FDI in Japan

Overview by Globlatrade.net:

FDI in Figures

Despite the increase of FDI since the mid-1990s, Japan continues to have the smallest inflow of foreign investments. The stock of FDI in Japan did not account but for 4% of the GDP at the end of 2009. The flow of FDI had slowed down due to the global economic crisis, and they started to pick up again at a slow rhythm. According to the UNCTAD report on world investment, Japan's potential appeal for foreign investment is very strong compared to the other countries of the world, but its performance in terms of reception of FDI is weak. Of the 141 countries studied for the report, Japan ranked on the 135th place on performance level in 2009.

The main asset of Japan is its position as a leader in matters of high technology, research and development. The potential hindrance to investment are of a linguistic order and business culture. The disaster that hit Japan on March 11, 2011 (the earthquake and the devastating tsunami that followed), as well as environmental and health concerns about the situation of the Fukushima Daiichi Nuclear Plant could slow down foreign investment for a short period. However, Japan remains a key market for investors. In addition, the Japanese economy should be able to finance the reconstruction of the country without too much difficulty thanks to a Surplus in Savings accumulated over recent years.

Foreign Direct Investment 200720082009
FDI Inward Flow (million USD) 22,55024,42611,939
FDI Stock (million USD) 132,851203,372200,141
Performance Index*, Ranking on 141 Economies 134129135
Potential Index**, Ranking on 141 Economies 2725-
Number of Greenfield Investments*** 179200161
FDI Inwards (in % of GFCF****)
FDI Stock (in % of GDP)

Source: UNCTAD

Note: * The UNCTAD Inward FDI Performance Index is Based on a Ratio of the Country's Share in Global FDI Inflows and its Share in Global GDP. ** The UNCTAD Inward FDI Potential Index is Based on 12 Economic and Structural Variables Such as GDP, Foreign Trade, FDI, Infrastructures, Energy Use, R&D, Education, Country Risk. *** Green Field Investments Are a Form of Foreign Direct Investment Where a Parent Company Starts a New Venture in a Foreign Country By Constructing New Operational Facilities From the Ground Up. **** Gross Fixed Capital Formation (GFCF) Measures the Value of Additions to Fixed Assets Purchased By Business, Government and Households Less Disposals of Fixed Assets Sold Off or Scrapped.


FDI Inflows By Countries and Industry

Main Investing Countries 2009, in %
USA 37.5
Netherlands 18.0
Cayman Islands 8.5
France 7.6
Singapore 5.3
United Kingdom 3.5
Germany 3.6
Main Invested Sectors 2009, in %
Financial intermediation 45.0
Manufacturing sector 35.0
Trade and repairs 6.7
Transport, storage and communications 3.4
Real estate 2.1

Source: Japanese Trade and Investment Statistics, JETRO

Form of Company Preferred By Foreign Investors
Kabushiki Kaisha (Public Limited Company)
Form of Establishment Preferred By Foreign Investors
Main Foreign Companies
The JETRO website lists « success stories » of investors
Sources of Statistics
Japanese trade and investment statistics, proposed by JETRO
Japanese statistical Bureau
Cabinet Office

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Why You Should Choose to Invest in Japan

Strong Points
Japan is the world's second economic power. The purchasing power is one of the highest in the world. Technology is modern and innovative. Substantial means are devoted to education and R&D. Accessing the Japanese market gives access to the rest of Asia. The business climate is favorable. The population is ageing, which opens up a new development potential to meet the needs of the older age groups.
Click here for further arguments in favor of investing in Japan.
Weak Points
Over-regulation in Japan continues to restrain economic growth, raise the cost of doing business, restrict competition, slow down the market entry and exit, and slow down investment.
Government Measures to Motivate or Restrict FDI
The government still imposes some restrictions on the penetration of the Japanese economy by foreign investors. Nevertheless, Japan’s Company Law has been re-examined in 2009, which simplified and made access to the national market easier for foreign investors.
Click here for further information about this reform.

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