Japan Business Handbook 2016

Japan Business Handbook 2016Second Edition

Suhayl Abidi

Handbook - 22/2016Second Edition — March 2016

GoG-AMA Centre for International Trade

Japan Business Handbook 2016Second Edition

Compiled bySuhayl Abidi

For any queries, please contact: [email protected]

First Published: November 2014Second Edition: March 2016

Published byGoG-AMA Centre for International TradeAhmedabad Management AssociationTorrent-AMA Management CentreCore-AMA Management HouseATIRA Campus, Dr. Vikram Sarabhai MargAhmedabad 380 015Phone: +91-79-2630 8601 • Fax: +91-79-2630 5692Email: [email protected] • Website: www.amaindia.org

Contents

Highlights 1

Introduction 1

Economic Performance and Outlook 2

Key Laws and Policies for Investment 9

A Magnet for Investment 12

Focus Areas for Investment 16

Infrastructure 25

Important Industries 28

International Trade 34

Services Industry 46

Investment — Barriers, Risks and Challenges 49

Indo-Japan Economic Relations 52

Japan Business Handbook 2016 Introduction 1

Highlights

• Japan’s economy on recovery after two decades

• Japan is world’s third largest economy

• World’s fourth largest exporter and importer

• One of world’s largest markets - Third highest GDP

• Ranked 1st in the world for patent registration

• Ranked 1st in the world for R&D expenditure as a percentage of GDP

• Ranked 1st in the world for business environment

• World Class transportation system

• Ranked 1st in Asia on Global Peace Index

• World’s 3rd largest automobile manufacturing country

• Possesses over 10% of the world’s private financial assets.

• Aiming to reduce the effective corporate tax rate down to the 20% range

• World’s fourth in market size

• Tokyo Stock Exchange is world’s third largest in market capitalization

• World’s second largest IT and pharmaceutical market

• World’s No.1 in broadband penetration

• No. 1 in the world for life expectancy

• Ranked 3rd in the world for site of global headquarters of multinationals

• Number of hospital beds per 1,000 people (13.4) is ranked 1st among OECDcountries.

• The economic ripple effect of 2020 Olympics is estimated at approximately 3 trillionyen, and 150,000 jobs creation.

• World’s largest net importer of food products in the world

Introduction

Japan is the world’s third-largest economy, and its service sector contributes some 75% ofthe country’s GDP, with wholesale and retail trade, real estate services, and professionalservices as the major growth engines. With the declining importance of agricultural andmining sectors, which contribute collectively about 1% of the national income, the industrialsector accounts for the rest of the GDP. Transport equipment, food and beverages are themajor manufacturing industries of Japan.

Japan Business Handbook 2016

Fuelled by government-industry co-operation, a strong work ethic, mastery of hightechnology, and a comparatively small defence budget allocation, Japan has now developedan extremely technologically advanced economy and has the largest electronic goodsindustry, facing increasing competition from China and South Korea. It is also the world’s3rd largest automobile manufacturing country and possesses over 10% of the world’sprivate financial assets.

Economic Performance and Outlook

Two years have passed since “Abenomics”- a three pronged strategy of monetary loosening,fiscal stimulus and growth-oriented structural reform- was launched. Abenomics has had apositive effect particularly on the unemployment rate in Japan, recording an unemploymentrate of 3.1% in October, 2015. Japan’s nominal GDP growth is also impressive, achieving$4.06 trillion (500 trillion yen) this year for the first time since the financial crisis in 2008.

Two decades of sluggish growth and persistent deflation have reduced Japanese livingstandards below the OECD average. Gross government debt has risen to 226% of GDP, thehighest in the OECD, driven by rising social spending and inadequate revenues. Rapidpopulation ageing is putting continued pressure on public spending, while pushing downJapan’s potential growth rate to around ¾%. Abenomics – bold monetary policy, flexiblefiscal policy and a growth strategy to revitalise the economy and end deflation – had animmediate positive effect in 2013, thanks to the first two arrows. Growth was interruptedin the wake of the tax increase in April 2014, but resumed later in the year. OECD April2015

Macroeconomic Indicators and Projections

2011 2012 2013 2014 2015 2016

Demand and output (volumes)

GDP -0.5 1.8 1.6 0.0 1.0 1.4

Consumption: Private 0.3 2.3 2.1 -1.2 0.7 1.6

Government 1.2 1.7 1.9 0.3 0.8 0.7

Gross fixed investment 1.4 3.4 3.2 2.6 -0.2 0.6

Public -8.2 2.7 8.0 3.7 -4.8 -19.1

Residential 5.1 3.2 8.7 -5.2 -2.6 6.8

Business 4.1 3.7 0.4 4.1 1.7 5.3

Final domestic demand 0.6 2.4 2.3 -0.1 0.5 1.2

Stock-building -0.2 0.2 -0.4 0.1 -0.1 0.0

Total domestic demand 0.4 2.6 1.9 0.0 0.4 1.2

Exports of goods and services -0.4 -0.2 1.5 8.2 6.6 6.4



2011 2012 2013 2014 2015 2016

Imports of goods and services 5.9 5.3 3.1 7.2 3.0 4.7

Net exports -0.9 -0.9 -0.3 0.0 0.6 0.2

Inflation and capacity utilisation

GDP deflator -1.9 -0.9 -0.5 1.7 1.8 1.5

Nominal GDP -2.3 0.8 1.1 1.6 2.8 2.9

CPI -0.3 0.0 0.4 2.7 1.0 1.5

CPI -0.3 0.0 0.4 1.2 0.5 1.5

Core CPI -0.9 -0.5 -0.1 0.5 1.2 1.6

Unemployment rate 4.6 4.3 4.0 3.6 3.5 3.3

Output gap -1.7 -0.7 0.4 -0.4 -0.3 0.2

Memorandum items

World trade growth 6.7 3.0 3.3 3.0 4.5 5.5

Oil prices (spot Brent price in $) 111.2 111.6 108.7 101.4 60.0 60.0

Net government lending -8.8 -8.7 -8.5 -7.7 -6.8 -5.9

Net primary balance -8.0 -7.8 -7.8 -6.7 -5.8 -4.9

Gross government debt 209.6 215.5 220.3 226.0 229.3 231.5

Net government debt 127.3 129.3 122.9 128.6 131.9 134.1

Household saving ratio (%) 2.7 1.2 -0.2 1.1 1.6 1.4

Current account (% of GDP) 2.1 1.1 0.7 0.6 2.2 2.4

The economic expansion was derailed in 2015 by a sharp slowdown in demand fromChina and other Asian countries and sluggish private consumption. Output growth isprojected to pick up from around 0.5% in 2015 to 1% in 2016, as rising real wages supportconsumer spending. However, with the consumption tax hike in 2017, growth is likely toslow to 0.5%. Headline consumer price inflation, which has fallen close to zero with thedecline in oil prices, is projected to reach 1.5% by end-2017.

GDP PPP – Last 5 Years (US$ billion) Inflation – Last 5 Years (%)

4,700

4,600

4,500

4,400

4,300

3

2

1

0

-12011 2012 2013 2014 2015 2011 2012 2013 2014 2015



1.21%

72.5%

26.21% 18.53%

Agriculture Services Industry Manufacturing

GDP Composition %

The government’s target of a primary surplus by FY 2020 remains a priority to put grosspublic debt, which has risen to 230% of GDP, on a downward trend. Above all, achievingfiscal sustainability requires faster output growth through bold and wide-ranging structuralreforms. To sustain confidence in Japan’s public finances, a detailed and concreteconsolidation plan to achieve the FY 2020 primary surplus target is essential. The Bank ofJapan’s quantitative and qualitative easing (QQE) should continue until the 2% inflationtarget is sustainably achieved.

Exports and Production haveFallen Significantly

Index 2010 = 100

Private Consumption has Stagnated as theSaving Rate has Risen

Index 2005 = 100 %

Japan

104

102

100

98

96

94

112

110

108

106

104

102

100

4

3

2

1

0

-1

-22013 2014 2015

Real industrial production

Real exports

Private consumption index1

Saving rate2

1. The third quarter of 2015 is based on July and August 20152. OECD estimates from the first quarter of 2014

Source: Ministry of Economy, Trade and Industry, Bank of Japan; Cabinet Office; and OECD Economic Outlook 98 database. (http://dx.doi.org/10.1787/888933296342)

2012 2013 2014 2015



Japan’s reliance on thermal energy sources increased sharply following the Great EastJapan Earthquake, as all nuclear power plants were closed until mid-2015. The governmentenvisages that nuclear power will supply around 20% of electricity in 2030, compared toaround 30% before the earthquake, which would reduce energy costs and greenhousegas emissions. The plan to enhance competition in the electricity sector will facilitate theuse of renewable energy from its current low level and promote green growth. Japan’srelatively low taxation of CO2-emitting fuels, especially in heating and industrial processing,could be increased. OECD Nov 2015

OUTLOOK FOR 2016 AND BEYOND

Goldman Sachs estimates a slight upwards revision in GDSP from 0.6% in 2015 to 1.0% in2016.

“The outlook for the Japanese stock market in 2016 is that we are bullish in the Year of theMonkey… We expect to see double-digit earnings growth, driven by top-line growth andvery high operational gearing as opposed to a weaker yen,” says Kathy Matsui, vice chair ofGoldman Sachs Japan and chief equity strategist in Goldman Sachs Research.

Headline Inflation has Fallen Since Early 2014 Firms Face Shortages of Capacity and Labour

% Diffusion index, % pts

4

3

2

1

0

-1

-2

-3

Inflation target

2012 2013 2014 2015

Inflation (excluding tax hike)1

Inflation (including tax hike)1

Core inflation2 (excluding tax hike)1

2010 2011 2012 2013 2014 2015

15

10

5

0

-5

-10

-15

-20

Firm’s perception of their own labour situationFirm’s perception of their own capacity situation

1. In April 2014, the consumption tax was raised from 5% to 8%. The tax hike added 2 percentage points to inflation according toestimates by the Bank of Japan and the Cabinet Office.

2. OECD measure which excludes food and energy3. The diffusion indices show the number of firms responding they had an excess number of workers minus those reporting a

shortage and the number responding that they had excess capacity minus those with a capacity shortage. A negative number thusindicates an overall shortage of labour and capacity. Numbers for the fourth quarter in 2015 are companies’ projections made inSeptember 2015.

Source: OECD Economic Outlook 98 database; Bank of Japan; and OECD calculation. (http://dx.doi.org/10.1787/888933296354)



Ten Key Reforms in the Japan Revitalisation Strategy

1. Enhance corporate governance: Sustained growth in corporate value The JPX-Nikkei Index 400 was launchedAiming for sustainable growth through enhanced corporate in January 2014, followed by a Stewardshipin corporate value. governance as well as improved Code in February. A draft corporate

management and strengthened governance code would require listed firmsfundamentals supported by financial to have at least two outside directors on ainstitutions. “comply or explain basis”.

2. Reforms for management of Steadily implement reforms for manage- The Government Pension Investmentpublic and quasi-public funds. ment of public and quasi-public funds, Fund decided in 2014 to increase the

based on the recommendations share of equities in its portfolio andpresented by the expert panel. reinforce its governance structure.

3. Promotion of venture A ‘Venture ecosystem’ (virtuous The tax system for business angels wasbusiness: Creating an cycle of venture funding and made more user-friendly andentrepreneur-friendly business creation), leading to measures to promote crowd-fundingenvironment. globally competitive companies. were promulgated in 2014.

4. Corporate tax reform: Battering Strengthen Japan’s competitiveness as The FY 2015 tax reform will reduce thethe business environment for a global business location by reforming combined corporate income tax rateall companies. the corporate tax rate to a globally from 34.6% to 31.3% in FY 2016.

competitive level.

5. Stimulate innovation through Promote innovation of science and The budget for science and technology,science and technology and a technology and develop which had been managed by a number“Robot Revolution”: Japan as infrastructure that links innovative of ministries, was centralised in thea technology frontier. technology with new business. Council for Science, Technology and

Innovation to promote effective R&D.

6. Enhancing women’s Provide a working environment An additional 0.4 million childcare placesparticipation and advancement. conducive to women with/caring are being added to eliminate waiting lists,

for children and improve the together with another 0.3 million placesbusiness environment to enhance in after-school care for school-age children.women’s career advancement at These measures have contributed to aworkplaces. 3.9% rise in female employment since

late 2012.

7. Enable flexible working Develop more creative working Subsidies to maintain jobs are beingpractices: Improving the practices where performance is shifted to promoting labour mobility.talent pool. evaluated over number of hours Measures against overwork will be

worked. Spread and promote model reinforced and the government willcases of “diversified regular review flex-time and discretionaryemployment” focusing on job working-hour systems. The governmentduties, etc. Develop a transparent will propose a system to evaluate high-and globally recognised labour level professionals based ondispute resolution system. performance rather than working hours.

8. Attract talent from overseas: Create an environment where skilled Foreign trainees, who are allowed to stayA society where foreign professionals from overseas can plan in Japan for three years, will be allowedworkers play an active role. an active role. Conduct a drastic an additional two years.

review of the Technical Intern TrainingSystem for foreign workers in Japan.

9. Aggressive agricultural policy. Aim to double the income of farmers The production quotas for table rice areand farming communities by making being phased out over a five-year periodagriculture a growth industry. Draw by FY 2018. Reforms to agriculturalon corporate experience while cooperatives are planned.accelerating private-sectorparticipation in agriculture.

10. Healthcare industry and high Secure a sustainable social security A new health insurance scheme will bequality services: A stronger system and revitalise the healthcare introduced to give patients faster accesshealthcare industry and industry by establishing a structure to to new treatments that are yet to beimproved services. provide efficient and high quality services. covered by public health insurance.



JAPAN MARKET

Japan’s recent economic turnaround spells new opportunities for businesses across a rangeof sectors in a country that already has the strong fundamentals of a world-class economy.The Japanese market is a very rewarding market for products and services, in part becauseJapanese companies and consumers are prepared to pay premiums for quality, reliabilityand service. With Japan being the host nation for the Rugby world cup in 2019, the Olympicsin 2020, as well as the recently announced 86 billion economic stimulus plan by theGovernment, this is a country which offers significant business opportunities for firms willingto invest in exporting there.

Japan is a Prosperous, Sophisticated and Enormous Market

Japan is an enormous market, one of the world’s largest in terms of economic scale. Thescale of the economy of the country’s individual regions rivals that of some countries.

GDP Comparison between Japan’s Regions and Select Foreign Countries

Source: IMF “World Economic Outlook Database”; Prefectural Economic Almanac 2010", Economic and Social ResearchInstitution, Cabinet Office.



WHY THIS MARKET IS IMPORTANT

Nearly 60% of foreign companies see the massive size of the market as Japan’s attractiveness.In a government survey, 112 foreign companies out of 203 cited “size of the market” as theadvantage of Japan’s business environment.

Japan is the 3rd largest economy in the world - with GDP at nearly 4.5 trillion - twice thesize of the UK and its GDP per capita is 8 times that of China. Its population is 128 million,and is considered as the second most technologically powerful economy in the world afterthe US.

Japan is the world’s fourth-largest exporter and fourth-largest importer, as well as beingone of the largest overseas investors. It is an established home of innovation and hasexpertise in a wide range of industries, particularly in technology. It is also a leading nationin scientific research, particularly technology, machinery and bio-medical research.

Japan is the world’s third-largest automobile manufacturing country, has the largestelectronics goods industry, and is often ranked among the world’s most innovative countriesas many Japanese firms rank high for the number of international patent applications filed,including Panasonic which is the 1st in the world. The Tokyo Stock Exchange is the thirdlargest stock exchange in the world by market and Japan is home to 326 companies fromthe Forbes Global 2000.

In the Global Competitiveness Report 2013-2014 issued by the World Economic Forum,Japan ranked 10 out of 140 countries.

The difficulty of penetrating the Japanese market depends to a great extent on the productor service involved. Key variables include the degree of local or third-country competition,the number of regulatory hurdles to be overcome, and cultural factors such as language(both spoken and written), strict service and quality expectations, and business practices.Generally, tariffs on most imported goods into Japan are low. However, cultural, regulatory,or other non-tariff barriers continue to exist that can impede or delay the importation offoreign products into Japan.

JAPAN’S CREDIT RATINGS

Moody’s A1 StableS&P A+ StableFitch Ratings A Stable

Moody’s: Japan’s A1 Rating Supported by Fundamentals,Despite Heavy Debt Burden and Weak Growth

Singapore, November 26, 2015 — Moody’s Investors Service says Japan’s A1 issuer andsenior unsecured ratings and stable outlook are supported by fundamental features thatmake an extraordinarily high level of government debt affordable.



But the foremost credit challenge is bolstering debt sustainability through fiscal consolidation.It is unclear how the government can reach its balanced or near balanced primary fiscalbalance target by 2020 in the absence of stronger growth.

More robust economic activity will likely depend on the nature, speed of implementation,and effectiveness of structural reforms.

Japan Rating Cut by S&P as Abe Falls Short of Early Promise

16 Sep 2015

S&P sees little chance of Japanese revival anytime soon. China, South Korea are now bothrated higher than Japan

Standard & Poor’s cut Japan’s long-term credit rating one level to A+, saying it sees littlechance of the Abe government’s strategy turning around the poor outlook for economicgrowth and inflation over the next few years.

The move comes just a day after the Bank of Japan refrained from boosting record assetpurchases, betting there will be a resumption in growth and inflation. That’s left the onuson Prime Minister Shinzo Abe and his Cabinet to consider a fiscal stimulus package toboost what evidence indicates is a lacklustre recovery in the second half of the year so far.

“We believe that the government’s economic revival strategy – dubbed “Abenomics” – willnot be able to reverse this deterioration in the next two to three years,” S&P said in astatement. “Economic support for Japan’s sovereign creditworthiness has continued toweaken.”

Japan’s problems are mounting, with inflation near zero, the economy contracting lastquarter and debt rising as the population ages. The International Monetary Fund estimatespublic debt will increase to about 247% of gross domestic product next year.

Key Laws and Policies for Investment

INDUSTRIAL COMPETITIVENESS ENHANCEMENT ACT (EFFECTIVE ON JAN. 2014)

Ë%System of Special Arrangements for Corporate Field Tests - Preferential regulatory flexibilityto individual enterprises will be allowed as a special provision. The authority responsiblefor promoting specified businesses provides careful and detailed support for enterprises’new business initiatives.

• System to Remove Gray Zone Areas - By making it clear that existing regulations will beapplied to start-ups, enterprises are encouraged to enter new fields without hesitation.



• Encouraging Investment in Venture Businesses-As a corporate tax incentive, 80% of theinvestment amount in authorized venture funds is counted as a deductible expense bysetting aside reserve for investment loss.

