2011 JETRO Global Trade and Investment Report
International Business as a Catalyst for Japan's Reconstruction

Presentation Document

October 2011
Overseas Research Department
Copyright (C) 2011 JETRO. All rights reserved.

Contents
Chapter 1 The World Economy, Trade and Direct Investment

Chapter 2 World Trade Rules under the new economic
environment
Chapter 3 International Business towards Reconstruction

Note: This document is the translation of the Japanese version report published in August. Most of Data used in thisdocument are those available as of July 2011.
2

Copyright (C) 2011 JETRO. All rights reserved.

Chapter 1

The World Economy, Trade andDirect Investment

3

Copyright (C) 2011 JETRO. All rights reserved.

Chapter 1 Section 1: World economy and its risks

The world economy is increasingly polarized and multi-polarized■ Downside risks still remain
Since 2010, the world economy has generally been on track for recovery, although the pace of recovery has varied between developed countries and developing
countries. According to the IMF’s estimate as of April 2011, the world’s real GDP growth (on a purchasing power parity (PPP) basis) was 5.0% in 2010,
representing a rapid recovery from 2009 when the effects of the global financial crisis resulted in a drop of 0.5%; the rate is expected to keep rising in 4% range
through 2011 and 2012. While developing countries particularly in Asia are generally expected to sustain steady growth, for developed countries, on the other
hand, given efforts to reduce household debt in the U.S. and the worsening sovereign risk of southern European countries, downside risks still remain. In June,the IMF revised its estimated growth for 2011 down to 4.3%.
Fig. I - 1 GDP growth and contribution by country and region
2007
PercentchangeU.S.
E U 27
Euro Zone
U.K.
Japan
East Asia
China
South Korea
ASEAN
ThailandSingapore
Malaysia
Vietnam
India
Central and South America
Central and Eastern Europe
RussiaMiddle East and Northern Africa
Sub-Saharan Africa
World
Reference
Developed Countries
Developing Countries
ASE AN + 6
BRICS (Including South Africa)
BRICs (Excluding South Africa)

2008

Contributi Percent
onchange(%)

2009

Contributi Percent
onchange2010

Contributi Percent
onchange2011 (Estimate） 2012 (Estimate)

Contributi Percent
onchangeContributi Percent
onchangeContributi
on

1.9
3.2
2.9
2.7
2.4
10.8
14.2
5.1
6.7
5.0
8.8
6.5
8.5
9.9
5.7
5.5
8.5
6.2
7.2

0.4
0.7
0.5
0.1
0.2
1.9
1.4
0.1
0.3
0.0
0.0
0.0
0.0
0.4
0.5
0.2
0.3
0.3
0.2

0.0
0.7
0.4
- 0.1
- 1.2
7.0
9.6
2.3
4.4
2.5
1.5
4.7
6.3
6.2
4.3
3.2
5.2
5.1
5.6

0.0
0.2
0.1
- 0.0
- 0.1
1.3
1.1
0.0
0.2
0.0
0.0
0.0
0.0
0.3
0.4
0.1
0.2
0.2
0.1

-2.6
-4.1
-4.1
-4.9
-6.3
5.8
9.2
0.2
1.4
- 2.3
- 0.8
- 1.7
5.3
6.8
- 1.7
- 3.6
- 7.8
1.8
2.8

- 0.5
- 0.9
- 0.6
- 0.2
- 0.4
1.1
1.1
0.0
0.1
- 0.0
- 0.0
- 0.0
0.0
0.3
- 0.1
- 0.1
- 0.3
0.1
0.1

2.8
1.8
1.7
1.3
3.9
9.3
10.3
6.1
7.5
7.8
14.5
7.2
6.8
10.4
6.1
4.2
4.0
3.8
5.0

0.6
0.4
0.3
0.0
0.2
1.9
1.3
0.1
0.3
0.1
0.1
0.0
0.0
0.5
0.5
0.1
0.1
0.2
0.1

2.8
1.8
1.6
1.7
1.4
8.0
9.6
4.5
5.4
4.0
5.2
5.5
6.3
8.2
4.7
3.7
4.8
4.1
5.5

0.5
0.4
0.2
0.0
0.1
1.7
1.3
0.1
0.2
0.0
0.0
0.0
0.0
0.5
0.4
0.1
0.1
0.2
0.1

2.9
2.1
1.8
2.3
2.1
8.0
9.5
4.2
5.6
4.5
4.4
5.2
6.8
7.8
4.2
4.0
4.5
4.2
5.9

0.6
0.4
0.3
0.1
0.1
1.8
1.4
0.1
0.2
0.0
0.0
0.0
0.0
0.4
0.4
0.1
0.1
0.2
0.1

5.4

5.4

2.9

2.9

- 0.5

- 0.5

5.0

5.0

4.4

4.4

4.5

4.5

2.7
8.8
8.6
11.1
11.3

1.6
3.7
2.5
2.4
2.3

0.2
6.1
5.2
7.5
7.6

0.1
2.7
1.5
1.7
1.7

- 3.4
2.7
3.6
4.8
5.0

- 1.8
1.2
1.1
1.1
1.1

3.0
7.3
8.2
9.0
9.2

1.6
3.4
2.6
2.2
2.2

2.4
6.5
6.8
8.0
8.1

1.2
3.1
2.2
2.1
2.0

2.6
6.5
6.9
7.8
8.0

1.3
3.2
2.3
2.1
2.1

4

Notes:(1) The IMF calculates GDP
growth using purchasing
power parity (PPP).
(2) Contributions by country
and region are calculatedusing the weighted PPP for2009.
(3) East Asia refers to China,
South Korea, Hong Kong,
Taiwan and ASEAN.
(4) ASEAN+6 refers to
ASEAN, Japan, China, South
Korea, India, Australia and
New Zealand.
(5) Figures may differ from
elsewhere in this presentation
due to revisions anddifferences in original
statistics.
(6) The definitions ofdeveloped and developing
countries follow the World
Economic Outlook (IMF).
Source: WEO (IMF).

Copyright (C) 2011 JETRO. All rights reserved.

Chapter 1 Section 1: World economy and its risks

Disparities among countries and regions due to surging commodity prices■ The high price of commodities increases inflationary pressure
From 2008 to 2010, the increased public expenditures and monetary easing polices of various countries resulted in excessive liquidity in certain markets. Due tothe weakened dollar, faltered performances of financial funds (stocks, bonds, etc.) and expectation of demand expansion in emerging countries, these excess
funds flowed into commodity markets of gold and other precious metals, industrial materials and grains, resulting in rise of markets. The rise of commodity
markets, through rise of imports price, have been causing inflation pressure to grow. Especially the rise of foodstuff prices may cause a serious effect on
developing countries whose Engel’s coefficients are high.
Fig. I – 2 International commodity market conditions(The beginning of 2008 = 100)
220.0
Total

180.0

16.0

Non-energy

EnergyGrainsIndustrial Materials

Precious Metals

Rates of Increase in Consumer Prices (2010/ %)200.0

Fig. I – 3 Major countries’ Engel’s coefficient and rates of increase in consumer prices

Soft Commodities

160.0
140.0
120.0
100.0
80.0
60.0

11/04

11/01

10/10

10/07

10/04

10/01

09/10

09/07

09/04

09/01

08/10

08/07

08/04

08/01

40.0

Developed Countries
Developing Countries

14.0
12.0

10.0
8.0
6.0
4.0

2.0
0.0
- 2.0
- 4.0

0.0

10.0

20.0

30.0

40.0

50.0

60.0

Engel's Coefficient(The proportion of consumption expenditure spent on food, average for 2000 - 2010, %)(Yr/Mo)Note: Soft Commodities are coffee, cocoa, sugar, etc.
Source: Thomson Reuters.

Note: Classification of developed countries and developing countries follows WEO standards.
Source: WEO (IMF), International Marketing Data and Statistics 2011
(Euromonitor International).
Copyright (C) 2011 JETRO. All rights reserved.
5

Chapter 1 Section 1: World economy and its risks

World money flows into developing countries■ Money flow in international financial market is polarized as well
The excessive liquidity flows not only into international commodity markets, but also results in an inflow of funds to developing countries, through international
financial markets. With respect to the balance of cross-border bank credit (direct transaction basis) as of the end of 2010 was US$30.2 trillion, representing only
80% of the peak. Meanwhile, while cross –border bank credit towards developed countries continued to be sluggish, credit towards developing countries arestrengthening overall, with credits towards Asia and Oceania, China, Central and South America and Middle East and Africa reaching their highest levels at theend of 2010. The rapid flow of funds towards developing countries may cause not only inflationary pressure, but also significant damage to the real economy.
Fig. I–4 Cross-border bank credit extension transactions (direct transaction basis)(1) Developed countries and regions

35.0(2) Developing countries and regions; offshore financial centers(US$ trillion)

8.0(US$ trillion)
Offshore Financial Centers

30.0

U.S.

7.0

Europe
25.0

6.0

Japan

Central and South America and the Carribean
Developing Countries in Europe
China

Other
5.0

20.0

4.0

Asia and Oceania
Middle East and Africa

15.0
3.0

10.0
2.0

5.0
1.0

0.0
0.0

Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3
2002
03
04
05
06
07
08
09
10

Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3
2002
03
04
05
06
07
08
09
10

(Year/Quarter)

Source: Consolidated banking statistics (BIS).

(Year/Quarter)

6

Copyright (C) 2011 JETRO. All rights reserved.

Chapter 1 Section 1: World economy and its risks

The global imbalance widening again■ The global imbalance and Asian money flow return
The global imbalance (global imbalance of international balance of payments) that temporarily shrank after the financial crises in 2008 started to grow again
starting from 2010. The U.S. current account deficit in relation to the GDP dropped to 2.4% in the fourth quarter of 2009, but thereafter started increasing. Thiswas due to insufficient savings in the government sector, and thus the imbalance is structurally different from the pre-financial crisis period, when the current
account deficit expanded due to increases in household consumption. Meanwhile, with respect to the financing of current account deficits, the presence ofinvestment funds from Asian countries and regions is steadily expanding.
Fig. I-6 Composition ratio of U.S. inward investment amounts
by region (flows; cumulative amount for each period)

Fig. I-5 Current account balances by country and region
2,000

1,500

1,000

(US$ billion)
U.S.
28 Developed Countries (excluding U.S., NIES and Japan)
Japan
NIES (4 countries and regions)
23 Developing Countries in Asia (including China)
20 Commodity (Non-fuel) Exporting Countries
27 Fuel Exporting Countries
Other 80 Developing Countries

100

(%)

90

Other
14.4
24.6

80

18.5

60

26.5

50
0

40
30

1.5
1.6
20

- 500

10

- 1,000- 1,500
02

03

04

05

06

07

08

09

10.4

Central andSouth America

16.7

Middle East andAfrica

12.4
3.8
3.3

10.0

6.9

5.0
8.3

19.0

10.0

7.0

2000-2005

2006-2010

001

Europe

70

500

2000

U.K.

Other Asia andOceania
NIES
China

Japan

10

11
12
13
14
15
16 Note: Investment amounts are the sum of direct investments,(Est.)(Est.)(Est.)(Est.)(Est.)(Est.)
Notes: (1) Classification of countries and regions is based on WEO (IMF).
investment in securities, and other investments.
(Year)(2) NIES are South Korea, Hong Kong, Taiwan and Singapore.
(3) (Est.): estimate.
Source: U.S. International Transactions (U.S. Department of Commerce).
(4) Developing Countries in Asia excludes four countries that belong to fuel exporting countries andcommodity (non-fuel) exporting countries.
Source: WEO (IMF).

7

Copyright (C) 2011 JETRO. All rights reserved.

Chapter 1 Section 2: World trade and Japan's trade

World trade saw an increase of 22.2% in 2010 (1)■ Nominal exports marked the second highest percent change of the past 30 years
JETRO estimates that World trade in 2010 based on merchandise trade and nominal exports rose by 22.2% over the previous year to US$15.495 trillion. Due inpart to the backlash from the previous year which had the largest rate of decrease since 1949, the percent change marked the second highest figure over the past
30 years, after 2004, when transactions showed significant growth under a global boom. Though the export price change are no higher than usual, significant
volume increase of 16.5% contributed to the increase in trade value. Real exports, excluding the effect of price fluctuation, began recovering in June 2009, and in
December 2010 surpassed the peak figures of April 2008 before the financial crisis.
Fig. I-7 World trade indicesFig. I-8 Trends in world export volume(seasonally-adjusted figures; August 2008 = 100)

Units
World merchandise trade, export basis
percent change (nominal)
percent change (real)

US$ billion%%%

percent change (price)
World merchandise trade, import basis US$ billion
percent change (nominal)%%%

percent change (real)
percent change (price)
World trade in services, export basis

US$ billion

percent change
World trade in services, import basis

US$ billion

percent change
World real GDP growth
Industrial production index growth(developed countries)
Average price
Crude oil
Quantity of demand%%%%$/barrelmillion bbl/day

2006
12,107
16.0
11.6
4.4
12,261
14.8
9.5
5.3
2,832
13.4
2,658
12.0
5.2

2007
13,82914.2
5.8
8.4
14,131
15.3
7.3
8.0
3,409
20.4
3,170
19.3
5.4

2008
16,030
15.9
5.5
10.4
16,310
15.4
3.3
12.1
3,840
12.7
3,622
14.3
2.9

2009
12,379- 22.8- 12.1- 10.7
12,530- 23.2- 10.3- 12.93,384- 11.93,214- 11.3
- 0.5

3.1
64.3
85.0

2.9
71.1
86.4

- 2.4
97.0
86.0

- 13.0
61.8
84.7

2010
15,050 110.0
22.2
16.5
5.7
15,47021.1 100.0
14.6
6.5
3,664
8.3
3,503
9.0 90.0
5.0
6.7
79.0
87.4

Notes: (1) 2010 trade value and growth rates are JETRO estimates.
(2) Percent change (real) = percent change (nominal) - percent change (price).
(3) Real GDP growth based on purchasing power parity.
(4) Definition of developed countries follows IFS classification.
Sources: IFS (IM F), WEO (IM F), WTO, BP.p.l.c and statistics of individual countries/regions.

80.0
1 2 3 4 5 6 7 8 9 101112 1 2 3 4 5 6 7 8 9 101112 1 2 3 4 5 6 7 8 9 101112
2008
2009
2010
(Yr/Mo)Source: The Global Economic Monitor (World Bank).

8

Copyright (C) 2011 JETRO. All rights reserved.

Chapter 1 Section 2: World trade and Japan's trade

World trade saw an increase of 22.2% in 2010 (2)Fig. I-9 World trade by country and region (2010)(US$ million, %)Exports
Total

NAFTA
U.S.
CanadaMexicoEU27
EU15Germany
The Netherlands
France
Italy
Belgium
U.K.
Japan
East Asia
China
South Korea
Hong Kong
TaiwanASEAN
Singapore
Malaysia
ThailandIndonesia
RussiaSwitzerland
India
Australia
BrazilSouth Africa
World trade (JETRO estimate)

Developed countries
Developing countries
BRICs

1,964,473
1,278,263
387,979
298,230
5,167,405
4,573,192
1,268,890
573,831520,889
447,418
412,408
419,399
767,025
3,735,585
1,578,444
466,384
401,023
262,017
1,027,717
352,076
198,941
195,297
157,779
348,528
195,318
223,176
212,782
201,915
81,311
15,049,538
9,087,362
5,962,176
2,352,063

Pe rce ntchange

22.6
21.0
22.5
29.9
12.4
11.8
13.2
15.1
7.5
10.0
11.5
18.2
32.1
29.7
31.3
28.3
21.6
35.2
29.9
30.4
26.3
28.7
35.4
49.0
12.8
35.1
37.7
32.0
30.3
22.2
17.6
30.0
34.1

Imports
Share

13.1
8.5
2.6
2.0
34.3
30.4
8.4
3.8
3.5
3.0
2.7
2.8
5.1
24.8
10.5
3.1
2.7
1.7
6.8
2.3
1.3
1.3
1.0
2.3
1.3
1.5
1.4
1.3
0.5
100.0
60.4
39.6
15.6

Contribution

2.9
1.8
0.6
0.6
4.6
3.9
1.2
0.6
0.3
0.3
0.3
0.5
1.5
6.9
3.1
0.8
0.6
0.6
1.9
0.7
0.3
0.4
0.3
0.9
0.2
0.5
0.5
0.4
0.2
22.2
11.0
11.2
4.9

Total

2,606,566
1,913,160
391,925
301,482
5,310,122
4,650,783
1,066,723
517,154605,919
484,000
390,767
588,070
691,4473,448,476
1,393,909
425,212442,035
251,794
935,525
310,973
164,847
184,519
135,663
211,439
175,978
328,731
193,558
181,649
80,212
15,469,552
9,612,084
5,857,468
2,115,728

Pe rce ntchange

23.2
22.7
21.9
28.6
13.0
12.4
15.2
16.6
8.2
16.7
11.0
14.4
25.2
34.3
38.9
31.6
25.3
44.6
31.0
26.5
33.0
37.1
40.1
36.2
12.8
27.6
21.5
42.3
23.7
21.1
17.8
27.0
37.0

Share

16.8
12.4
2.5
1.9
34.3
30.1
6.9
3.3
3.9
3.1
2.5
3.8
4.5
22.3
9.0
2.7
2.9
1.6
6.0
2.0
1.1
1.2
0.9
1.4
1.1
2.1
1.3
1.2
0.5
100.0
62.1
37.9
13.7

Contribution

3.8
2.8
0.6
0.5
4.8
4.0
1.1
0.6
0.4
0.5
0.3
0.6
1.1
6.9
3.1
0.8
0.7
0.6
1.7
0.5
0.3
0.4
0.3
0.4
0.2
0.6
0.3
0.4
0.1
21.1
11.3
9.8
4.5

Notes: (1) Data for the world, EU27, developed countries and developing countries follow JETRO estimates.
(2) ASEAN in this chart stands for the following six countries: Singapore, Thailand, M alaysia, Indonesia, Vietnam and the Philippines.
(3) East Asia in this chart are the following countries/regions: China, South Korea, Hong Kong, Taiwan and ASEAN.
(4) Definitions of developed and developing countries follow DOT (IM F) standards.
Source: Statistics from individual countries/regions.
9■ China leads world trade in both exports and imports

China’s exports rose by 31.3% over the previous year to US$1,578 billion.
China maintained its largest export country position since 2009. Importsrose by 38.9% to US$1,394 billion, second in the world after the U.S..
China has showed the highest degree of contribution to the increase in both
exports and imports, and is serving to underpin the recovery of world trade.
China’s import volume began to grow as early as February 2009 andremained at a high level through 2010.
■ Exports of resource-rich countries growDue to a steep rise in international commodity prices, exports of resourcerich countries such as Russia and Brazil surged by over 30%. In addition toincreases in energy and metal prices due to increasing demand, from mid2010, the rapid price rises in food and agricultural raw materials because of
weather conditions gave a boost to exports.
Fig. I-10 Import volumes for Japan, major importing countries and the world(seasonally-adjusted figures: August 2008 = 100)

Sources: The Global Economic Monitor (WBG), Real Exports and Real Imports (Bank of Japan).
Copyright (C) 2011 JETRO. All rights reserved.

