### 3. Japanese Business Expansion into African Region

### 3.1 Interview survey on Japanese companies operating in Africa

The operation of Japanese companies in the African region is currently extremely limited.

According to the reports by the Japan External Trade Organization (JETRO) and other organizations, there are approximately 400 Japanese companies operating in Africa. Of these, 15 businesses have entered into the agricultural, forestry, marine, and food industries. By region, two thirds of the Japanese companies are concentrated in South Africa and in North Africa. The latter includes countries along the Mediterranean Sea, such as Egypt, Algeria, Tunisia, and Morocco. In contrast, there are very few companies that have advanced into West Africa or East Africa. Moreover, the number is especially limited for markets in Cote d'Ivoire and Ethiopia, the two subject countries in this report.

In this report, interview was conducted on 11 Japanese companies which have had experience, or are interested in operating in across Africa in domains such as production, processing, distribution, or other related fields for agricultural, forestry, marine goods and food products. Our interviews focused mainly on their experience in market development and the investment environments in Africa in order to have basic understandings on future business advancement into Africa.

In particular, in regards to Cote d'Ivoire or Ethiopia, interviewed firms were asked their evaluation of the market environment and their interest in making entry into the two countries.

Of the 11 Japanese companies interviewed, 10 businesses are currently operating in Africa, and remaining 1 is conducting a feasibility study in Africa.

The interviewed group largely constituted two business types; import of agricultural products from Africa to Japan (5 firms importing coffee, cocoa, soybean, sesame, flowering plants, cotton, and other agricultural products) or the export of Japanese products to Africa (4 firms exporting seeds, agricultural chemicals, agricultural machines, outboard engines, and other machines). There were also companies which produce instant noodles and canned products in India and Thailand to sell them to markets in Africa.

In importing agricultural products from the countries, Japanese firms not only procure products from exporters but also provide technical guidance to local production sites and conduct quality control. Some firms engage in social contribution activities while conducting business. However, in terms of farms, there are currently none owned directly by Japanese companies.

Japanese exporters to the countries provide local agents with technical guidance, hold explanatory meetings, offer inspection services for their products, and otherwise quickly respond to problems with local buyers.

When the companies are involved in the distribution of products in African markets, such as in the case of instant noodles and canned products, it is less costly to produce them at local sites than to import from other countries. Local production in Africa would likely be faced by issues such as material procurement, quality control, and labor management. Nevertheless, it was found through the interviews that companies of this business area were positively considering the potential shift to local production in the future.

Following are some main points that became apparent through the interviews.