• Promoting Investment in Cutting-Edge Facilities-Immediate depreciation or 5% taxreduction (for enterprises with a capital of less than 30 million yen: 10%, 30 to 100million yen: 7%) for investment in cutting-edge facilities will be introduced.

• Promoting Business Restructuring-For promoting the restructuring and merging ofbusinesses, investing companies count 70% of the amount of both investment andloans to an integrated company as deductible expenses by setting aside reserve forinvestment loss.

PRIVATIZATION PROGRAM

Japan has privatized many major state-owned enterprises over the last two decades. Inother instances, it has reorganized government-run businesses as separate companies,although the government remains the sole or primary shareholder of the reorganized entity.

A bill to allow the sale of airport operation management rights for 27 airports owned andoperated by the central government, including large regional airports like Sendai andHiroshima as well as 67 airports owned and operated by local governments, passed intolaw on June 19, 2013. Under the new law, local government operators of the airports mustinitiate the request for privatization of management, and the request must be approved bythe central government after a stakeholder review process. If approved, private firms wouldbe able to bid on operation rights at these airports while the central or local governmentswould maintain ownership of the land and buildings.

JETRO (JAPAN EXTERNAL TRADE ORGANISATION)

The Japan External Trade Organization (JETRO) is a government-related organizationpromoting mutual trade and investment between Japan and the rest of the world. As oneof our activities, we offer foreign investors with abundant information on all aspects ofdoing business in Japan, by providing expert consultation and offering free temporaryoffice space in major business areas across the country.

JETRO provides comprehensive support including translation and interpretation to foreigncompanies through:

• Consultation regarding administrative procedures required for FDI into Japan.

• Arranging meetings with officials of regulatory agencies, if needed.

• Relaying requests for regulatory reforms to the Japanese government.

FOREIGN DIRECT INVESTMENT (FDI)

According to the 2014 UNCTAD report on world investment, Japan was the 15th mostattractive destination for multinational companies in the 2014-2016 period. Its potentialappeal is very strong compared to other countries, but its performance in terms of reception



of FDI is weak. After slowing down in 2009 following the global economic crisis, Japanexperienced two consecutive years of disinvestment before FDI influx returned to positivevalues. In 2014, the influx reached US$ 10 billion.

The main asset of Japan is its position as a leader in matters of high technology, researchand development. The potential hindrances to investment are linguistic in nature and involveits business culture. The disaster that hit Japan on March 11, 2011 (the earthquake and thedevastating tsunami that followed), as well as environmental and health concerns aboutthe situation of the Fukushima Daiichi Nuclear Plant, could slow down foreign investmentfor a short period. However, Japan remains a key market for investors. In addition, theJapanese economy should be able to finance the reconstruction of the country without toomuch difficulty thanks to a surplus in savings accumulated over recent years. The growthstrategy of Prime Minister Shinzo Abe aims to double the value of the 2012 FDI stock by2020.

Foreign Direct Investment 2012 2013 2014FDI Inward Flow (million US$) 1,732 2,304 2,090FDI Stock (million US$) 205,752 170,710 170,615Number of Greenfield Investments*** 150 182 228

Source: UNCTAD, 2015

The government aims to double the Foreign Direct Investment (FDI) stocks in Japan by2020. The government has announced that it will develop an environment where allcompanies and human resources enjoy the benefits of global economy and facilitate full-fledged globalization in Japan in order to attract outstanding overseas manpower andtechnologies to Japan and to create employment and innovation. It will also aim to doubleinward FDI stocks to 35 trillion yen (US$455 billion) in 2020 (17.8 trillion yen at the end of2012 – US$231.4 billion).

• The benefits of FDI into Japan are its large scale economy, sophisticated infrastructureand human resources. However, foreign-affiliated companies evaluate expensive businesscosts including tax rates as hindrance to investment.

• Comparing business costs, property costs in other cities in Asia can be higher thanthose of Tokyo. The differences in employment cost for some occupations have beensignificantly reduced.

• There are many foreign-affiliated companies that have a large share in markets forJapan’s domestic consumer goods. Foreign-affiliated companies are the top sellers inbeverages, contact lenses and accessories.



A Magnet for Investment

WHY YOU SHOULD CHOOSE TO INVEST IN JAPAN

Strong Points Japan is the world’s third economic power. The purchasing power is one ofthe highest in the world. Technology is modern and innovative. Substantial means aredevoted to education and R&D. Accessing the Japanese market gives access to the rest ofAsia. The business climate is favourable. The population is ageing, which opens up a newdevelopment potential to meet the needs of the older age groups.

Weak Points

Over-regulation in Japan continues to restrain economic growth, raise the cost of doingbusiness, restrict competition, slow down the market entry and exit, and slow downinvestment.

Japan also suffers from:

• A highly insular and consensual business culture that is resistant to hostile mergers andacquisitions (M&A) and prefers to do business, especially M&A transactions, with familiarcorporate partners;

• Exclusive supplier networks and alliances between business groups that can restrictcompetition from foreign firms;

• Cultural and linguistic challenges;

• Labour practices that inhibit labour mobility, suppress productivity, and negatively affectskill development.

Government Measures to Motivate or Restrict FDI - In recent years, reforms in the financial,communications, and distribution sectors have encouraged foreign investment in theseindustries. The government still imposes some restrictions on the penetration of the Japaneseeconomy by foreign investors. Nevertheless, Japan’s Company Law has been re-examinedin 2009, which simplified and made access to the national market easier for foreign investors.

Japan is the centre of new trends and creativity and is a coveted testing ground for newproducts. Today, increasing numbers of companies around the world are partnering withJapanese companies to develop products and services, create innovative technologies, andconduct R&D projects.

Despite the challenges foreign investors occasionally face, confidence is rising among globalprivate equity firms that foreign investment into Japan will see an uptick in the year ahead.This sentiment was echoed by KKR co-founder Henry Kravis, who in September 2013 saidJapanese companies are shedding their bias toward foreign private equity investment asthey see the benefits private capital can offer their businesses. Perhaps in a demonstrationof this trend, Panasonic sold its healthcare equipment division to KKR in a spinoff transaction



worth ¥132 billion (US$1.33 billion) later that month. Similar transactions could follow asa number of struggling Japanese companies divest noncore assets and shed their long-time aversion to private equity.

Fundraising targets also reaffirm private equity’s interest in Japan. In July 2013, the CarlyleGroup launched its third Japan-focused fund, setting out to raise ¥98 billion (US$1 billion).Similarly, KKR will commit a portion of its recently raised Asia Fund II, valued at ¥591 billion(US$6 billion), to completing acquisitions and investments in Japan, with TPG set to followwith similar transactions after closing its sixth Asia fund.

INBOUND INVESTMENT FROM OUTSIDE ASIA

By the numbers, buyers from outside Asia have shown the most interest in Japan, completing66% of inbound transactions since 2010. In value terms, the divide is even more impressivewith non-Asian acquirers accounting for 84% of deal dollars, or roughly ¥3.4 trillion (US$35billion) in acquisitions.

The United States has accounted for the largest percentage of deal traffic with 75 deals or42% of inbound activity into Japan since 2010. Like other prospective buyers, US-basedfirms see Japanese companies as catalysts for growth. The high-tech edge Japanese assetscan provide creates an appealing allure, and US investors are willing to pay, a trendexemplified by the fact that the US accounted for 74% of deal value since 2010.

European buyers have likewise experienced significant deal volume over the past fouryears. Top acquiring countries included France with eight deals worth ¥47 billion (US$511million), Germany with six deals worth ¥46.2 billion (US$460 million), and the UnitedKingdom with five deals worth ¥138 billion (US$1.4 billion). The UK’s noticeable dealvalue included UK-based private equity firm Permira’s ¥98 billion (US$1 billion) buyout ofsushi chain Akindo Sushiro from its founding family and Japanese private equity houseUnison Capital.

More than a significant dollar amount, the Akindo Sushiro deal goes against historicaltrends pertaining to foreign investors. Historically, Japanese sellers, particularly family-runbusinesses, have shown a preference for local buyers over their foreign counterparts,demonstrating efforts to keep national brands and technology closer to home. As a case inpoint, in 2012 Elpida Memory, a struggling chipmaker, had originally sought an acquisitionby Toshiba. The bid, however, was lost to US-based Micron Technology.

INVESTMENT AID

Forms of Aid

The Japanese government’s program for promoting imports and investment takes the formof discounts and reductions of taxes, guarantees on loans, and loans at reduced rates.

It also takes the form of assistance for foreign exporters wishing to import into Japan.Following the effects of the disaster of March 2011, on December, 2011, the Ministry of



Economy, Trade and Industry (METI) announced that it would offer investment incentivesto ten foreign companies to establish high-value-added business operations in Japan.

Privileged Domains

Creation of jobs, national and regional development, protection of the environment, Aidfor research and development, poll of competitiveness.

Easing the Requirements for Accepting Highly Skilled Foreign Professionals

Requirements for annual income, research achievements, and accompanying parents/domestic servants have been eased.

Privileged Geographical Zones

Since applications for special zones for structural reform began being accepted, a total of910 zones have been established throughout Japan, each with its own distinctive character.Established at the initiative of local governments or private businesses, they are exemptfrom one or more national regulations. In practice, the acceptance of the projects raisessome difficulties, but in theory, this measure offers foreign investors attractive terms forsetting up. The Cabinet Office summarizes this policy.

Current efforts concerning the decentralization of public finances should soon allow localgovernments to use the fiscal tool to draw FDI to their areas.

Free Zones

Japan no longer has free zones or free ports. Nevertheless, the government wants to facilitateaccess to the Japanese market through access Zones for imported products located nearports and airports. Japan’s objective is to develop 22 zones like these with infrastructuresdesigned to facilitate imports and loans at preferential rates and tax reductions. Specialfunding has been allocated for the reconstruction of the Tohoku region that was devastatedby the March 11, 2011 disaster. Incentives exist for potential foreign investors in this region.

Designation of National Strategic Special Zones

Six areas designated as “National Strategic Special Zones” as part of bold regulatory andinstitutional reform to promote a range of international business and advanced industries.

Organizations Which Finance

The State, the Japanese development bank, the Japanese bank for international cooperation,Japanese financial corporation for SMEs make loans at advantageous rates. The regionalcorporation for the development of Japan develops “nurseries” for companies and obtainslong term reduced rate loans valid for foreign companies too.



INVESTMENT OPPORTUNITIES

The Key Sectors of the National Economy

Medical equipment, pharmaceutical products, biotechnology, dietary supplements, Electroniccomponents, software Aviation and spare parts, engineering services, the new generationof energy Tourism, education and training services, safety equipment, telecommunicationsequipment, the fashion market, real estate products.

High Potential Sectors

The car industry, retail trade, information and communication techniques, biotechnology,medical care, the environment, the sectors relative to elderly people.

Privatization Programmes

The energy sector (privatization program being studied).

The Ministry of Land, Infrastructure, Transport and Tourism (MLIT) is expected to begin newdiscussions on the possibility of further privatization of Narita Airport.

TENDERS, PROJECTS AND PUBLIC PROCUREMENT

• JETRO - Japan External Trade Organization, Tenders• Asian Development Bank, Procurement Plans in Asia• Tenders Info, Tenders in Japan• DgMarket, Tenders Worldwide

Sectors Where Investment Opportunities Are Fewer

Monopolistic Sectors The monopolistic sectors are :

• postal services• water• telecommunications: foreign investors are not allowed to hold more than 1/3 of the

rights to vote in Nippon Telegraph and Telephone Corporation (NTT), arms, explosives,atomic energy, aviation industries and aerospace.

Sectors in Decline Agriculture

Finding Assistance for Further Information

• Investment Aid Agency Japan External Trade Organization, JETRO• Invest Japan Business Support Centres (IBSC)• Kansai Council of Investment Promotion• Japan Invest Council• Business Development Centre Tokyo• Other Useful Resources Venture Japan• Doing Business Guides Doing Business in Japan - Japan Guide



• The Deloitte « International Tax and Business Guide » about Japan• Japan Commercial Guide 2010 - Buy USA• JETRO has supported over 10,000 projects for investment into Japan since 2003, among

which 1,136 companies have successfully established their bases in Japan. We areespecially reaching out to industries of environment, health, tourism and retail or R&Dbases.

Focus Areas for Investment

MAJOR GROWTH SECTORS

Tokyo Olympics 2020

While having the Olympic Games rarely proves to be the bonanza that optimistic consultants’reports predict, Tokyo’s victory in the race to host the 2020 Games is seen as a stimulant togrowth hopes and has been quickly dubbed the fourth arrow of Shinzo Abe’s Abenomicspolicy.

Tokyo pledged a compact, cost-efficient Games in keeping with an era of comparativeausterity, but the government nevertheless predicts a 0.5% boost to GDP in 2020. It believesthat the Games will add 3 trillion yen ($28 billion) to the economy in the lead up andcreate 150,000 jobs.

The overall spend for the Tokyo Games is modest, though, at just over 1 trillion yen (9.5billion), thanks to Japan having most of the necessary infrastructure in place, although it islashing out on a new stadium.

The opportunity that the Olympics really offers Japan, though, is the chance for it to reinvent,or at the very least, rebadge itself by proving that it has recovered from the March 2011tsunami, and is on top of the clean-up efforts at the Fukushima Daiichi nuclear power plantand is rebounding from years of economic stagnation.

“If the government’s growth strategies go according to plan, the benefits should be obviousto all by the time that the Tokyo Games are held in summer 2020. Economic partnershipswill have restored Japan’s international competitiveness, women will be much more activein society, and the Japanese labour force and university system will have become moreglobal in outlook, giving the Japanese people more of a spring in their step,’’ a recentNomura research report found.

Increasing the Share of Renewable Energy in Power Generation

According to the forecast on power generation released by the Japanese government inJune 2012, the share of renewable energy is expected to increase greatly from 11% in FY



2010 to 25%–35% in FY 2030. The government recognizes the rising importance ofrenewable energy and states that it will accelerate the development and use of renewableenergy in order to acquire energy security.

Specific measures include the widening of system operations, maintenance andimprovement of power grids, reformation of regulations on location, acceleration of technicaldevelopment, acquirement of backup power, and improvement of systems that enable usto live in harmony with the community.

The Market Size will Greatly Expand by 2020

The government estimates that the market size of renewable energy in Japan will greatlyexpand by 2020. The market size of solar power generation devices is expected to grow upto 1,287,600 million yen, which is 8 times larger than the 2008 figure. The market size ofwind power generation plants is expected to grow up to 249,000 million yen, which is 4times larger than the 2008 figure, and the growth expectation of lithium-ion batteries is upto 600,600 million yen, which is 14 times larger than the 2008 figure. With regards tocharging stations and geothermal power generation plants, their market sizes were smallin 2008 but they are predicted to grow up to 148,000 million yen and 78,400 million yen,respectively, by 2020. New energy business is expected to grow up to 2,431,100 millionyen, which is 32 times larger than in 2008.

Solar Power Systems

Expanding the market share of products by overseas manufacturers The market size forsolar power systems in Japan in FY 2012 was 1,624,763 million yen. The amount forresidential systems was 869,071 million yen (53.5%) and the amount for non-residentialsystems was 755,692 million yen (46.5%). The government’s subsidy system for theintroduction and the feed-in tariff program for surplus power will continue and the systemprice is likely to drop. Therefore, the market is predicted to continue to grow after FY 2013.

As for residential systems, the percentage of adopting solar power systems to new housesby large home builders was over 50% in FY 2010, and the percentage is also rising amongmedium-sized and small home builders.

The number of cases where the systems are introduced to existing houses is also increasingas various subsidy programs are available and the introduction cost is dropping. Accordingto the estimation by Yano Research Institute, the four major companies of Sharp Corporation,KYOCERA Corporation, Panasonic Corporation, and Mitsubishi Electric Corporation accountedfor 70% or more of the market in FY 2010. However, the technology for solar cells made byoverseas companies is approaching the level of Japanese manufacturers in terms ofconversion efficiency and other qualities. It is expected that the market share of overseasmanufacturers will increase as the competitiveness grows with regard to the productionscale and the price.

As for systems for public and industrial use, the market suddenly expanded after FY 2009because the government introduced solar power systems to educational facilities. Since FY



2011, however, the market size has been shrinking because the installation at educationalfacilities settled and major subsidy.

Wind Power Systems

Products by overseas manufacturers account for 70% of the wind power market in Japan

The wind power introduction volume (cumulative) in Japan in FY 2012 was 2,649,000 kW,and the single-year capacity was 92,000 kW. The market size was 73,800 million yen in FY2010. The volume of new introductions to the wind power business decreased after 2010because of the cancellation of subsidies for the construction of new businesses in anticipationof the feed-in tariff program, in addition to the confusion caused when power companieslimited the capacity required and the Building Standards Act was revised, but the markethas been improving since the feed-in tariff program started in July 2012. Because windpower generation became applicable to the environmental assessment in FY 2012, theintroduction volume is not increasing at the moment, but the introduction volume is expectedto increase sharply from now on.

According to reference material provided by the Japan Wind Power Association, more windpower has been introduced to windy regions such as Hokkaido, Tohoku, and Kyushu.Aomori has remained number one in terms of the volume of introduction since 2008. Withregards to the newly introduced facilities with 10,000 kW or more, Aomori Prefecture had22,000 kW, Kagoshima Prefecture had 20,000 kW, Ibaraki Prefecture had 16,000 kW, andAkita and Hyogo prefectures had 12,000 kW, in FY 2012.

The major Japanese companies in this sector are Japan Steel Works Ltd., Hitachi Ltd., andMitsubishi Heavy Industries Ltd. Foreign-affiliated companies based in a subsidiary or abranch in Japan that are developing businesses in Japan are Vestas Wind Technology JapanCo., Ltd., GE Japan Corporation, and Enercon Industries Corporation. Compared with theworld market, the Japanese market for wind power systems is delayed in some areas.According to the results so far, more than 70% of the products are manufactured by overseasmanufacturers, which shows that the barrier to entry is low for foreign-affiliated companies.

LIFE SCIENCES

Japan is the second-largest market in the world after the United States, occupying about10% of the market in each of the global drug and medical device markets. Many foreign-affiliated companies have entered the Japanese market and are now active as major playersnow in various fields.

An aging society with fewer children is growing in Japan today. The percentage of thepopulation aged 65 and older is higher compared to other developed countries. In addition,medical expenses are on the increase every year due to “an increase in the number ofelderly aged 75 years and older with characteristics of high consultation rate for chronicdiseases, high disease rate, and high nursing care utilization rate,” “an increase in thenumber of elderly who live alone and cannot expect support within the family,” and “anincrease in medical cost per person due to the upgrading of the service in medical care and



nursing care.” To solve these problems the government, in the “Japan Revitalization Strategy,”set the goal of the “realization of a society where people are able to live a healthy life andgrow old by enhancing effective preventive care services and health management”, and atthe same time worked out a policy of aiming to improve international competitiveness ofmedicine-related industries. In the “Regulatory Reform Implementation Plan” decided bythe cabinet in June 2013, the government specified four priority action items for therealization of a “healthy life expectancy society” to build an environment for the medicine-related market.

