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Megha Desai Roll No. 10 Div A – Marketing PTMBA - NMIMS

Megha Desai Roll No. 10 Div A – Marketing PTMBA - NMIMS. JAPAN - Opportunity Overview. Second largest economy in the world ! Largest market for U.S. exporters ! Firms always seeking new goods and services ! Consumers very open to imported goods. Basic Facts about Japan.

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Megha Desai Roll No. 10 Div A – Marketing PTMBA - NMIMS

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  1. Megha Desai Roll No. 10 Div A – Marketing PTMBA - NMIMS

  2. JAPAN - Opportunity Overview • Second largest economy in the world ! • Largest market for U.S. exporters ! • Firms always seeking new goods and services ! • Consumers very open to imported goods

  3. Basic Facts about Japan • Population of 126 million, graying… • “Yen” (US$1=120 yen) • Major commercial centers in Tokyo, Osaka, Nagoya • Two international airports – Narita International Airport (NRT) and Kansai international Airport • Climate - Generally temperate, with four distinct seasons • Main Tourist Attractions – The Imperial Palace, Ueno Zoo, Yasukini Shrine, Akihabara (electronic market) amongst others

  4. Source: The World Bank

  5. History - An imperial legacy laced with conflict • Some celebrated warrior clans, popularly known as Samurai, gained recognition, and successive Shoguns or military dictators from these clans ruled in Japan up until the middle of the 19th century • During the first half of the 20th century, Japan embarked upon an ambitious strategy of aggressive militarization and an expansion of its empire. • 1990s - Japan suffered an economic downturn prompted by scandals involving government officials, bankers, and leaders of industry. • 1998 - Japan succumbed to the Asian economic crisis • But slowly, the economy started gathering steam…

  6. Geography • Japan is situated in north eastern Asia between the North Pacific and the Sea of Japan; • The area of Japan is 377,873 sq. kms, nearly equivalent to Germany and Switzerland combined or sightly smaller than California; • Japan consists of four major islands, surrounded by more than 4,000 islands; • 75% of the country's landmass is made up of mountains;

  7. Constitution & Legal System • Japan is a constitutional monarchy where the power of the Emperor is very limited. • Power is held chiefly by the Prime Minister of Japan and other elected members of the Diet, while sovereignty is vested in the Japanese people. • Legislative power is vested in both the government and the two chambers of parliament; the Diet with the House of Representatives and the House of Councillors.

  8. Taxation Structure • The Financial Accounting Standards Foundation (FASF) was established in 2001, and the Accounting Standards Board of Japan (ASBJ) was organized under the auspices of the FASF as an independent, private-sector entity to develop accounting standards • Local governments have their own tax offices, separate from national tax offices to levy and collect local taxes. • Tax Administration System National taxes are levied and collected by the National Tax Agency (NTA), which is a semi-independent organization under the Ministry of Finance. • NTA has one central office, 12 regional national tax bureaus and 524 national tax offices.

  9. Taxation Structure for Foreign Companies • Foreign companies, those are companies, which do not have their head office in Japan, are classified into the following four types for tax purposes. • Only domestic source income of a foreign company is subject to a Japanese corporate tax. No foreign tax credit is allowed for a foreign company. • Foreign company carrying on business through a branch office, factory, or other fixed place of business situated in Japan - Subject to tax on all domestic source income. • Foreign company carrying business through undertaking construction, installation or assembly activities in Japan for longer than one year or supervising such activities undertaken in Japan for longer than one year or an agent in Japan who has habitually exercises, the authority to conclude contracts for or on behalf of a foreign company • Foreign company having no permanent establishment and not carrying on business as stated above but having certain domestic source income such as income from providing personal service in Japan, income from rent for the use of real estate

  10. Maturing Economy • Highly industrialized economy with aging population • Shrinking labor force • Since 1993, slow, negative growth has hurt many major corporations • “Bubble”burst in 1990s…similar to US tech bubble of 2001 • Policies failed to bring back growth • Deflation causing corporations to re- organize, re-think, go out of business

  11. On the brighter side… • Japan has an enormous base of capital—physical, human and financial • Consumers are bargain hunting.. • Consumers are looking for value rather than simply brand…an excellent opportunity for imported goods • Imports are increasing… • Bottomline - The size of the market opportunities in Japan dwarfs any other overseas market, and competitive U.S. companies should be here.

