# ![](media/image1.jpeg){width="0.7395833333333334in" height="0.78125in"} Doing Business in Japan: A Country Commercial Guide for U.S. Companies

# Chapter 6: Investment Climate

# INTERNATIONAL COPYRIGHT, U.S. & FOREIGN COMMERCIAL SERVICE AND U.S. DEPARTMENT OF STATE, 2007. ALL RIGHTS RESERVED OUTSIDE OF THE UNITED STATES.

A. [Government Attitude to Foreign Investment: Attracting FDI a Policy
Priority](#a.-government-attitude-to-foreign-investment)

> A.1 [Openness to Foreign Investment: Few Restrictions, but Unique
> Challenges](#few-restrictions-but-unique-challenges-return-to-top)
>
> A.2 [Conversion and Transfer Policies: Largely
> Uninhibited](#a.2-conversion-and-transfer-policies-largely-uninhibited-return-to-top)
>
> A.3 [Expropriation and Compensation: Virtually No
> Risk](#a.3-expropriation-and-compensation-virtually-no-risk-return-to-top)
>
> A.4 [Dispute Settlement: No Outstanding Cases in Investment
> Area](#dispsettle)
>
> A.5 [Performance Requirements and Incentives:
> None](#a.5-performance-requirements-and-incentives-none-return-to-top)
>
> A.6 [Right to Private Ownership and Establishment: Secure for Foreign
> Business](#righttoprivown)
>
> A.7 [Protection of Intellectual Property Rights: A Well Developed
> System, but Can Be Time-Consuming and
> Costly](#a.7-protection-of-intellectual-property-rights-a-well-developed-system-but-can-be-time-consuming-and-costly-return-to-top)
>
> A.8 [Transparency of Regulatory System: Toward More
> Openness](#a.8-transparency-of-the-regulatory-system-toward-more-openness-return-to-top)
>
> A.9 [Capital Markets and Portfolio Investment: Less Than
> Perfect](#a.9-capital-markets-and-portfolio-investment-less-than-perfect-return-to-top)
>
> A.10 [Political Violence: Rare to
> Unknown](#a.10-political-violence-rare-to-unknown-return-to-top)
>
> A.11 [Corruption: Evolution Towards Stricter Ethical
> Standards](#a.11-corruption-problems-remain-despite-obvious-progress-return-to-top)

B. [Bilateral Investment
Agreements](#b.-bilateral-investment-agreements-return-to-top)

C. [OPIC and Other Investment Insurance Programs: Not
Available](#c.-opic-and-other-investment-insurance-programs-not-available)

D. [Labor: Toward More
Flexibility](#d.-labor-toward-more-flexibility-return-to-top)

E. [Foreign-Trade Zones / Free Ports / Special Zones for Structural
Reform](#e.-foreign-trade-zones-free-ports-special-zones-for-structural-reform-return-to-top)

F. [Foreign Direct Investment Statistics: Steady Increase in Japan\'s
FDI Stock in CY2004](#FDIstats)

G. [Web Resources](#g.-web-resources-return-to-top)

## A. Government Attitude to Foreign Investment: 

## Attracting FDI a Policy Priority [**Return to top**](#chapter-6-investment-climate)

## A.1 Openness To Foreign Investment: 

## Few Restrictions, but Unique Challenges [**Return to top**](#chapter-6-investment-climate)

Japan, as the world's second-largest economy and the United States'
fourth-largest trading partner, is an important potential destination
for U.S. foreign direct investment (FDI). The Government of Japan (GOJ)
imposes few formal restrictions on inward FDI, and has removed or
liberalized most legal restrictions that previously applied to specific
business sectors. In addition, since 2001, the government has made
increasing Japan's stock of FDI an economic policy priority recognizing
its potential for enhancing Japan's competitiveness and contributing to
sustainable economic growth. Then-Prime Minister Junichiro Koizumi in
February 2001 announced a national goal of doubling Japan's stock of
FDI, as a percentage of GDP, within five years. Despite its best
efforts, the GOJ fell just short of that goal. Nevertheless, in June
2006, the government set a further goal of increasing the nation's stock
of FDI to 5 percent of GDP by 2010. Immediately upon taking office in
September 2006, Prime Minister Shinzo Abe publicly renewed that goal and
on a number of subsequent occasions has reiterated his government's
commitment to improving Japan's investment climate.

Japan is now in the midst of the longest period of continuous economic
growth in its post-war history. At the same time, the government in
recent years has undertaken significant structural reform of the economy
thereby creating new opportunities for FDI. Together, these factors have
led to growing merger and acquisition (M&A) activity. Since 1999, the
annual level of M&A in Japan has more than doubled. Most of these are
domestic transactions but there has been a slower, if steady, increase
in cross-border deals as well.

The GOJ does not impose export balancing requirements or other
trade-related FDI measures on firms seeking to invest in Japan. Risks
associated with investment in many other countries, such as
expropriation and nationalization, are also not of concern in Japan

Nevertheless, foreign investors who want to establish or enhance their
presence in Japan face a number of unique challenges, many which are
matters of private business practice rather than of government
regulation. The most notable of these include:

-   A high overall cost structure that makes market entry, exit, and
    expansion expensive;

-   Cultural and linguistic challenges to doing business;

-   Corporate practices and market rules that inhibit foreign
    acquisition of Japanese firms, such as insufficient financial
    disclosure practices, cross-holding of shares among companies
    belonging to the same business grouping, and a low proportion of
    publicly traded common stock relative to total capital in many
    companies;

-   Exclusive buyer-supplier networks and alliances maintained by some
    business groups that limit competition from foreign firms and
    domestic newcomers;

-   Labor practices which inhibit labor mobility, repress productivity,
    and negatively impact development of skills;

-   Public wariness about "hostile" foreign takeovers.

All of these issues continue to be addressed in government-to-government
talks and progress has been made in some areas.

Despite the increase in FDI since the mid-1990s, Japan continues to have
the smallest amount of inward foreign investment as a proportion of GDP
of any major OECD nation. According to the 2006 World Investment Report
issued by the United Nations Conference on Trade and Development
(UNCTAD), the current ratio of FDI to GDP in Japan is 2.2 percent,
compared to 13.0 percent in the United States, 37.1 percent in the
United Kingdom, 18.0 percent in Germany, and 28.5 percent in France.
UNCTAD's report ranks Japan as 131 among 141 countries in terms of the
ratio of FDI to GDP, although Japan's Inward FDI Potential Index is
ranked 22 in terms of the amount of FDI money received. Foreign
participation in mergers and acquisitions also lags in Japan. According
to Recof, a Tokyo-based M&A consultancy, the total number of M&A
transactions in Japan 2006 was 2,764, up 1 percent from the previous
year, but only 148 of those deals involved foreign buyers. Japan's
relative lack of inward foreign investment also acts to limit the
potential growth of imports.

On a yen basis, FDI stock in Japan rose from 3.0 trillion yen at the end
of 1998 to 11.9 trillion yen at the end of 2005. According to OECD
figures, Japan's inward FDI fell sharply in 2005 to \$2.8 billion after
several years of solid growth. In part, this reflected sales by a number
of foreign funds that had purchased shares in distressed assets during
Japan's banking crisis of the 1990s. In addition, there were several
large disinvestments by foreign companies facing difficulties in home
markets, most notably, General Motors' sale of 17 percent of Suzuki
Motor Corporation for \$2 billion in April 2006 and Vodafone's \$15.5
billion sale of its Japanese cellular telephone business to the Japanese
firm Softbank in March 2006.

Meanwhile, Japan continues to run a significant imbalance between inward
and outward FDI (see Table 1b). Japan's outward flow of foreign direct
investment rose almost 47 percent in CY 2005 to \$45.8 billion, up from
\$28.8 billion in CY 2003.

In recent years, the GOJ has taken welcome steps to address
investment-related problems. Reforms in the financial, communications
and distribution industries have encouraged foreign investment into
these sectors. At the same time, reform of Japan's corporate code,
bankruptcy laws and accounting principles are also helping to attract
foreign investment into Japan. The Japan External Trade Organization
(JETRO), a quasi-governmental entity, and the Ministry of Economy, Trade
and Industry (METI) have the lead in implementing programs to attract
greater foreign investment to Japan. At the regional level, a number of
prefectural and city governments are intensifying efforts to attract
foreign investors.

The most significant FDI-related legislative change in recent years has
been the revision of Japan's Company Law. This new law, approved June
29, 2005, entered into force on May 1, 2006. The most significant
provision in regard to FDI is the easing of rules on the use of foreign
stock as consideration in cross-border mergers. Previously,
consideration given to shareholders of merged companies was generally
limited to cash or stock of the surviving company. This restriction
served as a disincentive to otherwise advantageous mergers. Under the
new Company Law, the surviving company can provide cash or shares of its
foreign parent company instead of, or in addition to, its own stock in a
procedure known as a triangular merger. However, under pressure from
business interests, the GOJ delayed implementation of the law's
triangular merger provision until May 2007 in order to allow firms time
to determine whether to adopt defensive measures against hostile
takeovers.

In anticipation of these new provisions coming into force, the Diet in
December 2006 took up discussion of the tax treatment of cross-border
triangular mergers. Although the relevant Diet tax panel agreed, in
principle, to extend tax deferral to cross-border triangular mergers,
certain conditions may make the use of this type of transaction
impractical for the majority of deals especially those involving new
entrants to the Japanese market. Final rules will be set out in
government ordinances scheduled for completion in the first quarter of
2007.

Also relevant to investors, particularly in the financial sector, is the
new Financial Instruments and Exchange Law passed by the Diet in June
2006. The bulk of its provisions will come into effect in 2007. By
amending or abolishing 93 previous laws regulating banking, securities,
investment and real estate trusts, the law establishes a broad new
framework for the regulation of financial instruments and services. The
government\'s stated purpose in amending the law is to establish a
flexible regulatory system with a uniform set of rules for similar
financial instruments while enhancing protections for investors and
promoting financial innovation. The law, inter alia, establishes rules
for tender offers (TOBs) that clarify the shareholding limits which
trigger a mandatory TOB, extend the minimum time period for TOBs, and
require greater disclosure of the size and price of share purchases by
large-scale investors in order to protect the interests of smaller
shareholders.

**Liberalization of Investment Restrictions**

Japan has gradually eliminated most of the formal restrictions governing
its FDI regime. In 1991, the GOJ amended the Foreign Exchange and
Foreign Trade Control Law (which also controls foreign investment) to
replace the long-standing \"prior notification\" requirement for all FDI
with an \"ex post facto notification\" requirement for investment in
non-restricted industries. \"Prior notification\" (and thus case-by-case
approval) is now required only for investment in certain restricted
sectors, including agriculture, forestry, petroleum,
electrical/gas/water utilities, aerospace, telecommunications, and
leather manufacturing. Administrative approval for foreign investment in
some of these sectors is quite certain, while in other sectors it is
likely to be subject to greater scrutiny based on \"national
sovereignty\" or national security concerns. In December 2006, METI
announced 2006 the formation of a working group made up of academics and
business representatives to recommend updating the list of restricted
sectors with special attention given to materials and technology that
could be used in the production of weapons of mass destruction. The
working group is to submit its recommendations in the first quarter of
2007.

U.S. investment has become increasingly common in some traditionally
restricted sectors, particularly in the petroleum and telecommunications
industries. The only legal restriction on foreign ownership in Japan\'s
telecommunications sector applies to Nippon Telegraph and Telephone
(NTT): foreign investment in NTT is limited by law to one third.
Japan\'s Radio Law and Broadcasting Law limits foreign investment in
broadcasters to 20 percent, or to one third for a broadcaster
categorized as facility-supplying. Under a revision that passed the Diet
in October 2005, foreign ownership of Japanese companies investing in
terrestrial broadcasters will be counted against these limits. However,
these limits do not apply to communications satellite facility owners
and program suppliers or to cable television operators.

Several sections of the Japanese Anti-monopoly Law (AML) are relevant to
FDI. Chapter four of the AML includes extensive antitrust provisions
pertaining to international contract notification (section 6),
shareholdings (sections 10 and 14), interlocking corporate directorates
(section 13), mergers (section 15), and acquisitions (section 16). The
stated purpose of these sections is to restrict any shareholding,
management, joint venture, and M&A activities that constitute
unreasonable restraints on competition or involve unfair trade
practices. These provisions are not intended to discriminate against
foreign companies or to discourage FDI.

**Limitations on Facility Development, and Availability of Investment
Real Estate**

While the nationwide average price of real estate fell for 13
consecutive years (from 1992 to 2005), real estate prices in major urban
areas, although less than half the 1991 price level, have now leveled
off and remain high. Potential foreign investors find high prices of
commercial office space can be an obstacle to investment in Japan. Lack
of information on land prices and ownership also impedes foreign and
domestic investors, by making it harder to assess the real asset value
of potential business partners or acquisition targets. In the major
urban areas of Tokyo and Osaka there is significant new commercial real
estate under construction at the end of 2006, which may ease prices
somewhat in the future.

Revisions to the Securities Investment Trust Law enacted in 2000 lifted
the ban on real estate investment trusts (REITs) to permit marketing of
mutual funds that invest in property rights. In November 2006, there
were 39 REITs listed on the Tokyo Stock Exchange, holding more than 4
trillion yen in real estate assets. REITs are increasing demand for
transparency and accurate pricing in the real estate market.

