Profile on Japan
Key facts and figures
Capital city: Tokyo
Currency: yen (JPY) per US dollar - 94.5 (2009), 103.58 (2008), 117.99 (2007)
Government: Head of state: Emperor Akihito, Prime Minister: Naoto Kan
Population: 126,804,433
Population growth rate: - 0.242%
GDP - real growth rate: - 5.3% (2009)
Economy
The Japanese market has enormous potential, and is one of the world’s largest in terms of economic scale. Japan’s regions also offer an attractive market and extensive business opportunities. In addition to possessing high purchasing power, Japanese consumers are early adapters and move quickly to stay on the cutting edge of latest technologies. Many global projects have originated in Japan or have gained a competitive edge by being developed in Japan. It is often seen as an ideal test market for the introduction of all new global products and services. Japan’s 120 million citizens hold the personal financial assets of approximately 1500 trillion yen, adding up to considerable potential buying power.
Japan carries with it the legacy of WWII; it still has tense relationships with both China and South Korea as a result of Japan’s actions in WWII and how this is conveyed to the Japanese population. Following on from WWII however Japanese lawmakers created a pacifist constitution, which led to some public divide over Japan’s entry into the Iraq war in 2003.
After WWII Japan found itself in a period of rapid expansion until the 1990s – this was largely due to the international success of the consumer electronics and car manufacturing industries. In 1997 Japan was struck by the Asian economic crisis along with many of its regional peers, and found itself in a period of recession which resulted in a number of changes in banking, public spending and reforms to private sectors. Japan was also strongly affected by the Global Economic Crisis early on, with exports in January 2009 46% lower than the same period the year before.
Japan has a strong culture focused on tradition, with strong employment and social hierarchies; however, this is under strain as the youth move more towards Western cultures and societal norms.
ICT
ICT is an area in which Japan, backed by its world-leading technological capability, is strong in all stages of the product development process, from R&D to design and production. The scale of the market is enormous and growing steadily, yet it is heavily saturated. The number of fixed-line telephone subscribers in 2001 was 50,740,000, a 2.6% decline over the previous fiscal year, marking the fifth consecutive decline. This number is still decreasing with 2008 figures citing it at 47,579,000 users; still the fourth highest number of users worldwide. This is in part due to the switch to mobile phones, and in part to the replacement of ISDN by ADSL for high speed Internet access. The number of mobile phone subscribers reached 71,622,000 in August 2002, a 10.7% increase over the previous year. As of 2008 this figure stood at 110,395,000 users, ranking Japan seventh internationally. More than 80% of the Japanese population have subscribed for a mobile phone.
Foreign investment
Japanese investments abroad have expanded steadily since the 1970s, as a result of both liberalization on the outflow of capital and the prosperity of the Japanese economy. It has been partly due to increased investment in the US and EU as a conciliatory move to lessen the trade gap between Japan and the two industrial regions. In 1996, Japan reportedly invested $50 billion overseas and attracted only about $7 billion in inward direct investment. In part this imbalance in foreign investment from Japan versus into Japan may be attributed to the high cost of doing business in Japan (potentially resulting in reduced profits) and the Japanese government not strongly advocating foreign investment. In June 2006 the government did announce plans to attempt to double foreign investment into Japan. With JETRO (Japanese External Trade Organisation) now offering to assist the establishment of foreign companies investing into Japan and with free use of an office in Japan for up to 50 days, some of the barriers to entry may be moving. Japan is also home to some of the world’s top companies. These companies have established bases throughout the world and continue to expand their procurement, production and sales networks. They are continuing to offer unique and innovative products and services as a result of active investment in R&D, which is conducted to enable them to enhance their international competitiveness and maintain growth.
In June 2010 there was speculation by the Nikkei Business Daily that Japan was trying to capture more foreign investment by lowering corporate tax (currently the highest in the world at 40%), and simplifying immigration procedures, amongst other changes.