COUNTRY OVERVIEW

(Last updated: 23 Mar 2012) With a population of 127 million, Japan is the third largest global economy. The Japanese market is characterised by consumers with high levels of disposable income, and companies with a strong global orientation and willingness to invest in sustainable, long-term products and services. Japanese buyers are drawn to premium, higher end goods and services offering higher returns on trade investment. Japan has made a name for itself as a nation of quality and innovation, and has staked its future on this value proposition. Along with this comes a strong commitment and loyalty to business partners, once acquired. The mainstream of the Japanese economy remains cashed up, both in terms of individual savings and liquidity, and in terms of corporate balance sheets. Japan is now faced with the dilemma of how best to utilise its significant assets in uncertain times. As in hard times in the past, the Japanese are showing resilience and often demonstrate a stronger predilection for change under pressure. Understanding where and how the new changes will lead to new opportunities for Australia is both a challenge but also a unique window of opportunity in itself.

Country facts
Capital city: Tokyo

Surface area:

378,000 sq km

Population:

127.6 million

Official language(s):

Japanese

Head of State:

HM Emperor Akihito

Head of Government:

Prime Minister HE Mr Yoshihiko Noda

Australian exports to Japan:

A$46,880 million

Australian imports from Japan:

A$16,685 million

Japan's principal export destinations:

China, USA, Republic of Korea

Japan's principal import sources:

China, USA, Australia

(Source: Department of Foreign Affairs and Trade - Country economic fact sheet)

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Economic climate
Japan is currently experiencing an unprecedented period of political and economic turmoil. The Global Economic Downturn has exposed Japans continuing heavy reliance on export led growth. Net exports and corporate capital expenditure are sharply down. Domestic consumption is less affected; however, buoyed also by government stimulus packages, as elsewhere. The current upheaval, which has mostly been driven by external factors, is now starting to have far-reaching effects on certain sectors of the manufacturing economy and society in general. Most affected are the blue-collar and technical workers, as is common around the globe. This is likely to have a significant impact in terms of changes in social values, behaviour and consumption patterns. The Japanese Government has spent several hundred trillion yen on economic stimulus packages in an effort to spur a recovery. However, the success of these packages is still in doubt as stagnation continues and Japans banks continue to hold large non-performing loans.

Changes that are evidence of the new economy emerging in Japanese business practices include: High interest in IT-based solutions Demand for innovative cost effective business solutions which can include imported product and services Breakdown of traditional interlinked (keiretsu) business relationships Introduction of business-to-business (B2B) and business-to-consumer (B2C) ecommerce ventures Speeding up of the business decision making processes Introduction of Western management practices Japan faces a number of challenges going forward, some economic and some structural. Many of these longer term drivers for change also favour Australia. Japans ongoing reliance on imported minerals and energy, and growing concerns over food safety and food security (with food self-sufficiency hovering at around 40 per cent) are priorities for them. In addition, Japans silver generation faces challenges to preserve and grow their substantial wealth of US$14 trillion in household savings. As the population ages, Japan is tipped to be the worlds leading test bed for the silver market. Continuing emphasis on increasing productivity among the declining workforce, the need to more fully utilise women, increased reliance on technology for competitive edge and growth in outsourced services are key social and corporate themes. Corporations are still relatively cashed up from rich profits in recent years, despite the alarming change in their current circumstances. The macroeconomic situation for Japan may certainly get worse before it gets better. At the heart of this, Japans large corporates are looking to invest their way out of the crisis. They continue to target M & A and greenfields investment opportunities worldwide, benefiting from low asset prices and a strong yen. Japanese investors are there for the long-haul. They are looking for environmental technology, agribusiness, infrastructure and renewable energy opportunities in Australia alongside more traditional resource investments. Increasingly Japanese investments in Australia are targeted at the Australian domestic market itself, or aimed at using Australia as a springboard into Asia. The prolonged economic slow-down is causing fundamental changes in Japanese business practice, which will ultimately have a positive impact on demand for Australian goods and services. These changes are evidence of a new economy emerging in Japan where companies are being forced by market pressures, including government deregulation measures, to change traditional business practices. Despite economic growth stagnation, the sheer tremendous size of the Japan economy and its regional markets will always present opportunity for

Australia. Please also see DFAT's 'Great East Japan Earthquake: economic and trade impact' publication For the latest key economic indicators and statistics, please see the Department of Foreign Affairs and Trade country economic fact sheet.

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Political climate
Although the Japanese Government has little direct involvement in the operation of the private sector, through its ministerial bureaucracies it maintains tight supervision of firms via regulation and mandatory administrative guidance. It manages industrial policy by directing various sectors into suggested areas of enterprise and facilitating their entry by providing seed money and research, technical and regulatory support. Under the revised post-war Constitution of 1947, Japan adopted a Westminster form of government. The Diet (Parliament) consists of a popularly elected House of Representatives (Lower House 500 seats) and a House of Councillors (Upper House 252 seats). There are three tiers of government National, Prefectural (State) and Local. The key political parties are the: Liberal Democratic Party New Komeito New Conservative Party Democratic Party of Japan Social Democratic Party of Japan Japanese Communist Party

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Trade relations and statistics

