Japan is the third largest economy in the world in terms of GDP and is characterised by a democratic, constitutional monarchy, respect for the rule of law and commitment to regional security. Japan’s large population and significant number of wealthy, highly educated citizens, makes it one of the world’s largest consumer markets in the world.
In terms of merchandise trade, Australia’s key exports to Japan are coal, iron ore and concentrates, beef and copper ores and concentrates. In services, personal travel (excluding education) and transport contribute the largest amount in export value. Japan’s key imports into Australia are passenger and goods vehicles, refined petroleum and civil engineering equipment and parts.
Trade Agreements
A Free Trade Agreement (FTA) between Australia and Japan has been under negotiation since 2007. Two key benefits of the FTA would be reduced tariff and non-tariff barriers to trade and expanded export opportunities for trade in the agricultural sector which is currently quite regulated.
Japan and Australia also sit on a number of regional forums including APEC and ASEAN.
Economic Outlook
There are three key factors that could impact on Japan’s economic outlook moving forward. These include:
• The impact of the 2011 earthquake and tsunami which severely affected Japan’s global supply chains and has left the country with power shortages. Nuclear power constituted 30% of the total energy supply.
• Japan has an ageing population. By 2050, the population is expected to fall by 20 million from where it stands currently at 127 million. With fewer tax payers to fund the increase in expenses associated with an aging population, the government will be forced to increase taxes.
• The weak global economy is hampering the recovery of the Japanese economy following the devastating 2011 natural disasters.
• The Government is expected to continue with monetary easing in an attempt to stimulate the economy, and have increased their target inflation rate to 2 per cent. On a positive note, the weakening Yen is increasing competitiveness and analysts expect the strengthening of global markets, coupled with resilient domestic demand, will enable Japan to emerge from recession by mid-2013. Nevertheless, the future remains uncertain as the country faces an ongoing battle with deflation.
Doing business in Japan
The Japanese are very polite, and business etiquette is extremely important. Politeness, sensitivity and good manners are the pillars of Japanese business etiquette. When doing business in Japan, also take note of the following:
• Business cards should be printed with English on one side and Japanese on the other. It is not so important to have you address translated, more so you name and company name. Carry at least 100 cards for a one week business trip. Present your business cards with two hands and with the Japanese side facing upwards to the most senior member of the Japanese party first, bowing slightly as you do so. NEVER write notes on a Japanese business card, treat them with respect and store them away only after the meeting closes.
• English is not widely spoken in the business world so an interpreter is normally required
• Japanese business attire is formal. Men should wear blue or black suits, a white shirt and subdued tie. Women should be conservatively well dressed, wearing either trousers or a longer skirt suit.
• When it comes to attending business meetings, be sure to arrive at least 5 minutes early and call ahead if you are running late. Wait to be seated. It looks good to take a lot of notes during the meeting at it shows your interest in the matter.
• Do not shake your hosts hand when first meeting as the Japanese seldom shake hands. Be pleasant and do not speak derogatorily about anyone, even competitors, be willing to learn and ask lots of questions (just not about their personal life).
Opportunities for Australian Exporters
Prominent sectors including energy, education, food and agribusiness, have been identified as export growth markets. However, for Australian exporters, the focus should be on higher value-added and knowledge intensive sectors as these are seen to offer the most promising prospects for exports growth to Japan. These can include:
• biotechnology and nanotechnology
• building materials and products
• bloodstock and equine industry
• creative industries including architectural design and arts
• clean technology and renewable energy
• education and training
• food and agribusiness
• health and lifestyle products and services
• mining
• energy infrastructure
• finance and investment.
• information technology
• aerospace
Tariffs and taxes
Japan has low or zero tariffs on most industrial products but maintains tariffs and restrictions on some agricultural items. Australian products enter the country at the lowest rate notified, with the exception of preferential rates, with a ‘self-assessment’ system designed to accelerate customs clearance allowing prior calculation of duty by importers.
Author:
Stacey Mills
Export Council of Australia
Ph: 02 8243 7460
Fax: 02 9251 6492
Email: StaceyMills@export.org.au
Website: www.export.org.au
Education & Training: http://www.aiex.com.au
Twitter: http://twitter.com/Aussieexport
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