is used in dressings,pickles, marinades and for preparingsushi rice. Most Japanese ricevinegar is light in color and flavor and only mildly acidic. Darkvinegars are also produced and drank as a health drink.

Rice FlourRice flour, made from ground up white or glutinous rice, is used tomake various Japanese sweets and rice crackers (senbei), as athickening agent in cooking, or as substitute for wheat flour to makebread. Rice flour is gluten free.

Rice Bran (Nuka)Rice bran, or nuka, is the hard outer skin of the rice grains that isremoved when polishing brown rice to make white rice. Rice branhas a high nutritional value and is used in a variety of ways inJapanese cooking, most commonly to make a typeofpickle(nukazuke).
http://www.japan-guide.com/e/e2029.htmlhttp://www.japan-guide.com/e/e2029.htmlhttp://www.japan-guide.com/e/e2029.htmlhttp://www.japan-guide.com/e/e2043.html#mochihttp://www.japan-guide.com/e/e2043.html#mochihttp://www.japan-guide.com/e/e2043.html#mochihttp://www.japan-guide.com/e/e2037.htmlhttp://www.japan-guide.com/e/e2037.htmlhttp://www.japan-guide.com/e/e2037.htmlhttp://www.japan-guide.com/e/e2037.htmlhttp://www.japan-guide.com/e/e2037.htmlhttp://www.japan-guide.com/e/e2037.htmlhttp://www.japan-guide.com/e/e2037.htmlhttp://www.japan-guide.com/e/e2037.htmlhttp://www.japan-guide.com/e/e2037.htmlhttp://www.japan-guide.com/e/e2038.htmlhttp://www.japan-guide.com/e/e2038.htmlhttp://www.japan-guide.com/e/e2038.htmlhttp://www.japan-guide.com/e/e2349.htmlhttp://www.japan-guide.com/e/e2349.htmlhttp://www.japan-guide.com/e/e2349.htmlhttp://www.japan-guide.com/e/e2349.htmlhttp://www.japan-guide.com/e/e2038.htmlhttp://www.japan-guide.com/e/e2037.htmlhttp://www.japan-guide.com/e/e2037.htmlhttp://www.japan-guide.com/e/e2037.htmlhttp://www.japan-guide.com/e/e2043.html#mochihttp://www.japan-guide.com/e/e2029.html


17/31

Common rice dishes

Cooked Rice (Gohan)A bowl of rice forms the basis of mostJapanese meals. It is often the

central dish of meals such as with a Japanese breakfast or set meal(teishoku) in which the other dishes are traditionally consideredaccompaniments to the rice. A bowl of rice is commonly served as aset with miso soup andpickles. At Western style restaurants, cookedrice is served as an alternative to bread. Rice Cakes (Mochi)Rice cakes (mochi or omochi) are traditionally made from steamedand pounded glutinous rice. They are traditionally eaten onNewYear, but have become a popular dish throughout the year. Ricecakes are prepared in a variety of ways and may be eaten fresh,grilled, fried or served in soups like dumplings.Rice Balls (Onigiri)Rice balls, or onigiri, are made of cooked rice and are commonlywrapped in noriseaweed. They are usually lightly seasoned with saltand often contain a filling such asumeboshi(pickled Japaneseplum), okaka (dried bonito shavings and konbu) or salmon. Rice ballsare a popular and inexpensive snack available atconveniencestores, but are also commonly served atgeneralrestaurantsandizakaya.Tamago Kake GohanTamago kake gohan is a common breakfast dish consisting of a rawegg mixed into a bowl of rice. There are many variations on thissimple comfort food, but most often it is seasoned with bit of soysauce. Eggs are commonly eaten raw or partially cooked in Japan.

