Japan is looking positive.
‘There is a surge in consumption; people are going out there, spending their money and living in the moment.’
‘We're seeing an uptick across categories from automobiles to CPG (consumer packaged goods).’
‘We're launching more stores for brands than ever before.’
‘In the long run, Japan’s domestic market is becoming more interesting. We are thinking about what companies would be possible to acquire and what possibilities are there for investments. But it's very much tied into the Japanese yen and the political situation. It’s hard to manoeuvre.’
Japanese and foreign firms alike rely on their global networks to maintain and grow their business and profits in Japan. However, small and medium-sized enterprises form the backbone of Japan’s economy.
SMEs employ around 70% of the total workforce in Japan and contribute about 53% of Japan's total added value (GDP).
Rising wages and higher costs of capital are putting Japan’s SMEs under a lot of pressure.
‘Wages of part-time workers are going up at 2 ½ to 3½% per annum, which is unheard of. Japan has a chronic labour shortage.’
‘The cost of capital has risen from zero to about 1%. One per cent doesn’t sound like much, but when you have a marginal business and suddenly have to pay for something previously free, you come under a lot of pressure.’
As a result, foreign firms may have an opening to break the tight customer-supplier relationships in Japan.
‘The traditional supplier-customer relationship was hard to break into in Japan. However, smaller companies in traditional relationships won't be able to sustain those relationships with their rising labour and capital costs. It's a good time for foreign firms to come along and say, “We've got a solution.” It gives you a way to get in.’
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