February 8, 2007, by Simon Firth

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 50th 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, provides a few thoughts 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 IP protection laws and ……

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 bilingual business cards; It demonstrates respect, as well as, a commitment to the market. For those companies heading over to Japan, it’s 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 kokkan. Give and receive cards with both hands and take the time to read the cards you receive. Most importantly, refrain from writing on business cards; especially on those you receive as the action is like that of defacing property.

Trends

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 1995 Chris established Austrade’s office in Fukuoka and after more than 20 years of experience dealing with Japanese companies says “…………………….”

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 in-store 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 reviewing in-market media resources, magazines and online materials.

Size and presentation matter!

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 many Japanese consumers shop daily and this has a marked impact on the size and preference for ‘fresh’ food 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 exporters in Japan and with bans imposed on other foreign suppliers in recent years, opportunities have resulted for some Australian suppliers. The outbreak of BSE infected meat from the US caused public provocation 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 increasing consumer awareness at the retail level is 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. For more information on packaging your products and services, consider contacting the resources listed below.

'Please Consider'

We have 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 are plenty.

As I continue to assist early stage exporters in exploring markets like Japan, I am witnessing common rules in their paths to success. My recommendations are:

• 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’re looking to learn more about Japan and its potential for your business, please consider the following resources:

   Austrade – Market Report

   JETRO –

    DFAT – Japan page

    Japan Australia Business Council of South Australia

    ANZCCJ

    Australia Japan Business Association

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 email me at: simonf@business-sa.com or simon@expatriateconnect.com