As a world economic power, second only to the USA, Japan remains an important and influential player in global and regional affairs. Japans foreign policy is administered by the Ministry of Foreign Affairs. Japan is an active member of the Asia Pacific Economic Cooperation (APEC) and the United Nations. As the largest creditor nation in the world, Japan supplies Overseas Development Assistance (ODA) to many developing countries and actively participates in

humanitarian programs worldwide. The Japanese corporate trade network, particularly throughout Asia, is extensive and these connections potentially hold great opportunities for Australian exporters particularly linked to Japans ODA program. Japan has traditionally been seen as a closed or difficult market to enter for foreign companies, and during the 1980s it was under considerable pressure (from the USA particularly), to open up its markets to foreign competition. Acceptance of foreign imports is increasing as Japanese consumers demand greater variety and value for money. At times, Japans bi-lateral relationships with several Asian nations have been strained for historical reasons. However, as the economies of many Asian countries are closely linked to their growing trade with Japan, concerted efforts by each government are assisting in building strong relationships for the new century in the Asian region. Australia and Japan enjoy excellent relations built on more than 100 years of bilateral trade and exchange. Japan signed a bilateral trade agreement - a Free Trade Agreement (FTA) with Singapore in October 2000. Over the past decade, opportunities for Australian exports to Japan are heading increasingly through the massive regional markets of the Japanese economic including the Kansai (Osaka area), as far north as Hokkaido, and the southern island of Kyushu. Australia is one of only a handful of countries in the world that enjoys a trade surplus with Japan. Commodities dominate Australias exports to Japan but the mix is becoming increasingly diversified with processed foods and beverages, ICT-related products and services and other manufactures increasing. Austrade Japan has predicated its trade and investment strategy on four pillars underpinning the medium-term needs of the Japanese economy. These are food security and safety, energy security, the needs of an ageing society and a strong reliance on technology as a major driver of intellectual property and competitive edge. Austrade in Japan pursues its business plan through the use of six industry teams with national coverage of priority sectors. These teams are Food and Beverage, Agribusiness and Clean Energy, Services, Consumer Products, Technology, and the Creative Arts. Please see the Department of Foreign Affairs and Trade country economic fact sheetfor key trade statistics.

Business opportunities
Japan, a key strategic international business partner for Australia This section is aimed at giving Australian businesses comprehensive insights into trade and investment opportunities in Japan, and how to make the most of them. Its almost impossible to overstate the importance of Japan for Australia, in so many ways. Japan is one of Australias most important and strategic international business partners with an ever-evolving partnership that extends over 50 years. With a population of 127 million, the Japanese market is characterised by consumers with high levels of disposable income, and companies with a strong global orientation and willingness to invest in sustainable, long-term products and services. Japan is an active investor in an increasingly diverse range of Australian industries. These days the Japanese economy is no longer confined to Japan alone, as their business interests and activities expand globally, especially throughout the Asia-Pacific region, Japan offers a multitude of partnering opportunities for savvy Australian companies. Austrade covers Japan with a network of four offices extending from Sapporo in the north through to Tokyo, and Osaka and Fukuoka in the south. Staffed by a total of 47 Australian and Japanese professionals, they deliver a comprehensive range of in-market services, tailored carefully to your needs. Whether youd like to tackle Japan for the first time, or take a fresh look at revitalising your existing business plans, Austrades complete coverage of the archipelago and inside access to key decision-makers puts you well ahead of the pack. Japan has made a name for itself as a nation of quality and innovation, and has staked its future on this value proposition. With a free trade agreement on the cards, and with Japans determination to emerge strongly from the economic downturn, I invite you to take another look at the rapidly changing Japanese market - you may be pleasantly surprised... Austrades business development specialists have prepared a range of market profiles that offer potential to assist in your exporting investigations. Austrades inmarket teams have identified opportunities for Australian exporters in various industries (see 'Profiled industries in this market' on the left side of this page).

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Business etiquette
Business tips
Business etiquette and practices are important in Japan. The Japanese are extremely polite and place importance on respect and social rank. You will be

showered with elaborate compliments while your host remains humble and plays down their achievements. Australians who show modesty will be well regarded by Japanese people. While business meetings during the day can seem to be slow and often skirting key issues, night time drinking and dinners are often the time when more useful information is fed back to you. The Japanese equate being indirect with being polite. Thus being indirect, such as starting a business meeting with small talk will help to get the meeting off to a good start. Australians can misunderstand this indirectness and interpret it as indecisiveness or non-commitment from the Japanese side. In these situations, it pays to be patient. English is not widely spoken in business and government , with some exceptions, such as in trading companies. If a meeting is conducted in English, be sure to speak slowly and clearly, and do not use Australian idiomatic expressions or humour. Meetings in English are rare and an interpreter is generally required. Punctuality is a must in Japan. It is usual to arrive at a meeting at least five minutes before the appointed time. In the event that you are running late, it is polite to call ahead to advise of when approximately you will be arriving. All appointments should be arranged with companies prior to your arrival in Japan. Partners - it is inappropriate to take friends, spouses, or children to business meetings in Japan. It is also not common for spouses to be invited out for business dinners. Product brochures and a company profile should be taken with you when you visit a Japanese company for the first time. Business cards are handled in both hands and laid carefully on the table. You will need to bring at least 100 business cards with you to Japan. Business meetings invariably begin with the exchange of business cards. Don't place the card in your pocket or write on it. If time allows, have your business cards printed with your company name and name in Japanese. Don't have your business address translated to Japanese as this renders it meaningless. Seating arrangements are used in formal business meetings. The most important guest sits furthest from the door and the host sits closest to the door. If in doubt, wait to be seated or ask where you should sit. Gifts are not necessary and it is inappropriate to offer expensive gifts, particularly on first meetings. Small gifts, such as company pens or ties, etc. can be presented, once business is ready to commence or has commenced. It is generally considered impolite to open gifts in front of the giver. Resolving conflict Japanese people also try hard to avoid open conflict and so may answer ambiguously or even agree to an offer that they have no intention of accepting. One productive way of solving this problem is to prepare a brief but clear memo describing the situation and obligations of both parties and present it

to the Japanese side as a record of the meeting. This will test the Japanese sides position on the issue as they will be forced to respond.