The building of a market environment in the life sciences field in Japan is in progress, withadvances in regulatory reforms by the government such as simplification and speedup ofprocesses through deregulation relating to regenerative medicine and medical devices;promotion of new drug research and promotion of the use of generic drugs; establishmentof Orphan Drug/Medical Device Designation System; and release of Guidelines for theQuality, Safety, and Effectiveness of Biosimilar Products.

Promotion of Deregulation Relating to Regenerative Medicine and Medical Equipment

At present, the Japanese government is promoting regulatory reform for simplification andspeedup of approval processes relating to regenerative medicine products and medicaldevices. The “Regenerative Medicine Promotion Act” was passed on April 26, 2013, topromote the market entry of private companies, such as by permitting the subcontractingof the processing or culture of cells used for regenerative medicine, which was previouslylimited to medical institutions, to private companies. In addition, on May 24, 2013, thecabinet approved a “revision of Pharmaceutical Affairs Law” to allow private third-partyorganizations to certify regenerative medicine products and medical devices to speed upthe use of such products and devices; action is being taken to move toward deregulation.

Promotion of New Drug Research and Promotion of the Use of Generic Drugs

For such purposes as innovative new drug research and the development of non-insuredtreatment, a “premium for promoting new drug research and resolving problems of treatment

Chart 1: Global Drug Market –Market Share by Country

Chart 2: Global Medical Device Market –Market Share by Country

Source: “The World Pharmaceutical Markets Fact Book2012”, espicom

Source: “Medistat World Medical Market Forecasts to2017”, espicom



not covered by insurance” was introduced, and it was practically agreed that until genericdrugs were marketed, the relevant drug prices could be maintained as is. The governmentset the goal for the share of generic drugs in the total quantity of dispensed drugs to reach60% or more by the end of March 2018, and reviewed a “premium for dispensing genericdrugs added to a basic fee on receiving a prescription in pharmacies.” For the percentage ofgeneric drugs in quantity relative to the total quantity of drugs dispensed for the latestthree months, pharmacies that have dispensed more generic drugs than previous premiumtargets are being highly evaluated so as to further promote the use of generic drugs.

Introduction of Priority Measures to Orphan Drug/Medical Device Approval Processes

Drugs or medical devices can be designated as “orphan drugs or medical devices” if theyare intended for use in less than 50,000 patients in Japan and for which there is a highmedical need, so that they are subject to priority review for marketing authorization toensure that they are supplied to clinical settings at the earliest possible opportunity.Categories of lower user fees are applicable to review for marketing authorization ofdesignated orphan drugs. In this market, foreign-affiliated companies in particular can takeadvantage of their strong point; when the market environment is ready, these companiesare expected to be active.

Building of an Environment Through Introduction of Guidelines Relating to Biosimilar Products

Unlike chemically synthesized drugs, in developing biosimilar products, it is often difficultto verify that the active ingredients of a biosimilar product are identical to those of thereference biopharmaceutical product. Given that new assessment guidelines, different fromthe guidelines used for evaluating generic versions of chemically synthesized drugs, werethus necessary, “Guidelines for the Quality, Safety, and Effectiveness of Biosimilar Products”were established in March 2009. Thanks to the release of the said guidelines, companiesare entering the biosimilar product market at an increasing rate.

Medical Device Market

High-end models sold well in the medical equipment industry The size of the domesticmarket for medical equipment in FY 2011 was 2,385,998 million yen, 103.0% of the marketsize in the previous year. The volume of imports from overseas companies amounted to1,058,373 million yen, occupying 44.4% of the total. Of all the medical devices, the marketfor high-end models is booming for the following reasons: While the number of operatingrooms has decreased throughout Japan due to (rationalization by) merging and closingdown hospitals, the number of operating rooms in special functioning hospitals has increaseddue to such hospitals’ extension or reconstruction, and a supplementary budget was postedby the government. The fields in the medical device market where foreign-affiliatedcompanies are expected to be active include endoscopic surgery medical equipment,magnetic resonance imaging (MRI) equipment, medical X-ray computerized tomography(CT) equipment, artificial organs, catheters and tubes, and interventional radiology (IVR)products.



Drug Market

Many foreign-affiliated companies active in the drug market The size of the domestic marketfor drugs in FY 2011 was 9,380,257 million yen, 104.8% of the market size in the previousyear. The volume of imports from overseas companies amounted to 2,531,292 million yen,occupying 27.0% of the total. The introduction of a “premium for promoting new drugresearch and resolving problems of treatment not covered by insurance” had a significantimpact on the domestic medical drug business and worked especially in favour of foreign-affiliated companies in Japan. For the number of FY 2012 new drug research premiumtarget items, eight foreign-affiliated companies are included among the top ten companies.

Generic drugs, biopharmaceutical products, and biosimilar products are areas to whichattention should be paid in the domestic drug market. Generic drugs Since theimplementation of the policy promoting the use of generic drugs in 2002, the generic drugmarket has expanded every year. The size of the domestic market in FY 2011 was 910,000million yen*. The number of products and the number of companies entering the marketwill continue to increase in the future, making the market active and further expansive.Major domestic companies in the said market include Nichi-Iko Pharmaceutical Co., Ltd.,Sawai Pharmaceutical Co., Ltd., Towa Pharmaceutical Co., Ltd., and Nipro PharmaCorporation. Foreign-affiliated generic pharmaceutical product companies have also enteredthis market. They include Teva Pharma Japan Inc., Sandoz, and Mylan Laboratories Ltd.Biopharmaceutical drugs

As with the global drug trend, driven by the antibody drug market, the domesticbiopharmaceutical product market shows a tendency toward expansion. Antibody drugsare used to treat cancer and rheumatoid arthritis.

Biosimilar Products

In contrast to the above, the size of the domestic market for biosimilar products for FY2011 was 4,000 million yen*. Because the guidelines were released in March 2009 andbecause the major portion of domestic biosimilar product patents will start to expire around2014, many companies are announcing their entry into this market at an increasing rate.

Regenerative Medicine

The size of the market for regenerative medicine in FY 2012 was 9,110 million yen. Themarket size in FY 2020 is expected to be 95,440 million, 10 times larger compared to thatin FY 2012.

INFORMATION TECHNOLOGY – JAPAN’S LARGEST INDUSTRY

Production by the electronics industry in Japan is estimated to have risen 7% year on yearin 2015, to ¥12.6 trillion, following 2014 when positive growth was seen for the first timein four years. It should rise 3% year on year in 2016, to ¥12.9 trillion, the third straight yearof increase. They are very positive signs.



In 2015, global production by Japanese electronics and IT companies (including offshoreproduction) appears to have increased for the third straight year, rising 7% year on year, to¥42,796.8 billion, mainly thanks to the strong performance of flat televisions and electroniccomponents and devices and an unexpectedly large positive effect of exchange rates. Globalproduction by Japanese electronics and IT companies in 2016 is expected to rise 2%, to¥43,481.6 billion, reflecting a stronger orientation towards high-performance and high-end products in the world market, the advantage of Japanese companies in energy-savingand downsizing, and an expected rise in aggressive IT investment in the Japanese market.

In 2015, the business environment for Japanese companies was positive thanks toAbenomics. In flat televisions, demand for larger screen sizes and high-function, high-performance and high-end products was well established and remained firm overseas.Also strong were needs for products such as smartphones that incorporated technologiesat which Japanese companies excel on the strength of their high reliability and energysaving. Consequently, production of electronic components, display devices andsemiconductors remained solid. Although the market for standalone products in whichJapanese companies have traditionally been dominant was eroded by the spread ofsmartphones, production by Japanese electronics and IT companies (including offshoreproduction) in 2015 is estimated to increase 7% year on year, to ¥42,796.8 billion, partlydue to the larger-than-expected benefit of exchange rates. Of this total, electronics productionis seen increasing 8%, to ¥36,825.8 billion. In 2016, the world economy is expected togrow moderately. In electronic components and devices, needs for the kind of highly reliableand high functional products at which Japanese companies excel are expected to increasefurther with the growing presence of IT in automobiles and the expansion of IoT equipment.In IT solutions and services, growth in new IT investment is anticipated, given moves towardsaggressive IT management and accelerating trends towards security measures in theJapanese market. In addition, as IT investment in industry and social infrastructure, inparticular, is expected to gain momentum towards the Tokyo 2020 Olympic and ParalympicGames, global production by the Japanese electronics and IT companies should see positivegrowth in 2016.

After rising for the first time in four years in 2014, domestic production by the Japaneseelectronics industry in 2015 is expected to increase for the second straight year, climbing7% year on year, to ¥12,580.2 billion. Moreover, 2016 should see a third consecutive yearof increase in domestic production by the industry, with an increase of 3% year on year, to¥12,942.6 billion, on the strength of an expected rise in exports of electronic componentsand devices and an anticipated improvement in domestic demand going forward.

Big Data Market — Expecting Future Market Growth Analyzing big data for marketing isnow drawing attention. For this reason, the big data market is largely comprised of BI(business intelligence) services, where a large amount of a company’ s data is used for itsdecision-making after being stored, analyzed, and processed. The market size of big data inFY 2011 was estimated to be 190 billion yen, including software license, system architecture,hardware, and support.



The positioning and role of big data are likely to change in the short, medium, and longterm, and the market size will expand accordingly. With active use of big data for companybusiness, in the long run, the market size is predicted to become 630 billion yen in FY2017, more than 3 times the current size, and to exceed 1 trillion yen in FY 2020, morethan 5 times of what it is today.

ERP Market — Expecting Future Revitalization of the Market. The ERP package licensemarket plunged due to the Lehman shock in 2009, followed by the Great East JapanEarthquake and the floods in Thailand, and its growth rate remained in the single digitsuntil 2011. However, the market seems to have recovered from the economic downturn in2012 and is back in a full uptrend. With a steadily increasing number of projects to newlyinstall ERP for replacement of aging systems, business enhancement, and improvement ofoperating processes, the market has now been revitalized. High-priority ERP investmenttarget systems include SCM (supply chain management), production management systems,and accounting systems. This can be because there is a need for global production, inventorymanagement, distribution optimization, and quick understanding and management ofbusiness information.

Mill

ion

Yen

1,200,000

1,000,000

800,000

600,000

400,000

200,000

02011 2012P 2013P 2014P 2015P 2016P 2017P 2018P 2019P 2020P

Fiscal Year

Forecast of Big Data Market Size

The above chart is based on the following possible scenarios:

a. Short-term (FY 2011): Stimulate investment mostly in data analysis for sales improvement and economy of speed.b. Medium-term (around FY 2015): Promote investment in the use of big data for a competitive advantage, leading to

industry structural change.c. Long-term (around FY 2017): Use the big data technology for the infrastructure of smart cities, optimising waste and

excess in society.

Source: Yano Research Institute, “Big Data Market 2012”



Cloud Computing

The Cloud Computing market in Japan is witnessing an influx of telecommunicationscompanies. These companies possess the necessary infrastructure required for cloudcomputing, which makes it easier to enter the market. All the three majortelecommunications companies, KDDI Corp., NTT Communications Corp. and SoftBankTelecom Corp., have established themselves in the market. These companies with theirmany data centres are involved in providing IaaS. During the forecast period, these companiesare expected to gain a larger market share.

Analysts forecast the Cloud Computing market in Japan will grow at a CAGR of 9.7% overthe period 2013-2018. According to the report, the growth of the Cloud Computing marketin Japan is driven by several factors, one of which is the increasing adoption of cloud-basedsolutions in SMEs. In order to deliver better services and achieve greater operational efficiencySMEs are adopting cloud solutions. As cloud computing penetrates Japanese businesses,big data technology/services demand is also increasing. This market size was $211 millionin 2012, expected to reach more than $10 billion in 2017 according to IDC Japan.

cPDM (Collaborative Product Definition Management) Market

The analysts forecast the cPDM market in Japan to grow at a CAGR of 10.5% over theperiod 2014-2019.

The cPDM market in Japan is divided into two application segments: Comprehensive cPDMand cPDM Focused Applications.

The report, cPDM Market in Japan 2015-2019, has been prepared based on an in-depthmarket analysis with inputs from industry experts. The report covers cPDM market landscapeand its growth prospects in the coming years. The report also includes a discussion of thekey vendors operating in this market.

Integration of PLM software with MES software in enterprises is a major trend emerging inthe market. This has led to the integration of ERP, MES, and PLM, leading to reducedproduct development time, costs, and production of quality products.

According to the report, an increase in product recalls from automobile manufacturingcompanies in Japan is one of the key factors driving the market. The effective use of cPDMsolutions helps minimize product defects, making the product more refined and impeccable.

Further, the report states that the use of enterprise resource planning software as acollaboration tool in several companies across industries in Japan poses a challenge to themarket. ERP software is a business management solution that enables organizations tointegrate all business operations, including product planning, product development,manufacturing processes, inventory control, and distribution for optimal management.

Nanotechnology

Over the last two or three years, R&D on organic-inorganic hybrid perovskite solar cells,organs-on-chips, trillion sensors, quantum computers, atomically thin two-dimensional



functional films (e.g., graphene), topological insulators, and MOFs (metalorganic frameworks)among other topics have been attracting worldwide attention. Since 2000 Japan has steadilyproduced technological achievements that have drawn attention around the globe, includingthe discovery of iron-based superconductors, the development of MOFs, and thedevelopment of perovskite solar cells. All of these achievements were made in the midst ofheated competition. In Japan, the Tsukuba Innovation Arena - Nanotech (TIA-nano) iscurrently expanding its funding and the numbers of participating researchers and researchprojects.

Japan is also earnestly developing the Nanotechnology Platform for the shared use ofstate-of-the-art research equipment in the fields of nanofabrication, nano-structural analysis,and molecule and material synthesis. Japan, however, faces a shortage of specializedpersonnel capable of supporting users of facilities, equipment, and software and engagingin the accumulation and advancement of skills, as well as the necessity of putting in placecareer paths for such personnel. Any of Japan’s industry, academia, or government sectorshave not yet found any policies that are adequate for securing and fostering the personnelin the long term and a stable manner. In addition to these issues, there are several otherproblems in Japan, including approaches to bridging basic bionanotechnology research toclinical applications, strategies for handling intellectual property in university research andin collaborative research between industry and academia, strategies for promotingstandardization in nanotechnology, and risk assessment regarding environmental, healthand safety (EHS) issues as well as ethical, legal, societal implications (ELSI), and socialacceptance.

Japan’s green nanoelectronics market is estimated to grow to approximately $ 911 billionby 2030.

Infrastructure

SHOSHA — A UNIQUE JAPANESE INSTITUTION

Originally the “SHOSHA” were known as trading companies, and then the term evolved togeneral trading companies. In the interim however, they have expanded and diversifiedtheir functions and business fields to include not only trading, but also investment as wellas services and industry development.

Shoshas develop global business processes, form value chains, and enhance the efficiencyof distribution to improve the traceability of products and their added value. Or they connectenterprises in different lines of business to create another business that these enterpriseseach cannot create alone. Furthermore, they can pick up and plant seeds of small businessesto grow them into a large business.

Infrastructure 25


Therefore, Shoshas act as organizers who participate in business to create businesses. Theyare capable of connecting one with another to make three as a result of synergy effect,instead of two. This is the greatest strength that Shoshas have.

Another strength they have is that Shoshas are able to “transform” themselves. Their businessused to be centred on B-to-B buying and selling. It has been transformed significantly withtime. Today, they make investments to earn their interests through stock dividends, formalliances with overseas corporations, or acquire ownership of business.

The global economic presence of Asian economies has been increasing continuously. Asiancountries are showing a high rate of contribution to global economic growth. The rolesdemanded of Japanese companies that have built robust supply chains in these countriesand those of “Shosha” have increased in direct proportion to the growing presence ofAsian economies.

Building Supply Chains as Part of Offshoring Operations

In response to continuing global economic advancement, Japanese companies havevigorously expanded into Asia as part of the offshoring of their operations to cut productioncosts and mitigate the yen’s appreciation. In tandem with the liberalization of trade in theAsian region, Japanese companies have built robust regional supply chains.

Today, upgrading supply chains within the region is essential to the management strategiesof Japanese companies. Even when considering recent rises in wages in Asian countriesand the correction of the yen’s excessive appreciation, Asian business expansion is stillexpected to remain crucial, with a sustainable growth trend projected for the future.

Shosha Roles Expand in an Increasingly Borderless World

Shosha are fulfilling a variety of roles to promote infrastructure systems exports. In theproject formation and finance stage, Shosha identify and propose projects by gatheringand analyzing information on trends in demand, regional characteristics and other factorsin the host country, as well as structuring financing arrangements. Furthermore, in theengineering, procurement and construction phase, Shosha are responsible for arranginglogistics and negotiating with the government officials of the host country. In the projectmanagement and operations phase, Shosha manage projects to secure profits whilecontrolling business costs. Specific examples of major infrastructure projects in Asia are theindustrial parks in the Thilawa, Dawei and other zones of Myanmar, the Indonesia EconomicDevelopment Corridor, and the Delhi-Mumbai Industrial Corridor in India.

INDUSTRIAL DEVELOPMENT ZONES (IDZS)

Japan no longer has free-trade zones or free ports. Customs authorities allow the bondingof warehousing and processing facilities adjacent to ports on a case-by-case basis.

Infrastructure 26


National Strategic Special Zones Law Established (effective on Dec. 2013)

Under a law passed in late 2013, Japan is moving to set up new “National Strategic SpecialZones” (NSSZ) to implement selected deregulation measures intended to attract newinvestment and boost regional growth. In March 2014, the Special Zones Advisory Councilchaired by Prime Minister Abe selected six initial locations for the new Zones, including themetropolitan areas of Tokyo, Osaka, and Fukuoka.

The zones offer experimental sites for regulatory reform in various sectors such as education,medical care, etc.

Location (Sector): Tokyo zone (International business and innovation), Kansai zone (HRand medical care, etc.), Niigata city (large-scale agriculture), Yabu city (hilly and mountainousarea agriculture), Fukuoka city (employment), Okinawa prefecture (sightseeing)

Goal: To form an international business base that gathers money, people and companiesfrom around the world and to create new internationally competitive businesses throughstart-ups and innovation in the areas of drug creation, etc., by building the most business-friendly environment in the world, which also takes the 2020 Tokyo Olympic and ParalympicGames into consideration.

Program Contents: Under the process of being determined in the zone plan afterexamination by the National Strategic Special Zone Council for the Greater Tokyo Areacomprising the national government, relevant local government, and private businesses.

