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

# Chapter 4: Leading Sectors for U.S. Export and Investment

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

Complete U.S. government foreign trade statistics (exports and imports
by country and product) are available online from the U.S. Department of
Commerce, U.S. Census Bureau at
[www.census.gov/foreign-trade/statistics/country/index.html](http://www.census.gov/foreign-trade/statistics/country/index.html).
A table showing U.S. exports to Japan in 2006 by product/commodity group
is available on CS Japan's web site at
[www.buyusa.gov/japan/en/mom.html](http://www.buyusa.gov/japan/en/mom.html)
(under "Market Overview").

Japanese foreign trade statistics (imports and exports) are available
online from the Japan External Trade Organization (JETRO) at
[www.jetro.go.jp/en/stats/statistics/](http://www.jetro.go.jp/en/stats/statistics/).

> [Agricultural Sector](#agricultural-sector-return-to-top)

#### Commercial Sectors

-   [Aircraft / Aircraft Parts
    (AIR)](#aircraft-aircraft-parts-air-return-to-top)

-   [Building Products (BLD)](#building-products-bld-return-to-top)

-   [Computer Software (CSF)](#computer-software-csf-return-to-top)

-   [Education & Training Services
    (EDU)](#education-training-services-edu-return-to-top)

-   [Household Consumer Goods (HCG)](#HCG)

-   [Medical Equipment (MED)](#MED)

-   [New Energy Power Generation
    (POL/ELP)](#new-energy-power-generation-polelp-return-to-top)

-   [Pharmaceuticals (DRG)](#pharmaceuticals-drg-return-to-top)

-   [Travel & Tourism (TRA)](#travel-and-tourism-tra-return-to-top)

## Agricultural Sector [**Return to top**](#ch4)

The United States remained Japan's top supplier of farm products, with a
22 percent market share in 2005, despite a beef import ban. However,
China, Latin America, Australia and Russia have grown as strong
competitors for the United States. U.S. farm exports to Japan decreased
slightly in CY 2005 to \$9.7 billion. However, pork and processed foods
showed good growth and corn, soybeans and wheat exports remained strong.
At 40%, the Japanese food self- sufficiency rate is the lowest of all
industrialized countries, compared to the U.S. rate of 119%. The
Japanese also spend a very high percentage of their income on food
(almost 20% compared to 10% in the United States). In 2005, the value of
Japan's consumer food and beverage market was \$584 billion. For
complete agricultural statistics, please visit the web site of the U.S.
Department of Agriculture's Foreign Agricultural Service at
[www.fas.usda.gov/ustrade](http://www.fas.usda.gov/ustrade).

Opportunities exist for a range of agricultural products, in particular,
processed and consumer ready food products. For U.S. companies to tap
into this dynamic market, they should be aware of several key factors
affecting food purchase trends. These factors are a rapidly aging
population, diversification of eating habits, emphasis on high quality,
increasing demand for convenience, and food safety concerns. Exporters
interested in the Japanese market should make note that three of the
biggest annual food related trade shows in Japan and all of Asia are:
Foodex Japan, International Food Ingredients & Additives Exhibition and
Conference (IFIA) Japan, and Health Ingredients (HI) Japan.

Japan's population is aging faster than any other country in the world.
According to Japan's National Institute of Population and Social
Security Research, by 2010, 23 percent of the population will be over 65
years of age. Coupled with the fact that Japanese life expectancy is the
highest in the world, there is a strong demand for \"healthy foods.\"
Such concepts as \"functional foods\" are well understood, and many
products certified by the Ministry of Health, Labor and Welfare as FOSHU
(Food for Specific Health Use) are commonly consumed. Food products that
are seen to have some health benefit, for example lowering cholesterol
or containing a high level of antioxidants, have an advantage in Japan.

Since the 1960\'s, the Japanese diet has become dramatically
westernized. In 1960, the source of per capita protein consumption was
32% from rice, 24% from seafood, 5% from meat and 3% from dairy
products. In 2005, the percentages became 12%, 22%, 17% and 10%. Rice
and tofu-based products have been replaced by meat and dairy as the main
source of protein.

In addition to this move towards westernization, food trends have
recently become more complex. Various ethnic foods are also becoming
popular and are often combined with Japanese cuisine creating \"fusion\"
foods. Another aspect of diversification is the trend of \"individual
eating\", or convenience foods. Because of the busy, fast paced
lifestyle of modern Japanese, it has become less common for all family
members to eat together. \"Individualization\" of eating makes
convenience an essential factor. Microwave (or semi- prepared) food and
Home Meal Replacement (HMR) cuisine has become an indispensable part of
life and are sold in supermarkets, restaurants and convenience stores
such as 7-Eleven and Lawson's that are now found all over Japanese
cities.

Economic stagnation and declining income have made people more
price-conscious than in the past, however quality continues to be the
most crucial factor in food purchasing decisions. Food safety has also
become an important consideration for most Japanese consumers, who are
more sensitive to perceived risk than the average American consumer.

The retail sector remains the focus of U.S. investment in Japan's food
industry. Wal-Mart now owns 54% of Seiyu, and was the third largest
Japanese supermarket in terms of food sales in 2005. U.S. investment in
Japan's agricultural sector is limited to a few large-scale ventures in
the livestock and grain sectors.

