PowerPoint Presentation€¦ · PPT file · Web viewPerformance Then Now Net Margins 0 .2% (FY01) 4.8% (FY06e) Free Cashflow Y8 ... Import ¥163,545MM(US$1,485MM ... 2005: 126 million

1

Japan Market Brief March–April 2007

John E. PetersMinister Counselor for Commercial Affairs

U.S. Embassy, Tokyo

2

What’s Different? Performance ThenThen NowNow

Net Margins 0.2% (FY01) 4.8% (FY06e) Free Cashflow Y8.2trn (FY01) Y25.1trn (FY06e)

Non-Performing Loans Y86trn (FY01) Y4.2trn (FY06e)

Valuations Price to Earnings 68 times(1990s avg) 17 times (FY06e) Price to Cashflow 15 times(1990s avg) 5.4 times (FY06e)

Price to Book 2 times(1990s avg) 1.4 times (FY06e)

Ownership Crossholdings Ratio 51% (FY90) 20% (FY06e) M&A Cases 470 (per year, 1990s) 1,700 (2002-2006 avg.)

Courtesy of: Jesper Koll – Merrill Lynch Japan SecuritiesU.S. Commercial Service - Japan

3 Domestic Structural Up-Cycle: Capital Investment

Capital Stock Vintage in Years – All Sectors

Source: Cabinet Office ; Merrill Lynch

6.0

7.08.0

9.0

10.0

11.012.0

13.0

14.0

70 72 74 76 78 80 82 84 86 88 90 92 94 96 98 00 02 04 06 08

Years


4

No Lost Decade Here

Source: National Institute of Population and Social Security Research

Relentless Focus on Research & Development Spending(total R&D spending by public and private sector as % of GDP)

Source: NIPSSR

2.0

2.2

2.4

2.6

2.8

3.0

3.2

3.4

85 87 89 91 93 95 97 99 01 03 05

Japan

US

Germany

France


5Japan: Highest Patent Filings by National/Regional Offices

CY 2005

14,43627,98831,19232,253

60,222128713

160,921

173,327

390,733427,078

0

50

100

150

200

250

300

350

400

450

Japa

n

USA

Chi

na

Rep

ublic

of

Kore

a

Euro

pean

Pate

nt O

ffice

Ger

man

y

Rus

sia

Aust

ralia

UK

Mex

ico

Thou

sand

s

NonResident

Resident

U.S. Commercial Service - JapanSource: World Intellectual Property Organization

*These statistics are based on information provided by national and regional patent offices.

6

International Patent Filings

Source: World Intellectual Property OrganizationU.S. Commercial Service - Japan

1 USA 34.2% 6 UK 3.7%2 Japan 18.2% 7 Netherlands 3.3%3 Germany 11.7% 8 China 1.8%4 S. Korea 3.4% 9 Switzerland 2.4%5 France 4.2% 10 Sweden 2.1%

Top 10 International Patent Filings

International Patent Applications

01020304050

USA

Japa

n

Ger

man

y

S Ko

rea

Fran

ce UK

Net

herla

nds

Chi

na

Switz

erla

nd

Swed

en Italy

Can

ada

Aust

ralia

Finl

and

Isra

el

All O

ther

s

Thou

sand

s

2004

2005

7

Yes, A Trade Surplus with China

Japan Trade Balance With China (Peoples’ Republic + Hong Kong)

Source: Cabinet Office

-120-90-60-30

0306090

120150180210

00 01 02 03 04 05 06 07-20-15-10-505101520253035

Bn US$

Japan

US

Surplus

Deficit

6mmaBn ¥


8

Japan is Back on Global Scene

Source: Thomson Financial, Merrill Lynch

Strong Balance Sheets and Profits Trigger A New Global Investment Cycle:Outward M&A Accelerating Sharply

05

1015202530354045

83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07

Japan M&A$BnOut

In


9

Toyota Expects to Build PlantsToyota Motor Corp. is studying its projected 10-year

growth in the U.S. to build plants.“All I know is compared to today it will be more,” said

Jim Lentz, Executive Vice President of Toyota’s U.S. sales arms.

Toyota could build as many as five new North American assembly plants in the next 10 years.

Toyota’s U.S. Sales• 12.5% increase to $2.54 million• 5.5% increase to $2.68 million (projected)• New Tundra and Hybrids will drive the growth

Source: Detroit Free Press, January 17, 2007U.S. Commercial Service - Japan

10

One of the Largest ODA Contributors

• Ranked as the world’s top ODA provider from 1991 ~ 2000 (net disbursement basis)

• Assisted 185 countries and regions• Total amount disbursed until 2003: US$221 billion

J apan's ODA Spending

$13B

$9B$9B$9B$10B

$14B$12B$11B

$9B$9B

$14B

0

5

10

15

2019

95

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

(CY)

billi

on U

S$

Source: Ministry of Foreign Affairs, JapanU.S. Commercial Service - Japan

11

Cool NipponDo You Think This Country’s Products Are “Cool”?

