Japanese Economy. -Business Opportunities in Japan - Japan External trade Organization (JETRO) Toshihiko Sakaguchi.

Transcription

1 2 December 2015 Japanese Economy -Business Opportunities in Japan - Japan External trade Organization (JETRO) Toshihiko Sakaguchi

2 CONTENTS Japanese Economy Japan is Back by Abenomics Why Japan? 5 atractiveness What JETRO can do for you 2

3 Achievements of Abenomics Stock Prices (Nikkei Stock Average) 10,230 yen (26 Dec. 2012) 20,570 yen (1 Jun. 2015) Exchange Rate (yen / $ ) yen (26 Dec. 2012) yen (2 Jun. 2012) Corporate Profits 48.5 trillion yen (FY2012) 64.6 trillion yen (FY2014) ( 370billion : 175yen/ ) Unemployment Rate CPI Growth Rate 4.3% (2012 average) -1.1% (2012) 3.3% (Apr. 2015) +2.2% (2014) Source: JETRO 3

4 Recent Japanese Real GDP Changes from the previous quarter Q Net Exports -0.8% Q Residential -1.2% Investment Q % Consumption Q Public 1.3% Demand Q % investment Q % Inventory Private Consumption Change in Private Inventory Real GDP Private Residential Investment Public Demand Private Non-Resi. investment Net Exports of Goods & Services Source: Cabinet Office Quarterly Estimate of GDP 4

5 Trend of Japanese Real GDP Growth On the Path to Escape Deflation And a Steady Recovery (%) Q % Q % Q % Q % Q % Q % Nominal growth rate Real growth rate Source: Cabinet Office Mid-Year Economic Projection for FY2015 5

6 Fiscal Consolidation Tax revenue is expected to increase Government Bonds is declining 60 Tax revenues (JPY tril.) Dependency ration on JGBs (%) Primary deficit to GDP ratio FY % FY % FY2020 0% (Target of achieving a primary surplus by 2020 ) 10 0 Source: Ministry of Finance 6

7 Third Arrow of Abenomics Expand a Positive Economic Cycle Revolution in Productivity Policy Menu Earning Power Corporate governance Corporate tax reform Innovation Local Abenomics Productivity in service industries Tourism Industry Reform on working style Correction of prolonged working hours Women s participation / highly skilled foreign professionals Gov. Labor - Management Meeting further wage hikes Improvement of transaction conditions for SME suppliers Source: Cabinet Office Economic recovery will contribute to fiscal consolidation Future-Oriented Investment Newly established public-private sector dialogue Thorough utilization of ICT Respond to social transformation Investment in human resources Bedrock Regulations Reform Reform of primary industries Reform of medical / healthcare industries Reform of energy industries National Strategic Special Zones Implemented 1 st Arrow: Bold Monetary Easing 2 nd Arrow: Flexible Fiscal Policy 7 7

8 Abenomics2 nd Stage New Three Arrows Strong Economy GDP 600Trillion Yen (490 Trillion yen; FY2014) Support for Families Fertility rate; 1.8 (1.42; 2014) Social Security Separation rate of Job for family healthcare ;Zero (100,000 people; 2012) 8

9 WHY JAPAN? 5 attractiveness to do business in JAPAN 1: Japan s Re-emergence 2: Sophisticated market 3: Innovation Hub 4: Business Friendly Infrastructure 5: Comfortable Living and More 9 9

10 1: Japan s Re-emergence Governmental aim: double Japan s investment balance to 35 trillion yen by 2020 (Unit: Billion Yen) 40,000 The stock of inward FDI in Japan 35,000 30,000 25,000 The bankruptcy of Lehman Brothers (Sep. 2008) The Great East Japan Earthquake (Mar. 2011) Launch of Abenomics (Dec.2012) 19,551 23,344 35,000 20,000 19,408 19,555 18,735 18,824 19,227 15,000 10,000 9,902 10,634 12,37713,430 10,325 15,703 5,000 6,096 6, Source: The Bank of Japan 10

11 1: Japan s Re-emergence Reduction of the corporation tax rate FY 2015: 34.62% 32.11% (- 2.51%) FY 2016: 32.11% 31.33% (- 3.29%) Continuing the reform down to a range of twenties in FY 2017 and onward. Corporate Tax Rate (%) ( 2.51%) ( 3.29%) down to the range of 20s 16.5 FY 2014 FY 2015 FY 2016 FY 2017 Onward Hong Kong (As of March 2014) 11