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Tariffs and non-tariff barriers

Tariff
Tariffs are based on the Harmonised System - most duties are ad valorem (per cent) based on the GATT valuation system approximately cost, insurance and freight (CIF) value (Incoterms 1990). Japan has low or zero tariffs on most industrial products. Japan maintains tariffs and restrictions on some agricultural items, which are relevant to some Australian exporters. Australian products are entered at the lowest rate notified (preferential rates excepted). Generalised preferences are granted to developing countries. A self assessment system designed to expedite customs clearance allows prior calculation of duty by importers. Customs authority contact details: Director General Customs and Tariff Bureau Ministry of Finance 3-1-1 Kasumigaseki Chiyoda-ku Tokyo 100 Tel: +81 3 3581 4111 Fax: +81 3 5251 2122

Non-tariff barriers
Potential exporters to Japan should not be deterred by a widely perceived view that the Japanese market is closed and heavily regulated. Barriers to market access for merchandised and value added goods are mainly informal. Examples of informal barriers include, successful entrance into business networks, maintenance of market presence and product quality assurance. Formal restrictions - mostly on agricultural produce - do exist, and the Australian Government has a range of market access issues, which it continues to work on with the Japanese Government on behalf of Australian industry. Like Australia, customs laws and regulations, and import processes are strict and need to be clearly understood by exporters.

Import licensing may be required for some imports. Two categories exist: 1. Import Quota (IQ): Quotas set by Ministry of Economy, Trade and Industry (METI), range from moderately to severely restrictive. Quotas are imposed on a variety of foods including some dairy products, seafood, cereals and grains. Importers must obtain an import quota allocation certificate from METI, which entitles the importer to receive an import licence on application to a foreign exchange bank. 2. Import Declaration (ID): a wide range of raw materials, semi-finished products and manufactured goods can be imported without prior approval from METI. Completed ID forms are freely verified by authorised foreign exchange banks on application, prior to import. Goods must be cleared through customs within the validity period of the licence (usually six months). Imports from Australia, which includes most fresh fruits (excluding certain oranges, mangoes, blueberries, Fuji apples, pineapples and green bananas) are subject to restrictions (see also 'Public health requirements).

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Product certification, labelling and packaging

Labelling
Foodstuffs must have a sticker attached to each package after importation showing a detailed description of contents, including artificial colourings or preservatives, name and address of importer and date of import or manufacture in Japanese. Many food products and consumer products are subject to very specific labelling requirements and importers should always be consulted on proposed labelling. Containers of canned and bottled goods, soft drinks, small goods, frozen foods and prepacked foods must be marked and labelled solely in metric measurement by the Australian exporter, even though responsibility for metric measuring rests with the Japanese distributor. Drug usage directions should be printed in Japanese. Special labelling regulations apply to electrical appliances, soap, aluminium foil, some kitchen utensils, cleaning materials, toilet and bath fittings, plastic film, certain furniture, hot water bottles and cosmetics.

Packaging
Use of straw packing materials is prohibited. Proposed packaging should be cleared with importers as they have definite

preferences. Goods should be marked according to normal commercial practice.

Special certificates
Animals, plants and their products require health certificates issued by an approved authority in the country of origin. Frozen vegetables and fruit must be accompanied by a certificate of condition (Form E46) instead of a phytosanitary certificate. Meat for human consumption require an additional certificate, issued by an approved authority in the country of origin, stating that the animals were free from designated infectious diseases prior to slaughtering and that subsequent processing was under hygienic conditions. Imports of food require a food import permit issued by the Ministry of Health and Welfare. Spirituous beverages may require a certificate of age. Electrical appliances must conform with the Electric Appliance Control Law, with certain goods requiring type approval before being permitted to be offered for sale in Japan. Machine tools under a year old must be accompanied by a certificate of date of manufacture.

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Methods of quoting and payment

No legislative requirements. Quotations in Australian dollars are common. Methods of quoting and payment depend on type of product, quantity and relationship established between exporter and importer. Advance payments may be made for some imports.

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Documentary requirements
Fax signatures are not permitted. Note: Even minor typing and other errors in documentation often result in serious delays and complications at point of entry.

Pro-forma invoice

No special requirements.

Commercial invoice
A minimum of three copies are required. Invoices must be signed by the supplier and should include the following details: marks and serial numbers of packages description and quantity of goods CIF value (Incoterms 1990) place and date of preparation destination and consignee name of vessel import licence number conditions of contract relating to determination of the value It is strongly recommended, whenever possible, to include the HS Commodity Classification of the goods to be imported. Complete invoices and packing lists should be forwarded promptly to the importer by airmail, (see also 'Tariff' - self assessment system, above).