SPECIAL ZONE FOR ASIAN HEADQUARTERS

Launch date 2011

Areas Central Tokyo and waterfront area, Shinjuku Station vicinity, Shibuya Station vicinity,Shinagawa and Tamachi stations vicinity, former site of Haneda Airport

Goal: To gather more Asian regional headquarters and R&D centres by attracting foreigncompanies to the special zone in order to raise Tokyo’s international competitiveness andlead Tokyo to further growth.

Target (by 2016)

Target numbers: At least 500 foreign companies, including 50 companies establishing theirAsian regional headquarters or R&D centres.

Target industries: All industries including IT, medical/chemical, electronics/precisioninstruments, aviation, finance/securities, and content/creative

Program contents: A menu of tax incentives, deregulation, and administrative and financialsupport is prepared for foreign companies advancing operations to the special zone for thefirst time. A one-stop consultation desk providing assistance in the English language hasalso been established to allow foreign companies to conduct business smoothly in thespecial zone and so that employees and their families can feel reassured about living in

Infrastructure 27


Japan. Other measures include multi-language dissemination of information, provision0ofoffices with high performance and functions, which are resilient against disasters, and thepreparation of a comfortable business and living environment for foreigners.

Establishing an Office

Before setting up an office in Japan, companies may wish to examine programs of Japan’sMinistry of Economy, Trade and Industry (METI) for promoting foreign investment intoJapan. Programs include loans available through the Japan Bank for InternationalCooperation and the Development Bank of Japan. Entry-level business support programsare provided by the Japan External Trade Organization (JETRO) as well as by some municipaland prefectural governments. Current information on investing in Japan, establishing anoffice, and other JETRO programs for foreign businesses can be found on JETRO’s websiteat http://www.jetro.go.jp.

Important Industries

Japan’s strength lies in technology. From handheld consumer tech to advanced industrialcapabilities, Japan excels in innovation.

Japan’s industries are globally competitive, and, as can be seen in the automotive sector,the nation’s industrial structure is broad-based, with a large number of smaller companiesfunctioning to support the world heavy weights. For foreign companies, Japan is not just anattractive sales market, in all of its sectors, Japan offers foreign companies extensiveopportunities.

As the East Asian market grows rapidly, the economic integration between countries in theregion continues to strengthen. Japan is becoming ever more important for companiesfrom around the world as a location for regional headquarters and R&D bases to supporttheir push into Asia.

However, Different companies in Japan have developed technologies for a part of the totalpackage. The collaborator should seek cooperation and license from different companiesto make bid for a complete package. Competition for desalination projects is a good example.Japan has the world-class technologies applicable to individual key components, such asthin film technology. Nevertheless, Japanese corporations have had difficulty putting thesecomponents together into one coherent project, and so they have been unable to win.Offering an advantage over their competitors for just one part of the whole project is notenough. If they are able to put together different pieces of knowledge and wisdom into acoherent whole centred on the key components, the result would be in the best interest ofnot only the companies, but the whole of Japan.



AGRICULTURAL PRODUCTS

The ageing Japanese agriculture sector is seeing some green shoots in the form oftechnological innovations. The use of robots in primary industries of agriculture and fisheriesand utilisation of data in dairy farming is proof that the agriculture industry is makingchanges in the way it operates - a long- awaited development for the traditionally old-fashioned and less progressive industry.

The Japanese government has launched a series of initiatives to support technologicaladvancements in the agriculture industry, including an investment of US$10 million inrobots aimed at reducing farming workloads and investments into cloud-based agriculturetechnologies, such as wearable devices and peripherals for monitoring livestock.

On the political front, the government’s plan to diminish the influence of the once-powerfulCentral Union Agricultural Cooperative (JA-Zenchu) is a strong indication that much-neededstructural reform of the agriculture industry is under way. By 2019, the JA Zenchu is expectedto become a general incorporated association with co-ops having the option of engagingindependent auditors instead of working with those associated with JA Zenchu. By reducingthe power of the union, the government is sending out a clear sign that it is serious aboutthe reforms, as further reflected in the increased openness towards a compromise for theTrans-Pacific Partnership (TPP).

AUTOMOBILE, AUTO COMPONENTS AND ACCESSORIES

In 2014 Japan’s gross exports rose by 4.8% from the previous year, and imports increasedby 5.7%. In value terms, automotive exports grew 3.8% from 2013 to 14.8 trillion yen,while automotive imports increased by 10.4% year-on-year to 2.1 trillion yen.

Passenger car and commercial vehicle demand in Japan in 2014 totalled 5.56 million units,an increase of 3.5% from the previous year. Total passenger car sales grew 3.0% to 4.70million units, with standard cars rising 2.7% to 1.44 million units, small cars dropping 3.4%to 1.42 million units, and minicars surging 8.8% to 1.84 million units. Meanwhile, sales oftrucks and buses increased 6.2% and 6.5% from 2013, to 851,000 and 12,000 unitsrespectively.

The auto sector is enjoying rising sales in its three major markets: the U.S., Europe andChina. This view is corroborated by sales increases 5.4%, 8.2% and 2.8% year over yearrespectively in the U.S., Europe and China over the first four months of 2015.

In 2014 motor vehicle production in Japan increased for the first time in two years, totalling9.77 million units, up 1.5% from the previous year. Passenger car production grew 1.1% toa total of 8.28 million units. Within that category, standard car and minicar production rose0.9% and 11.0%, to 4.66 million and 1.87 million units respectively, whereas small carproduction dropped 7.3% to 1.75 million units. Truck and bus production showed an increaseover 2013, growing 3.8% to 1.36 million units and 5.4% to 139,000 units, respectively.



One trend visible is that Japan’s crowded auto industry is poised to look more like othermajor markets, with three or fewer carmakers left by the end of the decade.

The 500 trillion yen ($4.4 trillion) economy is home to eight automakers, including theworld’s sales leader Toyota Motor Corp., and other global players such as Honda Motor Co.and Nissan Motor Co. Toyota’s deal in January 2016 to acquire the remainder of DaihatsuMotor Co. for about $3.2 billion in stock may represent the dawn of a leaner Japanese autoindustry, according to Takaki Nakanishi. By 2020, the Jefferies Group LLC analyst sees thenation’s ranks of carmakers shrinking to no more than three company groups, driven bythe rising costs of competing to make cars cleaner, safer and more connected.

For Japan’s second-tier car companies, the cost of keeping up with investments in cleanerpowertrains and automated driving systems is getting prohibitive. Daihatsu PresidentMasanori Mitsui, for one, said the 109-year-old company opted to become wholly ownedby Toyota as it struggled to keep up with the rise of electric cars, as well as autonomousand connected-car technologies.

An automobile typically is composed of 20,000 to 30,000 parts, all of which even thelargest vehicle manufacturers cannot produce themselves. Automakers therefore eitheroutsource production or purchase finished products (such as tires, batteries, air conditionersand audio systems). Finished products purchased by the automakers include productsmanufactured abroad, and the volume of imported components increases yearly. Automobilemanufacturing is thus an integrated industry because it relies on many supporting industriesto produce the great diversity of materials and components it uses.

CONSUMER ELECTRONICS

The Japanese electronics industry is the largest consumer electronics industry though theshare of these Japanese companies gradually declined by competition from South Koreaand Taiwan. Japan still has a number of companies that produce television, camcorders,audio and video players, etc.

Decline Softens in 2015 Thanks to New Technology and Tourist Demand

Consumer electronics continued to see retail volume decline in 2015. However, the yearsaw the softest annual decline of the review period. This was partly due to growing touristdemand but was also linked to Japanese consumers buying into new product areas. Theemergence of smartphones offering popular elements of feature phones notably encouragedconsumers to switch to smartphones. Meanwhile consumers were also attracted byconvertible tablets, BD players and 4K internet smart LED TVs.

Mainstream Consumers Seek Multifunctional Devices

Most consumers in Japan are increasingly using one or two devices for a wide range offunctions, with smartphones and tablets being used to make calls, capture images andvideo, play media, check the time and navigate. This trend is thus impacting sales in most



product areas, with tablets and smartphones being among only a handful of areas to avoidretail volume decline in 2015. The popularity of smartphones meanwhile resulted in stronginterest in smartwatches within autonomous wearable electronics, with this area seeingsoaring growth in 2015 thanks to the launch of Apple Watch.

Forecast Period Recovery Driven by Smartphones and Smartwatches

Overall consumer electronics is expected to see good retail volume growth in the forecastperiod, thus achieving a partial recovery from the sharp decline seen during the reviewperiod. However, the vast majority of this growth will be driven by just two product areas,namely smartphones and smartwatches within autonomous wearable electronics.Consumers will become increasingly reluctant to buy, carry or use a wide range of devicesand will increasingly seek to pare down the range that they require. LCD TVs is also expectedto see good sales growth however and will continue to benefit from new technology, with8K TVs possibly set to emerge in the forecast period.

SEMICONDUCTOR INDUSTRY

According to the International Trade Administration (or ITA), Japan is the world’s thirdlargest electronics manufacturer and the fourth largest export market for SME(semiconductor manufacturing equipment). Japan, once the leading semiconductor marketin the world, now houses only two of the top ten semiconductor companies in the world.The two companies are Toshiba (TOSBF) and Sony (SNE).

The Japanese semiconductor market is expected to report a positive growth of 1% in 2016after reporting a negative growth of 10.3% in 2015 according to WSTS (World SemiconductorTrade Statistics). The growth could be supported by a revival in the Japanese economy,with the government expecting nominal GDP to expand 3.1% in fiscal 2016 to ~$4.3 trillion,surpassing the level before the 2007 crisis.

The semiconductor supply chain comprises semiconductor manufacturers, SME(semiconductor manufacturing equipment) suppliers, and consumers. The supply chain isspread worldwide, making countries interdependent.

While chip design and R&D (research and development) are concentrated in the USA andEurope, manufacturing is concentrated in Japan and South Korea, with semiconductorpackaging and testing concentrated in Taiwan. The United States and Japan are leadingSME suppliers, whereas China is the leading consumer of semiconductors and accountsfor over 50% of the global semiconductor consumption.

Japan has the Potential to Tap IoT

Japan has the world’s largest 200mm (or nanometer) wafer fabrication (or fab) capacityaccording to SEMI (Semiconductor Equipment and Materials International). Moreover, ithas a high product mix of analogue, discrete, foundries, logic, and MEMS (micro-electro-mechanical systems). This makes Japan an ideal production base for IoT (Internet of Things)chips.



Japanese Companies Hit by Losses

Japan’s consumer electronics form the biggest market for the semiconductor industry. Thecountry failed to realize the smartphone trend, and this led to consolidations andbankruptcies of several domestic semiconductor companies. In 2013, Micron Technology(MU) acquired the country’s only mobile DRAM (dynamic random access memory)manufacturer, Elpida.

CHEMICALS INDUSTRY

The Japanese chemical industry is the second largest industry in the country and the world’sfourth largest in terms of shipments, totalling US$286 billion in 2009. The industry can bedivided into four general areas of production:

• Base chemicals that include petrochemicals, their derivatives and basic inorganics.Produced in large volumes, they are sold as commodities to manufacturers in thechemical industry or to other industries.

• Specialty and fine chemicals that are intended for specialized use and produced inlower volumes than base chemicals. Examples include ingredients used in adhesives,additives, plastics, coatings, paints and inks, crop protection, dyes and pigments.

• Pharmaceuticals including both basic pharmaceutical products and pharmaceuticalpreparations.

Agricultural chemicals that include pesticides and chemical growth agents such as syntheticfertilizers and hormones.

After decades of brilliant achievements and growth, the Japanese chemical industry nowstruggles to maintain its position in the marketplace. Dependent on sluggish domesticmarkets, weighed down by overcapacity and over-diversification, impeded by a traditionalbusiness culture, and faced with increased competition from China and the Middle East,today’s Japanese chemical companies find themselves in an increasingly precarious position.

Indeed, to say that the Japanese chemical industry is at a crossroads is not an understatement.Change is required by Japanese companies; not cautious, incremental change but swiftand radical change affecting their very structure, culture, and long-term strategies. This willnot be easy or straightforward. With their eyes on the future, Japanese company leadersmust make tough decisions that include:

• A rigorous process of rationalization to eliminate unprofitable facilities and businessunits

• Asset swapping to generate scale

• Consolidation through mergers and acquisitions (M&A) to drive a new focus on corebusiness

• A stronger push into overseas operations, especially through joint ventures in emergingmarkets



• A continued commitment to research and development (R&D) and innovation to supportnew growth areas.

Like their counterparts in the US and Europe, Japanese chemical companies have access towell-developed facilities, strong client relationships, a highly trained workforce and significantlevels of intellectual property (IP). They also enjoy proximity to rapidly growing markets inAsia. With a firm commitment to change, the Japanese chemical industry may regaincompetitive advantage in today’s growing markets. KPMG, 2012

PETROCHEMICALS INDUSTRY

Japan’s petrochemical companies are concentrating their management resources towardexpanding health care, medical, housing, new energy and other functional productbusinesses to gain competitive advantages over overseas products manufactured with low-priced raw materials and to secure stable earnings. They are being prepared for NorthAmerica’s shale gas production that will start in full scale around 2018 and China’s full-fledged production of coal-based petrochemical products through M&As in and outsideJapan, establishment of research and development structures to facilitate steady businessexpansion and reorganization.

Earnings are recently improving owing to the improvement of trading terms due to thedecline of crude oil price, the decrease in energy costs and the recovery of exportingcompetitiveness due to the yen remaining weak. In the medium and long-term, however,the influx of products from the Middle East’s large-scale petrochemical complex as well asthe new and additional facilities for coal-based and shale gas-based petrochemical productsrespectively in China and North America remain threats for Japan’s petrochemical industry.Its survival requires continuous structural reforms.

The demand forecast of petrochemical products will be continuously increasing with arecovery of world economy and growth of Asia. However, the domestic demand in Japan isdecreasing because of population decrease. On the other hand, the supply will be facingon the new situation. New crackers in US based on competitive shale gas are planned tostart from 2017. And there are lots of new plants coming in China, which are “Coal toOlefin” and “Propane DE hydro”. These new plants will make cost competition severe notonly in Asia but also in the world. In Japan, two domestic companies announced to shutdown of their naphtha crackers as the countermeasure of the petrochemical situationchange following one shut down in 2014. Japanese petrochemical companies still have tomake an effort to survive, such as the cost reduction, development of high value derivatives,innovation of new technology for converting surplus fractions to short one, after downsizingcapacity. And the integration with nearby refineries, gas, and electric plant should benecessary to the cost competitiveness. Propylene balance will be changing more drastically.Propylene supply in japan will decrease due to permanent stop of Naphtha crackers. Onthe other hand, Propylene supply in northeast Asia will significantly increase due to increasenew facilities such as “Coal to Olefin”, “Methanol to Olefin” and “Propane De hydro”. Japanesesuppliers will be surplus position for Propylene even after some Naphtha crackers in Japan



shut down permanently. Therefore, Japanese petrochemical companies should work forfurther cost reduction and adjustment of operating rate of cracker and OCU because of dullbalance on Propylene. A large-scale investment for infrastructure and build and scrap ofcracker under support of government is also necessary for getting the competitiveness.

IRON AND STEEL INDUSTRY

Japan’s steel industry body lowered its forecast for the country’s crude steel output in thefiscal year to March 2016 by 1 million tonnes to 106 million tonnes, citing slow exportdemand. The revised forecast marks a 3.5% drop from the country’s actual crude steeloutput of 109.85 million tonnes in the fiscal year ended March 2015.

Japan’s crude steel output fell 7.3% in September from a year earlier to 8.57 million tonnes,marking a 13th straight monthly drop and a six-year low for the month, as weak demandand high inventories forced steelmakers to cut output.

Production has been on a downtrend due to slack sales of cars and houses after a tax hikein April 2014, which caused a rise in stockpiles of steel products, and slumping steel pricesin Asia that eat into export margins of Japanese steelmakers.

Asked when steel output would recover, Kakigi said it depends on export circumstances.

International Trade

Japan’s trade surplus hit its highest level in four years in January 2016, suggesting the yen’srise is yet to hurt exporters — but amid worrying signs of weak demand from China, the realtest will come in the months ahead.

Exports rose 0.6% on the previous month and imports fell 1.1% in January 2016 to producea trade surplus of Y119 billion, the largest since February 2011. Analysts said the surpluswas set to keep rising as the effect of falling oil prices fed through. External demand forJapan’s exports — one of the driving forces of the Abenomics stimulus — are holding up fornow, giving some encouragement to the Bank of Japan.

Export volumes grew 2.2% over December 2016, according to seasonal adjustments byanalysts at Credit Suisse, who said exports of electrical equipment to Asia excluding Chinawere the main thrust.

“Export volume looked to be keeping a moderate growth path at least as of January, despitethe recent turmoil in financial markets and yen appreciation against other Asian currencies,”noted analysts Hiromichi Shirakawa and Takashi Shiono.



But while trade picked up compared with December, it fell away sharply from a year ago,with sales to China suffering especially badly. Exports to Asia’s biggest economy weredown 17.5% on the previous year by value and 12.1% by volume.

The Bank of Japan’s monetary stimulus since 2013 has led to a sharp fall in the yen,increasing exports and becoming one of the main channels by which Abenomics has boostedthe economy.

Recently, however, weak data around the world have led to a surge in the yen from about¥120 to ¥113. against the dollar, threatening to make Japan’s exports less competitive. Aslowdown in China and other emerging market economies has also hurt demand.

Imports were down 18% on a year ago but that mainly reflected the effect of lower oilprices rather than weak demand in Japan. The slump in commodity prices means Japanhas returned to a trade surplus, despite needing to import more fossil fuels for electricitygeneration in the wake of the Fukushima nuclear disaster in 2011. Financial Times, 16 Feb2016.

