"Within one month our revenues had jumped over 50%."

Business Opportunities in Japan

Japan Blossoms - Business Opportunities in Japan

Japan is an archipelago of 6,852 islands. The four largest islands are Honshu, Hokkaido, Kyushu and Shikoku, together accounting for ninety-seven percent of Japan’s land area. Japan has the world’s tenth-largest population, with over 127 million people. The Greater Tokyo Area, which includes the capital city of Tokyo and several surrounding prefectures, is the largest metropolitan area in the world, with over 30 million residents. Tokyo has the largest metropolitan economy in the world. According to a study conducted by PricewaterhouseCoopers, the Tokyo urban area had a total GDP of US$1.479 trillion in 2008, which topped the list. A major economic power, Japan has the world’s third-largest economy by nominal GDP, estimated at $5.855 trillion in 2011 by the IMF. It is also the world’s fourth-largest exporter and fourth-largest importer. Let’s dive into some of the business opportunities in Japan.

What are some of the biggest business opportunities in Japan?

Japan is a leading nation in scientific research, particularly technology, machinery and biomedical research. Nearly 700,000 researchers share a US$130 billion research and development budget, the third largest in the world, according to Bloomberg Businessweek. Japan is the world’s 2nd largest automobile manufacturing country, has the largest electronics goods industry, and is often ranked among the world’s most innovative countries leading several measures of global patent filings, according to statistics post by the World Intellectual Property Organization. Facing increasing competition from China and South Korea, manufacturing in Japan today now focuses primarily on high-tech and precision goods, such as optical equipment, hybrid cars, and robotics. As of 2010, Japan possesses 13.7% of the world’s private financial assets (the 2nd largest in the world) at an estimated $14.6 trillion, as reported by the Huffington Post.

Japan’s service sector accounts for about three-quarters of its total economic output. Banking, insurance, real estate, retailing, transportation, and telecommunications are all major industries. Japanese manufacturing is very diversified, with a variety of advanced industries that are highly successful. The fields in which Japan enjoys high technological development include consumer electronics, automobile manufacturing, semi-conductor manufacturing, optical fibers,  optical media, and biochemistry. Only 12% of Japan’s land is suitable for cultivation. Due to this lack of arable land, a system of terraces is used to farm in small areas, this results in one of the world’s highest levels of crop yields per unit area. Japan’s small agricultural sector, however, is also highly subsidized and protected, with government regulations that favor small-scale cultivation instead of large-scale agriculture as practiced in North America. Japan has one of the smallest tax rates in the developed world. After deductions, the majority of workers are free from personal income taxes. Value-added tax rate is only 5%, while corporate tax rates are high, according to an economic survey by the OECD.

Are business opportunities in Japan worth exploring?

Overall, Japan is a really great market to trade in. It very large and also quite rich, with the GDP per capita estimated at $42,820 in 2010. Japan ranks 20th of 183 countries in the Ease of Doing Business Index 2012. However, the market is highly competitive with many strong domestic and foreign companies operating in the market. The Japanese economy has had very little growth since its real estate bubble burst in the late 1980′s. Plus, the size of the market is also relatively stagnant, with the population largely stagnant and predicted to decline significantly by mid-century. But the current market holds plenty of promise for businesses looking to operate in a large stable market.

-Jay Zadey

 

 

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Author:Globial International Business Team

The Globial International Business Team researches, analyzes, and reports on all things related to global trade and business.

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