Response By Consumers In Different Cities

0%10%20%30%40%

50%60%70%80%

JapanUSKorea

Source: NikkeiNote: China=Beijin, Shanghai, Guangzhou


12

Declining Population J apanese Population (2005~ projected)

100

110

120

130

140

1995 2000 2005 2010 2020 2030 (CY)

U.S. Commercial Service - Japan

Population:2006: 127.7 million (2006) 2030: 117.6 million (2030)Source: Ministry of Public Management, Home Affairs, Posts and Telecommunications, Japan

Ministry of Health, Labor and Welfare, Japan

13

The Most Aged Society Japanese Population Composite (%)

0

20

40

60

80

Year

%

0～14

15～64

65 andover

(2005 ~Projected)


65 yrs old and over 2005 26.82 million (21%) 2040 35.0 million (35%)

Total Population 2005: 126 million2040: 100 million

Source: Japan Aging Research Center

14

Consumer Confidence Index(excluding one-person households, original series)

Source: Economic and Social Research Institute, Cabinet Office, Japan


15.0

20.0

25.0

30.0

35.0

40.0

45.0

50.0

55.020

00 M

ar

2000

Sep

2001

Mar

2001

Sep

2002

Mar

2002

Sep

2003

Mar

2003

Sep

2004

Mar

2004

Sep

2005

Mar

2005

Sep

Consumerconfidence index

Overall livelihood

Income growth

Employment

Willingness to buydurable goods

15

U.S. Top Trading Partners

Canada

United Kingdom

China

Mexico

Japan

S Korea

Germany

Netherlands

Singapore

FranceOthers

CY2006 Exports (Goods) CY006 Imports (Goods)Germany

United kingdom

China

MexicoJapan

S Korea

Taiwan

Venezuela

FranceCanada

Others

Total U.S. Exports: $1,037.3 billionU.S. Exports to: Canada: $230.6 billion (22.2%) Mexico: $134.2 billion (12.9%) Japan: $59.6 billion (5.8%)Japan: $59.6 billion (5.8%) China: $55.2 billion (5.3%) UK: $45.4 billion (4.4%)

Total U.S. Imports: $1,855.4 billionU.S. Imports from: Canada: $303.4 billion (16.4%) China: $287.8 billion (15.5%) Mexico: $198.3 billion (10.7%) Japan: $148.1 billion (8.0%)Japan: $148.1 billion (8.0%) Germany: $89.1 billion (4.8%)

U.S. Commercial Service - JapanSource: U.S. Census Bureau

16 Japan’s Economy

• World’s 2nd largest economy• 2006 GDP: $4,712 billion • Longest boom in postwar period: - 60 months ~ (Feb. 2002 ~ current) - 57 months (Nov. 1965 ~ July 1970)

U.S.A.28%

Others41%

J apan10%

Germany6%

U.K.5%

France5%

China5%

-3-2-101234

%


Source: World Bank Source: Japanese Cabinet Office

World GDP (CY2005) Real GDP Growth Rate

17

Japan’s Top Trading Partners

(December 2006 Data - Provisional)Source: Japan External Trade Organization

Total Japanese Exports: $647.4 billion

Total Japanese Imports: $ 577.8 billion


J apanese Exports (CY2006)

0 50 100 150 200 U.S.A. China

S Korea Taiwan

Hong Kong Thailand Germany

Singapore UK

(billion US$)

2.4%

2.3%3%3.2%3.5%

5.6%6.8%7.8%

14.4%22.5%

J apanese Imports (CY2006)

0 20 40 60 80 100 120 140

China U.S.A.

Saudi Arabia UAE

Australia S Korea

Indonesia Taiwan

Germany Thailand

(billion US$)

2.9%3.2%3.5%4.2%

20.5%11.8%

6.4%5.5%

4.8%4.7%

18U.S. Trade in Goods with JapanU.S. Imports from Japan

100

110

120

130

140

150

160

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006(CY)

(in billion US$)

U.S. Exports to J apan

40.00

50.00

60.00

70.00

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006(CY)

(in billion US$)

Number of U.S. exporters to Japan (2005): 26,933Source: U.S. Census Bureau


19

Top 10 U.S. Exports to Japan

U.S. Commercial Service - JapanSource: U.S. Census Bureau

CY 2006

0 1000 2000 3000 4000 5000 6000 7000 8000 9000

Machinery

Optical, Medical, Surgical Instrument

Electrical Machinery

Aircraft, Spacecraft and Parts

Cereals

Vehicles and Parts

Inorganic Chemicals

Organic Chemicals

Plastic

Precious Stones, Metals

million US$

2.9%

2.9%

2.9%

2.9%

4.9%

13.8%11.1%

10.5%

9.8%

2.8%

20

CY2005 Service Exports Surplus$19.5 Billion

01020304050

(C Y )

billion

US$

Service Exports from U.S. to J apan Service Imports from J apan to U.S.

U.S. Commercial Service - JapanSource: Bureau of Economic Analysis, U.S. Department of Commerce

Imports Up 14.4% 2005: $22.3 billion2004: $19.5 billion

Exports Up 17.6% 2005: $41.8 billion2004: $35.6 billion

2005 Surplus:$19.5 billion

21

Major U.S. Service Exportsto Japan

Source: Bureau of Economic Analysis, U.S. Department of CommerceU.S. Commercial Service - Japan

0

2

4

6

8

10

12

14

2000 2001 2002 2003 2004 2005

(CY)

Billi

on U

S$Travel

Passenger fares

Freight

Port services

Royalties and licensefeesEducation

Financial services

Business

22

U.S. Private Services Trade Balance with Japan

0

5

10

15

20

25

(CY)

billion

US$

U.S. Commercial Service - JapanSource: Bureau of Economic Analysis, U.S. Department of Commerce

23Japan's Inward FDI*Cumulative (from end of 1996 through end of 2005)

Source: Japan External Trade Organization

*net international investment position


US leads at 251,676 million US$, followed by France and the Netherlands at 61,225 million US$ and 57,635 million US$, respectively.

Netherlands11.6%

UK4.5%

Sw itzerland3.9%

Hong Kong2.6%

Taiw an2.4%

Cayman Is.2.1%

Others8.8%

Germany6.3%

France12.3%

USA42.0%

USA

France

Netherlands

Germany

UK

Switzerland

Canada

Hong Kong

Taiwan

Cayman Is.

