The Abenomics economic plan has given Japan some new momentum
After suffering many years of economic stagnation and deflation, Japan has improved significantly with regard to dynamics and the willingness to reform since the launch of the “Abenomics” economic plan under Prime Minister Shinzo Abe. Damian Künzi, Senior Economist, Global Macro Research at Credit Suisse, explained: “If adjusted for population growth, Japan has even expanded faster than Germany since 2013, and three times faster than the Swiss economy. The labour market has improved significantly, and the unemployment rate is now at the lowest level since 1994. We expect the cyclical upturn to continue over the next two years, driven by moderate growth in private consumption, corporate investments and net exports. What’s more, the government has launched a fiscal stimulus program, which should also support growth over the period ahead. In fact, the economy is increasingly running into capacity constraints, but higher immigration remains a political taboo. Hence, the main feature of economic growth in Japan will continue to be “quality” – i.e. increased productivity – rather than quantity.”
The aging society also offers opportunities
The decline in population in Japan does affect private consumption, but the rapid increase in labor participation by women and rising real wages does however absorb this effect somewhat, added Künzi: “The aging Japanese economy also opens up opportunities in particular for Swiss pharmaceutical companies and the medtech industry. For example, the export of pharmaceutical products has more than doubled over the past 10 years, and currently accounts for 41% of all Swiss exports to Japan.”
Swiss quality products count, but they need to be tried-and-tested
If the quality and the niche are right, then products from other sectors are also clearly in demand, explained Stefan Barny, Senior Consultant Japan / South Korea at S-GE: “This includes Food, Cosmetics, Software and Machine Engineering. The USP is decisive; it needs to be a unique and exceptional product that has already been tested in another market, as the Japanese avoid risks.”
Significant demands on Swiss exporters
“In Japan, the customer is not king, but God. The Japanese do everything for their customers,” stressed Barny. This is something Swiss exporters are not used to: “SMEs need to be sure they have enough staying power.” If customers expect a return on investment in less than three years, they will be better off in another market, added Barny. Price and performance alone are not enough: Swiss companies must be able to guarantee top customer service locally, which means they will also need a local representative.
Japanese visual instruction in robot technology
Damian Künzi explicates: “The increasing labor shortage is acting as a driver for automation. Japan already has the third highest density of industrial robots in the world, after South Korea and Singapore, and the International Federation of Robotics expects the market to grow by 5% on average over the coming years.» In contrast to other countries, where automation is often seen as a threat, the Japanese government sees robotic technology as a strategic industry for the future, which is thus also being supported by the government, added Künzi. “The efforts to increase the utilization of robots in the work intensive health and care sectors appears to be particularly promising. For the Swiss machine engineering industry, the Japanese market therefore not only offers sales opportunities, but also an object lesson into where the journey could be going in relation to automation and above all robotics.”
“Sensor technology will be a central aspect in 2017”, added Barny: “Switzerland has a number of companies that are global leaders in this sector. We want to make them aware of the fact that world class technologies exist in Japan, and that Swiss products are more than capable of keeping up with them.”
Event “Impulses: The 4th Industrial Revolution in Japan”
During the S-GE event “Impulses: The 4th Industrial Revolution in Japan”from February 21, 2017, in Zurich, top ranking representatives from government and industry will be introducing the export market Japan and highlighting specific business opportunities in connection with Industry 4.0. During the networking event participants will also have the opportunity to exchange information and experiences with Swiss companies that are already successfully exporting to Japan. Ensure you meet the experts Stefan Barny from S-GE and Damian Künzi from Credit Suisse by registering now!