ChazukeChazuke, or ochazuke, is another simple comfort food consisting ofhot water, tea, or light fish stock poured over rice (sometimes madewith leftover rice). Chazuke is often garnished with toppings suchasumeboshi, grilled salmon orpickles. Chazuke is commonly servedatizakayaand is a popular dish to eat after drinking.
http://www.japan-guide.com/e/e620.htmlhttp://www.japan-guide.com/e/e620.htmlhttp://www.japan-guide.com/e/e620.htmlhttp://www.japan-guide.com/e/e2349.htmlhttp://www.japan-guide.com/e/e2349.htmlhttp://www.japan-guide.com/e/e2349.htmlhttp://www.japan-guide.com/e/e2064.htmlhttp://www.japan-guide.com/e/e2064.htmlhttp://www.japan-guide.com/e/e2064.htmlhttp://www.japan-guide.com/e/e2064.htmlhttp://www.japan-guide.com/e/e2310.htmlhttp://www.japan-guide.com/e/e2310.htmlhttp://www.japan-guide.com/e/e2310.htmlhttp://www.japan-guide.com/e/e2349.html#umeboshihttp://www.japan-guide.com/e/e2349.html#umeboshihttp://www.japan-guide.com/e/e2349.html#umeboshihttp://www.japan-guide.com/e/e2071.htmlhttp://www.japan-guide.com/e/e2071.htmlhttp://www.japan-guide.com/e/e2071.htmlhttp://www.japan-guide.com/e/e2071.htmlhttp://www.japan-guide.com/e/e2036.htmlhttp://www.japan-guide.com/e/e2036.htmlhttp://www.japan-guide.com/e/e2036.htmlhttp://www.japan-guide.com/e/e2036.htmlhttp://www.japan-guide.com/e/e2036.htmlhttp://www.japan-guide.com/e/e2036.htmlhttp://www.japan-guide.com/e/e2036.htmlhttp://www.japan-guide.com/e/e2349.html#umeboshihttp://www.japan-guide.com/e/e2349.html#umeboshihttp://www.japan-guide.com/e/e2349.htmlhttp://www.japan-guide.com/e/e2349.htmlhttp://www.japan-guide.com/e/e2349.htmlhttp://www.japan-guide.com/e/e2036.htmlhttp://www.japan-guide.com/e/e2036.htmlhttp://www.japan-guide.com/e/e2036.htmlhttp://www.japan-guide.com/e/e2036.htmlhttp://www.japan-guide.com/e/e2349.htmlhttp://www.japan-guide.com/e/e2349.html#umeboshihttp://www.japan-guide.com/e/e2036.htmlhttp://www.japan-guide.com/e/e2036.htmlhttp://www.japan-guide.com/e/e2036.htmlhttp://www.japan-guide.com/e/e2071.htmlhttp://www.japan-guide.com/e/e2071.htmlhttp://www.japan-guide.com/e/e2349.html#umeboshihttp://www.japan-guide.com/e/e2310.htmlhttp://www.japan-guide.com/e/e2064.htmlhttp://www.japan-guide.com/e/e2064.htmlhttp://www.japan-guide.com/e/e2349.htmlhttp://www.japan-guide.com/e/e620.html


18/31

KayuKayu, or okayu, is Japanese rice porridge made by slowly cookingrice in lots of water. It tends to be thicker than other types of riceporridge or gruel and is a suitable dish for using left over rice. Kayu isoften garnished withumeboshiand is commonly served to sick

people because it is easily digestible.Donburi(more info)Donburi refers to a bowl of plain cooked rice with some other food ontop of it.Donburiare served at specialty restaurants, but they arealso a common dish that can be found on all kinds of restaurants'menus. Some of the most popular varieties aregyudon(stewedbeef), katsudon (tonkatsu), tendon (tempura), oyakodon (chickenand egg), tekkadon (tuna) and kaisendon (raw seafood). Sushi(more info)Sushican be defined as a dish that contains sushi rice, cooked whiterice flavored with vinegar. There are various kinds of sushi dishes,such as nigirizushi (hand formed sushi), makizushi (rolled sushi), andchirashizushi (sushi rice topped with raw fish). Sushi is the mostfamous Japanese dish outside of Japan, and one of the most populardishes among the Japanese themselves.Fried Rice (Chahan)Fried rice, or chahan, is a dish that was originally introduced fromChina. There are an infinite variety of ingredients that can be addedto fried rice. Some common ones are peas, egg, green onions (negi),carrots and pork. Chahan is a suitable dish for using left over rice.

