Japan External Trade Organization (JETRO) Invest Japan Department

Copyright (C) 2011 JETRO. All rights reserved.

Currently, the worlds eyes are on Asia. Japan is full of business opportunities due to its strong ties with this rapidly developing region. In Asia, Japan is (1) the best country to create innovation and (2) a country with the best business and living environments in terms of safety, medical services, etc. As well as being one of the worlds largest economies, Japan is attracting attention as (3) a country with soft power, which sets trends for fashions and entertainment content in Asia. Japan offers foreign companies these three windows of opportunity: (1) Innovation Hub, (2) Business Platform and (3) Trendsetter. Through its networks in and outside Japan, JETRO supports many foreign companies to expand their business through investing in Japan.
Cabinet Decision, June 18, 2010

The New Growth Strategy

Domestic reforms to unify with the Asian market and doubling flows of people, goods, and money between Japan and the world
Within Japan, it is also necessary to remove the impediments to the flow of people, goods, and money with Asian countries and the world to as great an extent as possible. With the goal of doubling the flows of people, goods, and money into Japan, Japan will actively advance intensive domestic reforms, for instance by boldly revising regulations that constitute impediments to such flows.

National Strategic Projects

Reducing the effective corporate tax rate and promoting Japan as an Asian industrial center

Introducing a comprehensive special zone system and promoting full open Skies, etc.

Japan Opens 3 Windows to the World

Number of Researchers per 10,000 People

Japan boasts large numbers of leading global companies and SMEs with proprietary technologies which support global firms. Japanese firms rank high for the number of international patent applications (PCT applications). Japan comes top for the number of environment-related patent application publications. With their high level technologies and R&D capabilities, Japanese firms create diverse added-values and intellectual properties.
Source: Ministry of Internal Affairs and Communications, The Results of 2009 Survey on Science and Technology Research (Summary)

On October 21, 2010, the 4th runway and an international terminal opened. Flights to 11 countries and regions (17 cities) are planned.
Provided by: Tokyo International Air Terminal Corporation

Japan plays an important role as a bridge nation connecting Asia and the world which contributes to Asias growth. Japan has some of the best infrastructure in terms of advanced infrastructure (ICT infrastructure) as well as basic infrastructure (electricity, gas and water). Japan promises a safe, secure and comfortable living environment.

Japan is one of the worlds largest economies. The economic size of each region within Japan can be compared to one countrys economy. Japan offers a market for test marketing before entering Asian markets. It is also a country with soft power, which sets trends. Sectors with large growth potential exist including health and tourism markets. 2

A show held at Japan Fashion Week C Japan Fashion Week Organization

st Window Innovation Hub

With its rapidly growing economy, Asia is becoming increasingly influential in the world economy. Japan, as a country in Asia, plays an important role as a bridge nation connecting Asia and the world, which contributes to Asias growth. Japan has great potential to become a regional hub and a R&D center in Asia, as exchanges of personnel, goods and money accelerate within Asia.

Innovation Hub

Japan ranks first for scientific research expenditure (percentage of GDP) and the number of researchers (per 10,000 people) Many Japanese firms rank high for the number of international patent applications (PCT applications) including Panasonic (1st in the world). Japan ranks first in the world for the number of environment-related patent application publications. Japan has large numbers of global companies and SMEs which support global firms. Some Japanese SMEs as well as large firms have the largest share in specific global markets.

New Growth Strategy

Cabinet Decision, June 2010

Doubling flows of people, goods, and money into Japan Reducing the effective corporate tax rate and promoting Japan as an Asian industrial center

Japans Reputation among Western and Asian Companies

Quality of the R&D Environment and R&D Capabilities Securing Excellent Personnel Large Numbers of Central Functions (Global Firms, etc.)

Cant say/ no answer 35%

Very attractive/ attractive 50%

Cant say/ no answer 31%

Very attractive/ attractive 58%

Cant say/ no answer 36%

Very attractive/ attractive 48%

Not so attractive/ not attractive 15%

Not so attractive/ not attractive 11%

Not so attractive/ not attractive 16%

Source: Ministry of Economy, Trade and Industry (METI), Survey on the Level of Interest of European, North American and Asian Firms in Investing in Japan (survey period: from December 2009 to February 2010)

Science and Technology Development Expenditure, Number of Researchers

Science and Technology Development Expenditure (Percentage of GDP)

4 3 2 1 0

Number of Researchers per 10,000 People

60 50 40 30 20 10 0

Country Japan U.S. Canada U.K. France Germany Italy Russia China Korea

Research Expenditure (Unit: 100 M dollars)

GDP Percentage of Fiscal Year GDP 1,616 3.78 2008 3,688 2.68 2007 238 1.82 2008 389 1.79 2007 432 2.08 2007 719 2.54 2007 197 1.13 2006 235 1.13 2007 1,023 1.49 2007 417 3.47 2007

Country Japan U.S. Canada U.K. France Germany Italy Russia China Korea

Number of Researchers (Unit: 10,000 researchers)

Number of Researchers per 10,000 People ( 65.7 51.5 142.6 47.6 13.4 41.6 17.5 28.9 21.1 33.4 28.4 34.6 8.8 15.0 46.9 32.9 142.3 10.7 22.2 45.8

Year 2008 2006 2005 2007 2006 2007 2006 2007 2007 2007

Source: Ministry of Internal Affairs and Communications, The Results of the 2009 Survey on Science and Technology Research (Summary) The original source (except for Japan) is OECD, Main Science and Technology Indicators. For conversion into dollars, the OECD purchasing power parity exchange rate was used.