## Web Resources [**Return to top**](#agricultural-sector-return-to-top)

Statistics on U.S. agricultural exports
[www.fas.usda.gov/ustrade](http://www.fas.usda.gov/ustrade)

USDA/FAS Reports
[www.fas.usda.gov/scriptsw/attacherep/default.asp](http://www.fas.usda.gov/scriptsw/attacherep/default.asp)

Trade Shows in Japan:

*Foodex Japan*
[www.imexmgt.com/index.cfm?fuseaction=calendar.factsheet&showid=181](http://www.imexmgt.com/index.cfm?fuseaction=calendar.factsheet&showid=181)

*IFIA Japan 2007*
[www.ejkrause.com/ifiajapan/](http://www.ejkrause.com/ifiajapan/)

*Health Ingredients Japan*
[www.hijapan.info/en/](http://www.hijapan.info/en/)

U.S. Food Related Info [http://www.myfood.jp](http://www.myfood.jp/)

Agricultural Trade Offices in Japan <http://www.greatamericanfood.info/>

Japanese Ministry of Agriculture,
[www.maff.go.jp/eindex.html](http://www.maff.go.jp/eindex.html)

Forestry, and Fisheries

Japanese Ministry of Health, Labor,
[www.mhlw.go.jp/english/index.html](http://www.mhlw.go.jp/english/index.html)

and Welfare

## Aircraft / Aircraft Parts (AIR) [**Return to top**](#ch4)

### Overview [**Return to top**](../../../../../../../../C:/DOCUME~1/HISANA~1/LOCALS~1/Temp/notes5852E6/#AIR)

+--------------------------+---------------+-------------+------------+
| ***(millions of US\$)*** | **2004**      | **2005**    | **2006**   |
|                          |               |             |            |
|                          |               |             | ***(est    |
|                          |               |             | imated*)** |
+--------------------------+---------------+-------------+------------+
| Total Market Size        | 13,937        | 14,538      | 15,338     |
+--------------------------+---------------+-------------+------------+
| Total Local Production   | 8,828         | 9,387       | 9,603      |
+--------------------------+---------------+-------------+------------+
| Total Exports            | 2,528         | 3,467       | 3,917      |
+--------------------------+---------------+-------------+------------+
| Total Imports            | 7,637         | 8,618       | 9,652      |
+--------------------------+---------------+-------------+------------+
| Imports from the U.S.    | 6,696         | 7,416       | 8,226      |
+--------------------------+---------------+-------------+------------+

> (Note: These figures are unofficial estimates based on information
> obtained from the Ministry of Finance and the Society of Japanese
> Aerospace Companies)

Japan continues to offer a lucrative market for imported aircraft and
aircraft parts, including aircraft engines. Long-term relationships ---
some spanning over fifty years --- between U.S. aircraft and aircraft
parts makers and Japanese manufacturers and trading firms has given the
United States an overwhelming presence in Japan's market.

In the civil aircraft market, Japan\'s two largest carriers, Japan
Airlines (JAL) and All Nippon Airways (ANA), have consistently selected
Boeing aircraft, including cargo freighters, virtually eliminating
commercial aircraft orders from Airbus.

Annual production of Japan's aircraft manufacturing industry is valued
at approximately \$10 billion. The industry is heavily geared towards
meeting the needs of the Japan's Ministry of Defense (MOD). Other
production supplies frames, wings, and other parts and components to
foreign aircraft manufacturers such as Boeing, Airbus, Embraer, and
Bombardier. Of the total domestic production in 2005, defense orders
accounted for 54 percent and exports for 27 percent.

Further growth in Japan's industry is expected to result from
international joint projects (such as Boeing's 737, 777, and 787),
domestic development of military patrol and transport aircraft, and
feasibility studies of a new environmentally friendly small jet.

U.S. suppliers of proven aircraft and aircraft parts are well positioned
for tapping into the coming decade's expanding opportunities.
New-to-market suppliers should consider partnering with trading firms
that are knowledgeable about and connected to aircraft industry
networks.

Japan is experiencing a boom in airport infrastructure development:

-   the Central Japan International Airport (Centrair) opened in Nagoya
    in February 2005;

-   Nagoya Airport recently was re-designated as a commuter flight base;

-   Kobe and Kitakyushu Airports were completed in 2006;

-   the Haneda, Narita and Kansai Airports are scheduled for further
    expansion.

These developments should create exciting opportunities for regional
airlines and corporate jet operations.

### Best Prospects/Services [**Return to top**](../../../../../../../../C:/DOCUME~1/HISANA~1/LOCALS~1/Temp/notes5852E6/#AIR)

Commercial aircraft and aircraft engines, business jets, helicopters,
aircraft parts and supplies, avionics.

### Opportunities [**Return to top**](../../../../../../../../C:/DOCUME~1/HISANA~1/LOCALS~1/Temp/notes5852E6/#AIR)

\"Japan Aerospace 2008,\" October 1-5, 2008, at Pacifico Yokohama
Convention Center, Yokohama, Japan, organized by the Society of Japanese
Aerospace Companies (SJAC). For more information, please visit
[www.japanaerospace.jp/](http://www.japanaerospace.jp/).

### Resources [**Return to top**](../../../../../../../../C:/DOCUME~1/HISANA~1/LOCALS~1/Temp/notes5852E6/#AIR)

CS Japan Contact: Mr. Hisanao Aomori (Tokyo)
<Hisanao.Aomori@mail.doc.gov>

Society of Japanese Aerospace Companies
[www.sjac.or.jp/](http://www.sjac.or.jp/)

## Building Products (BLD) [**Return to top**](#ch4)

### Overview [**Return to top**](#building-products-bld-return-to-top)

+-------------------------+--------------+------------+---------------+
| ***(millions of U.S.    | **2004**     | **2005**   | **2006**      |
| \$)***                  |              |            |               |
|                         |              |            | **(*          |
|                         |              |            | estimated)*** |
+-------------------------+--------------+------------+---------------+
| Total Market Size       | 118,172      | 115,778    | 110,622       |
+-------------------------+--------------+------------+---------------+
| Total Local Production  | 108,331      | 106,364    | 101,701       |
+-------------------------+--------------+------------+---------------+
| Total Exports           | 1,853        | 2,122      | 2,109         |
+-------------------------+--------------+------------+---------------+
| Total Imports           | 11,694       | 11,536     | 11,031        |
+-------------------------+--------------+------------+---------------+
| Imports from the U.S.   | 1,116        | 953        | 907           |
+-------------------------+--------------+------------+---------------+

> *(Note: The above statistics include residential and commercial
> building products and are unofficial estimates. The exchange rates
> used are* *108.15 yen/US\$ for 2004, 110.11 yen for 2005, and 116.31
> yen for 2006.)*

Improving economic conditions in Japan in 2006 have helped to stem the
slide of commercial and residential property construction in Japan. As a
result, housing starts are expected to increase to 1.27 million in 2006.
This marks a significant turnaround in the Japanese construction
industry, which saw annual housing starts fall to the 1.15 million level
between 2002 and 2004. The improving quality of Japanese constructed
homes/apartments, moreover, has also led to increases in home
renovations/home improvement projects in Japan. As the Japanese economy
continues to improve, combined with an increasing population of aging
baby-boomers who look to modernize their homes, this trend is expected
to continue. As a whole, these trends bode well for the building
products in Japan which is expected to increase in terms of Japanese Yen
value in 2007, but decline slightly in dollar terms as a result of the
appreciating U.S. dollar against the Yen.