OmuraisuOmuraisu, short for omelet rice, is fried rice wrapped in a thin eggomelet. Omuraisu is usually shaped like an American football andmay be garnished with ketchup or demi-glace sauce. It is a commondiner or cafe food, although specialty omuraisu restaurants alsoexist.

Rice Crackers (Senbei)Senbei are baked or grilled crackers made from rice flower. Theycome in many different shapes and sizes, and there are both savoryand sweet varieties. Some of the most popular are flavored withasoy sauceglaze or wrapped inseaweed.
http://www.japan-guide.com/e/e2349.html#umeboshihttp://www.japan-guide.com/e/e2349.html#umeboshihttp://www.japan-guide.com/e/e2349.html#umeboshihttp://www.japan-guide.com/e/e2342.htmlhttp://www.japan-guide.com/e/e2342.htmlhttp://www.japan-guide.com/e/e2342.htmlhttp://www.japan-guide.com/e/e2342.htmlhttp://www.japan-guide.com/e/e2342.htmlhttp://www.japan-guide.com/e/e2342.htmlhttp://www.japan-guide.com/e/e2345.htmlhttp://www.japan-guide.com/e/e2345.htmlhttp://www.japan-guide.com/e/e2345.htmlhttp://www.japan-guide.com/r/e106.htmlhttp://www.japan-guide.com/r/e106.htmlhttp://www.japan-guide.com/r/e106.htmlhttp://www.japan-guide.com/e/e2038.htmlhttp://www.japan-guide.com/e/e2038.htmlhttp://www.japan-guide.com/e/e2038.htmlhttp://www.japan-guide.com/e/e2038.htmlhttp://www.japan-guide.com/e/e2038.htmlhttp://www.japan-guide.com/e/e2045.htmlhttp://www.japan-guide.com/e/e2045.htmlhttp://www.japan-guide.com/e/e2045.htmlhttp://www.japan-guide.com/e/e2310.htmlhttp://www.japan-guide.com/e/e2310.htmlhttp://www.japan-guide.com/e/e2310.htmlhttp://www.japan-guide.com/e/e2310.htmlhttp://www.japan-guide.com/e/e2045.htmlhttp://www.japan-guide.com/e/e2038.htmlhttp://www.japan-guide.com/e/e2038.htmlhttp://www.japan-guide.com/r/e106.htmlhttp://www.japan-guide.com/e/e2345.htmlhttp://www.japan-guide.com/e/e2342.htmlhttp://www.japan-guide.com/e/e2342.htmlhttp://www.japan-guide.com/e/e2349.html#umeboshi


19/31

SweetsRice flour and pounded glutinous rice (mochi) are among the mostcommon ingredients of Japanese sweets alongside sweet beans.Some common sweets made with rice products include daifuku(sweetened red bean paste wrapped in mochi), kushi-dango (mochi

dumplings on skewers) and ohagi (red bean paste wrapped in coarsepounded mochi rice).Rice Bran Pickles (Nukazuke)Rice bran pickles are common householdpicklesfermented in amixture of roasted rice bran (nuka), salt and other ingredients.Wholevegetablesare stirred into the mash and allowed to cureanywhere from a day to several months. The resulting crisp, saltyand tangy pickles are then rinsed clean, sliced and served.Nukazuke are rich in lactobacillus and said to aid in digestion.

Rice Bread (Komepan)Rice flour can be used to make a variety of different types of bread.Rice bread (komepan) is sold at many bakeries andsupermarkets,and is good gluten free substitute for regular wheat flour bread.

Rice Manners

Pick up your rice bowl with your hand while eating from it.It is considered polite to finish every grain of rice that you have been served. It is not common to pour soy sauce directly over rice. Do not leave your chopsticks standing up vertically in your rice. This is done at funerals.

