Market Entry As one of the world's largest economies, Japan offers a market that is highly lucrative yet difficult to penetrate because of the unique market characteristics and business practices that makes market entry very difficult, even for Japanese companies. Even so, more and more foreign companies are making successful inroads into the market, and with sound market research and long-term sales strategies, many companies are experiencing success and steady sales growth in the Japanese market. With a preference for well-known brands, and a legendary emphasis on quality and attention to detail, entry to the Japanese market requires a determined, dedicated and continuous effort in order to succeed. Once accepted however, a foreign company can expect to become a long-term valued partner for their Japanese agents, and will be rewarded by the equally legendary Japanese costumer loyalty. For food and agricultural products, market entry is made somewhat easier because of Japans low self-sufficiency rate, and subsequent need to import food to feed its population. This makes Japan the world’s largest net importer of food and agricultural products, and for some products groups, such as most of the major grains, Japan is almost entirely dependant on imports. Japan’s self-sufficiency rate varies across products, with a high degree of self-sufficiency for rice, vegetables and dairy product, while almost all soybean and wheat products are imported. For meat and fruit, the self-sufficiency rate varies, and there are therefore good export opportunities, provided that quarantine requirements can be met. Animal feed is another area, in which Japan is highly dependant on imports, and where there is a good export potential.
Traditionally, the Japanese primary sector has been protected from outside and even domestic competition, and as a whole, the domestic agricultural sector is therefore not very competitive, with high production costs, and correspondingly high wholesale prices for food and agricultural products. As a result, imported foods are generally quite price competitive in the Japanese marked, as the retail price of food is also quite high. All up, the Japanese Ministry of Agriculture, Forestry and Fishery (MAFF) estimates that the Japanese food market is worth approximately 25 trillion yen (DKK 1.4 trillion), with 60 percent of the Japanese calorie intake coming from imported foods. For more details on the Japanese food market, please follow this link to the Japan Foreign Trade Council: http://www.jtbf.info/foods_ind1e.html or the following link to the Japanese trade statistics: http://www.customs.go.jp/toukei/info/tsdl_e.htm. For more Danish export statistics, please visit: www.statistikbanken.dk/SITC2R4Y Import Regulations The import of food to Japan is regulated under the ‘Food Sanitation Law’ and the ‘Tariff Law’ but with the competency split between two ministries. This means that matters relating to animal health, veterinary requirements, import of live animals, trade in livestock products and international trade are managed by the Ministry of Agriculture and Fisheries (MAFF), whereas matters relating to food safety and human health are managed by the Ministry of Health, Labour and Welfare (MHLW). Before exporting goods to Japan, it is necessary to apply for and be granted an import permit by the Japanese Customs authorities. This is mostly a routine matter for products already available on the Japanese market but it can be a drawn-out procedure for products that have never before been imported into Japan. For non-complicated matters, the import permit will be issued after the necessary inspection of the goods and after applicable duties and taxes have been paid. For new food products, the Danish exporter or Japanese importer will need to prove that the food products are safe and in compliance with relevant Japanese legislation. For livestock and dairy products, the exporting country will need to apply for and be granted pre-approval of each of the exporting establishments, such as abattoirs, dairies or cold store facilities, from the Japanese authorities before the products can be exported from Denmark. Customs and duties In 2009, the average customs duty to be paid on products imported into Japan was 6.1%, on top of which a 5 % consumption tax must also be paid for all imported products. The duty on individual products varies greatly though, with the highest duty paid on agricultural products for which the average duty rate is 19%, or three times the average level. In addition, some products such as pig meat and butter are further regulated through strict import quotas and safeguard allowances to secure and maintain a minimum fixed price in the domestic Japanese market. Tariffs and quotas The Japanese tariffs and quotas are set out in the WTO agreements. For pig meat, this means that Japan is allowed a special ‘safeguards’ mechanism under which, the gate price can be increased if the quarterly import volume exceeds the rolling average of the past three years by more than 19 percent. This means that the gate price becomes dependant on the total volume of foreign imports, making it difficult to predict future import conditions for the Japanese market. Likewise, the import of rice and butter is managed under the WTO minimum access requirement, with steep rises in duty payments once these quotas have been exceeded. For more information on tariff schedules, please follow the link to Japan Customs: http://www.customs.go.jp/english/tariff/2010/index.htm For more information on import/export procedures for Japan, please visit Japan Customs on: http://www.customs.go.jp/english/exp-imp/index.htm Danish food exports to Japan The Danish food export to Japan is dominated by bulk exports of pig meat, cheese, butter and shrimps for the food processing industry. Over the years, the value of annual Danish food exports to Japan have averaged 4 billion DKK but with some fluctuations from year to year. At the same time, the total Danish exports to Japan have fluctuated between 8 and 10 billion DKK, with a couple of exceptions in early and late 2008. This means that food exports generally account for 40-50 percent of the total Danish exports to Japan, making food one of the single most import Danish export sectors for the Japanese market.
