Doing Business in Japan

2010 Road Show Presentation

Presented by Sumio Shibata

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State of North Carolina Japan Office
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GDP in 2009
Japan $ 5,095 billion
China $ 4,909 billion
(Source: Nikkei 1/21/10)
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 Real GDP Growth Overview
Japan USA Japan USA

4 10.0
3.1 2.7 2.1 2.7 2.4
3 5.6
6.0
2
2.2 5.0
1.9 2.0 2.4 1.7 2.2
1 3.8
0.4
0 0.0
△ 2.4 △ 0.6
-1 △ 0.7
△ 6.4
-2
△ 1.2
-5.0
-3
-4 -10.0
-5
△ 5.2 △ 13.7
-6 -15.0
2005 2006 2007 2008 2009 2010(*) 2011(*) Ja ｎ -Mar Apr-Jun Jul-Sep Oct-
Dec
(*) IMF world Economic Outlook Update Forecast 1/26/10
2009
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Source: Cabinet Office, Government of Japan / USDOC Bureau of Economic Analysis
 BOJ chief sees signs of sustainable
economic recovery
The Governor told reporters
economy has been picking
up on 4/7/10
(vs. March statement :
Economy is picking up)
He will raise current economic
projection
FY2010 FY2011
GDP +1.3% +2.1%
Bank of Japan
CPI -0.5% -0.2%
Governor
Masaaki
(Source : Nikkei Newspaper April 8, 2010) Shirakawa 10
 New Hatoyama Cabinet
• Growth Strategy for Economy
“For a Shining Japan”
2% yearly GDP growth through
2020

Economic growth driven demand

expansion (No more heavy
reliance on public work
projects)
DPJ (Democratic
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Party of Japan)
 New Hatoyama Cabinet
(cont’d)
• Reinforcement of the environment &
energy-related industries
• Enhancement of the health care sector
including medical and nursing services
• Promotion of science and technology
(platform for backing up the envisioned
growth)
• Government to finalize new growth
strategy by around June
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 Approval Rating in Japan
Approval Rating of Hatoyama Cabinet Parties Approval Ratings
%
80 %
60

70

50
non-approval (57)
60

50 40
DPJ (33)

40
30

30 approval (36)

20 LDP (23)
20

10 DPJ: Democratic Party of Japan

10
LDP: Liberal Democratic Party
(Source: Nikkei Newspaper March 29, 2010) 13
 Population & Land size
• Population of
127 million
・ 41% of USA
(307 million)
• Land Size of
146,000 sq miles
　・ 4% of USA
(3,787,000 sq miles)

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 Population

Japan 127 million

Tokyo Metropolitan
Area : 33 million

Osaka Metropolitan
Area : 21 million

KANSAI
Greater Nagoya :
15 million

Fukuoka : 5 million

Hokkaido : 5 million
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 Ties to the U.S.
• Japan is the United
State’s 4th largest Export
Market, after Canada,
Mexico and China.
• Second largest foreign
investor in the U. S., with
more than $230 billion
invested, second only to
U. K.
• The U. S.-Japan alliance
is a cornerstone of U. S.
security interests in Asia
and is fundamental to
regional stability and
prosperity.
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(Source: U.S. Commercial Service / 2010 Country Commercial Guide)
 Ties to the U.S. (cont’d.)
• The Foreign Ministry
of Japan released
“The Diplomatic Blue
Book 2010”

• Japan pledges to
deepen security
alliance with U.S. to
serve as a basic
framework to secure
the stability of Asia- (Source : Kyodo News, April 7, 2010)

Pacific region 17
Japanese Subsidiaries in the Piedmont
Triad Region (Manufacturers only)

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 Investment in NC

• Toshiba America • Mori Seiki, one of

Nuclear Engineering leading machine tool
Corporation companies in Japan
Opened engineering Opened Charlotte
center in Charlotte in Technical Center in
August, 2009. January, 2009
# of personnel : 200
(by 2013)
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クリスピー・クリーム　 in Tokyo
NC Investment in Japan