Chapter 1 Section 2: World trade and Japan's trade

Asia’s production networks draw tighter around China■ Asia’s production network and trade
In Asia, production networks have been built with China on the center. Comparing the trade intensity index (exports) of 2000 and 2010, the relationships of Asian
countries with the U.S. became weaker and those with China became closer. Meanwhile, China has tightened its relationship with the U.S. as a products final
demand location.
■ The new image of production network presented by ―value-added trade‖
In East Asia, a mutually complementary production structure has been established, with Japan and South Korea producing goods that require advanced
technology and China and other nations handling the labor-intensive production processes. In this regard, the analytical framework provided by ―value-added
trade," which breaks down the added value of trade goods into production processes not only gives a clearer picture of the current condition of production
networks, but also shows a picture different from that of the traditional concept of balance of payments. For example, the U.S. trade deficit with China according
to the ―value-added trade‖ analysis will be significantly narrower than when based on usual calculations. This is a perspective that can replace the traditional
concept of ―country of origin."
Fig. I-11 Trade intensity index among major countries/regions

Fig. I-12 U.S. -China trade balance: Traditional statistics versus value added terms

2000
Japan
China
Hong Kong
South Korea
TaiwanSingapore
Malaysia
Thailand
U.S.
EU15

Japan
2.7
0.9
1.9
1.8
1.2
2.1
2.4
1.3
0.3

China
1.7
9.3
2.9
0.5
1.1
0.8
1.1
0.6
0.3

U.S.
1.5
1.0
1.2
1.1
3.8
0.9
1.0
1.1
0.5

EU15
0.4
0.4
0.4
0.4
2.4
0.3
0.4
0.4
0.6
-

Japan
1.5
1.2
0.8
1.3
0.9
2.1
2.1
0.9
0.2

China
1.9
2.5
5.2
2.7
1.0
1.2
1.1
0.7
0.3

U.S.
1.1
1.3
0.8
0.8
0.8
0.5
0.7
0.7
0.5

EU15
0.3
0.5
0.2
0.3
0.3
0.3
0.3
0.3
0.5
-

-42%
-21%

2008

Value added estimates (including China's
processing trade)
-53%
-27%

Value added estimates

2005

2010
Japan
China
Hong Kong
South Korea
TaiwanSingapore
Malaysia
ThailandU.S.
EU15

Traditional measures

Notes: (1) Degree of trade intensity calculated from exports data.
(2) Cells in gray indicate degree of trade intensity below 1.0.
Source: Based on statistics from individual countries/regions.

-20 %

- 300

- 250

- 200

- 150

- 100

2000

- 50

0

(US$ billion)

Note: China's processing trade data not available for 2000.
Source: "Trade patterns and global value chains in East Asia: From trade in goods to trade in tasks" (IDE-JETRO, WTO ).

10

Copyright (C) 2011 JETRO. All rights reserved.

Chapter 1 Section 2: World trade and Japan's trade

World Trade in Q1 2011 steadily grows■ Exports in Q1 2011 expands by 21.2%
Exports of the major 22 countries/regions, where recent data available, increased steadily in the first quarter of 2011, up 21.2% over the same period of theprevious year and surpassing the figure of the fourth quarter of 2010, which was 18.9%. The commodity prices rise dragged into 2011, contributing to anincrease in export values. The WTO estimates that the world exports in real term, excluding the effect of price fluctuation, will increase by 6.5% for the full yearof 2011, historically an average level.
Fig. I-13 World trade (by products, export/import) for major countries/regions
22 majorcountries/regions'share of world
total in 2010

Total

64.5

Machinery and equipment

78.4

General equipment

75.7

Electrical equipment

81.4

Transport equipment

76.6

Precision instruments

81.6

Chemicals

64.1

Foodstuffs

53.8

Iron ore

80.1

Mineral fuels

40.8

Crude oil

26.3

Textiles and textile products

62.2

Steel

62.4

Exports
2010
Ⅰ
2,177,771(28.4)
1,017,419(29.1)
305,965(20.5)
346,430(32.5)
270,230(34.3)
94,794(31.8)
311,359(30.1)
117,369(13.5)
12,544(15.0)
195,317(62.3)
65,481(79.6)
83,150(13.3)
85,876(16.0)

Ⅱ2,392,256(30.5)
1,121,758(30.0)
334,719(28.0)
392,868(29.8)
292,164(33.8)
102,007(27.4)
320,884(23.1)
124,855(9.5)
20,417(94.1)
216,975(61.3)
74,402(56.5)
94,863(20.4)
102,775(43.1)(US$ million, %)2011
Ⅲ
2,483,985(22.2)
1,171,824(23.6)
351,702(25.0)
425,931(23.9)
286,097(22.6)
108,095(20.8)
329,513(15.0)
131,261(11.7)
25,880(124.0)211,606(26.4)
70,973(18.0)
110,406(18.8)
97,217(24.0)

Ⅳ
2,660,360(18.9)
1,252,550(16.1)
377,716(18.5)
444,129(15.9)
317,398(14.2)
113,307(14.5)
342,034(14.1)
146,025(15.2)
27,615(141.3)
237,267(28.6)
79,582(18.3)
106,584(20.6)
101,798(20.6)

Ⅰ
2,638,651(21.2)
1,194,209(17.4)
360,962(18.0)
406,793(17.4)
318,265(17.8)
108,189(14.1)
366,239(17.6)
142,948(21.8)
25,048(99.7)
253,757(29.9)
81,787(24.9)
102,896(23.7)
109,654(27.7)

22 majorcountries/regions'share of world
total in 2010

63.5
69.2
67.5
75.7
59.9
74.1
61.2
55.9
87.8
65.7
71.1
60.6
54.5

Imports
2010
Ⅰ
2,218,444(28.3)
894,955(28.6)
274,725(20.2)
343,329(33.8)
193,455(32.1)
83,447(30.2)
301,751(31.5)
128,581(12.9)
20,956(36.0)
343,207(51.3)
195,640(71.1)
82,850(8.4)
75,142(11.4)

Ⅱ2,418,105(31.9)
999,371(31.2)
303,094(28.2)
391,925(32.2)
213,795(35.6)
90,556(27.0)
314,537(26.2)
136,082(10.6)
27,795(71.6)
369,204(51.6)
216,371(52.5)
84,781(14.7)
88,198(45.4)

Notes: (1) Based on data available as of the end of June 2011.
(2) The 22 major countries/regions are Japan, US, Canada, Mexico, Argentina, Brazil, China, Hong Kong, Taiwan, South Korea, Singapore, Thailand, Malaysia, Indonesia, the Philipines, Australia, UK,
Germany, France, Switzerland, Russia and South Africa.
(3) Figures in parentheses are YoY growth rates.
Source: Statistics from individual countries/regions.
11

2011
Ⅲ
2,524,770(22.2)
1,057,124(25.0)
320,931(27.7)
429,468(26.0)
210,763(21.0)
95,962(21.0)
325,205(17.6)
135,681(11.0)
32,013(66.3)
370,075(21.5)
213,456(14.2)
103,785(15.8)
88,880(34.1)

Ⅳ2,662,953(19.0)
1,118,679(18.2)
336,551(20.3)
445,675(17.0)
234,201(17.8)
102,252(17.8)
336,375(16.0)
152,225(12.9)
35,848(85.5)
386,715(19.2)
218,058(12.6)
98,854(19.0)
89,844(22.1)

Ⅰ
2,722,766(22.7)
1,068,488(19.4)
330,442(20.3)
409,392(19.2)
232,042(19.9)
96,611(15.8)
356,244(18.1)
150,348(16.9)
38,892(85.6)
456,163(32.9)
261,390(33.6)
100,844(21.7)
96,602(28.6)

Copyright (C) 2011 JETRO. All rights reserved.

Chapter 1 Section 2: World trade and Japan's trade

Japan’s trade significantly increased in 2010
■ Japan’s trade significantly increased in 2010
Japan’s trade on customs clearance basis showed a significant expansion in both exports and imports in 2010, following a serious decrease in 2009, with
US$767.0 billion in exports, up 32.1% year-on-year, and US$691.4 billion in imports, up 25.2%. Because exports recovered earlier than imports, the trade
surplus rose to US$75.6 billion, US$47.0 billion higher than the previous year. On a quantity basis, exports rose by 24.2% and imports by 13.9%, showing thefirst increases in three and four years, respectively. But imports and exports still have not reached pre-financial crisis levels.
■ The Great East Japan Earthquake had a strong effect after April 2011
Japan’s trade has been greatly affected by the Great East Japan Earthquake. Exports in April 2011 dropped by 2.4% over the previous year, showing the firstdecrease in 18 months. In May and June, the stronger yen inflated the dollar-denominated trade value and showed an increase year-on-year, while the yen-based
trade value has been falling since March. With respect to imports, partly due to the continuing rise in crude oil price, the percent change have been over 20%
since April. As a result, the trade balance turned to deficit in April and May.
Fig. I-14 Japan's trade (2009 to June 2011)(US$ million, billion yen, %)2010

Dollar-based

Total exports (US$ million)(Percent change)
Total imports (US$ million)

Yen-based(Percent change)
Trade balance (US$ million)(Difference from same quarter, previous year)
Total exports (billion yen)
(Percent change)
Total imports (billion yen)
(Percent change)
Trade balance (billion yen)
(Difference from same quarter, previous year)
Export volume index(Percent change)
Import volume index(Percent change)
Crude oil import price (US$/barrel)(Percent change)
Average exchange rate (yen/US$)(yen appreciation, %)

2009

2010

580,787-25.2
552,252-27.0
28,535
8,703
54,171-33.1
51,499
-34.8
2,671
608
81.6
-26.6
88.2
-14.4
60.7
-40.4
93.5
10.5

767,025
32.1
691,447
25.2
75,57847,04367,40024.4
60,765
18.0
6,635
3,963
101.4
24.2
100.5
13.9
79.2
30.5
87.8
6.6

Ⅰ
176,94846.4
159,030
21.5
17,91827,996
16,02843.2
14,415
19.2
1,613
2,516
95.7
43.7
94.8
13.2
77.7
75.4
90.7
3.2

Ⅱ
184,980
40.9
166,418
35.4
18,562
10,16817,06633.2
15,357
28.1
1,709
892
101.8
32.8
98.0
19.2
81.3
54.7
92.0
5.7

2011
Ⅲ
196,470
28.1
177,72225.0
18,748
7,602
17,031
17.8
15,409
14.9
1,623
574
103.6
18.5
103.5
14.5
75.7
7.7
85.9
9.0

Notes: (1) For volume indices, year 2005 = 100. (2) The exchange rates are interbank rate averages for each period.
(3) Percent change for quarterly data are year-on-year comparisons. (4) Figures of imports in June are nine-digit provisional.
Sources: "Trade Statistics" (Ministry of Finance) and "Foreign Exchange Rates" (Bank of Japan).
12

Ⅳ208,62719.0
188,277
20.5
20,3501,278
17,274
10.0
15,584
11.3
1,690
-18
104.5
8.6
105.8
9.6
82.2
9.3
82.6
8.6

Ⅰ
199,02912.5
194,623
22.4
4,406-13,512
16,421
2.4
16,06311.4
357-1,256
98.0
2.5
101.6
7.2
96.8
24.6
82.3
10.1

Ⅱ
191,9783.8
207,22824.5-15,249-33,811
15,692-8.0
16,94910.4-1,256-2,965
93.3
-8.3
100.7
2.8
115.0
41.4
81.7
12.6

April
62,083-2.4
67,77921.6-5,696-13,567
5,157
-12.4
5,624
9.0
-468
-1,197
92.9
-11.6
101.0
1.3
111.9
40.1
83.4
12.0

May
58,513
2.5
68,95028.3-10,437-13,797
4,760
-10.3
5,617
12.4
-857
-1,166
84.5
-10.8
99.3
5.5
118.7
39.7
81.2
12.9

June
71,382
11.1
70,49923.9883-6,448
5,776
-1.6
5,707
9.8
69
-602
102.7
-2.7
101.9
1.7
114.7
43.9
80.5
12.9

Copyright (C) 2011 JETRO. All rights reserved.

Chapter 1 Section 2: World trade and Japan's trade

Trade with East Asia remains strong■ Exports to every major countries/regions
expanded in 2010
Japan's exports to major countries/regions all expanded
in 2010 over the previous year. When compared with
2008 data, prior to the contraction of trade, 2010
exports to Asian countries such as China, ASEAN and
India and to Central and South America countries
surpassed the results of 2008, while the exports to the
U.S. and EU are still below the 2008 level, reflecting
the fact that there is a difference in recovery speed.

Fig. I-15 Japan's trade with major trading partners

Exports

World
Imports

Percent change

Total
Percent change

Total
U.S.

Exports Percent change
Percent change (volume)

Total
Imports Percent change
Percent change (volume)

Total■ Imports from East Asia continue to expand
Imports from most major trading partners also
increased. Imports from the U.S. and EU in 2010
fourth quarter expanded slower than previously
recorded, whereas imports from China and other East
Asian countries continued to grow, resulting in East
Asia contributing roughly half of the imports increasein 2010. Furthermore, since crude oil prices have been
on rising trend since the beginning of 2009, imports
from Middle East largely contributed to the increase.

Total

EU27

Exports Percent change
Percent change (volume)

Total
Imports Percent change
Percent change (volume)
Exports

East Asia
Imports

Total
Percent change

Total
Percent change

Total
China

Exports Percent change
Percent change (volume)

Total
Imports Percent change
Percent change (volume)

Total
ASEAN

Exports Percent change
Percent change (volume)

Total
Imports Percent change
Percent change (volume)
Exports

Middle East
Imports

South andCentralAmerica

Exports
Imports

Total
Percent change

Total
Percent change

Total
Percent change

Total
Percent change

2009

2010

580,787

767,025(US$ million, %)2010
Ⅰ
176,948

Ⅱ
184,9802011

Ⅲ
196,470

Ⅳ
208,627

Ⅰ
199,029

Ⅱ
191,978

-25.2

32.1

46.4

40.9

28.1

19.0

12.5

3.8

552,252

691,447

159,030

166,418

177,722

188,277

194,623

207,228

-27.0

25.2

21.5

35.4

25.0

20.5

22.4

24.5

93,653

118,199

27,61030,79133,26329,485

26,633

-31.2
-35.7

26.2
21.2

26,535
36.9
31.0

31.2
28.2

25.2
18.7

16.2
12.3

11.1
6.0

-3.5
-11.1

59,044

67,171

15,931

16,85816,937

17,446

17,15319,098

-23.3
-23.1

13.8
11.0

8.0
4.8

20.6
23.5

18.8
15.6

8.7
1.8

7.7
5.9

13.3
6.6

72,37486,735

20,104

20,511

21,77324,347

23,27122,220

-33.8
-35.6

19.8
24.4

21.5
19.3

22.0
31.3

22.6
29.0

14.5
19.5

15.8
14.5

8.3
-6.2

59,13066,187

15,924

15,771

17,202

17,28918,075

19,769

-15.4
-20.3

11.9
12.7

8.3
9.4

15.4
19.7

16.4
16.7

8.2
5.3

13.5
2.8

25.4
6.7

305,621417,953

95,142

101,586

107,346

113,879

107,976

107,662

-17.7

36.8

62.1

44.9

28.7

21.9

13.5

6.0

241,916

306,468

68,47973,96379,61084,41684,99989,862

-19.6

26.7

20.4

35.5

27.8

23.9

24.1

21.5

109,630

149,086

32,96435,45837,88842,77640,00438,198

-11.6
-15.4

36.0
25.2

60.1
47.2

36.7
29.7

27.3
18.3

28.4
13.8

21.4
11.1

7.7
-6.1

122,545

152,801

33,10436,87439,791

43,032

41,59243,357

-13.9
-12.6

24.7
18.3

15.9
17.9

32.8
25.6

26.0
17.3

24.2
13.2

25.6
13.6

17.6
5.4

80,449112,461

25,872

27,051

29,26430,27428,531

29,249

-21.7
-24.0

39.8
27.9

67.7
67.2

54.9
39.8

29.8
16.9

21.1
4.8

10.3
-1.6

8.1
-2.4

77,936100,619

23,29324,163

26,213

26,95028,63930,293

-26.6
-15.1

29.1
16.9

21.3
17.0

39.5
20.4

31.6
18.2

25.3
12.3

23.0
6.5

25.4
0.5

21,65025,182

6,586

6,023

6,246

6,327

6,124

4,897

-35.8

16.3

22.2

42.7

15.7

-4.8

-7.0

-18.7

92,850118,00930,46228,36627,49031,691

37,65838,309

-43.9

27.1

61.4

55.5

4.4

7.8

23.6

35.1

33,11643,966

11,10010,812

11,365

10,68910,98911,283

-18.6

32.8

31.6

57.0

40.5

10.2

-1.0

4.4

20,16028,359

6,015

6,268

7,462

8,614

8,318

8,687

-26.6

40.7

21.1

42.3

44.8

52.9

38.3

38.6

Note: East Asia includes China, ASEAN, South Korea, Taiwan and Hong Kong. Source: "Trade Statistics" (Japan's Ministry of Finance).

13

Copyright (C) 2011 JETRO. All rights reserved.

Chapter 1 Section 2: World trade and Japan's trade

After the earthquake, imports of chemicals and foodstuffs have risen■ In 2010, exports of automobiles and IT products surged
Automobiles made the greatest contribution to the exports increase in 2010; while the main export market for automobiles remains the U.S. and Europe, exports
towards China surged by 82.1%. At the same time, due to the increase in demand associated with the world economy's recovery, IT products such as
semiconductor manufacturing equipment increased strongly as well. With respect to imports, due to the rise in crude-oil price, contribution of mineral fuel was
high, while machinery and equipment such as TV and air conditioner performed strong as well.
■ After the Earthquake, due to goods domestic supply shortage, imports of chemicals and foodstuffs rose
Due to the Great East Japan Earthquake, production activity was stalled and exports of transport equipment has been declining from March 2011, and exports ofelectric equipment also contributed negative in April due to suspended production of semiconductors and other electric components such as IC. With respect toimports, mineral fuel continued to increase, while due to domestic supply shortage after the Earthquake, chemicals and foodstuffs imports remarkably rose.
Fig. I-16 Japan' export on monthly percent change(contribution by product, year-on-year comparison, dollar-based)

Fig. I-17 Japan' import on monthly percent change(contribution by product, year-on-year comparison, dollar-based)(percent change, YoY)
60.0

45.0

50.0
40.0

Other

Steel

Chemicals

Precision instruments

Transport equipment

Electric equipment

General machinery

Total(percent change, YoY)
Other

Other machinery

40.0

IT equipments

Chemicals

35.0

Foodstuffs

Mineral fuel

Total
30.0

30.0

25.0

20.0

20.0
15.0

10.0

10.0
0.0
5.0
-10.0

0.0

-20.0

-5.0
01 02 03 04 05 06 07 08 09
2010
Source: "Trade Statistics" (Ministry of Finance).