Aiming to increase the liquidity of Japanese real estate markets, the
government has progressively lowered capital gains, registration, and
license taxes on real estate in recent years. It also reduced
inheritance and gift taxes to promote intergenerational transfer of land
and other assets. More changes in tax policy and accounting standards
could increase real estate liquidity, but the market is still hampered
by a shortage of legal and accounting professionals, lack of information
on prices and income flows, and taxes that discourage real estate
transactions. Beginning April 2001, the Japan Institute of Certified
Public Accountants introduced a new standard that required companies to
write off substantial losses (50 percent or more) on real estate
inventories acquired for sale or development, further encouraging
liquidity in real estate markets.

Japan continues to restrict the development of industrial and commercial
facilities in some areas in an attempt to prevent excessive
concentration of development in the environs of Tokyo, Osaka, and
Nagoya, and also to protect land designated as optimal for agriculture.
On the other hand, many prefectural governments outside the largest
urban areas make available property in public industrial parks.
Generally speaking, Japan\'s zoning laws give local Japanese officials
and residents considerable discretionary authority to screen almost all
aspects of a proposed building. These factors effectively reduce the
real estate available for development and often lead to delays in
construction and higher building costs.

**Corporate Tax Treatment**

Local branches of foreign firms are generally taxed only on corporate
income derived from within Japan, whereas domestic Japanese corporations
are taxed on their worldwide income. Calculation of taxable income and
allowable deductions, and payments of the consumption tax (sales tax),
are otherwise the same as those for domestic companies, with national
treatment for foreign firms. Corporate tax rules classify corporations
as either foreign or domestic depending on the location of their
"registered office," which may be the same as --- or a proxy for --- the
place of incorporation.

The United States has a new bilateral tax treaty with Japan that came
into full force in January 2005. The treaty generally allows Japan to
tax the business profits of a U.S. resident only to the extent those
profits are attributable to a "permanent establishment" in Japan, and
provides measures intended to mitigate double taxation. Cross-border
dividends on listed stock are not subject to source country withholding
tax if the parent company owns 50 percent or more of the foreign
subsidiary. Interest on financial transactions payable to a nonresident
as well as royalties paid to a foreign licenser also is no longer
subject to source country withholding tax.

A special tax measure allows designated inward investors to carry over
certain losses for tax purposes for ten years rather than for the normal
five years. In JFY 1996, the scope of losses that qualify for this
special measure was expanded. As part of the JFY 2003 tax reform,
Japan's effective corporate tax rate, including local taxes, was reduced
from 40.87 percent to 39.54 percent. Corporate tax reform proposals for
FY 2006 abolished tax breaks for IT-related investments and created new
tax incentives for advanced software investments.

The option of consolidated taxation was made available to corporations
since April 2002. Consolidated taxation was intended to facilitate
investment and corporate restructuring, because the losses usually
expected from a new venture or recently acquired subsidiary can be
charged against the profits of the parent firm or holding company.

**Investment Incentives**

In Japan, both government and the private sector are increasingly
promoting inward FDI. In 2002, the Cabinet established FDI promotion as
one of the key strategies for revitalizing the Japanese economy and
resolved to put teeth into the measures needed to attract investment. In
2003, the Japan Investment Council (JIC) prepared a report setting out a
"Program for Promoting Foreign Direct Investment," which discussed five
target sectors and 74 specific measures. (For details of the report, see
<http://www.investment-japan.net/index.htm>) During the JIC's March 2006
meeting, with the original goal of doubling Japan's stock of FDI close
to achievement, the Council proposed a new goal "to increase the balance
of FDI into Japan to 5 percent of the country's GDP, double the present
percentage by 2010." To support this objective, the JIC established the
Program for Acceleration of Foreign Direct Investment in Japan at its
June 2006 meeting.

The Japan External Trade Organization operates the Invest Japan Business
Support Center, a one-stop office providing investment-related
information and services to foreign companies. (More detailed
information is available at <http://www.jetro.go.jp/investjapan/>). In
addition, all concerned ministries have established information desks as
a source of investment information and a resource to help investors
navigate administrative procedures.

Local governments are also increasing their efforts to attract foreign
capital, both through outreach to prospective foreign investors and by
offering business start-up support services and limited financial
incentives. Ongoing efforts to decentralize fiscal authority in Japan
may give local governments the ability to offer tax breaks in the
future. JETRO supports local governments\' investment promotion efforts.
Detailed information on FDI promotion at the local level is available in
English on the JETRO website listed above.

The Japanese Government launched the "Special Zones for Structural
Reform" initiative in 2003, and to date the GOJ has approved
approximately 550 Special Zones. Building on ideas developed by local
governments and private companies, this program designates certain local
areas as exempt from one or more national regulations in order to
develop the areas' special features. In theory, local governments can
use this Special Zones initiative to obtain regulatory exemptions that
can significantly improve the investment environment, such as zones that
liberalize restrictions on ownership of hospitals, schools, and
agricultural enterprises or allow localities to introduce exemptions for
visas/resident qualifications to expand the acceptance of foreign
engineers, tourists and exchange students. In practice, however, the
Special Zones Office has rejected about 70 percent of all Special Zones
proposals since the start of the initiative --- in most cases due to the
objections of the GOJ ministry or agency involved. Moreover, while a
handful of approved Special Zones have addressed investment climate
issues, most zone applications have not sought to create significant new
opportunities for foreign investors. The Headquarters for the Promotion
of Special Zones for Structural Reform, however, continues to invite
ideas on new zones from all sources, including domestic and foreign
governments and private enterprises. In November 2006, the government
announced plans to extend indefinitely the law governing these
structural reform zones which was due to expire March 31, 2007.

## A.2 Conversion and Transfer Policies: Largely Uninhibited [**Return to top**](#chapter-6-investment-climate)

All foreign exchange transactions to and from Japan --- including
transfers of profits and dividends, interest, royalties and fees,
repatriation of capital, and repayment of principal --- are, in
principle, freely permitted unless expressly prohibited. With the 1998
revision of the Foreign Exchange Law, Japan moved to an ex-post
notification system. This means that all foreign exchange transactions
(unless specifically prohibited, including certain foreign direct
investments, listed in the Appendix of the law) no longer require prior
notification or approval. In addition, the law eliminated the authorized
foreign exchange bank system, whereby foreign exchange transactions all
had to go through certain registered banks. All other restrictions on
methods of payment --- including netting of settlements --- were also
removed, enhancing the ability of foreign and Japanese financial firms
to offer a fuller range of services in Japan. This has led to lower
foreign exchange transaction costs for non-financial firms as well.

Japan is an active partner in the struggle to choke off terrorist
financing. In coordination with other OECD members, the GOJ has
strengthened due-diligence requirements for financial institutions. The
Diet passed a "Know Your Customer" law in 2002. Beginning January 2007,
customers wishing to make cash transfers exceeding 100,000 yen (\$850)
must do so through bank clerks, not ATMs, and must present an ID or
other verification document. These changes could have an impact on the
transfer of funds.

## A.3 Expropriation and Compensation: Virtually No Risk [**Return to top**](#chapter-6-investment-climate)

[]{#dispsettle .anchor}

In the post-war period, the GOJ has not expropriated or nationalized any
enterprises, with the exception of the nationalization in 1998 of two
large capital-deficient banks and, in 2002, of two small failed regional
banks. Expropriation or nationalization of foreign investments is
unlikely in the foreseeable future.

## A.4 Dispute Settlement: No Outstanding Cases in Investment Area [**Return to top**](#chapter-6-investment-climate)

There have been no major bilateral investment disputes since 1990, and
there are no outstanding expropriation or nationalization cases in
Japan. There have been no cases of international binding arbitration of
investment disputes between foreign investors and the GOJ since 1952.
Japan is a member of the 1958 New York Convention on the Recognition and
Enforcement of Foreign Arbitration Awards. However, it has long been
considered an inhospitable forum for international commercial
arbitration. The Japan Commercial Arbitration Association, the only
organization that arbitrates international trade and investment-related
disputes, had 103 cases submitted to it between FY 1999 and FY 2005. For
FY 2005 the JCAA had 36 cases, of which 26 were continuation cases from
the previous year. 16 of the 36 cases went to arbitration and 10 were
carried over to 2006.

There are no legal restrictions on access by foreign investors to
Japanese lawyers, and significant reforms in laws governing legal
services and the judicial system are increasing the ability of foreign
investors to obtain adequate legal advice on doing business in Japan ---
despite some foot-dragging on implementing rules by the Federation of
Japanese Bar Associations (*Nichibenren*).

Based on the Program for Promoting Justice System Reform endorsed by the
Cabinet in March 2002, the Diet passed legislation to promote
cooperation and collaboration between Japanese lawyers (*bengoshi*) and
foreign lawyers qualified under Japanese law (*gaiben*) in 2003. The
Amendment to the Special Measures Law Concerning the Handling of Legal
Business by Foreign Lawyers", which took effect in April 2005, made the
following changes:

> a\. Eliminated the prohibition on the employment of Japanese lawyers
> by foreign law firms qualified under Japanese law;
>
> b\. Eliminated the regulations on joint enterprises between *gaiben*
> and *bengoshi*; and
>
> c\. Abolished legal provisions governing specified joint enterprises
> (*tokutei kyodo jigyo*) and the establishment of joint enterprises
> between foreign lawyers qualified under Japanese law and Japanese
> lawyers or Japanese lawyer professional corporations (*gaikokuho kyodo
> jigyo*).

As a result of the enactment of the Amendment:

> a\. These joint Japanese/foreign joint legal enterprises (*gaikokuho
> kyodo jigyo)* organized as a single law firm or as separate firms can
> provide integrated legal advice and legal services on any and all
> matters within the competence of its members;
>
> b\. *Gaiben* and *bengoshi* in these enterprises can adopt a single
> law firm name of their choice;
>
> c\. *Gaiben* and *bengoshi* in such enterprises may determine the
> profit allocation among them freely and without restriction;
>
> d\. *Gaiben* are permitted to hire Japanese lawyers to work with them
> directly or in a joint legal enterprise or in a Foreign Japanese Joint
> legal office (*gaikokuho-jimu-bengoshi jimusho)* composed of multiple
> *gaiben*;
>
> e\. *Gaiben* and Japanese lawyers continue to be permitted on an ad
> hoc basis to enter into relationships that involve the sharing of
> profits and expenses.

In another significant step, the Cabinet adopted in March 2002 a
judicial reform program with the following results:

-   To increase the number of legal professionals, raised the annual
    number of persons who pass the Bar Examination to 1,500 by 2004 and
    to 3,000 by around 2010; and in cooperation with the Ministry of
    Education, Culture, Sports, Science and Technology, introduced a new
    system of law schools, starting in April 2004.

-   In 2003 the Diet passed a new Alternative Dispute Resolution (ADR)
    Law, including a major revision of the existing Arbitration Law and
    improvement of the legal framework for arbitration, including
    international commercial arbitration. The ADR Law will come into
    effect by May 31, 2007. Foreign lawyers qualified under Japanese law
    can represent parties in ADR proceedings taking place in Japan in
    which one of the parties is foreign or foreign law is applicable, at
    least to the extent such representation is not inconsistent with the
    law. The United States continues to urge Japan to promote
    alternative dispute resolution mechanisms by ensuring that "foreign
    lawyers qualified under Japanese law", foreign lawyers and
    non-lawyers can act as neutrals in any international arbitration or
    other international alternative dispute resolution (ADR) proceedings
    that take place in Japan, in whole or in part, regardless of the
    governing law or matter in dispute.

-   To increase the speed and efficiency of civil litigation, in 2003
    the Diet passed the Law Concerning Trial Facilitation which aims to
    reduce by half the length of time required to complete court trials
    through measures to promote efficient scheduling of hearings,
    increase significantly the number of judges and court personnel, and
    facilitate litigants\' collection of evidence at early stages of
    litigation.

-   The Diet passed a partial amendment of the Administrative Case
    Litigation Law, which came into effect on April 1, 2005, to
    strengthen judicial oversight over administrative agencies.

-   The Diet passed the Law on the Establishment of the Intellectual
    Property High Court. The first Intellectual Property High Court was
    established in Tokyo on April 1, 2005.

More generally, Japan's civil courts enforce property and contractual
rights, and the courts do not discriminate against foreign investors.
However, they are sometimes ill suited for litigation of investment and
business disputes. As in many other countries, Japanese courts operate
rather slowly. As noted above, the Judicial Reform Promotion
Headquarters is enacting a number of changes to speed the conduct of
trials.

In addition, the courts lack contempt powers to compel a witness to
testify or a party to comply with an injunction, and timely temporary
restraining orders and preliminary injunctions are very difficult to
obtain. Filing fees are still based on the amount of the claim, rather
than a flat fee. Lawyers usually require large up-front payments from
their clients before filing a lawsuit, with a modest contingency fee, if
any, at the conclusion of litigation. Contingency fees familiar in the
U.S. are relatively uncommon. A losing party can delay execution of a
judgment merely by appealing, and in appeals to the high courts,
additional witnesses and other evidence are sometimes allowed.

Courts do have power to encourage mediated settlements, and the courts
have a supervised mediation system. Parties can manipulate this system
to delay resolution, however, and because judges move frequently,
continuity is often lost. As a result, it is very common for companies
to settle out of court.

## A.5 Performance Requirements and Incentives: None [**Return to top**](#chapter-6-investment-climate)

[]{#righttoprivown .anchor}

Japan does not maintain a system of performance requirements. Japan also
maintains no formal requirements for local management participation or
local control in joint ventures or other forms of direct investment,
except in restricted sectors.