Others

24

U.S. Firms in Japan

1,554 U.S. affiliated firms in Japan


Foreign Affiliated Firms in J apan(49% or more equity)

European42%

Asian11%Other

2%

U.S.45%

1,5541,451390

83

(As of December 2005)

Source: “Foreign Affiliated Companies in Japan 2006” published in May 2006 by Toyo Keizai

25

U.S. Firms in Japan by Industry

Chemical21%

Electric Equip/ Parts

20%

Machinery15%

Pharmaceutical6%

Food5%

Other33%

Software14%

Other52%

Wholesale, Machinery

6%

Info Service9%

Wholesale, Electric

Equipment/Parts

9%

Service 10%

Source: “Foreign Affiliated Companies in Japan 2006” published in May 2006 by Toyo Keizai


Manufacturing Total 381 U.S. firms

Non-Manufacturing Total 1,173 firms

80

77

57

126

2219

169 118107102

70608

(As of December 2005)(As of December 2005)

26

Regulatory Reform: Steady and On-track with Significant Progress

• U.S.-Japan Regulatory Reform Initiative (RRI) established in 2001 as key component of U.S.-Japan Economic Partnership for Growth

• The 5th RRI report (June 2006) noted 85 points of significant Japanese progress in the ten areas under discussion: Telecom, IT, Med/Pharm, Financial Services, Competition Policy, Transparency, Privatization, Legal Systems Reform, Commercial Law, and Distribution

But there are still some lingering bilateral issues • The 5th RRI report underscores the need for continued efforts and

progress in all areas • Extreme concern about postal privatization, and triangular mergers

• U.S. beef imports: a major bilateral issue

• Some of Japan's acknowledged critical challenges are:- huge public debt - low birth rate; rapidly aging population; and projected labor shortages - income disparities; protracted lack of income growth and weak consumer spending - agricultural reform


27

Major Obstacles Faced by Foreign Firms in Japan

Source: Invest Japan Department, Japan External Trade Organization


28Insurance Market in JapanChanges in Japan’s Insurance Market

1. Japan’s financial “Big Bang”: Removal of “convoy system” (maximum control, industry protection, administrative guidance, and before-the-fact adjustment); U.S.-Japan insurance agreements.

2. Establishment of Financial Service Agency: Rules-based regulatory approach, self-responsibility principle and ex-post checking.

3. Changes in consumer purchasing trend: Emerging focus on living-benefit products vs. death-coverage due to demographic changes in Japan.

4. Increasing sales of variable annuities and third-sector products, led by U.S. insurance companies.

5. Partial liberalization of bank sales - fueled variable annuity market.

6. Growth of the U.S. share through purchases of Japanese life insurance companies in the late 1990s.

0.0%2.0%4.0%6.0%8.0%

10.0%12.0%14.0%16.0%18.0%20.0%

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005

Japanese Fiscal Year

U.S. Share in Life Insurance Market (premium income)

US Companies Non-US Foreign Companies

Japan is the second largest market for insurance in the world after the United States.

• $340 billion in JFY 2005 – direct net premiums

• U.S. insurance companies earned over $40 billion in life and $2 billion in non-life premium income – a major portion of revenues outside U.S.

Major U.S. Players in Japan

Aflac, AIG, Hartford, Prudential

Sources: USTR National Trade Estimate, Life Insurance Association of Japan, Insurance Research Institute, industry sources


29

Japan’s Environmental Market to Reach $560 billion by 2010 (METI forecast)

• Current Market: $500 billion• Outstanding commercial opportunities in:

- Asbestos abatement equipment and services:40 million tons in older building; 40 million tons in older building; Japan plans removing a million tons/yearJapan plans removing a million tons/year

- Soil remediation equipment and services - Industrial wastewater treatment technology - Renewable energy, including biomass technologies

• US passed the “Superfund Act” in 1980• Japan enacted a similar act:

“Soil Contamination Countermeasures Law” in 2002

Source: Ministry of Economy Trade and Industry (METI), Japan Environment Information & Communication Network, Japan


30

Major Projects in Japan In a horizon that stretches from the spring of 2007 over the next ten years, U.S. companies will have an opportunity to bid on construction projects with an aggregate value approximating $5.4 billion and on the supply of goods, equipment, or services in response to non-construction procurements valued at an aggregate of $18.16 billion. The following summary highlights this $23.56 billon in aggregate opportunities for U.S. firms.


Project Name Approx. ValueSecond Runway Central Japan International Airport $3 billionNaha International Airport (expansion) NAKansai International Airport NATokyo International Airport (Haneda Airport) expansion $810 million Okinawa Institute of Science and Technology $75 million Osaka Station North District NAMetropolitan main ring roads construction $780 millionMetropolitan Highway Project $310 millionThe Fish Wholesale Market relocation $430 millione-Japan Project: Biometrics Immigration System $33 millionSocial Insurance Agency (Pension) IT system $4.2 billionNational Police Agency (NPA): Fingerprint systems $3 millionOhma Nuclear Power Station $3.9 billionHigashi Dori No.1 Nuclear Reactor $3.3 billionTsuruga No. 3 and No.4 Reactors $6.4 billion

31

Major Projects – recent news

Employ competitive bidding for some 60% of its discretionary contracts, or about 2.1 trillion yen (approx. $18 billion)

To raise the percentage of contested public contracts to about 80% in terms of value

With plans to fully implement the change in fiscal 2007

For transparency of the process, the government is requiring ministries to disclose all contracts on their respective Web sites, as well as provide explanations for retaining discretionary contracts.