Number of Patent Applications

PCT Applicants Ranking, 2010

Share of PCT Applications by Country of Origin (2009)

Sweden Swiss 2% 3% Netherland 3% U.K. 3% France 5% China 5% Korea 5%

Others 15%

U.S. 29%

Japan 19%

Germany 11% Source: Japan Patent Office,Japan Patent Office Annual Report 2009

Publication

Number of Environment-related Patent Application Publications

(2001-2009 total)

SourceWIPO Statistics Database

Source: Japan Patent Office

Examples of Companies with the Largest Share in the Global Market (Large Enterprises)

Memory Test Systems

Industrial lighting

Endoscopes

Digital cameras

Lithium-ion batteries

Aircraft interiors

Industrial sewing machines

Premium helmets

Motor Exhaust Gas Analyzer

Semiconductor silicon wafer

Sony
Semiconductor encapsulating materials Camcorder Printing Inks PAN-type carbon fiber Automobiles

White LED

Insulators

Electron microscopes

AC drives

Plasma panels

Vacuum Feedthrough

Ultra-precision lapping polishing materials

Miniature & small sized ball bearings

Multi layer ceramic capacitors

Motorcycles

Small electric DC motors

Source: Created by JETRO based on press reports. Global share is based on the company's annual production of 2010, shipping volume, shipment value, sales and revenue etc.

Source: Created by JETRO based on each companys website.7

Examples of Companies with the Largest Share in the Global Market (SMEs) Yamada Chemical Co., Ltd.
[Kyoto City, Kyoto] Worlds Top Company for Color Formers As key materials for thermal recording, color formers are widely used for thermal paper for distribution/sales labels, tickets and receipts.

Tamano Kasei Co., Ltd.

[Nagoya City, Aichi] Specializing in precision formed parts, it conducts the integrated production of high-performance resin products such as automobile parts and precision parts for OA equipment, from rheological analysis, manufacturing and assembly to inspection. In particular, it has over a 70% share in the domestic market and over a 20% share in the global market for washer nozzles for automobiles.

Nippon Super Industry Co., Ltd.

[Sakai City, Osaka] It built a mass production system for the key components of fine precision miniature motors which support miniature and mass-storage hard disc drives (HDDs). It supports global parts supply including an 83% share in the market for yokes for HDD motors and a 37% share in the HDD motor hub market.

Kurotani Corporation
[Imizu City, Toyama] It is one of the worlds leading companies in terms of the quantity of nonferrous metals collected from Japan and elsewhere and then recycled (10,000 tons per month). In particular, it has a 70% share in the global supply of aluminum bronze which is used for screw manufacturing for large vessels such as tankers (aluminum bronze is used due to its corrosion resistance against sea water and its durability).

Attachments for aluminium hubs: yokes

The range of roundness error: 0.3 micron. Closeto-perfect circle stainless steel hub for a 2.5-inch HDD

Alloys are made from recycled metals based on customer needs.

Ihara Electronic Industries Co., Ltd.

[Kasugai City, Aichi] Starting with the development of medical equipment, it developed its own brand densitometers and colorimeters. Currently, there are only around five manufacturers of densitometers and colorimeters worldwide and the company has the leading measuring technologies in the world.

Transmission densitometer

Source: Created by JETRO based on METI, 300 Vibrant Small and Medium Manufacturing Enterprises.

Examples of Foreign-affiliated Companies Conducting Business in Japan (Automobiles)

Automobile Parts: Establishing a Production Base in Japan

Robert Bosch GmbH Germany Systems and components for Diesel engine management, Brake systems for Passenger car

MAHLE Germany Piston systems, cylinder components, as well as valve train, air management, and liquid management systems

GKN U.K. Driveline parts for automobiles

TRW Automotive USA Steering systems, braking systems, air bags-seat belt systems, safety electronics

Johnson Controls, Inc. USA Automotive seating, interiors and electronic control components

Webasto Germany Sunroofs, convertible roofs and body systems, and temperature management systems

RECARO Germany Seats for passenger car, Office chairs, Train seats, Stadium seats

Automobile Parts: Sales, etc.

Supported by JETRO Supported by JETRO Supported by JETRO Supported by JETRO

Magna International Inc. Canada Manufacturing and sale of automotive parts of exteriors, interiors, seating, powertrain, roof system, etc.

DURA USA Sale of driver control systems, etc.

The Magni Group, Inc. USA Sale and products and technical support of chrome-free coating system for automotive & nonautomotive industries.