## A.6 Right to Private Ownership and Establishment: Secure for Foreign Business [**Return to top**](#chapter-6-investment-climate)

Japan legally maintains the right for foreign and domestic private
enterprises to establish and own business enterprises and engage in all
forms of remunerative activity.

## A.7 Protection of Intellectual Property Rights: A Well Developed System, but Can Be Time-Consuming And Costly [**Return to top**](#chapter-6-investment-climate)

Protection of intellectual property rights is an integral part of every
successful U.S. exporter\'s basic market strategy in Japan. It is
necessary to file applications to register patents and trademarks in
Japan to obtain protection, but prior patent filing in the United States
can provide certain advantages if applications are filed promptly in
Japan. A U.S. patent or trademark attorney can provide informal advice,
but it is necessary to hire a Japanese lawyer or patent practitioner
*(benrishi)* registered in Japan to prosecute the patent or trademark
application. In conformity with international agreement, Japan maintains
a non-formality principle for copyright registration --- *i.e.,*
registration is not a pre-condition to the establishment of copyright
protection. However, the Agency of Cultural Affairs maintains a registry
for such matters as date of first publication, date of creation of
program works, and assignment of copyright. U.S. copyrights are
recognized in Japan by international treaty. U.S.-produced semiconductor
chip design-layouts are protected for ten years under a special law if
they are registered with the Japanese "Industrial Property Cooperation
Center" --- a Japanese government-backed public corporation.

Obtaining and protecting patent and trademark rights in Japan can be
time-consuming and costly, although patent fees have recently been
reduced considerably. While the process to safeguard such rights might
seem prohibitive, lack of protection would permit competitors both in
and outside of Japan to copy a product or production process. Even when
intellectual property rights have been acquired, pirating of technology
and designs can occur in Japan, as in other countries. Each company in a
trading or licensing agreement should understand clearly what its rights
and obligations are with respect to the intellectual property rights
owned or acquired by the other. Such a clear understanding helps to
create a good rapport based on mutual trust, thereby ensuring the
success of the trading or licensing agreement.

######## Patents, Trademarks, Utility Models and Designs

Unlike U.S. patent law, patents are granted to the first to file an
application for a particular invention, rather than to the first to
invent. Although Japan accepts filings in English (to be followed by a
Japanese translation), companies should ensure that translations of
their applications are perfect, as significant negative ramifications
may result from translation errors. Prompt filing in Japan is crucial
because printed publication of a description of the invention anywhere
in the world, or knowledge or use of the invention in Japan, prior to
the filing date of the Japanese application, would preclude the grant of
a patent on the application. Also, unlike the United States, where
examination of patent applications is automatic, an applicant must
request examination of his patent application in Japan within three
years of filing.

As is true in many countries, all patent applications are published 18
months after filing. If, during the examination, the Japanese Patent
Office (JPO) finds no impediment to the grant of a patent for a
particular invention, it publishes the patent application in the Patent
Public Gazette a second time, including any changes that have been made
during the examination. Under a recent amendment to the Patent Law,
parties may contest the terms of a patent grant immediately after
issuance by the Patent Office (for a period of up to six months), rather
than prior to registration as had been the previous practice. The patent
is granted and valid for 20 years from the date the application is
filed.

According to the latest JPO statistics in CY-2005, it takes an average
of 26 months from the request for examination of application to First
Action. An applicant can request accelerated examination, and efforts by
the Patent Office to make the documentation necessary for the
preliminary research required to request accelerated examination
available electronically are expected to lower the cost of such requests
to the applicant. During the examination period, limited effective legal
protection exists. In 2006, JPO and USPTO announced two agreements that
should make the examination process more efficient. The Patent
Prosecution Highway pilot project, which began in July 2006, permits
USPTO and JPO to be able to use results of examination in first office
for an application to the second office. In November, an agreement on
Priority Document exchange was reached which allows the second office to
pull up an electronic copy of the \"Priority Document\" from the first
office.

Japan\'s Trademark Law protects trademarks and service marks. As is the
case with patent applications, a resident agent (usually a lawyer or
patent agent) must prosecute the trademark application. And as with the
processing of patent applications, Japan\'s trademark registration
process can be slow. Any company planning on doing business in Japan
should file for trademark registration as early as practicable. Japan is
subject to the Madrid Protocol (effective March 14, 2000) and trademarks
registered at the WIPO Secretariat will be protected among member
countries.

Japan\'s Utility Model Law, as amended in the Unfair Competition
Prevention Law in April 2005, also allows registration of utility
models, a form of minor patent with a 10-year term of protection.
Additional changes in 2005 provided for a reduction of registration fees
and the ability to apply for patent rights based on Utility Model
rights. A separate design law allows protection of designs, with a
15-year term of protection from the date registration was made.

######## Unfair Competition and Trade Secrets

Protection for trademarks in Japan prior to registration is provided
under the Japanese Unfair Competition Prevention Law. Under this law,
the owner of the mark must demonstrate that the mark is well known in
Japan and that consumers will be confused by the use of an identical or
similar mark by the unauthorized user. Since 1990, Japan amendments to
the law have provided some protection from theft of trade secrets, such
as know-how, customer lists, sales manuals, and experimental data. The
law, which was amended completely in 1993, also provides for injunctions
against wrongful use, acquisition, or disclosure of a trade secret by
any person who knew or should have known that the information in
question was misappropriated. Amendments to the law in 2005 strengthened
protection of trade secrets by introducing criminal penalties as well as
by raising penalties. The judicial process, however, makes the
enforcement of rights without loss of trade secrets difficult.

## A.8 Transparency of the Regulatory System: Toward More Openness [**Return to top**](#chapter-6-investment-climate)

Over-regulation in Japan continues to restrain economic growth, raise
the cost of doing business, restrict competition, impede market entry
and exit, and impede investment. It also raises prices and increases the
cost of living for Japanese consumers and for foreign businesses
operating in Japan. Typical of highly regulated economies, Japan suffers
from misallocation of resources, less than optimal foreign investment
and a lack of entrepreneurial innovation. In addition to slowing growth,
government over-regulation lies at the heart of many market access and
competitive problems faced by U.S. companies in Japan.

An essential prerequisite for a vibrant Japanese economy is a regulatory
system that is transparent, fair, predictable and accountable and which
guarantees domestic and foreign firms alike full access to information
and opportunity to have input into the regulatory decision-making
process. The Japanese Government has made greater transparency a
crosscutting theme of its regulatory reform initiatives. Systemic
measures set out in the GOJ's 2004 Plan on the Promotion of Regulatory
Reform are contributing to needed improvements in the transparency and
accountability of the Japanese regulatory system. They include the
following: wider use of the Public Comment Procedures for Formulating,
Amending and Repealing Regulations; strict enforcement and promotion of
the use of the 1994 Administrative Procedure Law; increased transparency
of administrative guidance; full and effective implementation of the Law
Concerning the Disclosure of Information Retained by Administrative
Agencies; expanded use of the "no-action letter" system; comprehensive
and objective evaluation of the regulatory process; and examination of
the need, effects, and costs of new proposed and existing regulations.

Building on these measures, the United States in its annual Regulatory
Reform Initiative submissions has recommended that the Japanese
Government undertake additional improvements in its regulatory system to
support Japan's reform efforts and to ensure universal access to
government information and the policymaking process. Japan has taken
welcome steps in recent years to improve its Public Comment Procedures
(PCP), but the effectiveness of these revisions remains to be seen. The
United States continues to urge the GOJ to take concrete steps to ensure
the spirit of the revised PCP is adhered to, including compelling
ministries and agencies to provide minimum 30-day public comment periods
unless there is a genuinely urgent need to do otherwise; seriously
consider public views submitted and incorporate them into final
regulations where appropriate; publish draft regulations at the earliest
possible time to allow interested parties sufficient time to analyze
issues and prepare meaningful public comments; and provide sufficient
time between the closing of a comment period and the finalizing of
regulations so that comments can in fact be incorporated. In addition,
given the often-significant role of advisory councils and other
government-commissioned study groups in Japanese policy development, the
United States also recommends measures to increase their transparency
and provide greater opportunities for public input into deliberations of
these groups. The United States further recommends that Japan take
further steps to enhance the effectiveness and increase the usage of
Japan's "no-action letter" system, which provides regulated firms with
an opportunity to seek clarification of an administrative agency's
interpretation of laws and regulations.

The United States continues to hold bilateral working-level discussions
in an effort to encourage the Japanese to promote deregulation,
competition policy, and administrative reform measures that could help
revive the Japanese economy, increase imports and foreign direct
investment into Japan. The reader should consult the National Trade
Estimate Report on Foreign Trade Barriers, issued by the Office of the
U.S. Trade Representative (USTR) for a detailed description of Japan's
regulatory regime as it affects foreign exporters and investors.

In an effort to increase the transparency of Japan\'s regulatory system
to foreign investors, the Cabinet Office is coordinating a
government-wide effort to produce consistent translations of selected
Japanese laws and regulations into foreign languages, starting with
English. In December 2006 the Cabinet decided to establish a section at
the Justice Ministry beginning in JFY 2009 to handle English
translations of Japanese laws and regulations concerning businesses as
part of measures to promote more foreign investment, according to press
reports. The new section will take over this work from a task force on
judicial reform at the Cabinet Secretariat which had been doing the
translations, but will be disbanded at the end of JFY 2008. In JFY 2009,
the Justice Ministry will also set up a new Web site that allows users
to search for legal terms and clauses.

## A.9 Capital Markets and Portfolio Investment: Less Than Perfect [**Return to top**](#chapter-6-investment-climate)

Japan maintains no formal restrictions on inward portfolio investment,
and in fact foreign capital occupies an increasingly important place in
Japanese capital markets. Informal restrictions on management
participation of foreign shareholders limit the attractiveness of
Japan\'s equity market to foreign investors, although some firms have
taken steps to facilitate exercise of shareholder rights by foreign
investors, such as permitting electronic proxy voting.

######## Environment for Mergers and Acquisitions

Japan's aversion to M&A activity is fading, accelerated by the unwinding
of extensive corporate cross-shareholding brought about by
implementation of improved accounting standards and new government
mandates that banks divest cross-held shares above a set level of
holdings.

Friendly transfer of wholly owned and majority-owned subsidiaries
remains by far the more common form of M&A in Japan. Similarly,
owner-operated unlisted firms --- which traditionally would only sell
out as a last resort before bankruptcy --- are becoming more amenable to
acquisition, including by foreigners. Particularly in the more modern,
more service-oriented sectors of the economy, purchase by foreigners is
less of a badge of shame than in years past.

Still, there remain a number of key factors limiting greater entry into
the Japanese market through M&A with unlisted firms --- including tax
policy, weak accounting and disclosure practices, Japan\'s
underdeveloped OTC stock market (which if more developed would reduce
the risks involved in M&A), lack of readily available information on
firms that might be acquired, and the relative shortage of M&A
\"infrastructure\" in the form of specialists skilled in making matches
and structuring M&A deals. Many senior business executives remain wary
of foreign M&A which they see as inherently hostile and based largely on
short-term profit motives although public and media perceptions of
cross-border M&A is improving.

The Tokyo Stock Exchange "Mothers\" Exchange, established in 1999 to
encourage start-ups and venture capital investments with less-stringent
listing criteria for emerging companies than the main Tokyo bourse, has
few listed firms and suffers from a lack of liquidity.

**Commercial Law Revisions**

A major revision of Japan\'s commercial laws is nearing completion. In
2001, new laws designed to facilitate procedures for spin-offs to
establish new firms and to transfer divisions from one company to
another went into effect. Important legislation was passed in 2002 and
2005 that has significantly increased the flexibility of capital
structure and improves corporate governance:

In June 2005 the Diet passed a new Company Law that revised and combined
Part II of the existing Commercial Code with existing laws governing
limited liability companies (*yugen gaisha*) and audits under the
Commercial Code. The Company Law, the bulk of which entered into force
in May 2006, introduced changes to facilitate corporation start-up and
make corporate structure more flexible, including elimination of minimum
capital requirements for joint-stock companies (*kabushiki kaisha*),
merged a number of different corporate structures and created a new
corporate form (*godo kaisha*) modeled on the U.S.-style limited
liability company.

Included in the new law was a provision --- Article 821 --- which has
created uncertainty among foreign corporations that conduct their
primary business through their company branches in Japan\'s market. As
written, Article 821 appears to prohibit such branches of foreign
corporations from engaging in transactions in Japan on a continuous
basis. While supplementary steps were taken in Japan\'s Diet prior to
passage of the new Company Law to clarify the provision\'s intent and
assure companies that the Japanese government would not apply Article
821 to legitimate entities, there remains some legal uncertainty for
these branches, particularly with respect to private litigation that
could be brought against their directors and officers. In bilateral
talks on investment and regulatory reform, the U.S. Government has urged
that Japan make revisions to the Company Law to clarify Article 821. The
Japanese government, for its part, has undertaken to ensure that Article
821 does not adversely affect the operations of foreign companies that
are duly registered in Japan and conduct their business in a lawful
manner.

