World Country Guide

Business Profile

Economy
After suffering massive destruction during World War II, Japan was the economic phenomenon of the late 20th century. At $4,000 billion, the country’s GDP ranks second in the world after the USA. This has been achieved through several decades of sustained growth (although this period has now ended – see below) driven by judicious application of import controls and consistently high domestic investment, coupled with an aggressive export drive orchestrated by the powerful Ministry of International Trade and Industry (MITI). The structure of the Japanese domestic economy revolves around a group of large multi-product corporations (many of which have since become global household names), linked in loose alliances (known as keiretsu) with banks and finance houses. The corporations are serviced with components and raw materials by a plethora of small firms with low overheads and labour costs, and a well-honed distribution system (many of these lower-level processes are now carried out in the ‘tiger economies’ of the Pacific Basin).
The model worked superbly until the early 1990s, when competition from abroad and excessive lending by the banks began to put the Japanese economy under a set of pressures to which it has proved quite unable to respond. The extent of the problem became apparent initially with the 1991 property crash and, more spectacularly, with the 1997 Asian financial crisis. Since then, the economy has stagnated, often struggling to reach 1 per cent growth annually. Unemployment, a comparative novelty in a country where jobs were typically guaranteed for life, has now reached 6 per cent. Successive governments have made little more than token efforts at structural reform. The financial sector continues to operate much as before. The Koizumi government has tabled a set of proposals, which include deregulation and much-needed reform as well as a package designed to kick-start the economy and create 5 million jobs. Unfortunately, its plans are being undermined by the government’s poor fiscal position (government debt is 150 per cent of GDP – by way of comparison, conditions for Eurozone countries require that the figure not exceed 60 per cent).
Agriculture is the only sector of the economy that does not measure up to Western standards in terms of technology and management, and remains relatively inefficient and heavily protected by the government. (This is a quirk of the Japanese electoral system, which affords a disproportionate number of parliamentary seats to rural areas.) Rice, potatoes, sugar and citrus fruits are the main crops. The manufacturing industry is still important, particularly vehicles and electronic goods, although traditional industries such as coal mining, shipbuilding and steel are also sizeable and, unlike many of their Western counterparts, profitable. Overall, industry contributes 35 per cent of economic output – a larger proportion than the world’s other leading economies. The service sector grew rapidly in the 1980s as the economy matured and Japan became a major force in the international economy. The emphasis in Japanese trade thus switched from manufactured goods to export of services and ‘invisibles’, such as finance and insurance. Japan’s major trading partner is still the US but China (PR) has overtaken Korea (Rep), Taiwan (China), Indonesia and various Middle Eastern oil producers in importance. In the international arena, Japan is a leading member of the Organisation of Economic Co-operation and Development (OECD) and the Asia-Pacific Economic Co-operation (APEC) forum.

Business
A large supply of visiting cards printed in English and Japanese is essential. Cards can be quickly printed on arrival with Japanese translation on the reverse side. Appointments should be made in advance and, because of the formality, visits should consist of more than a few days. Punctuality is important. Business discussions are often preceded by tea and are usually very formal. Office hours: Mon-Fri 0900-1700. Some offices are open Sat 0900-1200.

Commercial Information
The following organisations can offer advice: Japanese Chamber of Commerce, Salisbury House, 29 Finsbury Circus, London EC2M 5QQ, UK (tel: (020) 7628 0069; fax: (020) 7374 2280); or Nippon Shoko Kaigi-sho (The Japan Chamber of Commerce and Industry), 2-2 Marunouchi 3 Chome, Chiyoda-ku, Tokyo 100-0005 (tel: (3) 3283 7824; fax: (3) 3211 4859; e-mail: info@jcci.or.jp; website: www.jcci.or.jp); or JETRO (Japan External Trade Organisation), 2-2-5 Toranomon, Minato-ku, Tokyo 105-8466 (tel: (3) 3582 5511; fax: (3) 3587 0219; website: www.jetro.go.jp).

Conferences/Conventions
The Japan Convention Bureau is a division of the Japan National Tourist Organisation (see Contact Addresses section); its Convention Planner’s Guide to Japan lists 35 cities with conference facilities including Hiroshima, Kyoto, Nagasaki, Osaka, Tokyo and Yokohama. Kyoto has proved to be one of the most popular locations for international meetings over the last few years. For further information, contact the Japan Convention Bureau, 2-10-1 Yuraku-cho, Chiyoda-ku, Tokyo 100-0006 (tel: (3) 3216 2905; fax: (3) 3216 1978; e-mail: tsato@jnto.go.jp; website: www.jnto.go.jp).