Japan Market Assesment

Part I

Basic national demographics:

Japan has a population of 127,463,611 people. The country’s majority age structure is from 15-64 years of age. This age block makes up roughly 65% of the population. The death rate and birth rate is almost exactly the same, with a population growth of only 0.02%. The country is facing a declining population due to population ageing which can be disastrous for the society. The worst possible scenario of this situation is that the population will fall too low and will not be able to support their current social welfare economic system.

Japan is almost primarily Japanese. The official language spoken in the country is Japanese. The country has a very high literacy rate of 99%. Japan’s education system played a central part in enabling the country to meet the challenges presented by the need to quickly absorb Western ideas, science, and technology. This was also a huge part in Japan’s recovery and rapid economic growth in the decades following the end of World War II. The Japanese economy is one of the strongest in the world. Only the United States has a higher GNP.

The country’s budget in revenues is $1.429 trillion and expenditures are $1.775 trillion which includes capital expenditures and public works of only $71 billion. Japan feels that given the recent situation of bidding and execution of public works in Japan, it is a matter of extreme urgency to recover people’s confidence in execution of public construction and in public works. Recognizing the increasing interest of foreign companies including those of the United States, the government of Japan views it important to make its bidding more transparent and objective with an international perspective taken into account. The country GDP is $4.018 trillion, with a public debt of 158% of GDP. This huge amount of debt can be contributed to all of the overbidding that occurs in Japan.

During the post-war period in Japan the economy grew by enhancing production capability to become a manufacturing economy. Japan has a current labor force of 66.4 million. It’s automobile and consumer electronics industries are considered world leaders and strong global competitors. Japan's main export goods are cars, electronic devices, and computers. The service industries such as telecommunications, transportation, and finance are far behind the global top spots. The Japanese industry is referred to as having strong manufacturing and a weak service industry. As the economy develops, the industrial structure changes, and employment and value-added increases in the service sector while they decline in the manufacturing sector. Though there is a decline in their strong manufacturing process, the country still observes an industrial growth rate is of 1.5%.

With the globalization of capital, goods and services, and information the service industries can no longer remain purely domestic. Japan’s service industries have been less exposed to global competition than its manufacturing industries and their management has become less effective. Industry jobs account for 27.8% of the work force. Japanese companies are losing their spots in high value added industries such as telecommunications, the internet, and insurance. Most of the population is employed in service industry, which accounts for 67.7% of the total workforce. Real estate and wholesale and retail trade are the two service industries with the highest level of value. Agriculture employment accounts for roughly five percent of the workforce. This has many people in Japan feeling anxiety over food security for the future.

The most important single trade partner is the United States, which imports more than one quarter of all Japanese exports. Japan has a large surplus in its export/import balance. The most important import goods are raw materials such as oil, food products, and wood. Being an island nation, Japan’s resources of raw materials are very limited and the mining industry is rather small.

The country has a GDP growth rate of 2.7%, with a GDP per capita of $31,500. Their GDP by sector are agriculture with 1.7%, industry with 25.8%, and service of 72.5%. The country’s unemployment rate climbed a record high of 5.4% in October, causing concern that an economic downturn will get worse before the situation gets better. The unemployment rate of 5.4% roughly the same as the United States, but Japan is less equipped than the U.S. to encourage worker mobility.

The country has an inflation rate of -0.3% which means that the prices of most products are decreasing. Some problems with this current deflation include a decrease in both land value and stock prices. Nonperforming loans that have plagued the Japanese economy have not been resolved. Japanese banks, which previously dominated international