Top 50 Japanese Exports in 2014 and 2015 (US$ thousand)

Code Product Label Value in 2014 Value in 2015Total All products 690217466 625074044‘87 Vehicles other than railway, tramway 142513899 134018220‘84 Machinery, nuclear reactors, boilers, etc. 132442709 117672117‘85 Electrical, electronic equipment 104055254 95628693‘99 Commodities not elsewhere specified 35844356 37081342‘90 Optical, photo, technical, medical, etc. apparatus 40369373 35747498‘72 Iron and steel 33383028 27522091‘39 Plastics and articles thereof 25267573 22500687‘29 Organic chemicals 23446471 17927448‘89 Ships, boats and other floating structures 12913707 11429695‘27 Mineral fuels, oils, distillation products, etc. 15824801 11410987‘40 Rubber and articles thereof 12243285 10284797‘73 Articles of iron or steel 13045588 10271119‘71 Pearls, precious stones, metals, coins, etc. 10202516 10079527‘38 Miscellaneous chemical products 10042669 9156141‘74 Copper and articles thereof 7991720 6779776‘88 Aircraft, spacecraft, and parts thereof 5411108 5170847‘37 Photographic or cinematographic goods 4367402 3937954‘32 Tanning, dyeing extracts, tannins, derivs, pigments etc. 4355095 3934918‘82 Tools, implements, cutlery, etc. of base metal 3822633 3698240‘28 Inorganic chemicals, precious metal compound, isotopes 3822673 3512261‘30 Pharmaceutical products 2922619 3409882‘96 Miscellaneous manufactured articles 2855468 3231090‘70 Glass and glassware 3629410 2886887‘48 Paper and paperboard, articles of pulp, paper and board 2380603 2293784‘76 Aluminium and articles thereof 2346549 2249776



Code Product Label Value in 2014 Value in 2015‘68 Stone, plaster, cement, asbestos, mica, etc. articles 2371839 2234858

‘34 Soaps, lubricants, waxes, candles, modelling pastes 2228522 2081482

‘54 Manmade filaments 2178315 2029087

‘33 Essential oils, perfumes, cosmetics, toiletries 1706606 1960963

‘55 Manmade staple fibres 1974992 1850598

‘69 Ceramic products 1574241 1511596

‘95 Toys, games, sports requisites 1818064 1483048

‘03 Fish, crustaceans, molluscs, aquatic invertebrates nes 1293698 1345419

‘91 Clocks and watches and parts thereof 1100608 986836

‘47 Pulp of wood, fibrous cellulosic material, waste etc. 1048001 981083

‘94 Furniture, lighting, signs, prefabricated buildings 1077008 923526

‘81 Other base metals, cermets, articles thereof 1121726 922925

‘35 Albuminoids, modified starches, glues, enzymes 1048815 907407

‘86 Railway, tramway locomotives, rolling stock, equipment 679268 895939

‘56 Wadding, felt, nonwovens, yarns, twine, cordage, etc. 976126 884412

‘59 Impregnated, coated or laminated textile fabric 914470 850377

‘21 Miscellaneous edible preparations 772120 843091

‘75 Nickel and articles thereof 918327 815482

‘83 Miscellaneous articles of base metal 947370 806366

‘25 Salt, sulphur, earth, stone, plaster, lime and cement 764050 764179

‘92 Musical instruments, parts and accessories 595909 567719

‘52 Cotton 590977 555177

‘60 Knitted or crocheted fabric 600717 547171

‘16 Meat, fish and seafood food preparations nes 563084 545054

‘19 Cereal, flour, starch, milk preparations and products 441647 523556

‘22 Beverages, spirits and vinegar 455949 513062

‘49 Printed books, newspapers, pictures etc. 456422 424817

Japan Top 10 Export Destinations-2015

Export Partner Export Volume ($) Percentage Distribution

United States of America 130,773,312,212

China 126,361,385

Korea, South 51,520,342,760

Hong Kong 38,143,173,329

Thailand 31,349,004,499

Singapore 21,012,895,276

Germany 19,054,719,158

Indonesia 14,735,347,660

Australia 14,176,008,515

Malaysia 14,133,079,721



Top 50 Japanese Imports in 2014 and 2015 (US$ thousand)

Code Product Label Value in 2014 Value in 2015

Total All products 812184752 648620936

‘27 Mineral fuels, oils, distillation products, etc. 262106100 150971309

‘85 Electrical, electronic equipment 99346235 90222752

‘84 Machinery, nuclear reactors, boilers, etc. 65041607 59516062

‘90 Optical, photo, technical, medical, etc. apparatus 24824258 23259292

‘30 Pharmaceutical products 19899057 23122457

‘26 Ores, slag and ash 30114001 20966088

‘87 Vehicles other than railway, tramway 21566267 19102442

‘29 Organic chemicals 15210857 14190475

‘39 Plastics and articles thereof 15472557 13776214

‘62 Articles of apparel, accessories, not knit or crochet 14788452 13535361

‘61 Articles of apparel, accessories, knit or crochet 14576466 13321107

‘99 Commodities not elsewhere specified 10460788 10687498

‘03 Fish, crustaceans, molluscs, aquatic invertebrates nes 11450350 10250538

‘44 Wood and articles of wood, wood charcoal 11684072 10045272

‘71 Pearls, precious stones, metals, coins, etc. 10257189 9295573

‘02 Meat and edible meat offal 9605656 8596330

‘76 Aluminium and articles thereof 8844401 7969519

‘94 Furniture, lighting, signs, prefabricated buildings 8234988 7503325

‘73 Articles of iron or steel 7103642 6557685

‘72 Iron and steel 8524468 6195256

‘88 Aircraft, spacecraft, and parts thereof 6907219 6170143

‘28 Inorganic chemicals, precious metal compound, isotopes 6740922 5962459

‘10 Cereals 6931611 5953996

‘16 Meat, fish and seafood food preparations nes 6052871 5637348

‘64 Footwear, gaiters and the like, parts thereof 5763088 5426339

‘42 Articles of leather, animal gut, harness, travel goods 5734088 5329435

‘95 Toys, games, sports requisites 6244394 5179323

‘38 Miscellaneous chemical products 5438746 5142959

‘12 Oil seed, oleagic fruits, grain, seed, fruit, etc., nes 5309396 4910775

‘40 Rubber and articles thereof 4929499 4248244

‘24 Tobacco and manufactured tobacco substitutes 3773484 3499190

‘63 Other made textile articles, sets, worn clothing etc. 3749290 3438202

‘91 Clocks and watches and parts thereof 3229887 3294779

‘22 Beverages, spirits and vinegar 3553606 3271518

‘20 Vegetable, fruit, nut, etc food preparations 3492927 3231360

‘48 Paper and paperboard, articles of pulp, paper and board 3470180 3089864

‘08 Edible fruit, nuts, peel of citrus fruit, melons 2991165 2994740

‘33 Essential oils, perfumes, cosmetics, toiletries 2992280 2796267

‘23 Residues, wastes of food industry, animal fodder 3119290 2623822



Code Product Label Value in 2014 Value in 2015

‘07 Edible vegetables and certain roots and tubers 2445830 2342995


‘70 Glass and glassware 2484036 2285201

‘74 Copper and articles thereof 2875758 2189468

‘09 Coffee, tea, mate and spices 1995248 2127176

‘25 Salt, sulphur, earth, stone, plaster, lime and cement 1858041 1670564

‘21 Miscellaneous edible preparations 1785256 1611911

‘82 Tools, implements, cutlery, etc of base metal 1624181 1577255

‘04 Dairy products, eggs, honey, edible animal product nes 1789547 1577201

Top 10 Import Sources 2015

Import Partner Import Volume ($) Percentage Distribution

China 181,294,159,255

United States 73,045,283,421

Australia 48,117,721,953

Saud Arabia 47,414,450,521

United Arab Emirates 41,595,447,126

Qatar 33,443,528,791

Korea, South 33,385,306,767

Malaysia 29,181,375,599

Indonesia 25,672,884,311

Russia 24,755,659,661

The Japanese market offers numerous opportunities in a wide variety of sectors. Bestprospects for exporters in the Japanese market include the following sectors:

• Aerospace• Agricultural• Biotechnology• Computer Software• Cosmetics and Toiletries• Education and Corporate Training• Electronic Components• Healthcare IT• Medical Equipment• Nanotechnology• Pharmaceuticals• Renewable Energy• Senior Market• Safety and Security• Soil Remediation and Engineering Services



• Telecommunications Equipment• Travel and Tourism

Apparel

Japan has been one of the world’s largest apparel markets with a market value of $95.8billion. In fact, Japan accounts for 23.5% of the Asia-Pacific apparel retail industry value asa whole.

Japanese consumers are well known for their unending thirst for designer labels and thelatest fashions. According to the U.S. Bureau of Labour Statistics, Japanese consumersspend 4.2 % of their total expenditure on clothing products whereas U.S. consumers spend4.0%. With large number of consumers with high levels of disposable income for apparelproducts, Japan’s apparel market can offer many opportunities to agile fashion apparelcompanies.

Agriculture Produce, Food and Ingredients

According to the Global Trade Atlas, Japan is the world’s fourth-largest importer of agri-food and seafood products. With an import value of C$59.2 billion and exports of C$4.2billion in 2014, Japan is also a significant net importer of agri-food and seafood products.However, Japanese imports of agri-food and seafood decreased at a CAGR of 1.5% between2012 and 2014.

Japan’s top agri-food and seafood imports in 2014 were corn, cigarettes, frozen pork, non-durum wheat, prepared chicken meat, and frozen shrimp. Key supplying countries werethe United States, China, Thailand, Canada, and Australia. Canada was Japan’s fourth-largestsupplier of total agri-food and seafood products in 2014, with a 5.8% share.

Top agri-food imports

Commodity Import Value C$ MillionCorn 4,255.3Cigarettes 3,699.1Frozen pork 2,971.4Prepared Chicken Meat 2,143.4Non-durum wheat 2,076.6Soybeans 2,037.4Frozen Shrimp and Prawns 2,009.6Fresh Pork 1,795.1Fresh Boneless Beef 1,491.6Coffee 1,470.4

Source: Global Trade Atlas, 2015

Given the internationalization of food in Japan has given many overseas companies animportant advantage in the Japanese food market. Until recently Japan had a relatively



uniform food market, with rice, vegetables, fish, eggs, and soy products making up thetraditional Japanese diet. As Japan became more affluent, and more Japanese were exposedto diverse food products from around the world, there has been a major trend toward dietdiversification. One hallmark of this market is the Japanese consumers’ obsession withquality. Japanese tend to value the taste of food over the quantity of food. However, thishas changed slightly and many Japanese consumers are seeking value. Still, Japaneseconsumers are highly brand-conscious, cognizant of the seasonality of certain foods. Japaneseare increasingly health-conscious, and given their aging society, are leading the world indemand for functional foods. They also consider a food product’s aesthetic appearance, onthe shelf, in the package, and on the table to be important and indicative of quality andhealthfulness of the product.

Japan is an important destination for consumer ready food products. Wheat, rice, corn,soybeans, pork, beef, frozen vegetables, citrus, wine and processed snack foods make upthe largest sectors. The long-term prospects for food and agricultural exporters in Japan areexcellent for the following reasons: (1) growing consumer demand for value (2) Japaneseagriculture continues to decline, leading to increased dependence on imports for stablefood supplies; (3) continued Westernization of the Japanese diet away from fish and ricetoward meats, dairy products and other staples.

Marine Products

Japan is the second-largest fish and seafood importer in the world and the top market inall of Asia. Japan’s fish and seafood import market was valued at $11.68 billion in 2013, adecrease of 11.8% from 2012. Japan’s supply is quite diversified, with fish and seafoodproducts imported from 123 different countries. Japan’s top suppliers in 2013 were China(with a 17.9% share), Chile (8.2%), Thailand (8.1%), Russia (7.8%), and the United States(7.8%).

In 2013, Japan’s primary fish and seafood imports included frozen shrimp and prawns,prepared or preserved shrimp and prawns, frozen skipjack/stripe-bellied bonito tuna fillets,frozen fish, and frozen fish fillets.

Japan’s exports of fish and seafood in 2013 were valued at $1.53 billion, an increase of11.9% from the previous year.

Consumption Trends

Per capita consumption of fish and seafood in Japan declined from approximately 40 kg in2007 to 33 kg in 2012, due in part to a rise in consumption of meat and dairy products(Euromonitor International, 2014).

Other factors responsible for the decline in per capita consumption include consumer foodsafety concerns following the Fukushima nuclear power plant meltdown and reduced fishingcapacity caused by the earthquake and tsunami. The declining population and changinglifestyles may explain the declining consumption (Euromonitor International, 2014).



An article in World Fishing and Aquaculture, March 24, 2013, entitled “Japan seeks to boostseafood consumption,” expounds on the efforts of both the Japanese government and thefishing industry to reverse the meat consumption trend in favour of increasing fish andseafood in the Japanese diet. To that end, the fish processing industry is trying to developinnovative products that are easier to prepare.

Japan is a major importer of a number of premium seafood products which Canada has tooffer, such as shrimp, salmon, scallops and lobster (Global Trade Atlas, 2014). Consumer-ready products that are convenient and easy to prepare and eat would be welcomed inJapan, which has traditionally been known for its high per capita consumption of fish andseafood.

Though domestic protection is still strong, market access has improved over the years viapersistent negotiations in the WTO by many export nations, leading Japan to eliminatesome of the agricultural market access barriers for which it was once famous. Where earlierquotas and outright bans restricted the market for beef, citrus, fruit juice, cherries, and icecream, all of these markets have now, to some degree been opened. However, accessissues still hamper greater farm trade due to high tariffs on processed food products,restrictive plant quarantine measures on fruits and vegetables, trade-limiting quotas andcomplicated labelling practices. In addition, a stringent system for regulation of agrochemicalresidues including strict inspection of imported foods and a time – consuming approvalprocess for biotechnology products also hinder trade in agricultural products.

Packaged Food Market

While traditional menus and tastes still generally guide average Japanese consumptionhabits, Western and other Asian ethnic cuisines are making headway in the market. However,Japan’s high-end food and beverage market continues to face important challenges, resultingfrom an aging population and a lasting anaemic economic growth. However, this hasaccentuated the trend toward functional, healthy, nutritious and value-for-money fooditems.

Despite all of this, Japanese consumers are willing to accept high prices for quality, safetyand convenience. To this end, major supermarket chains in Japan are introducing widerprivate label offerings in addition to sourcing new and innovative food products.

Euromonitor predicts that the Japanese population will decline in the upcoming years dueto a low birth rate; consequently, the Japanese food market may have to shift toaccommodate an ever-expanding older and wealthy population. The opportunities for high-quality and high-value foods that meet the demand of this market will only increase.

Japanese Consumer Characteristics

Food retailers and manufacturers have invested a great deal to develop several productlines that accommodate Japan’s younger customers who are always on the go. They havealso created ready-to-eat meals targeting working mothers, and now provide services for



the fast growing elderly population, such as delivery. Euromonitor describes average Japaneseconsumers as people who:

Have small families and homes with minimal storage space, thus, large packages areimpractical.

• “Eat with their eyes” and often view food as art. All food products have to be of aestheticappearance, on the shelf, in the package, and on the table.

• Are highly concerned about food safety and traceability.

• Place great importance on quality.

• Appreciate taste and all of its subtleties (and are willing to pay for it).

• Are well-educated and knowledgeable about food and its many variations.

• Are highly brand-conscious.

• Care a great deal about seasonal foods and freshness.

• Are increasingly health-conscious, all-across the generations spectrum.

• Are sophisticated and highly demanding with uncompromising quality standards, whoexpect high-value and consistency even from inexpensive products.

• Are willing to pay a premium for innovative and creative products.

According to Euromonitor, Japan’s baby boom generation (people born around 1947) isnow at the age of retirement, and account for the majority of consumption in Japan. Withroughly 32 million citizens, and the fastest growing elderly population (over 65), Japan hasone of the oldest population in the world. Furthermore, recent Euromonitor demographicreports claim this demographic group represents 26% of the entire Japanese population(2014). By 2020, it is estimated to increase to 29% and then to 36% by the year 2040. Inaddition, the total population is expected to decline from 127 million in 2014 to 105million in 2040, therefore affecting the entire Japan economy including the packaged foodindustry. It is expected that functional foods will be the largest beneficiary of this demographicchange.

The demographic changes in Japanese society continue to drive growth in mealreplacements, ready-meal solutions and canned/preserved foods. This trend will continuefor the years to come, as there has been growth in the number of consumers who prefer topay more to save time, rather than cook from scratch. Furthermore, there has also beengrowth in the number of single females and males who do not get married. These consumersparticularly value the convenience of ready meals, as they often need to work long hoursand have little time to prepare meals themselves.

Spices and Herbs

The Japanese spice and herb market has been dominated mostly by traditional Japanesespices such as wasabi and mustard. Apart from these traditional spices, only limited productssuch as pepper and parsley were seen, and the market was not expanding to handle awider range of products. However in recent years, the Japanese diet has become diversified,



and the market for assorted spices and herbs aside from the traditional Japanese spices(2) Market for industrial use and (3) Market for processing) has been growing significantly.These spices were not familiar to Japanese eating habits and remained small scale becauseconsumers and restaurants were not aware of the usage and tended to avoid them. However,due to steady efforts by suppliers to educate consumers and eateries such as introducingrecipes, there is a better understanding of their uses and cooking methods, which has ledto an increase in sales.

There are numerous types of spices and therefore exporters to Japan are widely distributed,including Asian countries such as China, Malaysia, and India, as well as Mediterranean andAfrican countries. The top exporter in terms of volume is China, mainly exporting red pepperand cinnamon. The total volume of exports from China in 2010 was 56,569 tons, but therecent trend has been downward. India, on the other hand, has shown a steady performancewith its main spices, turmeric and mixed-spice blends (mixtures). 2010 exports showed6,203 tons (90.4% vs. previous year), and despite the drop from the previous year, importvolume has been generally stable. As for African nations, Morocco exported 3,589 tons(130.8% vs. previous year) in 2010, most of which was coriander.

Japan relies on imports for almost all of its supply of raw ingredients for spices. Somespices grown in Japan include wasabi, Japanese pepper, red pepper, and garlic, butproduction is limited with the self-sufficiency rate lower than 10%.

Meanwhile, most of the small-package products used in households or products forprocessing/industrial use are processed and commercialized in Japan, and imports of spicesas products are rarely seen.

Due to the soaring world prices of raw materials, most of the prices for spices and herbswere increased in Japan in 2008. However, due to some factors such as the tendency toeat at home and save money driven by the stagnant economy, household demand forspices and herbs such as pepper and red pepper is showing steady performance.Furthermore, spices and herbs are used in bulk by restaurants and the food processingindustry. General demand has not declined, despite the drop in 2009 imports as a reactionto the price hike.

Cut Flowers

Except for temporary drops following the collapse of the Bubble Economy in the early1990s, imports of cut flowers has steadily increased. Most recently, in particular, the quantityof imports reached a record level every year from 2006 to 2010. Imports of cut flowersreached 114% of the previous year’s figures in terms of both quantity and value, 44,145tons and 32.3 billion yen, respectively.

Among the different items, chrysanthemums had by far the largest import volume. Increaseduse of different varieties of chrysanthemum at funeral services and increased demand forspray chrysanthemums in recent years has supported the growing trend in chrysanthemumimports.



Other flowers in demand are carnations, orchids, roses and lilies.

Cut flowers are imported to Japan from countries around the world. In terms of quantity,the largest imports in 2010 came from Malaysia at 10,333 tons which accounted for 23.4%of total imports to Japan; Malaysia has remained the largest source of cut flower imports toJapan since 2006. Malaysia is followed by the Republic of Korea (8,102 tons, 18.4%) andChina (6,237 tons, 14.1%), ranking 2nd and 3rd, respectively. As with the case with thesethree countries, countries of origin of cut flower imports to Japan are typically those in theAsian region due to their close proximity to Japan. India occupies 10th place.