The major exporters competing with companies in the United States are
China, Canada, the countries of East Asia and Scandinavia. Since many
Japanese companies are not all that familiar with imported building
products, it is important for manufacturers and exporters to provide
information on how to use their products, as well as to pay close
attention to after sales service.

### Best Prospects/Services [**Return to top**](#building-products-bld-return-to-top)

Since it is extremely difficult for US products to compete with Chinese
and other Asian building products on price, it is important to avoid
price competition. US building products that have some unique features
have increased potential in Japan. Wood windows and doors, vinyl
windows, kitchen and bathroom faucets, paints and insulation materials
are currently examples of imported building products that are doing well
in the Japanese market.

### Opportunities [**Return to top**](#building-products-bld-return-to-top)

The Japan Management Association (JMA) organizes the Japan Home &
Building Show ([www.jma.or.jp/jhbs/](http://www.jma.or.jp/jhbs/)). This
show is a U.S. Department of Commerce certified trade show. CS Japan and
JMA will co-organize a USA Pavilion in the show in November 2007. For
further details, please contact <Kazuhisa.Takabatake@mail.doc.gov>.

The Economic Research Association, a private association which publishes
information concerning building materials and building technologies,
manages the \"Kenchiku Shizai" database on its Japanese-only website
([www.kensetsu-plaza.com/](http://www.kensetsu-plaza.com/)). This
database lists many imported building materials that can be reviewed by
Japanese general contractors and architectural design firms. This
website may be a good gateway to disseminate product information of U.S.
commercial building material manufacturers. Inquiries for registration
of product information should be addressed to <media@zai-keicho.or.jp>.

A group of Japanese architectural design firms who originally
established a database for their own use have since made it open for
other architectural design firms and general contractors. This useful
database, known as "Archimap," can be found at
[www.archimap.ne.jp/](http://www.archimap.ne.jp/) (in Japanese only).
Direct all inquiries to <info@archimap.ne.jp>.

### Resources [**Return to top**](#building-products-bld-return-to-top)

CS Japan Contacts:

> Residential Building Products: Mr. Kazuhisa Takabatake (CS Osaka)
> <Kazuhisa.Takabatake@mail.doc.gov>

Commercial Building Products: Mr. Koji Sudo (CS Tokyo)

> <Koji.Sudo@mail.doc.gov>

Building Materials/Housing Mailing List

CS Osaka-Kobe sends "CS Market Research" reports on the Japanese housing
market to U.S. companies by e-mail. To be placed on our broadcast e-mail
lists, please register at
[www.buyusa.gov/japan/en/mailing.html](http://www.buyusa.gov/japan/en/mailing.html).

Useful Websites:

Japanese Ministry of Land Infrastructure and Transport (MLIT)

[www.mlit.go.jp/english/index.html](http://www.mlit.go.jp/english/index.html)

Building Center of Japan (BCJ)

[www.bcj.or.jp/en/](http://www.bcj.or.jp/en/)

Evergreen Building Products Association

[www.ep.org/](http://www.ep.org/)

CS Japan's Website on "Residential Building Products, Housing and
Interior Textiles"

[www.buyusa.gov/japan/en/housing_textiles.html](http://www.buyusa.gov/japan/en/housing_textiles.html)

Economic Research Association (English)

[www.zai-keicho.or.jp/english/index.html](http://www.zai-keicho.or.jp/english/index.html)

## Computer Software (CSF) [**Return to top**](#ch4)

### Overview [**Return to top**](#computer-software-csf-return-to-top)

+---------------------------+-------------+-------------+------------+
| ***(millions of U.S.      | **2004**    | **2005**    | **2006**   |
| \$)***                    |             |             |            |
|                           |             | **(e        | **(es      |
|                           |             | stimated)** | timated)** |
+---------------------------+-------------+-------------+------------+
| Total Market Size         | > 132,065   | > 137,880   | > 146,880  |
+---------------------------+-------------+-------------+------------+
| Total Local Production    | > 128,258   | > 132,050   | > 140,390  |
+---------------------------+-------------+-------------+------------+
| Total Exports             | > 292       | > 800       | > 980      |
+---------------------------+-------------+-------------+------------+
| Total Imports             | > 3,326     | > 4,500     | > 4,950    |
+---------------------------+-------------+-------------+------------+
| Imports from the U.S.     | > 3,003     | > 3,310     | > 3,540    |
+---------------------------+-------------+-------------+------------+

> *(Note: The above statistics are unofficial CS estimates.)*

Japan's software business has been growing steadily as Japan's
investment in IT has shifted from hardware and network infrastructure to
software and services. By industry sector, manufacturing, finance,
information services, and government procurement are currently the major
buying segments. In fact, these four segments together currently account
for over 60% of total market revenue.

Given Japan\'s increased focus on the protection of personal information
--- a \"privacy\" law was established in 2005 --- Japanese businesses
are increasingly interested in IT security.

### Best Prospects/Services [**Return to top**](#computer-software-csf-return-to-top)

Information security software, embedded software for consumer
electronics and other software products that utilize improved hardware
and network infrastructure.

### Opportunities [**Return to top**](#computer-software-csf-return-to-top)

For U.S. exporters, the Japanese software market is attractive in terms
of the size and demand for quality software imports. This trend should
continue as the Japanese software industry historically struggles with
increasing development costs and a lack of skilled engineers. There are
three key elements to launching software products into the Japanese
market: (1) localization --- localization includes Japanese translation,
testing, and customization. Software suppliers are required to provide
not only translations but to consider Japanese business customs and
culture to meet local client needs; (2) support capability --- Japanese
language support is mandatory; and (3) product quality --- quality
control is one of the most important considerations for Japanese users.