Insurance
Normal commercial practice. A certificate may be required if customs clearance without invoice is requested (to assist in appraisal of taxable value/quantity). In such circumstances other documents covering transportation cost, premium specifications and price list etc., may be required.

Bill of lading
For goods dispatched by sea, minimum of three signed originals and two unsigned copies are required. For goods sent by air, standard sets of 10 are available (original plus nine copies) but no strict rules apply. If made out To Order, it should indicate the name and address of the person to be notified. Information required is usually specified in importer's letter of credit but should include name of shipper, ultimate and intermediate consignees, marking and number of packages, and description of goods with gross weights and measurements in metric terms.

Packing list

Two copies recommended, indicating details of goods, including the weight and measurement of each package.

Certificate of origin
Required for goods eligible for concessions granted under GATT. Normally issued by Japanese consular or diplomatic officer at place of production, purchase or shipment. Certificates issued by Customs, other government agencies or an approved authority (see 'Guidelines', section 2.3) are acceptable. These must also be signed by the exporter. Certificate must show origin, marks and/or numbers of commodities, description and number of packages and must certify that commodities were produced in stated country of origin.

Public health requirements

Strict controls govern the manufacture and sale of both fresh and preserved foodstuffs. All imports of food must be accompanied by a food import permit, issued by the Food Sanitary Inspection Service of the Ministry of Health and Welfare. Foods may also be subject to inspection on arrival. When imported for the first time, a description of all ingredients and the manufacturing processes involved will be required for application, along with any other requested documents, eg. health certificates from the country of origin. The use of certain substances such as food additives are either strictly controlled or prohibited. The use of other food additives is strictly controlled. The use of chemicals whose residue remains in crops or soil or pollutes water is strictly controlled. Imports of animals and plants and their products require health certification issued by an approved authority in the country of origin. In Australia, this is usually the Australian Quarantine and Inspection Service (AQIS), Agriculture, Fisheries and Forestry-Australia (AFFA) or the relevant state department of agriculture. Under Japanese quarantine regulations Australia can supply green bananas, mangoes, lemons, pineapples and certain oranges and many vegetables (basically those which do not contain seeds). Recently, blueberries and Fuji apples from Tasmania have been approved for export to Japan. A larger range of fruits and vegetables from Tasmania can now be imported into Japan, as it is now recognised that Tasmania is free from fruit fly. The official reference for importing and distributing drugs in Japan is the Pharmaceutical Affairs law. Manufacturers or importers intending to manufacture

or import drugs, medical equipment, cosmetics and toiletries need to obtain approval in accordance with the Pharmaceutical Affairs law. If cosmetic products contain ingredients outside the Comprehensive Licensing Standards, the approval of Minister of Health and Welfare will be required to import those products.

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Taxation
You should seek professional advice on taxation is it applies to foreign companies and operations in Japan. The major international accounting companies operate in Japan and have English-speaking staff. A five per cent consumption tax is levied on all purchases in Japan including food. Some hotels charge 8-10 per cent service tax on accommodation. Businesses operating in Japan will be subject to a range of taxes including: corporate tax income tax withholding tax local tax residents tax Liquor taxes, expressed in specific terms per quantity, are levied on beverages, whether imported or domestically produced. Excise tax is levied on tobacco imports.

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Intellectual property protection

As in Australia, there is the need to protect intellectual property rights and be covered by patent, design and trademark protection. Japanese companies are experienced international business players and understand the need for confidentially and non-disclosure agreements when beginning business discussions. You should act in the same manner as you would in Australia to protect your business security interests. As discussions progresses, consulting Australian and Japanese lawyers, with specific expertise is recommended, particularly in hi-tech and services industries. Generally, while the paper contract agreement for business is important, developing and committing to a relationship is more crucial to potential Japanese business partners. Long legal documentation can often dull the enthusiasm of

potential partners so a balance needs to be reached. Japans recent sp ate of bankruptcies means that exporters should exercise due diligence on their business partners before sending shipments to Japan. Credit service checks of Japanese companies are available. For further information please visit IP Australia.

Economy
links The Japanese economy is one of the third largest in the world. Only the USA and China have a higher GNP. The Japanese currency is the Yen. Exports: Japan's main export goods are cars, electronic devices and computers. Most important trade partners are China and the USA, followed by South Korea, Taiwan, Hong Kong, Singapore, Thailand and Germany. Imports: Japan has a surplus in its export/import balance. The most important import goods are raw materials such as oil, foodstuffs and wood. Major supplier is China, followed by the USA, Australia, Saudia Arabia, South Korea, Indonesia and the United Arab Emirates. Industries: Manufacturing, construction, distribution, real estate, services, and communication are Japan's major industries today. Agriculture makes up only about two percent of the GNP. Most important agricultural product is rice. Resources of raw materials are very limited and the mining industry rather small.

Rice

Rice is Japan's most important crop, and has been cultivated across the country for over 2000 years. It is the primary staple food of the Japanese diet and of such fundamental importance to the Japanese culture that it was once used as currency, and the word for cooked rice (gohan) has become synonymous with the general meaning of "meal". A bowl of cooked rice is a central part of traditional Japanese meals, but the grain is also processed into several different types of products including alcohol, vinegar and flour. The following are some common rice products and a list of common rice dishes that can be found across the country. Common types of rice

White Rice (Hakumai) Japanese rice is short grain and becomes sticky when cooked. The majority of Japanese rice is polished to remove the hard outer skin (rice bran) and consumed as hakumai ("white rice"). White rice is the foundation of Japanese cooking and is served with most meals.

