Introduction to Doing Business in Japan

January 19th 2011January 19th, 2011Kevin Kalb, Project Coordinator

Presentation OutlinePresentation Outline

• Japan’s Demographics and Economy

• Major Japanese Industries & TrendsMajor Japanese Industries & Trends

• Japanese Presence in the US

• Establishing Business in Japan

• What is JETRO?What is JETRO?

QUICK COMPARISONQUICK COMPARISONJAPAN USA

Land Area 145,925 sq mi 3,794,101 sq mi

Population Density 873.9 people sq mi 82.2 people sq mi 

2010 Population 127 million people 312 million people2010 Population 127 million people 312 million people

2030 Estimated Population 117 million people 323 million people 

• Japan is approximately the size of California and stretches from Maine to Florida.  

• Iowa has 3 times as much arable land as Japan.

• Tokyo is the largest metropolitan area in the world with 35.6 million people.

Tokyo 8.5 mil Kobe 1.5 mil Saitama 1.2 milYokohama 3.6 mil Kyoto 1.4 mil Hiroshima 1.1 mil

• Japan has 13 cities with more than 1 million people, compared to the USA’s 9 cities.

Osaka 2.6 mil Fukuoka 1.3 mil Sendai 1.0 milNagoya 2.2 mil Kawasaki 1.3 mil Kitakyushu 1.0 milSapporo 1.9 mil

(Japan Marketing Data 2008-09)(Japan Marketing Data 2008 09)

QUICK COMPARISONJ USA

QUICK COMPARISON(continued)

Japan USA

Life Expectancy (2009 est.)male: 78.8 yearsfemale: 85.62 years  

male: 75.65 yearsfemale: 80.69 years

GDP (2010 t ) $4 308 t illi (3rd) $14 624 t illi (1st)GDP (2010 est.) $4.308 trillion (3rd) $14.624 trillion (1st)

Per Capita GDP (2010 est.) $42,325 (17th) $47,132(9th)Source: UN, International Monetary Fund

• Japan has the world’s longest life expectancy. At the sameJapan has the world s longest life expectancy. At the same time, it also is the first industrialized nation to enter zero population growth.  

• Seniors in Japan have more than $13 trillion in household savings.

Japan’s Aging SocietyJapan s Aging Society

(in Thousand)

Higher CaseMedium CaseLower Case

Age of  65 or older

ation

Age of 15‐64 EstimatesActual

Popu

la

15 64

Age of

EstimatesActual

Age of 14 or younger

（Year）

Data : Ministry of Health, Labor and Welfare, Government of Japan

QUICK COMPARISONQ2010 est. GDP by country

Source: International Monetary Fund

WHAT DO JAPANESE MANUFACTURERS MAKE?

• Automobiles, heavy trucks and parts

• Electronics (consumer electronics, computers and semiconductors)

I d i l hi ( i li )• Industrial machinery (automation, tooling, etc.)

• Iron & Steel

• Petrochemicals• Petrochemicals

• Pharmaceuticals & biotechnology

• Advanced materials (composites, nanotech, etc.)( p , , )

65% of all Japanese exports are automobiles, heavy trucks or related parts.

Japan is home to six out of top 10 largest vehicle manufacturers in the world. 

Japan has 7 out of top 20 world's largest chip manufacturers as of 2005. 

In 2004, the Japanese food industry (including processing) was worth more than $800 billion, which is comparable to the food industries of the USA and the EU.

DEVELOPMENTS & NEW TRENDSDEVELOPMENTS & NEW TRENDS• New sectorsNew sectors

o Information and Communication Technology (ICT)o Green Technology & Clean Technologyo Medical & Biotechnologyo Service Robotics

“C l J ”o “Cool Japan”o Japanese Food and Food Ingredients

• New business modelso Services that can be adopted to meet needs of 

Japanese consumers (e.g., financial, real estate, logistics, funeral)T h l t f & li io Technology transfer & licensing

JAPANESE PRESENCE IN THE USAJAPANESE PRESENCE IN THE USAIn 2005, Japan was the second largest investor in the U.S.In 2005, Japan was the second largest investor in the U.S. (Survey of Current Business, Aug. 2006 ,Tables F4 & F5, pp. D11‐D12)

• UK 17.3%• Japan 11.6% ($190.3 billion dollars)• Germany 11.3%

In 2004, Japanese affiliated companies in the U.S. employed more than , p p p y614,000 people.  In 2007, there were over 1,900 Japanese affiliated manufacturing plants in the US (JETRO).

Beyond the economic impact, these companies import ideas like monozukuri and kaizen.

QUESTION: Where is Japanese manufacturing in the US?  Why is it there?

JAPANESE MANUFACTURINGJAPANESE MANUFACTURING FACILITIES IN THE USA

1987 1992 1995 1999 2002 2007Illinois 28 114 112 120 116 109

FACILITIES IN THE USA

Illinois 28 114 112 120 116 109Indiana 12 76 82 112 102 97Michigan 25 85 80 103 94 90hiOhio 16 128 138 183 170 165

Kentucky 10 70 84 100 102 116Tennessee 17 55 53 99 81 91Alabama 9 24 25 35 39 48Georgia 40 84 83 112 105 110TOTAL 157 636 657 864 809 826U.S. Total 550 1724 1696 2126 1961 1918

Source: JETRO Chicago Manufacturing Plant Survey 1988‐2008

WHAT MAKES JAPANESE ?MANUFACTURERS DIFFERENT? 

MONOZUKURI!MONOZUKURI!QUALITY Manufacturers are committed to quality, not just cost. 

EFFICIENCY Manufacturers focus on eliminating waste and inefficiency as much as possible ThisEFFICIENCY  Manufacturers focus on eliminating waste and inefficiency as much as possible.  This includes nonproductive activity (muda), inconsistencies (mura) and physical strain (muri).