-Nikkei NewsJanuary 27, 2007


Govt To Seek Competitive Bids On 60% Of Discretionary Contracts

32

World’s 2nd Largest Medical Device Market

• The most important export destination for American medical devices

• The sector has consistently enjoyed a sizable (approximately $4 billion) trade surplus with Japan

• Approximately $5 billion worth of U.S. medical devices and supplies are sold in this market

• American products have approximately 60% share of the total imports

• The market for medical equipment in Japan remains strong, but

• American companies will continue facing severe challenges in both pricing and regulatory matters

70

18 146 5 2

0

10

20

30

40

50

60

70

USA Japan Germany UK France Korea

World's Medical Device Market in 2004

$ billion

Source: Country Commercial Guide

Market Share of Imported Medical Devices in 2004

58%

7%4%

10%

21%

United States Germany China Ireland Others

Source: Ministry of Health, Labor and Welfare

U.S. Commercial Service Japan

33World’s 2nd Largest Pharmaceutical Market

• The most important export destination for American pharmaceuticals

• The value of Japanese pharmaceutical market is approximately $60 billion

• The market share of American companies is estimated to be 15-20%

• Of the 99 leading global medicines, only 60 are available in Japan

• GOJ intends to accelerate the drug approval process and to offer incentives to develop innovative drugs

• Japanese market is increasingly promising for innovative pharmaceuticals, although American companies will continue facing severe challenges in both pricing and regulatory matters

182.7

60.326.7 22.4 15 14.5

0

50

100

150

200

USA Japan Germany France UK Italy

Leading Pharma Markets in 2005

$ billion

Source: IMH Health

Source:PhRMA

Availability of global 100 top-selling drugs in Japan in 2004

16

53

22

9 Launched within 2 years afterglobal launch

Lacunched with delay of morethan 2 years

Still under development orregistration

Not under development

31% still not available in Japan

Average 5.2 years of delay


34U.S. Machine Tools Forge Ahead of Swiss Products, Reclaiming Lost Ground

020406080

100120140160180200

(million $) 2004 2005 2006

USAGermanySwitzerland

U.S. exports jump 61% from $88 million in 2005 to $142 million in 2006.

Source: Ministry of Finance, Japan


35

Strong Exports of U.S. Aircraft and Aerospace Components

(in million $) 2003 2004 2005 2006

TotalImports 7,573 7,637 8,618 9,652

(% CHG) 1% 13% 12%

USA: 6,629 6,696 7,416 8,226

(% CHG) 1% 11% 11%

U.S. 88% 88% 86% 85%MarketShare:

0100020003000400050006000700080009000

10000

'03 '04 '05 '06

ImportsUSA$million

Overwhelming U.S. presence attests to long-term partnerships

Source: The Society of Japanese Aerospace Companies (SJAC), Ministry of Finance, Japan U.S. Commercial Service - Japan

36Boeing Country• 80% civil aircraft orders for

the past 10 years went to Boeing.

• ANA & JAL, first customers for Boeing 787s. 50 and 30 each beginning in 2008 (approx. $9.6 billion in total).

• Boeing forecasts Japanese demand at 1,176 aircraft (approx. $147 billion) for the next 20 years.

0

500

1,000

1,500

2,000

2,500

3,000

3,500

Airframes Egn Parts

USAEUASEAN$million

Airframes ($3,459 mil): USA, 90%; EU, 3%Afrm Parts ($1,427 mil): USA, 82%, EU, 13%Engines ($1,201 mil): USA, 92%; EU, 5%Egn Parts ($1,964 mil): USA, 90%; EU, 9%Source: The Society of Japanese Aerospace Companies (SJAC), 2005

Source: Boeing JapanU.S. Commercial Service - Japan

37

Biotechnology

Key Market Segments in Japan•Pharmaceuticals (antibody therapeutics) and Diagnostics•Functional Food•Agriculture•Bio-informatics•Equipment for Biotech Research (DNA chips; reagents, etc.)

15,500

16,000

16,500

17,000

17,500

2004 2005 2006(estimated)

Total Market Size(Million US$)

Source: Nikkei Bio Nenkan 2007

(+3.1%)(+3.1%)(+3.0%)(+3.0%)


38

Opportunity in Japan

Event: USA Pavilion at BioJapan 2007 Dates: September 19-21, 2007 Venue: Pacifico Yokohama (Kanagawa) http://expo.nikkeibp.co.jp/biojapan/eng/CS Contact: Tamami Honda, Commercial Specialist

U.S. Embassy, TokyoPhone: 81-3-3224-5876Fax: 81-3-3589-4235E-mail: [email protected]


39

20022003 2004

2005

Dow Chemical Japan

Dupont Japan 0

20000

40000

60000

80000

100000

120000

Value in million yen

Year

Dow Chemical Japan

Dupont Japan

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006

Inorganic Chemicals (HS 28)Organic Chemicals (HS 28)

Plastics and Rubber (HS 39-40)0

500

1,000

1,500

2,000

2,500

Value in USD million

Year

Inorganic Chemicals (HS 28)Organic Chemicals (HS 28)Plastics and Rubber (HS 39-40)

• U.S. chemical exports to Japan recovering

USD 5.3 billion in 2006


• Sales of Japan-based U.S. firms show underlying strength

USD 1.5 billion in 2005

Source: Japan Tariff AssociationSource: Dow Chemical Japan, Dupont Japan

U.S. Chemical Business in Japan

40

U.S. University Fair (IIE Fair in Japan ) for regionally-accredited U.S. colleges and universities:2006 Fairs Tokyo: Nagoya: 76 schools 32 schools 1,328 visitors 308 visitors2007 Fairs October 21 October 20For details and on-line registration: http://www.iiehongkong.org/fair/ufair/index.htm

Contribution of internationalstudents to US economy: $13.5 billion or $24K per student

Total International Students in USA

300,000

350,000

400,000

450,000

500,000

550,000

600,000

650,000

700,000

94/9

5

95/9

6

96/9

7

97/9

8

98/9

9

99/0

0

00/0

1

01/0

2

02/0

3

03/0

4

04/0

5

# of

stu

dent

sEducation: International Students

in the United States

(Source: Institute of International Education http://opendoors.iienetwork.org)


http://www.iiehongkong.org/fair/ufair/index.htm

41Education: Japanese Higher Education Abroad

Source: Institute of International Education (http://opendoors.iienetwork.org)

