Investing in Japan
Speeches by the Chairman Invest Japan Seminar in Brussels
May 4, 2016
Distinguished speakers, ladies and gentlemen, I am Hiroyuki Ishige, Chairman & CEO of JETRO.
I am truly honored to be able to speak on business and investment between Belgium and Japan in front of so many distinguished guests.
Belgian Prime Minister Charles Michel, on the occasion of his first visit to Japan in May of last year, made a proposal for Japanese Prime Minister Shinzo Abe to deliver a speech at this seminar.
It is a great pleasure for me to be able to hold this event in this commemorative year of the 150th anniversary of friendship between Belgium and Japan.
Before going into today’s topic, I would like to convey our heartfelt condolences to the victims of the terrorist attack here in Brussels on March 22nd.
I set foot in Brussels National Airport the day before yesterday.
In spite of lingering feelings of sorrow, I could see the determination of the people here to carry on.
I would like to express my deepest respect to the Belgian people.
We at JETRO have held seminars for foreign direct investment, or FDI, into Japan about 50 times around the world since 2003.
We are truly fortunate to be able to hold such a seminar here in Brussels, an economic, political and cultural center of Europe.
Furthermore, this is the first time for us to hold our seminar in such a beautiful palace.
I understand that Japanese food has become popular in Belgium.
But did you know that Belgian food is also popular in Japan?
Japanese people love chocolate, potato fries and beer, all of which Belgium is of course renowned for. Just last night, I had the chance to try “waterzooi”, a kind of creamy chicken stew. It was the perfect complement for my Belgian blonde ale.
While still in Tokyo the other day, I also enjoyed an order of Belgian “frits and beer”.
I heard that Prime Minister Michel and Deputy Prime Minister Kris Peeters also stopped by this shop last year.
In addition to your fine food and beer, we Japanese are eager to discover much more about Belgium.
Investment imbalance between Japan and Belgium
With that, I would like to get into today’s theme, FDI into Japan. Japan’s FDI stock at the end of 2014 was about 200 billion dollars. Of that figure, investment from Europe accounts for about 90 billion dollars. So around half.
From this, we can infer that Europe is the largest partner for Japan.
How about the relationship between Belgium and Japan?
Currently, there are about 250 Japanese companies in Belgium.
Toyota and Daikin both have their European headquarters here.
The FDI stock from Japan to Belgium was 18.3 billion dollars at the end of 2014.
In comparison, the scale of investment from Belgium to Japan is still narrow.
It is only one-thirteenth of the investment from Japan to Belgium.
I therefore believe that there is a great potential to grow here.
As we welcome the 150th year of friendship between Belgium and Japan, the next step is developing bilateral business exchange.
As I said earlier, we Japanese already love your chocolate, “frits” and beer.
We now want you to come to Japan.
Allures of Japan as an investment destination
“Well,” you may be asking, “why Japan? It’s a mature and low-growth economy.” Such a misperception must be eliminated!
I will give you four reasons why.
These are: sophisticated market, innovation hub, business friendly infrastructure, and comfortable living.
To illustrate the sheer size of Japan’s market, I would like to call your attention to this map.
The economic scale and GDP of the Tokyo area alone is equal to that of the United Kingdom.
The Kansai region centered on Osaka a little bit smaller than Spain.
And the Kyushu region to that of Belgium.
Regarding the sophistication of the market, I would like to read a quote from P&G.
When asked why it tests its new disposable diapers in Japan, P&G had this to say:
“Because Japanese housewives are the world’s strictest consumers.”
Just as they are toward their own husbands!”
If you succeed in Japan, you can succeed anywhere.
Therefore, the brand of “Made in Japan” has come to hold a particular value in markets across the globe.
I understand that Godiva now sells sweets containing “matcha,” or green tea powder, developed in Japan within North America and Europe.
This is the reason why we would like you to invest in Japan.
Second of all, Japan has great appeal as an innovation hub.
As you can see in this chart, Japan has the highest ratio of R&D expenses compared to GDP.
UCB has made achievements in joint research with major Japanese pharmaceutical giants.
Meanwhile, Umicore has jointly established an R&D site in Aichi Prefecture with a Japanese catalyst manufacturer.
In addition to “Made in Japan,” we are seeing the idea of “Developed in Japan” also take flight.
The third reason to invest in Japan is the stable and convenient “business infrastructure”.
The World Economic Forum declared Japan’s business environment as the most sophisticated in the world.
You can see from this figure that transportation infrastructure stretches across Japan.
The fourth reason is the safe and comfortable “community infrastructure.”
The UK’s information magazine “Monocle” released a ranking of “the top 25 most livable cities in the world.”
Tokyo came in first, Fukuoka in twelfth and Kyoto in fourteenth.
International companies praise Japan’s security. They celebrate our hospitality. They are enchanted by the beautiful nature.
Further, our delicious and healthy cuisine is second to none… except for Belgium, of course!
This is why we’d like you to invest in Japan.
Making Japan the most business-friendly country in the world
But, I suspect you still may have concerns about cost in Japan. If so, you can put those concerns to rest.
From the results of our research on foreign-affiliated companies in Japan, “high cost” was the most commonly cited problem in the past.
However, this answer has drastically decreased over recent years.
As Prime Minister Abe said, expenses for office rent and housing are comparatively lower than those of other major urban areas in Asia.
And just to drive the point home, I would like to direct your attention to the price of Starbucks coffee.
As you can see, when enjoying a coffee at Starbucks, the price for a latte in Japan is only 2.94 euros.
In comparison, the prices in European cities are substantially higher than that of Japan.
Are you convinced by this argument yet? You do not seem to be. Then, I will give you the most convincing story “Abenomics.”
Abenomics, the economic policy of Prime Minister Abe, has proven to be a game-changer. The Prime Minister has declared the following: “Our government will make Japan the most business-friendly country in the world.” We mean business!
In fact, all of the following economic indices have improved: GDP growth rate, corporate income, business confidence and employment.
The growth in the Japanese market has drawn greater investment from overseas.
Corporate tax has been reduced to the 20% range.
The electricity retail market has just been liberalized, ending 60 years of monopoly control. And with reform to the medical field, Japan is now the ideal place to develop medicine and medical equipment. In addition to these reforms, it is expected that the negotiations on the FTA between the EU and Japan will be concluded this year.
No one could have imagined these developments possible just a few years ago. We mean business!
The European Business Council in Japan had this to say: “2016 will present a ‘golden opportunity’ for business in Japan.”
That seems to be hard to believe, but it is true. The EBC has changed, and they are now our allies.
It is my hope that by the end of today’s seminar, you are all left with the same impression. Japan has changed.
Talk to JETRO first
Before finishing, I would like to briefly promote my own organization, JETRO, if I may. JETRO is a government-related organization which facilitates mutual trade and investment between Japan and the rest of the world.
For companies investing in Japan for the first time, we provide one-stop services free-of-charge to help them get started.
We have supported more than 14,000 of these investment projects from overseas.
Among them, more than 1,400 international companies successfully opened business in Japan.
When our two countries first interacted 150 years ago, it took four months to reach Japan from Belgium.
With the direct flight that opened last year, we are now separated by only 12 hours.
And JETRO is committed to filling that remaining gap.
My final question for today:
When is the time to invest in Japan?
The answer, of course, is “Now!”
If you have any questions or requests regarding investment in Japan,
please “Talk to JETRO First!”Thank you!