10

11

12

01 02
2011

03

04

05

06

(Yr/Mo)01 02 03 04 05 06 07 08
2010
Source: "Trade Statistics" (Ministry of Finance).

14

09

10

11

12

01 02
2011

03

04

05

06

(Yr/Mo)Copyright (C) 2011 JETRO. All rights reserved.

Chapter 1 Section 3: World FDI, Japan's FDI and cross-border M&As

Global FDI fell 4.4% in 2010
■ Investment in developing countries has steadily gained more share
In 2010, Global FDI (on an inward FDI basis) fell 4.4% over the previous year to US$1,224.9 billion, recording a decline for the third consecutive year. However,the decline is shrinking, and investment is showing signs of the bottoming out. Factors for the improvement include: (i) in conjunction with the recovery of world
economy, corporate profits of overseas subsidiaries recovered; and (ii) companies that looked for sales channels aggressively began to expand business todeveloping countries. The proportion of overall FDI directed towards developing countries has been steadily expanding since 2000.
■ China enhances its presence in both inward and outward investments
China’s inward FDI rose solidly by 62.0% to US$185.1 billion, surpassing the FDI of Luxembourg which includes many transit-type investments, making
China’s inward FDI the world’s second highest in 2010. In recent years, the industries and regions targeted for investment have expanded from the
manufacturing industry to cover the service industry, and from coastal areas to inland areas. China’s outward FDI has also continued to expand, with a view
towards securing resources and energy, moving in rank from ninth to sixth.
Fig. I-18 Global FDI and cross-border M&As(%)

(US$ billion)

3,000(US$ million)
Inward direct investment
Outward direct investment
2009
2010
2009
2010
40.0
1 Luxembourg
209,746 U.S.
236,226 U.S.
303,606 U.S.
351,350
2
U.S.
158,581
China
185,081
Luxembourg
234,295
Luxembourg
130,176
35.0
3 China
114,215 Luxembourg
152,255 France
102,949 Germany
104,857
4
U.K.
71,140HongKong
68,904The
Netherlands
100,571
France84,11230.0
5 Hong Kong
52,394 Belgium
52,803 Germany
78,200 Hong Kong
76,077
37,627 Brazil
48,438 Japan
74,650 China
60,15125.0 6 Germany
7 Russia
36,500 Germany
46,134 Hong Kong
63,991 Switzerland
58,253
8
Saudi
Arabia36,458U.K.
45,908U.K.
44,381
Japan
57,22320.0
9 India
35,649 Russia
42,868 China
43,898 Russia
52,47615.0 10 France
34,027 Singapore
38,638 Russia
43,665 Canada
38,585
Sources: Balance of payments statistics, BOP (IMF) and Thomson Reuters.

45.0

FDI in developed countries
FDI in developing countries

2,500
Global cross-border M&As

2,000

Fig. I-19 Top 10 countries/regions in FDI

Proportion of FDI directed at developing
countries (right axis)

1,500

1,000

10.0
500
5.0
0

0.0
99 2000 01

02

03

04

05

06

07

Note: FDI here is on inward FDI basis.
Sources: Balance of payments statistics, BOP (IMF) and Thomson Reuters.

08

09

10

(Year)

15

Copyright (C) 2011 JETRO. All rights reserved.

Chapter 1 Section 3: World FDI, Japan's FDI and cross-border M&As

27.8% increase in global cross-border M&As
■ About 20% of acquirers are U.S. companies
In 2010, the total value of global cross-border M&As increased 27.8% compared to 2009 to US$659.1 billion while the number of deals completed also rose by
19.9％ to 8,795, both the first year-over-year increases seen in three years. The increase in corporate value on the stock markets as a result of global economy
recovery and the fact that it became easier for companies with good financial condition to obtain financing for M&As compared to the situation during thefinancial crisis were among the factors contributing to the resurgence in M&A activity. The share of U.S. companies in total global acquisitions rose to 21.1%.
■ Emerging countries target European and U.S. markets
If one looks at the trends in M&A activity by region, between the two five-year periods of 2001 through 2005 and 2006 through 2010, a marked increase in
M&A activity by companies other than North America and Europe ones is also apparent. M&A activity targeting the markets of the developed countries by
Middle Eastern and African countries supported by plentiful oil money and by Asian, Oceanian and Central Asian countries experiencing rapid economic growth
gained momentum. In 2010 for the first time the value of M&A transactions initiated by Asian countries exceeded 20% of the global transactions.
Fig. I-20 Global cross-border M&A deal value trends

Fig. I-21 Trends in M&A by region

16

Copyright (C) 2011 JETRO. All rights reserved.

Chapter 1 Section 3: World FDI, Japan's FDI and cross-border M&As
Fig. I-22 FDI of major countries/regions(net flows, based on balance of payments)

U.S.
CanadaEU27
EU15FranceGermany
Italy
Luxembourg
The Netherlands
Spain
U.K.
12 new EU member states
Switzerland
Australia
Japan
East Asia
China
South Korea
Hong Kong
ASEAN 5Singapore
India
BrazilRussia33 developed countries/regions

Developing countries
World

InwardPercent
Value
Change236,226
49.0
23,413
9.4
292,384- 43.8305,266- 37.233,905- 0.4
46,13422.6
9,497- 52.7
152,255- 27.4- 65,679
n.a.
21,086130.8
45,908- 35.5- 12,882
n.a.
- 6,561n.a.
32,472
26.3- 1,359n.a.
325,405
62.6
185,081
62.0
- 150
n.a.
68,904
31.5
69,078142.2
38,638152.9
24,640- 30.948,43886.7
42,86817.4
730,841- 11.7494,057
9.0
1,224,897- 4.4

Fig. I-23 10 Largest cross-border M&A deals (2010 and January-June 2011)2010(US$ million, %)Outward
Percent
Value
Change351,350
15.7
38,585- 7.4
407,692- 38.2442,451- 31.5
84,112- 18.3
104,857
34.1
21,009- 1.3
130,176- 44.4
12,267- 87.822,268128.7
11,020- 75.2- 34,758
n.a.
58,25375.2
26,431
63.6
57,223- 23.3
208,169
26.9
60,151
37.0
19,23011.8
76,07718.9
41,52925.5
19,7396.9
14,626- 8.2
11,519n.a.
52,47620.2
1,121,295- 10.9187,59015.7
1,308,885- 7.8

Notes: (1) JETRO estimates for "World" and "Developing countries" figures.
The figures for developed countries are the totals for the 33 countries/regions
as classified by BOP (IM F).
(2) The ASEAN 5 are Thailand, M alaysia, Indonesia, the Philippines andSingapore.
(3) The figures for East Asia are the total for China, South Korea, Taiwan,
Hong Kong and the ASEAN 5.
Sources: Balance of payments statistics, BOP(IM F) and other sources.

(US$ million)
Acquiring company
Country

Target company
Industry

IndustryValue

ownership %aftertransaction

U.K.

Foodstuffs

21,418100.0

Telecommunications Zain Africa BV

Nigeria

Telecommunications

10,700100.0

Telecommunications Brasilcel NV

BrazilTelecommunications

9,743

100.0

EDF Energy PLC-UK PowerDistribution Business

U.K.

Electric, Gas andWater Distribution

9,056

100.0

Lihir Gold Ltd

Papua New
Mining (gold ore)
Guinea

8,578

100.0

April

Kraft Foods Inc

U.S.

Foodstuffs

June

Bharti Airtel Ltd

India

September Telefonica SA

Spain

October Investor Group

Hong Kong Investor Group

August Newcrest Mining Ltd Australia

Country

Mining (gold ore)

Cadbury PLC

Orange PLC

FranceTelecommunications T-Mobile(UK)Ltd

U.K.

Telecommunications

8,496

100.0

February Abbott Laboratories

U.S.

Drugs

Solvay Drugs SA

Belgium

Drugs

7,603

100.0

The Netherlands

Foodstuffs

FEMSA-Beer Op

MexicoFoodstuffs

7,325

100.0

China Petrochemical
China
Corp {Sinopec}

Oil and Natural Gas

Repsol YPF Brasil SA

BrazilOil and Natural Gas

7,111

40.0

Merck KGaA

Drugs

Millipore Corp

U.S.

Precision Machinery
Manufacturing

6,869

100.0

April

April
DecemberJuly

Heineken

Germany

January-June 2011
Acquiring company
Country
February International Power PLC France

Industry
Electric, Gas andWater Distribution

Target company
Country
GDF Suez Energy Europe &International

Belgium

Industry
Electric, Gas andWater Distribution

Value

ownership %aftertransaction

25,056

100.0

April

VimpelCom Ltd

The Netherlands

Telecommunications Weather Investments Srl

Italy

Telecommunications

22,382

100.0

April

Sanofi-Aventis SA

FranceDrugs

Genzyme Corp

U.S.

Drugs

20,856

100.0

May

Ensco PLC

U.K.

Oil and Natural Gas

Pride International Inc

U.S.

Oil and Natural Gas

8,685

100.0

June

Barrick Canada Inc

CanadaMining (gold ore)

Equinox Minerals Ltd

Australia

Mining (gold ore)

7,460

100.0

Central Networks PLC

U.K.

Electric, Gas andWater Distribution

6,505

100.0

April

PPL Corp

U.S.

Electric, Gas andWater Distribution

April

TD Bank NA

CanadaBanking

Chrysler Financial Corp

U.S.

Finance

6,300

100.0

March

Banco Santander SA

Spain

Banking

Bank Zachodni WBK SA

PolandBanking

5,629

95.7

June

Telecommunicacoes de
Sao Paulo SA

Spain

Telecommunications Vivo Participacoes SA

BrazilTelecommunications

5,524

100.0

March

Vodafone Group PLC

U.K.

Telecommunications Hutchison Essar Ltd

India

Telecommunications

5,000

100.0

Notes: (1) Year and month indicate the completion date of the transaction. (2) Country of the acquirer is that of its ultimate parent company.
(3) The definition of M&A follows Thomson Reuters. (4) The ranking is based on the value of a single transaction.
(5) If the acquirer is a single purchasing unit of a business corporation, the business corporation name is cited; if there is more than one business corporation,
the industry is denoted as Investors.
(6) The Investor Group consists of Cheung Kong Infrastructure Holdings Ltd., Hong Kong Electric Holdings Ltd. and Li Ka Shing Foundation Ltd.
(7) "FEMSA-Beer Op" stands for Fomento Economico Mexicano SAB de CV {FEMSA}-Beer Operations.
Source: Thomson Reuters

17

Copyright (C) 2011 JETRO. All rights reserved.

Chapter 1 Section 3: World FDI, Japan's FDI and cross-border M&As

Japan's outward FDI showing recovery■ Fourth quarter of 2010 showed first increase in five quarters
Japan’s outward FDI in 2010, net flows based on balance of payments, declined for the second straight year, falling by 23.3% over 2009 to US$57.2 billion. As
was the case since last year, a key factor was reinvestment earnings decrease of Japanese overseas subsidiaries as their operating profit worsened. However, thefourth quarter of 2010 data turned the first year-over-year increase in five quarters and the trend continues in 2011.
■ Increased investment in Asia
By region of destination, Asia was the only major region seeing an increase of FDI, which expanded by 7.2% to US$22.1billion. Investment in Singapore wasactive and investment in China, the largest target of Japanese investment in Asia, registered a record high for the second straight year.

Fig. I-24 Japan’s outward FDI by type250,000

Fig. I-25 Japan’s outward FDI by country/region (balance of payment basis, net, flows)(US$ million)

200,000(US$ million, %)Equity capital (outflow)

Other capital (outflow)

Reinvested earnings (outflow)

Equity capital (inflow)

Other capital (inflow)

Outward FDI (net)2009

150,000

100,000

50,0000- 50,000- 100,000
96

97

98

99 2000 01

02

03

04

05

06

07

08

09

10

Note: The yen-based value is converted to dollars by quarter, using the average quarterly Bankof Japan interbank rate, and the annual sum is then calculated.
Source: "Balance of Payments Statistics" (Ministry of Finance and Bank of Japan).

10 11
1-5 1-5

2010

Share

Percent
Change

2011
1-5

Share

Asia
20,636
22,131
38.7
7.2
11,373
43.1
China
6,899
7,252
12.7
5.1
4,340
16.5
ASEAN
7,002
8,930
15.6
27.5
5,114
19.4
India
3,664
2,864
5.0
- 21.9173
0.7
North America
10,8899,016
15.8- 17.2
1,869
7.1
U.S.
10,660
9,193
16.1- 13.8
1,728
6.5
Central/South America
17,393
5,346
9.3- 69.392
0.3
Brazil
3,753
4,316
7.5
15.0
1,703
6.5
Oceania
7,629
6,407
11.2
- 16.04,297
16.3
Australia
7,136
6,371
11.1
- 10.73,746
14.2
Europe17,83015,04326.3- 15.6
7,825
29.7
EU
17,0398,359
14.6- 50.9
7,103
26.9
World
74,65057,223100.0- 23.3
26,380100.0
Note: The yen-based quarterly value is converted to dollars, using the average quarterlyBank of Japan interbank rate.
Source: "Balance of Payments Statistics" (Ministry of Finance and Bank of Japan).

Percent
Change

126.2
127.1
171.4
- 67.4- 25.0- 27.6- 96.7
9.4
28.3
10.9
178.4
195.5
67.2

(Year)

18

Copyright (C) 2011 JETRO. All rights reserved.

Chapter 1 Section 3: World FDI, Japan's FDI and cross-border M&As

Large increase in outward M&As by Japanese companies■ Upward trend in number of overseas M&A transactions by Japanese companies in recent years
There was a sharp increase of 64.5% in the value of outward M&A by Japanese companies, to US$34.0 billion. The number of deals was 347, second only to therecord high of 427 registered in 1990 and continuing the upward trend that has been in progress since 2005. The country seeing the highest total value ofJapanese acquisitions was the U.S., with US$14.1 billion, three and half times the amount of the preceding year, followed by South Africa (US$2.7 billion),
Brazil (US$2.0 billion) and India (US$1.7 billion). Outward M&A continued at a strong pace through the first half of 2011 totaling 195 deals with a total valueof US$13.2 billion.
Fig. I-26 Trends in Japan’s outward M&A value and number of deals(US$ million)

Fig. I-27 Japan’s top 10 outward M&A transactions (2010 - June 2011)

80,000Acquiring company

Transaction
completed(Deals)Industry

U.K.

Australia

Industry

U.S.

Pharmaceuticals

3,838

South Africa

Business services(computer related)

2,730

CaridianBCT Inc.

U.S.

Healthcare Equipment

2,625

Dec-2010 Sumitomo Corporation Trading

Mineracao Usiminas

BrazilMining

1,930

Soap andcosmetics
products

Bare Escentuals Inc.

U.S.

Soap andcosmetics
products

1,522

Oil and natural
gas

1,500

Jun-2010

Other

70,000Astellas Pharma Inc. Pharmaceuticals OSI Pharmaceuticals Inc.

350 Dec-2010 NTT
Total Numberof Deals(right axis)→

60,000300

50,000

Apr-2011 Terumo

250
Mar-2010 Shiseido Co Ltd

40,000200

30,000

Telecommunicati
Dimension Data Holdings
ons
Healthcare EquipmentMay-2010

Mitsui Oil Exploration Oil and naturalgas
Co.,Ltd.

Anadarko Petro Corp-Shale
Assets (*2)

U.S.

Jun-2010

Mitsui & Co./ Tokyo
Gas & Co., Ltd

Natural Gas Thermal Power
Plant of Gas Natural (Spain) (*3)

Mexico water distri-150

20,000-Jan-2011

50

0096 97 98 99 2000 01 02 03 04 05 06 07 08 09 10

Source: Thomson Reuters

10 11
1-6 1-6(Year)NTT DATA

Telecommunicati
Keane International Inc
ons

May-2011 Dai-ichi Life Insurance Insurance

Tower Australia Group(US$ million)

Electric, gas and1,465

bution100

10,000

AmountCountry

400
U.S.

Target company

U.S.

Business services(computer related)

Australia Insurance

1,368
1,203

Retail sales
TradingJun-2011 Itochu
Kwik Fit Ltd
U.K.
1,040
(tires)
Notes: (1) Rankings are based on the amount of single transaction. (*2) Acquired a 32.5% stake in Anadarko Petroleum's shale gas
project in Marcellus Shale Area, PA. (Shale gas refers to natural gas contained in mudstone, an unconventional natural gas.) (*3)
Five natural gas thermal power companies and natural gas pipeline companies. (4) The transaction wherein KDDI acquired (for US$4
billion) from a subsidiary group of Liberty Global (U.S.) shares of Jupiter Telecom (J:com), a major cable TV provider, is regarded as aninvestment in a domestic company, and hence is excluded.
Source: Thomson Reuters

19

Copyright (C) 2011 JETRO. All rights reserved.

Chapter 1 Section 3: World FDI, Japan's FDI and cross-border M&As

Companies targeting expansion to emerging countries■ Type of business widening
The aggressive overseas business development by Japan's domestic demand-led industries such as foodstuffs and pharmaceuticals, which gained momentum in
2009, expanded to other industries as well in 2010, including retail, food services, transport and other services. 2010 was also characterized by an increased
activities focused on expansion into emerging economies including China, India, Russia, Eastern Europe and Central and South American countries.
Fig. I-28 Examples of Overseas expansion of Japanese companies in emerging countries (after 2010)
Industry

Target Country

Foodservices

China, India,
Thailand, etc.

Transport

Overview
The soba and udon noodle chain, Kazokutei, established joint venture companies first in China and then subsequently in India and Thailand. The company plans toextend overseas business centered on Asia through franchise outlets. In 2010 opened two soba and udon restaurants in Shanghai, China, one in Singapore and four inThailand, and has a plan to set up a business in India in 2011. Is also considering an extension into Russia, Vietnam, Indonesia, Canada and Australia.

