At the beginning of the New Year in 2024, the Japanese economy saw a strong rebound, with the Nikkei breaking through its 34-year all-time high. Japan, began to attract more and more people’s attention.
Mr. Zhou, the chief consultant of Sinnvoll Global Strategy, summarized the factors of Japan’s economic re-takeoff as follows:
The macro environment is indeed beginning to favor Japan. The current clear strategic competitive relationship between the U.S. and China and the delicate relationship between the EU and China have actually boosted Japan’s attractiveness, especially for investments in sensitive industries, such as chips, AI, and new energy vehicles. In addition, the re-construction of the regional industrial chain has also allowed Japan to enjoy certain industrial dividends.
From the perspective of Japan’s internal environment, the concept of “reform for growth” has been deeply rooted in people’s minds and has begun to bear fruit. The Kishida administration is still sparing no effort to promote various reforms. For example, in order to improve the attractiveness of Japan’s securities market, the Japanese government has begun to improve the investment environment for shareholders.
So where is Japan’s industrial growth?
Over the past three decades, although Japan has lost out to China and the United States in many technological competitions, it has retained considerable strength in many industries.
In addition, Japan’s materials industry, electrical equipment, precision instruments and electronic parts industry is still very promising industries.
It is worth mentioning that, with the formation of the U.S. and China’s strategic competition pattern, many Japanese companies began to implement the “relocation” strategy. Because of the sensitive type, semiconductor industry saw the first response. The relocation will inevitably lead to the redevelopment of the local industry, but due to the lack of new investors, the industry’s upward momentum is clearly insufficient.
Japan has indeed become a capital hedge harbor area for global investors, and it will have certain impact on the global strategies of Chinese companies riding on the globalization trend.
First of all, looking around Asia, Japan is one of the few mature markets enjoy all of the three conditions –”strong purchasing power”, “larger industry and market volume” and “good business environment” – at the same time.
Secondly, compared to consumers in the US and Europe, Japanese consumers generally have a “de-nationalized”, rational consumer mindset. Japanese consumers’ preference for Chinese products has not changed much after the epidemic and the Russia-Ukraine war, and for most Japanese consumers, quality is the core consideration rather than national factors. Looking back at the past few years, not only have brands such as Haier, Hisense and Lenovo gained a foothold in Japan, but also new brands such as MIXUE, Lemon8 (under Byte), and Florasis have also managed to break into their own space in Japan.
Again, the commonalities between Chinese and Japanese youth consumer groups are increasing. For example, they both like to learn about the latest trends through social media or lifestyle apps, and they are used to searching for “online stores” through these platforms and constantly make their shopping decisions via exploring or after reviewing the online comments. Therefore, many of China’s models can be effectively replicated in Japan when it comes to marketing strategies.
Finally, with the depreciation of the yen and the monetary policy, the cost of doing business in Japan is lowered down, especially compared with the more serious inflation in Western Europe or the United States.
From the above points, it can be concluded that a new period of change has taken place in the Japanese economy, and a time window for globalization landing has just appeared for Chinese enterprises. If not to consider the extreme conditions of political uncertainty, Japan has become an important option for Chinese enterprises to enter for the high-end market.