Doing Business in Japan

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Doing Business in Japan2010 Road Show Presentation

Presented by Sumio ShibataState of North Carolina Japan Office

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PopulationJapan 127 millionTokyo Metropolitan Area : 33 million

Osaka Metropolitan Area : 21 million

Greater Nagoya : 15 million

Fukuoka : 5 million

Hokkaido : 5 million

KANSAI

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Ties to the U.S.• Japan is the United

State’s 4th largest Export Market, after Canada, Mexico and China.

• Second largest foreign investor in the U. S., with more than $230 billion invested, second only to U. K.

• The U. S.-Japan alliance is a cornerstone of U. S. security interests in Asia and is fundamental to regional stability and prosperity.

(Source: U.S. Commercial Service / 2010 Country Commercial Guide)

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Japanese Subsidiaries in the Piedmont Triad Region (Manufacturers only)

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クリスピー・クリーム　 in TokyoNC Investment in Japan

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1,404

1,715

1,913

2,008

2,279

4,049

4,168

4,489

5,328

5,850

0 1,000 2,000 3,000 4,000 5,000 6,000 7,000

Plastics

Oil Seeds/Grain/Seed, Fruit

Inorganic Chemicals

Meat

Pharmaceutical Products

Electric Machinery

Cereals

Industrial Machinery, incl. Computers

Aircraft, Spacecraft, And Parts

Optical, Medical Instruments

*Total Export : $ 51 billion (2008 : 65 billion) Unit : $ 1 million

Source : WISERTrade

Top 10 U.S. Exports to Japan (2009)

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NC Exports to Japan (2010)

NC is 10th among all US states for exports to Japan

$1.5 billion in NC exports to Japan

Japan is 4th largest market for NC exports

(HondaJet at GSO) (Source : SMARTrade)

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Emerging Sectors for NC Export

• 1) Biotechnology

• 2) Nanotechnology

• 3) Renewable （ Green) Energy

• 4) Senior Market

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1) Biotechnology/Pharmaceuticals in Japan

• Market size of Biotech industry : $24.3 billion in 2008 (+27.9% over 2007)

• Leading sub-sector : medical biotech $6.85 billion (Source : Fuji Keizai)

• <High growth potential> Therapeutic antibodies Molecularly targeted cancer therapies

• Japanese pharmaceutical companies eagerly seek new drug candidates and pipeline identified or developed by US biotech companies to be further developed into new drugs

(Source : U.S. Commercial Service)

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Biotechnology/Pharmaceuticals (cont’d.)Key market segments

for Biotech Medical Care Food Bio Tool & Information (Bioimaging analysis

equip., DNA Chips, Protein/Gene Analysis Equip)

Environment & Energy

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1) Biotechnology/Pharmaceuticals World second largest

consumer of pharmaceuticals

American pharmaceutical firms have a market share of almost 20%

Japan’s aging population is generating increased demand for pharmaceutical treatments for cardiovascular problems, metabolic, gastrointestinal, CNS. Generic drugs have good potential

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2) Nanotechnology• METI’s Strategic Technology

Roadmap 2009 designated Nanotech as one of most important fields(*) in science and technology to promote R & D investment in the public & private sectors.

(*) Life Science, Information & Communications, Environmental Sciences, Energy and etc.

(The Ministry of Economy, Trade, and Industry)

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2015 (billion of US$)

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33

49

72

0 20 40 60 80

MeasurementInstruments

MedicalApplications

Energy/Environment

Electronics

Nanotechnology (cont’d)• Market : $60 billion in 2010

(estimated) $230 billion by 2015

Market Segment :

Electronics, Energy/Environment, Medical Applications, Measurement Instruments

(Source : Nomura Research Institute)

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Seven-Eleven Eyes 20,000 Green Stores Worldwide In 5 Years

• LED technology for signs and lighting, generate electricity from solar power, and feature hot-water systems utilizing waste heat from air conditioners. Some will even have rechargers for electric vehicles

. • Green technology is seen slashing

store energy consumption by as much as 30% and will also cut greenhouse gas emissions

(Source : Nikkei April 6, 2010)