Rice fields

Rice fields are a common sight in the Japanese countryside and an image of nostalgia for manypeople. The fields start as flooded patties in the early summer and turn into seas of green and goldwaves as the rice grows and matures through the season. The crop of rice is then usually harvestedin the fall, although some southern regions may plant more than one crop per year.

Some places famous for particularly nice rice patty landscapes include theNotoPeninsula,Shodoshimaand theEchigo Tsumariregion inNiigata Prefecture.
http://www.japan-guide.com/e/e2349.htmlhttp://www.japan-guide.com/e/e2349.htmlhttp://www.japan-guide.com/e/e2349.htmlhttp://www.japan-guide.com/e/e2346.htmlhttp://www.japan-guide.com/e/e2346.htmlhttp://www.japan-guide.com/e/e2346.htmlhttp://www.japan-guide.com/e/e2073.htmlhttp://www.japan-guide.com/e/e2073.htmlhttp://www.japan-guide.com/e/e2073.htmlhttp://www.japan-guide.com/e/e4250.htmlhttp://www.japan-guide.com/e/e4250.htmlhttp://www.japan-guide.com/e/e4250.htmlhttp://www.japan-guide.com/e/e5430.htmlhttp://www.japan-guide.com/e/e5430.htmlhttp://www.japan-guide.com/e/e5430.htmlhttp://www.japan-guide.com/e/e7650.htmlhttp://www.japan-guide.com/e/e7650.htmlhttp://www.japan-guide.com/e/e7650.htmlhttp://www.japan-guide.com/list/e1207.htmlhttp://www.japan-guide.com/list/e1207.htmlhttp://www.japan-guide.com/list/e1207.htmlhttp://www.japan-guide.com/list/e1207.htmlhttp://www.japan-guide.com/e/e7650.htmlhttp://www.japan-guide.com/e/e5430.htmlhttp://www.japan-guide.com/e/e4250.htmlhttp://www.japan-guide.com/e/e4250.htmlhttp://www.japan-guide.com/e/e2073.htmlhttp://www.japan-guide.com/e/e2346.htmlhttp://www.japan-guide.com/e/e2349.html


20/31

Senmaida rice fields on the Noto Peninsula


21/31

http://en.j-cast.com/2004/11/01000023.html

Japanese Business Overview11, 01. 2004

Overall Condition of the Economy and Industries

The waterfront in Tokyo

Current StateOut of the Long Tunnel of Recession

In 2004, Japanese industry made a comeback out of the dark tunnel ofrecession it found itself in after the bursting of the economic bubble. Industriesare treading a full-fledged path of recovery, and extreme pessimism regarding

the future has all but disappeared. Management is beginning to regainconfidence.

Skyscraper buildings newly built in Shiodome Area, Tokyo
http://en.j-cast.com/2004/11/01000023.htmlhttp://en.j-cast.com/2004/11/01000023.htmlhttp://en.j-cast.com/2004/11/01000023.html


22/31

With the exception of just a few industry sectors like construction, virtually allsectors saw growth, with the automotive industry as the biggest driver ofgrowth. The three top Japanese automobile manufacturers -Toyota Motor

Corporation,Nissan Motor Co., Ltd.andHonda Motor Co., Ltd.- togetheraccounted for FY2003 current income that surpassed two trillion yen. Digitalindustries centering on mobile phones and electronics, also became pillarsthat supported economic recovery. Even major consumer electronicsmanufacturers, which saw sustained stagnation, achieved profitability. Thiswave also hit the industrial materials manufacturing industry, with specialistsestimating that steel and chemical engineering is seeing the highest levelssince 1990 - 1991. The growth of global demand, centering on China, isbehind this.

On the other hand, the construction industry is still in the doldrums. It is

being affected by lowered public works spending that has resulted from thegovernment's fiscal crunch. Another cause of this stagnation is said to be thefall in construction tender prices resulting from the fact that it has becomedifficult in recent years to form Dango cartels.

