IN CASE you haven’t heard – “Japan is back”. In a telephone conversation on December 13 2006, Australian Prime Minister John Howard and Japanese Prime Minister Shinzo Abe agreed to proceed with negotiations for a Japan-Australia Free Trade Agreement (FTA), expected to commence this year. This news could not have come at a better time as 2007 also celebrates the 50^th anniversary of the signing of the Australia-Japan Agreement on Commerce.

Australia’s relationship with Japan is now stronger than ever. Complementary economies, together with shared strategic interests have contributed to a loyal trade relationship and friendship seemingly enjoyed by few other nations. As our largest export market, it is no secret that Japan is particularly dependent upon Australia for its energy and mineral supplies. What I am observing, however, is that further opportunities still exist for Australian service exporters, which for those already in-market are showing positive returns.

I agree with the current suggestion by the Japan External Trade Organisation (JETRO), that now could be a good time to reassess your export potential in Japan. FTA talks amid a resurging economy, together with an ageing and affluent population provide some of the reasons that give credit to this notion.

I discover that in my role of preparing small to medium sized enterprises (SMEs) for export, new or first-time exporters often ask: ‘Why should I consider Japan? China’s the place to be, isn’t it?’

There’s no doubt China possesses great potential. On the other hand, we have a long track record with Japan and you do not have to look far to find a group of South Australian companies who have been trading with Japan for more than 30 years. More than six times the population of Australia, Japan is recognised as a country that respects and values Intellectual Property (IP) protection laws and established the “Intellectual Property High Court” in April 2005, reaffirming this common belief.

Alternatively, experienced exporters new to Japan often ask: ‘Is it necessary to get our business cards printed in Japanese and English?’

You are bound for a positive start to doing business with the Japanese having high-quality and embossed bilingual business cards; It demonstrates respect, as well as, a commitment to the market. It is wise to take plenty of business cards as meetings usually start with the exchanging of cards, customary in Japanese business and known by the term meishi koukan. Give and receive cards with both hands and take the time to read the cards you receive. It is considered impolite to receive a card and not give one in return and most importantly, refrain from writing on business cards – as this action can be interpreted as defacing property. For further reference and as an additional sign of respect, place the card/s you receive in front of you at the meeting table and when you leave, store in a business card holder on the inside lapel pocket of your suit jacket.

In developing an understanding of Japan and considering it as part of your go to market campaign, consider the following statement by Austrade State Manager SA/NT, Chris Rees:

“You should know that Japan offers some of the most interesting and unique consumers in the world”. In 1992 Chris established the Austrade office in Fukuoka and after more than 20 years of experience dealing with Japanese companies says, “While it is the accepted view that Japan is a hard market to crack, it must be remembered that Japanese firms have an intrinsically positive view of Australia and Australians, and getting access to the right people, while never straightforward, is quite achievable. As well, there have been so many changes in the Japanese market over the past few years that many preconceptions that may have had a grain of truth once, now need to be reassessed”.

Austrade’s Japan team proposes that recent reform, driven by the Japanese government, has brought about increasing opportunities for exporters in retailing, wholesaling, banking and financial services, education and training, ICT, hospitality and franchising.

World famous for the latest gadgets and electronic goods, Japanese consumers have in recent years enjoyed rapid advancements in consumer focused technologies and services. Chris shares that “M-Commerce, a term yet to be widely recognized by Australians, has emerged at such a phenomenal rate, retailers and Telco providers are struggling to keep up with demand”. A mobile alternative to e-commerce, analysts predict that by this year over 60 per cent of mobile phone users in Japan will have the ability to use their mobile phone handsets as virtual credit cards simply by swiping their phones over instore scanners.

Furthermore, retiring from this year is the dankai no sedai generation (aka ‘baby boomers’); highly astute consumers with modern views on the importance of healthy lifestyles and enjoyment. They have widely embraced advancing technologies of the last decade and possess some of the highest disposable incomes in the world. Of this generation, my friends in Nagoya are living proof of this opinion and remain to be extremely health conscious, regular overseas travelers and sport an array of designer fashion, particularly of the French and Italian variety.

Keep in mind that trends can have a marked effect on the commercial success of almost any business. To find out what’s really happening in your target market, consider contacting in-market resources and reviewing local media, magazines and online materials.

In Japan, aesthetics have historically played an important role in the national culture. Present in the traditional arts of tea ceremony, flower arrangement, swordsmanship and theater, elements of this custom can be found today even in the packaging of everyday items, such as 'O'bento' (lunch-box).

Furthermore, having spent time in Japan early in my career I observed that Japanese consumers shop daily rather than the ‘weekly grocery shop’ commonly favored by many Australians. This has a marked ‘shelf’ impact resulting in smaller portions and a higher preference for fresh products. Despite the fast paced nature of Japanese society, home cooked meals are yet to be compromised by the introduction of microwave dinners so widely available in Australia.

There are already many Australian food companies exporting to Japan, however, with bans imposed on other foreign suppliers in recent years; opportunities have, as a result, increased for many Australian suppliers. The outbreak of BSE infected meat from the US caused public displeasure across Japan and almost sent the popular national restaurant chain Yoshinoya broke. According to a recent Austrade report, this, coupled with Avian Bird Flu fears, has contributed to an increasing consumer demand for product traceability and a shift towards non-genetically modified and organic alternatives. Japan now boasts the largest market for organic foods in the Asia-Pacific and the demand is expected to almost double in value by 2010. Most importantly, however, is that consumer awareness is increasing at the retail level, driving a demand for these products that is said to be in excess of supply.

In packaging your products and services bound for Japan, consider the general cultural importance these elements play and the potential impact this may have on your level of success in satisfying your target market. For more information on packaging your products and services, consider contacting the resources listed below.

Australia has a long track record with Japan and the recent multi-layer of developments are worthy of noting. Almost 130 million consumers on average enjoy some of the highest disposable incomes in the world and the experts are telling us that the opportunities for Australian exporters remain plenty.

As I continue to assist early stage exporters in exploring markets like Japan, I am noticing a common pattern in their paths to success. For those of you interested in the potential Japan may play for your business:

• Take the time to heavily research the market and thoroughly prepare your business.
• Connect with ‘insiders’ who are on the ground and can share practical knowledge and know-how.
• Obtain sound guidance on choosing the right market entry strategy for YOUR business.
• Don’t expect initial high profit returns and;
• Commit yourself to your target audience.

If you are looking for support and/or to learn more about Japan and the opportunities that may exist for you, please consider the following resources:

• ExpatriateConnect (EC)
• Austrade’s Japan Market Report
• Austrade’s Japan website
• The Japan External Trade Organisation Australia (JETRO)
• The Japan Australia Business Council of South Australia (JABCSA)
• The Australian & New Zealand Chamber of Commerce in Japan (ANZCCJ)
• The Australia Japan Business Association (AJBA)

As a resource for ExpatriateConnect, I regularly work with Australian businesses preparing for export. Should you have any questions and/or experiences trading with Japan that you would like to share, I invite you to contact me at simonf@business-sa.com or simon@expatriateconnect.com