######## Improvements in Corporate Governance

In addition, the Diet has enacted a number of revisions to the
Commercial Code and the Industrial Revitalization Law to ensure
efficient corporate governance, including amendments:

> 1\. Providing publicly traded companies the option of adopting the
> U.S.-style corporate governance system instead of complying with the
> statutory auditor (*kansayaku*) requirement. This new option requires
> the appointment of executive officers and the establishment of a board
> committee system in which at least the audit, nomination and
> compensation committees would be composed of a majority of outside
> directors. Initially available only under the Industrial
> Revitalization Law, which requires companies to submit their company
> revitalization plans to the METI Minister to obtain authorization, the
> new measure is available for companies in general under the new
> Company Law; and
>
> 2\. Permitting companies to use the Internet or other electronic means
> to provide notices of shareholders' meetings and other similar
> communications to shareholders upon individual consent, and permitting
> shareholders to exercise their voting rights through the use of
> electronic devices. In addition, companies are permitted to meet their
> mandatory disclosure requirements for balance sheets (and profit and
> loss statements) by making the full text available for five years in
> an electronic format.

**Cross-shareholding and M&A**

Potential foreign investors in Japan frequently point out that extensive
cross-shareholding in Japan greatly complicates market-based merger and
acquisition transactions and reduces the potential impact of
shareholder-based corporate governance. Such corporate governance
practices result in senior management emphasizing internal loyalties
over shareholder returns and can lead to premature rejection of M&A
offers. However, Japanese companies are starting to unwind
cross-shareholdings, a process that has accelerated in recent years
under the pressure of difficult corporate finances and stricter
accounting requirements. Similarly, more corporations are hiring outside
directors and placing greater emphasis on shareholder value in their
management practices.

To assist corporations in reducing the unfunded liabilities of corporate
pension funds and to accelerate the unwinding of cross-shareholdings,
the Japanese government implemented legislation in 2000 that allows
corporations to transfer shareholdings to their related corporate
pension funds. If the shares are directly transferred, the pension fund
is able to properly execute shareholder rights and sell the shares if it
is deemed in the best interests of the pension-holders. However, many
firms prefer the alternative of indirect transfer of shares through a
trust whereby the sponsoring corporation retains voting rights and
effectively influences when the shares can be sold. In 2001 the GOJ
created the Banks\' Shareholdings Purchase Corporation to facilitate
sale of bank cross-held shares.

In another useful innovation, the Diet approved amendments to the
Company Law permitting domestic stock swaps, through which one of the
parties becomes a wholly owned subsidiary company and the other a parent
company. The GOJ provided special tax treatment to allow deferment of
taxes on capital gains on stocks involved in such swaps at the time of
exchange and transfer. However, for a foreign investor to take advantage
of these new rules, it must legally establish a Japanese subsidiary firm
to act as the counterpart to the stock exchange/transfer.

Japan\'s new 2005 Company Law provided for increased flexibility in
compensation for M&A transactions, including permitting cross-border
stock swaps in triangular merger transactions involving Japanese public
companies. These provisions will take effect in May 2007. However, in
anticipation of the new provisions, the LDP Tax Panel in December 2006
proposed tax rules, which, depending on how they are interpreted in
subsequent ordinances, could greatly, limit the effectiveness of the
triangular mergers structure for newly entering investors and limit the
potential benefits of the new law in terms of increasing inward FDI.

**Accounting and Disclosure**

Accounting and disclosure standards are an extremely important element
in assessing and improving any nation's environment for mergers and
acquisitions. Before any merger or acquisition can take place, it is
critical that the merging or purchasing corporations have the best
possible information on which to make business decisions. Implementation
of so-called "Big Bang" reforms since 1998 has significantly improved
Japan's accounting standards.

A shift to consolidated accounting was made mandatory in JFY 1999 and
\"effective control standards and influence\" standards were introduced
in place of conventional holding standards, expanding the range of
subsidiary and affiliated companies included for the settlement of
account. Consolidated disclosure of contingent liabilities, such as
guarantees, began in 1998. Since JFY 2001 all marketable financial
assets held for trading purposes including cross-shareholdings and other
long-term securities holdings are recorded at market value in Japan.

Also starting in JFY 2000, companies were required to disclose unfunded
pension liabilities by valuing pension assets and liabilities at fair
value. Fixed asset impairment accounting went into effect in JFY 2005.
This new rule would require firms to record losses if the recoverable
value of property, plant or equipment is significantly less than book
value.

The greater focus on consolidated results and mark-to-market accounting
is already having an impact and is encouraging unwinding of cross-held
shares. Corporate restructuring is accelerating, and companies are
rushing to reduce pension under-funding. Banks have stared disposing of
low-yield assets. While the recent improvement in accounting standards
and growth in M&A activity have been welcome, they have also exacerbated
the shortage of accounting professionals.

######## Taxation and M&A

Preferential tax treatment of initial public offerings remains a
problem. Under current regulations, if a company is sold in an M&A
transaction before an IPO listing, a 10 percent capital gains tax rate
applies for listed stocks. (Japan adopted a standard 20 percent capital
gains tax rate applicable from January 1, 2004. However, the capital
gains tax rate on sales of listed stocks will remain 10 percent through
the end of 2007. Tax changes proposed in December 2006 would, if
approved extend this reduced rate through 2008). Under a series of
special measures Japan has adopted to promote venture businesses, if the
founding shareholder of a qualified company sells shares in the company:

-   a 10 percent capital gains tax rate will apply if the sale is made
    prior to public listing in an M&A transaction

-   a 5 percent rate will apply if the shares are sold by the end of
    2007 *and* within three years of listing

-   from 2008, a 10 percent rate will apply to shares sold by the
    founding shareholder within three years of listing.

######## Bankruptcy Laws

An insolvent company in Japan can face liquidation under the Bankruptcy
Act or take one of four roads to reorganization: the Civil
Rehabilitation Law, the Corporate Reorganization Law, corporate
reorganization under the Commercial Code, or an out-of-court creditor
agreement.

In 2000, Japan overhauled its bankruptcy law governing small and medium
size firm bankruptcies by enacting the Civil Rehabilitation Law, which
focuses on corporate restructuring in contrast to liquidation. The law
provides improved protection of debtor assets prior to the start of
restructuring procedures, eases requirements for beginning restructuring
procedures, simplifies and rationalizes procedures for the examination
and determination of liabilities and improves procedures for approval of
rehabilitation plans. Japan's Corporate Reorganization Law, generally
used by large companies, was similarly revised in 2003. Amendments made
corporate reorganization for large companies more cost-efficient,
speedy, flexible and available at an earlier stage. By removing many
institutional barriers to the restructuring process, the new bankruptcy
regime has already accelerated the corporate restructuring process in
Japan.

In the 1990s, most corporate bankruptcies in Japan were dealt with by
out-of-court creditor agreements because court procedures were lengthy
and costly. Also the fact that bankruptcy trustees had limited powers to
oversee restructuring meant that most judicial bankruptcies ended in
liquidation, often at distress prices. In 2001, a group of Japanese
bankruptcy experts published a set of private rehabilitation guidelines,
modeled after the UK-based INSOL guidelines, for out of court corporate
rehabilitation in Japan. Out of court workouts in Japan tend to save
time and expense, although they sometimes also lack transparency and
fairness. In practice, because 100 percent creditor consensus is
required for out-of-court workouts and the court can sanction a
reorganization plan with only a majority of creditors' approval, the
last stage of an out-of-court workout is often a request for a judicial
seal of approval.

######## Credit Markets

Domestic and foreign investors have free access to a variety of credit
instruments at market rates. In general, foreign companies in Japan have
not experienced significant difficulties in obtaining funding. Most
foreign firms obtain short-term credit by borrowing from Japanese
commercial banks or one of the many (close to one hundred) foreign banks
operating in Japan. Medium-term loans are available from commercial
banks, as well as from trust banks and life insurance companies. Large
foreign firms have tended to use foreign sources for long-term financial
needs, although increasingly sophisticated derivatives products are
becoming available to assist in hedging foreign investors' perceived
risk.

## A.10 Political Violence: Rare to Unknown [**Return to top**](#chapter-6-investment-climate)

In general, political violence is rare in Japan, and acts of political
violence involving American business interests are virtually unknown.

## A.11 Corruption: Problems Remain Despite Obvious Progress [**Return to top**](#chapter-6-investment-climate)

The penal code of Japan covers crimes of official corruption. An
individual convicted under these statutes is subject, depending on the
nature of the crime, to penal servitude ranging from one month to
fifteen years, and possible fines up to three million yen or mandatory
confiscation of the monetary equivalent of the bribe.

Although the direct exchange of cash for favors from government
officials in Japan is extremely rare, some foreign Japan-watchers have
described the situation in Japan as "institutionalized corruption." The
web of close relationships between Japanese companies, politicians,
government organizations, and universities has been said to foster an
inwardly-cooperative business climate that is conducive to the awarding
of contracts, positions, etc. within a tight circle of local players.
This phenomenon manifests itself most frequently and most seriously in
Japan through the rigging of bids on government public works projects.
During 2006 three prefectural governors were forced to resign and faced
criminal prosecution for colluding with construction firms on the award
of public works contracts in exchange for bribes or political support.

The Japanese authorities have acknowledged the problem of bid rigging
and have taken a series of steps to address it. In addition to the
longstanding laws on bribery of public officials and misuse of public
funds, the Japanese government has passed legislation aimed specifically
at eliminating official collusion in bid rigging. The Bid-Rigging
Prevention Act, which came into effect in January 2003, authorizes the
Japan Fair Trade Commission (JFTC) to demand central and local
government commissioning agencies to take corrective measures to prevent
continued complicity of officials in bid-rigging activities, and to
report such measures to the JFTC. The Act also contains provisions
concerning disciplinary action against officials who have participated
in bid rigging and compensation for overcharges when the officials
caused damage to the government due to willful or grave negligence. New
ground was broken in 2005 when the JFTC invoked the Bid-rigging
Prevention Act for the first time against a central government agency in
the wake of a major bid-rigging scandal involving executives of the
state-owned corporation in charge of highway construction and
maintenance. Previous applications of the Act had been directed only at
local authorities. Nevertheless, questions remain as to whether the
Act\'s disciplinary provisions are strong enough to ensure that
officials who facilitate illegal bid rigging will be held accountable.

Complicating efforts to combat bid rigging is the phenomenon known as of
*amakudari* whereby government officials retire into top positions in
Japanese companies, usually in industries that they once regulated.
*Amakudari* employees are particularly common in the financial,
construction, transportation, and pharmaceutical industries --- which,
not coincidentally, are traditionally heavily regulated. Foreign
companies usually do not enjoy such pipelines into the bureaucracy, and
thus are somewhat disadvantaged in their ability to understand and deal
with laws, regulations, and informal ministry guidance. This
disadvantage has been ameliorated somewhat in recent years by the
introduction of more transparent administrative procedures. In addition,
egregious examples of bid-rigging undertaken through *amakudari*
connections have led to reform efforts. For example, following the May
2005 revelation of a major bid-rigging conspiracy tied to government
tenders for steel bridge construction, both the Ministry of Land,
Infrastructure, and Transport (MLIT) and the Japan Highway Public
Corporation issued new, stricter guidelines on post-retirement
employment by officials and executives. In 2006, MLIT took an additional
measure against *amakudari* by requiring all companies doing business
with the Ministry to disclose whether they have employed former MLIT
officials on their staffs. The Japanese government also announced plans
to introduce legislation during the 2007 regular Diet session that would
allow the imposition of prison sentences on any central government
officials who pressure companies to provide them with post-retirement
jobs or who, after retirement, seek favors from their previous
government agencies for their new private-sector employers.

While there have been some high profile exposures of officials having
either given or accepted bribes, the Japanese government does not have
an aggressive record of criminal prosecution. Those prosecuted have
generally received suspended sentences. Nevertheless, surcharges applied
by the JFTC and fines imposed by the courts on companies for violations
of the Anti-monopoly Act have increased significantly, particularly
since new amendments to the Act came into effect at the beginning of
2006. Early evidence indicates that these measures have had a deterrent
effect on bid rigging, with winning bids for government contracts
dropping precipitously from over 90 percent of the government\'s
estimated cost to only 50-60 percent on some major projects. Despite
these improvements at the central government level, however, indications
are that bid rigging remains rife in Japan\'s localities. As of the end
of December 2006, 18 of Japan\'s 47 prefectures had yet to implement
fully central government guidelines for open bidding on public works
projects and less than half of the country\'s 1,827 municipalities had
open bidding mechanisms in place.

With respect to corporate officers who accept bribes, Japanese law also
provides for company directors to be found personally liable for the
amount of the bribe, and some judgments have been rendered against
company directors. This may pose a significant deterrent to the payment
of bribes, as individuals are held personally liable without the shield
of the company to protect them, although there has been discussion at
various times within the ruling political party since 1993 when the law
was amended to facility the filing of shareholder derivative suits of
possible new rules to make it more difficult to file shareholder
derivative lawsuits, a position supported by the conservative Japan
Business Federation (Nippon Keidanren).

Japan has also ratified the OECD anti-bribery convention, which bans the
bribing of government officials in countries outside Japan. The OECD has
identified deficiencies in Japan\'s implementing legislation, some of
which the government of Japan has taken steps to rectify, but an OECD
follow-up examination in February 2006 concluded that \"Japanese law
enforcement authorities have still not made adequate efforts to
investigate and prosecute foreign bribery cases.\" In May 2004, Japan
amended the unfair competition prevention law (UCPL) to extend national
jurisdiction to cover the crime of bribery and, in April 2006, made
changes to the corporation tax law and the income tax law for the
purpose of expressly denying the tax deductibility of bribes to foreign
public officials. In addition, Japan extended the statute of limitations
for prosecuting natural persons and corporate bodies from three to five
years. Nevertheless, as of January 2007, Japan had yet to file any
foreign bribery cases.

