Japan is a member of the Asia-Pacific Economic Cooperation (APEC). Japan and the Association of Southeast Asian Nations (ASEAN) have also entered into an agreement (April 2008) on a Comprehensive Economic Partnership. Japan is a signatory to multilateral and bilateral agreements with many countries. Japan also signed last February, 2009 a Free-Trade Agreement with Switzerland allowing the exemption of customs duties for 99 % of trade transactions between these two countries, within 10 years. The legislation includes provisions on trade in goods, services and movement of natural persons for commercial purposes. Japan signed in March 2011 a Tariff-Cutting Trade Treaty with India that will eliminate or reduce about 94% of tariffs on the countries’ bilateral trade over a ten-year period. Also, an agreement between Japan and the Republic of Peru was reached in May 2011. Bilateral agreements with Australia, the European Union, and the Republic of Korea are currently being negotiated.
Non Tariff Barriers
Some factors limit access to the Japanese market for foreign companies: recourse to exclusively Japanese standards, the importance of personal relations in doing business, a regulation policy oriented towards preference for national products, etc. Quotas exist for certain marine products, certain organic chemical products, explosives, certain pharmaceutical and medical products, certain animals and plants in respect of the Washington Convention. An import license is necessary for products subject to quotas, dangerous products and perishable goods. Some goods are prohibited from importation.
Japan uses the harmonized system. As a reminder : The Harmonized Commodity Description and Coding System, generally referred to as "Harmonized System" or simply "HS", developed by the World Customs Organization (WCO), comprises nearly 5,000 commodity groups, each identified by a six digit code. The system is used by more than 200 countries and economies as a basis for
Goods that are used as and which qualify as samples are eligible for duty-free entry. In order to qualify, the total customs value should be 5,000 yen or less and the words "sample, not for resale" should be written on the commercial invoice. The goods should be marked or mutilated so that they can only be used as samples and not be sold.
Traditionally, Japanese have always been more aware of the quality and the renown of the brand name, and the features of a product and its quality. But with economic conditions becoming harder, the price is a more and more important factor in a consumers choice.
Customer service is an important element in a sale: extra technical explanations, keeping to delivery dates, etc.
The quality of the service rendered will depend on the way linguistic barriers have been raised and the way in which sales techniques have been adapted to the local population.
Consumer Profile and Purchasing Power
Japanese consumers were traditionally rather reluctant to buy foreign products, but they have become progressively more open to them. Traditionally, Japan’s consumers are rich, sophisticated and highly diverse in their interests and tastes, going from traditional needs to westernized desires. They value home comfort. They like goods to be meticulously presented, and to have exquisite packaging and very detailed instructions for use. Tough economic times have made price an increasingly important consideration for Japanese consumers.
The Japanese distribution system is going through a crisis linked to three types of factor:
1. Protection standards and recourse to a system of licenses and permits impose heavy restrictions on the free development of stores. In particular, the setting up of hypermarkets is controlled by the Large-Scale Retail Store Location Law of 2000 and regulated by local authorities on the basis of environmental considerations.
2. The deflationist trend of the macroeconomic situation has eroded the margins of middle-men.
3. Information technology allows producers to be informed rapidly of fashion effects and the evolution of consumer tastes. To react quickly to changes in consumer trends, producers tend to develop internet sales platforms. To learn about current trends in the Japanese retail trade, consult the Einnews.com website.
Specialized stores represent almost all types of the outlets (88%), the majority of the sales (57%) and the employees in the sector (65%). Supermarkets are in second position with a market share of sales of 30% although they only represent 9% of stores. Nevertheless, sales made by supermarkets have shown a negative rate of growth over the last few years. The well-known foreign names are present on the Japanese market: Tesco, Metro, Toys’R’Us, etc. But the Japanese do not easily accept foreign sales techniques. Carrefour paid for this and decided to withdraw from the Japanese market after having set up 8 stores. Unlike supermarkets, small stores are doing well. The number of convenience stores, especially, is increasing, with a constantly growing volume of sales. For further statistical information about the sector, consult the METI (Ministry of Economy, Trade and Industry) website.
Japan has 128 ports, including 23 main ports. They are situated all along the Japanese coastline. Ports are the mainstay for 99% of Japan's foreign trade and 42% of its domestic distribution. Tokyo Bay (six harbors, including Yokohama and Tokyo), Osaka Bay (five harbors including Kobe and Osaka) and Ise Bay (five harbors including Nagoya) are known as the Three Major Bays. These bays handle approximately 35% of all port cargo in Japan. Japanese ports handle more than 3,090 thousand tons per year.
The total amount of international freight handled at airports in Japan is more than 3,100 thousand tons per year. Japanese Airlines carried approximately one third of the total amount of international freight.
The industrial sector contributes approximately 28% of GDP. Manufacturing employs nearly 18% of the workforce. Japan has traditionally been a leading the world for automated production processes. The industry on is whole has benefited from innovative technology also in some less competitive sectors such as chemicals, aircraft and software. Japan ranks among the world's largest and technologically advanced producers of electronic equipment, machine tools, steel and nonferrous metals, ships, chemicals, textiles, processed foods. The production value of the food industry ranked third among manufacturing industries after electric and transport machinery.