Bodycote plc U.K. Providing thermal processing services for automobile parts.

Source: Created by JETRO based on each companys website.

Examples of Foreign-affiliated Companies Conducting Business in Japan (Clean Technology)

Solar Cells

Supported by JETRO

Supported by JETRO

Supported by JETRO

Suntech Power China Development, manufacturing and sale of solar cells (crystalline). MSK became a wholly owned subsidiary in 2008.

Dyesol Australia Sale of dye-sensitized solar cells. Its Japan base was established in 2010.

Changzhou Trina Solar Energy Co., Ltd. China Development, manufacturing and sale of solar cells (crystalline).

Q-CELLS Germany Sale of PV cells and modules. Its Japan base was established in 2010.

Konarka USA Sale of solar cells (organic). Its Japan base was established in 2010.

Solar Cell Parts and Manufacturing Equipment

Lithium-ion Batteries, Fuel Cell Components

Supported by JETRO

DOW CORNING USA Development, manufacturing and sale of silicon materials for photovoltaics. It established a joint venture company with TORAY Industries, Inc. in 1966.

APPLIED MATERIALS USA Sales, etc of solar, semiconductor and display equipment. It's Japan base was established in 1979.

UMICORE Belgium Development, manufacturing and sale of materials for lithium ion batteries. It plans to build a new factory in Kobe in 2010.

SGL Carbon SE Germany Manufacturing and sale of graphite materials for fuel cells and thermal energy storage materials.

Industrial Gases

Wind Turbines

Air Products USA Manufacturing and sale of industrial and specialty gases/chemicals. Its Japan base was established in 1991.

AIR LIQUIDE France Production and sales of industrial and medical gases, and related services.

Evonik Industries Germany Manufacturing of monosilane gas. It built a manufacturing plant in Mie and will start operation in 2011.

Vestas Denmark Sale and maintenance of wind generators

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Source: Created by JETRO based on each companys website.

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Development of Asian Industrial Centers and R&D Centers in Japan: Example of Foreign Firms Investing in Japan

Nippon Boehringer Ingelheim Co., Ltd.

Nippon Boehringer Ingelheim Co., Ltd. opened the Kobe Pharma Research Institute. As one of Boehringer Ingelheims Research and Development centres, the Kobe Pharma Research Institute conducts research and development activities for drug discovery and non-clinical development for new drug applications thus contributing to global research and development in each phase.
Extracted from a press release (Nov. 18, 2008)

Nihon LOral K.K.

LOral established a R&D center in Japan in 1983. In 2004, the center in Japan became the first and only research center outside France that conducts all research stages including basic research, applied research and development. The Japanese R&D center not only develops products for Japanese and Asian markets, but it has grown to disseminate its proprietary technology worldwide by utilizing new materials and innovations developed in Japan.
Extracted from the website

Umicore Japan K.K.

Supported by JETRO Umicores JPY 4 billion investment in Kobe City will provide a vital production presence in Japan. The investment will also incorporate a new technical center for the testing and validation of battery materials. This investment has qualified for a subsidy from the Japanese authorities in the framework of the Japanese Ministry of Economy, Trade and Industry (METI) initiative to promote the development of low-carbon industries.
Extracted from a press release (Apr. 7, 2010)

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2nd Window Business Platform

Japan promises a safe and secure living environment as well as providing a high level and stable business environment.

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Business Platform

Some of the best infrastructure in the world in terms of advanced infrastructure (ICT infrastructure) as well as basic infrastructure (electricity, gas and water). One of the safest countries in the world (1st in Asia). One of the best medical service systems (the highest number of hospital beds per 1,000 people in the world). Extended aviation networks which cover Asia. 24-hour international hub airports.
Japans Reputation among Western and Asian Companies
Infrastructure Cant say/ no answer 31% Living Environment Suitable for Foreigners Cant say/ no answer 37% Well-developed Laws such as Intellectual Property Rights Cant say/ no answer 47% Very attractive/ attractive 39%

Very attractive/ attractive 61%

Very attractive/ attractive 45%

Not so attractive/ not attractive 8%

Not so attractive/ not attractive 18%

Not so attractive/ not attractive 14%

Source: Ministry of Economy, Trade and Industry, Survey on the Level of Interest of European, North American and Asian Firms in Investing in Japan (survey period: from December 2009 to February 2010)

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ICT Infrastructure

Comparison of ICT Infrastructure in Different Countries

ICT Infrastructure Ranking 1st 2nd 3rd

Japan
Korea Finland

Broadband fees (low prices) 1st

2nd

Fiber-optics coverage 1st 2nd 3rd

Broadband speed

Japan
Finland Korea
and others

Japan
Korea Hong Kong

Japan
1st 3rd Korea Singapore

Number of PCs infected with bots (percentage of non-infected PCs)

1st
3rd

Japan
Finland Netherland

[Note] 23 countries and regions were compared (Japan, Korea, China, Singapore, Taiwan, Hong Kong, Australia, New Zealand, U.S., Canada, Finland, Netherlands, Denmark, Sweden, Switzerland, France, Portugal, U.K., Germany, Spain, Belgium, Italy, Austria). A bot is an attack program which can remotely control computers. Source: Created based on the Ministry of Internal Affairs and Communications, International Comparative Evaluation Report on ICT Platform in Japan (August 2009).