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 Top 10 U.S. Exports to Japan
(2009)
Optical, Medical Instruments 5,850
Aircraft, Spacecraft, And Parts 5,328
Industrial Machinery, incl. Computers 4,489
Cereals 4,168
Electric Machinery 4,049
Pharmaceutical Products 2,279
Meat 2,008
Inorganic Chemicals 1,913
Oil Seeds/Grain/Seed, Fruit 1,715
Plastics 1,404

0 1,000 2,000 3,000 4,000 5,000 6,000 7,000

*Total Export : $ 51 billion (2008 : 65 billion) Unit : $ 1 million

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Source : WISERTrade
NC Exports to Japan (2010)
 NC is 10th among all
US states for exports
to Japan
 $1.5 billion in NC
exports to Japan
 Japan is 4th largest
market for NC
exports
(HondaJet at GSO) (Source : SMARTrade)
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 2009 NC Exports to Japan
($1.5 billion)
Chemical/Plastic 457
Tobacco 345
Meat 175
Pharmaceutical Products 74
Industrial Machinery, incl. Computers 68
Gear Box for Car, etc. 66
Wood Pulp 51
Optical Fiber 48
Light Emitting Diode 46
Prevision Metal Article 34
Aircraft, Engine 24
Furniture 16

Apparel 4

0 100 200 300 400 500

Unit : $ 1 million 23
Source : WISERTrade
 Emerging Sectors for NC Export
• 1) Biotechnology

• 2) Nanotechnology

• 3) Renewable （ Green) Energy

• 4) Senior Market

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 1) Biotechnology/Pharmaceuticals
in Japan
• Market size of Biotech • Japanese pharmaceutical
industry : $24.3 billion in companies eagerly seek
2008 (+27.9% over 2007) new drug candidates and
• Leading sub-sector : pipeline identified or
medical biotech $6.85 developed by US biotech
billion (Source : Fuji Keizai) companies to be further
developed into new drugs
• <High growth potential>
Therapeutic antibodies
Molecularly targeted
(Source : U.S. Commercial Service)
cancer therapies
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 Biotechnology/Pharmaceuticals
Key market segments for (cont’d.)
Biotech
 Medical Care
 Food
 Bio Tool & Information
(Bioimaging analysis
equip., DNA Chips,
Protein/Gene Analysis
Equip)
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 Environment & Energy
1) Biotechnology/Pharmaceuticals
 World second largest consumer
of pharmaceuticals
 American pharmaceutical firms
have a market share of almost
20%
 Japan’s aging population is
generating increased demand
for pharmaceutical treatments
for cardiovascular problems,
metabolic, gastrointestinal,
CNS. Generic drugs have
good potential 27
 World Medical Pharmaceuticals Market
(unit : billion dollars, numbers on parenthesis : % )
【 2005 Average rate 】
Asia/Africa/Australia 1 dollar = 109.64 yen 1 euro = 136.97 yen
46.5(8.2%)

Latin America
24(4.2%)

In Addition Europe
53.4(9.4%) United States
252.2(44.6%)
The market scale
Spain of medical
15(2.6%) pharmaceuticals

Britain
566.1 billion
19.5(3.4%) dollars
Italy
19.6(3.5%)

France
30.3(5.4%)
Canada
Germany
13.5(2.4%)
31.8(5.6%)
Japan 28
<Source: GSK annual report 2005.Dec.> Japan
60.3(10.7%) Bioindustry
Association
Bio Japan 2010
• September 29-October 1,
2010 at Yokohama
Pacifico

• Main themes for

exhibition/seminar are
Health, Environment, and
Food (Functional Food,
GMO)
• Please join us to exhibit
at NC Commerce’s booth

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 2) Nanotechnology
• METI’s Strategic Technology
Roadmap 2009 designated
Nanotech as one of most
important fields(*) in science and
technology to promote R & D
investment in the public &
private sectors.

