Financial and legal Services sector in Japan
Japan is home to a colossal accumulation of personal wealth amounting to more than £10 trillion and to some of the largest financial institutions e.g. Japan Post Bank (USD2100 bn). With the blessings of PM Abe’s economic stimulus policy and monetary easing measures by the Bank of Japan, this sector is poised for further growth.
The total amount of deposit and loan in the Japanese banking sector as of end February 2013 was £5.4 trillion and £3.1 trillion respectively. The low loan deposit ratio propelled banks to invest in Japanese Government Bonds but with the purchase of JGBs by the Bank of Japan, this business model now needs to change.
Japan has the world’s second largest insurance market after the US; the gross premium income of the industry is estimated at USD 655 billion (of which 80% accounts for life insurance and the rest non-life).
There are approximately 30,000 lawyers (bengoshi) in Japan. There are about 350 foreign lawyers registered. Most of the leading UK/international firms have a presence in Tokyo.
About 60% of household wealth in Japan is in the form of cash and deposits.
There has been strong interest amongst Japanese financial institutions in working with foreign fund managers to invest funds into high yielding asset classes.
Partnership agreements were concluded between various UK and Japanese firms, eg Standard Life Investment working with Sumitomo Mitsui Trust Bank, Aberdeen working with Mitsubishi UFJ etc.
The introduction of a Japanese version of the ISA scheme which will be launched in January 2014 is expected to give significant boost to the retail investment market.
With the introduction of a substantial monetary easing policy from April 2013 under which the Central Bank will purchase JGBs held by Japanese financial institutions, there is demand for allocation of assets in different asset classes including foreign bonds, equities etc.
In an attempt to stimulate the economy and to rehabilitate some of the ageing infrastructure, the Abe Government is trying to legislate a “Resilience building plan for the nation”.
Japan’s sovereign debt already exceeds 200% of GDP and in order to maintain international confidence in the current monetary policy it would be highly crucial for the government not to aggravate the state of finance. We see this as a trigger for harnessing private sector finance with appropriate transfer of risk.
Private sector financing of large scale infrastructure is unknown territory for Japan and UK experience in designing structures/ risk transfer and management may be of interest to the Japanese.
In response to the expansion and surging outbound M&A activities by Japanese firms and a growing appetite in investing in overseas energy projects, there is a strong demand for international legal services.
Getting into the market
Depending on the type of business services you would like to provide to your clients, it may be necessary to obtain a license from the Japanese Financial Services Agency.
In order to supply to the public sector, the supplier needs to become a registered supplier of the municipality/ government ministry. UK companies should be prepared to provide the necessary documentation in order to achieve this, e.g. financial statement etc.
Companies interested in working in Japan should contact UKTI who can update you on the latest opportunities.
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.
Naomi Takegoshi, British Embassy Japan. Tel: +81 (0)3 5211 1156 or email: email@example.com
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.