Event: **WPC Expo 2007**

Date: October 2007

Venue: Tokyo Big Sight

Organizer: Nikkei Business Publication, Inc.

Web:
[expo.nikkeibp.co.jp/wpc/english/index.html](http://expo.nikkeibp.co.jp/wpc/english/index.html)

### Resources [**Return to top**](#computer-software-csf-return-to-top)

Computer Software Association of Japan (CSAJ)

[www.csaj.jp/english/index_e.html](http://www.csaj.jp/english/index_e.html)

Japan Information Technology Services Association (JISA)

[www.jisa.or.jp/english/index.html](http://www.jisa.or.jp/english/index.html)

CS Japan Contact: Mr. Toshihiro Matsuda (Tokyo)
<Toshihiro.Matsuda@mail.doc.gov>

## Education & Training Services (EDU) [**Return to top**](#ch4) 

### Overview [**Return to top**](#education-training-services-edu-return-to-top)

+----------------------------+-------------+-------------+-------------+
| ***(millions of US\$       | **          | **          | **          |
| except where otherwise     | 2004/2005** | 2005/2006** | 2006/2007** |
| noted)***                  |             |             |             |
|                            |             |             | ***(es      |
|                            |             |             | timated)*** |
+----------------------------+-------------+-------------+-------------+
| Total Market Size          | 994         | 925         | n.a.        |
|                            |             |             |             |
| of Japanese students       |             |             |             |
+----------------------------+-------------+-------------+-------------+
| Foreign Students in U.S.   | 565,039     | 564,766     | n.a.        |
|                            |             |             |             |
| (no. of individuals)       |             |             |             |
+----------------------------+-------------+-------------+-------------+
| Japanese Students in U.S.  | 42,215      | 38,712      | 39,000      |
|                            |             |             |             |
| (no. of individuals)       |             |             |             |
+----------------------------+-------------+-------------+-------------+

> *(Note: Market size figures are unofficial estimates.)*

In 2005/2006 a total of 564,766 foreign students studied in the United
States, of which 38,712 were Japanese students. This was a drop of 8.3%
from the previous year. However, the United States has been and still is
the most popular destination for academic programs. In terms of the
number of students studying in the United States, Japanese students
ranked fourth after students from India, China and Korea. Foreign
students' (and their spouses') spending in the United States (tuition &
living expenses) was estimated to be about \$13.5 billion dollars in
2005/2006.

Sixty-four percent of Japanese in the United States are enrolled in
undergraduate programs, and 21 percent in graduate. This is in sharp
contrast to Chinese and Indian students, who mainly enroll in graduate
programs. Among the Japanese students enrolled in higher educational
institutions, women account for about 56 percent. In addition to the
38,712 students noted above, tens of thousands of Japanese go to the
United States for short-term language studies.

### Best Prospects/Services [**Return to top**](#education-training-services-edu-return-to-top)

Interest in two-year colleges is continuously growing, especially for
schools with lower TOEFL requirements. Graduate studies in the United
States are also becoming more attractive to Japanese students, with MBA
programs being especially popular since Japan does not have equivalent
programs. With the post-World War II "baby boomers" retiring in
2007-2009, we expect a good number of new retirees will enroll in
two-week to one-year study programs abroad.

### Opportunities [**Return to top**](#education-training-services-edu-return-to-top)

Event: **U.S. University Fairs (IIE Fairs)**

Dates: October 20-21, 2007

Web:
[www.iiehongkong.org/fairs.htm](http://www.iiehongkong.org/fairs.htm)

### Resources [**Return to top**](#education-training-services-edu-return-to-top)

CS Japan Contact: Ms. Mieko Muto (Tokyo) <Mieko.Muto@mail.doc.gov>

Market reports are available through the USEAC offices nearest you or
through our Homepage.

## Household Consumer Goods (HCG) [**Return to top**](#ch4)

### Overview [**Return to top**](#HCG)

+------------------------+-------------+------------+------------------+
| ***(Millions of        | **2004**    | **2005**   | **2006**         |
| U.S.\$)***             |             |            |                  |
|                        |             |            | *                |
|                        |             |            | **(estimated)*** |
+------------------------+-------------+------------+------------------+
| Total Market Size      | 35,035      | 35,884     | 36,709           |
+------------------------+-------------+------------+------------------+
| Total Local Production | 30,900      | 31,500     | 32,094           |
+------------------------+-------------+------------+------------------+
| Total Exports          | 834         | 902        | 919              |
+------------------------+-------------+------------+------------------+
| Total Imports          | 4,969       | 5,286      | 5,534            |
+------------------------+-------------+------------+------------------+
| Imports from the U.S.  | 209         | 183        | 159              |
+------------------------+-------------+------------+------------------+

> *(Note: CS Japan has estimated the above statistics based on
> information from World Trade Atlas \[trade statistics database by
> GTI\] and JETRO\'s Marketing Guidebook 2004.)*

The household product category is broad and includes a wide range of
goods. Here, household products are defined as tableware, kitchenware,
small home electronic appliances, furniture & home furnishings, interior
fabrics, lamps, and other. 58% of U.S. imports in this group are in the
furniture & home furnishings category, followed by table and kitchenware
at 17%.

According to the 2005 National Census, Japan had 49 million households
with a total population of 127 million. Young consumers are sensitive to
home fashion, wishing to assert their distinctive lifestyles.
Middle-aged consumers are strongly interested in keeping up with their
health and wellness in spite of time constraints and the demands of life
and work. Overall, Japanese consumers are spending more time at home,
and the concept of nesting or staying home and relaxing is gaining broad
social acceptance.

It is important to note that the product lines in household goods stores
are becoming increasingly global, while Japanese consumers' lifestyles
are growing more and more diversified. To respond to the diversified
demands of the market, Japanese importers expect high-mix low-volume
production, flexible distribution in small lots, and prompt delivery
from foreign exporters.

### Best Products/Services [**Return to top**](#HCG)

As Japanese consumers value home comfort, U.S. home furnishing companies
offering quality products with distinctive design that appeal to the
Japanese will find significant opportunities in the Japanese market.

