In my previous letter I looked at two trends in Japan that may turn into “hot’ opportunities for those outside the country. Here are two more trends that will provide opportunities for an entrepreneurial soul.
On a year-on-year basis, Japan’s exports plummeted 46 percent at the start of 2010. This was the greatest fall ever recorded. The resulting trade deficit was about A$12 billion, the largest ever recorded. In part, this collapse was led by a 69 percent decrease in demand for Japanese automobiles. While there is no way to cast this in a good light, for some there could be a silver lining.
While Japan has famous international export brands — such as Toyota, Sony, Honda and Panasonic — these companies enjoy their international standing largely thanks to Japanese government programs established after the Second World War. A larger view shows that most Japanese companies prefer to stay in the domestic market and, as a result, there are few new companies with strong international profiles.
However, the recession is changing attitudes where the hassle of dealing with foreigners and foreign payments has been overcome by the need for cash. The result: interest in export sales is surging. The most nimble of the new wave of Japanese companies arose in 2007-2009 when China started opening up to Japanese exports. Accelerating this, increasing trade volumes have seen freight prices between these countries falling substantially.
Among the products being sold abroad are Japanese processed foodstuffs, fruit and even some manufactured goods in the small to mid-size range. This is set to continue with companies like Alibaba.com (a big B2B web trading site in China) doing a deal with Japan’s Netprice in which Netprice will help Japanese sellers to get their goods to China by handling language and logistics.
For Alibaba, the Chinese now perceive the health and safety of Japanese food and consumer goods as being superior and hence worth the extra cost and inconvenience of sourcing from Japan.
Overall, growth should be strong, with Netprice forecasting to have 500 Japanese small and medium-sized companies selling under its system by April 2010.
Right now there are Japanese consumer goods chains searching for distribution and retail partners in Australia. Alternatively, consider setting up an Alibaba-like operation in Australia to work with the Netprices of Japan.
Japan’s food self-sufficiency rate was 73% in 1965 falling to 37% in 1993. The rate held around 40% from 1998 to 2007 and slowly crept up to 41% in 2008 (compare this with 128% for the United States and 70% for Britain in 2003). At the national level, the goal is to return to 70% self-sufficiency. Add to this heightened consumer demand in Japan for ‘safer’ food and greater uniformity in appearance of the food and you have the start of a new trend in food production.
A number of small regional businesses have kicked this off by building facilities to increase vegetable production. These companies include Murakami Farm Co, a producer of sprouting seeds such as radish and broccoli; Nippon Noen Co, a producer of salad vegetables; and Fairy Angel, a producer of lettuce.
These vegetable factories are able to control the indoor environment and closely track nutrient amounts to grow vegetables without the use of fertiliser. Most of the effort so far has been made by smaller businesses that have developed expertise setting up 50 or so factories. Now larger companies are looking to vegetable factories to meet their consumer demands, which will greater accelerate activity in this area.
Opportunities to supply Japan in an area of national priority exist for companies able to provide technological advances in vegetable factory control systems and nutrient products or expertise to increase the capability, capacity and efficiency of indoor vegetable production facilities in Japan.
Jon Sparks is an Aussie entrepreneur and long-term resident of Japan, where he has founded, grown and sold two businesses. He also helps Australian entrepreneurial businesses build relationships and enter the Japanese market, ensuring that they don’t make the same mistakes he made. http://sawayaka.biz