Brown Rice (Genmai) Unpolished rice (genmai) is less commonly sold as it is not considered to be as delicious as white rice. However, it has been recently gaining popularity as a health food because it is more nutritious than white rice. The outer bran retains much of the vitamins and minerals that are removed by polishing.

Multigrain Rice Other grains and seeds may be added to white rice to add flavor and nutrients. One variation simply adds barley (resulting in mugi gohan), but more elaborate varieties may include more than a dozen different additions. Multigrain rice is usually called by the number of different grains that are added (e.g. juhachikoku), and is served at some health food restaurants and ryokan. Glutinous Rice (Mochigome) Glutinous Rice (also known as mochi rice or sticky rice) is the second most common variety of Japanese rice. When cooked it is even stickier than regular Japanese rice and is commonly pounded into rice cakes, made into sweets, or used in rice dishes such as sekihan (glutinous rice with red beans).

Common rice products Rice Wine (Nihonshu or Sake) (more info) Rice wine, commonly known as nihonshu or sake (sake also being used as a general term for alcohol), is an alcoholic drink made by fermenting rice. Sake comes in several varieties and may be served hot or cold. It is not traditionally drunk together with rice dishes as it is considered to be rice itself. Produced in a similar way, mirin is a sweet rice wine that is widely used in cooking.

Rice Vinegar Vinegar can also be produced from rice, and is used in dressings, pickles, marinades and for preparing sushi rice. Most Japanese rice vinegar is light in color and flavor and only mildly acidic. Dark vinegars are also produced and drank as a health drink.

Rice Flour Rice flour, made from ground up white or glutinous rice, is used to make various Japanese sweets and rice crackers (senbei), as a thickening agent in cooking, or as substitute for wheat flour to make bread. Rice flour is gluten free.

Rice Bran (Nuka) Rice bran, or nuka, is the hard outer skin of the rice grains that is removed when polishing brown rice to make white rice. Rice bran has a high nutritional value and is used in a variety of ways in Japanese cooking, most commonly to make a type of pickle (nukazuke).

Common rice dishes Cooked Rice (Gohan) A bowl of rice forms the basis of most Japanese meals. It is often the central dish of meals such as with a Japanese breakfast or set meal (teishoku) in which the other dishes are traditionally considered accompaniments to the rice. A bowl of rice is commonly served as a set with miso soup and pickles. At Western style restaurants, cooked rice is served as an alternative to bread. Rice Cakes (Mochi) Rice cakes (mochi or omochi) are traditionally made from steamed and pounded glutinous rice. They are traditionally eaten on New Year, but have become a popular dish throughout the year. Rice cakes are prepared in a variety of ways and may be eaten fresh, grilled, fried or served in soups like dumplings. Rice Balls (Onigiri) Rice balls, or onigiri, are made of cooked rice and are commonly wrapped in nori seaweed. They are usually lightly seasoned with salt and often contain a filling such as umeboshi (pickled Japanese plum), okaka (dried bonito shavings and konbu) or salmon. Rice balls are a popular and inexpensive snack available at convenience stores, but are also commonly served at general restaurants and izakaya.

Tamago Kake Gohan Tamago kake gohan is a common breakfast dish consisting of a raw egg mixed into a bowl of rice. There are many variations on this simple comfort food, but most often it is seasoned with bit of soy sauce. Eggs are commonly eaten raw or partially cooked in Japan.

Chazuke Chazuke, or ochazuke, is another simple comfort food consisting of hot water, tea, or light fish stock poured over rice (sometimes made with leftover rice). Chazuke is often garnished with toppings such asumeboshi, grilled salmon or pickles. Chazuke is commonly served atizakaya and is a popular dish to eat after drinking.

Kayu Kayu, or okayu, is Japanese rice porridge made by slowly cooking rice in lots of water. It tends to be thicker than other types of rice porridge or gruel and is a suitable dish for using left over rice. Kayu is often garnished with umeboshi and is commonly served to sick people because it is easily digestible. Donburi (more info) Donburi refers to a bowl of plain cooked rice with some other food on top of it. Donburi are served at specialty restaurants, but they are also a common dish that can be found on all kinds of restaurants' menus. Some of the most popular varieties are gyudon (stewed beef), katsudon (tonkatsu), tendon (tempura), oyakodon (chicken and egg), tekkadon (tuna) and kaisendon (raw seafood). Sushi (more info) Sushi can be defined as a dish that contains sushi rice, cooked white rice flavored with vinegar. There are various kinds of sushi dishes, such as nigirizushi (hand formed sushi), makizushi (rolled sushi), and chirashizushi (sushi rice topped with raw fish). Sushi is the most famous Japanese dish outside of Japan, and one of the most popular dishes among the Japanese themselves.

Fried Rice (Chahan) Fried rice, or chahan, is a dish that was originally introduced from China. There are an infinite variety of ingredients that can be added to fried rice. Some common ones are peas, egg, green onions (negi), carrots and pork. Chahan is a suitable dish for using left over rice.

Omuraisu Omuraisu, short for omelet rice, is fried rice wrapped in a thin egg omelet. Omuraisu is usually shaped like an American football and may be garnished with ketchup or demi-glace sauce. It is a common diner or cafe food, although specialty omuraisu restaurants also exist.

