Home > Highlighting JAPAN >Highlighting Japan January 2016>Opening the Doors to Overseas Businesses

Highlighting JAPAN

Deeply Invested in Japan

The foreign business community is bullish on Japan, drawn by elements such as the country’s highly educated and talented workforce, better corporate governance, strong legal and regulatory environment, stable government, solid transportation infrastructure, and the massive value of the market itself.

The October 2015 edition of the respected Foreign Chambers in Japan’s survey on business confidence—conducted since 2002 to identify perceptions of Japan’s economy in terms of growth and opportunity—revealed that 75 percent of the businesses responding from various countries’ respective chambers of commerce in Japan foresee further growth for their organizations in this country.

“There are numerous reasons that foreign businesses and investors find solid footing here,” says Jay Ponazecki, immediate past president of the American Chamber of Commerce in Japan (ACCJ), which was founded in 1948 to promote the flow of commerce between the United States and Japan. Considered Japan’s most influential foreign business organization, the ACCJ has over three thousand members, along with a thousand member companies, from over forty nations. One of its focuses is on advocacy related to foreign direct investment (FDI), corporate governance, labor mobility, healthcare and other regulatory issues.

“U.S.–Japan bilateral trade last year was valued at over US$200 billion, and our member companies conduct billions of dollars in commerce annually in Japan,” Ponazecki states. “Japan is still one of the world’s top three important markets, and a very competitive one. Trends and new products often start in Japan and then get introduced elsewhere in Asia. So the feeling is, if you can be successful here, you can be successful elsewhere in Asia.”

Ponazecki mentions a significant jump in the number of visits from U.S. government representatives and business delegations coming to Japan since last July. What’s drawing them?

“At the top of the list would be Japan’s highly educated, hardworking and talented workforce,” Ponazecki responds. “Superior engineering skills and patent portfolios also offer real opportunities to collaborate and help commercialize technology.

“Another draw is the maturity of the financial and investment markets,” she continues, “coupled with a strong legal and regulatory environment that gives investors predictability, which is a key. Equally important is Japan’s transportation infrastructure, and soft factors such as excellent international schools and cuisine, and that it’s one of the safest places in the world. The upcoming 2019 Rugby World Cup and 2020 Tokyo Olympics and Paralympics also mean that all eyes will be on Japan for the next several years.”

Prime Minister Shinzo Abe represents yet another key dynamic, according to Ponazecki. “Japan is a stable and reliable partner, and one with whom we have shared values—democracy, the rule of law, human rights and open markets.”

The Trans-Pacific Partnership (TPP) negotiations that concluded in October 2015 have also heightened interest overseas. “Abenomics has actually made progress in some key areas, particularly agricultural reform and corporate governance, ‘Womenomics’ and the corporate tax rate,” Ponazecki says. “The corporate tax rate and corporate governance are vital from an FDI perspective.”

The ACCJ expresses its opinions to both the U.S. and Japan through key advocacy initiatives, and offered some strategic inspiration about Japan in a 2010 white paper titled “Charting a New Course for Growth.” Most notable was advice on the country’s newly established Corporate Governance Code.

“M&A transactions produce most of the net increase or decrease in any country’s cumulative base of FDI,” says Nicholas Benes, who spearheaded the white paper. Benes runs a Japan-based M&A advisory boutique and the Board Director Training Institute of Japan, and has advised Diet members and the Financial Services Agency on the Corporate Governance Code after proposing it to them. “Better corporate governance encourages industry consolidation, spinoffs and sales of noncore businesses or divisions both domestically and to foreign buyers. This will result in more inward M&A opportunities.” 

According to Ponazecki, some hot areas are the services sector, financial services, healthcare (including medical devices, pharmaceuticals and regenerative medicine), tourism, ICT, cybersecurity and the Internet economy.

“There’s a lot of positive energy here,” Ponazecki notes. “If Japan’s domestic economy has favorable growth, it will create a virtuous cycle, pumping up demand for foreign goods and services, boosting investment opportunities in Japan as well as job and business growth opportunities abroad.”