Some of Canada’s biggest competitors are rediscovering Japan, which has made a major economic comeback. But one expert points out that Canadian firms have been slow to get back in the game.
“Canadian entrepreneurs may be preoccupied by the U.S. market and may be underestimatingopportunities in Japan—the very opportunities that American, European and Australian firms are pursuing,” says Patricia Bader-Johnston, President of the Canadian Chamber of Commerce in Japan and Director of Communication for IBM Japan.
Bader-Johnston notes that the Japanese market is bigger than China and India combined and that Tokyo alone is home to 52 Fortune 500 companies, twice the number located in New York, London or Paris.
Peter MacArthur, Senior Trade Commissioner at the Canadian Embassy in Japan, agrees. “If Canada is to really succeed in reaching higher levels of innovation,
productivity and competitiveness, it must catch the Japanese wave.”
According to a recent report from the Economist Intelligence Unit, the strong growth Japan recorded between 2003 and 2006 suggests that the worst of the country’s problems are now past. Although economic growth in this period was partly driven by strong Chinese demand for Japanese capital goods and components, domestic demand was also more robust.
MacArthur says that recent economic reforms together with the renewal of Japan’s important role as a trade and investment hub have made this sophisticated market more attractive for foreign companies—and firms from the U.S., Europe and Australia are capitalizing on opportunities in Japan that Canadian firms could be pursuing.
The worst of Japan’s economic problems are now past, says the Economist Intelligence Unit.
For example, Canadian trade officials say opportunities in the aerospace and defence sector are huge. Japan ranks second in the world in defence spending and it has shifted from licensed domestic production to international competitive bidding to meet its defence needs.
Canada is well-placed to capitalize on these opportunities, as Canadian aerospace and defence sales are very strong; Japan both purchases Canadian aircraft and supplies Canada’s aerospace industry with components.
The same is true in the agri-food sector, where Japan imports some 60% of its products. Trade officials say some of the greatest opportunities are in value-added packaged food and beverages, fish and seafood products, functional foods and
nutraceuticals, healthy ingredients and pet foods.
Building products are also in great demand. According to trade officials at the Canadian Embassy in Tokyo, Japan is Canada’s biggest overseas market for forest products. Canadian small and medium-sized enterprises have the building products to meet strong demand in energy efficient and healthy building construction, the renovation sector and seniors housing.
Trade officials also note that Japan is a leader in digital electronics, wireless technology, nanotechnology, robotics and advanced manufacturing. They also point out that other important sectors where opportunities are very promising include bio-industries, consumer products, health and environmental industries.
Japan, the world’s second-largest economy, is also one of the top three global centres for science and technology and R&D. In fact, the Economist Intelligence Unit assessed Japan as the world’s most innovative country.
“Some of the world’s leading research universities in Japan are increasingly sharing discoveries with industry as high-tech clusters emerge,” says MacArthur.
Bader-Johnston also points to Japan as a key investment partner. By conservative estimates, she says that thousands of Canadian jobs flow directly from existing Japanese direct investment in Canadian import and export capacity.
Thousands more are generated by Canadian merchandise exports from over 3,000 firms, mostly SMEs. In a typical month, Canadian exports of goods and services to Japan total $1 billion. In fact, both MacArthur and Bader-Johnston note that there is scope to create even more jobs around products appropriate for an advanced, post-industrial and premium market like Japan.
But while its domestic market is massive and potentially lucrative, Japan is also an effective springboard to other markets.
“In an era of global and regional supply chains, Japan can increasingly function as Canada’s gateway to Asia, just as Canada can serve as Japan’s gateway to the U.S. In fact, Japan is a dominant commercial player in emerging economies—particularly China, India and ASEAN— but it also has people-to-people links to Brazil,” says MacArthur.
So where can Canadian entrepreneurs go for help?
MacArthur says they can call the Canadian Trade Commissioner Service in Japan, which operates from Tokyo, Nagoya, Hiroshima and Sapporo.
“We are here to help Canadian firms that have already demonstrated commitment and capability in the U.S. markets to tackle the complex Japanese market and its inherent challenges. For example, crossing cultural and linguistic barriers can be tough but our knowledge and networks can help,” he says.
“It usually takes around three years of patience and persistence to make a breakthrough but once you do, Japan can be very rewarding and we have many examples of this happening,” says MacArthur.
From developing contacts and troubleshooting to gathering market intelligence and providing on- the-ground advice, Canadian trade commissioners can help entrepreneurs take advantage of opportunities in Japan—opportunities that MacArthur says Canadian firms are ready to pursue.
For more information, contact:
Peter MacArthur
Canadian Embassy in Japan
Website: www.infoexport.gc.ca/jp
Did you know that Japan…
…as the biggest exporter to China, is
the only G7 country enjoying a trade
surplus with “the world’s workshop?”
…is currently enjoying the longest
period of uninterrupted economic
growth since the war?
…is the investment source of over 550
subsidiaries and affiliate companies
employing thousands of Canadians?
…is our biggest offshore market for coal
and many agri-food and wood
products?
…is where over 60 Canadian high-tech
firms have established a presence,
many in software?
…has bought scores of Canadian-made
aircraft and related technology?