Economic climate

The Japanese Government has spent several hundred trillion yen on economic stimulus packages in an effort to spur a recovery. However, the success of these packages is still in doubt as stagnation continues and Japan's banks continue to hold large non-performing loans.

Changes that are evidence of the 'new economy' emerging in Japanese business practices include:
High interest in IT-based solutions
Demand for innovative cost effective business solutions which can include imported product and services
Breakdown of traditional interlinked (keiretsu) business relationships
Introduction of business-to-business (B2B) and business-to-consumer (B2C) e-commerce ventures
Speeding up of the business decision making processes
Introduction of Western management practices

The prolonged economic slow-down  is causing fundamental changes in Japanese business practice, which will ultimately have a positive impact on demand for Australian goods and services. These changes are evidence of a 'new economy' emerging in Japan where companies are being forced by market pressures, including government deregulation measures, to change traditional business practices. Despite economic growth stagnation, the sheer tremendous size of the Japan economy and its regional markets will always present opportunity for Australia.

Key economic indicators and statistics for 2008:
GDP – US$4,844.4 billion
GPD per capita – US$37,940
Real GDP growth –   -0.3 per cent
Inflation – 1.9 per cent

Political climate

Although the Japanese Government has little direct involvement in the operation of the private sector, through its ministerial bureaucracies it maintains tight supervision of firms via regulation and mandatory administrative guidance. It manages industrial policy by directing various sectors into suggested areas of enterprise and facilitating their entry by providing seed money and research, technical and regulatory support.

Under the revised post-war Constitution of 1947, Japan adopted a Westminster form of government. The Diet (Parliament) consists of a popularly elected House of Representatives (Lower House 500 seats) and a House of Councillors (Upper House 252 seats).

There are three tiers of government – National, Prefectural (State) and Local. The key political parties are the:
Liberal Democratic Party
New Komeito
New Conservative Party
Democratic Party of Japan
Social Democratic Party of Japan
Japanese Communist Party

Trade relations and statistics

As a world economic power, second only to the USA, Japan remains an important and influential player in global and regional affairs. Japan's foreign policy is administered by the Ministry of Foreign Affairs.

Japan is an active member of the Asia Pacific Economic Cooperation (APEC) and the United Nations.

As the largest creditor nation in the world, Japan supplies Overseas Development Assistance (ODA) to many developing countries and actively participates in humanitarian programs worldwide.

The Japanese corporate trade network, particularly throughout Asia, is extensive and these connections potentially hold great opportunitities for Australian exporters particularly linked to Japan's ODA program.

Japan has traditionally been seen as a closed or difficult market to enter for foreign companies, and during the 1980s it was under considerable pressure (from the USA particularly), to open up its markets to foreign competition.

Acceptance of foreign imports is increasing as Japanese consumers demand greater variety and value for money.

At times, Japan's bi-lateral relationships with several Asian nations have been strained for historical reasons.  However, as the economies of many Asian countries are closely linked to their growing trade with Japan, concerted efforts by each government are assisting in building strong relationships for the new century in the Asian region.

Australia and Japan enjoy excellent relations built on more than 100 years of bi-lateral trade and exchange.

Japan signed a bilateral trade agreement - a Free Trade Agreement (FTA) with Singapore in October 2000.

Over the past decade, opportunities for Australian exports to Japan are heading increasingly through the massive regional markets of the Japanese economic - including the Kansai (Osaka area), as far north as Hokkaido, and the southern island of Kyushu.

Australia is one of only a handful of countries in the world that enjoys a trade surplus with Japan.

Commodities dominate Australia's exports to Japan but the mix is becoming increasingly diversified with processed foods and beverages, ICT-related products and services and other manufactures increasing.

Major Australian exports to Japan (2007-08):
Coal – A$10,946 million
Iron ore and concentrates – A$4,904 million
Beef – A$1,858 million
Aluminium – A$1,820 million

Major Australian imports from Japan (2007-08):
Passenger motor vehicles – A$6,957 million
Goods vehicles – A$1,695 million
Refined petroleum – A$1,059 million
Civil engineering equipment  and parts – A$829 million