Generally, Japanese consumers are willing to pay premier prices for
quality, functionality, and design. Also, they are sensitive to safety
and cleanliness. For example, antibiotic or anti-odor functions are
almost common for products like kitchenware or bathroom goods. Interest
in eco-friendly business areas, such as organic products, is still high.

### Opportunities [**Return to top**](#HCG)

Event: **The 63rd Tokyo International Gift Show**

Dates: February 13-16, 2007

Venue: Tokyo International Exhibition Center
([www.bigsight.jp/](http://www.bigsight.jp/))

Web: [www.giftshow.co.jp/](http://www.giftshow.co.jp/)

Products: Giftware

Event: **The 2nd International Homefashion Fair**

Dates: April 4-6, 2007

Venue: Tokyo International Exhibition Center
([www.bigsight.jp/](http://www.bigsight.jp/))

Web:
[www.giftshow.co.jp/english/framepage.htm](http://www.mesago-messefrankfurt.com/)

Products: Housewares such as tabletop, cookware, and kitchen
accessories, cutlery and cleaning goods, small and major appliances,
furniture and home furnishings, lightings, outdoor living and gardening
items, giftware and other household consumer products.

Event: **Interior Lifestyle/Ambiente Japan**

Dates: June 6-8, 2007

Venue: Tokyo International Exhibition Center
([www.bigsight.jp/](http://www.bigsight.jp/))

Web:
[www.interior-lifestyle.com/en/index.html](http://www.interior-lifestyle.com/en/index.html)

Products: Housewares such as tabletop, cookware, and kitchen
accessories, cutlery and cleaning goods, small and major appliances,
furniture and home furnishings, lightings, outdoor living and gardening
items, giftware and other household consumer products.

Event: **International Furniture Fair Tokyo**

Dates: November 21-24, 2007

Venue: Tokyo International Exhibition Center
([www.bigsight.jp/](http://www.bigsight.jp/))

Web: [www.idafij.or.jp/en/index.html](http://www.idafij.or.jp/)

Products: Furniture and home accessories

### Resources [**Return to top**](#HCG)

CS Japan Contact: Ms. Rika Saito (Tokyo) <Rika.Saito@mail.doc.gov>

International Development Association of Furniture Industry of Japan

> [www.idafij.or.jp](http://www.idafij.or.jp/)

Japan Housewares Importers Association
[www.jhi.or.jp](http://www.jhi.or.jp/)

## Medical Equipment (MED) [**Return to top**](#ch4)

### Overview [**Return to top**](#MED)

+----------------------------------+--------+------------+-----------+
| ***(millions of U.S. \$)***      | **     | **2005**   | **2006**  |
|                                  | 2004** |            |           |
|                                  |        | ***(est    | ***(esti  |
|                                  |        | imated)*** | mated)*** |
+----------------------------------+--------+------------+-----------+
| Total Market Size                | 19,069 | 18,270     | 18,218    |
+----------------------------------+--------+------------+-----------+
| Total Local Production           | 14,207 | 13,670     | 13,533    |
+----------------------------------+--------+------------+-----------+
| Total Exports                    | 3,983  | 3,910      | 3,910     |
+----------------------------------+--------+------------+-----------+
| Total Imports                    | 8,845  | 8,510      | 8,595     |
+----------------------------------+--------+------------+-----------+
| Imports from the U.S.            | 5,140  | 4,795      | 4,890     |
+----------------------------------+--------+------------+-----------+

> *(Note: The figures for 2003 and 2004 are the latest official figures;
> statistics for 2005 and 2006 are unofficial estimates)*

The Japanese medical equipment and supplies sector ranks second in the
world and continues to be an extremely successful market for American
firms, representing an important sector where the United States has
consistently achieved trade surpluses with Japan. The value of Japan\'s
medical device sector has been approximately \$18 billion for the last
few years. Traditionally, imports account for approximately 40 percent
of this figure, with American firms supplying approximately 60 percent
of all imported products. Total U.S. sales in this sector, including
local production by American companies, are valued at more than \$6
billion annually.

A major revision of the Pharmaceutical Affairs Law in 2005 increased the
burden on applicants both in financial and practical terms due to its
complicated regulations. In fact, the number of new device applications
made to the Pharmaceutical and Medical Device Agency (PMDA) has
decreased since 2005 to about 2 applications per quarter whereas the US
FDA receives about 10 applications per quarter. Japanese medical device
importers have became extremely conservative when selecting new partners
or devices to import. To cope with the situation and to eliminate the
current 2-3 year "device lag," the Ministry of Health, Labor and Welfare
(MHLW) established in October 2006 a study group to consider quicker
approvals for the medical devices and in-vitro diagnostics that are
generally available in the United States and Europe but not yet in
Japan.

On the reimbursement side, the Japanese Government reduced medical
service fees by 3.16% in JFY 2006 --- the largest cut ever made. Of the
total reduction, 1.36% will come from doctor\'s fees (which had been
previously cut by 1.3% in 2002) and the remaining 1.80% will come from
regular drugs (1.60%) and medical devices (0.20%). Although the cut on
the medical device portion was limited to 0.2%, medical device companies
are receiving requests for further discounts from end users as doctor's
fee saw a large cut. It is expected that the Japanese Government will
continue focusing on reducing medical device prices in order to
counterbalance increasing healthcare expenditures resulting from Japan's
aging society. Overall, Japan\'s market for medical devices is expected
to exhibit flat to negative growth in 2007.

### Best Products/Services [**Return to top**](#MED)

American firms will continue to see sales prospects in the more
technologically sophisticated product categories. Those products include
pacemakers, advanced interventional cardiology products, artificial
implants, catheters and stents. Other areas of projected strong demand
include software and other products used in medical information systems
and health IT.

### Opportunities [**Return to top**](#MED)

Event: **The International Modern Hospital Show 2007 (IMHS2007)**

Dates: July 11-13, 2007

Venue: Tokyo Big Sight

Web:
[www.noma.or.jp/hs/index-e.html](http://www.noma.or.jp/hs/index-e.html)

Products: Healthcare equipment, medical devices and materials, nursing
care related devices and health care information systems.

