Why should you do business in Japan?
With this caveat in mind, lets see why you would want to even be in Japan. It's true that Japan is now in an economic slump. The high-flying days of asset inflation in Japan's stock and real estate markets are over, and banks and securities companies are reeling from the effects of the crash. But even with this economic slump, Japan is still an economic powerhouse that represents a huge market for Americans.
For one, Japan still has the world's second largest economy with a GDP of over $3 trillion. This makes for a per capita GDP figure of over $27,000 - higher than the United States.
Japan also has a large population of 123 million, one third of whom are concentrated in the Tokyo area. Although the EC market is potentially larger, it looks like a babble of languages, tax regulations and laws when compared with Japan.
These 123 million Japanese consumers represent a huge market for American goods. Japan imports over $48 billion in US goods each year, and is the second largest export market for the US after Canada. Thus, Japan actually is a great market for US firms.
But because Japan exports more than it imports, it gets a lot of bad press. Although there are many reasons for this imbalance, the biggest one simply may be the difference in savings rates between Japan and America. Until some combination of increased American saving and increased Japanese spending occurs, this trade imbalance will continue.
But that still doesn't mean that Japan isn't now a large and profitable market for Americans. For all the talk about how hard it is for "outsiders" to make it , foreigners make more money in Japan than Japanese do. For example, in 1990 foreign firms had operating profits as a percentage of sales of 5.7%, compared with 3% for Japanese firms, and this ratio has been fairly consistent for a number of years.