Dango (bid rigging), in which contractors privately form an agreement inadvance on bid prices, etc. used to be a habitual practice of the Japaneseconstruction industry. Industries that are heavily dependant on governmentsubsidies and aid are also still seeing a downturn. The agro-industry is aprime example of this.

The Automotive Industry Drives the Japanese Economy

The production line of Nissan Motor where robot machines stand in rows in Tochigi Plant

There was a time when production, that is to say the Japanese manufacturingindustry, was so overwhelmingly strong that Japan was said to be the "factory
http://www.toyota.co.jp/en/http://www.toyota.co.jp/en/http://www.toyota.co.jp/en/http://www.toyota.co.jp/en/http://www.nissan.co.jp/EN/http://www.nissan.co.jp/EN/http://world.honda.com/http://world.honda.com/http://world.honda.com/http://world.honda.com/http://www.nissan.co.jp/EN/http://www.toyota.co.jp/en/http://www.toyota.co.jp/en/


23/31

of the world." It began shortly after World War II with the textile industry,followed by the steel and chemical industries. From the post-war economicboom onward, consumer and industrial electronics gained strength. However,Taiwan, Korea, and now China caught up with Japan in terms of consumerelectronics, and we have seen, for example, related Japanese plants being

moved overseas or scaled down.

During the 1980s, Japan was the world leader in semiconductors. At onepoint, it had an 80% share of the world market for Dynamic Random AccessMemory (DRAM) storage elements. But, with the rapid growth of Koreanmanufacturers and the recovery of American firms, major Japanese playerspulled out of this market, one by one. There are no longer any remnants ofwhat used to be an industry that was closely associated with Japan. Thesame is happening in the case of personal computers. The exception in thisfield is digital cameras. When OEM (Original Equipment Manufacturer;

production under the brand name of another company) is included, digitalcameras manufactured in Japan account for a 75% share of the globalmarket.

Even under such a climate, the automotive industry retains a top globalposition. It is an industry that is representative of Japan in every aspect.Statistics announced by the JapaneseMinistry of Economy, Trade andIndustryshow that value of the domestic production of automobiles hasreached nearly 38 trillion yen, accounting for 13% total output by theJapanese manufacturing industry.The Japan Automobile Manufacturers

Associationestimates that more than 10% of Japanese workers, or roughly 7million people, are employed in fields related to automobile manufacturing.The number of cars produced in Japan in 2002 reached 8.62 million, ascompared with 5.12 million in Germany and 5.02 million in the Untied States.Japan is truly the world's top manufacturer of cars.

There are several reasons why automotives have come to represent strongindustry in Japan today and show outstanding performance while othertraditional manufacturing industries are struggling. An automobile iscomprised of twenty to thirty thousand parts, and combined strength in many

fields, such as machine tools, metal molding, robotics and electronics,become essential. In this sense, conditions were favorable for Japan, whichhas a broad industrial base. Furthermore, the spread of the Just-in-Timeproduction system originated by Toyota, Japan's technological developmentcapabilities as represented by hybrid cars, and the success of offshoreproduction in the US as well as Europe are some of the other reasons.
http://www.meti.go.jp/english/index.htmlhttp://www.meti.go.jp/english/index.htmlhttp://www.meti.go.jp/english/index.htmlhttp://www.meti.go.jp/english/index.htmlhttp://www.jama-english.jp/http://www.jama-english.jp/http://www.jama-english.jp/http://www.jama-english.jp/http://www.jama-english.jp/http://www.jama-english.jp/http://www.meti.go.jp/english/index.htmlhttp://www.meti.go.jp/english/index.html


24/31

A Weak Software Industry; Video Games an Exception

Japanese video games are popular among youngster

Software is one of industries that are weak in Japan. Domestic firms are farbehind those of the United States in the development and production ofcomputer software as well as movies and other visual content. The exceptionis video games, which continues to maintain a high share of the global market.Japanese videogame software accounts for the greater majority of popularvideogames in the U.S. As for videogame hardware, more than 70% of sold in

America are those of Japanese manufacturers.

