With a population of 127 million and the fourth-largest economy in the world, Japan is an economic powerhouse. Japan’s economy has returned to strong annual growth rates over the last decade after a period of stagnation in the 1990s and the global slowdown of the 2000s. Annual GDP growth has averaged 1.3% since 2012.
Economic growth in recent years has been supported by Prime Minister Shinzo Abe’s “Three Arrows” economic revitalization agenda of monetary easing, flexible fiscal policy and structural reform. Led by the Bank of Japan’s aggressive monetary easing, Japan is making modest progress in ending deflation.
Overall U.S. trade in goods and services with Japan was valued at $297.5 billion in 2018, with a trade surplus of $67.6 billion held by Japan. The country ranks fourth among U.S. export destinations and also among U.S. import sources. It was announced in late 2018 that negotiations would begin for a U.S.-Japan trade agreement. Discussions are ongoing, covering topics such as agriculture, standards for digital trade, and reducing Japan’s trade surplus.
Wisconsin exported $734.3 million worth of goods to Japan in 2018. Wisconsin’s exports to Japan declined by 6.88% in 2018 compared to the 2017 total, but rebounded in the first quarter of 2019 by 11.0% compared to the first quarter of 2018. Japan is the #6 destination for Wisconsin exports, with top categories including industrial machinery (which alone grew by 44.0% in the first quarter of 2019), medical and scientific instruments, electrical machinery, and prepared meat and seafood products.
In September 2019, the Wisconsin Economic Development Corporation (WEDC) will be leading a global trade mission to Japan. Wisconsin exporters of goods and services are invited to participate in this program, which will provide attending companies with meetings in Tokyo and Yokohama. In each city, participants will be scheduled for one-on-one meetings with potential partners in the market. These partners are chosen specifically for each participating company.
Participating companies will travel in a group with Wisconsin Governor Tony Evers, who will attend key group activities included in the program. Although the governor will not be present for businesses’ one-on-one meetings, his presence as part of the trade mission can help open doors and get meetings with higher-level executives at target companies.
Each participant in the global trade mission will also receive a company-specific Japan market assessment detailing considerations to keep in mind when introducing the company’s product or service into the Japanese market. WEDC has eyes and ears on the ground in the form of Wisconsin’s authorized trade representative—thus making it easier for Wisconsin companies to find local partners they can trust and taking some of the guesswork out of launching in a new market. With all your appointments arranged for you, you can focus on business rather than logistics and scheduling.
The program will also include a visit to Chiba City for group meetings with partners in Wisconsin’s sister state of Chiba Prefecture. The global trade mission is scheduled to align with the Midwest U.S.-Japan Conference, and participants will also be able to attend portions of the conference program as appropriate for their companies and business goals. Japanese participants in the conference include some of the country’s largest industrial and financial firms.
With a population of 35 million, the Tokyo-Yokohama metro area is the world’s most populous megacity. Because Japan is a large and well-developed economy, companies of just about any kind will find opportunities in this market. Japan is generally not the first export market Wisconsin companies pursue, due to the complexities involved, but new-to-export companies may consider attending as long as they understand that developing an export strategy and process will take time before their products are for sale in the Japanese market. In this relationship-based economy, attending companies will benefit from having a partner in the market to make personal introductions and help them navigate linguistic and cultural issues.
Wisconsin companies with expertise in the following areas are especially encouraged to attend:
- Aircraft and related parts, equipment and services
- Health technology
- Processed and consumer-ready foods
- Smart grid technology
- Cloud computing
- Defense procurement
- Education and training
- Renewable energy
Scarce in critical natural resources, Japan has long been dependent on imported energy and raw materials. After the complete shutdown of Japan’s nuclear reactors following the earthquake and tsunami disaster in 2011, Japan’s industrial sector has become even more dependent than before on imported fossil fuels and has sought alternative energy sources.
In addition to the size and relative affluence of the Japanese market, the benefits of exporting to Japan include being exposed to new technology, rigorous competition and, in some cases, the opportunity to partner with Japanese firms in third markets.
Japanese customers have a reputation for demanding high quality and innovative products and often having tastes that differ significantly from those of Western customers. U.S. companies wanting to be successful in the market should do their due diligence by conducting research and exploring the market firsthand before implementing costly strategies.