INSTITUTE OF MANAGEMENT STUDIES, D.A.V.V.

, INDORE

THIRD INTERNAL ASSIGNMENT

INTERNATIONAL FINANCE OVERVIEW AND STRATEGIC ANALYSIS OF

INTERNATIONAL BUSINESS OF JAPAN

Submitted to: Submitted by:

Dr.Yamini Karmakar Deeksha Raghuwanshi 64131
Shlok Jain- 64197
MBA(FA) Sem IV Section B
 MACROECONOMIC OVERVIEW OF JAPAN
1) The economy of Japan is a highly developed and market-oriented economy.

2) It is the third-largest in the world by nominal GDP and the fourth-largest by purchasing power parity (PPP).

3) Gross Domestic Product of Japan grew 0.8% in 2018 compared to 2017. The GDP figure in 2018 was $4,971,930 million, leaving Japan placed 3th in
the ranking of GDP.

4) According to a report of Japantimes, Japan logged a goods trade deficit of ¥1.2 trillion ($11 billion) in 2018. Imports rose 9.7 percent from a year
earlier to ¥82.69 trillion, outpacing a 4.1 percent increase in exports to ¥81.49 trillion.

5)The currency of Japan is JAPANESE YEN . Since 1973, the Japanese government has maintained a policy of currency intervention, and the yen is
therefore under a "dirty float" regime. This intervention continues to this day. Floating currency exchange rate system which is not controlled entirely
by the market forces of demand and supply. Instead, it is at least partially controlled by government intervention that limits appreciation or
depreciation of the currency within a range. Also called managed float. As on 15/4/2019, its exchange rate was Rs.0.62 = 1 Japanese Yen, 0.0089 USD=
1 Japanese Yen.

6) Japan's consumer price inflation stood at 0.2 percent year-on-year in February 2019, unchanged from the previous month's 15-month low and
below market expectations of 0.3 percent.

7) Japan’s unemployment rate was 2.4% as of December 2018, down from 2.5% one year earlier according to Trading Economics.

8) The Bank of Japan left its key short-term interest rate unchanged at -0.1 percent at its March meeting

9) The major stock exchanges of Japan are- Tokyo Stock Exchange and Nikkei 225.
 MAJOR IMPORTS AND EXPORTS

Major Imports: The import data mentioned below if of year 2018 (top 5):

1)Mineral fuels including oil: US$174.6 billion (23.3% of total imports)

2)Electrical machinery, equipment: $101 billion (13.5%)
3)Machinery including computers: $72.9 billion (9.7%)
4)Optical, technical, medical apparatus: $27.6 billion (3.7%)
5)Pharmaceuticals: $25.5 billion (3.4%)
TOTAL IMPORTS IN 2018- US$748.4 billion in 2018. 

Major Exports: The export data mentioned below if of year 2018 (top 5):

1)Vehicles: US$154.1 billion (20.9% of total exports)

2)Machinery including computers: $148 billion (20.1%)
3)Electrical machinery, equipment: $109.4 billion (14.8%)
4)Optical, technical, medical apparatus: $41.3 billion (5.6%)
5)Iron, steel: $29.9 billion (4.1%)
TOTAL EXPORTS IN 2018 US$738.2 billion 
 MAJOR MULTINATIONAL CORPORATIONS

Japan is home to some of the largest companies in Asia, in terms of revenue if not in terms of employees. These companies are also some of the most
successful in the world, thanks to the products and services they provide not just to the Japanese, but to people around the globe. Some of the largest
companies of Japan are:

1) Toyota Motor: Not only is Toyota Motor the largest company in Japan, it’s also one of the most successful automobile manufacturers in the world

2) Mitsubishi UFJ Financial: With assets of around $2.5 trillion, Mitsubishi UFJ Financial is the largest financial group in Japan.

3) Nippon Telegraph & Tel: The Japanese telecommunications company is one of the largest in the world (in terms of revenue) with an estimated
value of $61 billion. The Japanese government owns around 1/3 of the company’s shares, though it is listed as a private company.

4) Honda Motor: Not only is Honda one of the largest companies in Japan, it’s also the leading motorcycle manufacturer in the entire world

5) SONY: It is a Japanese multinational conglomerate corporation headquartered in Tokyo. The company owns the largest music entertainment
business in the world.
 MEMBERSHIP OF IMPORTANT INTERNATIONAL BODIES

1)Association of South East Asian Nation.

