Why Japan?

Tokyo: the world first economic megalopolis

The Greater Tokyo Area is home to 37 million inhabitants. The urban tissue here is very dense (4550 inhabitants by km²). Commercial areas, numerous and diverse, are mainly organized around train stations and are linked together by a very effective and sophisticated transportation network. Services, finance and insurances are the dominant sectors of the Japanese capital.

The Japan of regions

This country hosts 12 cities of more than 1 million inhabitants and displays an urbanization rate of 92%. Each region has its own strength: Northern regions are specialized in agribusiness, wood and paper crafts; the region surrounding Nagoya, the Chubu, hosts large automotive and aerospace industrial centres; Osaka is famous for electronics and Fukuoka, in the South, is well-known for its opening towards Asia.

The Japan of consumers

Japanese people are consumers that have one of the highest buying powers in the world. They are characterized by a high level of expectation and high appetite for novelty. Japan is often considered as a great test-market before launching new global products or services. French expertise maintains here a high-level brand reputation in the sectors of cosmetics, luxury, gastronomy and fashion.

Japan, worldwide leader of innovation

Japan is the country that devotes the biggest part of its GDP to R&D (3.5% of GDP, compared to 2.3% in France) and the 2nd country that files the most patents in the world. It is home to 20% of the world R&D. Widely acknowledged as a technological leader in B2C, Japan is also the technological leader of numerous B2B sectors. Japan counts 5.6 researchers for 100 inhabitants (4.7 in USA, 3.3 in France).

Economic trends ​​​​​​​

3rd Economic world power and member of the ASEAN, Japan is deeply involved in the Asian economy. The country is the second supplier of China and 54% of its exports are directed to Asia, a proportion that has been increasing since 2000. The integration of Japan within Asian economies is a key factor of its current success, which takes advantage of the growth of Asian emerging countries.

The quality of Japanese products, their constant renewal, but also the unique treatment given to customers, are huge strengths that allow some Japanese conglomerates to stay among the most profitable and powerful groups worldwide. Furthermore, Japan made sure to master key technologies in numerous high-tech sectors.

Regarding demography, the decreasing population and the increasing longevity are creating new market segments. Particular attention is being paid to senior citizens, be they active or retired. This portion of society holds an important buying power and needs a specific treatment regarding leisure, services and well-being. Thus, Japan has become the research lab of new trends that most Occidental countries will one day face, due to the ageing of their population.

On the financial front, Japan stays a key player. Thanks to the strength of its foreign trade, the country owns the world’s second most important foreign exchange reserves (1100 billion of dollars) and stays one of the main lenders worldwide.

In 2011, the Fukushima incident questioned the energetic mix, and especially the role of nuclear power. Japan still possess functional reactors that work occasionally. Before the incident, nuclear power was providing 29% of the country electrical cover, a gap that is now covered by importations, which have an effect on the trade balance that used to be into surplus. This situation helped to move faster forward in the ecological transition in Japan and encouraged the country to adopt ambitious goals regarding sustainable energies.

Since 2013 and the coming into office of the Prime Minister Shinzo Abe, Japan began a series of in-depth reforms, the ‘Abenomics’. The goals for the government are 1) to boost domestic demand with a plan of massive government spending (671 billion of euros in 2014), 2) to inject liquidity into the economy to favour loans and investments, 3) to liberalize some key sectors (in particular the pharmaceutical and energy industries). If you wish to learn more about the economic trends in each industry, please consult our industry notes.

French-Japanese commercial exchanges

About 10 000 French companies made 7.2 billion of Euros worth of exports to Japan in 2014. After an increase of 11.1% in 2013, French exports have progressed by 2.2% in 2014. The consumer sector is the driving force of French exports to Japan, even if we have seen a slowdown in the growth of the French luxury industry in Japan.

Main exports of French products in Japan are aeronautics (17.2% of total), agri-food industry (16.4%), pharmaceutical products (12.9%) and clothing and footwear (12.2%).

The agri-food industry remains at a satisfactory level, and Japan remains our first client in Asia in this industry. Half of our agribusiness exports to Japan are wines and spirits. The small market share of the energy sector (1%) is linked to the almost total paralysis of the nuclear industry.

The bilateral trade deficit, to the disadvantage of France, decreased by 32% to reach 983 million of euros. Main deficit budget items are equipment goods and automotive. However, French imports of equipment goods decreased by 7% to reach 3.4 billion Euros while French automotive exports progressed by 9.9% to reach 364 million of euros.

Japan is our 11th client (2nd in Asia after China) and our 11th supplier. France is the 3rd foreign investor in Japan after the USA and the Netherlands. The stock of the French foreign direct investments in Japan represented 6% of FDI inflows in the country in 2014. France has more than 500 companies in Japan. 69% of those companies belong to the manufacturing sector (Air France, Michelin, Renault, Valeo, Air Liquide, Total, Sanofi Aventis, Danone…). 31% of those companies belong to the services sector (Axa, BNP Paribas, Société Générale, Crédit Agricole, MC Decaux, Orange…). 

If you wish to learn more about Japan, do not hesitate to download our country sheet (in French):

Download our country sheet

Contact us: appui.entreprises(@)ccifj.or.jp 

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