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Japan became Australia’s largest trading partner in the early 1970s and maintained this position for 26 years. Although it became our second largest export market in 2009-2010, the economic relationship between Australia and Japan remains vital, supported by complementary strengths, needs and opportunities.
Japan has a highly industrialized market economy, the third in the world (GDP at market exchange rates). It views Australia as a safe, secure and reliable food supplier, a source of energy and mineral resources, and a world-class center for financial and other services.
Our Asian neighbor is an attractive market for Australian exporters as Japanese buyers are drawn to high-end premium goods and services with higher returns on investment.
âJapan has made a name for itself as a nation of quality and innovation and has built its future on this value proposition,â said Mr. Brett Cooper, Managing Director of Austrade, North East Asia. âThis comes with a strong commitment and loyalty to business partners, once acquired. “
The Australia-Japan Free Trade Agreement (JAEPA), which entered into force six years ago, has allowed many Australian products to benefit from zero tariff treatment upon implementation, while other tariffs are gradually reduced from year to year.
âOnce JAEPA is fully implemented by 2034, approximately 98% of Australia’s merchandise exports to Japan will qualify for preferential access or enter duty-free,â Cooper said.
âThe JAEPA also provides Australian service exporters with treatment equivalent to the best that Japan has agreed with any other trading partner. There are also benefits for Australian financial service providers, law firms, education providers, telecom providers, professional services firms (including architects, engineers and accountants), innovators and the creative industries. The Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), which entered into force on December 30, 2018, also allowed significant tariff reductions on a range of products.
According to Copper, Japanese investments extend beyond traditional fields of natural resources and touch sectors such as financial services, infrastructure, information and communications technology, real estate, food. and the food industry. JAEPA will further stimulate Japan’s diversified and growing investment in Australia, generating job growth, including in regional Australia.
Emerging opportunities for Australian exporters
With a shrinking population, Japanese companies continue to seek growth opportunities abroad. It positions itself as the standard bearer of free trade, an open international economic order and quality infrastructure standards.
Prime Minister Suga announced that priority areas for his government include economic recovery, digitization and government reform, data protection and revitalization of rural areas in Japan.
Some emerging areas of opportunity identified by Austrade include:
âWith the growing popularity of grains, opportunities exist for Australian grain exporters offering healthy and functional grains,â says Cooper. âFor example, BARLEYmax, which was developed by CSIRO over a decade, contains twice as much total dietary fiber and four times as much resistant starch as regular barley. Since Japan started importing BARLEYmax, it has been used in many products, including noodles.
“Disease prevention through diet and without the use of drugs is gaining popularity in Japan, so there is an opportunity for Australia to collaborate on R&D in this area.”
Food and drink
Japanese consumers are open to new, innovative and unique value-added products and always have a strong appetite to try new products that offer good value for money. Unique value-added products are those that use unique ingredients, packaging and / or manufacturing methods.
âThe demand for food and drink products with healthy attributes is growing rapidly, with increased interest in disease prevention from Japan’s aging population,â said Cooper. âCOVID has also increased consumer interest in strengthening the immune system.
âProtein has spread its popularity to consumers in general, and the demand for ‘protein’ added to food and drink is emerging. The market, however, is quite competitive and the Japanese preference for differentiation, taste and competitive price should be taken into account.
âPlant-based food and drink products are another area of ââgrowing demand. This has been influenced by global population growth, sustainability issues and the concerns of some consumers regarding the impact of the livestock industry on the global climate.
Japanese consumers are increasingly interested in alternative meats, with around 20 percent of people in Japan now saying they have tried plant-based meat, largely due to awareness of their health and its low in calories.
Another trend in Japan is the growing demand for alternative milk. Almond milk, rice milk, and macadamia milk have become staples in supermarkets recently, and now oat milk is hitting the shelves as well.
Health and Medical
COVID-19 has increased opportunities in the healthcare industry and accelerated social acceptance of online healthcare. The government has relaxed regulations regarding the provision of remote health services. As a result, Australian companies have more and more opportunities in digital health related products and services, such as medical sensing and measuring devices to enable remote consultations.
Mr. Cooper says clinical trials are another area of ââopportunity, and Australia has world-class capabilities in this area.
“Like other countries, Japan has seen the spread of COVID delay its clinical trials unrelated to COVID,” he explains. âIn contrast, Australia was one of the first countries in the world to be able to resume clinical trials unrelated to COVID. This showed the value of the high quality clinical trial services Australia can provide to pharmaceutical and medical device developers in Japan. “
Clean energy and technology
One of Australia’s biggest opportunities is in the clean energy and tech space.
Last October, Prime Minister Suga pledged Japan to become carbon neutral by 2050, and Japan has now also pledged to reduce its CO2 emissions by 46% by 2030. In addition, by the end of 2020 , a roadmap has been published by the Japanese government outlining how Japan will evolve from its dependence on fossil fuels and towards renewable energies. The 2050 plan is to create opportunities in renewable energy, energy storage systems like batteries and new energy management systems.
Carbon capture and storage (CCS) is also a key part of Japan’s 2050 strategy. As a result, many Japanese companies are looking for opportunities in Australia to store CO2 captured in Japan or elsewhere to offset corporate portfolios.
Also, hydrogen appears as the third phase of the Australian-Japanese energy partnership (after coal in the 1960s and LNG in the late 1980s). Different forms of hydrogen and ammonia will be crucial in helping Japan achieve the goal of carbon neutrality in 2050, and Australia is one of Japan’s priority potential suppliers.
Challenges facing Australian exporters
Japan is well into its fourth wave of COVID-19 and has introduced various measures to control its spread. To deal with COVID-19, the government has implemented a state of emergency with limited restrictions and various concentrates, which has spread to Tokyo, Osaka and a number of other prefectures.
Some of the restrictions have included reducing the number of workers in offices by 70%, reducing restaurant and bar opening hours, avoiding evening outings and canceling events.
As the state of emergency impacts the Japanese economy, businesses and individuals are more accustomed to working under COVID conditions and working remotely, and exporters must also be aware of the changes and adapt. .
Australian exporters looking to further diversify their export strategy to include Japan should remember that while opportunities exist, Japan remains a mature, sophisticated and competitive market requiring long-term commitment to be successful.
More information on the Japanese market
The Austrade website has a page on Japan that includes the following information to help exporters:
- Market profile
- To do business
- Austrade Assistance
To learn more about how Austrade can help your business, visit austrade.gov.au, send an email [emailÂ protected] or call 13 28 78 (in Australia).
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