(*) Life Science, Information &

Communications, Environmental
Sciences, Energy and etc.
(The Ministry of Economy, Trade, and Industry)

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 Nanotechnology (cont’d)
• Market : $60 billion in 2010 (estimated)
$230 billion by 2015

Market Segment :
Electronics, Energy/Environment, Medical
Applications, Measurement Instruments
2015 (billion of US$)

Electronics 72

Energy/Environment 49

Medical
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Applications
Measurement
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Instruments
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0
(Source : Nomura Research Institute) 20 40 60 80
 “Japan Analytical
Instruments
Manufacturers’
Association” EXPO
September 1-3, 2010
at Makuhari Messe

• Free of charges to display and distribute your literatures at NC Japan Office’s booth

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 3) Renewable （ Green) Energy

 Renewable energy
technologies such
as photovoltaic
solar panels,
biomass-to-
ethanol, lithium-
ion battery for
hybrid car 　 &
electric vehicle
are promising
sectors in Japanese
market now. 33
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 Greenhouse Gas Emission
Reduction by 2020 (Pledges)
• Japan : 25% from 1990
levels
• USA : 17% from 2005
levels
• E U : 20-30% from 1990
levels
• China 40-50% from 2005
levels (*)
• India : 20-25% from 2005
levels (*)
(*) amount of CO2 emitted per
unit of GDP, or <CO2/GDP>

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(Copenhagen Climate Summit, January, 2010)
 Seven-Eleven Eyes 20,000 Green
Stores Worldwide In 5 Years
• LED technology for signs and
lighting, generate electricity from
solar power, and feature hot-water
systems utilizing waste heat from
air conditioners. Some will even
have rechargers for electric
vehicles
.
• Green technology is seen slashing
store energy consumption by as
much as 30% and will also cut
greenhouse gas emissions

(Source : Nikkei April 6, 2010) 37

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Exhibited at :

“Japan Green
Device Show”,
October, 2009

“Japan Home
Show”,
November,
2009 39
 4) Senior Market
Percentage of age 65
and older Comparison of aged population
Japan 　 19.7(%) 2000
　　　　　　　　　 USA 12.3
Average Life Expectancy
Women Men
Japan 86 79
USA 79 76

• Average saving of households

of people aged 60-69 years
old: $245,000 (after debt)
• Average income : $59,000

(Source : JETRO) 40
 Deflation Makes Older People
Key Consumers
• CPI in 2009 : -1.2%
• Households of persons
aged in 60s : Net
savings of $230,000.
Consumption rose 1.2%
in 2009
• Households of persons
aged in 30s : Net debt
of $19,700.
Consumption dropped
1.1% in 2009 (Source : Nikkei April 5, 2010)
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 Senior Market
(cont’d)
• Promising market
for, Medical
care/welfare
& services
Leisure products
Home remodeling
Travel
Pet products
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 Opportunities for NC Exporters

• Aerospace
• Computer Software
• Electronic
Components
• Medical Equipment
• Safety & Security
• Furniture

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 Aerospace
14,953
Market Size
13,833

11,017
Imports
10,887

9,352
Imports from the U.S.
9,044

0 2,000 4,000 6,000 8,000 10,000 12,000 14,000 16,000

(Millions of U.S. $)
2007 2008

(Source: Ministry of Finance, Ministry of Economy, Trade and Industry, and

Society of Japanese Aerospace Companies) 44
 Aerospace (cont’d)
• Aerospace industry is • Best Prospects :
shifting the focus from
Defence (56%) to Civil
(44%) in 2008 Aircraft parts and
supplies, Avionics
• Japanese makers such
as Mitstubishi Heavy
Industries, Kawasaki, Fuji
are supplying 35% of
Dream Liner, or 787
content to Boeing
(Fuselage, and etc.)

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 Computer Software
(Millions of U.S. $)

• Interest shifting from 7,589

Market Size
on premises legacy 7,239

software
3,892
to SaaS Imports
3,526

(Software-as-a-
Service) and cloud Imports from 3,503
the U.S.
computing 3,174

0 1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000

2008 2009

(Source: JEITA, JISA and unofficial

CS estimates.) 46
 Computer Software (cont’d)

Best Prospects :

Smartphone
applications, security,
SaaS(*), Smart Grid,
Cloud Computing

(*)Software as a
Service
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 Computer Software (cont’d)
Key Elements to launching in the
Japanese market :
a) Localization : translation,
testing, customization
b) Support Capability : Japanese
language support is mandatory
c) Products Quality : High quality
control is a very important
consideration for Japanese
users
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 Medical Equipment
(Millions of U.S. $)

