Long Australia’s major trading partner, Japan has slipped to number two in recent years amid the rapid emergence of neighbouring China.
However, with Tokyo named the host of the 2020 Olympics, and Japanese Prime Minister Shinzo Abe pushing growth, here’s five reasons why exporters should take another look at Japan.
1. Tokyo Olympics generates $40 billion economic gains
Tokyo is planning its biggest housing project in 42 years for the Games, which are forecast to generate up to $40 billion worth of economic gains, including $4 billion worth of construction projects, 150,000 local jobs and 8.5 million tourists.**
The Tokyo Metropolitan Government will have overall responsibility for the event, with a new organisation planned for early 2014 to take charge of procurement. Australian businesses involved in previous Olympics are expected to be ahead of the queue in bidding for international tenders, which for the London Olympics included architectural, cleaning, construction and engineering firms as well as specialised sporting providers.
Global Sky Managing Director Ko Nagata, operator of the newly established Queensland Business Centre in Tokyo, said the build up to the Games should see increased business activity, and Japanese companies are receptive to partnerships with Australian SMEs.
2. Food, glorious food
Japan remains Australia’s top agricultural export market and with continuing concerns over food safety, Australian produce is likely to remain in strong demand. The expansion of major retailers such as Aeon and Lawson across the Asian region has increased opportunities for Australian food exporters to access a range of markets.
According to Austrade, specific opportunities have been identified in such areas as Australian native herbs and spices, organic produce, fruits and nuts and high quality processed food such as olive oils.
3. The rise of online
Japanese may enjoy unparalleled in-store customer service, but online shopping is expanding at a rapid 20 per cent annual growth rate. The online sector and television shopping has provided more selling opportunities particularly to the wealthy ‘silver’ sector, where functional foods and anti-aging products are in strong demand.
The growth of online retailers such as Amazon Japan and Rakuten has also provided opportunities for logistics centres around major cities, which have been at record low vacancy rates.
4. Going natural
The natural or “eco” market is showing solid growth and is estimated to reach $140 billion by 2025 compared to just $16 billion in 2000.
Australian organic products are well regarded in this sector, which has been promoted by a range of retailers even including convenience store operators, such as the “Natural Lawson” range.*
5. Free trade agreement?
Under negotiation since 2007, a free trade agreement (FTA) between Australia and Japan could be finally announced this year, according to media speculation.
The Department of Foreign Affairs and Trade estimates an FTA would deliver a $19 billion boost for Australian consumers and $68 billion for the Japanese over 20 years. Australia is currently Japan’s third-largest source of imports, and an agreement could ease barriers on farm products and merchandise exports as well as services.*
Japan has also entered into negotiations over a regional Trans-Pacific Partnership, with the Japanese government viewing freer trade as a key part of structural reform.
Japanese gross domestic product grew by an annualised rate of 3.8 per cent in the latest quarter, with economists expecting growth of 2.8 per cent in fiscal 2014 on the back of expansionary “Abenomics” policies.*
Will the Olympics help fire a “fourth arrow” for Abe’s economic growth strategy? With banners in the Japanese capital proclaiming “Japan Needs the Power of This Dream Now!” Australian exporters would be remiss to not dream of better times too.
About the author
Anthony Fensom is a communication consultant and writer with more than a decade of experience in the financial and media industries of Australia and Asia. Anthony spent six years in Tokyo, Japan as a full-time writer and is a committee member of the Queensland Japan Chamber of Commerce and Industry.