China, Hong
The major small parcel delivery service, Yamato Holdings, bought a 65% stake of a Chinese government related logistics company, Shanghai Bus Logistics, for US$37.0
Kong, Singapore, million, and began parcel delivery service in January 2010. Aims to capture demand from wealthy consumers in conjunction with the growth in online shopping. Has
Malaysia
already started services in Singapore and Hong Kong and has plans for starting in Malaysia as well in the second half of 2011.

RetailChina

Yamada Denki, a major home appliances retailer, opened its first overseas store in Shenyang, China in December 2010 and China's second outlet in Tianjin in June 2011.
Aims to differentiate itself from Chinese mass retailers by Japanese-style retail service characterized by separate sales areas for each type of product. Plans to open five
stores in China within three years and launching online sales covering whole China by the end of 2011.

Industrial gas

India

Taiyo Nippon Sanso, Japan’s largest industrial gases supplier, acquired the Indian industrial gases company, K-Air India Gases (acquisition value not disclosed). Plans tostart producing industrial gas in 2012. This is the first case of a Japanese industrial gas manufacturer starting business in India (March 2010) .

Ceramics

India

Krosaki Harima, a refractory manufacturer, acquired for US$100 million shares in India’s largest refractory manufacturer, Tata Refractory. Krosaki has been exporting
products from its manufacturing site in China but with the growth of the Indian market moved to establish a production base. Aims to expand sales to neighborhood
regions including the Middle East (May 2011).

Insurance

TurkeySompo Japan Insurance Inc. acquired the mid-size Turkish non-life insurance company Fiba Sigorta for US$343 million. Turkey is seen as an up-and-coming market next to
BRICs (November 2010).

Foodstuffs

RussiaSanyo Foods acquired a 49.99% stake (acquisition value not disclosed) in KL Sanyo Foods (headquarters in Cyprus), the holding company for Russia’s third ranking
instant noodle manufacturer, King Lion Group. Ultimately looking into local sales of "Sapporo Ichiban" and other brands (April 2011).

Foodstuffs

PolandLotte Holdings (the holding company for the confections Lotte) acquired a Polish chocolate maker Wedel from Kraft Foods of the U.S. (acquisition value not disclosed).
In addition to securing a foothold for entering the markets of Middle and Eastern Europe, aim is to strengthen overall European business (September 2010).

Chemicals(fragrance)

BrazilTakasago International bought from Givaudan, the largest Swiss fragrance manufacturer, a flavor and fragrance plant in Brazil for US$10 million. Together with existing
plants, this strengthens the company’s manufacturing base for Central and South America . Plans to export to neighboring countries as well (July 2010).

Online sales

BrazilRakuten bought a stake (75% of outstanding shares, acquisition value not disclosed) in Ikeda, a leading Brazilian electronic commerce servicing company. Aims to startup
a virtual shopping mall business some time in 2011. With Brazil's online sales sharply growing, expansion in the market ahead of the leading U.S. and European
competitors (June 2011).

Notes: Values are from Thomson Reuters. The dates shown in parentheses are the dates transactions were completed.
Sources: Thomson Reuters, company press releases and news reports.
20

Copyright (C) 2011 JETRO. All rights reserved.

Chapter 1 Section 3: World FDI, Japan's FDI and cross-border M&As

Overseas earnings continued on a firm footing■ Asia steadily increases its importance as a source of earnings for Japanese companies
According to JETRO’s tabulation of corporate overseas profits, compiled from consolidated financial results posted by listed 375 companies with fiscal years
ending between December 2010 and March 2011. The results show that out of Japanese global business sales (not including exports from Japan) and operating
profits, 42.4% comes from overseas sales and 53.1% from overseas profit, meaning that overseas operating profits exceeded those from domestic market.
Looking at the 362 companies for which comparisons to the previous year are possible, operating profits recovered in Europe (up 143.8%) and the Americas (up75.3%) while earnings in Asia/Oceana continued on a firm footing, up by 43.5%. The overall rate of increase in operating profit after adjustments forconsolidation was 67.1%, well exceeding the 47.2% for all companies listed on the Tokyo Stock Exchange (1,551 companies with fiscal years ending inMarch) ,meaning that the recovery of firms having overseas business units was much faster.
Fig. I-29 Overseas operating profits of Japanese listed companies(1) Proportion of profits by region
Fiscal Year
(Number ofcompanies)

FY 2000 (668)
FY 2005 (804)
FY 2006 (832)
FY 2007 (866)
FY 2008 (890)
FY 2009 (887)
FY 2010 (375)
Fiscal Year
(Number ofcompanies)

FY 2000 (668)
FY 2005 (804)
FY 2006 (832)
FY 2007 (866)
FY 2008 (890)
FY 2009 (887)
FY 2010 (375)

Sales share by region
Domestic Overseas

71.9
66.1
66.2
63.1
63.8
65.0
57.6

28.1
33.9
33.8
36.9
36.2
35.0
42.4

Americas Europe

12.6
12.5
12.6
13.0
11.0
11.1
15.3

5.2
6.3
6.9
8.5
7.0
6.9
7.3

Asia/
Oceania

6.4
10.1
10.3
12.0
14.8
13.3
15.0

Operating profit share by region
Domestic Overseas

79.9
70.8
73.5
67.1
47.5
56.5
46.9

20.1
29.2
26.5
32.9
52.5
43.5
53.1

Americas Europe

10.4
10.8
9.1
8.7
1.9
9.5
14.1

0.7
4.7
4.1
6.8
3.6
3.0
3.4

Asia/
Oceania

6.0
10.0
8.3
12.2
39.4
23.8
24.6

Notes:(1) The data cover listed companies(2) Percent change, year-on-year
whose fiscal years end between(%)(Year-on-year, %)December and march (excluding
Sales percent changebanks and insurance companies), andFiscal Year
whose consolidated financial(Number ofstatements included segment
World Domestic Overseas
Asia/
Other
companies)
Americas Europe
Other
information by region.
Oceania
3.9(2) For fiscal year 2010, the data include
10.3
7.8
15.4 13.7 10.5 28.0
4.2
corporations that had released their
5.0 FY 2005 (748)consolidated financial results for FY
FY
2006
(773)
13.9
14.3
13.0
10.3
18.7
16.7
3.9
4.1
2010 by June 5, 2011.
7.9
6.4
10.5
7.5 19.1 15.0 - 8.5
3.5 FY 2007 (786)(3) Total sales include inter-segment sales.
3.4 FY 2008 (841) - 13.0 - 12.3 - 14.2 - 18.8 - 16.0 - 11.1 - 7.4 (4) The data include some listed
subsidiaries and thus are duplicated in
3.7 FY 2009 (854) - 12.8 - 12.5 - 13.4 - 12.8 - 22.0 - 8.0 - 15.2
some cases.
4.8 FY 2010 (362)
8.3
6.2
11.1
4.9 - 0.4 27.0
8.1 (5) "Other," in regions, includes data
covering multiple regions, such as
Operating profits percent change"Europe and the U.S." or "overseas."
Fiscal Year
(6) Year-over-year percent changes are(Number of
only calculated for companies whose
World Domestic Overseas
Other
Asia/
companies)
Americas Europe
Other
previous year figures were available
Oceania
and allowed for comparison.
3.0
14.6
12.4
20.3 16.1 18.2 33.7
5.4 (7) Regional composition ratios are
3.7 FY 2005 (748)calculated based on figures before
28.2
33.4
14.9
6.5 38.2
2.9 47.8
5.1 FY 2006 (773)adjustments for consolidation.
11.3
7.4
20.3 - 10.0 55.0 41.2 12.5 Sources:
5.2 FY 2007 (786)7.6 FY 2008 (841) - 55.0 - 65.5 - 38.7 - 89.8 - 69.9 - 20.0 - 10.8 Toyo Keizai Inc. "CD-ROM of Corporate
Records" (for FY 2005 and
20.1
25.2
14.1 335.5 - 19.7
7.1 - 28.4 Financial
7.1 FY 2009 (854)prior years), published earnings digests
59.5
71.7
50.6 75.3 143.8 43.5 25.9 and securities reports (FY 2006-2010)11.1 FY 2010 (362)21

Copyright (C) 2011 JETRO. All rights reserved.

Chapter 1 Section 3: World FDI, Japan's FDI and cross-border M&As

Asian FDI in Japan increases■ Investment in manufacturing remains steadyIn 2010 Japan’s net inward FDI (net flows based on balance of payments) was a negative (withdrawal) US$1.4 billion. This was in large part due to the fact thatthe withdrawal from Nikko Cordial Group by the U.S. Citigroup, which actually took place in 2009, was reflected in the statistics for 2010. Looking at inflows
by region, there was large investment from Asia and by industry, there was large investment in transportation equipment and general machinery. Japan’s inward
FDI in the manufacturing sector topped US$1 billion for the fourth consecutive year.
■ Japan’s industrial concentration and the attractiveness of the Japanese market stokes inward FDI from Asia
Asian FDI in Japan reached US$3.1 billion, about three times the level of the previous year, and exceeded that from any other major region. In areas of advanced
technologies such as renewable energy, technical cooperation with Japanese companies and Japan’s industrial concentration were factors that spurred investment
into Japan by Asian companies in 2010, while in such cases as the real estate investment by Singapore’s state-owned enterprises or the opening of Japan routes
by Asian low-cost air carriers (LCCs) the Japanese market was the attraction for Asian investors.
Fig. I-30 Breakdown of Japan's inward FDI by typeFig. I-31 Major investment cases by Asian companies to Japan in 2010

(US$ million)
Nationality

80,000
Other capital (outflow)
Other capital (inflow)
Reinvested earnings (inflow)
Equity capital (outflow)
Equity capital (inflow)
Inward FDI (net)60,00040,000China

20,0000Company-40,000

Citigroup withdrawal (Estimate: approx. 1 trillion yen）

M&A

Acquired Evatech (Kyoto), an LCD manufacture and sales company.
Evatech's facilities will survive as R&D center.

Shandong Ruyi Group

Textiles

4.0 billion
yen

M&A

Acquired 41.25% share of Renown, an apparel and textile manufacture andsales company.

CITIC Group

Investment fund

4.1 billion
yen

M&A

Acquired HYNT, an industrial film production company through funds
established in Belgium.

AUO

Liquid crystal panel 15.0 billion
manufacture
yen

M&A

Acquired M.SETEK (Tokyo), which manufactures silicon wafer for solar
batteries.

MotechSolar battery
manufacture

0.27 billion
With Itogumi Construction (Hokkaido), a general contractor, established a
Ventureyen
joint company, Itogumi Motech. Manufactures photovoltaic modules.

Mapletree

Real estate
investment fund20.0 billion
yen

Parkway Life REIT

Real estate
investment fund

7.0 billion
yen
6.0 billionyen

YTL Hotels & Properties Hotels-80,000
96

97

98

99 2000 01

02

03

04

05

06

07

08

09

10

10 11
1-5 1-5

Malaysia
AirAsia

Airlines

Air Busan

Airlines

NHN

Software services－(Year)

Note: The yen-based value is converted to dollars for each quarter, using the average quarterly Bank ofJapan interbank rate, and the annual sum is then calculated.
Source: "Balance of Payments Statistics" (Ministry of Finance and Bank of Japan).

South
Korea

Overview

4.8 billion
yen

Singapore-60,000

Investment
Investment
value
form
(Estimates)Wind power
Liaoning Hi-Tech Energy
generator
Group (A Power Energy)
manufacture

Taiwan-20,000

Industry

M&A

M&A
M&A

A subsidiary company of Temasek Holdings, a government investment
corporation. Acquired six facilities in 2010, including an industrial warehouse in
Kashiwa-city, Chiba.
From 2008, acquired domestic nursing homes. In 2010, acquired elevenfacilities.
YTL, a Malaysian conglomerate, acquired Niseko Village (facilities such as
Hilton Hotel, Hokkaido).

Flight AirAsia X, long-flight division of AirAsia (LCC), the largest discount airline inservices East Asia, introduced a new route between Kuala Lumpur and Haneda.

Introduced Busan - Kansai Airport route and Busan - Fukuoka Airport route.
FlightFukuoka mayor looks forward to the "construction of cross-border economic
services
sphere."6.3 billion
Acquired all shares of Livedoor. NHN is the operating company of "Naver,"M&A
yen
the largest portal site in South Korea.
－

Sources: JETRO SENSOR (May 2011), company press releases and news reports.

22

Copyright (C) 2011 JETRO. All rights reserved.

Chapter 2
World Trade Rules under
the new economic environment

23

Copyright (C) 2011 JETRO. All rights reserved.

Chapter 2 Section 1: WTO rules: significance and issues

WTO Doha Round negotiations at a turning point■ Seeking an early harvest focused on issues important for the Least Developed Countries (LDCs)
With no resolution in sight for the major issues confronting the WTO Doha Round, WTO Director-General Pascal Lamy has proposed a plan for an early harvest(antecedent agreement) for LDC related issues, covering a limited number of issues. It appears that the Doha Round, which was launched 10 years ago based on theprinciple of a single undertaking covering inclusively every area of negotiation, is at a turning point. At the same time even agreement on an early harvest plan is
encountering difficulties.
■ The role of the WTO as enforcer of trade rules and its challenges ahead
The role of the WTO in the enforcement of trade rules remains important. One example of this is the important role it has in subsidy rules, which is an area difficult toagree on a bilateral basis given the increasing complexity of the policies of individual countries supporting specific industries. Against the backdrop of the steep rise in
prices for natural resources and the increase in the number of countries adopting export restrictions, clarification of trade rules regarding exports is now also a pressing
issue.

Fig. II-1 The Doha Round Early Harvest Proposal
Classification

Fig. II-2 WTO rules: significance and issues
Significance and Issues

M ain Issues

・In principle duty-free and quota-free market access for LDC products and relatedFirst track rules of origin(for LDCs) ・Waiver of obligations for LDCs (liberalization of services, etc.)
・Cotton Subsidies (reduction of subsidies by developed countries)
・Trade facilitation
・Agricultural exports subsidies
・Fisheries subsidies
Second・Implementation issues (relaxation and waiver of existing obligations of developing
track
countries under WTO agreements)(LDC-Plus) ・Special and different treatment (strengthening and review of consideration given todeveloping countries)
・Reduction of duties on environmental goods or agreement to maintain present applied
tariff rates
・Non-agricultural market access (tariff reductions, elimination by sector, etc.)
・Agricultural market access and domestic subsidies
・Liberalization of services
Third track
・Review of rules on subsidies and countervailing measures and anti–dumping
・Intellectual property rights (expansion of protections for certain geographic
indications, etc.)
Sources: WTO Secretariat materials, WTO Reporter (BNA), Inside U.S. Trade (Inside Washington Publishers)

24

Description
As a result of WTO Agreements such as the Sanitary andPhytosanitary Measures (SPS) Agreement and the Agreement on
Subsidies and Countervailing Measures, etc., the clarification of
Enforcement of trade rules andtrade rules has progressed since the GATT era; and throughsecuring compliancestrengthened dispute settlement procedures and committee
deliberations, measures for securing compliance with the WTO
rules have improved.
For matters such as subsidies and developing countries issues,
multilateral agreements are more effective than bilateral
Progress in issues that are difficultagreements. Multilateral discussions are also indispensable in
to resolve on a bilateral basis
regard to such issues as discipline in adopting export restriction
measures.
WTO rules have been formulated with a focus on import rules,

Post-Doha Round issues

Source: Hearings and studies, etc.

but now, in respect to the issues confronting the 21st century
such as assuring supplies of natural resources and food,clarification and strengthening of the obligations of exporting
countries must also be sought. There are also other issues such as
the strengthening of enforcement rules for the Agreement on
Trade-related Aspects of Intellectual Property Rights (TRIPS)
and expansion of coverage of the Agreement on Government
Procurement.
Copyright (C) 2011 JETRO. All rights reserved.

Chapter 2 Section 1: WTO rules: significance and issues

Incentive policies for industries lead to WTO disputes■ Some industry support policies may be linked to subsidies; those for environmental industries in particular draws attention
Environmental industries such as renewable energy and green cars are sectors which many countries actively support. As seen in the establishment of a WTO Dispute
Settlement Panel in July 2011 on the basis of a complaint by Japan that the Renewable Energy Feed-in Tariff Program implemented by the Province of Ontario in Canada fell
under a prohibited subsidy under the WTO Agreement on Subsidies and Countervailing Measures, national incentive polices can become the subject of WTO disputes.
■ Interpretations by the WTO Dispute Settlement Body serve to strengthen and clarify the regulation of subsidies
Many cases before the WTO where the illegality of subsidies has been argued have been disputes relating to prohibited (so-called ―red light‖) subsidies under the Agreement
on Subsidies and Countervailing Measures. However, in decisions handed down by the WTO Dispute Settlement Body in recent years, the grounds for finding violations
have broadened and even so-called ―yellow light‖ subsidies, which do not fall under prohibited subsidies, where they have had adverse effects such as causing substitution
for other countries’ imports, have been deemed violations of the Agreement. This trend may possibly lead to an increasing number of subsidy-related disputes at the WTO.
Fig. II-3 Major disputes at the WTO relating to subsidies(Colored sections refer to 2010 environment-related disputes.)
Case Name (Year)
Respondent

Complainant

U.S. cotton subsidies(2002)U.S.

Brazil

Civil aircraft (Airbus)(2004)EU

U.S.

Civil aircraft (Boeing)(2004）U.S.

EU

China preferential tax
treatment (2007)
China

U.S.,
MexicoChinese branddevelopment subsidies(2008)

Summary of Dispute

There existes "serious prejudice" due to increases in the market price of cotton
being prevented due to various domestic subsidies provided for under U.S. laws
relating to agriculture, and some of the subsidies fall under subsidies favoring
the use of domestic products.
Various subsidies by the EU have given rise to "serious prejudice" by causing
substitution of Boeing exports in EU and third-country markets. The Appellate
Body reversed the findings of the Panel in regard to the correspondence toexport subsidies.
The Panel found Boeing's profits resulting from tax emptions on offshore
income fell under an export subsidy and also found "serious prejudice" due toAirbus export substitution in third country markets.

Fig. II-4 Overview of subsidies covered under the WTO Agreement on
Subsidies and Countervailing Measures
Panel andAppellate Body
compliance reports
adoptedPanel andAppellate Body
reports adopted

Proceedings byAppellate Body

Assertion that preferential tax treatment (refunds, reductions, exemptions, etc.)
Agreement on
in regard to products including steel, lumber and paper, fall under export
withdrawal ofsubsidies. A memorandum of understanding was signed with China agreeing to proceedings
abolish the treatment.

China

Assertion that government support for home appliances, textile products, etc.,
aimed at the development of domestic brands was given contingent upon export Panel proceedings
frozenperformance, and thus this falls under export subsidies. A memorandum of
understanding was concluded among the concerned countries.

