Chemicals sector in Japan
3D Chemical model
According to the Japan Chemicals Industry Association (JCIA), Japan has the third largest chemicals market in the world producing US$ 338.2 billion worth of chemicals in 2010 and it creates approx. 880,000 jobs in Japan. As one of Japan’s key industries, the chemicals sector generated added value worth ¥15,000 billion (approx £100 billion @¥150 = £1) in 2010, which was the largest of all manufacturing industries. However, like many other manufacturing industries in developed countries, it faces severe competition from other markets and especially low cost production countries.
In order to differentiate its products and maintain within the world’s top 3 positioning, the Japanese chemicals industry has increasingly been making investment in development of innovative products and spent ¥2,300 billion (£15.3 billion) solely on R&D in 2010. There has also been a trend toward foreign direct investment not only for low cost production in emerging markets but also production close to the consumption market. Europe was the top investment destination in 2011 (£7.4 billion), followed by North America and Asia by a significant margin.
With regard to overseas trade, Japan exports and imports in 2011 were ¥6,798 billion (£45.3 billion) and ¥6,098 billion (£40.7 billion) respectively. Import from Western Europe accounted for 38.0% of all imports.
From the product characteristics, the chemicals market consists of various industry sectors with major ones being pharmaceuticals in terms of production value, R&D expenditures and import value. Organic chemicals are positioned at the 2nd place in terms of production and import values.
There has been severe competition from emerging markets for conventional volume products. Japanese companies do not expect a supply of these products from the UK, but are interested in the following areas:
Purchase of innovative products
In-licensing of innovative proprietary technologies enabling them to differentiate the products from competitors
Outsourcing production of specialist chemicals
Industry sectors offering comparatively higher market opportunities will be:
Energy (e.g. power generation, fuel cells, batteries)
Getting into the market
There are several Japanese companies which are capable of dealing with overseas companies direct, but doing business via a local distributor or agent with specialist knowledge of chemicals as well as a good network with prospective end-users is recommended. Distributors can deal with quite a large number of overseas suppliers to respond to client’s requirements as quickly as possible.
In order to stand out within their possibly large portfolio, UK companies will wish to highlight their unique selling points effectively, maintain regular communication with Japanese partners, visit the market not only to show their commitment to the market but also to understand the market needs.
You may also wish to note that Japanese companies put emphasis on developing the trust and mutual confidence that will lead to a strong, enduring relationship rather than on getting down to business instantly.
Market intelligence is critical when doing business overseas, and UKTI can provide bespoke market research and support during overseas visits though our chargeable Overseas Market Introduction Service (OMIS).
To commission research or for general advice about the market, get in touch with our specialists in country – or contact your local international trade team.
Hitomi Nakai, Consulate General Osaka; Tel: +81 (0)6 6120 5656; Email: [email protected]
Kaori Arai, British Embassy Tokyo; Tel: +81 (0)3 5211 1150; Email: [email protected]
UKTI runs a range of events for exporters, including seminars in the UK, trade missions to overseas markets and support for attendance at overseas trade shows.
9-11 April 2014