2005/06 Total Int’l students

564,766

= 100%

1 India 76,503 13.5%2 China 62,582 11.13 Korea 58,847 10.4 4 Japan 38,712 6.95 Canada 28,202 5.0 6 Taiwan 27,876 4.9 7 Mexico 13,931 2.5

International students in USATop 7 sending countries

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000

90,000

Japan

India

China

Korea

Canada

Taiw an

Mexico

Note: US – F-visa, Australia-new enrollments on student visa, Canada-study permits for college/university/ESL (no permit required if duration is 6 mos or shorter)

Japanese students destinations

05000

1000015000200002500030000

year

USA

Australia

Canada

(Source: Diplomatic Missions in Japan)


42Education: American Students at Japanese Universities

Source: Institute of International Education, Open Doors (http://opendoors.iienetwork.org)

US Students in Japan

1,500

2,000

2,500

3,000

3,500

4,000

4,500

1995/ 96 1996/ 97 1997/ 98 1998/ 99 1999/ 00 2000/ 01 2001/ 02 2002/ 03 2003/ 04 2004/ 05

Year US Students in Japan

Yearly Change (%)

Year US Students in Japan

Yearly Change (%)

1995/96 2,010 - 2001/02 3,168 21.011996/97 2,018 0.40 2002/03 3,457 9.121997/98 2,285 13.23 2003/04 3,707 7.231998/99 2,485 8.75 2004/05 4,101 10.631999/00 2,679 7.81 2005/06 n.a.2000/01 2,618 -2.28

1995/96-2004/05 +104.0%


43

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

18,000

20,000

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006 (CY)

Num

ber

(in T

hous

and)

Japanese travels to the U.S. Japanese travel abroad

Source: Office of Travel and Tourism Industries, U.S. Department of Commerce Japan National Tourist Organization

Japanese Outbound Travel


17,535(+0.8%)

3,672(-5.4%)

5,368

17,819

44

Japanese Travel to the U.S.

1,000

2,000

3,000

4,000

5,000

6,000

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

(CY)

Num

ber o

f Tra

vele

rs

(in T

hous

ands

)J apanesetravel tothe U.S.J apanesetravel toHawaii

3,672 (-5.4%)

1,374 (-9%)

Source: Office of Travel and Tourism Industries, U.S. Department of Commerce State of Hawaii


5,368

2,217

45

0

1,000

2,000

3,000

4,000

5,000

6,000

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006 (CY)

Num

ber

of T

rave

llers

(in T

hous

and)

Japanesetravels to theU.S.

US residentstravel to Japan

Source: Office of Travel and Tourism Industries, U.S. Department of Commerce

Japan & U.S. Outbound Travel5,368

3,672(-5.4%)

1,497(+40%)

1,287


46U.S. – Japan Telecommunications Equipment Mutual

Recognition Agreement (MRA) Signed on Feb. 16, 2007

Scope: Telecommunications terminal equipment and radio equipment subject to certification in Japan regardless of location of the supplier or country of origin of the equipmentTelecom MRA will lower costs and speed up the marketing in Japan of innovative U.S. telecom products, which is the fifth largest export market for the U.S.

Country 2005 2006Actual (billion USD)

Mexico 1.672 2.139Canada 1.683 1.596Netherlands 1.793 1.480United Kingdom 0.838 0.936Japan 1.035 0.833China 0.703 0.825Germany 0.522 0.583Hong Kong 0.442 0.564Venezuela 0.289 0.479Australia 0.437 0.442

Country 2005 2006Actual (billion USD)

China 14.056 17.848Mexico 5.507 6.518Korea 6.377 5.691Malaysia 4.485 4.165Canada 2.290 2.445Taiwan 1.311 2.413Japan 1.574 1.398Thailand 1.889 1.390Singapore 0.54 0.622Sweden 1.164 0.563

U.S. Export U.S. Import

Source: U.S. Department of Commerce, U.S. International Trade CommissionU.S. Commercial Service - Japan

47

Market Growth:•Strong at 4% and projected to reach US$173 billion by 2010•The amount of imported software was US$3.2 billion in 2005. Within imported software, the share of U.S. products is 90.3% and the amount has reached US$2.9 billionMarket Trends:•Enactment of Japanese SOX (Sarbanes‐Oxley act)•Growing corporate IT-related budgets *46% of Japanese firms will increase IT spending *34.5% will increase their spending by more than 20%

Security Software Market:•Rising awareness of the importance of IT security and related software•Tremendous growth at 21.9%•Current market size is $1.2 billion•Projected to reach $2 billion by 2010 at 11.2% growth

(Source: MIC Research Institute and Japan Information Technology Services Industry Association)

130

135

140

145

150

155

160

165

170

175

180

Software Market in Japan

(Billion US$)

US$ 147

US$ 173

Includes customized software, packaged software, game software, data services, etc.

74%

Packaged Software 8%

Game Software

Data ServicesOthers 2%

Customized Software

8%

8%

Percentage of Software sales in Japan

(Source: METI/ Ministry of Economy, Trade and Industry)

2005 2010

Software Market in Japan


48

Electronic Devices Market in Japan•U.S. plays a leading role in the Japanese semiconductor industry.

•Market share of U.S. electronic devices in Japan has grown to 26% and reached US$ 5.4 billion in 2005, compared to 17% and $1.7 billion in 1995.

•Total amount of imported electronic devices is US$23 billion.

•Demand for electronic devices in wireless applications, such as WiMAX, UWB/Wireless USB, WiFi and ZigBee is growing rapidly.

•WiMAX, in particular, is projected to reach US$827 million by 2010 from less than US$1 million in 2006.