CanadaJapan asserted that the added value requirement for procurement, etc., ofmaterials in Ontario as a condition for participation in the Province of Ontario
Panel established
Renewable Energy Feed-in Tariff Program falls under subsidies favoring the useof domestic product.

U.S.,
MexicoProvince of Ontario
Feed-in Tariff program（2010）
Japan

Chinese wind power
equipment (2010)
China

U.S.

U.S. asserted that preferential measures granted by the Chinese government tocompanies establishing wind power plants in China are subsidies favoring theuse of domestic products. In June 2011 China agreed to make rectification.

Type

Current Status

Termination
foreseen underbilateral
consultations

Notes: The year shown in parentheses is the year in which the request for consultation was made. Only disputes regarding illegality of subsidies areincluded; disputes regarding countervailing duties are not included.
Sources: WTO Secretariat materials, Case Book - WTO Law (Yuhikaku Publishing Co., 2009)

Overview

ClauseThere is a financial contribution by a government or any public
SubsidyArt. 1.1
body or any form of income or price support and a benefit isthereby conferred.
The subsidy is granted to a specific enterprise or industry or group
Art. 2A subsidy having specificity
of enterprises or industries. A prohibited subsidy is deemed tohave specificity.
If the Dispute Settlement Body finds the subsidy to be a prohibited
Prohibited ("Red light")
subsidy, the subsidizing country shall withdraw the subsidy
Art. 3subsidies
without delay.
Subsidy granted contingent, in law or in fact, upon export
Export subsidy
1 (a)performance.
Subsidy favoring the use Subsidy granted contingent upon the use of domestic over1 (b)of domestic goods
imported goods.
In the case of subsidies found to have adverse effects to theinterests of other countries, either the adverse effect shall be
Actionable ("Yellow light")
removed or the subsidy withdrawn. Or if injury to the domestic
Art. 5subsidiesindustry of the importing country is found, countervailing duties
may be imposed.
Effect on domestic market of importing country by the subsidy.
Injury to domestic industry Selection of either remedy based on dispute settlement(a)proceedings or implementation of countervailing measures.
Cases, for example, in which the subsidy displaces the imports ofanother country in the market of the subsidizing country or of a
Serious prejudice(c)third country market, impedes a rise in market price or significantly
reduces sales in the same market.
A non-specific subsidy is not subject to the discipline of theNon-specificity
Art. 1.2
Agreement on Subsidies and Countervailing Measures.
Source: WTO Agreement on Subsidies and Countervailing M easures

25

Copyright (C) 2011 JETRO. All rights reserved.

Chapter 2 Section 1: WTO rules: significance and issues

The need to establish rules covering export restrictions heightens■ With the growing demand for mineral and food resources and the limited number of producing countries, new focus on export restrictions
As seen in the case of rare earths, where China alone accounts for a majority of global exports, supplies of mineral resources often come from a limited number ofcountries and any measures restricting exports by those countries can have a significant impact on importing countries. In July 2011 the Dispute Settlement Bodyof the WTO found that China’s restrictions on exports of raw materials violated WTO rules; it is likely that the future will see additional disputes before the WTO
involving export restrictions.
■ Present trade rules formulated with a focus on the treatment of imports; the extent to which exceptions are allowed for exports is unclear
The WTO’s basic principles of most-favored-nation treatment and prohibition of quantitative restrictions apply not only to imports but to exports as well; however,
because there are many exceptions and few precedents of WTO decisions in regard to export restrictions, the scope of exceptions is not sufficiently clear. From theperspective of resource-importing countries, a clarification by the WTO of rules on export restrictions is desirable. At the same time it is also necessary to consider
revamping FTA-based export rules in areas outside the scope of current WTO rules.
Fig. II-5 Share of global rare earth metals exports value
by country

Fig. II-6 Principal export regulations and exceptions under WTO rules
Item(US$ thousands)
400,000

General most-favored-nation treatment
Other

350,000
300,000
250,000

EU
U.S.

China

Principles
General prohibition of quantitative
restrictions
Prevention of critical shortages offoodstuffs, etc.

Establishment of prohibitions or
restrictions of exports of foodstuffs
Protection of life or health
150,000
Conservation of exhaustible natural
100,000
Exceptions resources
M aintenance of essential quantities
50,000pursuant to a stabilization plan by thegovernment0
M aintenance of products for which there
99
00
01
02
03
04
05
06
07
08
09
10
(Year)
are supply shortages
Note: Rare earth metals, defined as HS code 2805.30, is a collective term for the 17
Important security interests
rare earth metals including yttrium, lanthanum, europium, neodymium and others.
Sources: Trade statistics of individual countries/regions.
Prohibition in principle of export duties
200,000

Total export value(Reference)
Examples Quantitative export restriction clauseof FT A
rules

Export price clause
Sources: WTO agreements, etc.

26

Description

Shall be granted immediately and unconditionally to like products directed to the territory of
all treaty countries in respect to the method of collection of export duties and surcharges
and all related rules and procedures.
In regard to sales for export or for import, no prohibitions or restrictions other than tariffs
and surcharges shall be established or maintained, whether quotas, export licenses or otherprocedures.
Temporarily applied export prohibitions or export restrictions for the purpose of preventing
or relieving critical shortages of products essential to the exporting country.
When establishing export prohibitions or restrictions adequate consideration shall be given
to the food security of importing countries and provide necessary information as requested.
Export prohibition, etc., of materials harmful to the health of humans and animals.
Only to be implemented in conjunction with restrictions on domestic production andconsumption.
Measures to impose restrictions on the export of raw materials needed domestically in orderto ensure essential amounts for domestic processing industries.
Essential measures for the acquisition or distribution of products for which there are supply
shortages either generally or locally.
The taking of necessary measures for maintaining national security shall not be precluded.
No export duties whatsoever shall be established or maintained. (Common to Japan's major
FTAs)
The export quantity shall not as a result of the export restriction be lower than the exporting
country's share of the supply over the past three years. (NAFTA)
An export price higher than the domestic price at the time of export shall not be imposed bymeans of export licenses, tariffs or other surcharges or establishment of a minimum export
price. (NAFTA)
Copyright (C) 2011 JETRO. All rights reserved.

Chapter 2 Section 1: WTO rules: significance and issues

Sectors covered by trade rules broaden (environment, intellectual property)■ 2010 trade in environmental goods reaches US$235.3 billion, hopes for the Doha Round negotiations

Tariff reductions for environmental goods may be among the sectors included in a WTO Doha Round early harvest package. WTO member countries are aiming
for across-the -board reductions and ultimately the elimination of tariffs on environmentally friendly products and products having light environmental footprints.
Global trade in environmental goods (the 43 items designated by the World Bank, on an export basis) was US$235.3 billion, an increase of 27.4% over 2009. Withsolar panels as the driver, China led all other countries in the export of environmental products.
■ Content of the Anti-Counterfeiting Agreement (ACTA) completed, hopes for signing and implementation within next few years
The strengthening of the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) enforcement rules has been cited as a major issue for the
WTO. Developing countries in general have been unenthusiastic about strengthening intellectual property protection rules and ACTA is a multilateral framework
led by developed nations for supplementing TRIPS. There are hopes, however, that ACTA will not simply be enforced just among the participant countries but that
it will also serve as a standard for intellectual property protection provisions in future FTAs negotiated around the world.
Fig. II-7 Environmental goods export value by country/region
Fig. II-8 Principal TRIPS-Plus provisions of ACTA
(43 item basis)(US$ million)
2007

2008

2009

Subject

2010

Value

Value

Value

Value

NAFTA

24,84927,58525,60530,64419.7

US17,11918,63017,64521,06419.4

EU15

76,20594,88275,777

84,816

11.9

Germany

28,796

36,79228,28232,530

15.0

Italy

10,497

12,456

10,0489,903- 1.4 CriminalJapan

17,44019,75015,854

19,31621.8 enforcement

East Asia

32,91947,52743,49872,318

66.3

China

16,17427,371

24,39742,572

74.5

South Korea

4,389

5,744

6,738

9,241

37.1

Taiwan

4,141

5,820

5,145

9,403

82.8 Border measures

ASEAN5

8,214

8,592

7,218

11,10253.8

173,843

218,820

184,659

235,273

27.4

World (JETRO estimates)

Notes: (1) The ASEAN-5 countries are Indonasia, Malaysia, The Philippines,
Singapore and Thailand.
(2) The figures for East Asia are China, South Korea, Hong Kong, Taiwan and
the ASEAN-5 countries.
Source: Trade statistics of individual countries/regions.

GrowthCivil enforcement

Item
Lighter burden of proof for
amount of damages

Description
In claims for damages the amount of the profit of the infringer
may be presumed to be the amount of the damages.

Broadening the power toissue injunctions

Broadening of the scope of authority for issuing orders preventing the
inflow of counterfeit goods, from imports only to exports as well.

Criminalization of the import or domestic use of illegal labels,
Punishment of trade in illegal
prevention of means for importing them separately from thelabelscounterfeit products themselves.

Enforcement ofintellectual property
rights in digital
environments

Ex officio enforcement
authority

Granting of ex officio investigative power to the authorities inrespect to illegal use of trademarks and illegal copying of
copyrighted materials.

Mandatory enforcement byauthorities

Mandatory enforcement by authorities at time of customs
clearance, which was voluntary under TRIPS.

Control of export cargoes

Expand control on request of victim from just imports to export
cargoes as well when appropriate.

Civil and criminal
enforcement

Implement civil and criminal enforcement against intellectual
property rights infringement in a digital environment.

Clarification of "technicalmeans"

Provisions for legal protection and remedies for preventing thestart-up of illegally reproduced programs.

Sources: Ministry of Economy, Trade and Industry materials

27

Copyright (C) 2011 JETRO. All rights reserved.

Chapter 2 Section 2: Landscape of FTAs development

Outstanding increase of cross-regional FTAs
■ Japan’s FTA coverage ratio is 18.2% , but South Korea’s FTA coverage ratio now surpasses Japan

As of June 2011, around the world there are 199 Free Trade Agreements (FTAs), including customs unions, notified to WTO. In recent years, with the intraregional FTA network almost completed in many regions, there has been a remarkable increase in cross-regional FTAs. At the same time, FTAs between regions orcountries with large trade volumes have also become more common.
Looking at the progress of Japan’s FTAs, the Economic Partnership Agreement (EPA) with India took effect in August, lifting Japan’s FTA coverage ratio (theshare of a country’s trade with FTA partners) to 18.2%. However, for South Korea, with the FTA with the EU into force in July, its ratio rose to 25.2%, thus
surpassing Japan's level. With the pending U.S.-Korea FTA approved in their Congress, South Korea’s ratio will jump another 10.1 points. China has Economic
Cooperation Framework Agreement (ECFA) in force with Taiwan, its FTA coverage ratio is now 16.6%, catching up the Japan's level.
Fig. II-9 Number of world's FTAs by period and region

Russia,CIS(number of agreements)
M iddleNorth
Asia, CrossEast,
Total
America Oceania region
AfricaYear

Europe1955-59

1
1

1

1

1

60-64
65-69
70-74
75-79
80-84
85-89
90-94
95-99
2000-04
2005-09
2010Total

4
3
8
5
5
28

5
17
4
2
28

2
2
5

9

1
1
2
5
8
7
26

2
2
3
9
20
4
40

2
1
2
2
6
18
34
3
68

Source: WTO website.
(http://rtais.wto.org/UI/PublicAllRTAList.aspx : as of June 1, 2011)

1
2
0
4
3
3
3
18
33
52
68
12
199

Fig. II-10 FTA coverage rate in major countries/regions(%)
Top countries/regions for trade value
FTA coverage rate
(Exports + Imports)
Exports +Imports

Japan
U.S.
CanadaMexicoChile
PeruTotal trade value
EU
External trade
South Korea
China
India
Singapore
ASE AN
Australia
New Zealand

18.2
34.9
68.2
80.9
89.0
69.0
74.8
26.4
25.2
16.6
17.9
66.1
60.1
26.5
48.7

Exports Imports
18.4
40.8
77.5
92.6
87.6
69.2
77.4
29.5
26.9
12.0
21.0
66.3
57.9
18.1
48.1

18.0
31.0
59.0
69.4
90.9
68.7
72.2
23.6
23.4
21.7
15.7
65.9
62.3
35.6
49.3

First

SecondASEAN (14.6)
India (1.0)
NAFTA (28.8)
DR-CAFTA (1.5)
NAFTA (65.9)
EFTA (1.2)
NAFTA (67.2)
EU (7.8)
China (20.6)
EU (16.2)
US (17.7)
China (16.2)
EU (65.0)
Switzerland (2.4)
Switzerland (6.6) EEA (4.0)
ASEAN (10.9)
EU (10.3)
ASEAN (9.8)
Taiwan (4.9)
ASEAN (9.3)
South Korea (2.4)
ASEAN (27.3)
China (10.6)
ASEAN (25.6)
China (13.6)
ASEAN (14.2)
US (7.2)
Australia (20.6) China (13.5)

Notes: (1) "FTA coverage rate" shows how much a country's trade is done with trading partners with which the country
has FTA (as of August 1, 2011), the data based on year 2010 Trade Statistics.
(2) DR-CAFTA: the U.S. FTA with the Dominican Republic and Central American countries / EEA: the European Economic Area.
(3) China excludes the ratio for Hong Kong (7.7%) and Macau (0.1%).
(4) Not all ASEAN countries have yet gone into effect with all ASEAN-related FTAs, but all involving countries trade amounts are added.
Sources: Government documents, DOT (IMF), trade statistics of individual countries.

28

Copyright (C) 2011 JETRO. All rights reserved.

Chapter 2 Section 2: Landscape of FTAs development

Japan and EU start pre-FTA consultations■ The Japan's next FTA negotiations will be with the EU; preliminary talks have begun

At the 20th regular Japan-EU Summit Meeting held in May Japan agreed on the start of preliminary talks with EU, so-called scoping, possibly followed by official
FTA negotiations. Under the Japan-EU FTA, with large bilateral trade volumes, any progress made in trade liberalization and trade rules development have
implications for multilateral negotiations. The EU has an interest in Japan’s non-tariff barriers. 68.7% of Japan’s imports from the EU are already duty-free, a very
high ratio when compared to the ratio of EU imports from Japan of only 35.9%. Japan’s agricultural imports from the EU mainly includes prepared food stuff,
beverages and alcoholic drinks, and primary agricultural products are not major items.
The EU-South Korea FTA came into provisional force in July, and competition environment between Japanese and Korean products in EU market may alter.
Looking at Japan-Korea export competitiveness in the EU market by product, Japan is particularly ahead in vehicles (HS code 87). However, under the FTA the
10% duty on automobiles will be eliminated in stages and the impact is a concern to Japan. The U.S.-South Korea FTA are likely to be approved later this year by
the U.S. congress, which has been the greatest obstacle.
Fig. II-13 Competitiveness of Japan and South Korea in the EU
market (2010, HS 2-digit code)

Fig. II-11 Japan's imports from the EU by tariff level (2010)

0.1-5%

5.5% 4.5%
Non-agricultural products 63.2% 14.9%
Total
68.7% 19.3%
Agricultural products

1.2% 1.3% 0.2% 0.8% 1.1%
4.9% 0.8% 0.2% 0.5% 0.1%
6.2% 2.0% 0.4% 1.3% 1.2%

66,187
Total

14.6%
84.5%
0.9%

100.0%

Fig. II-12 EU's imports from Japan by tariff level (2010)
EU's import from Japan (US$ million):
Non-ad Unclassif
5.1-10% 10.1-15% 15.1-20% 20%valorem iable

85,564

Duty free

0.1-5%

Agricultural products

0.1%

0.0%

0.1%

0.0%

0.0% 0.0%

0.0%

0.4%

Non-agricultural products

35.8%

37.9%

24.3%

0.7%

0.0% 0.0%

0.1%

98.8%

Total

35.9%

37.9%

24.4%

0.8%

0.0% 0.0%

0.1%

0.9%

Total

100.0%

Notes: (1) "Agricultural products" are products defined in the WTO Agreement on Agriculture, plus fisheryproducts (HS03 etc.) and lumber (HS44 etc.). "Non-agricultural products" are the remaining products.
(2) "Non-classifiable" is reimports and others.
Sources: Trade Statisitcs of Japan, Customs Tariff Table of Japan, Trade Statistics of EU, Customs Tariff Table of EU and
WTO Tariff Analysis Online.

29

South Korea's Competitiveness in EU
market (RCA)

Duty free

5.0

Japan's import from EU (US$ million):
Non-ad Unclassif
5.1-10% 10.1-15% 15.1-20% 20%valorem iable

4.0
3.0

59:ImpregnatedTextile Fabrics 54:Manmade
Filaments

87:Vehicles

2.0

85:Electrical
Machinery
55:Manmade
Staple Fibers
40:Rubber
1.0
82:Nonmetal 90:Optical
Instruments
39:Plastics Tools
84:General
83:Base Metal
Machinery
0.0 Products
26:Mineral Ore
56:Nonwoven
Textile92:Musical
86:Rail Vehicles
68:Stone/Cement Instruments
70:Glass△ 1.0
73:Steel Products

△ 1.0

0.0
1.0
2.0
3.0
4.0
5.0
Japan's Competitiveness in EU market (RCA)

Note: RCA.....Revealed Comparative Advantage Index
Source: EU Trade Statistics.

6.0

Copyright (C) 2011 JETRO. All rights reserved.

Chapter 2 Section 2: Landscape of FTAs development

TPP negotiations underway■ Final outlines of the agreement still not in sight

The Trans-Pacific Partnership (TPP) Agreement, a multilateral FTA, is under negotiation led by the U.S. initiatives. Nine participating countries have alreadycompleted seven negotiating rounds. Reaching to an agreement by November 2011 appears difficult, but TPP is a milestone ahead in the process of establishing theFree Trade Area of Asia-Pacific (FTAAP), which is the long-term goal of the Asia-Pacific Economic Cooperation (APEC).
A large number of FTAs are already in force among the nine countries in the negotiations. The question of how TPP relates to these existing FTAs, whether justfollow the existing FTAs schedule or instead negotiate a new tariff concessions regardless of existing FTAs, will change the nature of the TPP agreement. In
existing FTAs there are several items excluded from liberalization, which means that any participating country has its own sensitive areas. This is not limited togoods tariffs, but also includes other areas such as government procurement and investment chapters.
Fig. II-14 Existing FTAs among TPP negotiating countries
Participating countries

Singapore(+)

Singaporenon-member

Participating countries

NZ

NZ

(+)

Chile

(+)

(+)

Brunei

(+)

(+)

U.S.