Stones and Tiles

Imported building stone is roughly classified into marble and granite (including sandstone),although granite by far constitutes the majority. Granite accounts for 90% or more ofimported stone in terms of both volume and value. Most imported granite is worked productsuch as granite plate. Very little raw granite is imported. The same holds true for marble.Every year, building stone imports have shifted away from raw stone and more towardworked products. This is partly a result of the producer nations’ wish to shift from rawstone exports to the export of value-added processed products, which aligns with thewishes of their Japanese counterparts to cut transportation and domestic processing costs.Given this background, we can assume that the volume of processed products beingimported will continue to increase.

Nutritional Supplements

Japan has taken steps to streamline import procedures and to open its 1,150 billion yen(approximately $14.4 billion) nutritional supplements market, although many significantmarket access barriers remain. Burdensome restrictions on health claims are a major concern.Only those products approved as Foods for Specified Health Uses (FOSHU) or Foods withNutrient Function Claims (FNFC) are allowed to have health or structure/function claims.Producers of most nutritional supplements, however, are unable to obtain FOSHU or FNFCapproval due to FOSHU’s costly and time-consuming approval process and due to thelimited range of vitamins and minerals that qualify for FNFC. These processes apply to bothimported and domestic products. Other concerns include long lead times for food additiveapplications; inability to use food ingredients and food additives, including organic solventsfor processing ingredients to be used in nutritional supplements; high import duties fornutritional supplements compared to duties on pharmaceuticals containing the sameingredient(s); lack of transparency in new ingredient classifications; and lack of transparencyin the development of health food regulations. The U.S. Government continues to discussthese issues with the Japanese government.

Cosmetics and Quasi-Drugs

Japan is the world’s second largest market for cosmetics and quasi-drugs after the UnitedStates. In 2011, U.S. exports of cosmetics and personal care products to Japan were estimatedat $373 million, second only to France. Despite this market presence by U.S. products,



regulatory barriers continue to limit timely consumer access to safe and innovative products,generating unnecessary costs. Unlike the over-the-counter drug monograph system in theUnited States, Japan requires premarket approval for certain products, such as a categorycalled “medicated cosmetics” that are classified as quasi-drugs under the PharmaceuticalAffairs Law. The approval process of the quasi-drugs includes requirements that areburdensome, lack transparency, and do not appear to enhance product safety, quality, orefficacy.

Cosmetics imports to Japan in 2013 showed a hefty increase up 11.95 to ¥214.8 billionfrom ¥191.8 billion a year ago. This again renewed the highest in volume since the year2003. France maintained its position as largest exporter with a market share of 24.6%, up0.1% from a year earlier. China remained third with its share unchanged at 9.0% in 2013.

Skincare products as the largest import category increased to $830.3 million in 2013. Thehair care product category which includes shampoos, rinses, preparations for hair perms,and hair lacquers has become the second largest import category recently.

Around 2010, Thailand has started growing as a sourcing base of hair care products toJapan and has outranked the U.S. and China. 2013 imports from Thailand were $367.3million. This remarkable growth is reportedly attributable to the relocation of domesticmanufacturing facilities by some major manufacturers to that low cost producing country.

Fragrance imports in 2013 recorded strong growth by 9.5% to $209.9 million.

Make-up imports in 2013 increased 18.6% to $276.5 million, continuing growth since2009. France remained the leading supplier with exports $94.5 million, followed by Chinawith $46.6 million.

BILATERAL AND MULTILATERAL TRADE AGREEMENTS

In October 2015, the Trans-Pacific Partnership (TPP) agreement was concluded with Japanamong the 12 Pacific-Rim signatory countries, which cover some 40% of the global economy.The TPP aims at lowering import duties and establishing common rules among members.With TPP, Japan will open its agricultural markets in return for lower tariff rates for Japaneseautomobiles and parts in the US market.

As of end-October 2015, Japan had concluded 15 free trade agreements (FTAs) andeconomic partnership agreements (EPA), including Singapore, Mexico, Malaysia, Chile,Thailand, Indonesia, Brunei, the Philippines, Switzerland, Vietnam, India, Peru, Australia,Mongolia and a comprehensive economic partnership with ASEAN, which went into forcein December 2008. Beside, Japan has embarked on bilateral FTA negotiations with othereconomies, including Canada, Colombia, the EU, and the Gulf Cooperation Council (GCC),and regional FTAs including Regional Comprehensive Economic Partnership (RCEP).



Services Industry

BANKING AND FINANCIAL SERVICES

In Japan, the Financial Services Agency (FSA) serves as a regulatory authority of financialinstitutions. In the past, the Ministry of Finance had responsibility for bank supervision andinspection, but the Ministry of Finance has no regulatory authority over financial institutionstoday.

Banks are corporations that have been established in accordance with the CommercialCode (presently, the Companies Act) and have obtained a license to conduct bankingbusiness in accordance with the Banking Act.

The Banking Act of Japan was amended in June 2013. Among the various topics containedin the amendments, there are three topics that will have an impact on cross-border bankingbusiness: (i) regulations on foreign bank agency services; (ii) regulations on foreign bankbranches; and, (iii) regulations on the business scope of banks’ subsidiaries in cases ofoverseas M&A.

For a foreign bank, the amendments to (i) above will relax the regulations on the provisionof its services to Japanese customers, while the amendments to (ii) above will tighten theregulations on its local business base in Japan. On the other hand, the amendments on(iii) above will relax the regulations applicable to Japanese banks conducting outboundM&A transactions. The amendments on all three topics above will come into effect on April1, 2014.

HEALTHCARE

Medical and Healthcare

Japan is a leading nation in scientific research, particularly technology, machinery andbiomedical research. Nearly 700,000 researchers share a 96 billion research anddevelopment budget, the third largest in the world, according to Bloomberg Business.Long-time considered as a closed market, the Japanese health-sector is rapidly expandingand increasingly opening their doors to foreign firms. The phenomenon of a rapidly agingpopulation and recent deregulation has created a favourable environment for foreigncompanies’ entry into the Japanese healthcare markets.

For companies seeking opportunities in international markets, Japan and the broader Asianmarket hold tremendous opportunities for business development and collaborations.

Senior Market

Japan is one of the world’s most rapidly aging societies. As of 2010 30.3% (38.54 million)of Japanese were 60 years old or older. By 2030 38.9% of the population is expected to be60 or older. At the same time, Japanese life expectancies are among the longest in the



world; 88.12 years for women and 82.57 years for men. These demographic trends willlikely increase demand for health and medical care products, home remodelling, continuingeducation, and tourism and leisure services.

Japan’s senior citizens have spending power. In 2009, the average two-or-more-person-household savings (after-debt) of those 60-69 years old was $213,595. The consumptionexpenditure per head of household where householders were aged 60-69 was highest ofall the 10-year age brackets except that of the under 29 years olds. As Japan’s post-warbaby-boomers marched into their 60’s, there emerged a big market for those ̄ active seniorswho are willing to spend to enrich their lives. Japanese educational institutions who aresuffering from a rapid drop in the number of 18-year-olds are trying to recruit adult students,including the seniors. As the youth population shrinks, Japanese businesses are scramblingto cater to the needs of senior citizens.

Healthcare

The Japanese healthcare and welfare industry, which promises the expansion of domesticdemand as a result of the aging society, is expected to serve as an engine for the entireeconomy of the nation. The government regards the industry as one of the strategic areas,and has been implementing various deregulation and other incentive policies. Japan nowhas the second largest healthcare and pharmaceutical markets in the world, after the US,with national medical expenditure around 300 billion, and with record growth rates inrecent years. It has one of the fastest ageing societies on the planet. In 2010, approximately23% of Japan’s 128 million people were over 65 - and this is predicted to increase to over30% by 2025 and to 40% by 2055. In many ways a source of concern at a national level, itis also creating opportunities in specific sectors - healthcare, pharmaceuticals and medicaldevices being three notable ones.

Japan has been a pioneer in dealing with its rapidly aging population with its emphasis onthe prevention of age-related diseases, and the ever-changing and expanding healthcareand welfare market in Japan has contributed to developing many new businessopportunities; for example, in generics, over-the-counter drugs (OTCs), and healthmanagement services. In addition, novel drugs and medical devices, includingbiopharmaceuticals and nano-medicines, are under development.

Healthcare IT

In 2012, the market size of healthcare IT systems in Japan totalled $6.18 billion. The adoptionof electronic medical records is a major healthcare IT priority in Japan, and according to anindustry source, the adoption rate for electronic medical records and ordering systemsamong hospitals in 2012 was 18.7% and 30.3% respectively. 56.9% of the hospitals withmore than 400 beds implemented electronic medical records and 75.3% of them haveordering systems. Due to rapid demographic changes and hospital shortages, demand forhome nursing care is expected to grow. Healthcare IT is an emerging sector and promisingareas exporters would include security/privacy, big data, and cloud computing.



TOURISM AND INDUSTRY

A foreign traveller to Japan is increasing rapidly. The number of foreign visitors to Japanexceeded 10 million in 2013, a result of new LCC flights and the easing of requirements forissuing visas. The aim is 20 million by 2020. The growth of businesses targeting foreigntravellers is expected.

In an effort to promote tourism-related investment and facilities development as part of its“Growth Strategy,” the Abe Government in late 2013 introduced legislation in the Diet thatwould lead to legalization of casino gambling as part of “integrated resorts” construction.The initial bill would instruct the government to prepare implementing legislation andregulations for privately-operated casinos by 2016. The government hopes that the first“integrated resorts” can be completed and operating by the time Tokyo hosts the SummerOlympic Games in 2020.

EDUCATION AND TRAINING

Many Japanese multi-nationals have introduced English as their corporate language (evenin Japan). The other challenge is the globalised skill-set needed to succeed and talentmanagement of a global workforce. In addition to the people aspect, Japanese companiesare becoming more aware of management of various risks (legal, IP, natural, terrorism,political etc.) in a different business environment. There are long-term opportunities forproviders in education and training, human resources, project management, consultancyand finance. Sourcing skilled workers as Japan’s population ages (especially those who canspeak English and Japanese) may also prove to be a lucrative business opportunity.

TOEFL scores of Japanese students are low by global standards, and are even lower withiBT testing. Therefore, there is scope for setting up TOEFL centres. Indian English teachershave extensive experience in teaching English to non-English speaking students who cometo join Indian universities, such as Arab, Iranian, Central Asian and African students. Thesame experience can be leveraged to Japanese students learn English and qualify for USUniversities.

RESEARCH AND DEVELOPMENT

Japan is very aggressive in R&D and innovation, and has filed a large number of patents,many of which have high distribution value internationally. It is Ranked 1st in the world bynumber of patents registered in patent offices in the US, Europe, and Japan, an appropriateindex of high distribution value internationally.

Some examples of high-tech industrial innovations

GE: Developing high-tech products through collaboration with Japanese enterprises(nationwide) - Currently expanding a “Japan Technology Initiative” project nationwide toadvance innovation with Japanese companies. Established a joint corporation with NipponCarbon Co., Ltd, and other companies to develop high-tech inorganic fiber for next-generation



aircraft engines. Will also develop engines for small business jets with Honda Motor Co.,Ltd.

Lamborghini: Established laboratory for next-generation materials (Nagoya) - EstablishedACSL Japan (Automobili Lamborghini S.p.A. Advanced Composite Structures LaboratoryJapan) with the Nagoya Institute of Technology in 2013. Plans to conduct R&D with a rangeof Japanese automobile, aircraft, and other companies using technology to mass-producelightweight carbon-fibre composite parts in a short time and at low cost.

L’Oreal: Developing advanced cosmetics with Japanese technology (Kawasaki) - Operatingits first development centre for all research phases outside of the company’s home countryof France in Kawasaki-shi, Kanagawa Prefecture. Fusing existing technology with technologyfrom Japan, L’Oreal is developing cosmetic products (hair care, makeup, skin care, andother products) that incorporate the characteristics and demands of consumers in eachcountry, and taking them worldwide.

BOSCH: Largest safety system research base outside of Germany (Yokohama) - In 2010,Bosch expanded the amount of floor space and number of employees at its YokohamaResearch and Development Center (established in 1992) to approximately double its size.Conducting R&D on safety systems such as ABS (anti-lock braking system), airbag, and ESC(electronic stability control), and taking them worldwide. Besides Yokohama, the companyestablished a technical centre in Memanbetsu, Bosch¼s largest safety system research anddevelopment centre outside of Germany.

3M: Established global “Super Hub” base in Yamagata - Positioning Japan as an “importantmanufacturing base with world-class quality control capability and living traditions ofcraftsmanship,” the company established production and R&D centres in Kanagawa,Yamagata, Iwate, and other prefectures. Yamagata in particular serves as a global “SuperHub” for the 3M group, supplying products to each 3M company overseas. It is alsoconducting R&D on reflectors, optical film, and others.

IT AND SOFTWARE

There is ample scope for IT certification training and test training programs in increasingand India has experienced institutes in this area.

Investment — Barriers, Risks and Challenges

Country Risk Rating

A1 The political and economic situation is very good. A quality business environment hasa positive influence on corporate payment behaviour. Corporate default probability isvery low on average.



A1 The business environment is very good. Corporate financial information is availableand reliable. Debt collection is efficient. Institutional quality is very good. Intercompanytransactions run smoothly in environments rated A1.

Strengths

• Exclusive geographic position in a dynamic region• Very high national savings level (around 23% of GDP) • 90% of public debt held by domestic investors• Favourable yen exchange rate (monetary easing by Bank of Japan)

Weaknesses

• Government instability (seven prime ministers in seven years)• Worsening public finances• Decline in economically active population and growing proportion of workers without

job security• Low productivity of SMEs • Uncertainties over nuclear energy question

The Japanese economy continues to suffer from over-regulation, which can restrain potentialeconomic growth, raise the cost of doing business, restrict competition, and impedeinvestment. It also increases the costs for Japanese businesses and consumers. Over-regulation underlies many market access and competitive problems faced by overseascompanies in Japan.

In the financial sector, the Financial Services Agency (FSA) has made efforts to expand thebody of published written interpretations of Japan’s financial laws, and has improvedoutreach to the private sector regarding these changes.

Despite being the world’s third largest economy, Japan continues to have the lowest inwardforeign direct investment (FDI) as a proportion of total output of any major OECD country.According to OECD statistics, FDI stock at the end of 2010 was only 3.7% of Gross DomesticProduct (GDP) in Japan, compared to 28.8% on average for all OECD members. Inwardforeign merger and acquisition (M&A) activity, which accounts for up to 80% of FDI inother OECD countries, also lags in Japan.

While the Japanese government has previously recognized the importance of FDI torevitalizing the country’s economy, its performance in implementing domestic regulatoryreforms to encourage a sustained increase in FDI has been uneven.

Another challenge is the way to deal with the aging population and the declining birth rate.Since Japan’s total population is expected to be less than 100 million in 2050, it is vital to



create an environment that attracts talented people from overseas countries. Japan hasmade considerable progress in “outbound globalization” by promoting overseas businessoperations. Now, Japan should launch more efforts to make the life of non-Japanesenationals easier as the country works toward “globalization within.”

Tender Bid-rigging

This is a known problem in some industries. Complicating efforts to combat bid rigging isthe phenomenon known as amakudari, whereby government officials retire into top positionsin Japanese companies, frequently in industries that they once regulated. Amakudariemployees are particularly common in the financial, construction, transportation, andpharmaceutical industries, among Japan’s most heavily regulated industries.

Complying with Japanese Certifications and Regulatory Bodies

Many domestic and imported products alike are subject to product testing and cannot besold in Japan without certification of compliance with prescribed standards. Knowledge of,and adherence to, these standards and their testing procedures can be the key to makingor breaking a sale. Product requirements in Japan fall into two categories: technicalregulations (or mandatory standards) and non-mandatory voluntary standards. Compliancewith regulations and standards is also governed by a certification system in which inspectionresults determine whether or not approval (certification/quality mark) is granted.

Approval is generally required before a product can be sold in the market or even displayedat a trade show; unapproved medical equipment may be displayed at a trade show ifaccompanied by a sign indicating that the product is not yet approved for sale.

Compliance with Standards

There are two on-going trends in Japan regarding standards. One is a move toward standardsreform and the other towards harmonising Japanese standards with prevailing internationalstandards. While reform is underway, there are numerous laws containing Japan-specificmandatory standards most of which have not been translated into English. Therefore, it isimportant that a Japanese agent or partner be fully aware of the wide variety of standardsin effect that could impact the sale of the imported product.

Japan has non-tariff barriers that impede or delay the importation of foreign products intoJapan. Although competition, U.S. and other foreign government pressure, as well as otherfactors, have lessened the impact of these impediments, companies may still encounternon-tariff barriers such as the following:

• standards unique to Japan (formal, informal, de facto, or otherwise);

• a requirement in some sectors or projects for companies to demonstrate prior experiencein Japan, effectively shutting out new entrants in the market;

• official regulations that favour domestically-produced products and discriminate againstforeign products;



• licensing powers in the hands of industry associations with limited membership, strongmarket influence, and the ability to control information and operate without oversight:

• cross stock holding and interconnection of business interests among Japanese companiesthat disadvantage suppliers outside the traditional business group;

• cartels (both formal and informal) and,

• the cultural importance of personal relationships in Japan and the reluctance to breakor modify business relationships.

Japan’s Status in Global Economic Rankings

Corruption Perceptions Index 18/168DHL Global Connectedness Index Score 39/140E&Y Globalization Index Score 43/60Ease of Doing Business Rank 29/189Ease of Paying Taxes Rank 120/186Employment Protection Index 32/35Freedom of the Press 41/195Global Competitiveness Report 6/140Global Enabling Trade Report 8/138Global Manufacturing Competitiveness Index (GMCI) 10/38Index of Economic Freedom 20/178International Logistics Performance Index (LPI) 10/160International Property Rights Index 11/97Inward FDI Potential Index 24/141KOF Index of Globalization 54/185Networked Readiness Index (NRI) 7/142

Indo-Japan Economic Relations

Indo – Japanese economic relations are exhibiting a new surge. The present-day importanceand future prospects of India for Japanese companies are well understood by the businesscommunity. India has the fastest-growing middle-class society in Asia, expected to grow byalmost 20% in the next five years. The Japanese economy is highly advanced, with theservices sector accounting for 68% of the GDP. The industrial sector, once the engine ofJapan’s growth, now contributes only 30% to the GDP while the agricultural sector accountsfor 1%. Similarly, the services sector is the largest contributor to India’s GDP, accounting for52% while agriculture and industry contribute 18% and 30% respectively. The two countries,therefore, share a similar structure, especially about their reliance on the services sector. Inrecent years, India and Japan have strengthened bilateral ties through new initiatives andprogrammes ranging from economic and cultural linkages to defence and security.