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Infrastructure Environment

Advanced social infrastructure Well-developed transport infrastructure

- Annual accidental power failure per house: 16 min. in Japan (37 min. in Germany and 100 min. in the U.K.) Electricity - Capacity of PV systems installed: 3rd in the world (1st: Germany, 2nd: Spain) - Percentage of households which use city gas in the city gas-supplied area: 107.8% (Tokyo) Gas - Safety equipment installation rate (intelligent gas meters): 99.6% Water supply and sewerage - Water supply and sewerage coverage: 100 (Tokyo) - Water supply restrictions: 0 case (Tokyo, 2008)

- Number of airports: 96 airports. Airports can be accessed within one hour from 70% of the areas. Airports - International hub airports: Narita, Haneda, Chubu and Kansai - Regular international flight services: 29 airports - Rate of arrivals on time: JAL is ranked number one among the worlds leading airlines - Railway network length: 20,050 km (Korea: 3,399 km, China: 63,637 km) Railways - Shinkansen bullet trains: 6 routes, 2.5 hours from Tokyo to Osaka, 341 services a day (Tokaido Shinkansen Line) - Total real length of expressways: 9,036.9 km (Japanese land area: 370,000 m2) Roads - Total real length of general national highways: 54,735.9 km - Number of ports: 997 ports nationwide Ports - Number of entering vessels: 4,608,451 vessels nationwide (2008) - Container shipping: 20,707,667 TEUs nationwide (2008)
Source: Federation of Electric Power Companies of Japan, Ministry of Internal Affairs and Communications, Japan Gas Association, Tokyo Metropolitan Government, Ministry of Land, Infrastructure, Transport and Tourism, Conducive Technology Corp. Flightstats

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Examples of Foreign-affiliated Companies Conducting Business in Japan (ICT)

Search Engines E-commerce
Supported by JETRO

IT Solutions

Google USA Operating search engines. Its Japan base was established in 2001.

Baidu Inc. China Developing and providing web search services and internet advertising services. Its Japan base was established in 2006.

Alibaba.com China Online marketplace. Its Japan base was established in 2007.

IBM USA Development, manufacturing and sale of hardware, applications, etc. Its Japan base was established in 1937. Supported by JETRO Supported by JETRO

Hardware

Apple, Inc
USA Sales of computers, smartphones, portable music players, and other products. Its Japan base was established in 1983. Dell USA PC custom selling. Its Japan base was established in 1989. Intel USA Sales of microprocessors, SSD, etc. Its Japan base was established in 1976. BLADE Network Technologies USA Sales of network equipment for blade server and rack-mount. Its Japan base was established in 2009. VSS Monitoring USA Sale of IP network equipment. Its Japan base was established in 2007.

Software

SAP AG
Microsoft Corporation USA Sale of software, etc. Its Japan base was established in 1986. Oracle USA Sale of corporate software. Its Japan base was established in 1985. Symantec USA Sale of security, storage and systems management. Its Japan base was established in 1994. Supported by JETRO Germany Development, sale, etc. of business software. Its Japan base was established in 1992.

Online Games

Others

NHN Korea Operating online game portal sites. Its Japan base was established in 2000.

IPSTAR Thailand Operating high-speed internet services. Japanese branch was established in 2009.

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Source: Created by JETRO based on each companys website.

Good Public Safety, Well-developed Medical Services

Good Public Safety

Global Peace Index Ranking
Rank 1 2 Country New Zealand Iceland Score 1.188 1.212

Well-developed Medical Services

Number of Hospital Beds per 1,000 People
Country Number of hospital beds

Japan
Korea Germany France Italy U.K. Canada U.S. China

14.0
8.6 8.3 7.3 3.9 3.9 3.4 3.1 2.2

3
4 5 6 7 7 9 10

Japan
Austria Norway Ireland Denmark Luxembourg Finland Sweden

1.247
1.290 1.322 1.337 1.341 1.341 1.352 1.354

Number one in the world

Source: Economist Intelligence Unit,2010 Global Peace Index

Note: Latest available data in the period between 2002 and 2007 was used. Source: Ministry of Internal Affairs and Communications, World Statistics 2010

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Well-developed Intellectual Property Protection Systems

Intellectual Property Protection Systems in Japan

Intellectual Property Strategic Program Laws Intellectual Property High Court Control measures at points of entry (customs) The program was created by the Intellectual Property Strategy Headquarters which was established for the Cabinet based on the Intellectual Property Basic Act. High standard legal frameworks are in place including the protection of industrial property rights (patent rights, utility model rights, design rights and trademark rights), copyrights and trade secrets as well as prevention of unfair competition. It specializes in prompt trials for cases related to intellectual property rights. At the points of entry, customs control the violation of industrial property rights and copyrights and the infringement of the Unfair Competition Prevention Act. The customs control the entry of a broad range of goods violating intellectual property rights.

