Introduction
Japan is one of the biggest world economies like the United States, China, and Great Britain. It is actually the 60th largest country in the world (McCargo, p. 8). It has a total area of 377,835 km2. (p. 8). Japan is an Asian country that counts China, North Korea, South Korea, and Russia as its closest neighbors. It is an archipelago which is composed of 6,852 islands (McCargo, p. 8). Its four major and largest islands are Honshu, Hokkaido, Kyushu and Shikoku. All these consist about 97% of its total land area. Its total population as of 2010 is estimated to be more than 127 million (p. 9).
The country has a diverse climate, with tropical weather in its Southern region and cool temperature in its Northern side. Japan has three seasons: summer, monsoon and winter (p. 9). Japan is known to be sitting in the earthquake belt and so, it experiences an average of 1500 earthquakes annually (p.9). It is also called the land of tsunamis and volcanoes.
Being one of the largest economies around the world, Japan is a very attractive foreign market. It mainly imports its energy and food resources. Japan has the most important Fortune 500 companies that are principally involved with manufacturing, exporting and trading (Foreign Affairs and International Trade Canada, p. 1). They are the base resources for most manufacturing supplies in Asia and the world. Japan also invests heavily in scientific research and development. It has commercialized most of its scientific discoveries. Globally, Japan is known as a market leader in applied technology and advanced manufacturing, design, among others (p. 1). It is also number one in energy conservation and environmental technology, digital electronics and nanotechnology, hybrid cars, specialized steel, machines and robots. However, it remains a complicated and protected foreign market. There are various market barriers, especially in its agricultural and forestry products (p. 1).
Socio-cultural Background
Many Japanese businessmen know how to interact with people from other cultures. Yet, they maintain their conservatism and restrained. They expect to be understood in their own ways (Katz, p. 1). Hence, one needs to know their social norms and general culture.
Japan’s culture is very group-oriented. They value the sense of belongingness more than their own individualistic preferences (p. 1). They often conform to social norms and maintain balance and harmony in their relationships. They are very loyal to their own groups. For the Japanese, it is highly important that they establish lasting and trusting relationships. While foreign cultures may expect a good relationship to come in handy over the business negotiation process; most Japanese expect to develop a firm relationship first before any business deal closing. (p. 2)
The country’s national language is Japanese. They have a difficulty speaking and understanding English and hence, it is best to send business proposals prior and during business negotiations. Otherwise, there is a good use for an interpreter. The Japanese usually speak gently and quietly. They show politeness, gentleness and emotional restrained in speaking (p. 3).
Political Background
Japan is a constitutional monarchy with a parliamentary form of government. They also exercise suffrage through a secret ballot for all their elective offices. Just like a republic, their national sovereignty reigns in their people. The Emperor stands as its state symbol. They also have two legislative bodies namely the House of Representatives and the House of Councilors. The executive body is governed by a cabinet which is composed of a prime minister and ministers of state. Their prime minister and elected by his co-ministers. He has the power to appoint and remove ministers. The judicial body is an independent entity in the Japanese government (p. 19). Their local government is composed of forty-seven prefectures, with each respective governor, legislature and administrative functions. A prefecture is divided into cities, villages and towns (p. 19).
In June, 2010, Japan experienced a national political issue when Prime Minister Yukio Hatoyama and DPJ Secretary-General Ichiro Ozawa both resigned. The main reason was the political finance scandal which disgusted the public. The new Prime Minister Kan was sworn. The latter’s popularity also experienced a downfall during the 2011 earthquake. In August, 2011, Prime Minister Kan stated his resignation after the Diet’s passage of reconstruction legislation (The CIA World Factbook, p. 1). At present, the head of its government is Prime Minister Yoshihiko Noda.
Economic Conditions
Japan is the world's largest economy after the European Union, United States and China. Its economic decline will really have a striking effect on the global economy (Amadeo, p. 1). It has been fighting recession in the last twenty years. In the 1990s, the Bank of Japan had brought down its interest rates to 0% to keep the value of its currency very low. This has made its exports competitively priced (p. 1). This stimulated foreign investments as investors borrow in the low interest yen to buy high yielding foreign currencies (p. 1). This has induced liquidity in the global marketplace.
Japan’s economy was greatly affected by the 2011 earthquake and nuclear power plant disaster. It was just recovering from a deep recession during this national crisis. It impressively rebounded in 2010, with a 3% increase in its GDP. This rate is its fastest growth in the last twenty years (p. 1). The economy was expected to further recuperate with its stronger exports to Asia’s leading economies when the nuclear plant exploded. It led to the devastating economy downfall as its major industry, manufacturing, weakened due to the said crisis (p. 1).
Aside from the power crisis, the Japanese economy is still overcoming the increasing prices of commodity, a shrinking pool of manpower and an ageing population (p. 1). The country is also challenged by a debt-to-GDP ratio of over 200%. Like the United States, Japan’s debts mostly sprung from its efforts to stimulate economic growth out of its 20-year deflationary period and recession (p. 1).