Rice Crackers (Senbei) Senbei are baked or grilled crackers made from rice flower. They come in many different shapes and sizes, and there are both savory and sweet varieties. Some of the most popular are flavored with a soy sauce glaze or wrapped in seaweed.

Sweets Rice flour and pounded glutinous rice (mochi) are among the most common ingredients of Japanese sweets alongside sweet beans. Some common sweets made with rice products include daifuku (sweetened red bean paste wrapped in mochi), kushi-dango (mochi dumplings on skewers) and ohagi (red bean paste wrapped in coarse pounded mochi rice). Rice Bran Pickles (Nukazuke) Rice bran pickles are common household pickles fermented in a mixture of roasted rice bran (nuka), salt and other ingredients. Wholevegetables are stirred into the mash and allowed to cure anywhere from a day to several months. The resulting crisp, salty and tangy pickles are then rinsed clean, sliced and served. Nukazuke are rich in lactobacillus and said to aid in digestion.

Rice Bread (Komepan) Rice flour can be used to make a variety of different types of bread. Rice bread (komepan) is sold at many bakeries and supermarkets, and is good gluten free substitute for regular wheat flour bread.

Rice Manners Pick up your rice bowl with your hand while eating from it. It is considered polite to finish every grain of rice that you have been served. It is not common to pour soy sauce directly over rice. Do not leave your chopsticks standing up vertically in your rice. This is done at funerals. Rice fields Rice fields are a common sight in the Japanese countryside and an image of nostalgia for many people. The fields start as flooded patties in the early summer and turn into seas of green and gold waves as the rice grows and matures through the season. The crop of rice is then usually harvested in the fall, although some southern regions may plant more than one crop per year. Some places famous for particularly nice rice patty landscapes include the Noto Peninsula,Shodoshima and the Echigo Tsumari region in Niigata Prefecture.

Senmaida rice fields on the Noto Peninsula

http://en.j-cast.com/2004/11/01000023.html

Japanese Business Overview

11, 01. 2004

Overall Condition of the Economy and Industries

The waterfront in Tokyo

Current State Out of the Long Tunnel of Recession

In 2004, Japanese industry made a comeback out of the dark tunnel of recession it found itself in after the bursting of the economic bubble. Industries are treading a full-fledged path of recovery, and extreme pessimism regarding the future has all but disappeared. Management is beginning to regain confidence.

Skyscraper buildings newly built in Shiodome Area, Tokyo

With the exception of just a few industry sectors like construction, virtually all sectors saw growth, with the automotive industry as the biggest driver of growth. The three top Japanese automobile manufacturers - Toyota Motor Corporation, Nissan Motor Co., Ltd.and Honda Motor Co., Ltd. - together accounted for FY2003 current income that surpassed two trillion yen. Digital industries centering on mobile phones and electronics, also became pillars that supported economic recovery. Even major consumer electronics manufacturers, which saw sustained stagnation, achieved profitability. This wave also hit the industrial materials manufacturing industry, with specialists estimating that steel and chemical engineering is seeing the highest levels since 1990 - 1991. The growth of global demand, centering on China, is behind this. On the other hand, the construction industry is still in the doldrums. It is being affected by lowered public works spending that has resulted from the government's fiscal crunch. Another cause of this stagnation is said to be the fall in construction tender prices resulting from the fact that it has become difficult in recent years to form Dango cartels. Dango (bid rigging), in which contractors privately form an agreement in advance on bid prices, etc. used to be a habitual practice of the Japanese construction industry. Industries that are heavily dependant on government subsidies and aid are also still seeing a downturn. The agro-industry is a prime example of this.

The Automotive Industry Drives the Japanese Economy

The production line of Nissan Motor where robot machines stand in rows in Tochigi Plant

There was a time when production, that is to say the Japanese manufacturing industry, was so overwhelmingly strong that Japan was said to be the "factory

of the world." It began shortly after World War II with the textile industry, followed by the steel and chemical industries. From the post-war economic boom onward, consumer and industrial electronics gained strength. However, Taiwan, Korea, and now China caught up with Japan in terms of consumer electronics, and we have seen, for example, related Japanese plants being moved overseas or scaled down. During the 1980s, Japan was the world leader in semiconductors. At one point, it had an 80% share of the world market for Dynamic Random Access Memory (DRAM) storage elements. But, with the rapid growth of Korean manufacturers and the recovery of American firms, major Japanese players pulled out of this market, one by one. There are no longer any remnants of what used to be an industry that was closely associated with Japan. The same is happening in the case of personal computers. The exception in this field is digital cameras. When OEM (Original Equipment Manufacturer; production under the brand name of another company) is included, digital cameras manufactured in Japan account for a 75% share of the global market. Even under such a climate, the automotive industry retains a top global position. It is an industry that is representative of Japan in every aspect. Statistics announced by the Japanese Ministry of Economy, Trade and Industry show that value of the domestic production of automobiles has reached nearly 38 trillion yen, accounting for 13% total output by the Japanese manufacturing industry. The Japan Automobile Manufacturers Association estimates that more than 10% of Japanese workers, or roughly 7 million people, are employed in fields related to automobile manufacturing. The number of cars produced in Japan in 2002 reached 8.62 million, as compared with 5.12 million in Germany and 5.02 million in the Untied States. Japan is truly the world's top manufacturer of cars. There are several reasons why automotives have come to represent strong industry in Japan today and show outstanding performance while other traditional manufacturing industries are struggling. An automobile is comprised of twenty to thirty thousand parts, and combined strength in many fields, such as machine tools, metal molding, robotics and electronics, become essential. In this sense, conditions were favorable for Japan, which has a broad industrial base. Furthermore, the spread of the Just-in-Time production system originated by Toyota, Japan's technological development capabilities as represented by hybrid cars, and the success of offshore production in the US as well as Europe are some of the other reasons.