(+)

Australia

(+)

(+)

Chile

Brunei

(+)

(+)

(+)

(+)
(+)

U.S.
(+)

(+)

Australia
(+)

(+)

(+)

(+)

(+)

(+)

Negotiations
concluded(bilateral)+(bilateral)

(+)

(+)

(+)

(+)

(+)

under
Negotiaions(bilateral)

(+)

(+)

(+)
(+)

(+)

(+)

+
(bilateral)

Vietnam(+)(+)

Negotiations
concluded(bilateral)

(+)

(+)

Malaysia

(+)

(+)

+
(bilateral)

(+)

(+)

Japan

(+)

(+)

(+)

under
Negotiaions(bilateral)+

FTA signed (not yet in effect)

Country

(+)
(+)
(+)
+
(bilateral)

(+)

30

MeasuresChile

96 items such as wine,
Chilealcoholic beverages, rice,
Malaysia (nottobacco, wheat, sugar,
yet in effect ) honey and used tire
Meat (including pork,
chicken)ASEAN- Some passenger cars,
Australia-NZ cargo vehicles, andmotorcycles

Excluded from liberalization.

Maintain the current tariff-quota
system.
Maintain the 5% tariff even ten
years after the FTA into force.

（AANZFTA)

Malaysia

Steel products (rolled steel Maintain the 10% tariff even tenplates)years after the FTA into force.
138 items such as
Chilefireworks, explosives,
Malaysia (notalcoholic beverages, ricein effect yet) and tobacco(+)

New negotiations under TPP

Items

U.S.

(+)

(+)

FTA

Maintain the current tariff-quota
U.S.-Australia Sugar, dairy products, etc.
system.
Maintain the current tariff-quota
U.S.-Peru Sugar
system.

(+)
(+)

(+)

(+)
FTA in effectSources: Government documents.

(+)

(+)

Peru

(+)

Peru

(+)

(+)

(+)

non-member

Vietnam Malaysia Japan

Fig. II-15 Major items excluded from liberalization in existing
FTAs among TPP negotiating countries (goods)

Some passenger cars,

Vietnam

AANZFTA cargo vehicles, andmotorcycles

Sources: Agreements and related documents.

Excluded from liberalization.

Maintain the 5-50% tariff eventwelve years after the FTA into
force.

Copyright (C) 2011 JETRO. All rights reserved.

Chapter 2 Section 2: Landscape of FTAs development

A year after ASEAN+1 FTAs completed, more Companies use FTAs
■ Japanese companies aggressively making use of FTAs among third countries

With the ASEAN+1 FTAs (between ASEAN and Japan, China, Korea, Australia, New Zealand and India, respectively) all coming into force in 2010, Japanesecompanies are making use of such FTAs. Not only more companies use ASEAN-China FTA, but the number of companies having a trade between ASEAN and
China has also risen by 1.5 times. The ASEAN-India FTA, even in the first year, already has a high utilization rate of 21.4%.
■ Significant rise in the ASEAN+6 intra-regional trade ratio
The proportion of intra-regional trade in the Asia-Pacific region continues to be higher. The ASEAN+6 intra-regional trade ratio (excluding re-exports) rose 2.1
percentage points over last year to 45.9%. Intraregional trade ratios are continuing their rise and particularly with the ratio for ASEAN+6 exceeding that of
NAFTA. The integration of ASEAN+6 economies is accelerating.
Fig. II-16 ASEAN+1 FTA utilization rate by Japanese companies(based on number of companies)
FTA

StatusAFTA

existing user（n= 135→198）

ASEAN-China（n= 189→287）

ASEAN-South Korea（n= 114→165）

Thailand-India

potential user
existing user
potential user
existing user
potential user
existing user（n= 80→94）

ASEAN-India

potential user
existing user（n= 79→103）

Thailand-Australia（n= 65→70）

ASEAN-Australia-NZ（n= 77→80）

potential user
existing user
potential user
existing user
potential user

Fig. II-17 Intra-regional trade ratio in the world’s major economic frameworks
(%)

2009

2010

33.3
18.5
15.9
22.8
13.2
17.5
21.3
→
18.8
46.8
24.2
12.9
33.8

32.3
23.7
19.5
23.3
16.4
18.8
19.1
25.5
21.4
29.1
27.1
14.3
17.5
18.8

Notes: (1) Percentage is per (n), which is the number of companies engaged in trade
in respective FTA participating countries.
(2) ASEAN-India and ASEAN-Australia-NZ FTAs were not in effect in 2009, no data.
(3) The number of companies that responded to the survey is 935 for FY 2009 and1002 for FY 2010.
Source: "Survey on the International Operations of Japanese Firms: FY 2009/2010" (JETRO)

(%)

Asia

ASEAN+6 (Re-export adjusted)
ASEAN+6
ASEAN+3
ASEAN
ASEAN+China
ASEAN+India
ASEAN+Japan
ASEAN+6+Taiwan
ASEAN+3+Taiwan
ASEAN+Taiwan
Americas NAFTA
EuropeEU27
APEC
TPP (Trans-Pacific Strategic Economic Partnership)

2000
41.9
40.6
37.4
22.7
20.1
22.3
26.4
44.9
41.9
23.8
46.8
65.1
72.3
13.0

2005
44.1
43.0
39.1
24.9
20.7
23.8
26.0
47.7
44.2
25.1
43.0
65.0
69.3
12.6

2008
43.1
42.5
37.4
25.0
20.4
24.2
26.0
46.4
41.7
25.3
40.0
64.8
64.7
12.4

2009
43.8
43.0
37.8
26.1
20.3
24.7
27.0
46.8
42.0
26.3
39.5
65.1
66.8
12.9

2010
45.9
45.0
39.6
25.6
22.0
24.4
27.3
49.0
44.0
25.9
40.4
65.0
66.9
12.8

Notes: (1) The share of intra-regional trade (export+import) is calculated as follows:(intra-regional exports + intra-regional imports) / (exports to the world + imports from the world) *100(2) In calculating "ASEAN+6 (Re-export adjusted)", adjustments are made to exclude re-exports which would
cause double counting, using the methods below.
-For Singapore's export, domestic-export value is used in order to exclude re-exports.
-For Singapore's import, import minus re-export is used as "a net import."- Hong Kong's trade imported from a ASEAN+6 country and re-exported to a ASEAN+6 country is added in intra-regional
trade, although trade flow from China to China via Hong Kong is regarded as China's domestic trade, and hence is excluded.
Sources: DOT (IMF), Trade Statistics of Taiwan, Hong Kong and Singapore.

31

Copyright (C) 2011 JETRO. All rights reserved.

Chapter 3
International Business towards
Reconstruction

32

Copyright (C) 2011 JETRO. All rights reserved.

Chapter 3 Section 1: The Great East Japan Earthquake influences on goods flow

Impact on the domestic and foreign supply chains■ The regions hit by the earthquake are highly competitive producers of materials and components

In terms of value of shipments by products or industries, the six prefectures affected seriously by the Great East Japan Earthquake — Aomori, Iwate, Miyagi, Fukushima,
Ibaraki and Chiba - hold a large share of Japan’s overall production of the materials and components forming the basis of finished products. The items produced byaffected companies are supplied to users throughout not only Japan but also the world. For instance, regarding such industries as semiconductors, liquid crystal panels
and materials for lithium ion batteries manufacturers having worldwide large shares operate in the affected prefectures.
■ Industries both inside and outside Japan depend on the Tohoku region
Many items based on materials and components from the Tohoku region are demanded not only within that region but are also in large demand in the Kanto region too.
For example, more than half of the automobile components and accessories produced in the Tohoku region and more than 40% of its communication equipment andcommunication-related devices are used in the Kanto region. Since its intermediate and final products exported worldwide, the decrease in production capacity resulting
from the earthquake and subsequent power shortages have had an adverse impact worldwide.
Fig. III-1 Regional shipping share of six Tohoku/Kanto
prefectures by industry

Product/Industry
Petroleum and coal products
Non-ferrous metals and products
Chemical and allied products
Iron and steel
Beverages, tobacco and feed
Lumber and wood products except furniture
Food
Fabricated metal products
Ceramic, stone and clay products
Plastic products except otherwise classified
Business oriented machinery
Electronic parts, devices and electronic circuits
Pulp, paper and paper products
Information and communication electronics equipment

Total manufacturers(%)

Fig. III-2 Regional breakdown of users of Tohoku-made material products (Regional
production basis)
Hokkaido Tohoku

Share
Agriculture, forestry and fishery
Beverages and foods
Pulp, paper, paperboard, building paper
Non-ferrous metals
Metal products
General machinery
Household electronics equipment
Computers and accessory devices
Electronic components
Motor vehicle parts and accessories

4.5
5.2
2.1
1.0
2.7
1.3
2.3
1.1
0.9
0.0

55.9
45.4
47.8
45.2
43.9
44.0
26.7
54.2
61.0
28.8

(%)

Kanto Chubu Kinki Chugoku Shikoku Kyushu
24.9
2.9
7.5
1.0
0.9
2.3
34.3
4.6
5.9
1.2
1.0
2.5
33.1
4.1
10.6
0.8
0.4
1.0
39.0
4.8
5.3
3.6
0.1
1.0
38.2
6.2
4.6
1.9
0.5
2.0
34.5
6.6
5.8
2.4
0.7
4.7
42.1
6.0
10.4
3.3
2.0
7.2
27.6
6.9
3.6
3.8
0.8
2.0
26.4
5.0
2.7
1.0
0.8
2.2
55.1
6.6
2.6
0.9
0.0
5.9

28.9
20.6
17.7
17.0
16.7
16.4
16.0
13.9
13.1 Notes: (1) The top ten categories in sales value are shown.
(2) "Kyushu" includes Okinawa.
13.0 Source: "2005 Inter-Regional Input-Output Table" (Ministry of Economy, Trade and Industry).
13.0
Most products produced in the Tohoku region are consumed in the Kanto
12.7
region. The earthquake revealed that the suspension of operation at factories in
12.7
the Tohoku region affects industries not only over Japan but also around the12.3
world.
12.5

Note: The six prefectures are Aomori, Iwate, Miyagi, Fukushima, Ibaraki and Chiba.
Source: "Census of Manufactures (2009, final version)" (Ministry of Economy, Trade and Industry)

33

Copyright (C) 2011 JETRO. All rights reserved.

Chapter 3 Section 1: The Great East Japan Earthquake influences on goods flow

Auto exports fall following the earthquake■ Exports of key materials and components slow down
The Great East Japan Earthquake cut the supply chain to overseas customers. Due to damage from the quake to the factories of major manufacturers, the export of
microcontrollers, a key component in automobiles, fell on a volume basis 11.7% in March, 27.8% in April and 38.7% in May, with the size of the decreases growing
month by month. Exports of silicon wafers which are basic materials for semiconductors, also on a yen value basis were down in April year-over-year for the first time in
17 months and on a volume basis are down year-over-year in May for the first time in 20 months. In June, however, the decreases began to be moderate.
■ The impact from material and component shortages spreads to intermediate and finished products
The slowdown in the production of materials and components led to a fall in intermediate and finished products exports too. Looking at Japan’s total global exports for
March and April, immediately after the earthquake, by HS four digit product categories, the products which registered the largest contribution to drop in exports wereautomobiles (HS8703) and integrated circuits (HS 8542）. Although export volume sharply dropped immediately following the earthquake, the subsequent speed of therecovery of the supply chain exceeds expectations. As a result, for example, the decline in automobile exports hit bottom in April and since then the extent of the decline
has shown rapid improvement.
Fig. III-4 The twenty items most contributing to the decrease in exports

Fig. III-3 Trends in silicon wafer export(%)(Billion Yen)

35

100.0

30

80.0

25

60.0

20

40.0

15

20.0

10

Rank ofnegative
contribution

HS
code

1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20

8703
8542
8704
8525
8708
8901
8443
2710
8407
8517
8529
7403
8429
9001
8541
9018
7210
4011
8532
8536

0.0
Value

5

Value percent change (YoY): right axis

-20.0

Volume percent change (YoY): right axis

0

-40.0
01 02 03 04 05 06 07 08 09 10 11 12 01 02 03 04 05 06(Yr/Mo)2010
2011
Source: "Trade Statistics" (Ministry of Finance)

34

Category
Passenger vehicles
Integrated circuits
Cargo vehicles
Visual apparatus
Automobile components
Vessels
Printing machines, parts and accessories
Oil and bituminous oil other than crude-oil, preparation for such products and waste oil

Piston-type internal combustion engines
Communication devices
Audio and visual device components
Refined copper and copper alloys ingot
Construction and mining machinery
Optical fibers and other optical goods
Diodes, transistors and other similar semiconductor devices
Medical and veterinary devices
Iron and non-alloyed steel flat-rolled products
Rubber pneumatic tires
Fixed, variable or adjustable condenser
Switching, protective or connection devices for electric circuits

Share ofJapan's totalexports (%)

11.7
4.5
1.3
1.2
4.6
3.3
2.0
1.5
0.7
0.7
0.7
0.5
1.2
0.7
1.6
0.5
0.7
0.9
0.7
1.0

Notes: (1) Categories are listed in order of minus contribution, with the sum of M arch-April 2011 compared by YoY.
(2) "Share of Japan's total exports" is for 2010.
(3) The product categories listed here have shares in excess of 0.5% of 2010 exports.
Source: "Trade Statistics" (M inistry of Finance).
Copyright (C) 2011 JETRO. All rights reserved.

Chapter 3 Section 1: The Great East Japan Earthquake influences on goods flow

Earthquake also affects foodstuffs exports■ Sharp fall in exports immediately following the earthquake
April exports of foodstuffs fell 21.9% to 29.7 billion yen, the largest decrease seen since August 2009. Products which were subjected to the greatest disruption ofexports in March and April, immediately following the earthquake, were frozen fish such as sauries and swordfish as well as prepared baby foods and tobacco, which
also fell markedly. The fall in the value of exports continued into May with a drop of 22.4%. However, in June, buoyed by increased exports to Thailand and Vietnam,
exports of foodstuffs returned to a level approximately the same as the prior year, registering a decline of only 3.6%.
■ National and regional import restrictions also impede export recovery
The slowdown of foodstuffs export is caused not only by infrastructure impairment and harmful rumors about radioactivity, but also by various types of import restrictive
measures. However, the reactions of importing countries have begun to moderate. For example, on June 13, Canada completely rescinded the special measures it had
implemented following the earthquake for more stringent inspection including requiring the submission of test certificates regarding radioactivity and exports to Canada,
which had suffered double digit declines in April and May rebounded to a double digit gain in June.
Fig. III-6 Import restrictive measures on Japan’s agricultural/fishery products by major countries/regions

Fig. III-5 Japan’s Foodstuffs exports on monthly
percent change(contribution year on year, yenbased)

Local
authority(Year-on-year, %)
20.0
15.0

U.S.

FDA

Targeted prefectures

Products

Measures

Kanagawa, Gunma and Chiba

Tea leaves

Fukushima, Tochigi and Ibaraki

Products for which domestic sale and exports are restricted: somevegetables, milk, mushrooms, bamboo shoots, greens and sand lance Imports suspended
from Fukushima, spinach from Tochigi and tea leaves from Ibaraki
and Tochigi
Milk and dairy products and vegetable, fruits and their processed
products

10.0

Radiation inspection certificate
required

Products other than those listed above

5.0
0.0
EU

-5.0

EuropeanCommission

Other prefectures (including
Foodstuffs and feed
Kanagawa, Gunma and Chiba)
Fukushima, Gunma, Tochigi, Ibaraki,
Miyagi, Nagano, Yamanashi, Saitama,
All foodstuffs and feed
Tokyo, Chiba, Kanagawa and Shizuoka(12 prefectures)

Processed food products-15.0

Seafood-20.0

All foodstuffs and feed

Fukushima, Gunma, Tochigi, Ibaraki,
Miyagi, Niigata, Nagano, Saitama,
Tokyo, Chiba (10 prefectures)

All foodstuffs and feed

Other prefectures

Vegetables and such products, milk and dairy products, fishery
Government-issued radiation
products and aquatic animals, tea leaves and such products, fruits and inspection certificate and certificate
fruit products and medical plant productsof origin
Government-issued certificate ofFoodstuffs, food crops and feed other than those listed above
originChina AQSIQ

Foodstuffs (total)

-25.0
05 06
2010

07

08

09

10

11

12

01 02
2011

Source: "Trade Statistics" (Ministry of Finance)

03

04

05

06

(Yr/Mo)Government-issued radiation
inspection certificate required andinspection of samples in importing
countries
Government-issued certificate oforigin required and inspection ofsamples in importing countries

Other prefectures

Other

-10.0

Inspection of samples in U.S.

Fukushima, Gunma, Tochigi, Ibaraki,

Department Chiba (5 prefectures)of Health,TaiwanExecutive
Other prefectures
Yuan

Imports suspended

All foodstuffs (shipped March 26, 2011 or later)

Imports suspended

Fruits, vegetables, fishery products (live, chilled, frozen), dairy
products, baby foods, mineral and other water and seaweed

Inspection of all lots

Processed food (produced March 12, 2011 or later)
Note: Restrictions shown here are based on reports as of July 12.
Sources: Reports from JETRO overseas offices
35and documents from Ministry of Agriculture, Forestry and Fisheries.

Other information

Radiological inspection
certificate may be issued
by U.S. inspection agency.

Production date certificate
required for foodstuffs andfeed produced or processed
before March 11.

・Foreign exporters ofJapanese foodstuffs ortheir agents are required toregister.
・Import and sale record
system imposed on
Chinese importers ofJapanese foodstuff.

Inspection of samples

Copyright (C) 2011 JETRO. All rights reserved.

Chapter 3 Section 2: Reaffirming Japan’s strengths in reconstruction process―Reconstruction open to the world‖
The Reconstruction Design Council in Response to the Great
East Japan Earthquake―Towards Reconstruction‖ （Excerpts）―In reconstruction, it is important to absorb the vitality ofother countries in various ways.‖―One of the means of achieving that is through promoting
foreign direct investment. In particular, it would bedesirable to encourage global companies toestablish research bases and Asian headquarters functionsin Japan by developing an environment that has
international appeal.‖―Japan should promote the acceptance of foreign nationals
who can contribute to the revitalization of Japan.‖―At the same time, markets for Japanese products must besought not only within Japan, but also from across Asia andthe world.‖―Japan will make its efforts to ensure a level playing field in
the world for Japanese enterprises and Japanese products
through the continued promotion of the free trade system.‖―Seek to generate employment and develop the economy indisaster-affected areas through the expansion of overseas
sales routes for products from the affected areas.