In FY 2013-14, Japan-India bilateral trade reached $16.31 billion, which is 11.89% lowerthan $18.51 billion in the previous fiscal year. The fall in the total trade is mainly due toreduction in Japanese exports by 23.53%. However, India’s exports have risen by 4.36% in2013-14. The share of the India-Japan bilateral trade has been hovering around 1% ofJapan’s total foreign trade, while it was in the range of 2.2 to 2.5% of India’s total trade inthe last couple of years. The bilateral trade fell from $15 billion in 2014 to $13 billion in2015. However, there is expectation that the bilateral trade could surge to $100 billion by2020.

India’s primary exports to Japan have been petroleum products, chemicals, elements,compounds, non-metallic mineral ware, fish and fish preparations, metalliferous ores andscrap, clothing and accessories, iron and steel products, textile yarn, fabrics and machinery etc.

Japanese FDI into India grew exponentially from US$ 139 million in 2004 to all time high ofUS$ 5551 million in 2008 due to mega deals particularly acquisition of Ranbaxy by DaichiSankyo. Subsequent years have seen decreasing trend in Japanese FDI to India in line withoverall FDI to India. However, in 2012, Japan’s FDI into India increased by 19.8% over 2011to reach $2786 million, although it accounted for only 2.3% of Japan’s overall FDI outflowin 2012. In 2013, the FDI declined by 22.64% which is1.6% of the total FDI outflow fromJapan. FDI from Japan to India was US$ 1.7 billion during January-December 2014. JapaneseFDI has mainly been in automobile, electrical equipment, telecommunications, chemicaland pharmaceutical sectors.

The number of Japanese affiliated companies in India has grown significantly over theyears. Presence of Japanese companies in India has been increasing steadily. As on December2014, there are 1209 Japanese companies registered in India which constituted a 13%increase over 2013 figures. There were also a total of 3961 establishments of Japanesebusinesses operating in India- a rise of 56% compared to the year before.

Japan is looking to boost trade and investment ties with India. The reasons behind thisinterest in India are obvious. India offers a large domestic market base. Besides, mutualsynergies between businesses in the two countries are driving initiatives -

1. Japan’s ageing population (23% above 65 years) and India’s youthful dynamism (over50% below 25 years)

2. Japan is a relatively labour scarce, capital abundant country that complements India’srich spectrum of human capital

3. India’s prowess in the software sector lends synergy to Japan’s excellence in the hardwaresector

4. India’s abundance of raw materials and minerals matches well with Japan’s capabilitiesin technology and capital to produce knowledge-intensive manufactured goods

5. India’s large domestic market has been the main factor for investments by Japanesecompanies. The majority of investments are in traditional fields like machinery,automobiles and auto parts



6. Japanese small and medium enterprises have begun to discover India as the new growthmarket. Japan and India share a common vision for the world. This is aptly illustrated bythe fact that there has been an increase in the number of joint declarations, delegationvisits and other business events between the two countries.

There are many opportunities for collaboration between Indian and Japanese companiesin the area of energy efficient and environment-friendly technologies. The agreement isexpected to increase exchanges in IT, ITES, financial services, construction, transportationand health-care services.

Top 25 Exports from Japan to India (US$ thousand)

Code Product label Value in 2014 Value in 2015

Total All products 8130224 8106831

‘84 Machinery, nuclear reactors, boilers, etc. 2353166 2054763

‘72 Iron and steel 1254336 1402634

‘85 Electrical, electronic equipment 834044 919676

‘39 Plastics and articles thereof 410792 549378

‘87 Vehicles other than railway, tramway 491820 457779

‘90 Optical, photo, technical, medical, etc. apparatus 453007 445097

‘99 Commodities not elsewhere specified 336855 401497

‘29 Organic chemicals 352934 350618

‘73 Articles of iron or steel 278050 219015

‘40 Rubber and articles thereof 214371 186376

‘38 Miscellaneous chemical products 119271 140601

‘82 Tools, implements, cutlery, etc. of base metal 89102 133357

‘74 Copper and articles thereof 122157 101626

‘28 Inorganic chemicals, precious metal compound, isotopes 62944 87675

‘54 Manmade filaments 78794 69248

‘34 Soaps, lubricants, waxes, candles, modelling pastes 63968 61739

‘27 Mineral fuels, oils, distillation products, etc. 168249 56581


‘32 Tanning, dyeing extracts, tannins, derivs, pigments etc. 48679 44393

‘68 Stone, plaster, cement, asbestos, mica, etc. articles 44934 42880

‘37 Photographic or cinematographic goods 37764 40689

‘70 Glass and glassware 24250 29311

‘48 Paper and paperboard, articles of pulp, paper and board 25821 26268

‘71 Pearls, precious stones, metals, coins, etc. 16353 26261

‘55 Manmade staple fibres 27222 24605



Top 25 imports from India (US$ thousand)

Code Product label Value in 2014 Value in 2015Total All products 6987497 4862280‘27 Mineral fuels, oils, distillation products, etc. 2744290 1282157‘29 Organic chemicals 740925 558677‘03 Fish, crustaceans, molluscs, aquatic invertebrates nes 441376 377058‘71 Pearls, precious stones, metals, coins, etc. 446515 352321‘84 Machinery, nuclear reactors, boilers, etc. 179429 208374‘72 Iron and steel 267981 192787‘62 Articles of apparel, accessories, not knit or crochet 210998 192349‘87 Vehicles other than railway, tramway 132473 132854‘26 Ores, slag and ash 317198 128599‘85 Electrical, electronic equipment 113588 100887‘90 Optical, photo, technical, medical, etc. apparatus 89154 85359‘32 Tanning, dyeing extracts, tannins, derivs, pigments etc. 81882 75714‘42 Articles of leather, animal gut, harness, travel goods 62600 73255‘23 Residues, wastes of food industry, animal fodder 95211 65675‘08 Edible fruit, nuts, peel of citrus fruit, melons 57398 64579‘52 Cotton 74383 58969‘25 Salt, sulphur, earth, stone, plaster, lime and cement 60312 55319‘09 Coffee, tea, mate and spices 51034 52989‘15 Animal, vegetable fats and oils, cleavage products, etc. 37505 50472‘63 Other made textile articles, sets, worn clothing etc. 59898 48258‘64 Footwear, gaiters and the like, parts thereof 34892 45088‘61 Articles of apparel, accessories, knit or crochet 43746 42943‘38 Miscellaneous chemical products 43738 41549‘13 Lac, gums, resins, vegetable saps and extracts nes 49438 39448

SOME EXPORT HOPEFULS

Pharmaceuticals

The sale of generic drugs account for almost 30% of the drug market in Japan and therebyrepresent an opportunity worth $33 billion. The government is Japan has expressed itsdesire to raise the share of generic drugs to 60% by 2017 in order to make healthcaremore affordable.

Four years after the last buyout, more Indian pharmaceutical firms are eyeing. SunPharmaceuticals Industries Ltd was planning to acquire the Japanese drug portfolio ofSwiss firm Novartis to make its entry into Japan. Japan, where drug sales were estimated at$115 billion in 2013, accounts for nearly 10% of the global pharma market, compared with38.4% for the US and 20.7% for western Europe, according to a 2014 Deloitte report.

An ageing population and mounting health costs have prompted the Japanese governmentto try and increase the presence of generic drug makers, bringing the Japanese marketunder the radar of Indian pharmaceutical companies.



Besides the reported move by Sun Pharma, other Indian generics makers, including DrReddy’s Laboratories and Glenmark Pharmaceuticals Ltd, are exploring options for enteringJapanese generics market with their formulation drugs.

Lupin is the only Indian pharma company to have a presence in the Japanese genericmarket from which it currently earns about 12% of annual revenue. Till date, Lupin Ltd hasmade two buyouts in Japan: Tokyo-based I’rom Pharmaceutical Co. Ltd in 2011 and KyowaPharmaceutical Industry Co. Ltd in 2007.

Specialty Chemicals

Japan is both an importer and exporter of specialty chemicals, so is India. Depending uponthe use, it can be a sizable two-way trade. Zeon Corporation, one of the leading chemicalmanufacturers in Japan, has established Indian unit with the launch of Zeon India PrivateLimited in Gurgaon, Haryana. While the company will initially focus on specialty rubberproducts business, primarily catering the auto component industry, it will eventually bringin products from its other business verticals - such as chemicals and specialty plastics. Thenew company commenced operations on October 1, 2015.

Die-casting and Forging Products – Various Alloys

Aluminium alloy and zinc alloy products for motorcycle parts, automobile parts, urbanlighting system, appliances like washing machine, construction machinery, other mechanicalproducts.

Steel Products

Japan’s traditionally higher prices for steel products by domestic producers have openeddoors for other steelmakers from Asia, who are suffering from low margins amid anoversupply in the region, to push through exports. As a result, Japan’s imports of steelproducts hit a 16-year high in January. “Steel products from South Korea and China arenow headed toward Japan as it’s the brightest spot in Asia with robust demand,” saidShinya Higuchi, Nippon Steel’s executive vice president.

Japan’s imports of steel products jumped 43.7% year-on-year in January to 487,000 tonnes,the highest since March 1998.

Food Items

Data on agricultural trade between India and Japan is annexed. In the year 2013-2014,India’s total export of agricultural commodities to Japan was of the order of US$ 842.98million. India’s principal agricultural exports during this period were lobsters, shrimps andprawns, cashew nuts, soybean flour, castor oil and soybean oilcakes. During the sameperiod, the agricultural import from Japan was of the order of US$ 5.83 million. India’smain item of import were catfish, vegetable seeds for sowing and other food preparations.

Japan imports from the other countries of the world the following agricultural items whichIndia has the potential to export: cut flowers, tomatoes, garlic, pepper, cucumber and



gherkins, shelled walnuts, mango, grapes, rice, sesamum seed, and sugar. Japan may explorethe possibility of sourcing these agricultural items from India.

Rice Bran Oil

Japan has shown interest in buying rice bran oil from India. Some of the Japanese producersare also looking for joint ventures with Indian companies for value-added products

List to Identify India’s Potential Exports to Japan (US$ million)

# Code Produce Label Japan’s India’s Japan’sImports Exports Imports

from India to World from World2012 2013 2012 2013 2012 2013

1 60390 Cut flowers and flower buds for bouquets or 0.0 0.0 26.7 36.5 24.2 20.5ornamental purposes , ex fresh

2 70190 Potatoes, fresh or chilled nes 0.0 0.0 18.3 33.6 8.9 8.63 70200 Tomatoes, fresh or chilled 0.0 0.0 53.6 69.4 27.6 34.64 70310 Onions and shallots, fresh or chilled 0.0 0.0 294.7 600.9 183.2 171.85 70320 Garlic, fresh or chilled 0.0 0.0 10.4 11.3 38.6 34.96 70960 Peppers of the genus Capsicum or of the genus 0.0 0.0 18.1 26.1 160.6 152.8

Pimenta, fresh or chilled7 70999 Fresh or chilled vegetables n.e.s. 0.0 0.0 0.0 65.3 48.7 42.58 71010 Potatoes, frozen 0.0 0.0 3.1 6.7 35.4 31.29 71080 Vegetables, frozen, nes 0.0 0.0 8.5 12.3 377.0 377.510 71190 Vegetables nex and mixtures provis preserved 0.0 0.0 6.2 5.8 71.2 65.5

but not for immediate consumption11 80232 Walnuts, fresh or dried, shelled or peeled 0.0 0.0 38.9 55.5 118.1 120.512 80290 Nuts edible, fresh or dried, whether or not shelled 0.0 0.0 8.9 6.7 9.9 8.0

or peeled, nes13 80390 Fresh or dried bananas (excl. plantains) 0.0 0.0 0.0 20.5 885.9 816.114 80450 Guavas, mangoes and mangosteens, fresh or dried 0.0 0.0 166.9 203.4 49.1 41.915 80510 Oranges, fresh or dried 0.0 0.0 12.8 8.1 157.9 127.816 80550 Fresh or dried lemons ‘Citrus limon, Citrus 0.0 0.0 8.2 9.4 83.9 89.1

limonum” and limes Citrus17 80610 Grapes, fresh 0.0 0.0 131.3 193.5 57.7 61.718 80620 Grapes, dried 0.0 0.0 53.3 42.4 94.2 95.619 80720 Papaws (papayas), fresh 0.0 0.0 6.0 6.4 8.3 7.020 80810 Apples, fresh 0.0 0.0 10.4 13.6 5.0 5.121 81090 Fruits, fresh nes 0.0 0.0 59.5 66.1 8.3 7.122 81340 Fruits, dried nes 0.0 0.0 18.0 12.3 15.4 13.423 90811 Nutmeg: Neither crushed nor ground 0.0 0.0 0.0 30.7 13.5 6.424 91012 Ginger: Crushed or ground 0.0 0.0 0.0 8.3 15.7 12.925 10119 Durum wheat (excl. seed for sowing) 0.0 0.0 0.0 319.9 93.1 83.926 100199 Wheat and meslin (excl. seed for sowing, and 0.0 0.0 0.0 932.8 2060.4 2191.7

durum wheat)27 100390 Barley (excl. seed for sowing) 0.0 0.0 0.0 107.9 412.4 439.6



# Code Produce Label Japan’s India’s Japan’sImports Exports Imports

from India to World from World2012 2013 2012 2013 2012 2013

28 100620 Rice, husked (brown) 0.0 0.0 45.6 13.3 27.4 12.529 100640 Rice, broken 0.0 0.0 286.4 318.6 12.7 6.430 100630 Flour, meal and powder of edible fruits, nuts 0.0 0.0 20.9 21.6 7.4 10.0

and peel of citrus fruit or melons31 120190 Soya beans, whether or not broken (excl.) 0.0 0.0 0.0 77.3 1804.5 1883.0

IT and ITES

Nucleus Software, Indian global software product and solutions company, is partneringwith Waseda University in Japan for launching an internship program at Indian headquartersof Nucleus Software. With this initiative, Nucleus hopes to motivate the young studentsfrom Japan to understand the product innovation and learn the spirit of software productdevelopment.

Lingua Next Technologies Pvt ltd, a Pune-based software product company has now openedits first wholly owned subsidiary outside India in Japan. The company is optimistic thatJapanese companies will find utility in its language localisation software, which allowscustomers to convert their business software into a different language from the language itwas written in, in order to penetrate other markets with localisation of language of theirsoftware products. Ministry of Commerce, Govt. of India

India, Japan Sign Action Plan to Double Investments in 5-years

1 May 2015

The governments of India and Japan signed an agreement on Thursday for doubling ofJapanese investment into Indian firms in the next five years, and boosting two-way trade.The signatories were Commerce and Industry Minister Nirmala Sitharaman and Japan’sminister for economy, trade and industry, Yoichi Miyazawa.

The plan was categorised into five broad areas: development of selected townships inIndia, promotion of investment and infrastructure development, further development andcooperation in information technology, enhancing cooperation in strategic sectors andAsia-Pacific economic integration.

During Modi’s visit, Japanese Prime Minister Shinzo Abe had set a target of 3.5 trillion yen($33.5 billion) of public and private investment and financing from Japan including officialdevelopment assistance to India to be made over five years. There are already 1,209 Japanesefirms operating in India out of which 137 have started their operations after October 2013.

Japan is the fourth largest foreign direct investment (FDI) contributor to India, with majorinterests in pharmaceuticals, automobiles, and services sectors accounting for 7.46% oftotal FDI equity inflows into India. During April 2000-November 2014, FDI from Japan intoIndia stood at $17.55 billion.



Under the Tokyo Declaration for Japan-India Special Strategic and Global Partnership, Modiand Abe have set a target of doubling Japanese FDI and the number of Japanese firms inIndia by 2019.

INDIAN INVESTMENT IN JAPAN

Indian investment in Japan is limited and concentrated in the IT sector. “Japan is not aneasy market to penetrate. The expectations on quality, cost and delivery are very high,” saidVikram Kirloskar, vice chairman of Toyota Kirloskar Motor Pvt Ltd and chairman of CII JapanCommittee. India plans to increase its footprint in Japan nevertheless. “We want investmentfrom India. JETRO will support it as a one-stop service provider,” said Naoyuki Maekawa,the India expert at JETRO.

Subsidiary of India based Moser Baer Solar in Japan has sold `100 Crore worth of solar PVmodules in the country. Japan is focusing a great deal on the renewable energy.

All is not well in Indian investments in Japan. Cadila Healthcare Ltd has decided to close itsJapanese subsidiary Zydus Pharma Inc., which was set up by the company in year 2006 totap the pharmaceutical market of Japan which is the second-largest pharmaceutical marketin the world. It is the fourth Indian drug manufacturer to exit from Japan’s pharmaceuticalmarket after Ranbaxy Laboratories Ltd, Dr Reddy’s Laboratories Ltd and Orchid Chemicalsand Pharmaceuticals Ltd. It appears that Japan’s copycat drugs market is still consideredtough for Indian drug manufacturers as the quality standards and regulations in Japan aremore stringent and often not very transparent.

JAPAN INVESTMENTS IN INDIA

• Japan currently has the fourth largest FDI in India

• More than 1000 companies from Japan control business in India.

• Main interests have been automobile industry, electrical equipment, pharmaceuticals,trading and telecommunications sector.

• Considering the wide market available in India. Japan has a very good opportunity toinvest in Indian Market.

• Infrastructure, Financial services, manufacturing, automobiles and auto parts, power,metals, renewable energy, food processing and electronic hardware have good scopein India

Investment Pipeline

The two Prime Ministers signed of the Memorandum of Cooperation on introduction ofJapan’s High Speed Railways (HSR) technologies (the Shinkansen system) to Mumbai-Ahmedabad route. It will be funded by a highly concessional Yen load.

There is provision for Japan-India Make-in-India Special Finance Facility” up to 1.5 trillionYen by Nippon Export and Investment Insurance (NEXI) and Japan Bank for International



Cooperation (JBIC), which aims to promote direct investment of Japanese companies andtrade from Japan to India, to support their business activities with counterparts in India,including development of necessary infrastructure, and to help materialise Make-in-Indiapolicy of the Government of India.

The two governments have shown intention to develop “Japan Industrial Townships (JITs),”with investment incentive for companies that would not be lower than under the prevailingpolicy framework such as Special Economic Zone (SEZ), and National Investment andManufacturing Zone (NIMZ). Moreover, both sides will work toward evolving special packagesfor attracting Japanese investment in the Japanese Industrial Townships in India.

Japan has identified 11 sites to set up industrial townships in India, which would serve ashubs for investments into the country. These include Tumkur in Karnataka, Ghilot in Rajasthan,Mandal in Gujarat and Supa in Maharashtra. Japan will also provide soft-skills training toIndian workers in the manufacturing sector to help bridge the demand-supply gap.

The government plans to give concessions to Japanese companies in the industrialtownships, equivalent to at least what is offered to units in special economic zones and theproposed National Investment and Manufacturing Zones. “We are yet to work out theinvestment incentives for the companies, but it will definitely not be lower than what isunder the prevailing policy framework including SEZs and NIMZs, like what has beenannounced for the Chinese industrial parks as well,” said the official.