2)United Nations

3) Group of 7 (G7)

4) International Monetary Fund

5) World Bank

6) World Trade Organization

 POLITICAL MILIEU OF JAPAN

1)The Japanese political system is based on Japan’s constitution, drafted after the end of World War II. Enacted on May 3,
1947, it firmly established a democratic constitutional monarchy.
2)The constitution of Japan defines the Emperor to be “the symbol of the State and of the unity of the people”. He is the
ceremonial head of the State.
3) Political power is held mainly by the Prime Minister appointed by the Emperor and other elected members of the Diet.
4) The Diet of Japan consists of an upper house, The House of Councilors, and a lower house, The House of Representatives. It
is the highest level of state power in the country, and the only section of government that can enact new laws.
5) The two major political parties of Japan are Democratic Party of Japan and Liberal Democratic Party.
6) The present Prime Minister of Japan is Shinzo Abe, he represents Liberal Democratic Party.
7) The program started by current government is named as Abenomics.
8) The policy platform of PM Shinzo Abe is based on 2 main strands –
(a) A major package of economic stimulus and structural reform
(b) Series of security reforms and increased diplomatic activity
9) The Vision of the government is to build ‘Society 5.0’ –
Solve social issues by incorporating the innovations of the fourth industrial revolution (e.g. IoT, big data, artificial intelligence,
robot, and sharing economy)
 JAPAN’S CONTRIBUTION IN INTERNATIONAL TRADE

1) Japan is the fourth largest exporter of the world as per data of 2017
2) As of 2018, Japan is the fourth largest importer in the world. It imported 4.8% of total global imports in 2018.
3) Japan is world’s third biggest importer of crude oil. Approximately it imports 7 % of total import of crude oil in the world.
4) Japan ranks second in the whole world when it comes to importing Liquefied Natural Gas. China recently over ranked Japan to
become no.1 importer of LNG worldwide.
5) Japan is second largest exporter of total cars produced worldwide. As of 2017, Japan exported 12.6 % of total car exports of the
world.
6) According to Visual Capitalist, an online platform, It is estimated that Japan will contribute 1% to the total GDP growth of the
world.
 PROBABLE FUTURE IN INTERNATIONAL BUSINESS

1) Economic partnership agreement: EU-Japan trade agreement the biggest trade agreement concluded to date by the EU. 99% of the tariffs applied
on EU exports to Japan, which currently amount to about €1 billion, will be removed. It will create an open trading area covering over 600 million
people and almost one third of the world’s total GDP.

2) Trump seeks free trade agreement with Japan: The U.S. is mulling a “comprehensive pact” covering a range of areas including goods, services,
investment and currency, Japan has insisted that the two governments aim for a trade agreement on goods only, the Japanese media reported
recently. Adding to it, Beijing and Tokyo -- world's two largest liquefied natural gas (LNG) importers -- the Trump report said that it will urge both
countries to increase the purchase of LNG from the U.S.

3) Japanese Foreign Minister Tarō Kōno has kicked off his visit to China on April 13. In the eyes of the world, this will further contribute to Sino-
Japanese relations. In fact, Japan's willingness to restore friendship with China in recent years is not new. It is generally believed that this is the
result of the "Trump shock" from the United States.

4) Japan and India: Japan will provide financing to infrastructure projects across the world of approximately USD 200 billion by 2021. Adding to that it
is decided with the PM Narendra Modi of India to develop the Mumbai- Ahmedabad High Speed Rail Corridor (MAHSR) based on the Japanese
Shinkansen system, aiming to start operation in 2023.
 REASONS TO INVEST IN JAPAN

1) Low Corporate Tax rates: The effective corporate tax is declining under Abenomics. As per official data, the corporate tax in 2018 was 30.86%. This
is all time low in the history of Japan. It is expected that this rate would further decline in future.

2) Full Liberalization in retail market of Energy and Gas: Implementing a drastic reform of electric power and gas system for the first time in 60 years,
a)Full liberalization of retail market of electricity (April 2016)
b)Full liberalization of retail market of gas (April 2017)

3) An Innovation Hub: Science and technology-related research is very active in Japan. It is ranked 1st in G7 countries as it contributes around 3.5% of
its GDP in research funding.

4) Excellent Business Environment: Japan’s business environment was highly rated in the World Economic Forum's "The Global Competitiveness
Report 2016-2017.“ It is ranked 2nd in the world(138 Countries) and 1st in Asia.