## B. Bilateral Investment Agreements [**Return to top**](#chapter-6-investment-climate)

The 1952 U.S.-Japan Treaty of Friendship, Commerce, and Navigation gives
national treatment and most favored nation treatment to most U.S.
investments in Japan. In addition, Japan has bilateral investment
treaties with the following countries or customs territories: Egypt, Sri
Lanka, China, Hong Kong SAR, Turkey, Pakistan, Bangladesh, Russia,
Mongolia, Vietnam and the Republic of Korea. Japan also has Economic
Partnership Agreements (its term for a free trade agreement) that
contain investment chapters with the following countries: Singapore,
Mexico, Malaysia and the Philippines.

######## U.S.-Japan Investment Initiative

U.S. Government concerns regarding barriers to foreign investment in
Japan continue to be addressed through bilateral discussions under the
U.S.-Japan Economic Partnership for Growth, established by President
Bush and Prime Minister Koizumi in June 2001. The Investment Initiative
Working Group has held biannual session for the past five years to
discuss policy measures to improve the investment climate in both
countries and has pursued a vigorous program of public outreach. In
order to increase business awareness and receptiveness to FDI,
investment promotion seminars were held in the Japanese cities of Kobe,
Fukuoka, and Nagoya in 2002; Osaka and Sapporo in 2003; Kitakyushu and
Kyoto in 2004; Nagoya and Chiba in 2005; and Sendai and Yokohama in
2006. Similarly, investment symposia were held in New York and Chicago
in 2002; San Francisco and Chicago in 2003; Atlanta and Los Angeles in
2004; New York and San Jose, California, in 2005; and Santa Clara,
California in 2006.

## C. OPIC And Other Investment Insurance Programs: Not Available

##  [**Return to top**](#chapter-6-investment-climate)

OPIC insurance and finance programs are not available in Japan. Japan
has been a member of the Multilateral Investment Guarantee Agency (MIGA)
since it was established in 1988. Japan\'s capital subscription to the
organization is the second largest among member countries, after the
United States.

## D. Labor: Toward More Flexibility [**Return to top**](#chapter-6-investment-climate)

The Japanese labor market today suffers from demographic,
macro-economic, and structural pressures, which are beginning to change
traditional Japanese employment practices. The regulatory philosophy
that has formed Japan\'s post-war labor laws is also changing. Foreign
investors seeking to hire highly qualified workers in Japan should
benefit from many of these changes.

Japanese employment practices have been said to rest on \"three
pillars:\" lifetime employment, seniority-based wages, and enterprise
unions. In fact, these three aspects of the Japanese labor market have
always applied only to the larger firms, and today all three are
undergoing rapid transformation. Demographic pressures --- fewer young
workers and a rapidly aging labor force --- as well as the need for
structural changes in the Japanese economy are forcing many firms to
abandon both lifetime employment guarantees and seniority-based wages in
favor of merit-based pay scales and limited-term contracts. Also,
although labor unions play a role in the annual determination of wage
scales throughout the economy, that role is shrinking. As of June 2006,
trade union membership as a portion of the labor force was 18.2 percent,
down 0.5 percent from the previous year. The figure has been declining
since 1976. However, the number of part-timer workers who are union
members rose a point to 4.3 percent as a result of strengthened
unionization efforts by some labor unions.

Investors should be aware of Japan\'s high wage structure. According to
a September 2006 MHLW survey, the average monthly wage for a salaried
worker in Japan was 276,818 yen. This was only 0.1 percent above a year
earlier. This slow growth in average wages in the midst of a return to
economic growth does not reflect slack demand for labor but rather
increased hiring of younger workers to replace the expected surge in
retirements of baby boomers over the next few years. Occupational wage
differentials are much smaller than in most countries. According to the
Ministry of Health, Labor and Welfare's (MHLW) statistics, base wages,
including basic benefits, are 74.3 percent of total wage costs. Annual
summer and year-end bonuses made up the rest. Relatively high statutory
welfare contributions are also required for basic government pensions,
health and accident insurance, and unemployment insurance. Most
companies also incur other employee welfare costs for family and/or
transportation allowances, company-provided pension schemes, and such
in-kind payments as housing for some employees. Off-setting these high
wage costs, of course, is the fact that the Japanese work force is
highly educated, disciplined, loyal to their employer, and motivated to
assure the economic well-being of the company.

Japanese workers have traditionally been classified as being either
\"regular\" or \"other\" employees and this system is, to a considerable
degree, still in place today. Regular employees are usually recruited
directly from schools or universities and given an employment contract
with no fixed duration. Other employees are given fixed duration
employment contracts, which generally cannot exceed one year but may be
renewed several times over. Still other employees include part-timers,
interns, and \"dispatched workers\" --- as workers from temporary work
agencies are called in Japan. Until very recently, only a few
occupations could be handled by dispatched worker agencies but this is
one area where Japanese labor law has in fact been deregulated, thus the
number and types of dispatched workers have increased substantially over
the past several years.

The regulation of private, fee-charging employment agencies ---
including executive search firms --- has also recently been liberalized.
Although a fairly time-consuming and bureaucratic licensing procedure is
still required, private employment agencies can now serve virtually the
entire range of occupations. On-line, Internet based, job seeking and
placement services are, however, still in their infancy in Japan ---
constrained at least partly by a MHLW requirement that every employment
agency must personally interview each of its clients.

Defined contribution pensions, introduced in October 2001, should
promote labor mobility, as workers will be able to carry their pension
funds to other jobs, but the ceiling on contributions needs to be raised
to realize the full potential of the move. The MHLW has begun a five
year review of the defined contribution pension scheme, as called for in
the 2001 law. The review will verify how companies are implementing
these programs and depending on the outcome of that review, the
government may consider raising current contribution ceilings.

## E. Foreign-Trade Zones / Free Ports / Special Zones for Structural Reform [**Return to top**](#chapter-6-investment-climate)

Japan no longer has any free-trade zones or free ports. Customs
authorities, however, do allow the bonding of some warehousing and
processing facilities in certain areas adjacent to ports on a
case-by-case basis.

In 2003, the government of Prime Minister Koizumi introduced the Special
Zones for Structural Reform initiative with the goal of helping
revitalize Japan\'s regional economies through locally led regulatory
and structural reforms. A small number of the Special Zones approved
under the initiative have helped to remove regulatory barriers that
limit U.S. business market entry and foreign investment into Japan; for
example, Japan reduced customs overtime charges within its International
Physical Distribution Zones by 50 percent in 2004. The majority of
Special Zones to date, however, have not offered significant
market-opening opportunities for foreign investors. (For more details,
*see also* the section on "Investment Incentives" under **[Openness To
Foreign Investment: Few Restrictions, but Unique
Challenges](#few-restrictions-but-unique-challenges-return-to-top),**
*supra*.)

## F. Investment Data [**Return to top**](#chapter-6-investment-climate)

FDI in Japan has soared since the mid 1990s with Japan's FDI stock
increasing (on a yen basis) from 3.0 trillion yen at the end of 1998 to
11.9 trillion yen at year end 2005. Flows have been equally strong over
the same period but net inflow dropped significantly in 2006 with a
number of high profile disinvestment cases. Much of this increase is due
to ongoing reforms in a number of sectors, including finance,
communication and distribution, which have encouraged foreign investment
in those sectors. At the same time, the GOJ has undertaken a concerted
campaign to build Japan's stock of FDI and has established a highly
professional interagency process to promote Japan as a destination for
FDI and to provide practical assistance to investors seeking to enter
the Japanese market. This policy initiative has shown some success but
still runs up the strong aversion of Japanese senior executives, many of
whom still view cross-border triangular merger as inherently "hostile"
and "abusive" and believe potential foreign acquirers as only interested
in short-term profits. These attitudes are only changing slowly. In CY
2005, Japan\'s overseas FDI soared to \$45.5 billion from the previous
year level of \$31.0 billion from the previous year\'s level of \$28.8
billion. The increase is largely due to strong flows to both North and
South America and to a lesser degree, East Asia, other than China. China
remains the number two destination for Japanese investment behind the
United States. All data in the tables below is from MOF and JETRO,
current as of January 2007, and converted into dollars using each
year\'s average exchange rate: CY00 data at 107.77 yen to the dollar, CY
01 data at 121.53 yen to the dollar, CY 02 data at 125.31 yen to the
dollar, CY03 data at 115.93 yen to the dollar, JFY03 data at 113.03 yen
to the dollar, CY 2004 data at 108.19 yen to the dollar, JFY 2004 data
at 107.49 yen to the dollar, CY 2005 data at 110.21 yen to the dollar
and JFY 2005 data at 113.26 yen to the dollar.

+-------------------+----------------------+--------------------------+
| **TABLE 1a**      |                      |                          |
+-------------------+----------------------+--------------------------+
| **Annual New FDI  |                      |                          |
| into Japan**      |                      |                          |
+-------------------+----------------------+--------------------------+
| *(Billions of     |                      |                          |
| Dollars,*         |                      |                          |
|                   |                      |                          |
| *Ba               |                      |                          |
| lance-of-Payments |                      |                          |
| Basis)*           |                      |                          |
+-------------------+----------------------+--------------------------+
| ###### JFY        | 1997                 | 3.20                     |
+-------------------+----------------------+--------------------------+
|                   | 1998                 | 3.27                     |
+-------------------+----------------------+--------------------------+
|                   | 1999                 | 12.31                    |
+-------------------+----------------------+--------------------------+
|                   | 2000                 | 8.23                     |
+-------------------+----------------------+--------------------------+
|                   | 2001                 | 6.19                     |
+-------------------+----------------------+--------------------------+
|                   | 2002                 | 9.09                     |
+-------------------+----------------------+--------------------------+
|                   | 2003                 | 6.24                     |
+-------------------+----------------------+--------------------------+
|                   | 2004                 | 7.81                     |
+-------------------+----------------------+--------------------------+
|                   | 2005                 | 3.22                     |
+-------------------+----------------------+--------------------------+
| Source:           |                      |                          |
| http:/            |                      |                          |
| /www.jetro.go.jp/ |                      |                          |
| en/stats/statisti |                      |                          |
| cs/bpfdi_01_e.xls |                      |                          |
+-------------------+----------------------+--------------------------+

+---------------------+---------------------+--------------------------+
| **TABLE 1b**        |                     |                          |
+---------------------+---------------------+--------------------------+
| **Ratio of Japan's  |                     |                          |
| Inward**            |                     |                          |
|                     |                     |                          |
| **to Outward FDI    |                     |                          |
| Flows**             |                     |                          |
+---------------------+---------------------+--------------------------+
| *(                  |                     |                          |
| Balance-of-Payments |                     |                          |
| Basis;*             |                     |                          |
|                     |                     |                          |
| *Net and Flow)*     |                     |                          |
+---------------------+---------------------+--------------------------+
| **JFY**             | 1997                | 1: 8.1                   |
+---------------------+---------------------+--------------------------+
|                     | 1998                | 1: 7.5                   |
+---------------------+---------------------+--------------------------+
|                     | 1999                | 1: 1.8                   |
+---------------------+---------------------+--------------------------+
|                     | 2000                | 1: 3.8                   |
+---------------------+---------------------+--------------------------+
|                     | 2001                | 1: 6.2                   |
+---------------------+---------------------+--------------------------+
|                     | 2002                | 1: 3.5                   |
+---------------------+---------------------+--------------------------+
|                     | 2003                | 1: 4.6                   |
+---------------------+---------------------+--------------------------+
|                     | 2004                | 1: 4.0                   |
+---------------------+---------------------+--------------------------+
|                     | 2005                | 1: 14.1                  |
+---------------------+---------------------+--------------------------+
| Source:             |                     |                          |
| http://www.jetro.go |                     |                          |
| .jp/en/stats/statis |                     |                          |
| tics/bpfdi_02_e.xls |                     |                          |
+---------------------+---------------------+--------------------------+

  ----------------------------------------------------------- ------------ ------------ ------------ ------------ ------------
  **TABLE 2**                                                                                                     

  **Foreign Direct Investment in Japan, by Country**                                                              

  ***(Millions of dollars; net and flow; balance-of-payments                                                      
  basis)***                                                                                                       

                                                              **CY2001**   **CY2002**   **CY2003**   **CY2004**   **CY2005**

  **North America**                                           4,268        3,019        -617         2,294        -636

  U.S.A.                                                      3,492        2,451        -641         1,407        309

  Canada                                                      776          569          25           890          -944

  **Asia**                                                    127          7            371          994          1,564

  China                                                       2            1            -2           -9           12

  Hong Kong                                                   94           -17          38           295          960

  Taiwan                                                      164          -24          80           74           -26

  Korea                                                       38           63           -101         251          32

  Singapore                                                   22           115          329          389          598

  Thailand                                                    -197         -125         28           -1           -6

  **Europe**                                                  2,863        6,261        5,103        5,623        1,122

  Germany                                                     241          551          1,764        1,170        237

  United Kingdom                                              -1,246       540          -442         -310         131

  France                                                      423          2,213        651          1,049        -77

  Netherlands                                                 2,530        1,732        3,200        3,611        2,541

  Switzerland                                                 126          1,043        -286         108          -749

  **Latin America**                                           -1,013       -176         1,376        -1,114       1,276

  Mexico                                                      0            2            2            0            \-