The high quality of Japanese manga (comics) and anime (animation) and theplentitude of related human resources are supporting the Japanese

videogame software industry. The biggest weak point of Japanese industry,which is basically maintaining favorable conditions, is the financial servicesindustry centering on banking. Through decades following the end of WorldWar II, Japanese banks and financial services were under the strict guidanceand supervision of the Ministry of Finance. Banks were not permitted toconduct other financial services, and vice versa. There was no room forindividual companies to create and devise original products. A delay in


25/31

Japan's implementation of deregulation and liberalization resulted in Japanfalling behind the U.S. and Europe in terms of competitiveness in this field.Furthermore, even major financial institutions faced the threat of bankruptcydue to the enormous amounts of non-performing loans that were left after thebursting of the economic bubble.

It was not until around 2000 that the move towards the merger, acquisition orpartnerships of and between financial institutions was accelerated. As of theautumn of 2004, the Japanese financial services industry has beenreorganized into seven major financial services/banking groups:Mizuho,Mitsubishi Tokyo,Mitsui Sumitomo, UFJ, Resona,Mitsui TrustandSumitomoTrust and Banking. The financial industry, nevertheless, has not yetcompletely recovered from the effects of the bursting of the economic bubble.UFJ and Resona both recorded losses for FY2003.

It is said that productivity in industries such as agriculture, construction, foods,energy, wholesale and retail, remain at a level that is about two-thirds of theU.S. This is because companies that should otherwise have left the marketare lingering through subsidies and protective administration.

The reduction of official regulations leads to a lowering of the burden placedon the people. Administration is streamlined and made more efficient,providing a greater forum for the private sector to exert their strengths. Withthis as a basic policy, Japan has been earnestly launching on deregulationsince the 1980s. The results of such efforts are gradually being seen, but

resistance forces still remain strong. The privatization of the Japan HighwayPublic Corporation has already been decided, and the postal service isscheduled to be privatized in 2007. Whether the privatization of the postalservice will proceed smoothly is likely to become a key, for the time being, toforecasting the future of Japan.

HistoryDemand Created by the Korean War Boosts the Japanese

Economy

In the last stages of the Pacific War, Japan was pretty much reduced to ruinsas a result of bombing by U.S. Forces, with its industrial infrastructureseverely damaged. After the end of the War, there was a serious shortage ofsupplies, which led to hyperinflation and deflation to counter it. The economysaw continued stagnation. However, the Korean War, which erupted in June1950, gave a boost that paved the way for the revival of the Japaneseeconomy. A broad spectrum of demand was created by this war, from heavy
http://www.mizuho-fg.co.jp/english/http://www.mizuho-fg.co.jp/english/http://www.mizuho-fg.co.jp/english/http://www.smfg.co.jp/english/index.htmlhttp://www.smfg.co.jp/english/index.htmlhttp://www.smfg.co.jp/english/index.htmlhttp://www.mitsuitrust-fg.co.jp/english/index.htmlhttp://www.mitsuitrust-fg.co.jp/english/index.htmlhttp://www.mitsuitrust-fg.co.jp/english/index.htmlhttp://www.sumitomotrust.co.jp/IR/company/index_en.htmlhttp://www.sumitomotrust.co.jp/IR/company/index_en.htmlhttp://www.sumitomotrust.co.jp/IR/company/index_en.htmlhttp://www.sumitomotrust.co.jp/IR/company/index_en.htmlhttp://www.sumitomotrust.co.jp/IR/company/index_en.htmlhttp://www.sumitomotrust.co.jp/IR/company/index_en.htmlhttp://www.mitsuitrust-fg.co.jp/english/index.htmlhttp://www.smfg.co.jp/english/index.htmlhttp://www.mizuho-fg.co.jp/english/


26/31

industry products such as military trucks, locomotives, rail-track materials, oildrums, barbed wire and iron pillars, to services such as transportation andcommunications. This gave Japan the momentum for it to enter into its era ofhigh growth.