  12. Source: http://www.economywatch.com/world_economy/

  13. Export opportunities • Medical Equipment and Devices • Japan's medical device market is the world's second largest • $18 billion in 2001 with US imports comprising 25% ($4.5 billion) of the total. Expected to almost triple in size by 2025 • Size of market steadily increasing with graying population • By 2025, 25% of Japan will be older than 65 • Pharmaceuticals • Largest international market for American firms ! Drug costs 25% of all med expenditures ! Foreign firm share of Japan's drug market 40% • Demand for drugs to treat: cardiovascular, central nervous system, diabetes, cancer gastrointestinal; antibiotics Challenge: Government caps on prices drive margins down

  14. Automotive Parts & Accessories • $120 billion in parts produced in Japan in 1999 • World's second largest market for automobiles • U.S. auto parts = 35% market share of imports Challenge: Fierce competition, extremely demanding quality and price standards

  15. Mobile & Wireless Market • Japan & Europe are at the cutting edge of mobile, wireless usage • “3G”high-speed mobile technology introduced in Japan 2001 • Mobile Internet app demand strong • 4G research launched • GPS-enabled phone on the market Challenge: competition, localization

  16. Japanese Culture – the most important aspect • Self-Awareness, the Group, and Conformity • One of the most homogenous nations in the world • Marrying a foreigner has always been virtually taboo and, • Some 98.5%of the residents of Japan are ethnic Japanese • Koreans & Chinese are the only two minority groups resident in Japan • Almost all Japanese are strongly aware and proud of their nationality.

  17. Japanese Culture – the most important aspect • There is a major degree of self-absorption and a widespread interest in questions like • “What does being Japanese mean?” • “Why has Japan been so economically successful?” • There is a well-known folk-saying ‘It is the nail that stands up that always gets hammered down’ • You might remember that it is a mistake to try to get a Japanese to act in a way that would make him or her stand out from the crowd. They will often not be able to comply, and if they try to do so, they will feel awkward and resent you for it.

  18. Harmony in group relations is highly prized • There is no strong class system in Japan • Young Japanese sent abroad to study • Social Changes • Outside influences are strong – written language came from China and Buddhist religion from Koree • The Second World War is a touchy subject • Huge generation gap

  19. Art & Culture • Symbolism matters much • Pine Tree = Long life • Bamboo – Constancy & Virtue • Lobster = Old age • Worship nature but also scared of it • Live a lot in the past, so story-telling is very common

  20. Work Culture • Only the Best is good enough • Hard work is regarded normal • Cannot, cannot criticise in a group. Shame is almost suicidal • For women – not the best! • Young Japanese women in white-collar work are generally known as “Office Ladies” and referred to as “OLs”. • Their main function is to be young, decorative, well dressed, and fragrant, in order to brighten up the men’s workday. In the evening they are expected to engage in mindless and frivolous entertainment. • It is assumed that women will marry and leave work by their mid-twenties, after which they are disparagingly referred to as “Christmas cakes”. (In many companies a woman must resign if she marries)

  21. Japanese Brands – Global or Not? • BusinessWeek listed top 100 global brands (2008), out of which only 6 were Japanese brands – Toyota, Sony, Honda, Nintendo, Canon & Panasonic – all in electronics or automobiles! • Japanese companies have adopted one of the three common marketing strategies • Develop home market then move to developed countries - Toyota • Enter market with low-priced products, capture large market share and then move to developed markets • To sell products in developed countries that the home market is not ready to consume – VCRs, sewing machines, etc

  22. Going forward… • Challenges faced by Japanese companies… • Excess debt, excess labour • Aging population • Constant innovation and R& D to keep it the ‘technology economy’ • Controlling brain drain • Globalisation of brands

  23. "Arigatou gozaimasu."

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