  Brazil                                                      0            0            0            20           2

  Cayman Isles                                                -1,051       -98          1,347        752          1,069

  **TOTAL**                                                   6,191        9,089        6,238        7,808        3,223

  *Note: Negative figures indicate net outflow.*                                                                  

  Source:                                                                                                         
  http://www.jetro.go.jp/en/stats/statistics/bpfdi_02_e.xls                                                       
  ----------------------------------------------------------- ------------ ------------ ------------ ------------ ------------

  ------------------------------------------------------------ ---------- ---------- ------------ ---------- -----------
  **TABLE 3**                                                                                                

  **Japan's FDI Inward Stock by Country/Region**                                                             

  **(Millions of dollars; International Investment Position)**                                               

                                                               **End of   **End of   **End of     **End of   **End of
                                                               2001**     2002**     2003**       2004**     2005**

  **North America**                                            20,050     28,289     40,222       45,919     47,262

  U.S.A                                                        18,465     35,743     36,612       40,872     43,459

  Canada                                                       1,586      2,647      3,610        5,049      3,803

  **Asia**                                                     3,368      3,705      4,904        5,889      6,636

  China                                                        73         80         90           90         101

  Hong Kong                                                    1,414      1,460      1,793        2,136      2,586

  Taiwan                                                       1,399      1,379      1,591        1,605      1,378

  Korea                                                        190        210        244          537        310

  Singapore                                                    303        480        1,039        1,380      2,138

  Thailand                                                     -91        17         49           48         42

  **Europe**                                                   24,709     33,350     39,273       41,779     97,728

  Germany                                                      3,896      4,142      4,978        3,915      5,847

  United Kingdom                                               2,422      2,695      1,692        2,310      3,004

  France                                                       7,021      10,348     12,321       13,693     10,672

  Netherlands                                                  7,331      9,868      13,541       14,210     11,540

  Switzerland                                                  1,958      2,778      2,646        3,172      2,241

  **Latin America**                                            1,733      2,408      4,764        3,004      8,138

  Mexico                                                       1          3          5            5          4

  Brazil                                                       11         12         14           33         30

  Cayman Isles                                                 1,625      1,749      4,186        2,666      5,544

  **TOTAL**                                                    50,446     78,490     89,838       97,305     100,331

  *Note: Negative figures indicate net outflow.*                                                             

  Source:                                                                                                    
  http://www.jetro.go.jp/en/stats/statistics/iipfdi_02_e.xls                                                 
  ------------------------------------------------------------ ---------- ---------- ------------ ---------- -----------

+----------------------+--------+--------+--------+--------+--------+
| **TABLE 4**          |        |        |        |        |        |
+----------------------+--------+--------+--------+--------+--------+
| **Foreign Direct     |        |        |        |        |        |
| Investment in Japan, |        |        |        |        |        |
| by industry**        |        |        |        |        |        |
+----------------------+--------+--------+--------+--------+--------+
| ***(Millions of      |        |        |        |        |        |
| dollars; net and     |        |        |        |        |        |
| flow;***             |        |        |        |        |        |
|                      |        |        |        |        |        |
| ***reporting basis   |        |        |        |        |        |
| for JFY2001--- 04,   |        |        |        |        |        |
| balance-and-payment  |        |        |        |        |        |
| basis for CY         |        |        |        |        |        |
| 2005)***             |        |        |        |        |        |
+----------------------+--------+--------+--------+--------+--------+
|                      | **JFY  | **JFY  | **JFY  | **JFY  | **CY   |
|                      | 2001** | 2002** | 2003** | 2004** | 2005** |
+----------------------+--------+--------+--------+--------+--------+
| **Manufacturing**    | 2,621  | 6,749  | 4,310  | 952    | -2,191 |
+----------------------+--------+--------+--------+--------+--------+
| Machinery            | 1,107  | 2,220  | 2,489  | 402    | ---    |
+----------------------+--------+--------+--------+--------+--------+
| General machinery    | ---    | ---    | ---    | ---    | 164    |
+----------------------+--------+--------+--------+--------+--------+
| Electric machinery   | ---    | ---    | ---    | ---    | -1,195 |
+----------------------+--------+--------+--------+--------+--------+
| Transportation       | ---    | ---    | ---    | ---    | 32     |
| equipment            |        |        |        |        |        |
+----------------------+--------+--------+--------+--------+--------+
| Precision machinery  | ---    | ---    | ---    | ---    | -59    |
+----------------------+--------+--------+--------+--------+--------+
| Chemicals            | 924    | 3,416  | 970    | 199    | ---    |
+----------------------+--------+--------+--------+--------+--------+
| Chemicals and        | ---    | ---    | ---    | ---    | -1,168 |
| pharmaceuticals      |        |        |        |        |        |
+----------------------+--------+--------+--------+--------+--------+
| Metals               | 1      | 136    | 25     | 7      | ---    |
+----------------------+--------+--------+--------+--------+--------+
| Iron, non-ferrous &  | ---    | ---    | ---    | ---    | -34    |
| metals               |        |        |        |        |        |
+----------------------+--------+--------+--------+--------+--------+
| Rubber & leather     | ---    | ---    | ---    | ---    | 1      |
+----------------------+--------+--------+--------+--------+--------+
| Petroleum            | 70     | 508    | 114    | 166    | -44    |
+----------------------+--------+--------+--------+--------+--------+
| Textiles             | 23     | 33     | 10     | 83     | 188    |
+----------------------+--------+--------+--------+--------+--------+
| Foods                | 281    | 68     | 448    | 32     | -211   |
+----------------------+--------+--------+--------+--------+--------+
| Glass & ceramics     | 75     | 3      | 7      | ---    | 103    |
+----------------------+--------+--------+--------+--------+--------+
| Others               | 84     | 365    | 248    | 63     | ---    |
+----------------------+--------+--------+--------+--------+--------+
| *                    | 14,784 | 11,186 | 14,412 | 36,507 | 5,414  |
| *Non-Manufacturing** |        |        |        |        |        |
+----------------------+--------+--------+--------+--------+--------+
| Farming & forestry   | ---    | ---    | ---    | ---    | -1     |
+----------------------+--------+--------+--------+--------+--------+
| Fishery & marine     | ---    | ---    | ---    | ---    | 0      |
| products             |        |        |        |        |        |
+----------------------+--------+--------+--------+--------+--------+
| Mining               | ---    | ---    | ---    | ---    | 0      |
+----------------------+--------+--------+--------+--------+--------+
| Finance & insurance  | 5,281  | 5,306  | 9,005  | 27,693 | 645    |
+----------------------+--------+--------+--------+--------+--------+
| Trading              | 871    | 2,118  | 3,265  | 999    | ---    |
+----------------------+--------+--------+--------+--------+--------+
| Wholesale & retail   | ---    | ---    | ---    | ---    | 1,157  |
+----------------------+--------+--------+--------+--------+--------+
| Services             | 1,330  | 2,025  | 955    | 1,263  | 178    |
+----------------------+--------+--------+--------+--------+--------+
| Real estate          | 588    | 239    | 609    | 213    | 15     |
+----------------------+--------+--------+--------+--------+--------+
| Telecommunication    | 6,622  | 1,412  | 535    | 4,338  | ---    |
+----------------------+--------+--------+--------+--------+--------+
| Communication        | ---    | ---    | ---    | ---    | 912    |
+----------------------+--------+--------+--------+--------+--------+
| Transportation       | 18     | 22     | 15     | 1,947  | 2,108  |
+----------------------+--------+--------+--------+--------+--------+
| Construction         | 69     | 19     | 10     | 31     | 41     |
+----------------------+--------+--------+--------+--------+--------+
| Others               | 6      | 45     | 18     | 24     | ---    |
+----------------------+--------+--------+--------+--------+--------+
| **TOTAL**            | 17,340 | 17,935 | 18,722 | 36,507 | 3,223  |
+----------------------+--------+--------+--------+--------+--------+
| *Note: Negative      |        |        |        |        |        |
| figures indicate net |        |        |        |        |        |
| outflow.*            |        |        |        |        |        |
+----------------------+--------+--------+--------+--------+--------+
| Sources:             |        |        |        |        |        |
| http://www.jetro.    |        |        |        |        |        |
| go.jp/en/stats/stati |        |        |        |        |        |
| stics/rnfdi_04_e.xls |        |        |        |        |        |
|                      |        |        |        |        |        |
| http://www.jetro.    |        |        |        |        |        |
| go.jp/en/stats/stati |        |        |        |        |        |
| stics/bpfdi_06_e.xls |        |        |        |        |        |
+----------------------+--------+--------+--------+--------+--------+

  ----------------------------------------------------------- ------------ ------------ ------------ ------------ ------------
  **TABLE 5**                                                                                                     

  **Japanese Direct Investment Overseas, by Country**                                                             

  ***(Millions of dollars; net and flow; balance-of-payments                                                      
  basis)***                                                                                                       

                                                              **CY2001**   **CY2002**   **CY2003**   **CY2004**   **CY2005**

  **North America**                                           7,631        8,509        11,003       7,601        13,168

  U.S.A.                                                      7,031        7,441        10,691       7,559        12,126

  Canada                                                      599          1,068        313          42           1,041

  **Asia**                                                    7,797        8,177        5,028        10,531       16,188

  China                                                       2,158        2,622        3,980        5,863        6,575

  Hong Kong                                                   496          229          -62          491          1,782

  Taiwan                                                      361          451          217          473          828

  R. Korea                                                    650          437          333          771          1,736

  Singapore                                                   951          1,884        -457         138          556

  Thailand                                                    1,594        528          678          1,867        2,126

  Indonesia                                                   481          307          484          498          1,185

  Malaysia                                                    570          257          -504         163          525

  Philippines                                                 275          1,074        114          6            441

  India                                                       150          146          124          139          265

  **Europe**                                                  18,206       9,721        7,943        7,097        7,509

  Germany                                                     687          571          714          645          269

  U.K                                                         13,142       2,033        2,468        1,649        2,903

  France                                                      222          3,987        1,153        25           540

  Netherlands.                                                3,094        1,447        3,454        3,337        3,314

  Sweden                                                      -108         -327         119          -70          82

  Spain                                                       -70          87           -145         183          363

  **Latin America**                                           4,271        3,965        3,150        3,120        6,402

  Mexico                                                      1            225          372          191          630

  Brazil                                                      864          743          1,068        -65          953

  Cayman Isles                                                1,474        3,316        1,636        2,726        3,915

  **Oceania**                                                 670          1,440        1,139        1,856        944

  Australia                                                   554          1,151        964          1,651        639

  **Middle East**                                             -1           89           -38          -63          543

  UAE                                                         -38          25           -47          -19          19

  Saudi Arabia                                                35           81           20           -38          495

  **Africa**                                                  -184         223          430          378          26

  **TOTAL**                                                   38,495       92,039       28,767       30,962       45,461

  *Note: Negative figures indicate net outflow.*                                                                  

  Source:                                                                                                         
  http://www.jetro.go.jp/en/stats/statistics/bpfdi_01_e.xls                                                       
  ----------------------------------------------------------- ------------ ------------ ------------ ------------ ------------