Proposed Anti-Counterfeiting Trade Agreement (ACTA)

Purpose It would aim at non-proliferation and the elimination of counterfeit and pirated goods by establishing a high-level international framework based on the pillars of a robust legal framework concerning intellectual property rights enforcement for anti-counterfeiting, the strengthening of intellectual property rights enforcement and international cooperation. Main Content Promotion of international cooperation Cooperation between enforcement authorities including capacity building and technical assistance for developing countries and information sharing Strengthening enforcement practices Establishing public and/or private advisory groups, fostering expertise specialized in intellectual property rights at law enforcement authorities, etc. Development of a legal framework (border measures, criminal and civil enforcement procedures) Prohibiting exportation and importation of infringing goods, applying criminal penalties to imitated labels, reducing right holders share of costs for storage and destruction of goods at customs, adequate compensation to right holders, measures against acts of infringement which take place on the internet, etc. Participating countries Japan, the U.S., European Union (EU), Switzerland, Canada, Korea, Mexico, Singapore, Australia, New Zealand, Morocco Efforts by Japan It aims at the early entry into force of ACTA and increasing the number of signatories.
Source: Japan Patent Office, Supreme Court of Japan, Ministry of Finance Japan, Ministry of Foreign Affairs of Japan, Ministry of Economy, Trade and Industry

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Transportation Network to Asia

China (GDP:4,520) 15 cities, 773 flights: 3hrs. 35 min. Korea (GDP:931) 3 cities, 567 flights: 2hrs. 25 min. Taiwan (GDP:403) 2 cities, 231 flights: 3hrs.30min. Hong Kong(GDP:215) 171 flights: 4 hrs. 25 min. Thailand(GDP:272) 103 flights: 6 hrs. 30 min. Singapore(GDP:188) 82 flights: 7 hrs. 5 min.

Japan (GDP:4,877)

India (GDP:1,207) 2 cities, 17 flights: 9 hrs. 45 min.

Note: GDP: 1 billion US dollars Flights: The number of regular flights from Japan per week (international flight schedule from August 1 to October 30, 2010) Time required: The departure airport is Narita Airport, the arrival airports are Beijing in China, Jinsen in Korea, Taipei in Taiwan and Mumbai in India. Source: IMF

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Transportation Network to Asia

Planned Destination Countries and Cities for International Flights from Haneda Airport
Country/Region Korea Seoul Shanghai City Country/Region City New York Detroit U.S. Los Angels San Francisco Honolulu Canada U.K. France Vancouver London Paris

Haneda Airport to Become a 24-hour International Hub Airport

Current arrival and departure slots at Haneda Airport (Tokyo) total about 300,000. The 4th runway started operating in October 2010 and the number of slots is being increased to 450,000 including international flights. Flights to 11 countries and regions (17 cities) are planned (as of October 2010).

China

Beijing Hong Kong

Taiwan Thailand

Taipei Bangkok Kota Kinabalu

Malaysia

Entry of LCCs (Low-cost Carriers) into the Market

Airline name Jetstar Airways (Australia, Singapore) Cebu Pacific Air (the Philippines) Jeju Air (Korea) Air Busan (Korea) Spring Airlines (China) AirAsia X (Malaysia) Jin Air (Korea) Outline

Kuala Lumpur Singapore Singapore

Flights to Narita Airport and Kansai International Airport 3 flights to Kansai International Airport per week (2008) Flights to Kansai International Airport, Kitakyushu Airport (2009) and Chubu Centrair International Airport (March 2010) Flights to Fukuoka Airport (March 2010) and Kansai International Airport (April, 2010) Flights to Ibaraki Airport (July 2010) Planned flights to Haneda Airport (December 2010) Planned flights to Kansai International Airport

Comparison of the Time Required to Access Airports

Heathrow (U.K.) 16 min.

Haneda (Japan) 17 min.

Beijing (China) 26 min. Charles de Gaulle (France) 29 min.

Narita (Japan) 36 min.

Chicago OHare (U.S.) 45 min. Gimpo (Korea) 45 min.

Through the launch of new-model Skyliners in July 2010, the time required to get from the city center to Narita Airport was reduced from 51 min. to 36

min.

Source: Keisei Electric Railway Co., Ltd.

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3rd Window Trend Setter

Japan is a huge market with one of the worlds largest economies. In addition, sectors with large growth potential exist in Japan, including health and tourism markets. Japanese consumers are sensitive to fashion and make new fashion a part of their lives quickly. Therefore, Japan offers a market for test marketing before entering Asian markets. Japan also attracts attention as a country with soft power, which sets trends for fashion and entertainment content in Asia.

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Trendsetter

Japan is one of the worlds largest markets. The economic size of each region within Japan rival one countrys economy. Japan offers a market for test marketing before entering Asian markets. It is also a country with soft power, which sets trends for fashions and entertainment content in Asia. Health and tourism are growing markets in Japan. Japanese people enjoy the longest life expectancy and the best health in the world. The governments New Growth Strategy aims to attract large numbers of foreign tourists.