Consumer Boom for the "Three Sacred Treasures" ofJapanese Households

A bullet train of the Shinkansen moving towards the high-speed run

Consumer consumption, which had been repressed during World War IIthrough slogans such as, "Extravagance is the Enemy," and "We Shall NotWant until We Win," exploded when post-war chaos settled down in the1950s. In particular, there was great demand for consumer electronic productssuch as television sets (monochrome), washing machines and refrigerators.

These three items represented an affluent lifestyle and were called the "threesacred treasures." In October 1964, the Tokaido Shinkansen (bullet train) Linecommenced operations between Tokyo and Osaka.

This was just prior to the opening of the Tokyo Olympic Games. Consumerdemand from the latter half of the 60s shifted to the "three Cs," cars, coolers(air conditioners), and color TVs, and related industries experienced rapidgrowth.

The Arab Oil Shock and Demise of the Post-war "Japanese

Miracle"In August 1971, U.S. President Richard Nixon announced the New EconomicPolicy as measures to defend the U.S. dollar. The "Nixon Shock," whichtemporarily suspended the convertibility of the gold to the dollar as well asintroduced new import surcharges, had a swift global impact. The value of theyen, which had been favorable for Japan in terms of exports, was forced to


27/31

appreciate. This was followed by the first oil shock. The Fourth Arab-IsraeliWar broke out in October 1973, and Arab oil producers raised the price ofcrude oil by 70% and imposed an embargo on countries that supported Israel.This had a major impact on Japan, which had been consuming large amountsof oil. The price of not only oil products but also almost all daily commodities

rose sharply. Consumers resorted to stockpiling while retailers held back onsales. It was a period of hysteria that saw a double-digit annual increase incommodity prices.

Trade Friction as a Result of Over-dependence on Exports

The second oil shock occurred in 1979. The structure of Japanese industrychanged greatly through the two oil crises, and it saw the rise of thefabricating industry which consumed less amounts of energy. The main playershifted from industrial materials manufacturing, with its consumption of a large

amount of energy, to the machine industry such as automotives, electronicand electric machinery, and precision instruments.

New cars loaded into an exclusive transport ship at the wharf of Oppama Plant of Nissan Motor,

Yokosuka-shi

It was during this time that the world saw the end of the era of Japan's rapidgrowth. Japan ceased to record the nearly 10 percent annual growth-averages of past years. It not only moved into a period of low economicgrowth but became ever more dependant on exports. This was not only

because domestic consumption was at a standstill but also due to theslowdown in investments. Japan looked abroad for demand. Exports,centering on Europe and the United States, rose sharply while there was littlegrowth in imports. It was difficult for foreign products to cut into the Japanesemarket because of stagnant domestic consumption, countless restrictivelegislation that remained toward imports, and a complex distributionmechanism. With Japan enjoying a trade surplus while its partners recorded


28/31

deficits, Japan became the target of global criticism and the root of economicfriction with other countries. Issues related to the structure of Japaneseindustry, including closed trade practices which did not welcome entry bynewcomers and the high number of government regulations, were singled outfor criticism by abroad.

The Bursting of the Economic Bubble and its Repercussions

Japan's path to stabilized growth seemed assured in the late 1980s afterJapan had overcome two oil shocks, and Japan re-entered a state of supereconomic growth. Ear-pleasing phrases such as "Japan as number one" and"the 21st century would be Japan's century" abounded, while share and landprices rose sharply in a short period of time. The Japanese went on a buyingspree, snatching up shares, bonds, real estate, and even works of art aroundthe world. The bubble economy, which began in November 1986, continued

for 51 months and lasted until February 1991, during which time banks put outloans indiscriminately, and money games of unprecedented scales wereunfolded.

