Japan is the world’s second largest economy by nominal GDP and the third largest in purchasing power parity. It is the world’s fourth largest exporter and importer of merchandise, and sixth largest exporter and fourth larger importer of services. In addition, Japanese multinational companies operating around the world are also significant contributors to the economies of many countries, including a major force in the Western Australian economy.
127 million consumers with world-class tastes
For Western Australian businesses interested in expanding their production and exports, Japan has a sophisticated market of 127 million consumers and over 1.5 million incorporated companies that offer a wealth of Business-to-Consumer and Business-to-Business opportunities. With a high GDP per capita, Japanese people have rightly earned a reputation for consuming world-class goods and services. Currently, there are over 3,000 foreign-backed companies active in Japan.
Changing business environment opens the door wider
In recent years Japan’s consumer market has matured, undergoing significant qualitative changes. A growing acceptance of foreign products and technology, together with legislation to make starting a business easier, means it is significantly easier for a foreign business to become established in Japan, in terms of both cultures and regulations. At the same time, corporate restructuring and increasing deregulation and competition have whittled away the high costs of doing business.
Changing consumer patterns
Looking at the market by category, notable growth categories include transportation, communications, culture and entertainment, which accounted for 70% of optional consumer spending. While the average propensity to consume is trending downwards, it has been rising among consumers 60 years old and over, and this group now accounts for nearly 40% of all consumer spending.
This coming together of the aging market demographic and optional consumer spending is expected to further expand growth among mature and silver consumers. At the same time, Japanese consumers are shifting away from brand goods to increasingly base their purchases on value for money and “experiential value”.
Opportunities for WA companies
In both general and niche markets alike, Japan offers WA companies diverse opportunities to expand their business. Reflecting the trends in Japanese society and economy, 4 key trends and fields emerge:
• Food: the quality and security of supply of safe foods, both primary and processed products
• Health services for an aging population: IT welfare systems, biotechnology, and healthcare innovations
• Lifestyle services for an aging population: home businesses, education, and recreation
• Information services: Japan has the largest penetration of broadband in the world, and is ideally positioned to leverage new information technologies and services, as a major driver of intellectual property to create a competitive edge.
For recent information on Japan, please see the WA Dept. of State Development Market Fact Sheet – Japan.