Japan over the past few years has been making news about the Japanese going extinct. This stems from that there are fewer Japanese babies being born than Japanese dying, thus the popular conclusion is the Japanese will gradually die off. It is true, Japan’s population has been shrinking over the past few decades. Indeed, the Japanese government has been pushing for more couples to have children. For many around the world, this leads them to conclude that the Japanese are imminently dying off and therefore Japan is not worth giving attention to from a business standpoint. But most, particularly eagerly hopefuls from the West still bitter from World War 2, overlook other factors that suggests that it will be at least 1000 years before Japan’s population shrinks to zero. First, Japan has among the highest life expectancy rates in the world (and the highest female life expectancy in the world). Further, contrary to normal trends of shrinking populations, Japan’s GDP has experienced growth (granted not always consecutively by quarters), due to advances in increasing productivity. Increased productivity often translates directly into higher household incomes. This is possible because Japan is a world leader in robotics and robots and automation are keys to increasing work productivity (trivia: half of the world’s industrial robots are in Japan). Japan is expected to be the leader in both industrial and household robotics for decades to come, and indeed an new trend in consumer robotics are robots to assist the elderly. Speaking of which, aside from having the highest life expectancies, Japanese elderly tend to be healthier and more active, even still productive members of Japanese society (as with most Asian cultures, Japan shows high respect and reverence towards the elderly).
Aside from being a highly technically advanced nation, Japan is still very strong economically. Until recently, Japan had the second highest GDP in the world, and has a respectably high per capita income. This makes Japan attractive market for exports and particularly a lucrative one too. But, Japan is not an easy market to break into. There can be both tariff and non-tariff barriers for exporters to Japan. Researching Japanese consumer markets prior to beginning exports is important. Japanese consumers do have tastes in foreign imports, especially luxury goods, and there is a sizable middle class with reasonable amounts of disposable incomes. Even normal consumer goods can be sold in Japan if marketed correctly. Setting up operations in Japan is a bit more difficult. Japan doesn’t encourage immigration, in fact has resisted relaxing its very tight immigration standards in spite of the declining population. There’s also concern about Japan’s national debt which is more than double its GDP, especially when taken with Japan’s lackluster growth rates. Between and increasing elderly population and shrinking workforce, the tax burden percentage on the average Japanese household is projected to continue to increase, from an already moderately high of 28%.
Again, none of suggests Japan is doomed at all. It is still a robust consumer and B2B market. Japan still has significant amount of time to turn around its aging and shrinking population, though it really needs to do more to address that issue now. Japan has risen through difficult times and survived hardship, the current prime minister, Shinzo Abe, is very mindful of the current crisis facing Japan and has proposed and initiated plans to jump start growth (the so called “abenomics”). Whether his proposals will help spark growth remains to be seen, but for now, even now, Japan’s marketplace should not be ignored.