KAIZEN  & GEMBA  The continual and ongoing process of improvement and learning by all employees from the CEO to production workers is kaizen Gemba means the actual place whereemployees, from the CEO to production workers, is kaizen.  Gemba means the actual place where work is done, where kaizen takes place.

KANBAN  Termed “Just In Time” in English, this means having the materials and workers at the i t d th li i ti i tprecise moment you need them, eliminating excess inventory.

FLEXIBILITY  Japanese production workers are usually skilled in multiple functions, allowing employees to be used shifted as need be. 

COOPERATION  Management and employees work together, building consensus before major decisions. 

CUSTOMER FOCUS Companies listen to their customers and give them what they need.

CHALLENGES FORJAPANESE MANUFACTURERS

• Over dependence on haken (temporary workers)

• >Automotive focus

• Endaka 2010 [Endakameans high yen recession. This is a state in which the yen is high compared to other currencies. Since Japan is highly dependent on exports, this can cause a recession.]

• Rise of Asian tech communities

• Low cost foreign production

• Under‐utilization of women in workforce

THE JAPANESE MARKETTHE JAPANESE MARKET1. Japan is the world's second‐largest market with a market scale ranking near the top of developed 

nations.  In fact, each of Japan’s geographic regions has an economic scale similar to or greater than many countries. 

2. The Japanese are sophisticated consumers with high purchasing power.  They tend to be early adopters and are eager to stay on the cutting edge with the latest technologies making Japan anadopters and are eager to stay on the cutting edge with the latest technologies, making Japan an ideal test market for new products.

3. Japan has a highly developed business environment. From major multinationals to small ventures, Japan’s world‐class companies produce innovative products and services.  Japan’s strong technology‐based industries offer many opportunities for foreign companies to partner with Japanese firms at all stages.

4. Japanese companies value loyalty and emphasize long‐term business relationships.  Foreign‐affiliated companies have long found their partnerships with Japanese companies to be ones ofaffiliated companies have long found their partnerships with Japanese companies to be ones of commitment and dependability, resulting in reduced costs and improved quality.

5. Japan is a global leader in technological innovation and product development.  Partnerships with Japanese firms enable foreign companies to leverage their respective talents, which is vital to 

i i l b ll titiremaining globally competitive.6. Japan offers foreign companies access to new Asian markets. Many consumer products that gain 

popularity in Japan, such as movies, game software, clothing and cosmetics, go on to become popular throughout East Asia.p p g

THE 3 P’s FOR DOING BUSINESS IN JAPAN

• Product & Management– Must be suitable or adaptable to Japanese consumers and businesses

• Japanese have a high standard of quality expectations and after sales service

• Patience– Japanese decision making takes longer that the American counterpart

• Relationship Building• Implementation of business transactionImplementation of business transaction

– Consensus building (Ringi System  and Nemawashi )

• Persistence– A trusting relationship must be built first– Long‐term commitment‐definition

About JETRO (Japan External Trade Organization)

JETRO, or the Japan External Trade Organization, is a government-related organization that works to promote mutual trade and investment between Japan and the rest of the world. o s o p o o e u ua ade a d es e be ee Japa a d e es o e o d.

As Japan’s official overseas trade & investment agency, JETRO’s network, resources and access are powerful tools unparalleled by any other organization or company.

Established: Established in 1958

E l A 1 680 (830 i J d 850 ) Employees: Approx. 1,680 (830 in Japan and 850 overseas) (As of April 2007)

Offices: JETRO has 36 offices in Japan and 73 offices in 54 countries world wide.

About JETRO ChicagoOUR MISSION:In order to strengthen the economic relationship between the U.S. and Japan it is our mission to assist Midwest companies and/or organizations Japan, it is our mission to assist Midwest companies and/or organizations enabling to expand their business ties with Japanese partners.

JETRO Chicago is responsible for 12 Midwest states

JETRO has 6 offices in the United States:Atlanta, Chicago , Houston , Los Angeles ,New York , San Francisco

Integrated JETRO Support

Setting up OfficeSetting up OfficeTime Frame

JETRO is a one stop 

service center ready to Time FrameIBSC

Consulting

service center, ready to 

assist companies with all 

of their Japan needs.

Business Business DevelopmentDevelopmentGroup Mission

B i M t hiBusiness MatchingAdvisor

Providing Providing Basic InformationBasic InformationAttractive Sectors, Success Cases

Sharing the Japanese MindsetSharing the Japanese Mindset

Incentives

Sharing the Japanese MindsetSharing the Japanese MindsetMonozukuri Seminar / Workshop etc

We are here to help your companyy y

JETRO Chicago Business Development Team

Ralph InforzatoDirector of Business DevelopmentTel: 312‐832‐6000 Ext 103

Kevin KalbProject Coordinator Business Development

Email: Ralph_Inforzato@jetro.go.jp

Tomonori ShibaharaDirector of Business Development

Project Coordinator, Business DevelopmentRobotics, automotive, and manufacturing inquiriesTel: 312‐832‐6000 Ext 205Email: Kevin_Kalb@jetro.go.jp

Director of Business DevelopmentTel: 312‐832‐6000 Ext 105Email: Tomonori_Shibahara@jetro.go.jp

G l C

Robert CorderProject Coordinator, Business DevelopmentBiotechnology & life sciences and business services inquiries

Galen CoxAutomotive Advisor, State of MichiganTel: 313‐378‐0330Email: galenrcox@gmail.com

Tel: 312‐832‐6000 Ext 204Email: Robert_Corder@jetro.go.jp

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Thank you!y

For more information, please visit http://www.jetro.org