For certain export areas, notably agricultural food and beverage, JAEPA has been the catalyst for a major boost in export volume. The table below outlines some of the percentage gains in individual product exports over 2015.
Clearly this suggests that a new chapter is being written in the trade relationship, thanks to JAEPA.
EXPORT GROWTH TO JAPAN, 2015
NEEDS TO PUT IN MORE
That said it hasn’t all been one-way traffic. Like all teams, the export side has some areas where improvement is still needed.
Notably, Australian exports of higher education (post graduate) to Japan have been on a continual decline since 2010.
This is an area where renewed focus is warranted, given the life-long links that often tend to be the by-product of education in a foreign country. That said, overall the export team have clearly delivered the goods.
There have been some individual performances worthy of highlighting. Most noteworthy perhaps was the success of innovative medical company Mesoblast in achieving approval for sales of regenerative medicine into the Japanese market earlier this year.
This is a great example outside of the traditional sphere of Australian exports to Japan.
MUST PULL THE SOCKS UP
This uplifting export story contrasts with the performance of the ‘other’ team, namely Australian direct investors into Japan.
The sad story is there are still only about 50 Australian companies operating on the ground in Japan. This is a woefully small number compared with the over 1000 companies who export to the country.
It is correct to observe the composition of major Australian exports to Japan, consisting mainly of primary produce, may not lend itself well to having (or requiring) on-ground presence beyond perhaps industry-level representation.
However, it is still a noticeably minor presence compared with markets like China where over 300 Australian companies have some kind of onshore base or Singapore where over 200 Australian companies have a home.
The scale of difference cannot be explained simply by export profile, nor by market size – Japan is after all Australia’s second-largest trading partner.
To switch to cricketing analogy, Australian director investors in Japan are barely troubling the scorers.
WHERE ARE THEY?
To try and get a little insight into this question, the Australia-NZ Chamber of Commerce in Japan (ANZCCJ) recently polled their members on why they think there are not more Australian companies operating in Japan.
The results sadly were fairly predictable and they boil down to there being a perception and awareness issue.
- There are perceived to be better opportunities in other markets (notably, China).
- The size and nature of the opportunity in Japan now is not well understood by Australian companies.
- There is a general perception that ‘low growth’ is the defining characteristic. There is very little media coverage of the Japan market in Australia and the coverage there is invariably comments on the demographic time bomb or overwork issues.
- The language and cultural barriers are perceived to be significant (although that is equally or even more so the case with China).
Overall, it is the perception issue which needs to be addressed. We need our Australian companies to be more ambitious and more objective about the opportunity that exists in Japan.
PERCEPTION VS REALITY