Ending two centuries of self- imposed isolation, Japan signed a landmark treaty with the United States in 1854, one year after an American navy fleet docked in Edo (now Tokyo) as part of a mission to establish trade relations between the two countries.
This year, as the United States and Japan commemorate the 160th anniversary of the signing of the Treaty of Peace and Amity, both countries look back at how their economies have grown increasingly integrated over the years and have prospered to account for one-third of the world’s output.
While the economic emergence of China is perceived to have diminished the importance of American-Japanese relations, the U.S. Bureau of Economic Analysis has noted that Japan remained the largest single foreign direct investor from Asia in 2012, investing $19.2 billion that year. Including all regions, Japan ranks as the fourth-largest FDI contributor.
That upward trend is especially evident on the U.S. West Coast, specifically in Los Angeles, California. According to the Los Angeles County Economic Development Corporation, Japan is the largest source of FDI in the sprawling county.
“While many American businessmen are likely to pay attention to the markets of China or South Korea, Japan is the largest foreign direct investor among Asia Pacific countries. Statistics of the U.S. Department of Commerce indicate that Japan represents 71 percent of inward FDI from Asia and (the) Pacific, with Korea at 5 percent and China at 1 percent. We’d like to draw attention to this fact,” stressed Consul General of Japan in Los Angeles Jun Niimi.
The LAEDC has also reported that 31.3 percent of foreign-owned and -affiliated companies in L.A. County are Japanese. Those companies account for around 120,000 jobs, not withstanding other indirect contributions to the local economy.
Since the 2008 global economic recession, the two countries are on the way toward recovery with investor confidence regaining its former momentum.
“In the last couple of years, the interest of Japanese companies to do business in the United States has significantly increased,” pointed out Sachiko Yoshimura, the chief executive director of the Japanese External Trade Organization in Los Angeles.
That renewed vigor is noticeable in all industries. While Japanese companies in the United States were traditionally associated with big business, particularly in the automotive and electronics industries, there is a new breed of firms that, while smaller and less well known, exhibit the same commitment to quality and innovation.
“Like all the other Japanese brands, the North American piece is one where we still see some good stability and good growth. Overall, Japanese brands have a very strong reputation here within the U.S. With most of the headquarters being on the West Coast, we fit in well within the car culture in California,” said Mazda North American Operations President and Chief Executive Officer Jim O’Sullivan.
Apart from the automotive sector, immense investment opportunities exist in new areas, specifically in green and renewable energy, mass transportation, healthcare, pharmaceuticals, biotechnology, hospitality, entertainment and most noticeably in food (there are more than 900 Japanese restaurants in Southern California alone).
“Japan represents 71 percent of inward FDI from Asia and the Pacific, with Korea at 5 percent and China at 1 percent. We’d like to draw attention to this fact"
- Consul General of Japan in Los Angeles Jun Niimi
“Small and medium size food companies have already put their interests into California by setting up their manufacturing plants here,” Yoshimura said.
Masumi Muroi, president of the Japan Business Association of Southern California, explains another cause of the investment flow toward the United States, saying, “The Japanese domestic market might not expand due to the decreasing population. But on the other hand, the US market is still growing and the economy is recovering steadily. Under such circumstances, the US is a good market to be penetrated especially by Japanese manufacturers and consumer services providers.”
The U.S. Census Bureau has reported that trade between Los Angeles County and Japan has risen every year since 2009. From $10 billion in 2010, the figure surged to $48 billion in 2012.
California is considered the main gateway between the United States and Asia. In fact, the Los Angeles and Long Beach ports handle more than 40 percent of all containerized sea cargo destined for the United States, while Los Angeles International Airport is the busiest air hub on the West Coast.
More than the world–class infrastructure and logistics facilities, Los Angeles has had a very long and rich history with Japan. Since the arrival of the first wave of Japanese immigrants in the late 1800s, the Japanese community has grown consistently and contributed greatly to the cultural wealth of the county.
In its most recent report, the LAEDC said Los Angeles County is home to the country’s largest Japanese-American community. Aside from the more than 100,000 people of Japanese heritage living in Los Angeles County, an additional 650,000 Japanese tourists visit the county every year.
“L.A. is one of the best places to start the business for Japanese companies, because of the appropriate infrastructure and large Japanese community including variety of Japanese foods, easier to accommodate their family as well,” said Muroi.
Little Tokyo, located in the heart of downtown Los Angeles is one of only three “Japan Towns” in the entire United States. Home to the Japanese American National Museum, the Japanese American Cultural and Community Center and the venue of the Nisei Week annual festival, Little Tokyo was declared a National Historic Landmark District in 1995.
Opportunities for prosperous collaborations between the United States and Japan continue to arise. Beyond the encouraging trade numbers, investment, attracted by the warmth and openness shown to Japanese businesses, has been pouring into Southern California.
“On behalf of the Japanese government, I’d like to express our sincere and deepest gratitude to California. We Japanese are comfortable here because of the warm and kind acceptance. I believe that the existing ties and bonds between Japan and the West Coast have been quite critical for our relationship, and we would like to do our best to further promote this existing good relationship now and in the future,” said Niimi.