• In 2008, imports
32,727
took 50% of the Market Size
21,688 (est.)

market.
19,530
• U.S. producers Imports
10,282

hold 60% share of

import, viz., Imports from 11,718
the U.S. 6,169 (est.)
accounted for 30%
of Japan market. 0 5,000 10,000 15,000 20,000 25,000 30,000 35,000

2008 2009
(estimate)

(Source: Ministry of Health, Labor and Welfare. CS Japan)

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 Medical Equipment (cont’d)
Best Prospects :

For chronic and life-

style diseases,
medical devices
alleviate pain,
complement lost
functions, improve
quality of life.

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 Safety and Security
(Millions of U.S. $)
• The number of crimes
has decreased since Market Size 6,192.2

2003. However, 5,922.7

Nikkei survey shows

75% of public had Imports
619
592
concerns about
security.
Imports from n/a
• Market for IP-based the U.S. n/a
surveillance
equipment continues 0 1000 2000 3000 4000 5000 6000 7000

to grow strongly 2008 2009

(estimated)

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(Source: Fuji Keizai)
 Safety and Security (cont’d)
Best Prospects :
• Biometric-related solutions
• Drug/explosive detection
equipment & systems
• Personal/container screen
systems
• Nuclear/biological/chemical
preparedness equipment and
medicines

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Furniture

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 Furniture (cont’d)
• Japan is 3rd largest Best Prospects :
importer of NC
furniture after
a) Compact and high-
Canada, and Saudi end, medium-high
Arabia. furniture
(Area of average
• Largest importer of Japanese house :
NC Mattress 900 sqft. Vs. U.S.
• 2nd largest importer of house : 2,300 sqft.)
NC Wood furniture b) Unique furniture

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Kennedy Rocker

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 Bottom Line
• World’s second
largest market
• Open business
climate with
transparency and
rule of law
• Resources ready to
assist your firm in
entering the market

The Japanese market is one of the most competitive

in the world. But if you find success in Japan, you
can use Japan as gateway to Asia. 57
 Tips for successful entry
Tips
Preparation On Paper
before contacting potential partners

• Prepare written company information

●Company profile including company history
　 ● Profile of president
●Sales/Statistics (incl. paid-in Capital)
●Your objective
• Product/Service information
　 ● Emphasize positive aspects such as 　
　 Uniqueness, Originality
●Domestic Market Successes (Track Record)

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 Tips for successful entry (cont.’d)
Tips
Attitude aimed at success

• Communicate in simple English and

quick follow-up
• Stress uniqueness of Product
• Have patience with ”Trial and Error”
• Be flexible
• Keep schedules, promises,
commitment is key 　
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 Tips
Most Common Mistake
Made
by Foreign Partners
• “Cold calling” prospective buyers in
Japan
• The Japanese prefer to do business
with someone only when they have
been properly introduced
• Rely on an introduction by a “go-
between,” such as the North Carolina
Department of Commerce
representative in Tokyo
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 What can the NCDOC Tokyo
Office do for you?
• We work seamlessly with ITD BDMs
(Business Development Managers) to
provide you with
– Market research
– Basic Translation services
– Temporary office space in central downtown
Tokyo location
– Trade show assistance
– Logistics/lodging assistance
– “Fast Track” partner search services
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 How does Fast Track work?
• Market research
• Partner profiling and screening
• Introduction to potential partners
• Scheduling of face-to-face meetings in
Japan
• Basic translation of marketing
collateral for business meetings
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 Where to start?
• Contact International Trade Division, NC
Department of Commerce
BDMs ( Business Development Managers)
tel. 919-733-7193
http://www.nccommerce.com/en/BusinessServi
ces/InternationalBusiness/InternationalTradeSe
rvices/

• Contact Sumio Shibata, NC Trade

Representative in Tokyo
[email protected]
tel +81-3-3435-9301
fax +81-3-3435-9303 63
Thank you very much

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