Event: **HOSPEX Japan 2007**

Dates: November 14-16, 2007

Venue: Tokyo Big Sight

Web:
[www.jma.or.jp/HOSPEX/english/index.html](http://www.jma.or.jp/HOSPEX/en/index.html)

Products: Hospital and welfare facilities, medical treatment equipment,
medical information systems, and healthcare/welfare support equipment
and related devices.

### Resources [**Return to top**](#MED)

CS Japan Contact: Mr. Hiroyuki Hanawa (Tokyo)
<Hiroyuki.Hanawa@mail.doc.gov>

Ministry of Health, Labor and Welfare (MHLW)
[www.mhlw.go.jp/](http://www.mhlw.go.jp/)

Pharmaceutical and Medical Device Agency (PMDA)
[www.pmda.go.jp/](http://www.pmda.go.jp/)

Advanced Medical Technology Association (AdvaMed)
[www.advamed.org/](http://www.advamed.org/)

The American Chamber of Commerce in Japan (ACCJ),

Medical Devices and Diagnostics Subcommittee
[www.accjmedtech.com/](http://www.accjmedtech.com/)

Japan Federation of Medical Device Associations
[www.jfmda.gr.jp/](http://www.jfmda.gr.jp/)

(JFMDA)

## New Energy Power Generation (POL/ELP) [**Return to top**](#ch4)

### Overview [**Return to top**](#new-energy-power-generation-polelp-return-to-top)

+--------------------------+--------------+--------------+------------+
| ***(millions of U.S.     | **2004**     | **2005**     | **2006**   |
| \$)***                   |              |              |            |
|                          |              |              | ***(est    |
|                          |              |              | imated)*** |
+--------------------------+--------------+--------------+------------+
| Total Market Size        | > 3,361      | > 3,475      | > 3,813    |
+--------------------------+--------------+--------------+------------+
| Total Local Production   | > 5,325      | > 6,603      | > 6,691    |
+--------------------------+--------------+--------------+------------+
| Total Exports            | > 2,241      | > 3,398      | > 3,426    |
+--------------------------+--------------+--------------+------------+
| Total Imports            | > 277        | > 270        | > 548      |
+--------------------------+--------------+--------------+------------+
| Imports from the U.S.    | > 9          | > 17         | > 16       |
+--------------------------+--------------+--------------+------------+

> *(Note: The above statistics are unofficial US&FCS estimates.)*

In this report, the term "New Energy Power Generation" refers to wind,
photovoltaic, waste, and biomass power generation. On June 4, 2002,
Japan ratified the Kyoto Protocol to the United Nations Framework
Convention on Climate Change. Based on the Kyoto Protocol, Japan is
committed to reducing its greenhouse gas emissions in the year 2010 to a
level six percent lower than it recorded in 1990. To secure this
reduction, the Japanese government has set an ambitious goal to increase
new energy power generation levels by tenfold over 1999 levels. To
accomplish this, the Japanese government enacted the Renewable Portfolio
Standards (RPS) Law in June 2002 and provides industrial subsidies for
new energy development. The RPS law requires Japanese electric utilities
to use renewable energy sources for a certain percentage of their sales.
The RPS mandate has generated a flurry of activity by utilities to
ensure compliance with this new policy target.

### Best Products/Services [**Return to top**](#new-energy-power-generation-polelp-return-to-top)

Best products include products and services related to wind power,
photovoltaic power, biomass.

### Opportunities [**Return to top**](#new-energy-power-generation-polelp-return-to-top)

Private entities or municipal governments that are not covered by World
Trade Organization (WTO) government procurement agreements conduct many
new energy power generation projects. Therefore, most of these projects
are closed to the public for bidding purposes. However, by partnering
with Japanese firms and through continued efforts, U.S. companies should
be able to increase their market share.

### Resources [**Return to top**](#new-energy-power-generation-polelp-return-to-top)

CS Japan Contact: Mr. Kenji Kobayashi (Tokyo)
<Kenji.Kobayashi@mail.doc.gov>

Useful Websites:

New Energy and Industrial Technology Development Organization (NEDO)

<http://www.nedo.go.jp/english/index.html>

## Pharmaceuticals (DRG) [**Return to top**](#ch4)

### Overview [**Return to top**](#pharmaceuticals-drg-return-to-top)

+-----------------------------+-------------+------------+------------+
| ***(millions of U.S. \$)*** | **2004**    | **2005**   | **2006**   |
|                             |             |            |            |
|                             |             | ***(est    | ***(est    |
|                             |             | imated)*** | imated)*** |
+-----------------------------+-------------+------------+------------+
| Total Market Size           | 67,518      | 63,325     | 65,178     |
+-----------------------------+-------------+------------+------------+
| Total Local Production      | 60,419      | 56,354     | 58,045     |
+-----------------------------+-------------+------------+------------+
| Total Exports               | 1,176       | 1,154      | 1,154      |
+-----------------------------+-------------+------------+------------+
| Total Imports               | 8,275       | 8,125      | 8,287      |
+-----------------------------+-------------+------------+------------+
| Imports from the U.S.       | 1,139       | 1,118      | 1,151      |
+-----------------------------+-------------+------------+------------+

> *(Note: The figures for 2003 and 2004 are the latest official figures;
> statistics for 2005 and 2006 are unofficial estimates.)*

Japan continues to be the world's second largest consumer of
pharmaceuticals and the largest international market for American
pharmaceutical firms. Each year, sales of prescription drugs in Japan
total about \$60 billion. Japan's imports of foreign pharmaceuticals
account for almost 10 percent of the total market, yet would be closer
to 45 percent if direct imports, local production by foreign firms and
compounds licensed to Japanese manufacturers were included. Allowing for
that, American pharmaceutical firms have actually achieved a market
share approaching 20 percent.