Source: JEITA/ Japan Electronics and Information, 　　　　　 Technology Industries Association

0

10000

20000

30000

40000

50000

60000

70000

80000

2000 2001 2002 2003 2004 2005 2006 2007

(million US$)

Total Local Production

Total Import

Total Export


49

Current Status

Future Prospect

2008 Projection for sub-markets by equipment type: Image/monitoring market US$ 1.2 billion (35% up from 2005) Sensor 1.36 billion (71%up) Home security (equip.& service) 755 million (17%up) Access control 920 million (11%up) Residential security service 464 million (19%up)

Sub-sectors expected to grow and 2008 projections: Home Security Unit US$ 78.6 million

(50% up from 2005) Home Security Service 418 million (20%up) School Commuting Service 25.6 million (160%up) Community Security Service 4.3 million (600%up) Biometrics by Vein 132 million (300%up) on-Vehicle DVR 38 million (200%up)

Number of Home Security Service Contracts (two major security service companies)

0100200300400500

year

Uni

t:10

00

SECOM

ALSOC

Source: Mainichi Economist

Chart 2

• Emerging new sub-sectors demonstrating drastic growth: *School security US$ 57 million (350% increase since 2005) *Town security 18 million (125% increase since 2005) **Regional safety 22 million (5% increase since 2005 )

(*Emergency alert system; ** Mass notification system)

The market size of the Japanese security industry has been increasing over the years. The overall market (Chart 1) includes the sales and installation of security equipment and security services, such as guards. The total sales figures do not show a sharp increase as unit prices in general have decreased over the past few years due to stronger competition in the market. In security service contracts, there has been a tremendous increase (Chart 2). According to the National Police Agency the total sales of security service alone amounts to US $27 billion.

According to a May 2006 Fuji Keizai survey, trends in the security industry are: • A projected market size of US $ 4.8 billion for security equipment by 2008 - a 34% increase since 2005.

Chart 1Market Size of Security Equipment

9.18 9.1310.16 10.98 10.41 10.89

02468

1012

2000 2001 2002 2003 2004 2005year

billi

on U

S $

Source: Japan Security Systems Association$1=110.11 (ex.rate as of 2005)


Japan Market – Safety & Security

50

Market Growth

Chart 6

Security Cameras at Train Stations

20

2730

-5

101520253035

Mar, 2004 July, 2005 Feb, 2006month, year

Uni

t:100

0

Source: Ministry of Land, Infrastructure and Transport

Chart 3

Crime Rate

-

500

1,000

1,500

2,000

2,500

3,000

75 80 85 90 95 00 04

yearC

ase:

100

0

Source: National Police Agency

Chart 4

Recent Major Crimes and Security Camera Shipment

0

0.5

1

1.5

2

2.5

95 00 04year

billi

on U

S $

$1=108.15 (ex.rate as of 2004)

Sharp rise in break-ins by lock picking

Setagaya family slayings

Ikeda Elementary School slayings

Kidnapping, killing of a girl in Nara Prefecture

Source: Asahi News Paper(June 8th, 2006)

Places Where Citizens Think Terrorism Might Happen

0 20 40 60 80

BusPower Plants

Large Event HallsRailroad

US Facilities Downtown

AirplaneBullet TrainOffice Area

Subway 68.5%59.5%

53.6%43.4%

42.0%35.3%

34.4%31.3%

25.7%16.5%

Source: Nihon Keizai Shimbun, Research conducted by Macromill(July 18th, 2005)

Chart 5

Recent market growth is attributed to increased public concern for security: Crime related• Sky-rocketing crime rate including burglaries, arson, and child murders (Chart 3).• New types of crime such as credit card and e-mail scams, and identity theft.There is a direct relation between major crimes and the number of security cameras installed (Chart 4).Terror related• Fear of terrorist attacks is pervasive (Chart 5) while Mass Transportation Authorities respond by installing more cameras (Chart 6).

-Safety and security has become an important factor in selecting products or services; -Central and local governments are making full efforts towards a safer society in response to public concerns.


Japan Market – Safety & Security

51

Japan’s Food Service Market: Opportunities Remain for Innovative Themes and Superior Know-How

Sales Growth

9698

100102104106108110112

2001 2002 2003 2004 2005

%T otal

Fas t f ood r es taur ants

Fami l y r es taur ants

P ubs and tr adi ti onal J pnr es t .

Ful l tabl e s er v i c er es taur ants

C af es , c off ee s hops

Other s

Growth of Location Numbers

98

100

102

104

106

108

110

112

114

2001 2002 2003 2004 2005

% Total

Fast foodrestaurants

Familyrestaurants

Pubs andtraditionalJpn rest.Full tableservicerestaurantsCafes, coffeeshops

Others

Food service viewed as time-saving and a leisure activity Demand for value-added service and unique concepts Consolidation and diversification Orientation toward healthy and safe food

Best Prospects Fast casual Alternate meal solutions (deli, takeout, etc)

$270.6 bil220.550.1

737.54,050.3

Alt food solution

Employees (000s)Locations (000s)

Total Sales Restaurants etc.

Market Data

Market Composition

41.3 45.3 49.2 50.1

203.2 211.8 226.3 220.5

0.0

50.0

100.0

150.0

200.0

250.0

300.0

2002 2003 2004 2005

Bils of Dollars

Prepared Food Solution Food Service Subtotal

Source: Food Service Industry Research Center

Market Trends


"Dinning-out" Market - Still Large

224.4151.7 149.5

101.5 106.0

0.0

50.0

100.0

150.0

200.0

250.0

Food service Department,GMC

Automobile,bicycle

Clothing,accessories

Furniture,houseware,

etc.