Japans Reputation among Foreign-affiliated Companies in Japan

Attractiveness of Japan as a Market for Test Marketing
No answer 12.1% Not attractive 18.8% Fairly attractive 49.3%

Future Business Development in Japan

Scale down businesses in Japan 2.6% No answer 9.5% Expand businesses in Japan 40.5%

Slightly attractive 19.8%

Maintain the current situation 47.4%

Source: Ministry of Economy, Trade and Industry, FY 2009 Survey Report on Foreign-affiliated Companies' Attitudes toward Foreign Direct Investment in Japan

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GDP Comparison of Japan with Other Major Economic Regions and Some Countries

GDP comparison of Japan with other major economic regions

GDP comparison of Japans regions with some countries

EU27 18,377
U.K. 2,679 France 2,865 Germany 3,652

NAFTA 16,964

Japan 4,880
East Asia 7,519
ASEAN5 1,263 NIEs 1,736 Canada 1,499

U.S. 14,369

Spain 1,601

Italy 2,307

Others 5,272

Mexico 1,096

Russia 1,660

China 4,520

India 1,259

Brazil 1,655

BRICs

9,094

(US $ billion, 2008)

Note: ASEAN5 means Indonesia, Thailand, The Philippines, Malaysia and Vietnam. NIEs means Hong Kong, Taiwan, Singapore and Korea. Source: Prepared by JETRO based on World Economic Outlook Database (April, 2011), IMF

(US $ billion, 2008)

Source: IMFWorld Economic Outlook Database (April, 2011); Prefectural Economic Almanac (February, 2011), Economic and Social Research Institute, Cabinet Office

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Setting Trends in Asia Japanese products and fashions are attracting strong interest worldwide. Many foreign companies find business opportunities in Japanese peoples sophisticated taste and choose Japan as the first market to enter in Asia. Overall Rating on the Impression of each Countrys Products in 14 Cities Worldwide (Emerging Markets) Excellent quality
Unique and clear characteristics

1st: Japanese products

(2nd: European products)

Smart, fashionable

1st: Japanese products

(2nd: European products)

Interesting/e njoyable

Good value for money

1st: Japanese products

(2nd: American products)

1st: Japanese products

Growing image
(2nd: European products)

1st: Japanese products

(2nd: Korean products)

2nd: Japanese products

(1st: Korean products)

Note: 14 cities include: Beijing, Shanghai (China); Hong Kong; Taipei (Taiwan); Seoul (Korea); Singapore; Bangkok (Thailand); Jakarta (Indonesia); Kuala Lumpur (Malaysia); Metro Manila (Philippines); Ho Chi Minh City (Vietnam); Delhi, Mumbai (India); Moscow (Russia). Compared products include: Japanese products, European products, American products. Korean products and Chinese products. Source: Created based on Hakuhodo, Hakuhodo Global HABIT 2008 (January 2009)

Apparel Brands which Have Entered the Japanese Market (First Time in Asia)

Abercrombie & Fitch (First Store in Asia)

Supported by JETRO

Abercrombie & Fitch, a high-end casual apparel brand in the U.S., opened its first Asian/Japanese store in Ginza, Tokyo. It has over 1,000 stores worldwide and its sales reach 2.9 billion US dollars. The Japanese store is its third flagship store after ones in London and Italy. 24

Comments of Top Corporate Management

Chanel: Richard Collasse, President of Chanel KK., Japan

Chanel

It must be that the Japanese luxury market continues to be a subject of admiration. For Asia, Japan is something to admire as much as Western countries. Japanese consumers have an insight into what is really a good product at the end of the day.
Source: Senken Shimbun (March 15, 2010)

Nihon LOral : Klaus Fasbender, President

Japan is the second largest cosmetic market in the world. As for skincare products, the Japanese market is the largest. Japan is a very strategic market for L'OREAL and its market is a benchmark as well. If we can satisfy Japanese customers, we can satisfy the rest of the world. We position Japan as an important R&D center and that is why we have been increasing investment in it.
Source: Diamond Weekly (December 11, 2010)

LG Electronics Japan: Lee Kyu-hong, President

Japanese consumers requirement standards are higher than any other country. Cultivating business in Japan will contribute to strengthening international competitiveness.
Source: Nikkei Business (October 12, 2009)

P&G Japan: Hatsunori Kiriyama, President and Representative Director

Japanese consumers are some of the most demanding in the world. Products which can meet their requirements should satisfy consumers in other developed countries in most cases.
Source: Nikkei Information Strategy (November 2009)

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International Events for Japanese Fashion and Entertainment Content Japanese fashion and entertainment content such as games, animation and manga comic books are growing in popularity in various parts of the world. Large-scale fashion events and events exhibiting entertainment content are being held in recent years.

