Despite the deep economic challenges faced by Japan, foreign companies have staked their long-term future in the world’s third-largest economy, which continues to develop pioneering technology and make the products that improve the lives of billions of people around the world.
“Japan is a major economy and a major target for American business and I expect it to remain so in the future,” said Christopher LaFleur, the president of the American Chamber of Commerce in Japan (ACCJ).
One of Japan’s biggest challenges is its aging population. While the growing number of the elderly has led to opportunities for the healthcare and pharmaceutical industries, the country, at the same time, had to deal with a shrinking domestic market and, as a result, had to seek growth opportunities abroad.
The government has supported various industries through changes in monetary policy, structural reform, and corporate governance, to name a few. These measures have helped many small- to medium-sized companies, which dominate the Japanese market.
“Even if you face a challenge, Japan is a tremendously well-off place. It can still be a growth market but you have to be aware that relative to other potential markets, the size of the market may be shrinking. The question is: Does the value you put into the market justify the investments?” LaFleur commented.
One industry that has seen worldwide growth is electrical machinery and home appliances. The focus for companies in this sector has been to diversify through the development of green and energy-saving technology. While competition is getting tougher, Japan enjoys the advantage of a reputation for high quality.
“The Japanese market is very demanding. We have to offer exactly what the customers require. Constant effort is needed to make products technologically better. We must always focus on innovation,” stressed Kiyoshi Ebizuka, the president of the Japan Electric Manufacturer’s Association (JEMA).
JEMA knows that Japan’s economic growth has stagnated and therefore, companies need to innovate in order to create opportunities both domestically and abroad. Working with the government to promote innovation, they open up the market for long-term investments. As an entity, JEMA has assumed the important responsibility to look after SMEs and ensure that they keep up with larger corporations.
“I hope that through those efforts, we can ensure that the Japanese electrical industry keeps on growing,” Ebizuka said.
While many equate Japan with high quality products, not many know that its homegrown services in IT and management have created a name for themselves around the world. Nomura Research Institute (NRI) had to expand abroad to compensate for the slowdown in the domestic market.
“The IT industry in Japan is able to grow domestically. But given the population and current market situation, it is important for us to go global to secure profits in the future,” NRI President and CEO Shingo Konomoto said.
To boost its growth, NRI merged or acquired companies that had the same business model and complementary services. It worked with Japanese companies that went global in an attempt to assisting them grow in new markets. Its impeccable track record in Japan has readily inspired trust among their potential partners at home and overseas.
“We pursue quality, which is our strength. Maybe it boils down to the nature of Japanese nationals. Japanese consumers are very strict in the level of quality that they seek. So, Japanese companies are ‘trained’ on this strict consumer supervision. We take that high quality for granted here in Japan. But when we go abroad, people are so amazed at the quality we can provide,” Konomoto said.