Brooks Brothers opened in Marunouchi Area, the center of the business town in Tokyo

The repercussions were disastrous. When the bubble burst, financialinstitutions found themselves strapped with massive bad loans and wereabsorbed or went under. The ballooning amount of nonperforming loansgradually began to drain corporate stamina. The once highly-admired

Japanese management style, with lifetime employment as one of its majorpillars, became an anachronism. The Japanese economy continued toworsen, excess facilities were disposed, and corporate downsizing became aboom. Instability continued, and when it looked at times as if the economywas on the upturn, it would immediately revert to a downward trend.


29/31

When deflation and a decrease in consumer prices hit Japan, pessimisticviews forecasting that "Japan would sink" was heard. The 1990s was dubbed"the lost decade" for Japan in the sense that the country was too busycleaning up after the economic bubble to implement any forward-lookingmeasures to revive its economy.

ForecastThree Key Points towards the FuturePoint 1

Aim to Become the Global Leader in Nanotechnology

The Government of Japan andthe Nippon Keidanrenand other economicorganizations have identified leading-edge industries, especiallynanotechnology, as priority fields that major investment should be made in.Nanotechnology is thought to lead to "dream-like inventions" such as

medication that zeros in on cancer cells, portable fuel cells or resin that willnot tear despite its thinness. The Japanese government estimates that thedomestic market for nanotech products will reach 20 to 30 trillion yen by 2010.Japan is currently a global leader in the research and development ofnanomaterials. In the 1980s, the U.S. Government shifted to a pro-patent(pro-intellectual property) policy, and high federal budget priority was placedon fundamental fields. A similar move by Japan did not come until about 20years later. For this and other reasons, Japan has been repeatedly sufferingbitter experiences in the cutting-edge field research and development race.Genomes (genetic codes) are a prime example. In the decoding of the humangenome sequence, completed in 2000, the U.S. contributed roughly 70percent of the basic map and Great Britain about 20 percent, while Japanaccounted for a mere 6 to 7 percent. Japan will draw on this experience as ittackles the nanotechnology development race.

Point 2

Information Appliances Show Potential to Become a Major Hit

There is a big surge in sales of information appliances such as flat-screenTVs, DVD recorder/players, and mobile phones equipped with digital

cameras. The information appliance market is expected to surpass 1 trillionyen in 2006, and it looks like the market will become even bigger as productsthat completely integrate consumer electronics, computers and networks arelaunched in the future. The Japanese Ministry of Internal Affairs andCommunications announced in February 2004 that it will begin draftingcommunications standards for the connection of all information appliancesused in homes.
http://www.keidanren.or.jp/index.htmlhttp://www.keidanren.or.jp/index.htmlhttp://www.keidanren.or.jp/index.htmlhttp://www.keidanren.or.jp/index.html


30/31

Screen board of a securities firm in the town which compares Japan-U.S. stock price

Point 3

The Falling Birthrate and Growth of the Elderly Industry

It is estimated that that the elderly 65 and older will comprise 35.7 percent ofthe Japanese population by 2050. As of 2004, home-based services thatutilize Japan's Long-term Care Insurance System as well as nursing homesand other facility services are beginning to mark sharp growth. Services forthe elderly will, without doubt, become a major industry in Japan.

"Freeter" Estimates in Japan

On the reverse side of the coin in the long-term, Japan's falling birthrate will

become the Achilles' heel of Japanese industry. Fewer and fewer children arebeing born in Japan, and its birthrate in 2003 was a mere 1.29 per woman.This is, of course, not only below the birthrate of the United States but also ofnorthern European countries. The proportion of the working-age population(between 15 and 64) has already been declining since 1996. While theworking-age population declines sharply, there is a big surge in pension,healthcare and nursing care expenditures. It is certain that the economy and


31/31

industry will weaken as a result. One solution is to accept more foreignworkers, something that Japan has shown reluctance in up to now. Accordingto one UN estimate, Japan will need to accept an average 160 thousandimmigrants per year in order to maintain its working-age population once afull-fledged era of low-birthrates hits. Another solution is to increase the

number of women in the workforce. Measures such as enhancing child-careservices and providing support for part-time work styles are underconsideration.