12 Japan is Back Structural reforms and deregulation Deregulation/Structural Reform Bold deregulation in fields (e.g. energy, agriculture, health care) Enhancement of Corporate Governance Revision of Companies Act which promotes appointments of external directors Number of companies which appoint independent external directors have dramatically increased. Accepting Highly Skilled Foreign Professionals Requirements below have been eased annual income research achievements accompanying parents/domestic servants National Strategic Special Zones Areas designated as "National Strategic Special Zones" regulatory reform institutional reform Tokyo, Kansai, Fukuoka, Niigata, Yabu, Okinawa, Senboku, Sendai, Aichi 12

13 1: Japan s Re-emergence In order to realize the growth strategy, National Strategic Special Zones were created for carrying out drastic regulation reforms. The below 9 areas were specified, to begin with. Fukuoka city Yabucity, Hyogo Center for employment system reform to promote new businesses Center for agricultural reform in hilly and mountainous areas Senboku city, Akita Center for the reform for agricultural and forestry/ international exchange of medical treatment National Strategic Special Zones Sendai city Center for the reform for Women s active social participation and start-ups Niigata City Center for agricultural reform in large-scale farming TokyoArea (including Kanagawa and Chiba) International business and innovation hub > Urban development > Employment guideline > Medical care for foreigners Okinawa Osaka/Kyoto/Hyogo Area Aichi Center for international tourism Center for international innovation in the field of medical care, etc. and general support Center for the general reform for education, employment, agriculture for fostering industry leaders 13

14 1: Japan s Re-emergence Attracting visitors to Japan Foreign travelers to Japan million people million people 2020(aim) 20.0 million people Source: JETRO, "JETRO World Trading Investment Report Ver. 2014" Data source: Japan National Tourist Organization (JNTO) Foreign travelers to Japan: Rapid INCREASE Japan attracting World s Attention Businesses targeting foreign travelers to grow Tokyo Olympics/Paralympics a boom in related businesses (tourism, construction, service) 14 14

15 2: Sophisticated market LARGE MARKET; GDP ranked 3 rd in the world International comparison of Japanese regional gross production (nominal, FY2011)(Unit: $1 billion) Chubu region Netherlands Kinki region Korea 1,116.2 Chugoku region Thailand Hokkaido/Tohoku region Turkey Kanto region 2,530.0 U.K. 2,428.7 Market of Chugoku region of >Market (including Hiroshima) Finland Kyushu region Switzerland Shikoku region New Zealand Source; Cabinet Office, Report on Prefectural Accounts 2012 (FY2014) Market of Kyushu of region >Market Sweden (including Fukuoka) IKEA Japan K.K We see that Japan is one of the highest potential markets in the world to grow our business both from the scale ofpopulation andgdp point of views. Peter List, CEO Source: Comment given on April 3, 2014 at the Fourth Expert Advisory Panel Round-Table Conference on Foreign Direct Investment in Japan hosted by the Cabinet Office

16 2: Sophisticated market Sophisticated Customers/World Standard Philips Electronics Japan, Ltd. Currently, you won t become a global market leader unless you succeed in Japan. If you can achieve the quality Japanese people demand, your products will sell anywhere in the world. Danny Risberg CEO of Philips Electronics Japan, Ltd. CEO of Philips Respironics GK. Taken from comments by Danny Risberg, Chief Executive Officer of Philips Electronics Japan, Ltd, in The Asahi Newspaper Danone Japan Co., Ltd. Japanese people are prepared to acknowledge high quality and real value and are ready to pay money for those. George Leon Zarifi, CEO Source: Comment given on March 25, 2014 at the Second Expert Advisory Panel Round-Table Conference on Foreign Direct investment in Japan hosted by the Cabinet Office 16 16

17 2: Sophisticated market Japan: market where foreign companies flourish Foreign companies hold a high share of sales in Japan, particularly in consumer-related markets Soft drinks 1 st Coca Cola (USA) 23.2% Coffee 1 st Nestlé (Switzerland) 32.6% 2 nd Mondelēz International, Inc. (USA) 16.0% Eyeglasses/Contact lenses 1 st Johnson & Johnson (USA) 17.1% Personal accessories 1 st Richemont (Switzerland) 6.5% 2 nd LVMH Moet Hennessy Louis Vuitton S.A. (France) 5.9% 3 rd KERING (formerly PPR) (France) 3.8% Source: JETRO, "JETRO World Trading Investment Report Ver. 2014" Data source: Euromonitor International "Euromonitor International" 17 17

