Exporting to Japan

With lower barriers to entry and increased consumer purchasing power, the land of the rising sun offers endless rays of golden opportunity for Australian SME exporters, following the success already experienced by Australian ICT export companies.

As the world’s second largest economy, with a GDP of $US 4.35 billion, it is baffling to hear terms such as “Asia ex-Japan” thrown around by some the world’s economists. Just like the champion yokozuna sumo wrestler, appearances can be deceiving. The Japanese economy remains a powerful force in today’s international market as it deftly adapts to the changing global environment. 

Within the last century, the Japanese economy has undergone numerous developments–from rapid modernisation and empirical expansion to conservative fiscal management policies resulting in consistently low levels of inflation.

According to The Lowy Institute for international policy, the Japanese economy is currently experiencing its longest continuous expansion since the post-war ‘boom period’ of the 1960s. The figures for real GDP growth have averaged over 2 percent per year in the last five years, and with The Bank of Japan’s decision to wind back a stringent deflation-first policy, the country can now expect a return to economic growth with moderate price rises. This bodes well for Australian exporters.

The meteoric rise of the Chinese economy, coupled with the emergence of India (no we’re not talking cricket), will undoubtedly alter Asia’s power structure and subsequently the Australian trade market.

Data provided by Austrade and the Department of Foreign Affairs and Trade (DFAT) illustrates that in the 2006-2007 financial year, Japan maintained its position as Australia’s largest trading destination, equating to 14.3 percent of Australia’s total international trade. Unsurprisingly, Australian exports to Japan accounted for 19.4 percent of Australia’s total exports–more than exports to China and the United States combined.

Modern Consumer

While the economic data indicates a long-held consistency within the Japanese economy, the same can’t be said for Japanese consumer markets. The Japanese government organisation JETRO, (Japan External Trade Organisation), which promotes mutual trade and investment between Japan and the rest of the world, has identified the emergence of a segmented Japanese market impacting across all business sectors.

This shift from a conservative and traditional Japanese consumer to one that mirrors the changes in the Japanese economy– modern and liberalistic–removes the previously held stereotypical views of the Japanese consumer.

Old textbooks will tell you of fiercely brand-loyal consumers who value a relationship with their seller as more important than price. The modern 20 to 30-year-old Japanese consumer is generally less concerned with loyalty and is very willing to experiment with new products and practices. The new Japanese consumer also takes price into consideration much more than that of the ‘traditional’ consumer.

Other social trends such as the emergence of single women exerting considerable purchasing power and influencing social trends, and an increasingly aging Japanese population combine to create a market that holds considerable opportunities for potential exporters in Australia.