Although Japan is the world's second largest pharmaceutical market,
Japan currently lags behind the United States, EU and many Asian markets
in terms of access to new medicines. The Ministry of Health, Labor and
Welfare (MHLW) acknowledged the need to reduce the delays in the
introduction of new drugs and positioned "Approval System Reform" as one
of its most important issues. In October 2006, MHLW created a study
group to discuss this "drug lag" in order to accelerate patients' access
to effective pharmaceuticals. In December 2006, the Council for Science
and Technology Policy (CSTP), one of the Cabinet Office's four councils
addressing policy questions, approved its reform report, which included
proposals such as doubling the number of reviewers at the Pharmaceutical
Medical Device Agency (PMDA) in the next three years, increasing the
fees paid by manufacturers to fund the costs for additional reviewers
and deregulating employment rules to allow hiring staff from industry.
MHLW is expected to give serious consideration to the CSTP
recommendations.

MHLW also recognized the need to create higher incentives for
manufacturers to develop new drugs in Japan through a more appropriate
pricing system. Japan's new Prime Minister Abe is placing great
importance in economic growth and his "Innovation 25" strategy
underscores fostering innovation in medicine as one of Japan's top three
priorities. While these are positive developments for the pharmaceutical
industry as a whole, Japan continues to face the problems of a rapidly
aging society and is, therefore, examining ways to limit the growth of
healthcare spending through means such as changes to its reimbursement
pricing policies. In 2006, the Japanese Government considered doubling
the frequency of price revisions from once every two years to once every
year. Although Japan decided not to conduct a price revision in Japan in
JFY 2007, the proposal may be revived in coming years. Overall, Japan\'s
market for pharmaceuticals is expected to exhibit flat to slightly
positive growth in 2007 partly due to this lack of a price revision in
2007.

### Best Products/Services [**Return to top**](#pharmaceuticals-drg-return-to-top)

Japan's aging population is generating increased demand for
pharmaceutical treatments for such chronic illnesses as cardiovascular
problems, diagnostic reagents, digestive problems, diabetes, and cancer.
It is also expected that the Japanese government will further promote
the use of generic drugs to ease the cost burden on its healthcare
system.

### Opportunities [**Return to top**](#pharmaceuticals-drg-return-to-top)

Event: **CPhI Japan 2007**

Dates: April 18-20, 2007

Venue: Tokyo Big Sight

Web: [www.cphijapan.com](http://www.cphijapan.com/)

Products: Active pharmaceutical ingredients, contract manufacturing,
biotechnologies, additives, fine chemicals, and intermediates.

Event: **INTERPHEX JAPAN**

Dates: June 20-22, 2007

Venue: Tokyo Big Sight

Web: [www.interphex.jp](http://www.interphex.jp/)

Products: Raw materials, additives, materials processing machinery and
equipment.

### Resources [**Return to top**](#pharmaceuticals-drg-return-to-top)

CS Japan Contact: Mr. Hiroyuki Hanawa (Tokyo)
<Hiroyuki.Hanawa@mail.doc.gov>

Ministry of Health, Labor and Welfare (MHLW)
[www.mhlw.go.jp/](http://www.mhlw.go.jp/)

Pharmaceutical and Medical Device Agency (PMDA)
[www.pmda.go.jp/](http://www.pmda.go.jp/)

Pharmaceutical Research and Manufacturers of America
[www.phrma-jp.org/](http://www.phrma-jp.org/)

The Japan Pharmaceutical Manufacturers Association
[www.jpma.or.jp/](http://www.jpma.or.jp/)

## Travel and Tourism (TRA) [**Return to top**](#ch4)

### Overview [**Return to top**](#travel-and-tourism-tra-return-to-top)

+-----------------+--------+-------+-------+-------+--------+-------+
| **(millions of  | **     | **2   | **2   | **2   | **     | **2   |
| US\$)**         | 2000** | 001** | 002** | 003** | 2004** | 005** |
+-----------------+--------+-------+-------+-------+--------+-------+
| Total outbound  | \$     | \$4   | \$4   | \$4   | \$     | \$4   |
| market          | 42,112 | 3,796 | 2,591 | 4,150 | 47,422 | 7,316 |
+-----------------+--------+-------+-------+-------+--------+-------+
| Outbound to the | \$     | \$1   | \$1   | \$1   | \$     | \$1   |
| U.S.            | 14,011 | 1,705 | 0,922 | 1,000 | 13,094 | 6,520 |
+-----------------+--------+-------+-------+-------+--------+-------+
| ***(millions of | **     | **2   | **2   | **2   | **     | **2   |
| people)***      | 2000** | 001** | 002** | 003** | 2004** | 005** |
+-----------------+--------+-------+-------+-------+--------+-------+
| Number of       | > 17.8 | >     | >     | >     | > 16.8 | >     |
| outbound        |        |  16.2 |  16.6 |  13.3 |        |  17.4 |
| travelers       |        |       |       |       |        |       |
+-----------------+--------+-------+-------+-------+--------+-------+
| Number of       | > 5.06 | >     | >     | >     | > 3.75 | >     |
| outbound        |        |  4.10 |  3.63 |  3.17 |        |  3.88 |
| travelers to    |        |       |       |       |        |       |
| U.S.            |        |       |       |       |        |       |
+-----------------+--------+-------+-------+-------+--------+-------+

*(Note: Data for 2006 is not available. The above statistics are
unofficial estimates.*

*Sources: U.S. Department of Commerce, Office of Travel and Tourism
Industries, Japan Tourism Marketing Co.)*

Japan has for many years been the largest overseas travel and tourism
market for the United States. However, immediately following the
September 2001 terrorist attacks on the World Trade Center in New York,
Japanese outbound travel dropped considerably, especially to the United
States. Another sharp drop occurred in 2003 because of concerns raised
by the SARS epidemic and the Gulf War. Since 2001, the increase in
Japanese outbound travelers to the United States has been slow compared
to the Japanese traveler\'s return to other countries, but even so,
Japanese visitors to the United States still accounted for almost
two-thirds of all Asian visitors in 2005. Regarding spending, Japan is
the number one market for the United States regarding travel and
passenger fare receipts, followed by the United Kingdom and Canada.