A Weak Software Industry; Video Games an Exception

Japanese video games are popular among youngster

Software is one of industries that are weak in Japan. Domestic firms are far behind those of the United States in the development and production of computer software as well as movies and other visual content. The exception is video games, which continues to maintain a high share of the global market. Japanese videogame software accounts for the greater majority of popular videogames in the U.S. As for videogame hardware, more than 70% of sold in America are those of Japanese manufacturers. The high quality of Japanese manga (comics) and anime (animation) and the plentitude of related human resources are supporting the Japanese videogame software industry. The biggest weak point of Japanese industry, which is basically maintaining favorable conditions, is the financial services industry centering on banking. Through decades following the end of World War II, Japanese banks and financial services were under the strict guidance and supervision of the Ministry of Finance. Banks were not permitted to conduct other financial services, and vice versa. There was no room for individual companies to create and devise original products. A delay in

Japan's implementation of deregulation and liberalization resulted in Japan falling behind the U.S. and Europe in terms of competitiveness in this field. Furthermore, even major financial institutions faced the threat of bankruptcy due to the enormous amounts of non-performing loans that were left after the bursting of the economic bubble. It was not until around 2000 that the move towards the merger, acquisition or partnerships of and between financial institutions was accelerated. As of the autumn of 2004, the Japanese financial services industry has been reorganized into seven major financial services/banking groups: Mizuho, Mitsubishi Tokyo, Mitsui Sumitomo, UFJ, Resona, Mitsui Trust and Sumitomo Trust and Banking. The financial industry, nevertheless, has not yet completely recovered from the effects of the bursting of the economic bubble. UFJ and Resona both recorded losses for FY2003. It is said that productivity in industries such as agriculture, construction, foods, energy, wholesale and retail, remain at a level that is about two-thirds of the U.S. This is because companies that should otherwise have left the market are lingering through subsidies and protective administration. The reduction of official regulations leads to a lowering of the burden placed on the people. Administration is streamlined and made more efficient, providing a greater forum for the private sector to exert their strengths. With this as a basic policy, Japan has been earnestly launching on deregulation since the 1980s. The results of such efforts are gradually being seen, but resistance forces still remain strong. The privatization of the Japan Highway Public Corporation has already been decided, and the postal service is scheduled to be privatized in 2007. Whether the privatization of the postal service will proceed smoothly is likely to become a key, for the time being, to forecasting the future of Japan.

History Demand Created by the Korean War Boosts the Japanese Economy
In the last stages of the Pacific War, Japan was pretty much reduced to ruins as a result of bombing by U.S. Forces, with its industrial infrastructure severely damaged. After the end of the War, there was a serious shortage of supplies, which led to hyperinflation and deflation to counter it. The economy saw continued stagnation. However, the Korean War, which erupted in June 1950, gave a boost that paved the way for the revival of the Japanese economy. A broad spectrum of demand was created by this war, from heavy

industry products such as military trucks, locomotives, rail-track materials, oil drums, barbed wire and iron pillars, to services such as transportation and communications. This gave Japan the momentum for it to enter into its era of high growth.

Consumer Boom for the "Three Sacred Treasures" of Japanese Households

A bullet train of the Shinkansen moving towards the high-speed run

Consumer consumption, which had been repressed during World War II through slogans such as, "Extravagance is the Enemy," and "We Shall Not Want until We Win," exploded when post-war chaos settled down in the 1950s. In particular, there was great demand for consumer electronic products such as television sets (monochrome), washing machines and refrigerators. These three items represented an affluent lifestyle and were called the "three sacred treasures." In October 1964, the Tokaido Shinkansen (bullet train) Line commenced operations between Tokyo and Osaka. This was just prior to the opening of the Tokyo Olympic Games. Consumer demand from the latter half of the 60s shifted to the "three Cs," cars, coolers (air conditioners), and color TVs, and related industries experienced rapid growth.

The Arab Oil Shock and Demise of the Post-war "Japanese Miracle"
In August 1971, U.S. President Richard Nixon announced the New Economic Policy as measures to defend the U.S. dollar. The "Nixon Shock," which temporarily suspended the convertibility of the gold to the dollar as well as introduced new import surcharges, had a swift global impact. The value of the yen, which had been favorable for Japan in terms of exports, was forced to

appreciate. This was followed by the first oil shock. The Fourth Arab-Israeli War broke out in October 1973, and Arab oil producers raised the price of crude oil by 70% and imposed an embargo on countries that supported Israel. This had a major impact on Japan, which had been consuming large amounts of oil. The price of not only oil products but also almost all daily commodities rose sharply. Consumers resorted to stockpiling while retailers held back on sales. It was a period of hysteria that saw a double-digit annual increase in commodity prices.

Trade Friction as a Result of Over-dependence on Exports

The second oil shock occurred in 1979. The structure of Japanese industry changed greatly through the two oil crises, and it saw the rise of the fabricating industry which consumed less amounts of energy. The main player shifted from industrial materials manufacturing, with its consumption of a large amount of energy, to the machine industry such as automotives, electronic and electric machinery, and precision instruments.