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4) Senior Market

• Average saving of households of people aged 60-69 years old: $245,000 (after debt)

• Average income : $59,000

Comparison of aged population

Percentage of age 65 and older

Japan 19.7(%)　　　　　　　　　 USA 12.3Average Life Expectancy Women Men Japan 86 79 USA 79 76

2000

(Source : JETRO)

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Deflation Makes Older People Key Consumers

• CPI in 2009 : -1.2%• Households of persons

aged in 60s : Net savings of $230,000. Consumption rose 1.2% in 2009

• Households of persons aged in 30s : Net debt of $19,700. Consumption dropped 1.1% in 2009

(Source : Nikkei April 5, 2010)

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Opportunities for NC Exporters

• Aerospace • Computer Software • Electronic

Components • Medical Equipment• Safety & Security • Furniture

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Aerospace• Aerospace industry is

shifting the focus from Defence (56%) to Civil (44%) in 2008

• Japanese makers such as Mitstubishi Heavy Industries, Kawasaki, Fuji are supplying 35% of Dream Liner, or 787 content to Boeing (Fuselage, and etc.)

• Best Prospects :

Aircraft parts and supplies, Avionics

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Computer Software

Best Prospects : Smartphone

applications, security, SaaS(*), Smart Grid, Cloud Computing

(*)Software as a Service

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Computer Software (cont’d)Key Elements to launching in the

Japanese market :

a) Localization : translation, testing, customization

b) Support Capability : Japanese language support is mandatory

c) Products Quality : High quality control is a very important consideration for Japanese users

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Medical Equipment

Best Prospects :

For chronic and life-style diseases, medical devices alleviate pain, complement lost functions, improve quality of life.

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Safety and Security

• Biometric-related solutions• Drug/explosive detection

equipment & systems• Personal/container screen

systems• Nuclear/biological/chemical

preparedness equipment and medicines

Best Prospects :

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Furniture• Japan is 3rd largest

importer of NC furniture after Canada, and Saudi Arabia.

• Largest importer of NC Mattress

• 2nd largest importer of NC Wood furniture

Best Prospects :

a) Compact and high-end, medium-high furniture

(Area of average Japanese house : 900 sqft. Vs. U.S. house : 2,300 sqft.)

b) Unique furniture

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Bottom Line• World’s second

largest market• Open business

climate with transparency and rule of law

• Resources ready to assist your firm in entering the market

The Japanese market is one of the most competitive in the world. But if you find success in Japan, you

can use Japan as gateway to Asia.

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• Prepare written company information ●Company profile including company history　 ● Profile of president ●Sales/Statistics (incl. paid-in Capital)

●Your objective• Product/Service information 　 ● Emphasize positive aspects such as 　 Uniqueness, Originality ●Domestic Market Successes (Track Record)

Tips for successful entry

Preparation On Paperbefore contacting potential partners

Tips

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Tips for successful entry (cont.’d)

Attitude aimed at success

• Communicate in simple English and quick follow-up

• Stress uniqueness of Product • Have patience with ”Trial and Error” • Be flexible• Keep schedules, promises,

commitment is key 　

Tips

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Most Common Mistake Made

by Foreign Partners• “Cold calling” prospective buyers in

Japan• The Japanese prefer to do business

with someone only when they have been properly introduced

• Rely on an introduction by a “go-between,” such as the North Carolina Department of Commerce representative in Tokyo

Tips

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What can the NCDOC Tokyo Office do for you?

• We work seamlessly with ITD BDMs (Business Development Managers) to provide you with– Market research– Basic Translation services– Temporary office space in central downtown

Tokyo location– Trade show assistance– Logistics/lodging assistance– “Fast Track” partner search services

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Where to start?• Contact International Trade Division, NC

Department of Commerce BDMs ( Business Development Managers)

tel. 919-733-7193http://www.nccommerce.com/en/BusinessServices/InternationalBusiness/InternationalTradeServices/

• Contact Sumio Shibata, NC Trade Representative in Tokyo

info@nctokyo.com tel +81-3-3435-9301fax +81-3-3435-9303