<table style="width:100%;">
<colgroup>
<col style="width: 29%" />
<col style="width: 1%" />
<col style="width: 12%" />
<col style="width: 2%" />
<col style="width: 12%" />
<col style="width: 0%" />
<col style="width: 13%" />
<col style="width: 0%" />
<col style="width: 12%" />
<col style="width: 0%" />
<col style="width: 12%" />
</colgroup>
<tbody>
<tr class="odd">
<td colspan="11"><strong>TABLE 6</strong></td>
</tr>
<tr class="even">
<td colspan="11"><strong>Japanese Direct Investment Overseas, by
Industry</strong></td>
</tr>
<tr class="odd">
<td colspan="11"><p><strong><em>(Millions of dollars;</em> <em>net and
flow;</em></strong></p>
<p><em><strong>reporting basis for JFY2001—04, balance-and-payment basis
for CY 2005)</strong></em></p></td>
</tr>
<tr class="even">
<td></td>
<td colspan="2"><strong>JFY2001</strong></td>
<td colspan="2"><strong>JFY2002</strong></td>
<td colspan="3"><strong>JFY2003</strong></td>
<td colspan="2"><strong>JFY2004</strong></td>
<td><strong>CY2005</strong></td>
</tr>
<tr class="odd">
<td><strong>Manufacturing</strong></td>
<td colspan="2">14,218</td>
<td colspan="2">14,689</td>
<td colspan="3">16,246</td>
<td colspan="2">13,750</td>
<td>26,146</td>
</tr>
<tr class="even">
<td>Electrical</td>
<td colspan="2">3,865</td>
<td colspan="2">3920</td>
<td colspan="3">5,005</td>
<td colspan="2">2,039</td>
<td>—</td>
</tr>
<tr class="odd">
<td>Chemicals</td>
<td colspan="2">1,511</td>
<td colspan="2">1,916</td>
<td colspan="3">4,749</td>
<td colspan="2">3,530</td>
<td>—</td>
</tr>
<tr class="even">
<td>Chemicals and Pharmaceuticals</td>
<td colspan="2">—</td>
<td colspan="2">—</td>
<td colspan="3">—</td>
<td colspan="2">—</td>
<td>3,363</td>
</tr>
<tr class="odd">
<td>Transport</td>
<td colspan="2">4,342</td>
<td colspan="2">4,916</td>
<td colspan="3">3,013</td>
<td colspan="2">3,601</td>
<td>—</td>
</tr>
<tr class="even">
<td>Food</td>
<td colspan="2">824</td>
<td colspan="2">222</td>
<td colspan="3">428</td>
<td colspan="2">1,088</td>
<td>1,685</td>
</tr>
<tr class="odd">
<td>Metals</td>
<td colspan="2">658</td>
<td colspan="2">633</td>
<td colspan="3">1,078</td>
<td colspan="2">1,391</td>
<td>—</td>
</tr>
<tr class="even">
<td>Iron, Non-Ferrous &amp; Metals</td>
<td colspan="2">—</td>
<td colspan="2">—</td>
<td colspan="3">—</td>
<td colspan="2">—</td>
<td>1,331</td>
</tr>
<tr class="odd">
<td>Machinery</td>
<td colspan="2">1,219</td>
<td colspan="2">1,288</td>
<td colspan="3">956</td>
<td colspan="2">1,108</td>
<td>—</td>
</tr>
<tr class="even">
<td>General Machinery</td>
<td colspan="2">—</td>
<td colspan="2">—</td>
<td colspan="3">—</td>
<td colspan="2">—</td>
<td>1,296</td>
</tr>
<tr class="odd">
<td>Electric Machinery</td>
<td colspan="2">—</td>
<td colspan="2">—</td>
<td colspan="3">—</td>
<td colspan="2">—</td>
<td>4,377</td>
</tr>
<tr class="even">
<td>Transportation Equip.</td>
<td colspan="2">—</td>
<td colspan="2">—</td>
<td colspan="3">—</td>
<td colspan="2">—</td>
<td>8,611</td>
</tr>
<tr class="odd">
<td>Precision Machinery</td>
<td colspan="2">—</td>
<td colspan="2">—</td>
<td colspan="3">—</td>
<td colspan="2">—</td>
<td>1,419</td>
</tr>
<tr class="even">
<td>Rubber and Leather</td>
<td colspan="2">—</td>
<td colspan="2">—</td>
<td colspan="3">—</td>
<td colspan="2">—</td>
<td>831</td>
</tr>
<tr class="odd">
<td>Lumber &amp; Pulp</td>
<td colspan="2">7232</td>
<td colspan="2">240</td>
<td colspan="3">28</td>
<td colspan="2">119</td>
<td>826</td>
</tr>
<tr class="even">
<td>Textiles</td>
<td colspan="2">216</td>
<td colspan="2">199</td>
<td colspan="3">178</td>
<td colspan="2">172</td>
<td>416</td>
</tr>
<tr class="odd">
<td>Petroleum</td>
<td colspan="2">—</td>
<td colspan="2">—</td>
<td colspan="3">—</td>
<td colspan="2">—</td>
<td>531</td>
</tr>
<tr class="even">
<td>Glass &amp; Ceramics</td>
<td colspan="2">—</td>
<td colspan="2">—</td>
<td colspan="3">—</td>
<td colspan="2">—</td>
<td>258</td>
</tr>
<tr class="odd">
<td>Other</td>
<td colspan="2">850</td>
<td colspan="2">1,354</td>
<td colspan="3">810</td>
<td colspan="2">702</td>
<td>—</td>
</tr>
<tr class="even">
<td><strong>Non-Manufacturing</strong></td>
<td colspan="2">17,796</td>
<td colspan="2">21,860</td>
<td colspan="3">19,599</td>
<td colspan="2">21,010</td>
<td>19,315</td>
</tr>
<tr class="odd">
<td>Finance/Insurance</td>
<td colspan="2">10,753</td>
<td colspan="2">12,801</td>
<td colspan="3">7,639</td>
<td>11,613</td>
<td colspan="2">9,227</td>
</tr>
<tr class="even">
<td>Trade</td>
<td colspan="2">2,700</td>
<td colspan="2">3,694</td>
<td colspan="3">4,315</td>
<td>1,884</td>
<td colspan="2">1,086</td>
</tr>
<tr class="odd">
<td>Wholesale &amp; Retail</td>
<td colspan="2">—</td>
<td colspan="2">—</td>
<td colspan="3">—</td>
<td>—</td>
<td colspan="2">4,623</td>
</tr>
<tr class="even">
<td>Real Estate</td>
<td colspan="2">692</td>
<td colspan="2">1,449</td>
<td colspan="3">1,494</td>
<td>370</td>
<td colspan="2">-851</td>
</tr>
<tr class="odd">
<td>Services</td>
<td colspan="2">1,612</td>
<td colspan="2">1,836</td>
<td colspan="3">1,940</td>
<td>2,360</td>
<td colspan="2">—</td>
</tr>
<tr class="even">
<td>Transportation</td>
<td colspan="2">1,387</td>
<td colspan="2">1,503</td>
<td colspan="3">1,876</td>
<td>1,286</td>
<td colspan="2">824</td>
</tr>
<tr class="odd">
<td>Mining</td>
<td colspan="2">495</td>
<td colspan="2">367</td>
<td colspan="3">1,915</td>
<td>2,054</td>
<td colspan="2">1,372</td>
</tr>
<tr class="even">
<td>Construction</td>
<td colspan="2">65</td>
<td colspan="2">121</td>
<td colspan="3">258</td>
<td>280</td>
<td colspan="2">148</td>
</tr>
<tr class="odd">
<td>Farming / Forestry</td>
<td colspan="2">36</td>
<td colspan="2">7</td>
<td colspan="3">158</td>
<td>38</td>
<td colspan="2">23</td>
</tr>
<tr class="even">
<td>Fisheries</td>
<td colspan="2">27</td>
<td colspan="2">56</td>
<td colspan="3">4</td>
<td>24</td>
<td colspan="2">-44</td>
</tr>
<tr class="odd">
<td>Communications</td>
<td colspan="2">—</td>
<td colspan="2">—</td>
<td colspan="3">—</td>
<td>—</td>
<td colspan="2">1,712</td>
</tr>
<tr class="even">
<td>Other</td>
<td colspan="2">26</td>
<td colspan="2">27</td>
<td colspan="3">—</td>
<td>—</td>
<td colspan="2">—</td>
</tr>
<tr class="odd">
<td colspan="2"><strong>TOTAL</strong></td>
<td colspan="2">32,297</td>
<td colspan="2">36,858</td>
<td>36,092</td>
<td colspan="3">34,548</td>
<td>45,461</td>
</tr>
<tr class="even">
<td colspan="11"><em>Note: Negative figures indicate net
outflow.</em></td>
</tr>
<tr class="odd">
<td colspan="11"><p>Sources:
http://www.jetro.go.jp/en/stats/statistics/rnfdi_02_e.xls</p>
<p>http://www.jetro.go.jp/en/stats/statistics/bpfdi_05_e.xls</p></td>
</tr>
</tbody>
</table>

+----------------+--------+--------+-------+-------+--------+--------+
| **TABLE 7**    |        |        |       |       |        |        |
+----------------+--------+--------+-------+-------+--------+--------+
| **Foreign      |        |        |       |       |        |        |
| Direct         |        |        |       |       |        |        |
| Investment in  |        |        |       |       |        |        |
| Japan Relative |        |        |       |       |        |        |
| to GDP**       |        |        |       |       |        |        |
+----------------+--------+--------+-------+-------+--------+--------+
| ***(Balan      |        |        |       |       |        |        |
| ce-of-payments |        |        |       |       |        |        |
| basis for      |        |        |       |       |        |        |
| CY2000         |        |        |       |       |        |        |
| onward;***     |        |        |       |       |        |        |
|                |        |        |       |       |        |        |
| ***in          |        |        |       |       |        |        |
| Trillions of   |        |        |       |       |        |        |
| Yen, Except    |        |        |       |       |        |        |
| Where          |        |        |       |       |        |        |
| Noted)***      |        |        |       |       |        |        |
+----------------+--------+--------+-------+-------+--------+--------+
|                | **CY   | **CY   | **CY2 | **CY2 | **CY   | **CY   |
|                | 2000** | 2001** | 002** | 003** | 2004** | 2005** |
+----------------+--------+--------+-------+-------+--------+--------+
| Nominal GDP    | 501.1  | 469.8  | 489.6 | 490.5 | 496.19 | 502.9  |
| (a)            |        |        |       |       |        |        |
+----------------+--------+--------+-------+-------+--------+--------+
| FDI Inflow (b) | 0.90   | 0.76   | 1.16  | 0.73  | 0.85   | 0.31   |
+----------------+--------+--------+-------+-------+--------+--------+
| b / a (%)      | 0.18   | 0.16   | 0.24  | 0.15  | 0.17   | 0.06   |
+----------------+--------+--------+-------+-------+--------+--------+
| Source:        |        |        |       |       |        |        |
| http://www     |        |        |       |       |        |        |
| .mof.go.jp/bpo |        |        |       |       |        |        |
| ffice/bpdata/f |        |        |       |       |        |        |
| di/fdi2bop.htm |        |        |       |       |        |        |
+----------------+--------+--------+-------+-------+--------+--------+