New cars loaded into an exclusive transport ship at the wharf of Oppama Plant of Nissan Motor, Yokosuka-shi

It was during this time that the world saw the end of the era of Japan's rapid growth. Japan ceased to record the nearly 10 percent annual growthaverages of past years. It not only moved into a period of low economic growth but became ever more dependant on exports. This was not only because domestic consumption was at a standstill but also due to the slowdown in investments. Japan looked abroad for demand. Exports, centering on Europe and the United States, rose sharply while there was little growth in imports. It was difficult for foreign products to cut into the Japanese market because of stagnant domestic consumption, countless restrictive legislation that remained toward imports, and a complex distribution mechanism. With Japan enjoying a trade surplus while its partners recorded

deficits, Japan became the target of global criticism and the root of economic friction with other countries. Issues related to the structure of Japanese industry, including closed trade practices which did not welcome entry by newcomers and the high number of government regulations, were singled out for criticism by abroad.

The Bursting of the Economic Bubble and its Repercussions

Japan's path to stabilized growth seemed assured in the late 1980s after Japan had overcome two oil shocks, and Japan re-entered a state of super economic growth. Ear-pleasing phrases such as "Japan as number one" and "the 21st century would be Japan's century" abounded, while share and land prices rose sharply in a short period of time. The Japanese went on a buying spree, snatching up shares, bonds, real estate, and even works of art around the world. The bubble economy, which began in November 1986, continued for 51 months and lasted until February 1991, during which time banks put out loans indiscriminately, and money games of unprecedented scales were unfolded.

Brooks Brothers opened in Marunouchi Area, the center of the business town in Tokyo

The repercussions were disastrous. When the bubble burst, financial institutions found themselves strapped with massive bad loans and were absorbed or went under. The ballooning amount of nonperforming loans gradually began to drain corporate stamina. The once highly-admired Japanese management style, with lifetime employment as one of its major pillars, became an anachronism. The Japanese economy continued to worsen, excess facilities were disposed, and corporate downsizing became a boom. Instability continued, and when it looked at times as if the economy was on the upturn, it would immediately revert to a downward trend.

When deflation and a decrease in consumer prices hit Japan, pessimistic views forecasting that "Japan would sink" was heard. The 1990s was dubbed "the lost decade" for Japan in the sense that the country was too busy cleaning up after the economic bubble to implement any forward-looking measures to revive its economy.

Forecast Three Key Points towards the Future

Point 1 Aim to Become the Global Leader in Nanotechnology The Government of Japan and the Nippon Keidanren and other economic organizations have identified leading-edge industries, especially nanotechnology, as priority fields that major investment should be made in. Nanotechnology is thought to lead to "dream-like inventions" such as medication that zeros in on cancer cells, portable fuel cells or resin that will not tear despite its thinness. The Japanese government estimates that the domestic market for nanotech products will reach 20 to 30 trillion yen by 2010. Japan is currently a global leader in the research and development of nanomaterials. In the 1980s, the U.S. Government shifted to a pro-patent (pro-intellectual property) policy, and high federal budget priority was placed on fundamental fields. A similar move by Japan did not come until about 20 years later. For this and other reasons, Japan has been repeatedly suffering bitter experiences in the cutting-edge field research and development race. Genomes (genetic codes) are a prime example. In the decoding of the human genome sequence, completed in 2000, the U.S. contributed roughly 70 percent of the basic map and Great Britain about 20 percent, while Japan accounted for a mere 6 to 7 percent. Japan will draw on this experience as it tackles the nanotechnology development race. Point 2 Information Appliances Show Potential to Become a Major Hit There is a big surge in sales of information appliances such as flat-screen TVs, DVD recorder/players, and mobile phones equipped with digital cameras. The information appliance market is expected to surpass 1 trillion yen in 2006, and it looks like the market will become even bigger as products that completely integrate consumer electronics, computers and networks are launched in the future. The Japanese Ministry of Internal Affairs and Communications announced in February 2004 that it will begin drafting communications standards for the connection of all information appliances used in homes.

Screen board of a securities firm in the town which compares Japan-U.S. stock price

Point 3 The Falling Birthrate and Growth of the Elderly Industry It is estimated that that the elderly 65 and older will comprise 35.7 percent of the Japanese population by 2050. As of 2004, home-based services that utilize Japan's Long-term Care Insurance System as well as nursing homes and other facility services are beginning to mark sharp growth. Services for the elderly will, without doubt, become a major industry in Japan.

"Freeter" Estimates in Japan

On the reverse side of the coin in the long-term, Japan's falling birthrate will become the Achilles' heel of Japanese industry. Fewer and fewer children are being born in Japan, and its birthrate in 2003 was a mere 1.29 per woman. This is, of course, not only below the birthrate of the United States but also of northern European countries. The proportion of the working-age population (between 15 and 64) has already been declining since 1996. While the working-age population declines sharply, there is a big surge in pension, healthcare and nursing care expenditures. It is certain that the economy and

industry will weaken as a result. One solution is to accept more foreign workers, something that Japan has shown reluctance in up to now. According to one UN estimate, Japan will need to accept an average 160 thousand immigrants per year in order to maintain its working-age population once a full-fledged era of low-birthrates hits. Another solution is to increase the number of women in the workforce. Measures such as enhancing child-care services and providing support for part-time work styles are under consideration.