Billions of Dollars

52 Opportunities in Japan's Cosmetics MarketU.S. As the 2nd Largest Exporter- 2006

Others19.6%

China9.0%

Belgium0.9%

Germany3.9%

United Staes21.9%

$312 million

Switzerland1.2%

Italy5.5% France

33.4%

UK3.6%

Taiwan1.0%

Cosmetics Market in Japan(In Million Dollars)

15,918 15,33914,23412,996 Total

13,200

11,753 89.04%

11,454 88.13%

12,39687.09%

13,14785.71%

13,67385.89%

1,485 9.33%

1,4829.66%

1,264 8.88%

1,025 7.89%

958 7.26%

7614.78%

709 4.63%

573 4.03%

517 3.98%

4883.90%

0

2,000

4,0006,000

8,000

10,000

12,000

14,000

16,00018,000

2001 2002 2003 2004 2005

TotalExportImportShipment

Gold Share Silver SharePerfm & toilet water 242,178 France 57.4% U.S.A. 10.5%Lip-make-up prep 91,151 France 48.2% China 17.8%Eye-make-up prep 105,964 France 48.5% U.S.A. 17.2%Manicure or pedic 30,637 U.S.A. 33.8% France 24.5%Toilet powders 14,656 France 46.1% U.S.A. 19.8%Beauty/make-up 42,500 France 45.3% China 13.8%Foundation cream 44,217 France 49.6% U.S.A. 23.4%Creams liquid form 55,458 U.S.A. 40.1% France 27.8%Beauty/make-up 167,512 France 32.0% U.S.A. 30.2%Beauty/make-up 248,735 France 40.3% U.S.A. 25.7%Shampoos 77,678 U.S.A. 0.0% China 3.4%Prep for perms 6 France 100.0% - -Hair lacquers 1,439 U.S.A. 44.8% Germany 4.4%Perfumed hair oil 10,254 China 25.0% Germany 15.2%Prep for use (others) 119,227 U.S.A. 15.8% China 11.0%Pre-/after-shave 6,602 U.S.A. 16.2% U.K. 15.6%Deodrants/antipersp 7,030 U.S.A. 16.7% Germany 13.0%Perf bath salts etc 24,820 China 42.6% France 17.4%Depilatories etc. *1 3,777 Germany 63.7% France 19.2%Depilatories etc. *2 128,205 U.S.A. 41.3% China 35.0%

Total 1,422,044 -- -- -- --

2006 Top 2 Import Country by Item (Millions of Dollars)

Item Total Import Top 2 Countries & Share

Source: Shukan Shogyo Co., Ltd., Fuji Keizai Co., Ltd, Cosmetics Importers Association of JapanNotes: *1: Depilatories and other perfumery, cosmetic or toilet preparations (with a basis of oil, fat or wax) *2: Depilatories and other perfumery, cosmetic or toilet preparations, n.e.s.

Domestic Shipment by Product Category-2005

Skin care43.8%

Make-up25.1%

Fragrance0.4% Hair care

27.0%

Special purpose

3.8%


53

Growth of 2x4 Housing Starts in Japan Annual (1997 – 2006)

50,000

60,000

70,000

80,000

90,000

100,000

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006

Houses based on North American 2x4 construction methods were first introduced into Japan in 1974. Over the past 10 years, 2x4 housing starts have shown significant growth and exceeded 100,000 units for the first time in 2006. Exports of U.S. building construction materials to Japan have supported this growth, exceeding USD $1 billion in 2005.

(105,390 units)


54

• Jewelry retail market was $11.3 billion in 2005.

• Japan is the 2nd largest overall jewelry retail market after the United States.

• 1/3 of retail sales are brand jewelry.

• Import brand Jewelry share:• 1995 7.9% ($1.7

bill)• 2004 21.4%

($2.4 bill)• US is the top supplier of precious

metal jewelry with a 24.3% share in 2006.– 1995 12.5% ($137 mill)– 2005 21.7% ($320 mill)– 2006 24.3% ($385 mill)

Top imports of Gold, Platinum, and Silver Jewelry in 2005:

Country Share % Country Share % Country Share %1 FRANCE 26.2 USA 51.01 USA 32.682 ITALY 26.13 FRANCE 19.18 ITALY 16.43 SWITZLD 9.1 HG KONG 6.73 THAILND 14.724 HG KONG 7.86 SWITZLD 5.92 CHINA 7.195 THAILND 6.25 ITALY 4.65 FRANCE 7.886 USA 5.37

Platinum SilverGold

Precious Metal Jewelry Imports

$0$100$200

$300$400$500

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

Year

Impo

rt V

alue

(in

Mill

ions

)

USAFRANCEITALYHG KONGTHAILNDSWITZLDCHINASPAIN

Jewelry Market

(Source: Japan Tariff Association)Source: Retail market size – Yano Research Institute;Brand retail sales – Japan Precious magazine;US imports – Japan Tariff Association


55Six Commercial Offices in Japan -- well-positioned to assist American exporters

• Over 40 professional staff and industry specialists in six locations

• From FY 2005 until present [30 months] the Commercial Service in Japan has:

- logged 3,700 consulting sessions with 2,300 clients

- provided successful

regulatory, policy, and bid advocacy on behalf of U.S. trade and investment interests

- and facilitated over 800 transactions worth $230 million for American firms from 42 states

Naha

Fukuoka

Osaka Nagoya

Tokyo

Sapporo


56

How the Commercial Service in Japan can help U.S. Companies

• Market Research & Due Diligence• Product Launches & Distribution Strategy• Partner Match Making• Trade Events• Trade Policy Advice• Web Postings• Government Procurement Advocacy• Industry Expertise/Business Counseling• Intellectual Property Protection Advice• Market Access Issues


57

Osaka-Kansai, Shikoku and Surrounding Prefectures

• GDP $980 billion, larger than Brazil, Korea, India, Mexico, Russia, or Australia

• 9-prefecture Kansai region is Japan's 2nd largest industrial, financial, and commercial area

• Also the 2nd largest population center with over 24 million people

• Home to firms like Panasonic, Nintendo, Kyocera, and some of the world's largest banks

• U.S. exports to the region up about 15% over 2005

• Much expansion and production abroad with over 5,600 firms having overseas subsidiaries

Commercial Service Osaka covers 14 prefectures:Osaka, Hyogo, Kyoto, Shiga, Nara, Wakayama, Tokushima, Kagawa, Ehime, Kochi, Hiroshima, Shimane, Tottori and Okayama.