[Japan International Contents Festival (CoFesta)]

[Tokyo Game Show (TGS)]

(C) Computer Entertainment Suppliers Association

- Number of visitors in 2009: about 1.12 million

- In September 2010, Tokyo Game Show 2010 was held as an official event of CoFesta. - Number of visitors: about 210,000 - Number of exhibitors: 194 companies

[Japan Fashion Week in Tokyo (JFW)]

- Number of visitors in March 2010: about 30,000 - Number of participating brands: 44

C Japan Fashion Week Organization

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Examples of Foreign-affiliated Companies Conducting Business in Japan (Apparel, Retailing)

Apparel
Supported by Supported by JETRO JETRO Supported by JETRO Supported by JETRO Supported by JETRO

Inditex Group (ZARA) Spain Sale of apparel products. Its Japan base was established in 1997.

H & M Hennes & Mauritz AB Sweden Sale of apparel products. Its Japan base was established in 2007.

Forever21 USA Sale of fast fashion apparel products. Its Japan base was established in 2008. Supported by JETRO

Abercrombie & Fitch USA Sale of high-end casual apparel products. Its Japan base was established in 2009.

Supermarkets

Walmart
USA EDLP supermarket. Seiyu GK became a wholly owned subsidiary in 2008. TESCO U.K. EDLP supermarket. C Two-Network Co., Ltd. became a wholly owned subsidiary in 2003. COSTCO WHOLESALE USA Membership warehouse supermarket. Its Japan base was established in 1998. METRO Group Germany Membership Wholesaler for food professionals. Its Japan base was established in 2000.

Beauty Products, Toiletries

LORAL France Manufacturing, sale, import and marketing of beauty products. Its Japan base was established in 1996.

Procter & Gamble USA Sale, import and export of beauty products and toiletries. It entered the Japanese market in 1973.

Unilever U.K. & The Netherland Manufacturing, sale and marketing of beauty products and toiletries. It entered the Japanese market in 1964.

Sporting Goods

Home Appliances

PUMA Germany Sale of sporting goods. Its Japan base was established in 2003.

SUNING China General sale of electric appliances. Equity participation in Laox Co., Ltd. since 2009.

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Source: Created by JETRO based on each companys website.

Growing Market: Health Japanese people enjoy the longest life expectancy and the best health in the world. With the aging of the population, the medical care, nursing services and other health-related industries are expected to grow. Progress in Aging and Future Estimates
(1,000 people) 35,899 33,781 29,412 25,672 22,005 18,261
Population aged 65-74 (early-stage elderly people) Percentage of the elderly population (65 or older) Percentage of the population aged 75 or older Population aged 75 or older (latter-stage elderly people)

Annual Changes in National Medical Care Expenditure

(%) (Unit: Trillion yen)

36,354 36,670 37,249

Source: Ministry of Health, Labour and Welfare, FY 2007 Outline of the National Medical Care Expenditure

Note: Values for up to 2005 are actual values. Values for 2010 onwards are estimates. Percentages of the elderly population and the population aged 75 or older are the percentages out of the total population. Source: Cabinet Office, Annual Report on the Aging Society: 2010

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The Size of the Domestic Nursing Care, Pharmaceutical and Medical Device Markets

Changes in the Size of the Domestic Pharmaceutical Market

8,500 8,000 7,870 7,685 7,292 8,017 8,317

Unit: 1 billion yen

Annual Changes in the Total Number of Nursing Care Preventive Service Users and Long-term Care Service Users
Unit: 1 million people

7,500 7,000 6,500

48.0 47.0 46.0 45.0 44.0 43.0 42.0 43.8 43.0 45.3

47.2

2004

2005

2006

2007

2008

Source: Ministry of Health, Labour and Welfare, Summary of FY 2008 Annual Report on Pharmaceutical Industry Production Statistics

Changes in the Size of the Domestic Medical Device Market

2,300 2,200 2,259

Unit: 1 billion yen

2,224 2,131

FY2006

FY2007

FY2008

FY2009

2,111 2,100 2,000 1,900 2004 2005 2006 2,060

Source: Ministry of Health, Labour and Welfare, Summary Results of the FY 2009 Survey on the Amount of Long-Term Care Benefits

2007

2008

Source: Ministry of Health, Labour and Welfare, Summary of FY 2008 Annual Report on Pharmaceutical Industry Production Statistics

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Examples of Foreign-affiliated Companies Conducting Business in Japan (Medical Care)

Pharmaceuticals

Pfizer Inc. USA Manufacturing, sale, export and import of human and animal pharmaceuticals and agrochemicals. It entered the Japanese market in 1953 through a joint venture with Tanabe Seiyaku Co., Ltd.

Novartis AG Switzerland Development, import, production, and sale of pharmaceutical products. Novartis Pharma K.K. was established in 1997.

GlaxoSmithKline U.K. Development, manufacturing, sale and import of pharmaceuticals, etc. After multiple mergers, GlaxoSmithKline K.K. was founded in 2001.

Merck & Co., Inc. USA Development, manufacturing and sale of pharmaceuticals and vaccines. Banyu Pharmaceutical Co., Ltd. became a wholly owned subsidiary in 2004. MSD was founded in 2010.

Sanofi-Aventis France Development, manufacturing, sale and import of pharmaceuticals and medical devices. After multiple mergers, Sanofiaventis K.K. was founded in 2006.

