General overview
Japan is one of the most important economic partners in Asia for Estonia, both as a destination country for the export of goods and services and as a source country for investments. The Export Strategy seeks to describe Japan's market characteristics and buyer behavior, as well as market entry strategies across the 5 target sectors: ICT, food and beverage, electronics, manufacturing, modular housing and wooden products.
The Export Strategy is intended to be used to inform early Japan market entry planning for Estonian entrepreneurs and provides, more specifically, a detailed insights and guidance in the 5 target sectors to consider when evaluating Japan market entry. Furthermore, the Strategy also provides clarity on Japan's cultural nuances and business practices.
Finally, the Strategy signposts key players, additional organizations, policies, regulations, etc., that can support subsequent Japan market entry planning and execution activities. In addition to sector-specific insights, this report also sets out a comprehensive trade and foreign direct investment (FDI) strategy for the Japanese market.
On May 20th, the Japanese market entry strategy was introduced to entrepreneurs at the Ministry of Foreign Affairs. The event program and presentations can be found here:
Presentations
This chapter provides a general overview of the functioning of the Japan economy and business society, highlighting its special cultural, demographic, political, and geographical features.
Japan Market Overview
The business relationship between Japan and Estonia is shaped by two existing international trade agreements: the Economic Partnership Agreement (EPA) between the European Union and Japan, and the Elimination of Double Taxation between Estonia and Japan.
Legal and commercial highlights
This chapter gives an overview of how to start a business in Japan and how to approach Japanese companies. It emphasizes that Japan is a market that requires a serious approach, thorough preparedness, and commitment to understand their meeting and business norms, as well as the budgetary cycle. Estonian companies will find in this chapter a useful outline of the decision-making processes inside Japanese companies and the anticipated steps when signing a business deal in Japan, as well as how to establish your own Japanese entity. Additionally, a clear overview of government procurement processes and labor laws is provided.
Doing business in Japan
Estonian companies can gain insight into Japan´s ICT sector, a vital component of the country's economy. In 2020, the ICT sector accounted for 10% of Japan's GDP. While the industry maintains well-established traditional power structures, newer subsectors are emerging, presenting opportunities for new entrants. Despite the presence of established players, collaboration and innovation opportunities exist, particularly in emerging subsectors such as cybersecurity and telehealth.
Moreover, it outlines respective national strategies, policies, and the regulatory environment in place.
This chapter provides SWOT analyses comparing Estonian ICT capabilities with the Japanese market, along with gap analyses for Estonian ICT export opportunities, accompanied by recommendations and a list of market entry consultancies. Also, a five-year market entry roadmap model is included for convenient planning.
Focus Sector: ICT
Estonian companies can gain insight into Japan´s manufacturing sector, which is actively embracing an "Industry 4.0" revolution, emphasizing digitalization, automation, and advanced technologies such as AI, IoT, robotics, and big data. Sustainability and energy-efficient practices are gaining more importance within the sector. The sector's resilience and global imprint reinforce the need for ongoing innovation and reforms to ensure continued growth amidst global competition and challenges like COVID-19.
This section outlines respective national strategies, policies, and the regulatory environment in place.
Included is SWOT analyze comparing Estonian manufacturing capabilities with the Japanese market, along with gap analyses for Estonian manufacturing export opportunities, accompanied by recommendations and a list of market entry consultancies. Also provided is a five-year market entry roadmap model for convenient planning.
Focus Sector: Manufacturing
The electronics sector in Japan is mature, dominated by globally recognized players forming cross-industry alliances. However, the sector is undergoing significant shifts and strategies to remain competitive and innovative as it faces various gaps and challenges. The market trend is diversification of offerings and moving beyond traditional sectors like electronic components and AV equipment to focus on more lucrative areas such as solution services, communications equipment, semiconductors, and information terminals. The growing need for digitalization and innovation creates new opportunities.
This section outlines respective national strategies, policies, and the regulatory environment in place.
Included is SWOT analyze comparing Estonian electronics capabilities with the Japanese market, along with gap analyses for Estonian electronic export opportunities, accompanied by recommendations and a list of market entry consultancies. Also provided is a five-year market entry roadmap model for convenient planning.
Focus Sector: Electronics
Japan faces challenges in meeting domestic timber demands due to its terrain. Despite having 70% of the country covered in wood, nearly half of Japan's lumber is imported from North America and Europe. Japan aims for carbon neutrality by 2050, focusing on sustainable forest management. Short-term strategies capitalize on woodworking traditions and bio-friendly construction methods to expand the market. The government has emphasized new technologies in forestry since 2014, including mechanization and ICTs to increase productivity and reduce production costs. The timber industry is competitive and price-sensitive. However, the need for sustainable practices and technological advancements creates opportunities for Estonian companies to expand into the Japanese market.
This chapter outlines respective national strategies, policies, and the regulatory environment in place.
Included is SWOT analyze comparing Estonian´s modular houses and wooden products sector´s capabilities with the Japanese market, along with gap analyses for Estonian wood industry export opportunities, accompanied by recommendations and a list of market entry consultancies. Also provided is a five-year market entry roadmap model for convenient planning.
Focus Sector: Modular Houses and Wooden Products
Japanese market has growing interest in new and unique products like functional food ingredients, health foods, and organic snacks and beverages driven by changing consumer tastes towards healthier options. The sector is dominated by smaller store chains and with few major players.
Key opportunities for Estonia lie in its strengths in organic products and health food ingredients, aligning well with the evolving trends in the Japanese market.
This chapter outlines respective national strategies, policies, and the regulatory environment in place.
Included is SWOT analyze comparing Estonian´s food and beverage industry capabilities with the Japanese market, along with gap analyses for Estonian food and beverage industry export opportunities, accompanied by recommendations and a list of market entry consultancies. Also provided is a five-year market entry roadmap model for convenient planning.
Focus Sector: Food and Beverage
This chapter includes key recommendations for the Estonian Government to build strong relationships with Japanese organizations. These recommendations include adding dedicated resources in Japan, promoting Estonia as a hub for innovation and digital advancements, and positioning Estonia as a value-for-money option. The plan involves leveraging Estonia's strengths in R&D, establishing international innovation hubs in Japan, and monitoring regulatory frameworks for seamless market entry.
Trade Strategy
The FDI strategy outlines increasing opportunities for investment from Japan, particularly in key sectors like manufacturing, AI, IoT, robotics, and sustainability. To facilitate this, the strategy recommends dedicated additional resources in Japan, aligning with Japanese investment trends, and enhancing support for Estonian start-ups.
Additionally, the strategy emphasizes leveraging Estonia's digital strengths, establishing KPIs for qualifying FDI leads, strengthening relationships with Japanese companies, conducting FDI missions, and participating in relevant industry events for networking. The strategy aims to promote Estonia's business-friendly environment, digital society, start-up ecosystem, and connectivity infrastructure to attract Japanese investors and align with Estonia's economic development goals.
Estonian start-up companies can find a list of Japanese venture capital funds (VC) and corporate venture capital funds (CVC), some of them with a presence in Europe. Also provided is a five-year roadmap model for strategy and tactical planning.
FDI Strategy
Japan Export Strategy is funded by the European Union – NextGenerationEU
Last updated: 30.11.2024