+-----------------+---------------------------------------+-----------+
| **TABLE 8**     |                                       |           |
+-----------------+---------------------------------------+-----------+
| **Examples of   |                                       |           |
| Major Foreign   |                                       |           |
| Direct          |                                       |           |
| Investments     |                                       |           |
| into Japan**    |                                       |           |
|                 |                                       |           |
| **by U.S. and   |                                       |           |
| Other Foreign   |                                       |           |
| Companies**     |                                       |           |
+-----------------+---------------------------------------+-----------+
|                 | **Company**                           | **        |
|                 |                                       | Country** |
+-----------------+---------------------------------------+-----------+
| **              | Promega K.K. Japan                    | US        |
| Biotechnology** |                                       |           |
|                 |                                       |           |
| **/ Chemicals** |                                       |           |
+-----------------+---------------------------------------+-----------+
|                 | DuPont K.K.                           | US        |
+-----------------+---------------------------------------+-----------+
|                 | Nihon L\'Oréal K.K.                   | France    |
+-----------------+---------------------------------------+-----------+
|                 | Stem Cell Sciences KK                 | Australia |
+-----------------+---------------------------------------+-----------+
|                 | Johnson & Johnson                     | US        |
+-----------------+---------------------------------------+-----------+
|                 | Dendrite International                | US        |
+-----------------+---------------------------------------+-----------+
|                 | Genzyme Japan K.K.                    | US        |
+-----------------+---------------------------------------+-----------+
|                 | Novon Japan, Inc.                     | US        |
+-----------------+---------------------------------------+-----------+
| **ICT /         | China TechFaith Wireless              | China     |
| Software**      | Communication Technology Ltd.         |           |
+-----------------+---------------------------------------+-----------+
|                 | Ellacoya Networks                     | US        |
+-----------------+---------------------------------------+-----------+
|                 | GeoVector                             | US        |
+-----------------+---------------------------------------+-----------+
|                 | Impact Investing Pty Ltd              | Australia |
+-----------------+---------------------------------------+-----------+
|                 | InterAct Technologies Japan Co., Ltd. | China     |
+-----------------+---------------------------------------+-----------+
|                 | Proofpoint                            | US        |
+-----------------+---------------------------------------+-----------+
|                 | UFIDA Software Engineering Japan Co., | China     |
|                 | Ltd.                                  |           |
+-----------------+---------------------------------------+-----------+
|                 | Genesys Conferencing KK               | France    |
+-----------------+---------------------------------------+-----------+
|                 | SIGMA-C KK                            | Germany   |
+-----------------+---------------------------------------+-----------+
|                 | Pixology Japan Ltd.                   | UK        |
+-----------------+---------------------------------------+-----------+
|                 | Cisco Systems, K.K.                   | US        |
+-----------------+---------------------------------------+-----------+
|                 | Founder International, Inc.           | China     |
+-----------------+---------------------------------------+-----------+
|                 | Ulead Systems                         | Taiwan    |
+-----------------+---------------------------------------+-----------+
|                 | IBM Japan, Ltd.                       | UK        |
+-----------------+---------------------------------------+-----------+
|                 | ARM K.K.                              | UK        |
+-----------------+---------------------------------------+-----------+
|                 | Celoxica Japan K.K.                   | UK        |
+-----------------+---------------------------------------+-----------+
|                 | Viewlocity Japan Co., Ltd.            | US        |
+-----------------+---------------------------------------+-----------+
|                 | Descartes Systems Group               | Canada    |
+-----------------+---------------------------------------+-----------+
|                 | Raxco Software                        | US        |
+-----------------+---------------------------------------+-----------+
|                 | Roxio Japan, Inc.                     | US        |
+-----------------+---------------------------------------+-----------+
|                 | Interwise Japan K.K.                  | US        |
+-----------------+---------------------------------------+-----------+
|                 | SSH Communications Security K.K.      | Finland   |
+-----------------+---------------------------------------+-----------+
|                 | Nihon Synopsys Co., Ltd.              | US        |
+-----------------+---------------------------------------+-----------+
|                 | Aspect Communications Japan Ltd.      | US        |
+-----------------+---------------------------------------+-----------+
|                 | Overture K.K.                         | US        |
+-----------------+---------------------------------------+-----------+
|                 | Juniper Networks, KK.                 | US        |
+-----------------+---------------------------------------+-----------+
|                 | Clearswift K.K.                       | UK        |
+-----------------+---------------------------------------+-----------+
|                 | Sterling Commerce K.K.                | US        |
+-----------------+---------------------------------------+-----------+
|                 | Computer Associates Japan, Ltd.       | US        |
+-----------------+---------------------------------------+-----------+
|                 | Extreme Networks K.K.                 | US        |
+-----------------+---------------------------------------+-----------+
|                 | Global Knowledge Network Japan, Ltd.  | US        |
+-----------------+---------------------------------------+-----------+
|                 | IFS Japan, Inc.                       | Sweden    |
+-----------------+---------------------------------------+-----------+
|                 | iNAGO KK                              | Canada    |
+-----------------+---------------------------------------+-----------+
|                 | Everypath, Inc.                       | US        |
+-----------------+---------------------------------------+-----------+
|                 | APC Japan, Inc.                       | US        |
+-----------------+---------------------------------------+-----------+
|                 | AdventNet, Inc.                       | US        |
+-----------------+---------------------------------------+-----------+
|                 | Polaris Software Lab Limited          | India     |
+-----------------+---------------------------------------+-----------+
|                 | Graphisoft Japan Co., Ltd.            | Hungary   |
+-----------------+---------------------------------------+-----------+
|                 | Atotech Japan                         | France    |
+-----------------+---------------------------------------+-----------+
|                 | Tera Systems                          | US        |
+-----------------+---------------------------------------+-----------+
|                 | VeriSign                              | US        |
+-----------------+---------------------------------------+-----------+
|                 | Speech Works                          | US        |
+-----------------+---------------------------------------+-----------+
|                 | Red Hat                               | US        |
+-----------------+---------------------------------------+-----------+
| **              | ANCA Pty Ltd                          | Australia |
| Manufacturing** |                                       |           |
+-----------------+---------------------------------------+-----------+
|                 | Balco Australia Pty. Ltd.             | Australia |
+-----------------+---------------------------------------+-----------+
|                 | Pelican Products                      | US        |
+-----------------+---------------------------------------+-----------+
|                 | Bosch                                 | Germany   |
+-----------------+---------------------------------------+-----------+
|                 | Lactalis Japon                        | France    |
+-----------------+---------------------------------------+-----------+
|                 | Demarle Japon Co., Ltd.               | France    |
+-----------------+---------------------------------------+-----------+
|                 | TMD Friction Japan KK                 | Germany   |
+-----------------+---------------------------------------+-----------+
|                 | dSPACE Japan K.K.                     | Germany   |
+-----------------+---------------------------------------+-----------+
|                 | ROHDE & SCHWARZ Japan K.K.            | Germany   |
+-----------------+---------------------------------------+-----------+
|                 | Campagnolo Japan Ltd.                 | Italy     |
+-----------------+---------------------------------------+-----------+
|                 | A. Proctor Group Ltd., Japan          | UK        |
+-----------------+---------------------------------------+-----------+
|                 | Rotex Japan Ltd.                      | UK        |
+-----------------+---------------------------------------+-----------+
|                 | SAINT-GOBAIN Group in Japan           | France    |
+-----------------+---------------------------------------+-----------+
|                 | Magna International, Inc.             | Canada    |
+-----------------+---------------------------------------+-----------+
|                 | MeadWestvaco K.K.                     | US        |
+-----------------+---------------------------------------+-----------+
|                 | Bolthouse Farms Japan Y.K.            | US        |
+-----------------+---------------------------------------+-----------+
|                 | Concurrent Nippon Corp.               | US        |
+-----------------+---------------------------------------+-----------+
|                 | Voith Paper Automation Japan Ltd.     | Germany   |
+-----------------+---------------------------------------+-----------+
|                 | Color Kinetics and Color Kinetics     | US        |
|                 | Japan                                 |           |
+-----------------+---------------------------------------+-----------+
|                 | Carpigiani Japan Co., Ltd.            | Italy     |
+-----------------+---------------------------------------+-----------+
|                 | Galbani Japan Company, Ltd.           | Italy     |
+-----------------+---------------------------------------+-----------+
|                 | G.D. Jidokikai K.K.                   | Italy     |
+-----------------+---------------------------------------+-----------+
|                 | Nippon RFI Shielding KK               | UK        |
+-----------------+---------------------------------------+-----------+
|                 | Lutron Electronics Company            | US        |
+-----------------+---------------------------------------+-----------+
|                 | Federal-Mogul K.K.                    | US        |
+-----------------+---------------------------------------+-----------+
|                 | Inergy Automotive Systems             | France    |
+-----------------+---------------------------------------+-----------+
|                 | Velux Japan Ltd.                      | Denmark   |
+-----------------+---------------------------------------+-----------+
|                 | Applied Materials Japan, Inc.         | US        |
+-----------------+---------------------------------------+-----------+
|                 | Continental Teves Corporation         | Germany   |
+-----------------+---------------------------------------+-----------+
|                 | Geislinger K.K.                       | Austria   |
+-----------------+---------------------------------------+-----------+
|                 | Grohe Japan Ltd.                      | Germany   |
+-----------------+---------------------------------------+-----------+
|                 | Air Products Japan, Inc.              | US        |
+-----------------+---------------------------------------+-----------+
|                 | Snap-on Tools                         | US        |
+-----------------+---------------------------------------+-----------+
|                 | Testo K.K.                            | Germany   |
+-----------------+---------------------------------------+-----------+
|                 | Trespa Japan Limited                  | Ne        |
|                 |                                       | therlands |
+-----------------+---------------------------------------+-----------+
|                 | Bodum Japan Co., Ltd.                 | Denmark   |
+-----------------+---------------------------------------+-----------+
|                 | Kennametal Hertel Japan               | US        |
+-----------------+---------------------------------------+-----------+
|                 | Dyson Japan                           | UK        |
+-----------------+---------------------------------------+-----------+
|                 | Vaisala KK                            | Finland   |
+-----------------+---------------------------------------+-----------+
|                 | A Color Kinetics Installation         | US        |
+-----------------+---------------------------------------+-----------+
| **Medical       | Pfizer Japan Inc.                     | US        |
| Care**          |                                       |           |
+-----------------+---------------------------------------+-----------+
|                 | Alcon Japan Ltd.                      | Sw        |
|                 |                                       | itzerland |
+-----------------+---------------------------------------+-----------+
|                 | Fresenius Medical Care Japan K.K.     | Germany   |
+-----------------+---------------------------------------+-----------+
|                 | Nippon Hexal Corporation              | Germany   |
+-----------------+---------------------------------------+-----------+
|                 | Widex Co., Ltd.                       | Denmark   |
+-----------------+---------------------------------------+-----------+
|                 | PAREXEL International                 | US        |
+-----------------+---------------------------------------+-----------+
|                 | KARL STORZ Endoscopy Japan K.K.       | Germany   |
+-----------------+---------------------------------------+-----------+
|                 | Draeger Medical Japan                 | Germany   |
+-----------------+---------------------------------------+-----------+
|                 | ELA Medical Inc.                      | France    |
+-----------------+---------------------------------------+-----------+
|                 | Nobel Biocare Japan                   | Sweden    |
+-----------------+---------------------------------------+-----------+
|                 | Haemonetics Corporation               | US        |
+-----------------+---------------------------------------+-----------+
|                 | Peter Brehm Japan                     | Germany   |
+-----------------+---------------------------------------+-----------+
|                 | Becton Dickinson                      | US        |
+-----------------+---------------------------------------+-----------+
| **Real Estate** | ProLogis                              | US        |
+-----------------+---------------------------------------+-----------+
|                 | Oakwood Corporate Housing             | US        |
+-----------------+---------------------------------------+-----------+
| **Servic        | Edelman                               | US        |
| es/Consulting** |                                       |           |
+-----------------+---------------------------------------+-----------+
|                 | Elanex                                | US        |
+-----------------+---------------------------------------+-----------+
|                 | HRnet One K.K.                        | Singapore |
+-----------------+---------------------------------------+-----------+
|                 | F.H. Bertling Logistics Japan KK      | Germany   |
+-----------------+---------------------------------------+-----------+
|                 | CNC Japan K.K.                        | Germany   |
+-----------------+---------------------------------------+-----------+
|                 | Datamonitor Japan                     | UK        |
+-----------------+---------------------------------------+-----------+
|                 | Christie\'s Japan                     | UK        |
+-----------------+---------------------------------------+-----------+
| **Servi         | Wall Street Institute, Japan, KK      | China     |
| ces/Education** |                                       |           |
+-----------------+---------------------------------------+-----------+
| **Ser           | Nihon Harmony Resorts KK              | Australia |
| vices/Leisure** |                                       |           |
+-----------------+---------------------------------------+-----------+
| **S             | KBS Japan KK                          | Korea     |
| ervices/Media** |                                       |           |
+-----------------+---------------------------------------+-----------+
| **Who           | Rucoline Japan Co., Ltd.              | Italy     |
| lesale/Retail** |                                       |           |
+-----------------+---------------------------------------+-----------+
|                 | Nihon Hallmark                        | US        |
+-----------------+---------------------------------------+-----------+
|                 | Puratos Japan                         | Belgium   |
+-----------------+---------------------------------------+-----------+
|                 | Chocolates El Rey Japan Co.,Ltd.      | Italy     |
+-----------------+---------------------------------------+-----------+
|                 | Loro Piana Japan Co.,Ltd              | Italy     |
+-----------------+---------------------------------------+-----------+
|                 | Freixenet Japan Inc.                  | Spain     |
+-----------------+---------------------------------------+-----------+
|                 | Chelsea Japan Co., Ltd.               | US        |
+-----------------+---------------------------------------+-----------+
|                 | Miele Japan Corporation               | Germany   |
+-----------------+---------------------------------------+-----------+
|                 | Pieroth Japan K.K.                    | Germany   |
+-----------------+---------------------------------------+-----------+
|                 | ZARA JAPAN CORPORATION                | Spain     |
+-----------------+---------------------------------------+-----------+
|                 | Warner Mycal                          | US        |
+-----------------+---------------------------------------+-----------+
|                 | Lands\' End                           | US        |
+-----------------+---------------------------------------+-----------+
|                 | Catalina Marketing                    | US        |
+-----------------+---------------------------------------+-----------+
|                 | Costco                                | US        |
+-----------------+---------------------------------------+-----------+
|                 | L.L.Bean                              | US        |
+-----------------+---------------------------------------+-----------+
|                 | Coach                                 | US        |
+-----------------+---------------------------------------+-----------+
|                 | Tully\'s                              | US        |
+-----------------+---------------------------------------+-----------+
| **Business      | Shopper Trak RCT Co.                  | US        |
| Consulting**    |                                       |           |
|                 |                                       |           |
| **Market        |                                       |           |
| Research**      |                                       |           |
+-----------------+---------------------------------------+-----------+
|                 | Oyo RMS Corp.                         | US        |
+-----------------+---------------------------------------+-----------+
|                 | Resource Connection Japan K.K.        | US        |
+-----------------+---------------------------------------+-----------+
|                 | Telekurs(Japan) Ltd.                  | Sw        |
|                 |                                       | itzerland |
+-----------------+---------------------------------------+-----------+
|                 | Sports Marketing Surveys Japan, Inc.  | UK        |
+-----------------+---------------------------------------+-----------+
|                 | Altair Engineering, Inc.              | US        |
+-----------------+---------------------------------------+-----------+
|                 | Harris Interactive                    | US        |
+-----------------+---------------------------------------+-----------+
|                 | ERM Japan Ltd.                        | UK        |
+-----------------+---------------------------------------+-----------+
|                 | Dorsey & Whitney LLP                  | US        |
+-----------------+---------------------------------------+-----------+
|                 | Pacifica Corporation                  | US        |
+-----------------+---------------------------------------+-----------+
|                 | WL Ross & Co.                         | US        |
+-----------------+---------------------------------------+-----------+
|                 | Sinomonitor                           | China     |
+-----------------+---------------------------------------+-----------+
|                 | Bowne & Company                       | US        |
+-----------------+---------------------------------------+-----------+
|                 | Basis Technology                      | US        |
+-----------------+---------------------------------------+-----------+
| **Insurance**   | Mondial Assistance                    | France    |
+-----------------+---------------------------------------+-----------+
|                 | AXA Non-Life Insurance Co., Ltd.      | France    |
+-----------------+---------------------------------------+-----------+
| Source:         |                                       |           |
| http            |                                       |           |
| ://www.jetro.go |                                       |           |
| .jp/en/invest/s |                                       |           |
| uccess_stories/ |                                       |           |
+-----------------+---------------------------------------+-----------+

## G. Web Resources [**Return to top**](#chapter-6-investment-climate)

Promotion of foreign direct investment (FDI) in Japan:

[www.investment-japan.net/index.htm](http://www.investment-japan.net/index.htm)

Invest Japan Business Support Center

Japan External Trade Organization (JETRO)

[www.jetro.go.jp/investjapan/](http://www.jetro.go.jp/investjapan/)

[Return to table of
contents](#doing-business-in-japan-a-country-commercial-guide-for-u.s.-companies)

U.S. exporters seeking general export information/assistance or
country-specific commercial information should consult with their
nearest **Export Assistance Center** or the **U.S. Department of
Commerce\'s Trade Information Center** at **(800) USA-TRADE**, or go to
the following website: [http://www.export.gov]().

To the best of our knowledge, the information contained in this report
is accurate as of the date published. However, **The Department of
Commerce** does not take responsibility for actions readers may take
based on the information contained herein. Readers should always conduct
their own due diligence before entering into business ventures or other
commercial arrangements. **The Department of Commerce** can assist
companies in these endeavors.