AstraZeneca PLC U.K. Development, manufacturing and sale of pharmaceuticals. After the merger of Astra and Zeneca, AstraZeneca K.K. was founded in 2000.

Boehringer Ingelheim Germany Research & development, import, manufacturing and marketing of pharmaceuticals, etc.SSP Co., Ltd. became a wholly owned subsidiary in 2001.

Eli Lilly USA Manufacture and market pharmaceuticals and animal health products. Eli Lilly Japan K.K. was established in 1975.

Generic Drugs

Medical Devices

Others

Supported by JETRO

Lupin India Development, manufacturing, sale, export and import of generic drugs. Kyowa Pharmaceutical Industry Co., Ltd. became a subsidiary in 2007.

Baxter USA Manufacturing, sale, import of dialysis products, plasma proteins, drug delivery systems etc. It entered the Japanese market in 1969.

Medtronic, Inc. USA Developing, manufacturing, importing and sale of medical devices for treating chronic disease such as cardiovascular, neurological disease, and diabetes. It entered the Japanese market in 1975.

DiaSys Diagnostic Systems GmbHGermany Development, manufacturing, export and import of invitro diagnostic reagents, food test reagents, analyzer, etc. It entered the Japanese market in 2006.

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Source: Created by JETRO based on each companys website.

Growing Market: Tourism

The Japanese governments New Growth Strategy aims to increase the annual number of foreign visitors to Japan to 25 million by the beginning of 2020 and to 30 million in the future.

Roadmap for Achieving 30 Million Foreign Visitors to Japan

3,500 3,000 2,500 2,000 1,500 1,000 500 0 2006 2007 2008 2009 2010 2013 2019 2019 733 835 835 1,000 679 1,500 2,000 2,500
Unit: 10,000 people

Number of Foreign Tourists Coming to Japan by Country

Unit: 1,000 people

3,000

Rank 1 2 3 4 5 6 7 8 9 10

Country/region Korea China Taiwan U.S.A Hong Kong Australia Thailand U.K. Canada France Others Total

2009 total 1,587 1,006 1,024 700 450 212 178 181 153 141 1,158 6,790

. 2010 total 2,440 1,413 1,268 727 509 226 215 184 153 151 1,326 8,612

Source: Japan National Tourism Organization (JNTO), Statistics on Tourism for Japan

Source: Japan National Tourism Organization (JNTO), Statistics on Foreign Tourists Coming to Japan

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Examples of Foreign-affiliated Companies Conducting Business in Japan (Tourism)

Hotels Resorts, Resort Facilities
Supported by JETRO Supported by JETRO

The HongKong and Shanghai Hotels, Limited Hong Kong Operating luxury hotels. It entered the Japanese market in 2007.

SOLARE HOTELS & RESORTS Co., Ltd. USA Hotel management, asset management and franchise operation in 75 locations nationwide *. Management covers hotel rooms, retail outlets, food & beverage outlets, saunas, public baths and spas. As of December, 2010

IHG U.K. It established a joint venture company for hotel operations with All Nippon Airways Co., Ltd. The company was launched in 2006.

Mingly Corporation Hong Kong It acquired, renovated and operates a Japanese-style inn Chikusenso. Its Japan base was established in 2009.

Niseko HANAZONO Resort Hong Kong Operating a ski resort in Niseko. It entered the Japanese market in 2004 as Australian capital. It is currently owned by Hong Kong capital.

Serviced Apartments

Travel Agencies
Supported by JETRO

Supported by JETRO

Oakwood USA Operating serviced apartments. It established a joint venture company with Mitsui Fudosan Co., Ltd. in 2000.

Expedia USA Online reservation services for overseas package tours and overseas hotels. Its Japan base was established in 2005.

DEEP POWDER TOURS Australia Planning and sale of ski package tours in Japan. Its Japan base was established in 2006.

Lion Travel Taiwan Providing travel agency services. Serving tourists from Taiwan to Japan. Its Japan base was established in 2009.

Transportation

Other Services
Supported by JETRO Supported by JETRO Supported by JETRO

Air Asia X Malaysia Operating a low-cost carrier which connects Japan and Malaysia. Its Japan base was established in 2010.

Air Busan Korea Operating a low-cost carrier which connects Japan and Korea. Its Japan base was established in 2010.

DBS Cruise Ferry Korea Operating ferries connecting Japan, Korea and Russia. Its Japan base was established in 2009.

Travelex UK Limited U.K. Provider of financial services including foreign currency exchange. It's Japan base was established in 2003, the company was founded in Britain in 1976 and now operates in over 25 countries

MCI Group Switzerland Professional conference/events organizer. It established a joint venture company with Japan Convention Services, Inc. in 2008.

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Source: Created by JETRO based on each companys website.

Invest Japan Department, JETRO (Japan External Trade Organization) 1-12-32, Akasaka, Minato-ku, Tokyo 107-6006 Japan Tel. +81 3 3582 5571, Fax. +81 3 3505 1990

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