18 3: Innovation Hub Japan s intellectual accumulation generates innovation Great innovation leads to good business! World-class in research funding and number of researchers 1 st in the world *1 Research funding as a percentage of GDP Number of researchers per 10,000 people 1 st in the world *2 An environment that generates innovation 1 st in the world *3 Triadic patent families (by number of patents registered in patent offices in the US, Europe, and Japan) Nobel Prize winners of Japan (all-time) 24*4 Source: *1,2 : Ministry of Internal Affairs and Communication, Survey Result on Science and Technology Research 2013 *3 : Ministry of Economy, Trade, and Industry, Survey *4 : Official Nobel Prize website 18 18

19 4: Business Friendly Infrastructure Well-developed social infrastructure supports your business Japan s business environment Ranked 1 st in the world for Business Sophistication (Evaluated on business network and quality of company operation/strategy) Source: World Economic Forum, "The Global Competitiveness Report " Japan s Attractiveness World Bank 1. Ease of resolving insolvency 2. Protecting investors 3. Ease of trading across borders 4. Ease of getting electricity 5. Ease of getting credit International Institute for Management Development (IMD) 1. Skilled workforce 2. Reliable infrastructure 3. High educational level 4. Strong R&D culture 5. Effective labor relations 19 19

20 4: Business Friendly Infrastructure Low infrastructure fees High business cost in Japan is changing. It s notnecessarily very expensive to run a business in Japan!!! 20 20

21 5: Comfortable Living and More Japan: where you can live safely and pleasantly Global Peace Index 2014 Ranked 1 st in Asia Source: INSTITUTE FOR ECONOMICS & PEACE "Global Peace Index 2014" OECD Better Life Index Safe category Ranked 1 st in the world Source:OECD"Better Life Index(2013)" Nearly 40% of foreign companies see social stability as an attractiveness of Japan Source: Ministry of Economy, Trade, and Industry (METI), "Survey on Attitudes of Foreign-Affiliated Companies toward Direct Investment in Japan Report 2014" Great environment for your business!!! 21 21

22 Reason5: Comfortable Living and More Widening FTA/EPA Network TPP reached agreement Mega-FTA negotiations (TPP, EU-Japan, RCEP, CJK) aiming at raising the FTA coverage from 22% to 70%+ by 2018 Japan as a Gateway to Asia Pacific market 22

23 Reason5: Comfortable Living and More Tokyo Olympic and Paralympic in 2020 Economic Impact +3 trillionyen ~+150 trillion yen, +150,000 jobs Synergy with Growth Strategy Increase Foreign Visitors Accelerate Infrastructure Investment Enhance Competitiveness of Tokyo Increase Inward FDI Sports have power to change the world and our future 23

24 What JETRO can do for you What s JETRO? JETRO s Global Network JETRO s business flow JETRO s Achievements (FY ) Recent cases supported by JETRO 24 24

25 What s JETRO? What is JETRO? JETRO: Japan External Trade Organization Established in 1958 Government-related organization Promoting business between Japan and the rest of the world (assisting companies global business) 25

26 Jetro s Global Network 73 Offices Worldwide 46Domestic Offices 26

27 JETRO FDI What does JETRO do to promote FDI? Providing information on Japanese business environment Finding and developing businesses interested in investing in Japan Supporting business startups through the IBSC Increasing business opportunities with Japanese companies Invest in Japan website Seminars and symposia Approach by Invest Japan attaches Visiting companies and exhibitions Individual consultation Providing information Temporary offices(ibsc) Advice from specialists Business matching events JETRO Head Quarters (Tokyo) JETRO s Foreign Offices Invest Japan Hotline JETRO s Domestic Offices Cooperation Cooperation Cooperation Foreign Embassies Government Ministries Local Governments Regulatory Reform Hotline 27

28 JETRO FDI Invest Japan Website <Example of using the JETRO HP: Research about how to set up business in Japan> <JETRO HP in Chinese> 28

29 Invest Japan Business Support Center Consulting Services Translation of subsidy application Requesting Deregulation Market and industry information Finding human resources Networking with potential business partners Information on legal systems Establishing an office Finding an office location Taxation, labor, legal issues Cost estimates Arranging meetings with government authorities Information on incentives from national and local governments -Temporary office space offered free of charge- Market information Consultation 29

