Japan

After a 250-year dictatorship, which brought stability to Japan, the country signed an agreement with the U.S. in 1854 and started industrialization. Between the late 19th and early 20th centuries, Japan took over Korea and southern Sakhalin Island; by 1937, Japan occupied China, and launched an attack against the U.S. in 1941. Now, with a recovered economy, and a friendship with the U.S., the Japanese emperor promotes national unity while the politicians and bureaucrats have all the power. Although the economy encountered some troubled times in the 1990s, it is still strong.

Main Airports

(Osaka) Kansai International (KIX) (Kansai), Fukuoka International (FUK), Tokyo Narita Airport (NRT) (Narita City)

U.S. Embassy

10-5 Akasaka 1-chome, Minato-ku, Tokyo (107)
tel. 81-3-3224-5000
http://tokyo.usembassy.gov/

Statistics

GDP: purchasing power parity:

$4.018 trillion (2005 est.)

GDP - real growth rate:

2.7% (2005 est.)

GDP - per capita: purchasing power parity:

31,500 (2005 est.)

Inflation rate (consumer prices):

-0.3% (2005 est.)

Labor force:

66.4 million (2005 est.)

Exports:

$550.5 billion f.o.b. (2005 est.)

Exports - partners:

US 22.9%, China 13.4%, South Korea 7.8%, Taiwan 7.3%, Hong Kong 6.1% (2005)

Imports:

$451.1 billion f.o.b. (2005 est.)

Imports - partners:

China 21%, US 12.7%, Saudi Arabia 5.5%, UAE 4.9%, South Korea 4.7%, Australia 4.7%, Indonesia 4% (2005)

Population:

127,463,611 (July 2006 est.)

Population growth rate:

0.02% (2006 est.)

Population Below Poverty Line:

NA%

Major Industries:

among world's largest and technologically advanced producers of motor vehicles, electronic equipment, machine tools, steel and nonferrous metals, ships, chemicals, textiles, processed foods

Employing Workers: 36*

Registering Property: 39*

Enforcing Contracts: 5*

Closing a Business: 1*

*2006 World Bank rank out of 175 countries

Starting a Business

The table below shows the number of steps and the amount of time needed to start a business, on average

Indicator	Japan	Region
Procedures (number)	8
Time (days)	23

Japan Risk Assessment

Country Rating

Rating: A1

The political and economic situation is very good. A quality business environment has a positive influence on corporate payment behaviour. Corporate default probability is very low on average.

Risk Assessment

Growth forecasts for 2008 have been revised down to 1.4 per cent. The yen appreciation in conjunction with the pronounced economic slowdown in the United States continues to impede export growth. Although continuing to make productivity gains companies have been struggling to stay price-competitive. The increasing cost of energy, certain raw materials, and transport has moreover been putting increasing pressure on their margins, particularly those of smaller companies.

In this context, companies will continue to exercise vigilance in their investment and hiring policies. Despite the scarcity of skilled labour, wages should only rise slightly with employees that go into retirement generally replaced by irregular jobs.


Those practises thus contribute to durably limiting the growth of household consumption, which represents 56 per cent of GDP. Households have been cutting back on spending as they necessarily focus on coping with soaring energy and food product prices, which undermine their purchasing power. With consumer prices only increasing slightly despite the upward pressure exerted by imported goods, the spectre of deflationary risk thus continues to loom over the Japanese economy. The fiscal deficit and the public debt remain at record levels with revenues at a virtual standstill amid the economic slowdown.


Japanese companies in general enjoy good financial health with good return on capital representing about 11 per cent of GDP, large cash flows, and their reliance on credit declining steadily as they reduce their indebtedness albeit with the residual debt nonetheless still high at 95 per cent of GDP. Companies should thus not suffer from a credit crunch even with the economic slowdown and high raw material prices undermining their profit growth (down 4.5 per cent in the 4th quarter last year. These positive factors — benefiting mainly large manufacturing companies — obscure the reality confronting smaller manufacturers. They constitute 99.7 per cent of Japanese manufacturing companies and, according to the Tax Commission, only one in three is profitable. Dependence on a single client has compelled many of them to steadily reduce their margins in recent years and to such an extent that, today, rising energy, transport, and raw material costs put them in jeopardy. The Japanese economic slowdown has particularly affected smaller companies located outside major metropolitan areas and focused exclusively on the domestic market. After declining for four years bankruptcies have thus been trending up again, primarily affecting smaller construction, retail, and service companies.

STRENGTHS

• A marked geographic adjustment of exports has reduced Japan's dependence on the United States.
• The current transactions surplus rests on the competitiveness of export industries in the car industry and electronics.
• Restructuring has allowed large banks and companies to consolidate their finances.
• R&D spending constitutes a strategic component of corporate medium-term industrial policy.

• The rapid ageing of the population has made public finance consolidation a crucial priority.
• Privileged ties between the political, civil service, and entrepreneurial worlds have impeded reforms.
• Social inequalities and regional disparities have tended to exacerbate household skittishness.
• The proportion of irregular workers has undermined wage growth.
• Small and medium-size companies are concentrated mainly in the services sector where productivity gains have been limited.

• Agriculture
• Apparel
• Arts & Crafts
• Automobile
• Bags, Cases & Boxes
• Chemicals
• Computer Hardware & Software
• Construction & Real Estate
• Consumer Electronics
• Electrical & Electronics
• Energy & Environment
• Food & Beverage
• Furniture & Furnishing
• Health & Medicine
• Home Supplies
• Industrial Supplies
• Lights & Lighting
• Machinery
• Mineral & Materials
• Office Supplies
• Security & Protection
• Service
• Sports & Entertainment
• Telecommunications
• Textile
• Toys
• Transportation