58

Nagoya-Chubu • At over 8.7 million people, Japan's

third largest metropolis • Nagoya (population 2.2 million) is

Japan's fourth largest city • GDP $770 billion, over 25% of Japan's

GDP - about the size of Brazil, Korea, India, Mexico, Russia, or Australia

• 18% of GDP: has ranked number one in shipments from Japan for 28 consecutive years

• Manufacturing heartland; center for aerospace, automotive, ceramics, and machine tool industries

• Massive plant expansion and new investment

• MHI, FHI, KHI key players in Boeing 787 Dream-liner production

• Toyota recently moved 3000 international sales staff from Tokyo to Nagoya

• Projected to soon exceed Kansai in industrial production

The Commercial Service Nagoya covers 9 prefectures: Aichi, Gifu, Mie, Shizuoka, Yamanashi, Nagano, Toyama, Ishikawa, and Fukui


59

Fukuoka-Kyushu and Yamaguchi • Fukuoka City – population 1.3 million,

economic, educational and cultural center of Kyushu

• Traditionally known as the "Gateway to Asia"

• $410 billion economy; 10% of Japan's GDP

• Japan's fourth largest economic center; greater GDP than Switzerland, Belgium, or Sweden

• "Silicon Island" with 30% of Japanese semiconductor production

• Japan's most advanced automotive production; 10% of national output

• "Solar Island" as focus of Japanese solar cell activity

• Numerous R&D facilities in biotech, nuclear fusion, robotics, ceramics, high-speed ocean transport

• Southern Kyushu hosts Japan's two space launch centers at Uchinoura and Tanegashima

• Two key U.S. military facilities: Sasebo Navy base in Nagasaki, and the Marine Corps Air Station in Iwakuni


The Commercial Service Fukuoka covers 7 Kyushu prefectures: Fukuoka, Oita, Saga, Nagasaki, Kumamoto, Miyazaki, Kagoshima, and Yamaguchi prefecture

60

Sapporo-Hokkaido and Tohoku• Population 5.7 million • GDP $ 383 billion; about same size as

Belgium, Switzerland, or Sweden • Toyota and components firms

expanding high-tech production in Hokkaido

• Booming domestic and international tourism; 5.5 million tourists in 1988: now about 19 million tourists

• Strong resort investment and tourism from Taiwan and Korea

• The 90-minute intercity flight between Tokyo and Sapporo is one of the world’s busiest domestic route in terms of capacity, with more than 9 million annual passengers. Sapporo has 123 fights daily to 18 cities outside of Hokkaido, and 48 flights to and from Tokyo

• Growing ties with the Russian Far East and Sakhalin Island

• Tohoku regional trade with China has increased 300% since 2001

Commercial Service Sapporo covers:Aomori, Miyagi, Iwate and Akita


61

Naha, Okinawa Prefecture• GDP $31 billion; population 1.37

million • Busy tourism destination with a

record 5.64 million tourists in 2006 • Active construction sector:

opportunities for American know-how • Okinawa Institute of Science &

Technology Project • A front-runner as a gaming industry

destination? • Software development and call

centers growing: employ 9,000 at 37 centers, and 2,000 at 73 IT firms

• 25,000 American marines and airforce based on Okinawa; provide security to the region; U.S. bases are Okinawa's 2nd largest employer, contributing $3 billion annually to the economy


62

Top Ten Tips to Successfully Marketing in Japan

To Maximize your potential in the market, adhere to these Top Ten Tips.• Recognize the strategic importance of Japan, and be willing to invest the

necessary resources to capture some of the market• Plan, prepare and execute an effective, long term strategy• Investing in professionally translated marketing material is with every "yen."• Visit Japan Often.....Personal contact remains key even in the age of Webinars• Get "on the ground" advice from professionals already engaged in the market.• Dedicate a "Japan Champion" in the home office. (Compassion more important

that language ability.)• Take time to structure the deal and remember due diligence, including IPR

protection• Networking is key. Use contacts, including CS/Japan to help you meet

prospective partners/customers.• Cut-throat competition is a way of life in Japan. Listen to you clients for

greater success here and internationally• Your Agent is only as good as you are to your Agent. It's a partnership. Help

them help you.


63Useful Links• Web Japan (Information on Japan)

http://web-japan.org• U.S. Embassy Tokyo, Japan

http://japan.usembassy.gov• Japan External Trade Organization (JETRO)

http://www.jetro.go.jp• Japan Statistics Bureau & Statistics Center

http://www.stat.go.jp/english • American Chamber of Commerce in Japan (ACCJ)

http://www.accj.or.jp• American State Offices Association (ASOA)

http://www.asoajapan.org• Japan Federation of Economic Organizations (Keidanren)

http://www.keidanren.or.jp• Japanese Chamber of Commerce and Industry

http://www.jcci.or.jp/home-e.html• Trade Fair in Japan (by JETRO)

http://www.jetro.go.jp/en/matching/j-messe• The Japan Times

http://www.japantimes.co.jp


64


Website:

http://www.buyusa.gov/japan/en

Email:

[email protected]


Documents

PowerPoint Presentation€¦ · PPT file · Web viewPerformance Then Now Net Margins 0 .2% (FY01) 4.8% (FY06e) Free Cashflow Y8 ... Import ¥163,545MM(US$1,485MM ... 2005: 126 million