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					Doing Business in Japan
2010 Road Show Presentation




         Presented by Sumio Shibata
                                            1
     State of North Carolina Japan Office
2
3
4
5
GDP in 2009
Japan $ 5,095 billion
China $ 4,909 billion
(Source: Nikkei 1/21/10)
                           6
7
8
         Real GDP Growth Overview
                              Japan         USA                                              Japan         USA

4                                                                  10.0
          3.1     2.7   2.1                           2.7    2.4
3                                                                                                                              5.6
2
                                                                                             6.0
                                                             2.2    5.0
         1.9    2.0     2.4                            1.7                                                2.2
1                                                                                                                              3.8
                                      0.4
0                                                                   0.0
                                        △ 2.4
-1                                                                                        △ 0.7                 △ 0.6
                                                                           △ 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(*)      Jan-Mar      Apr-Jun      Jul-Sep            Oct-Dec
     (*) IMF world Economic Outlook Update Forecast 1/26/10                                        2009

                                                                                                                           9
 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
                                              11
 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
                                            12
                 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)

                                 14
         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
                         15
                        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.
                                                                            16
(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)




                                          18
           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)
                                                   19
クリスピー・クリーム in Tokyo
    NC Investment in Japan




                             20
   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

                                                                                                        21
  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)
                                             22
   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

                               24
    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
                                                                   25
   Biotechnology/Pharmaceuticals
Key market segments for (cont’d.)
  Biotech
 Medical Care
 Food
 Bio Tool & Information
  (Bioimaging analysis
  equip., DNA Chips,
  Protein/Gene Analysis
  Equip)
 Environment & Energy
                                    26
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 46.5(8.2%)                      1 dollar = 109.64 yen 1 euro = 136.97 yen



          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

                                          566.1 billion
        Britain
      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



                               29
                  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.
                                                 30
(The Ministry of Economy, Trade, and Industry)
           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
                                                     33
                    Applications
                  Measurement
                                                25
                   Instruments
                                                                                       31
                                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           32
    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
34
35
            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>

                                                                           36
(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
38
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.
                           (Source : Nikkei April 5, 2010)
  Consumption dropped
                                                         41
  1.1% in 2009
          Senior Market
                      (cont’d)
• Promising market
  for, Medical
  care/welfare
   & services
   Leisure products
   Home remodeling
   Travel
   Pet products
                                 42
 Opportunities for NC Exporters

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



                              43
                                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.)

                                                     45
             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
                                47
      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
                                     48
           Medical Equipment
                                                                             (Millions of U.S. $)

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

  market.
• U.S. producers
                                                                    19,530
                          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)
                                                                                            49
 Medical Equipment (cont’d)
Best Prospects :

 For chronic and life-
style diseases,
medical devices
alleviate pain,
complement lost
functions, improve
quality of life.

                              50
               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)
                                                                                        51
                                               (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
                                   52
Furniture




            53
            Furniture (cont’d)
• Japan is 3rd largest       Best Prospects :
  importer of NC
  furniture after Canada,   a) Compact and high-
  and Saudi Arabia.           end, medium-high
                              furniture
• Largest importer of         (Area of average
  NC Mattress                 Japanese house :
• 2nd largest importer of     900 sqft. Vs. U.S.
  NC Wood furniture           house : 2,300 sqft.)
                            b) Unique furniture

                                                 54
55
Kennedy Rocker




                 56
  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)

                                                 58
    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
                                             59
                                           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
                                              60
       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
                                               61
    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
                                    62
             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/InternationalTrade
     Services/

• Contact Sumio Shibata, NC Trade
  Representative in Tokyo
        info@nctokyo.com
               tel +81-3-3435-9301
              fax +81-3-3435-9303               63
Thank you very much




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