CURRENT BUSINESS SITUATION

With a population of approximately 127 million, Japan is characterised by

consumers with high levels of disposable income and companies with a strong
global orientation and willingness to invest in sustainable, long-term products
and services.
Japanese buyers are drawn to premium, high-end goods and services offering
higher returns on trade investment. Japan has made a name for itself as a nation
of quality and innovation and has staked its future on this value proposition.
Along with this comes a strong commitment and loyalty to business partners,
once acquired.
The mainstream of the Japanese economy remains cashed up, both in terms of
individual savings and liquidity and in terms of corporate balance sheets. Japan is
now faced with the dilemma of how best to utilise its significant assets in
uncertain times. Many hope that the early positive results of Abenomics (the
economic stimulus reforms introduced by Prime Minister Abes LDP government)
may jolt the country back into growth.
The Japanese are showing resilience and often demonstrate a stronger
predilection for change under pressure. Understanding where and how changes
will lead to new opportunities for Australia is both a challenge, but also a unique
window of opportunity.

BUSINESS CULTURE

Business etiquette and practices are important. The Japanese are extremely
polite and place importance on respect and social rank. You may be showered
with elaborate compliments while your host remains humble and plays down
their achievements. Australians who show modesty will be well regarded by
Japanese people.

While business meetings during the day can seem to be slow and often skirting
key issues, night time drinking and dinners are often the time when more useful
information is fed back to you. The Japanese equate being indirect with being
polite, so starting a business meeting with small talk will help to get the
meeting off to a good start. Australians can misunderstand this indirectness and
interpret it as indecisiveness or non-commitment from the Japanese side. In
these situations, it pays to be patient.

English is not widely spoken in business and government, with some exceptions,
such as in trading companies. If a meeting is conducted in English, be sure to
speak slowly and clearly and do not use Australian idiomatic expressions or
humour. Meetings in English are rare and an interpreter is generally required.

Punctuality is a must and it is usual to arrive at a meeting at least five minutes

before the appointed time. In the event that you are running late, it is polite to
call ahead to advise the approximate time of arrival. All appointments should be
arranged with companies prior to your arrival. It is inappropriate to take friends,
spouses or children to business meetings and it is also not common for spouses
to be invited out for business dinners.

Product brochures and a company profile should be taken with you when you
visit a Japanese company for the first time.

Business meetings invariably begin with the exchange of business cards and are
given and recevied in both hands and laid respectfully on the table. Do not place
the card in your pocket or write on it. If time allows, have your business cards
printed with your name and company name in Japanese, but not your business
address as it is meaningless.

Breakfast meetings before 9.00am are not usually possible, although meetings
after 5.00pm are more common. Most large companies will not meet on
Saturdays but some medium to small sized companies will accept meetings on
Saturday, although this should not be taken for granted.

Seating arrangements are used in formal business meetings. The most important
guest sits furthest from the door and the host sits closest to the door. If in doubt,
wait to be seated or ask where you should sit.

Gifts are not necessary and it is inappropriate to offer expensive gifts,

particularly on first meetings. Small gifts, such as company pens, can be
presented once business is ready to commence or has commenced. It is
generally considered impolite to open gifts in front of the giver.

Japanese people also try hard to avoid open conflict and so may answer
ambiguously or even agree to an offer that they have no intention of accepting.
One productive way of solving this problem is to prepare a brief, but clear memo
describing the situation and obligations of both parties and present it as a record
of the meeting. This will test the Japanese sides position on the issue as they will
be forced to respond.

SETTING UP IN MARKET

The Japan External Trade Organisation (JETRO) provides an overview of the laws,
regulations and procedures related to setting up a business in Japan, as well as
an easy-to-follow flowchart outlining the basic steps and a model case which
shows approximate start-up costs.

JETRO is a Japanese government-related organisation that works to promote

mutual trade and investment between Japan and the rest of the world.

The Australian and New Zealand Chamber of Commerce in Japan (ANZCCJ) is

another source of information and contacts for businesses looking to set-up in
Japan.

The Tokyo Metropolitan Governments Business Development Center offers an

information service for foreign companies and entrepreneurs who are already
operating in or are considering establishment of a business base in Tokyo.

BANKING AND FINANCE

Japan is a mature market economy with a well-developed and sophisticated

banking and financial system and the total financial assets were estimated at
A$17 trillion (Source: Nomura Research Institute, Japan's Asset Management
Business 2013/2014). Three mega financial groups Mitsubishi UFJ (MUFG),
Sumitomo Mitsui (SMFG) and Mizuno FG dominate the banking sector. These
financial groups are comprised of retail banking, trust banking, investment
banking and asset management related businesses.

There are over 100 major regional banks, with total loans of JPY218.3 trillion and
total deposits of JPY296.9 trillion (Source: Japan Bankers Association, Bank
deposit and loans report (Japanese)). Yokohama, Fukuoka Financial Group, Chiba,
Hoku Hoku Financial Group (Hokuriku and Hokkaido) and Shizuoka are the top
five regional banks in terms of assets.

Some of the major foreign banks active in the market:

Bank of America
Barclays
Credit Suisse
Deutsche Bank
Goldman Sachs
HSBC
Societe General
Commonwealth Bank
National Australia Bank
ANZ.
Other major Japanese financial institutions include general insurance, life
insurance, investment banks, asset managers and investment advisors.

LINKS AND RESOURCES

Government, business and trade

Japan External Trade Organization

Ministry of Economy, Trade and Industry
Ministry of Finance
Ministry of Foreign Affairs
Ministry of Internal Affairs and Communications

Australian and New Zealand Chamber of Commerce in Japan

DFAT Smartraveller
DFAT Japan Information

Banking, other financial institutions and associations

Japanese Bankers Association

Regional Banks Association of Japan
The Second Association of Regional Banks
International Bankers Association
Trust Companies Association of Japan
The Commodity Futures Association of Japan (Japanese only)
The Financial Futures Association of Japan
Foreign Non-Life Insurance Association of Japan
The General Insurance Association of Japan
The Investment Trusts Association, Japan
Japan CTA (Commodity Trading Advisors) Association
Japan Financial Services Association (Japanese only)
Japan Securities Dealers Association
Japan Securities Investment Advisers Association
Japan Venture Capital Association
The Life Insurance Association of Japan
Japan Private Equity Association

News and media

Japan Times
Asahi Shimbun

Japan Today
News on Japan
Metropolis