On a sector basis, the export of pig meat accounts for 82.4 percent of the total danish food export to Japan, making pig meat the single most important Danish export commocity within the food sector. This dominance of the pig meat exports is also evident in the graph above, where the dip in total Danish food export throughtout 2009, was largely caused by a slump in pig meat exports, caused by the increased competition from the United States and Mexico.
The Danish export of dairy and fish products account for 6.7 and 5.0 percent of the total Danish food exports to Japan respectively but with the high reliance on fish products in the traditional Japanese diet, and the increasing Japanese fondness for cheese and yoghurt products, there is no reason why this market share shouldn’t increase significantly over the coming years. Trends and new opportunities Danish products are highly appreciated in Japan, and Danish food products in particular, are perceived to be safe and of a very high quality standard by the Japanese consumers. This means, that the Danish embassy in Tokyo is continuing to experience a steady, and even slightly increasing, interest from Japanese importers, looking for new and interesting food products from Denmark, even during the current global economic crisis. At the moment, there is a high demand for new confectionary products, and as evidenced elsewhere on this web site, some of the recently launched new Danish confectionary products have been very well received in the market, which should be an encouragement to others also. With a lower than usual demand for fish products in Europe, many Danish exporters have been looking to the Japanese market in recent months, and as most inquiries have been well received by the would be Japanese importers, it is believed that there are good export opportunities within this sector also, especially for everyday fish such as halibut, herring and mackerel. Danish style yoghurt products are also doing quite well in Japan, and it is believed that there may be a market for other types of Danish dairy products, including speciality cheeses, also. Because of the difficult economic times, Japanese consumers are also increasingly turning to cheaper no-brand alternatives, which could open up new export markets within the Japanese retail sector. One area that may be of interest to Danish exporters is the ready-made frozen food segment, that appears to be gaining stronghold as more and more Japanese eat at home instead of going out. Likewise, the very high prices of fruit and vegetables may present some opportunities for exporters of the frozen varieties of these products. To open up the market for these new product groups, the Embassy is running a year-long ‘honest food’ campaign, aimed at expanding the range of Danish products available in the retail sectors and used in high-end Japanese restaurants, and interested Danish exports are encouraged to contact the Embassy for more information about these activities. Finally, another interesting area to explore is process and agricultural production optimisation, where it is believed that Denmark can offer a range of services that would be of interest to Japan. Danish Food Ambassador The Danish Food Ambassador, Frederik, was born in Jutland, the main island of Denmark, where he grew up on a farm by the seaside, surrounded by animals, the land and his family. After finishing high school, he trained as a farmer but in his heart, he always knew that he wanted to be a chef. After years of working as a steward on transatlantic and pacific flights, he therefore started his chefs training in the spring of 1986 and passed his final exam in 1990. As part of his training, Frederik worked at two of Copenhagen French inspired restaurants ‘Le Mirabelle’ and ‘Le Buro’, gaining the expertise that we are today enjoying here at the Danish Embassy in Tokyo. Following his graduation, Frederik spent a year in the contemporary Nyhavn restaurant ‘Cap Horn’, before embarking on a working trip around Mediterranean Europe. This gave Frederik the inspiration and experience needed to join the ‘Krasnapolsky’ team, the team behind the new posh avant-garde cafés and nightclubs opening up in Copenhagen in the 90’ties. Here, Frederik was part of the group of people that introduced the Café culture to Copenhagen, and in the following six years, Frederik became involved in several other restaurants and nightclubs throughout Copenhagen also. In 1997, Frederik opened his own restaurant ‘Restaurant F’ that quickly made headlines and became a ‘hot spot’ on the local Copenhagen dining scene. Around the same time however, Frederik was invited to assist during an official Royal visit to Brazil, and soon after, he found himself working as a chef at the Danish Embassy here in Tokyo on a temporary 6-month assignment. Somehow Frederik kept postponing the return to Denmark though, and after two years at the Danish Embassy in Tokyo, he accepted a job at the Swedish Embassy, where he stayed for seven years, until returning to the Danish Embassy in 2008. Back at the Danish Embassy, Frederiks role has been extended to being the ‘Food Ambassador’ or ‘Chef for Denmark’ also, which is a job with many facets. As a representative of Danish food culture, Frederik always strives to present Danish food and the Danish food products available here in Japan in the best way possible when preparing official dinners or reception parties but that is not all. To further promote Danish food culture and products, Frederik also has a number of assignments outside the Embassy, including regularly preparing Danish inspired menus for a well-known Japanese hotel chain, just as Frederik has prepared numerous special themed feasts such as traditional Danish Christmas and Midsummer dinners in and around Tokyo. With his long working experience in both Japan, Frederik is fluent in Japanese and has a great insight into both the Danish and the Japanese food cultures, and draws on this knowledge when preparing food for the various Embassy events. If this sounds exciting, your company can book an event at the Ambassador’s residence, where Frederik will welcome the opportunity to help promote the interests of our business partners and endevaour to prepare an unforgettable dining experience suitable for the occasion.