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Doing Business in Japan

The U.S. Commercial Service provides guidance on doing business in Japan and offers valuable assistance to help U.S. businesses exporting to Japan.

Why doing business in Japan?

As the world’s fourth-largest buyer of American products, Japan is a market that American companies should not overlook, but approach with a thoughtful strategy. Japan is a technology powerhouse, a “proving ground” for consumer requirements, and stands in the vanguard with respect to the sweeping changes recently seen in developed market demographics. Most U.S. state economic development agencies are also well aware of the important foreign direct investment coming into their communities from Japan. While the reasons U.S. firms engage with Japan are diverse, savvy firms recognize that underestimating the strategic and tactical importance of the Japanese market may disadvantage them not only in Japan, but in the United States and third-country markets as well.

Japan is back in the business news headlines in 2013, owing in part to a rising stock market, a sharply lower yen, and stirrings of domestic demand for both personal consumption and capital investment. The new economic policy linked to these developments is known as “Abenomics”-- a three pronged strategy of bold monetary loosening, fiscal stimulus centered on infrastructure spending, and growth-oriented structural reform. While the implications and ultimate success of this strategy in reigniting growth in Japan are far from certain, it has drawn considerable attention from U.S. businesses.

In April 2013 the U.S. and Japanese governments agreed on a package of actions and agreements that pave the way for the Obama Administration to support Japan’s participation in the Trans-Pacific Partnership (TPP). With Japan’s participation in the TPP, its members would account for nearly 40 percent of World GDP. Moreover, the liberalization expected to be required of TPP member countries may play an important role in promoting the domestic economic reforms likely to be called for under “Abenomics.”

While Japan has made significant steps toward economic healing following the tragic combined earthquake, tsunami, and nuclear incident of March 2011, there are lasting changes noticeable on various levels, including idled nuclear power plants.

Japan remains the world‘s third-largest economy, after the United States and China, with a GDP of roughly $5.8 trillion. Japan is the fourth-largest export market for U.S. goods and services, and our fourth-largest trading partner overall. In 2012 the U.S. exported $70 billion in goods to Japan. The United States runs a persistent trade deficit with Japan in merchandise, and a surplus in services.

Japan is the second-largest foreign investor in the United States, with more than $257 billion invested.

During 2012 the Japanese yen was stable against the dollar. However, the yen weakened appreciably in the first half of 2013. Even so, U.S. products remain competitive in Japan.

Japan's large government debt, which totals over 200 percent of GDP, persistent deflation, and an aging and shrinking population are major challenges confronting the economy.

In 2012, the top exporters to Japan were China, the United States, Australia, Saudi Arabia, the UAE, South Korea, and Indonesia. The top importers from Japan were China, the United Sates, South Korea, Taiwan, and Hong Kong.

The U.S.-Japan alliance is a cornerstone of U.S. security interests in Asia and is fundamental to regional stability and prosperity. The United States-Japan alliance continues to be based on shared vital interests and values. These include stability in the Asia-Pacific region, the preservation and promotion of political and economic freedoms, support for human rights and democratic institutions, and securing of prosperity for the people of both countries and the international community as a whole. Japan is one of the world‘s most prosperous and stable democracies.