The United States is one of the most popular destinations for Japanese
travelers, many of whom are repeat visitors. Over 70 percent of the
repeat travelers visited the U.S. mainland or Hawaii last year. Other
competitive long-haul destinations for Japanese tourists are European
countries, especially for first-time travelers. Short-haul destinations
such as South Korea and China remain very competitive, and received over
one quarter of all outbound Japanese travelers. A majority of Japanese
tourists throughout the 1990s were females, typically groups of single,
working women and "mother & daughter" trips. However, the male market is
growing, and by 2003 had overtaken the female market. Males in their 30s
and 40s are now the majority of Japanese travelers to the United States.

Package tour/group trips are still the most popular and convenient way
for Japanese travelers to make their arrangements. However, individually
arranged travel known as Foreign Independent Travel (FIT) is gaining in
popularity, mainly due to the many options now available on the
Internet. Travelers with a specific purpose and with previous overseas
travel experiences tend to choose FIT. FIT that meets travelers'
specific needs is emerging as a new trend, as are Special Interest Tours
(SIT).

Pamphlets and Internet marketing still have a large influence on
consumer decisions concerning destinations. On the other hand,
"word-of-mouth" information, such as Internet blogs and the
recommendations of well-traveled friends have an increasing influence on
the consumer. The most significant change in the Japanese market is the
introduction of "dynamic packages" to the market in the past few years.
Dynamic packages are travel products with revolutionary booking tools
that can be put together over the Internet through e-commerce/online
travel agents. Travelers put travel components into their shopping carts
and buy the components they want in order to tailor the travel to their
needs and desires. This is having a great impact on the distribution
system of the Japanese travel and tourism industries.

For market entry, good local partners are a must. To take advantage of
new market trends, establishing relationships with E-commerce/online
travel agents is important, and online agents are looking for travel and
tourism content and/or components for dynamic-packaging. In order to
reach out to Japanese consumers to cultivate their interests and to
stimulate their motivations for travel, media exposure is also a key to
success for U.S. travel and tourism service suppliers. To obtain media
coverage, U.S. travel and tourism service suppliers are encouraged to
cooperate and participate in media familiarlization trips and film
locations.

### Best Products/Services [**Return to top**](#ch4)

Internet booking is expected to become a major method of making
reservations, especially for FIT and SIT travelers. This applies not
only to airplane tickets and hotels, but also to package tours and
personalized and/or tailored tours, such as "dynamic packages." Efforts
to improve the convenience of travelers using the internet to book, or
to develop systems for promoting special offers to internet bookers,
will grow the Japanese tourism market even more.

Today, Japanese travelers have more overseas experience and can act on
their own; thus they tend to look for something new and out of the
ordinary. The use of car rentals in travel has expanded their sphere of
action and led them to discover ways of finding new attractions. Those
who have experienced these new attractions become heavy repeaters.
Package tours that include the use of rental cars have been developed.
The introduction of "dynamic packaging" and package tours using car
rentals that are designed to meet travelers\' new interests will
stimulate the travel market in 2007.

### Opportunities [**Return to top**](#ch4)

**[U.S. Tourism Online Showcase]{.underline}**

Dates: Any time \[now available\]

Organizer: Commercial Service Japan

Phone: (81-3) 3224-5087

Fax: (81-3) 3589-4235

E-mail: <Yumiko.Okubo@mail.doc.gov>

Web: <http://www.buyusa.gov/japan/en/tourism06.html>

**[\"SeeAmerica Week --- Japan\" Events]{.underline}**

\(1\) TIA SeeAmerica Educational Seminar

Dates: September 2007 \[dates TBD\]

Place: Tokyo \[venue TBD\]

\(2\) TIA Media Market Place/Media Reception

Dates: September 2007 \[dates TBD\]

Place: Tokyo \[Venue TBD\]

Organizer: Travel Industry Association of America (TIA) Japan Office

Phone: (81-3) 5413-6352

Fax: (81-3) 5413-6355

E-mail: <kinoue@tia.org>

Web: [www.tia.org](http://www.tia.org/)

\(3\) JATA World Travel Fair - SeeAmerica Pavilion

Dates: September 14-16, 2007

Venue: Tokyo Big Sight

Organizer: Japan Association of Travel Agents (JATA)

Phone: (81-3) 5501-3215

Fax: (81-3) 5501-3218

E-mail: <koda@jata-net.or.jp>

Web:
[www.jata-net.or.jp/english/index.htm](http://www.jata-net.or.jp/english/index.htm)

Pavilion coordinator: Japan Visit USA Committee

Phone: (81-3) 5472-7609

Fax: (81-3) 5472-6341

E-mail: <toyoda@japan-usa.co.jp>

Web: [www.japan-usa.co.jp/](http://www.japan-usa.co.jp/)

**[SeeAmerica Workshops]{.underline}**

Dates: Fall 2007 \[dates TBD\]

Places: Osaka and Nagoya \[venues TBD\]

Organizer: Japan Visit USA Committee

Phone: (81-3) 5472-7609

Fax: (81-3) 5472-6341

E-mail: <toyoda@japan-usa.co.jp>

Web: [www.japan-usa.co.jp/](http://www.japan-usa.co.jp/)

### Resources [**Return to top**](#ch4)

**[Commercial Service, U.S. Embassy, Tokyo]{.underline}**

Ms. Yoko Hatano, Commercial Specialist Catherine Spillman, Commercial
Attaché

E-mail: <Yoko.Hatano@mail.doc.gov> E-mail:
<Catherine.Spillman@mail.doc.gov>

**[Japan Visit USA Committee]{.underline}**

Phone: (81-3)-5472-7609

Fax: (81-3) 5472-6341

Web: [www.japan-usa.co.jp](http://www.japan-usa.co.jp/)

**[Travel Industry Association of America (TIA) Japan
Office]{.underline}**

Phone: (81-3) 5413-6352

Fax: (81-3) 5413-6355

Web: [www.tia.org](http://www.tia.org/)

**[Japan Association of Travel Agents (JATA)]{.underline}**

Phone: (81-3) 3592-1274

Fax: (81-3) 3592-1268

Web: [www.jata-net.or.jp](http://www.jata-net.or.jp/)

**[Overseas Tour Operators Association of Japan (OTOA)]{.underline}**

Phone: (81-3) 5470-9501

Fax: (81-3) 5470-9503

Web: [www.otoa.com](http://www.otoa.com/)

[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.