Adopted June 25, 2011，
Submitted to the Prime Minister

Many Strengths Increase Location Attractiveness of Japan

Research and development underpinning high quality productsHigh productivity keeps intermediate goods competitive
Japan’s technical prowess for solving common problems

Contribute to Reconstruction through Expanding Overseas Business withJapan’s Strengths

Unchanged priority-Capturing overseas demands especially in the emerging countries

Japan’s presence in emerging markets-Expanding, but dwarfed by China and Korea••••

Expansion of overseas sales is crucial forreconstruction not only for the disasteraffected areas but for all Japanese businesses,
especially small-and-mid-sized businesses.

Capturing overseas markets by leveraging Japan’s meticulous productdevelopment and high factory productivity
Using Japan’s own experience to enter Asia’s graying markets
Strengthen energy conservation and other environmental technologies
for deploying overseas
All-out effort to revitalize and enhance the ―Japan Brand‖

36

Copyright (C) 2011 JETRO. All rights reserved.

Chapter 3 Section 2: Reaffirming Japan’s strengths in reconstruction process

Many Strengths Increase Location Attractiveness of Japan■ Japan’s strengths — Key to post-earthquake reconstruction
The Great East Japan Earthquake had a sweeping impact on goods flow and many other aspects in Japan. There are also concerns about its effect on Japan’s brand image.
In order to overcome the situation and to achieve rapid reconstruction, it is crucial to fully leverage Japan’s unique strengths and capture overseas demand.
Japan’s core strengths can be categorized as i) its capacity for research and development underpinning high quality products and ii) factory production capacity comingfrom industrial agglomeration. In addition, areas in which strengthened initiatives are sought in the wake of the earthquake are expected to be Japan’s strengths, includingiii) energy efficiency and other environmental technologies, iv) disaster prevention technologies. The medium- to long-term challenge of iv) establishing measures for
dealing with an aging society has the potential to be turned into new strength of Japan, as other countries will be facing the same issue.
Japan’s overall competitiveness has always received highest ratings in the annual Global Competiveness Reports of the World Economic Forum. In particular, the areas of―business sophistication‖ and ―innovation‖ drive the high rank. Continuing inward foreign direct investment to Japan even after the earthquake shows that Japan has
location attractiveness stemmed from the strengths just listed as well as the size of its market and other contributing factors.
Fig. III-7 Japan in ―Global Competitiveness Report―(6th place overall)(scores from 1 to 7)
Institutions (25th)
7

Innovation (4th)6Infrastructure (11th)

5

Businesssophistication(1st)

Macroeconomic
environment(105th)43Company/Industry
Dou YeeInternational Pte. Ltd.
Dyesol Japan
Zydus Pharma
salesforce.com
Eurocopter Japan T&E
Umicore2
1Market size
(3rd)Fig. III-8 Major investment in Japan after the earthquake

Teva Pharmaceutical

Health and Industries
primary
Prologis
education (9th)0Mexichem

Technologicalreadiness(28th)

Higher educationand training(20th)

Financial market
development (39th)

Goods market efficiency(17th)
Labor market efficiency(13th)

Japan

China

South Korea

Note: Numbers in parantheses show Japan's rank among 139 countries/regions.
Source: The Global Competitiveness Report 2010-2011 (World Economic Forum).

Microsoft
salesforce.com
LaSalle Investment
Management
Amazon Japan Logistics

Industry
Liquid crystal display

Country of
Global HQ

Next-generation photovoltaic cells

Australia

Pharmaceuticals
IT services

India
U.S.
FranceSpecial-purpose helicopter

Nonferrous metal

Generic drugs
Logistics
Chemicals manufacture
IT services
IT services
Real estate investment
Logistics

Mapletree

Real estate fund

Qingdao Jinlong Plastic
Compound Color
Printing Co., Ltd

Packing material
manufacture

Low cost carriers

Airline services

Sources: Press releases and 37
news reports.

Overview

On June 21 the company decided to establish a manufacturing and R&D base for film LCDs in Shobara, Hiroshima
Singapore Prefecture. Selected as a beneficiary of Subsidy Program for Projects Promoting Asian Site Location in Japan. Totalamount of initial investment expected to be roughly one billion yen.
Also selected by METI under Subsidy Program for Projects Promoting Asian Site Location in Japan (announced April
23). All are investments in R&D attracted by the many manufacturers and research centers in Japan.

In April 2011, using Employment Generating Low Carbon Enterprise and Regional Development Subsidy, opened aplant in Kobe for the manufacture of cathodes for lithium ion batteries. The planned investment amount is 4 billion yen.
On June 22 announced plans to open a design, R&D and manufacture base for platinum glass melt systems in
Yokohama.
On May 16, announced acquisition of Taiyo Pharmaceutical (Nagoya). On July 14 announced that it had completedIsraelthe acquisition of effectively 100% outstanding shares for US$934 million.
On June 2, construction of a dedicated logistics facility for the Miyagi Cooperative in Tomiya, Kurokawa-gun, Miyagi.
U.S.
The effects from the earthquake were kept to a minimum, and construction was completed as initially scheduled.
On May 9, plans to expand investment in Japan and South Korea were announced. With a total investment of US$150
Mexicomillion, it plans to produce refrigerants (fluorine compounds) in Japan and hydrofluoric acid in South Korea.
U.S.
Toyota Motors agreed to strategic alliances with Microsoft (April) and salesforce.com (May). The three firms plan toU.S.
invest one billion yen in total in a Toyota affiliate.
On April 26, announced that it had acquired land in the Tokyo Metropolitan inland area. To be developed as a large
U.S.
multi-tenant logistics facility by the fall of 2012; total investment of over 10 billion yen estimated.
On April 1, opened a new logistics center in Tokoname, Aichi, to support increasing scale of distribution by
U.S.
Amazon.co.jp and to provide prompt delivery service.
On March 25 announced that it had acquired a logistics facility in Hiroshima for 7.3 billion yen. With this deal, theSingaporefund’s investment in Japan covered 15 facilities for a total of around 65.2 billion yen.
On March 1, signed agreements for the construction of plants with Tottori Prefecture and the town of Daisan-cho.
China
Preparing to establish a Japanese corporation, with the goal of constructing a system for the full production of plasticbags and other goods for the Japanese domestic market.
・Spring Airlines (China): Launched Shanghai-Takamatsu route on July 15.
・Eastar Jet (South Korea): Launched Seoul-Shinchitose route on May 5, and Seoul-Narita route on July 1.
Asian・Jin Air (South Korea): Launched Seoul-Shinchitose route on July 15.
countries
・Air Busan (South Korea): Following new routes to Fukuoka and Kansai airport in 2010, launched route to Narita on
June 12, 2011.
Belgium

Copyright (C) 2011 JETRO. All rights reserved.

Chapter 3 Section 2: Reaffirming Japan’s strengths in reconstruction process

Research and development underlies high quality products■ Japan’s R&D led by private sector
Japan’s R&D expenditure remains among the highest in the world. Private sector expenditure on R&D in Japan is particularly high; Japan’s R&D as a percentage of GDP
reaches 2.69%, compared to the average for all OECD countries of 1.51%. This is a major factor underpinning Japan’s competitiveness.
Against this background of active R&D by private sector companies, Japan has a large number of patent applications, making up about 20% of all international patents
filed under the Patent Cooperation Treaty (PCT). The number of Japan’s international patent applications has seen an increasing trend over the last several years and in
February and March of 2011 surpassed the U.S. By technical field, large number of patents are applied in optical equipment, audio and video technology andsemiconductors, which make up nearly half of total patent application. Among companies, Panasonic is top ranking; in 2008 it ranked number two behind a Chinesecompany, but in 2009 (1,891 patents) and 2010 (2,154 patents) it regained the top spot.
Fig. III-10 Major countries’ shares of PCT applications in selected fields (sum of
2009 and 2010)

Fig. III-9 R&D expenditure in major countries by funding source
as a percentage of GDP

Optics

47.4

21.8

7.6

2.2

(%)
South
Korea
4.0

Audio-visual technology

45.5

18.3

5.5

3.4

6.4

Semiconductors

43.2

29.2

7.9

1.8

5.1

Electrical machinery, apparatus, energy

32.7

20.6

16.0

4.2

4.1

Telecommunications

24.7

22.8

3.3

9.5

13.4

Organic fine chemistry

15.7

29.1

12.1

2.9

2.8

Digital communication

13.0

25.0

2.9

20.5

7.4

Medical technology

11.6

45.3

7.8

1.6

2.2

Biotechnology

11.5

39.7

7.1

2.1

3.4

Pharmaceuticals

10.1

38.2

6.4

2.7

2.4

Total (2010)

19.6

27.4

10.7

7.5

5.9

(%)
3.5

Japan
Other

3.0

Government

Private sectors

2.5

2.0

1.5

1.0

0.5

0.0

Japan

South Korea

U.S.

GermanyOECD
Average

China

FranceU.K.

Notes:(1) The figures for U.K. are from 2010 and the rest are from 2008.
(2) The financial sources for "Other" are higher education institutions, private nonprofit institutions, foreignsources, etc. Figures for OECD Average and China were calculated backward from total.
Source: Main Science and Technology Indicators, Vol. 2010/2 (OECD).

U.S.

Germany

China

Notes: (1) The top five fields and bottom five fields for Japan's share of applications in those fields
among WIPO's 35 technical field classifications having at least 6,000 applications in 2009
(2) Figures for applications by field in 2010 are totals up to September.
(3) Applications that belong to multiple fields are counted in each field.
Souce: WIPO Database (as of M ay 2011).

38

Copyright (C) 2011 JETRO. All rights reserved.

Chapter 3 Section 2: Reaffirming Japan’s strengths in reconstruction process

High productivity keeps intermediate goods competitive■ Intermediate goods produced by high production capacity maintain competitiveness, as Asian production networks expand
Japanese companies, exploiting advanced technical capabilities, continue to create the highest quality parts and materials, and are maintaining strong competitive positions
in expanding and deepening production networks in Asia. Japan’s trade balances vis-à-vis China, Korea, Taiwan and ASEAN countries are all surplus and the size of thesurpluses continue to grow (based on import statistics of each country). In terms of the composition of imports and exports, Japan imports primary goods from Southeast
Asia and consumer goods from China while exporting intermediate goods to those countries and the ASEAN region. Although Taiwan and Korea are in a similar position,
Japan enjoys trade surpluses with both of these countries. Taking into account the fact that transactions with overseas Japanese–affiliated companies are included,
Japanese companies are in a position to prosper in the growing Asian market by exploiting their strengths in high productivity of components and materials.
In order to maintain and strengthen the competiveness, efforts should be continue for facilitating trade liberalization and improving Asia’s regional connectivity, while inJapan the ceaseless endeavor of Japanese companies must be supported through initiatives aimed at improving production and business environment.
Fig. III-11 Japan's trade balance with East Asia (2007 and 2010)

Fig. III-12 Trade flow in East Asia (intermediate goods and final consumption(US$ million)
goods) (2010, trade balance)(US$ million)

China

100,000

20,00037,432

Consumption goods
Primary goods
2007

2007

2010

2010

0
2,007

- 20,000

2010

2,007

2010

Intermediate goods Intermediate goods-proccesed goods -parts & components

2,007

2010

Capital goods

2,007

.

2010

Total

25,607

Japan

20,188
7

82

6,156

40,00031,146ASEAN

South Korea

China

60,000

Taiwan60,858South Korea

7,839

80,00048,565

Taiwan- 40,000

ASEAN- 60,000Intermediate goods

Final consumption goods(Notes) (1) Definition of trade goods classification is based on the RIETI-TID. (2) ASEAN here refers to the five countries of Indonesia, Singapore, Malaysia, the Philippines and Thailand.
(Source) Fig. III-11 and 12 are both based on import statistics of individual countries/regions.
Copyright (C) 2011 JETRO. All rights reserved.
39

Chapter 3 Section 2: Reaffirming Japan’s strengths in reconstruction process

Japan’s high-level technology for solving common problems■ Further advances expected in Japan’s energy conservation and other environmental technologies
Having experienced two oil shocks, Japan’s public and private sectors worked together to promote efficient energy use. Currently Japan is facing power supply shortages,
but the upside may be that this challenge will induce further advances in energy conservation technologies. There are many countries abroad facing the challenge of
inefficient energy use, and tackling climatic change is truly a shared challenge. If Japan overcome energy problems it now confronts, it will open up new business
opportunities abroad.
■ Increasing Attention on Japan’s disaster prevention technologies as it strives to build a society resistant to natural disasters
Despite the immense force of the Great East Japan Earthquake and the ensuing tsunami, there are disaster prevention technologies whose advanced capabilities gained
worldwide reputation. One example was the earthquake early detection system of the Shinkansen bullet trains which worked to stop all trains before any derailments
occurred. Disaster prevention is a common challenge shared by many countries, especially in Asia, which suffers frequent damage from natural disasters, especially fromearthquakes and tsunamis. In seeking to meet these common challenges, much hope is place on the disaster prevention technologies that Japan has developed in its long
history of tackling the issue.
Fig. III-13 Total energy consumption per US$1 million of value added
by industries(Tons of oil equivalent)

Fig. III-14 Natural disaster by regions: 1990-2011（1,828）

1,000

Asia

900

Total number of natural
disasters (7,912)

Americas

Africa37.6

23.7

EuropeOceania

20.8

13.9

19.6

8.2

4.1

800

1.3
700
626

1990

600

2000

2008

575

Number of earthquake/tsunami (590)

4.5
Other regions: 1.7

500
378 368

400
300
200

250

221
188

196 188

164

Number of deaths bynatural disasters (1,699
thousand)399

178
147 143

129 125

110

100

63.3

Oceania: 0.3

Number of deaths byearthquake/tsunami (813thousand)89 93 77

0

33.8

OECD

Germany

U.K.

Japan

ASEAN

China

Note: Total industry consumption of energy (including non-energy use) per value added in industry (constant 2000 US$).
Source: Energy Balances of OECD Countries, Energy Balances of Non-OECD Countries (IEA, 2010) and World
Development Indicators (World Bank).

40

13.4

(575 thousand)

0

U.S.

8.6

10

20

30

40

Other regions: 0.6

50

60

70

80

90

Source: ―EM-DAT: The OFDA/CRED International Disaster Database – www.emdat.be – Université catholique deLouvain – Brussels – Belgium‖ as of May 10, 2011.

100

(%)

Copyright (C) 2011 JETRO. All rights reserved.

Chapter 3 Section 3: Contribute to reconstruction through expanding overseas business with Japan’s strengths

Unchanged priority - capturing overseas demands especially in the emerging countries■ Markets in emerging countries continue to expand
In carrying out reconstruction, it will surely prove crucial to capture overseas demand by leveraging strengths of Japan which are laid out in the preceding section. The
emerging countries, especially in Asia, are of immense importance. As their economies grow, the purchasing power of the emerging nations has grown steadily. The
household consumption expenditure in emerging and developing nations rising sharply since the middle of the first decade of this century and is now over three times
that of Japan.
■ With the rise in income levels, more sophisticated consumption
Looking at trends in consumer spending by purpose in the Asian region (China, India and the ASEAN), expenditures on education, vehicles and medical services haveincreased rapidly and, in the current decade, the combined spending of these countries have surpassed the respective amounts of Japan. Luxurious spending such as
package holidays has also been increasing. As income levels rise, markets for many products and services that Japanese companies can target are growing.

Fig. III-15 Scale of household consumption expenditurein emerging/developing countries (nominal)(Japan: 100)

(Japan: 100)

Fig. III-16 Total consumption expenditure by purpose in Asian
region (China, India and ASEAN combined)

250

350

Western Asia
and Africa

300

Other Latin
America and the200
CaribbeanBrazil

Education

Cars, motorcycles,
and other vehicles
etc.

Emerging/Developing
Countries Total

250

Other Asia,
Oceania and
CIS
Russia200

150

Pharmaceuticalproducts, medical
appliances andequipment

Japan: 100

Japan: 100

Video/audio devices
and other durables
for recreation andculture

ASEAN

150

100
India

100

Catering
China

50
50

Package holidays

China, India andASEAN
01991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 20090(Year)

1990 91

Note: "Emerging/Developing Countries" here are the countries as classified by the UN for statistical convenience, plus Russia and the
CIS countries.
Source: National Accounts Main Aggregate Database (UN).

41

92

93

94

95

96

97

98

99 2000 01

02

03

04

05

06

07

08

09

10

(Year)

Source: Consumer Asia Pacific and Australasia 2011 (Euromonitor International).
Copyright (C) 2011 JETRO. All rights reserved.

Chapter 3 Section 3: Contribute to reconstruction through expanding overseas business with Japan’s strengths

Japan’s presence in emerging markets - expanding but dwarfed by China and Korea■ Japan’s export and investment to emerging countries are both expanding, but still lag behind the rapid pace of China and South Korea
As emerging countries has shown strong economic growth, Japan’s export to those countries has also grown. Since 2009 exports to Asian countries make up more thanhalf of Japan’s total exports, with a large share goes to China and the ASEAN countries. Percent change of exports to Russia, CIS, China and India exceed the average.
However, China’s and South Korea’s exports are growing at an even faster rate, far surpassing that of Japan; and there are countries and regions where the value of China
and South Korea’s exports exceed that of Japan.
Looking at foreign direct investment, Japan has shifted its concentration in Europe and U.S. toward Asia and Latin America, but China and Korea have concentrated evengreater percentages of their investments in emerging and developing countries. In 2009 China’s investment in Africa reached 11.1% of its total FDI, excluding FDI from
China to Hong Kong, and now the FDI stock in Africa reaches approximately US$9.0 billion, surpassing that of Japan.
Fig. III-17 Japan, China and South Korea's exports by country/region(2010, export basis)

China

56.1

40.5

54.2

2.2

5.1

3.1

9.9

14.6

5.8

China

19.4

－

25.1

4.9

－

6.3

11.9

－

9.3

ASEAN

14.7

8.8

11.4

1.6

8.0

2.6

12.0

14.7

5.7

India

1.2

2.6

2.5

3.6

26.0

8.6

2.8

12.7

3.6

Latin America

4.5

4.7

5.9

2.2

12.7

3.9

5.8

12.5

4.6

Brazil

0.8

1.5

1.7

2.5

20.0

4.5

3.4

13.3

4.2

Russia and CIS

1.2

3.4

2.4

11.6

16.9

8.5

2.6

14.9

3.1

3.6

4.7

5.6

2.6

10.3

3.4

4.5

12.0

4.2

Africa

1.6

3.8

3.3

2.4

11.9

4.7

3.0

15.1

3.9

Europe and America

27.9

39.1

23.0

0.9

6.4

1.7

2.9

8.2

1.4

World

100.0

100.0

100.0

1.6

6.3

2.7

5.2

10.7

3.1

Notes: (1) With respect to "Shares of Japan, China and South Korea ", the figures are based on the value ofexports from countries where custom statistics were available. Hence, there may be discrepancies with figuresin other sections of this report.
(2) The figures for "Europe and America" are the aggregate of those for U.S., Canada and EU.
Source: Trade Statistics of individual countries/regions.