The sectors will be wide-ranging, right from auto components to textiles, food processingand engineering

Japan has invested $4.5 billion in the first stage of the Delhi-Mumbai industrial corridorthrough lending by Japan International Cooperation Agency and Japan Bank for InternationalCooperation. They together hold 26% equity in the project.

Japanese telecom and internet giant SoftBank has announced its intent to invest nearly$10 billion (around `60,000 crore) in India over the next few years.

Japanese companies like Maruti Suzuki, Honda, Nissan and Isuzu have together committedinvestments in fresh capacity of about `25,000 crore and Toyota, the world’s largest carmaker, has recently completed an expansion of its production unit near Bangalore.

Japanese processed foods makers, Toyo Suisan Kaisha Ltd and Ajinomoto Co are establishinga joint-venture company in India for instant noodle business. Toyo Suisan will hold 51%with Ajinomoto owning the rest 49% which is expected to absorb investment of around$10 million (`62 crore).

Japan’s Kokuyo has recently acquired Riddhi Enterprises, a notebook manufacturing companybased in Mumbai, for $8 million.

Isuzu, an auto major in Japan is contemplating its debut in India with an investment of`3000 crore engine plant at Sri City.



Japan’s KITZ Corporation has recently signed an agreement to buy 100% stake in MicroPneumatics Pvt Ltd, an Indian valve manufacturer, in order to expand its operations overseas.

Japanese manufacturer of heavy equipment Hitachi Ltd. has recently made a statementthat the company would invest `4,700 crore in India till 2015-16. During the same period,the company looks to expand its revenue from India threefold to ̀ 20,000 crore. Substantialbusiness is expected to come from sectors such as construction, infrastructure and servicesand it is exploring new business prospects from projects like metro trains, mono-rail andbullet trains.

Japan’s Suzuki Motor corp. has recently announced that by the end of 2014, the companywill shift its entire export operations for the Middle East, Africa, Latin America and South-East Asia to India. The entire process is expected to be over by 2014-15.

Japanese telecom company NTT DoCoMo’s subsidiary - Oak Lawn Marketing (‘OLM’) is allset to enter Indian virtual retail market segment through a tie-up with TVC Skyshop.

Toshiba, the electronic giant of Japan, will purchase 26% stake from its existing shareholders,including private equity investor in UEM India, the unlisted water and waste managementcompany in India.

Japanese electronics major Toshiba is investing in its subsidiary Greenstar with a target ofachieving profit of US$ 40 million (`243 crore) in the next five years. Toshiba wants toenlarge its share in the Indian lighting market by utilizing all its resources and capabilities.

Itochu Petroleum Co (Singapore) Pte Ltd, a wholly owned subsidiary of Itochu Corporation,has acquired 40% stake in Aegis Group International Pte Ltd., a subsidiary of Aegis LogisticsLimited, for a total consideration of $ 5.85 million.

FCC Company of Japan has acquired the 50% stake of its Indian partner Rico Auto in FCCRico, an equal joint venture between FCC Company and Rico Auto, for a sum of `495crores, therefore gaining full control on FCC Rico which is engaged in manufacturing clutchparts for two-wheelers in India.

Japan’s Yamaha has commenced working on its first ever product to be developed entirelyin India. It is the part of Yamaha’s global strategy to develop at least 30% of its productsoutside Japan. India will be used as a product development and manufacturing hub byYamaha due to its low cost reputation, to develop models that will be sold in the domesticmarket of India as well as exported to other countries.

Japan’s largest e-commerce corporation Netprice is eyeing investments in the Indian e-commerce space through one of its companies, Beenos which has invested in two Indianstart-ups so far.

The healthcare sector in India has recently attracted the Japanese interest after research,marketing, HR and engineering sectors. Japanese IVD company, Arkray Inc. is acquiring the



in-vitro diagnostic business of India (Surat) based Span Diagnostics through its Indianaffiliate Akray Healthcare.

3F Industries Ltd. has formed a joint venture of 45:55 partnerships with Japanese firm FujiOil Co. for manufacturing and sales of oil and fat processed foods in India. This is the thirdjoint venture between an Indian agriculture firm and Japanese firms for edible oil business.

Japan’s Sumitomo Mitsui is all set to buy a 10% stake in India’s Reliance Capital owned byAnil Ambani. The proposed deal is worth $400 million (about ̀ 2,400 crore) and is expectedto be signed by September this year. If the deal is finalized, it will be the second largestinvestment by a Japanese company in the Reliance group and the fourth largest in theIndian financial services sector.

Japanese clothing chain UNIQLO is looking to source garments from India and may soonopen up to 100 of its stores in the country with investment exceeding $1.5 billion.

Rakuten, the Japanese membership-based internet services company, recently announcedthat it is opening its new Global Development and Operations Centre in Bangalore, India,namely, the Rakuten India Development and Operations Centre (RIDOC), in collaborationwith PROLIM Global Corporation, which is an IT consulting services company.

Fertilizer major Coromandel International, part of Murugappa group, would soon be finalisingthe outlay needed for its joint venture with two Japanese companies to make farmequipment. Officials from the Japanese companies will be coming to India soon to finalisethe investment details. Coromandel International has entered into a joint venture alliancewith Japanese companies Yanmar & Co and Mitsui & Co to make and sell small farmequipment used in paddy cultivation.

Japan’s Samurai Incubate is exploring various opportunities to participate in investmentprocess of startup companies in India along with other Indian incubators. From theexperience of making investment in Japanese start-ups the company is keen to expand itsinvestments in Indian start-ups. The company is also exploring the opportunities to have aset up in India through which it can extend support to start-ups both in India and Japan.

En-Japan Inc., Japanese recruitment solutions provider has acquired 60% stake in an Indianjob placement firm, New Era India Consultancy Pvt. Ltd, for `345 Million.

Japanese Industrial cluster starts taking shape in Gujarat, India

The Gujarat government has initiated the process of developing a Japanese industrial clusternear the Maruti Suzuki India Ltd (MSIL) factory at Hansalpur, Gujarat, India. The area hasalready managed to attract projects from major Japanese companies like Honda Motorcycleand Scooter India (HMSI), Mitsubishi Aluminium company, and around four medium sizedengineering companies from Japan, apart from the MSIL plant. Besides Mitsubishi, fourmedium sized engineering companies have also expressed interest to set up their projectsin the area.



Japanese Industrial cluster in Rajasthan

Approximately 545 acres industrial land for Japanese investment is reserved at Majrakath-Neemrana. 27 Japanese companies have taken allotment of total 344.82 acres land. 11companies have started production activities. More than 250 representatives of around100 companies have already visited area. Majority of investment is in Auto Sector. Totalinvestment of `2539.60 crores of 27 companies.

JV Opportunities

Japan is the leader in technology and infrastructure know-how. India with abundance innatural resources and a desirable geographic location and closer to ship Japanese goodscan be a true partner for Japanese Mid-size companies to penetrate in Middle East andAfrica with India as a hub. SMEs in areas like Rajkot which already have displayed theirengineering capabilities can tie up with Japanese SMEs to upgrade technology. Many autorelated SME companies from Mei Prefecture (province) where many auto giants are locatedare interested.

Scope for SME Collaboration

Japan is not all large industries but also home to a large number of SMEs in high technologyareas which Indian SMEs can collaborate with for synergistic gains.

SMEs in both the countries are going through a tough phase. According to a rough estimate,India has around 50 million SMEs. Japan, however, reportedly has twice that number. IfSMEs in Japan are forced to hollow out to third countries, the Indian SMEs are on the vergeof destitution and extinction.

Example-low carbon technologies and practices among Indian SMEs. Indian and Japaneseinstitutions are working on a pilot project to see the feasibilities of following technologies:

• Micro cogeneration

• Energy efficient ventilation fan

• Gas heat pump (GHP)

• Electric heat pump (EHP)

• Energy efficient air-conditioning system (VRV system)

• Energy efficient lighting system (light sensor with dimmer control)

• Amorphous transformer

• Electric induction melting furnace

• Compressed air system

• Wireless energy metering and communication system



HOW INDIA-JAPAN TIE-UP WILL FUEL STRATEGIC GROWTH FOR SMES

Entrepreneur India, Oct 2014

“The recent visit of Modi in Japan laid stress on India-Japan economic co-operation whichis likely to have good impact on major sectors such as automotive, engineering, textile,agro food, etc.,” says Vijay Kalantri, President, All India Industries Association.

The term ‘low cost manufacturing hub’ will make India a sourcing destination for countriesworldwide and will give huge boost to the small domestic exporter community. Exportersin automotive industry and pharma industry have already experienced huge growth withIndia becoming a base for all major manufacturers to manufacture small vehicles, automotivecomponents and spare parts, which are then shipped to their factories or assembly units inother countries.

“There are many instances where active pharma ingredients are sourced from India for usein global operations of pharma giants. If the emphasis on manufacturing stays, then Indiawill emerge as a strong manufacturing base over the course of a few years,” says VikramDham, CEO and Co-Founder, Emkor Solutions.

India-Japan strategic tie-up can open the doors for small domestic manufacturers tomanufacture more and more goods. Besides, the growth opportunity in India is verytremendous and MSMEs have always played a significant role in grabbing theseopportunities.

“India-Japan tie up should create significant opportunities for domestic manufacturing asthis is how it started in China several years back,” says Rahul Gupta, Chairman-SME Chapter,MAIT.

Sourcing from India is likely to create huge opportunity for small businesses to flourishover the next decade. But to gain foothold in the marketplace, there are some key factorswhich a small business needs to consider like building scale, reducing costs, strengtheninginnovation skills and building global standards of operation and quality control.

The only way to gain competitive advantage is to focus on the core business imperatives.Dham stresses on the fact that in order to survive, grow and thrive, SMEs in India need tohave right systems, best practices, discipline and processes in place.

How will Indian SMEs Benefit?

India has realised that in order to build a sustainable bilateral relations between twocountries, the first and foremost need is to invest in country’s infrastructure. Therefore,Modi has invited Japan to pump in around $33.58 billion in various development projectslike infrastructure, and building smart cities over a five-year period.



With this investment, India is all set to upgrade its poor infrastructure by building betterhighways, efficient power plants and better ports. The SMEs in India will definitely experiencethe trickledown effect of such huge investment.

“If one infrastructural project gets implemented in India, then it will create a great opportunityfor small companies. The Japanese investment will be very helpful and useful for SMEs,both in terms of increasing their revenue and lowering the cost,” states Viren Malhotra, ascale-up expert in the SME industry.

Kalantri agrees with the above statement and asserts, “Whatever investment comes, thebeneficiary will be the Indian SMEs. Big companies like Suzuki, Maruti, Toyota and othersare supplied by SMEs only.”

Small businesses always play a crucial role in tapping the growing market. Modi has endorsedinclusive growth many times and the involvement of SMEs in any project can serve as thenext wave of growth. “Projects like the freight corridors along Eastern and Western Indiacannot be completed without outsourcing small local businesses. All these outsourcingsand the zeal to build infrastructure will lead the flow of capital to small and mediumbusinesses in India,” explains Dham.

Boost to IT, Engineering Sectors

The definition of smart cities is apparently assembled to urban settlement which involvesusage of technology to build efficient public transportation, structured living conditionswith better management of energy resources, water, traffic, safety and security for residents.The much hyped smart city initiative intends to minimise pollution, maximise recycling andreduce wastage. All this requires a huge level of investment into technology and infrastructurewhich will enable the tech start-ups and small IT firms to scale up.

Anil Khaitan, Chairman (Industry Affairs Committee), PHD Chamber, says, “Smart citiesproject will provide proper housing, entertainment facility, shopping, education, medicalfacilities, hospitals and nursing homes. Smart cities are going to be wi-fi enabled cities, sothat will also be a tremendous advantage to the MSMEs.”

However, Malhotra emphasises that Wi-Fi connectivity is just one element of smart cityproject. To progress the quality of the existing cities, there are multiple elements whichneed to be improved like land acquisition, water supply, power supply, good roads, schools,and hospitals so that it will be a good fall out for IT and infrastructure companies whensmart city project will get implemented in India.

“Smart cities can only be built if we develop every nook and corner of the country. So theproject will benefit not only IT sector but various sectors simultaneously,” says Kalantri.

Amendments in Existing Policies

In India, plethora of unfavourable policies restricts foreign countries to establish their businessin India. The vital task of the government is to make business environment friendly andremove policy bottlenecks to attract more and more investments.



The present policy and tax structure in India requires some of the key amendments whichencompasses uniform goods and services tax, reduction in the cost of finance, progressivepolicies, smoother functioning of the bureaucracy and better taxation regime. Policies thatare both rational and transparent will encourage companies to invest locally for long term.

With the new government at the helm, India is all set to open its centres of investment forprivate capital and making India emblematic of business efficiency, speed and scale. And ifthis move gets implemented, then it is likely to create an environment which will be friendlyto both – business and investment.

“We have to make it business-friendly. Right now, we are not business friendly. Issues likeland acquisition, retrospective tax issues, infrastructural issue are making it difficult to investand operate on a day-to-day basis. All these things need to be sorted out,” asserts Malhotra.

Impact on Business Eco-system

The progressive relation between India and Japan seems to trim down the tariff barriers forsmall domestic companies. With new investment pouring into infrastructure andcommunication, smaller companies can take the benefit of better export performance viabetter ports and shipping, railways, roads, airports, telecommunication, businessenvironment and logistics.

The successful India-Japan tie-up will provide a growth and innovation platform for smallbusinesses and help them to build strategic expertise on every aspect of business. It willalso open the Japanese market for small companies based in India and make it easier forthem to do business there. SMEs in sectors like biotechnology, engineering, specialtymanufacturing, electronic hardware and energy etc. will gain learning from the bestmanufacturing practices of Japanese SMEs.

“There is much reason to cheer for Indian SMBs as both India and Japan look forward toconcluding regional partnership agreements and promoting greater co-operation betweenbusinesses in both countries,” concludes Dham.

“INDIA - JAPAN SME BUSINESS COUNCIL” is jointly initiated by Small and Medium BusinessDevelopment Chamber of India (SME Chamber of India), Maharashtra Industrial andEconomic Development Association (MIEDA) and India International Trade Centre(IITCINDIA) and Supported by SME Export Promotion Council, Packaging Industry Associationof India (PIAI) SME Technology Development Council and SME Business ManagementInstitute to accomplish the objectives.

The Council will act as a bridge to exchange information on business, import, export, jointventures, technology transfers, contract manufacturing tie up and other businessopportunities in various sectors as well as investment promotion in both the countries.



This will also be useful for identifying business partners, collaborations, alliances, settingup industrial units, display products and services and other related business activities aswell as to take up issues to concerned authorities.

Delhi-Mumbai Industrial Corridor (DMIC)

The DMIC project is proposed to be implemented on either side of the 1483 km longWestern Dedicated Rail Freight Corridor between Dadri (UP) and JNPT (Navi Mumbai). Theproject seeks to create a strong economic base with a globally competitive environmentand state-of-the-art infrastructure to activate local commerce, enhance investments andattain sustainable development. The DMIC spans the six States of Uttar Pradesh, Haryana,Madhya Pradesh, Rajasthan, Gujarat and Maharashtra and majority of projects in DMIC areenvisaged to be implemented through Public-Private Partnership mode. The DMICDevelopment Corporation (DMICDC) was incorporated in January 2008 for projectdevelopment, coordination and implementation of the numerous projects. Looking at themagnitude and diversity of the project, the entire project has been planned to beimplemented in phases. Initially, 7 nodes/ cities have been taken up for development.

The overall perspective plan for the entire DMIC Region has been completed. The MasterPlanning for the Investment Regions and Industrial Areas taken up initially to be developedas New Cities have been completed except for one. The State Governments have initiatedthe process of Land pooling/ procurement/ acquisition for the new industrial regions/areas as well as for the Early Bird Projects. Environmental Impact Assessment (EIA) Studieshave been initiated for five industrial cities. DMICDC had initiated development of SmartCommunities or Eco-Cities that can contribute to improving the sustainability of the DMICregion. Japanese technology and expertise is being made available under collaborationwith METI, Government of Japan. Along with the planning, as part of each city, certainmodel initiatives called early bird projects within or in the vicinity of the DMIC city have alsobeen taken up for feasibility studies on the recommendation of the State Governments.These projects are in the sectors of water supply, transport connectivity, logistic hubs, megaindustrial parks, knowledge cities etc.

In September 2011, the Government of India restructured the DMIC Project with anImplementation Fund of `17,500 crores to be utilized over a period of five years and anadditional project development Fund of `1000 crores. The land for the new industrial citieswill be the contribution of the State Government. The Japanese Government has alsoannounced their financial support for DMIC project to an extent of US$ 4.5 billion in thefirst phase of the project.

The “DMIC Project Implementation Fund”, which will be a revolving fund, will be set up asa Trust and will be a repository of Government of India financial assistance. The funds willflow from the Trust to the SPVs and the Trust will also receive the upside from bidding andmonetization of land values. The Trust will also provide resources to DMICDC for projectdevelopment activities. Action has been initiated for setting up of Trust as per the approvalof the Cabinet and the Trust Deed is being finalized in consultation with other Ministries.



The request of the Government of Japan for 26% participation in the equity of DMICDC hasbeen approved by the Cabinet in its meeting held on 23rd August 2012.

Japan-India Task Force on DMIC has been set up at Vice Minister/Secretary level and hasbeen meeting regularly. The tenth meeting of the Task Force was held on 19th October2012 in Tokyo.

AUTOMOTIVE SECTOR THE GOLDEN SECTOR FOR INDIA – JAPAN BUSINESS (EXTRACT)

Indian Express, 10 Nov 2015

The Indian automobile industry is a critical and crucial industry to Indian economy, whichhas seen lots of FDI inflows. The industry has also become a major stakeholder in India-Japanese relations. Japan is one of the major investors in Indian automobile industry amongother countries. Even before India market liberalization period Japanese automakers wereactive in India either as technical collaboration or minor partner with Indian companies.

FDI inflows from Japan is highly focused on automobile industry and is the second leadingsector, attracting nearly 20% of the total FDI during the period 2000-2014. Automotiveparts makers are also grabbing the new scale opportunities, the new needs are also pushingto find tie-ups and collaborations in India.

Demographically and economically well positioned, rising prosperity, easier access to Financeand increasing affordability of consumers all these factors are signalling that India’sautomotive industry is well-positioned for growth that lures Japanese Manufacturers. Tocater to both domestic demand and export opportunities, Japanese Manufacturers of allkinds are focusing to tap Indian market. Automotive sector is been and will always be aGolden sector for India- Japan business relations contributing from all dimensions.


Japan Business Handbook 2016

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Transcript of Japan Business Handbook 2016