Global Relations
Being a major economic power globally, Japan maintains an extensive diplomatic relations with almost all of sovereign nations. It has been an active member of the United Nations since 1956. Japan’s foreign policy is geared towards promoting peace and prosperity for its people through its harmonious relationship with all the members of the United Nations (CIA World Factbook, p. 1). Japan is also the world's third largest donor of legal developmental assistance after the United States and France. It has donated US$9.48 billion in 2009 (Karan & Dick, p. 18). The Japanese economy is also vital to the United States. Historically, the Bank of Japan has been the largest holder of U.S. Treasuries (Amadeo, p. 1).
While maintaining its good relations with the United States, the country has also extended its diplomacy and cooperation with other nations. It has a good relationship with China. In fact, it has given a vital economic assistance to China in its various modernization projects. Japan also supported China’s membership in the World Trade Organization (WTO) (p. 1). In the last few years, however, the Chinese gas field exploration in East China Sea has resulted in a disagreement over the demarcation of the Japanese and Chinese maritime boundaries. This also ignites the country’s long-standing boundary disagreement with China and Taiwan over the Senkaku (Diaoyu Tai) Islands (p. 1). Japan maintains economic and cultural relations with Taiwan but it does not maintain a diplomatic relations with the latter.
In recent years, Japan has also pursued a more active foreign policy and has extended its ties with the Middle East, from where it gets most of its oil resources (CIA World Factbook, p. 1). In 2009, it has also become an active partner in global anti-piracy efforts off the Horn of Africa. Japan has also become active in its relations with Latin America. It has concluded its Mexican and Chilean negotiations on an Economic Partnership Agreement (EPA). Its economic involvement with its Asian neighbors is also increasing. Specifically, it has strengthened its economic partnerships with Brunei, Indonesia, Malaysia, Philippines, Singapore, Thailand, and Vietnam (p. 1).
Business Outlook
Various trade opportunities exist for foreign businesses in Japan. Aside from the North American countries, Europe is also a very significant market for Japan. Japan stays as a general major trade partner of the European Union. Japan and Japanese business have been pursuing more economic ties and free trade agreement with various economies.
Foreign trade remains the center of Japan’s economy. It imports fuel, foodstuffs, industrial raw materials, and industrial machineries. Japan imports raw materials and processes them before exporting them back, thus, enhancing the value of world production/output. Japan’s exports are varied, with cars representing its leading export product to Australia, the United States, Canada, Germany and the United Kingdom. It also exports office machineries, scientific and optical equipment. South Korea, China, and Taiwan are three of its major export buyers of Japanese steel. Meanwhile, South Korea and Southeast Asian countries remain its primary buyers of plastic materials and fertilizers. Japanese woven fabrics are mainly exported to China, the United States, Hong Kong, and Saudi Arabia. Japan rarely exports food items. Most of its commodity exports are manufactured products. It composes of about 15% of the world's total manufactured exports (p. 1).
At present, Japan plays a competitive role in the global market, trade, even if it still protects and secludes most of its industries, especially agriculture. The total value of its imports is US$636.8 billion (p. 1). Its main imports commodities are machinery and equipment, fuels, foodstuffs, chemicals, textiles, raw materials. Most of its trading partners include China (22.2% of its total imports), U.S. (10.96%), Australia (6.29%), Saudi Arabia (5.29%), UAE (4.12%), South Korea (3.98%), and Indonesia (3.95%) (p. 1).
The U.S. government continues to work towards improving its trade engagement with Japan, through its government as well. The U.S. urges Japan to remove several trade barriers through various fora such as the United States-Japan Economic Harmonization Initiative and the United States-Japan Trade Forum (Amadeo, p. 1).
Works Cited:
Amadeo, Kimberly. Japan's Economy: How the Fourth Largest Economy Affects the U.S. and the World. May 16, 2012. About.com Website. Accessed on 22 July 2012 < http://useconomy.about.com/od/grossdomesticproduct/a/Japan_Recession.htm>.
CIA World Factbook. East and Southeast Asia: Japan. 2012. Accessed on 22 July 2012 < https://www.cia.gov/library/publications/the-world-factbook/geos/ja.html>.
Foreign Affairs and International Trade Canada. “Seizing Global Advantage: Japan – Global Commerce Strategy Priority Market.” Foreign Affairs and International Trade Canada Website. Accessed on 22 July 2012 < http://www.international.gc.ca/commerce/strategy-strategie/r10.aspx?view=d>.
Karan, Pradyumna Prasad; Gilbreath, Dick. Japan in the 21st century. 2005. Kentucky: University Press of Kentucky.
Katz, Lothar. Negotiating International Business, 2nd ed. 2007. South Carolina: Booksurge Publishing.
McCargo, Duncan. Contemporary Japan. 2000. London: Macmillan.
