Doing Business in Japan WHAT DO YOU NEED TO KNOW BEFORE ENTERING THE JAPANESE MARKET? BY MITCH TOMIZAWA 1

Map of Japan 2

Cherry blossoms now starting late March every year New business starts in April.  Spring starts with cherry blossom  New academic year start in April.  New graduates start working for companies and government  Individual income tax returns due March  Many Japanese listed companies close its fiscal year at end of March On April 1, people still take things seriously. 3

Tokyo Metropolitan train system Most convenient and punctual in city life 4

Tokyo subway system They say 179 stations exist 5

Japan Country Statistics  Name: Official name of the country is JAPAN  As united small islands of 6,852, of which people lives  only on 437 islands (6.7%) with no residents in the remaining 6,415 islands.  Population: 126 MM (rapidly aging population)  100 years ago the Japanese population was around 30 million. It grew by four times to the peak of 127,840,0000 in It is estimated to return to the level of 100 years ago in

GDP Comparison  Ranking: 1.US 16, bil) 2013 figures (nominal)  2.China8, (1/2 is investment)  3.Japan5,960.27*(60% is individual consumption)  *Equal to the sum of India, Aus. Korea, Indonesia and Taiwan. Additionally  25,263 Japanese companies doing business in 136 countries employing over 5MM staff.  4.Germany3,  5.France2,  6.UK2,

Two business approaches  1. Do business with Japanese customers in Japan Products- price sensitive (cheap)/insensitive (expensive) Volume driven/ quality driven Over 3000 international companies doing business in Japan TPP negotiation will influence company strategy significantly especially for price elastic products.  2. Do business with J companies globally. take advantage of local opportunities to start business with J companies. J expats most appreciate local invaluable business support, and never forgets.  In both cases, find the right and most qualified Japanese leader for your new operation. You need to select the right person for the job, or nothing happens. 8

Statistics: I Companies in Japan 2,875 I companies employing 510,000 staff FROM WHERE #employed  From Europe44%270,547  From US27%210,042  From Asia22% 29,993 OWNERSHIP: 100% ownership69% 50%<X<100% 17% 50% 6% 1/3<X<50% 7% INDUSTRY:  Wholesaler43.5%  Manufacturing17.7%  Services12.7%  ICT10.1%  Financial 4.6%  Retail 4.2% 9

# of J companies active offshore (more than 25, 000 companies)  # of J companies and Name of Country where J companies have operations  6,091 (24%) China2,276 (13%)------US  1,853 (7%) Thailand1,220 (5%)------Hong Kong  1,111(4%)-----Singapore989(4%)-----Taiwan  862(3%)-----Indonesia847(3%)-----UK  829(3%)-----Malaysia815(3%)-----Korea 10

Top 5 countries where J companies started operation in 2009 – 2012(est.)  (est.)  1.ChinaChinaChinaChina  2.USIndiaIndiaIndonesia  3.VietnamUSThailandThailand  4.ThailandThailandUSUS 11

You should know first  Japan Business groups:  Japanese business is still along the so called relationship driven business. It will take a bit longer than you might imagine but once established it will last long based on trust between parties.  Toyota: 23 cos with diverse industries; Panasonics: 4;Hitachi: 12;Sony:12;  Seven & I group: 23;NTT group: 10;Mitsui: 25;Sumitomo: 34;Mitsubishi: 39  Group companies share information to strengthen business ties.  JETRO (Japan External Trade Organization) can help. 12

Epilogue JAPAN AND NOW 13

You know where you are heading for before riding on it. 14