Latin America

Oceania

EuropeMiddle East

Africa

20.7

6.2

37.9

7.9

13.9

11.1

*Note: China's share of balance by region is calculated excluding Hong Kong.
(Balance to Hong Kong was US$24.6 billion in 2003 and US$164.5 billion in 2009.)

2003(US$33.2 billion)

16.5

6.4

2009
(US$115.5 billion)

6.1

53.8

53.3

18.9

5.5 6.2

5.5

2.5

1.3 1.0

6.5

16.5
1.7

2003
(US$33.8 billion)

42.4

29.7

9.6

1.3 1.2
14.1
0.6 0.7

2010(US$830.5 billion)

Japan

Middle East2009
(US$245.8 billion)

中国

Japan

South
Korea

South Korea

China

Asia

China

South
Korea

North America

2.4

China

Japan

South
Korea

Japan

Asia

Shares of Japan, China andSouth Korea at destinations (%)

韓国

Increase from 2000
(multiple)

25.6

31.6

12.9

日本

Export destination
composition ratio (%)

Fig. III-18 Japan, China and South Korea's outward FDI position(regional breakdown)

5.3

23.3

4.1
2003
(US$335.9 billion)

19.1

42.7

6.5

0.3 0.6
26.4

0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Notes: (1) Figures in parentheses are total world balance. (2) In calculating share by region, excluding investments by China in Hong Kongand by South Korea in unspecified countries. (3) Classification of regions are based on Balance of Payments Statistics of Japan (Ministryof Finance and Bank of Japan).
Source: Japan: "Direct Investment Position, breakdown by Region and Industry" (Bank of Japan), South Korea: OECD International direct
investment database, China: "2009 Statistical Bulletin of China's Outward Foreign Direct Investment" (China's Ministry of Commerce).

42

Copyright (C) 2011 JETRO. All rights reserved.

Chapter 3 Section 3: Contribute to reconstruction through expanding overseas business with Japan’s strengths

Capturing overseas markets by leveraging Japan’s
meticulous product development and high factory productivity■ Competitive edges of Japan’s small- and medium-sized enterprises has shown in overseas markets
In The Global Competitiveness Report by the World Economic Forum Japan ranks at the top in ―Business Sophistication‖ pillar. Looking at the more detailed evaluation of
the pillar, it is obvious that the high score stems from the depth of the production network underpinned by small- and medium-sized enterprises with high technicalcapabilities, as shown in very high scores in ―local supplier quantity,‖ ―local supplier quality‖ and ―state of cluster development." In fact, there are many SME active
overseas which can supply unique products not available from any other source because they can develop products precisely meeting the requirements of customers thanks
to their product development capabilities. In a questionnaire filled out by JETRO Member companies, a highly positive attitude toward exports by SME stood out.
As small- and medium-sized enterprises develop their overseas business, their capabilities of product development and production would improve even more and there
would be ripple effects such as expanding business opportunities with companies in Japan as well. In this sense, expanding overseas sales will be of increasing importance.
Fig. III-19 Export plans going forward (for about Fig. III-20 Examples of overseas market development by small/medium-sized companies
Primary target
three years)
Company
Overview of Products and Services, Status of M arket Development, etc.
countries

65.9
63.3

Asia Giken Co., Ltd.
(Kitakyushu, Fukuoka
Prefecture)

67.7

Southeast Asia,
China

to expand exports
12.6

to maintain their current
status11.9
13.0

Developed textiles using ultra-thin polyester yarn, using product development knowledge accumulated
over the course of many years. Commercialized as the "Amaike Super-Organza" the world's thinnest
and lightest fabric. Have actively participated in exhibitions, etc., utilizing to full advantage of this oneof-a-kind product, which has been adopted by leading European fashion brands.

Amaike Textile Industry Co.,
Ltd. (Nanao, Ishikawa
EuropePrefecture)

Total
Large companies

0.9

Developed static-eliminating devices that diffuse ions traveling long distance without using air blow.
TRINC.ORG (Hamamatsu, China, Southeast Has developed many types of devices, obtaining approximately 130 patents. Developing their businessShizuoka Prefecture)Asia
by writing books in Japanese and English and other promotional activities. In November 2010 launched
an exclusive brand for overseas markets.

To shrink of or withdraw from
1.2
exports

Small andmedium-sizedenterprises

0.7

Tanaka Electric Laboratory
Inc. (Setagaya-ku, Tokyo)

Vietnam,ThailandM anufacturer of environment monitoring instruments with plant located in Nasukarasuyama, Tochigi
Prefecture. M arketing dust density monitor designed for continuous measurement of dusts in harshindustrial environment to a Thai electric company, Vietnamese cement maker and others. The products
were developed taking into account the perspective of customers, and their easy-to-maintain design andother features have been well received. Sales discussion begun at the end of June in Vietnam progressingwell.

Hosoo & Co., Ltd. (Kyoto,
Kyoto Prefecture)

North America,
Europe, Hong
Kong, etc.

Kyoto manufacturer of Nishijin textile for over 300 years. Using advanced manufacturing technology,
has had success in marketing its products as upscale interior finishing materials to the contract market inEurope and North America. Its products are currently used in stores and showrooms of leading
European and North American fashion and jewelry labels.

5.0
2.2

Not involved in export but intend to
start exports

6.9

11.1
16.1

Not involved in export and have nointension to start exports

7.6
(%)

0

Welding machines and integrated management of stud welding systems from supplying studs (pins) toconstruction works. First in the world to succeed in developing ultra-instantaneous magnesium alloy
welding. Has expanded into markets in Southeast Asia, China and Taiwan. Actively welcomes trainees
from China and deploys an IT-based system for managing products at remote locations as the company
aims for further sales expansion.

10

20

30

40

50

60

70

Source: ―FY 2010 Survey on the International Operations of JapaneseFirms‖ (JETRO, March 2011)

Sources: Interviews, news reports, etc.

43

Copyright (C) 2011 JETRO. All rights reserved.

Chapter 3 Section 3: Contribute to reconstruction through expanding overseas business with Japan’s strengths

Using Japan’s unique experience to enter Asia’s graying markets■ Entering Asia’s graying markets in such areas as sanitary ware and nursing home for the elderly
Japan itself has already become a aging society, but aging is proceeding rapidly throughout the rest of Asia as well. According to the United Nations’ estimates andprojections (2010, medium-variant), the old age population ratio (the ratio of people 65 and older to the overall population) is 22.7% in Japan vis-à-vis 8.2% in China and11.1% in Korea. Japan thus is by far the highest level; however, both China and Korea are expected to rapidly approach the level of Japan and this will be accompanied
by an equally rapid expansion of graying markets.
In Japan this market expansion is not limited to such sectors as medical services and nursing care but is also seen in user-friendly home appliances for the elderly andbarrier-free housing among others. Some Japanese companies have already broken into the Asian market, building on the technical capabilities and high-level service
they have developed domestically in such areas as sanitary ware, nursing home for the elderly and meal delivery service.
Fig. III-21 Elderly population ratio in the world's
major countries/regions(%)

Fig. III-22 Examples of Japanese companies entering into Asia's graying markets
Company

Targetcountry

Business Specifics

First entered Chinese market in 1979 with the sale of sanitary ware for the renovation of the Diaoyutai State Guest House
40.0
in Beijing. In 1994 established a market presence by opening a joint venture company. Followed up with openingWorld
showrooms as sales base and built up a network of local sales agents capturing the top share for high-end sanitary ware.
TOTO
China
Japan
Sales and operating profit in China were 36.1 billion yen and 7.6 billion yen respectively with the latter comprising 46% of
35.0
China
total company operating profit in 2010. Have begun taking steps to cater to China's aging society through, for example,
South Korea
exhibiting toilets equipped with grab bars in Shanghai showroom.
30.0
Hong Kong
In November 2010, a subsidiary, Long Life International Business Investment, established in Qingdao a joint venture,
Hiking (Qingdao) Long Life Care Service Co., Ltd., together with a company belonging to the Chinese Hiking GroupASEAN
Long Life Holding Co.
China
Company (ownership share 34%, investment amount US$1.02 million) through which it became the first Japanese
India
25.0
company to open a nursing home for the elderly (168 rooms) in China. Has begun training of Chinese staff, aiming to start
U.S.
operations in October, 2011. Forecasting annual profit of approximately 30 million yen.
In 2008, the local leading dairy products manufacturer, Binggrae, utilized knowhow from the company to commercialize its
20.0
Senior Life Create Co.
Korea
meal delivery service focused on elderly consumers. In addition to home delivery under the brand Yegadwon, currently(formerly X-vinn Co. )operating two stores.
15.0
Together with the general food manufacturer Daesang Corporation it developed a food thickener, Nucare Toromi Perfect,
and launched sales in July 2010. The product are designed to facilitate the smooth delivery of fluids and nutrition to elderly
Nisshin Oillio Group
Korea
persons and those suffering from dementia who have diminished capacity to swallow. The products are sold at hospitals,
10.0
senior facilities and pharmacies.
Established in M arch 2008 with the objectives of providing Asia with the experience and knowledge gained by Japan as anSpecified Non-profit
aging society; of utilizing the geographical advantage of Fukuoka as a gateway to Asia to develop the city to be a model
5.0
China and
Organization Asian Agingcase of elderly-friend city; and of developing aging businesses that are needed in Asia. Organizes visits and training from
Korea
Business Center (AABC)
Asia at facilities for the elderly in Japan and promotes information sharing on aging society. Through these initiatives also0.0
hopes to raise the profile of Fukuoka City, promote international exchange and expand tourism.
1950 1965 1980 1995 2010 2025 2040 2055 2070 2085 2100
As a part of its efforts to develop its Asian hospital network business, in January 2010 invested in Gleneagles CRC(Est.) (Est.) (Est.) (Est.) (Est.) (Est.)
Singapore (Singapore), which is a subsidiary of the Parkway Group, the largest hospital group in Asia. Additionally, in July 2011,
andacquired 30% stakes in Integrated Healthcare Holdings Sdn. Bhd. (M alaysia) for 3.3 billion M alaysian ringgit, which holds(Year) M itsui & Co.
M
alaysiastakes of the Parkway Group and Pantai Hospitals, which is the second largest hospital group in M alaysia. Through these
Source: "World Population Prospects: The 2010 Revision" (UN)investments, M itsui & Co. expands looks to expand its hospital related services business.
Sources: Reports form JETRO's overseas offices, company and organization press releases and news reports

44

Copyright (C) 2011 JETRO. All rights reserved.

Chapter 3 Section 3: Contribute to reconstruction through expanding overseas business with Japan’s strengths

Japan's more environmentally-friendly technologies, including energy save, reach overseas markets■ Japan’s energy conservation technologies continues to attract strong interest

At the 12th China International Environmental Protection Exhibition and Conference held in June there was a high level of interest toward Japan’s energy conservation
technologies, such as those exhibited by Fumin from Fukushima Prefecture. An initiative to form a consortium that would provide a comprehensive array of services in
China and Taiwan deserves attention as an approach to tap into specialized technologies of individual firms. The Water Expo in Singapore International Water Week
2011 held in July was also the scene of active business discussions.
■ Energy-saving performance is also expected to have appeal in consumer market
Awareness of energy conservation among consumers in emerging countries in Asia and throughout the world is rising and the number of people who now take into
account energy efficiency when selecting electric appliances seems to be increasing. Increased level of energy efficiency resulting from the response to the power
shortage in Japan could eventually become a powerful competitive edge in consumer goods market.
Fig. III-24 Energy saving awareness and purchasing
behavior in China, Thailand and India

Fig. III-23 Examples of Japanese companies developing sales routes in the energy conservation andenvironmental sector
Company

Primary T arget
Countries

Among the people who answered "When buying
electronic appliances, I choose energy efficient products."

Overview of Products and Services and Status of Overseas Market Development, etc.

Developed technology for coating glass surfaces evenly with a transparent material that absorbs and cuts
infrared and ultraviolet rays. T he Singapore Housing & Development Board is using this heat blocking
coating in its public housing. At the 12th China International Environmental Protection Exhibition andFumin Co., Ltd.
Conference (CIEPEC) held in Beijing from June 7 to 11, 2011, engaged in business discussions with over
Singapore,(Fukushima, Fukushima
100 companies and expects several sales to be materialized.
China, etc.
Prefecture)
At CIEPEC, 24 companies and organizations (compared to 11 last year) participated, including Watara
Engineering of Fukushima. Altogether they actively held 1,096 business discussions (compared to 322 lastyear) and foresee 132 deals for a total value of US$5.81 million (compared to 42 deals last year for a total
value of US$2.64 million, including contracts already concluded).
A consortium of Japanese companies from diverse areas related to energy conservation. Formed in 2009,
they bring together multiple energy conservation technologies to provide a comprehensive package based
China,
on the particular needs of a customer. T he consortium provide services under a business model called
Green Group Members
T aiwan
Energy Service Company, where they installs energy saving equipment at no cost and receives payment
only from the cost savings subsequently realized. As of March 2011 has undertaken 123 projects andrealized a gross margin of 35%.
Produces equipment for generating highly concentrated sodium hypochlorite from water. T he technology
Chlorine Engineers Corp.
utilizes the company's top class electrolysis technology developed in the brine electrolysis field, and can beLtd.
applied to sterilization in water treatment plants. At the Water Expo in Singapore International Water
China, India,(Head Office: T okyo,
Week 2011 (July 5-7) exhibited actual electrolytic cells and received numerous inquiries.
Southeast Asia,
Okayama Works: T amano
27 companies including Chlorine Engineers (compared to 16 last year) exhibited in the Japan Pavilion at
U.S., etc.
City, Okayama)
Water Expo and actively engaged in business discussions. 1,478 business discussions (710 last year) were
held, out of which there are prospects for 68 deals for a total prospective value of US$10.93 million(compared to last year 41 deals for US$8.88 million, respectively).
A-Wing International Co.
Develops small wind power generators with superior generating efficiency. Aiming to promote use in Asia's(Head Office: T okyo,
T hailand,non-electrified regions, actively hires exchange students from Asia's emerging and developing countries.
Main Factory, Miyazaki Mongolia,
For generators targeting overseas sales, significantly reduces the number of parts and cuts down costs to: Miyakonojo, Miyazaki Bangladesh, etc. about one fifth while maintaining basic performance. Currently establishing manufacturing bases in
Prefecture)
Mongolia and T hailand and building a network to export to Bangladesh and other Asian countries.
Sources: Interviews, news reports, etc.
45

(%)
100

13.2

90

16.8
80
70

I do (butsometimes 32.8
not).

26.9

I plan to
do so.

27.2
35.7

60
50

86.8

40
30

75.6

69.3

62.8
54.4

20

I plan to
do so by 45.6
allmeans.

I alwaysdo.

100Present Hereafter
China

Present Hereafter
ThailandPresent HereafterIndia

Source: Survey on "energy saving awareness and purchace behavior (in China,
Thailand and India)" (JETRO, March 2011).

Copyright (C) 2011 JETRO. All rights reserved.

Chapter 3 Section 3: Contribute to reconstruction through expanding overseas business with Japan’s strengths

All-out effort to revitalize and enhance the ―Japan Brand‖■ Synergy effect with the service industry currently expanding overseas

Japanese service sector, which has often been cited for not sufficiently capturing overseas demand compared to the manufacturing sector, is now increasing overseas
operation and many companies, including small- and medium-sized enterprises, are seizing overseas business opportunities. In the food service industry, which initially
was feared to be strongly affected by the earthquake, some companies are achieving steady expansion after the disaster. The impact of the earthquake on products otherthan foodstuffs seems to have been successfully held to a minimum. This can probably be attributed to the trust in Japanese products and services built up over timethrough unstinting efforts of many Japanese individuals and companies.
There remain challenges, including strengthening marketing capabilities and developing global human resources, in order to make the most of Japan’s technicalcapabilities. Together with ongoing efforts to meet these challenges, what is needed is all-out effort to revitalize and enhance the ―Japan Brand‖ by actively disseminating
information and offering customers safe and high quality products and services when marketing and manufacturing export products, welcoming overseas visitors to Japan,
offering Japanese food and content abroad, and many other occasions.
Fig. III-25 Time of launching Overseas operation in service industry

Fig. III-26 Examples of post-earthquake overseas business

Description
At a medical equipment exhibition, MD&M East, held in New York from June 7(Number ofcompany)
to 9, a research team of Fukushima University introduced technologies that
Promoting Fukushima's
300
were developed in collaboration with local companies and others andadvanced Medical
promoted Fukushima's advanced medical equipment technology. Business
BtoC (retail, food services, services related
Equipment
discussions were held with a many international medical equipment
49
250
to daily living, etc.)
manufacturers and precision instrument makers.
BtoB (wholesale, telecommunications,
In recent years, Japanese specialty restaurants including ramen noodle shops
construction, finance, etc.)
200
and Japanese-style bars, have multiplied rapidly in South Korea, numbering
about 3,000 locations throughout the country. Although exports of JapaneseJapan's Food Service
27
foodstuffs dropped sharply after the earthquake, the impact on sales and150
Industry Actively
number of customers at outlets of the Japanese food service industry was
16
Developing Overseas
minimal and new locations continue to open.
232
Business
100
In the U.S. as well, many food service companies, including Ippudo ramen
10
noodles, Beard Papa's cream puffs and Marukame Udon noodles, continue to147
119develop their businesses steadily after the earthquake.
50
74
Many Japanese companies participated in the International Contemporary
3
2
Furniture Fair (ICFF) held in New York, May 14–17, 2011. The concerns of
31
30
Active Business0buyers about the earthquake and the nuclear power accident were not as great
Discussions at the1959 and
1960-69
1970-79
1980-89
1990-99
2000-10as had been initially feared and there were many inquiries about the productsInternational Contemporary
beforeexhibited. The results surpassed expectations, with the number of businessNotes: (1) The chart excludes "Other service industry" and companies that did not answer on thier Furniture Fair
discussions exceeding that of last year and many deals successfully
industry field or time of launcing overseas operation. (2) As for 2010, the number of launches
concluded.
includes the companies that answered that they planned to launch. (Survey period: OctoberSources: Interviews, news reports
November 2010.)(Among 740 companies that answered in the survey by
JETRO that it had already advanced overseas )Source: "Survey on overseas operation status in service industry: the fiscal year 2010" (JETRO).

Examples46

Copyright (C) 2011 JETRO. All rights reserved.