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January 21, 2013

Mass. Businesses: Don't Overlook Japan


Conventional wisdom is that China is the United States' key business partner in Asia. Yet, Japan remains a critical destination for Massachusetts goods and services, as well as an important investor and employer in the commonwealth. One sometimes hears of a phenomenon called "Japan passing," meaning that the Japanese feel the U.S. and Europe "pass over" Japan and focus on China for new trade and business opportunities. However, Massachusetts has a decades-long, strong trade relationship with Japan, one of the top five export destinations for Bay State products.

Any Massachusetts business thinking about expanding globally would be wise to consider Japan. While Massachusetts companies already enjoy strong relationships with Japan, there's room for growth given that Japan has the world's third largest economy and a population of 125 million. Its workforce is well-educated and technologically savvy. Industry sectors in this state that are a particularly good fit with Japan include manufacturing equipment, medical devices, biotechnology and scientific instruments. Japanese consumers value precision and quality, hallmarks of Massachusetts-made products.

Massachusetts companies have had success doing business with Japan using several different business models. Most common is the distributor model, though at least one Central Massachusetts firm has used the reseller model effectively. Some companies have established direct sales offices in Japan.

In recent years, Japanese businesses have invested in Bay State companies of all sizes, particularly in sectors such as pharmaceuticals, life sciences, technology and manufacturing. Japanese owners tend to be hands off with their investment, using it as a strategy to gain a foothold in the U.S. market, not drive cost savings.

Face-to-face meetings between Massachusetts executives and Japanese business partners can help overcome cultural differences and misunderstandings. The advent in 2012 of direct air service between Boston and Tokyo has made business travel easier and cost efficient.

In December, Japan elected a new prime minister, Shinzo Abe, who promised policy changes that would stimulate the economy and bring the country out of recession. Abe already approved approximately $150 billion in infrastructure spending, and the Japanese stock market reacted positively. Recent discussions between Massachusetts trade officials and high-ranking political and economic leaders in Japan confirm strong interest in working collaboratively to increase trade.

Further reforms bear watching, and savvy Massachusetts global executives may identify business opportunities that result from economic stimulus in Japan.


Kristen Rupert is executive director of the International Business Council, part of Associated Industries of Massachusetts.

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