With GDP 1.9 times larger than the UK, and GDP per capita 8 times that of China, Japan is Asia’s high-tech powerhouse economy.
Japan is Still a Lucrative Market for UK Companies Seeking to Do Business in Overseas Markets
A Huge Economy
Japan’s economy has been famously sluggish over the last two decades, but the market here remains vast and the present government has implemented a number of far-reaching reforms that are designed to bolster that recovery even further.
The three-pronged strategy introduced by Prime Minister Shinzo Abe – inevitably dubbed “Abenomics” – has stabilised the yen exchange rate, fattened the stock market, boosted corporate investment and encouraged the public to go out and spend.
In its most recent economic growth reading, released in early June 2014, Japan’s gross domestic product grew at an annualised rate of 6.7 percent for the January-March quarter, the sixth consecutive quarterly expansion.
Those figures mean that Japan is continuing to build on a number of impressive statistics – including that the economy of Tokyo is bigger than that of all Russia, while the Chubu region of central Japan is worth more than the GDP of South Korea.
Mr Abe has also expressed a desire to further develop Japan’s international economic ties, including through an economic partnership agreement with the European Union.
Like all nations, Japan is undergoing dramatic social changes, including the rapid aging of its population. That, for example, offers good opportunities for companies that specialise in the elderly-care sector and related businesses. Another area with good potential is education, with more parents recognising the importance of giving their children a more globalised outlook, with particular emphasis on English language learning from an early age.
A Cutting Edge Business Culture
- 62 Fortune 500 companies are Japanese (the UK has 26).
- Japan boasts the highest number of millionaires in Asia.
- Hunger for IP, especially in high-end electronics, biopharmaceuticals and business services.
- Young entrepreneurs are challenging old ways
- Japan has the fourth highest R&D spend in the world at 3.39% of world GDP.
- It is also a stable place to do business: commitments are upheld and things happen on time.
- Doing business holds fewer surprises in Japan than elsewhere in the region – with IP, in particular, well protected, and payment, deliveries and responses to queries arriving promptly.
Consumers with High Levels of Disposable Income
With a staggering 1.9 million Japanese millionaires – the most in Asia – there is clearly a large pool of people with money to spend. And the Japanese are, without doubt, fans of both cutting-edge new technologies and services and high-quality imported products. Which is ideal for UK firms with expertise in those areas.
Consumers here focus heavily on quality, style, reliability and a sense of tradition in a finished product and consider British companies capable of delivering all that and more.
Many consumers today are those who made their money during Japan’s rapid economic ascent and have now retired and are looking to enjoy the fruits of their labours. The over-60s have high levels of disposable income and are not shy about spending it on themselves or their families.
The amount of personal wealth is high: $12.8 trillion in net financial assets is held by households (almost equivalent to the value of US GDP).
From fashion through to automotive, food and drink, design and the latest digital creations, Japanese consumers have an affection for the best of British. And that’s without all the corporations looking to access British know-how in the areas of chemicals, construction, engineering, transportation, communications, consulting, energy, biotechnology, pharmaceuticals and a myriad of others.
Other sectors that can be fertile ground for UK companies include single-person households and singles who live with their parents and therefore have plenty of money to be attracted by the right products.
Contact one of our expert trade advisers to assess your market potential for doing business in Japan.
For additional information, login or sign up to download our detailed market report The Definitive Guide to Doing Business in Japan.
Updated: May 2016