30 Invest Japan Business Support Centre Eligibility IBSC Office Room Foreign companies which consider to start business in Japan Period up to 75 business days Private Office Space Fee Freeof charge (up to 50 days in principle) Deposit & communication fee are required tenancy fee will be charged for additional 25 business days Equipment Desks, chairs, telephones, WiFi Conference Room Facilities Location Conference rooms, multipurpose hall, business library, PC room Tokyo, Yokohama, Nagoya, Osaka, Kobe, Fukuoka 30

31 Tokyo One-Stop Business Establishment Centre Tokyo One-Stop Business Establishment Center You can file applications necessary for company establishment and obtain visas in one place. 1 Company Registration 2 National and Metropolitan Tax 3 Labor Insurance 4 5 Status of Residence Employment Insurance Inside the Center 6 Immigration 7 Health and Pension Insurance 31

32 JETRO s Achievements (FY ) Achievements (FY ) Project Supported over12,000 projects <Share of successful start ups by countries> Pacific 5% South-Central America 1% Middle East & Africa 1% Foreign companies successful startups supported over1,200 companies Asia 30% Europe 31% North America 32% Share of successful cases by region 32

33 JETRO s Achievements (FY ) Achievements (FY ) <Share of successful start ups by countries> Rank Country Number of cases 1 United States China Germany Republic of Korea 84 5 United Kingdom 76 6 France 64 7 Australia 44 8 Singapore 38 8 Taiwan Hong Kong 34 Hong Kong 3% Taiwan 3% Singapore 3% Australia 3% France 5% United Kingdom 6% Others 21% Republic of Korea 7% United States 30% China 10% Germany 9% 33

34 Recent cases supported by JETRO Target Industry Future Energy Systems HealthCare Tourism Retail 34

35 Recent cases supported by JETRO First Solar (United States) A global leader in the manufacturing of solar panels and development, construction, and operation of solar power plants It decided to establish a base for operations in Japan to support the supply of renewable energy to replenish the loss from non-operating nuclear power plants In November 2013, the company announced to invest ca.10 billion JPY in Japan for the development of solar power plants. JETRO s support Provided temporary office space in IBSC Tokyo Assisted company registration Provided with market information in Japan Future Energy Systems 35

36 Recent cases supported by JETRO Sanofi(France) HealthCare Major French Pharmaceutical company headquartered in Paris. In January 2013, Sanofiestablished its regional headquarters in Tokyo for its medical and pharmaceutical product business to manage the financing, human resources, strategies, and regulatory affairs in JPAC regions (Japan, Korea, Australia and NZ). JETRO s Support Provided information on incentive and other support programs. (Especially Subsidy Program for Projects Promoting Asian Site Location in Japan.) 36

37 Recent cases supported by JETRO Shanghai Spring International Travel Services (China) Tourism A leading Chinese travel agency with its subsidiary Spring Airlines, a low-cost carrier (LCC). In November 2012, it established Japanese subsidiary, Japan Spring Travel Services, Ltd.,in Tokyo. This comes amid rising expectations that more Chinese tourists will be visiting Japan in the future. JETRO s support Provided a range of services such as free temporary office, consultation on company registration, taxation, and information on permitting processes for a travel agency license. 37

38 Recent cases supported by JETRO Tommy Bahama(United States) With the brand concept of Make Life One Long Weekend, Tommy Bahama maintains an island-lifestyle apparel brand and runs more than 100 stores worldwide. In April 2013, Tommy Bahamaopened its first Japanese freestanding store in Ginza, Tokyo. It is the first store with a bar and a restaurant outside the U.S. JETRO s Support Consultation on entering the Japanese market Information about import regulations Introducing some service providers in Japan Retail 38

39 Talk to JETRO First Japan External Trade Organization(JETRO) London office MidcityPlace 71 high Holborn, London, WC1V 6AL UK Tel. +44 (0) This document is owned by JETRO. All of the content in this document, including, but not limited to, still images, text, pictorial works, designs and logos, is owned or licensed by JETRO. This document shall not be reproduced or reprinted on any medium or registered on any search system in whole or part by any means, without prior permission of JETRO. Although JETRO makes its best efforts to ensure the accuracy of the information contained in this document, JETRO does not take any responsibility regarding losses derived from the information contained in this document.