{"id":9112,"date":"2023-05-04T07:23:09","date_gmt":"2023-05-04T05:23:09","guid":{"rendered":"https:\/\/eurotext.de\/en\/?p=9112"},"modified":"2024-09-30T08:48:51","modified_gmt":"2024-09-30T06:48:51","slug":"e-commerce-in-japan","status":"publish","type":"post","link":"https:\/\/eurotext.de\/en\/blog\/e-commerce-in-japan\/","title":{"rendered":"E-commerce in Japan"},"content":{"rendered":"

Japan has the third-largest economy in the world, after the USA and China and before Germany<\/a>. The county’s advanced IT infrastructure makes it easy for e-commerce businesses to enter the market, but there are nonetheless challenges when doing business in Japan<\/strong>. In this article, we will discuss what businesses need to keep in mind when expanding to this fascinating country.<\/p>\n

Facts and Figures About the Country of Japan<\/h2>\n

Japan is an island nation<\/strong> made up of over 6,800 islands. It has a total area of nearly 378,000 square kilometers, making it the fourth largest island nation in the world. Although it is only slightly larger than Germany in terms of land mass, Japan’s population is much larger, with over 125.7 million inhabitants<\/strong>. Japan is also very urbanized: 92% of residents live in urban areas<\/strong>.<\/p>\n

All of Japan\u2019s highly populated areas are along the coast, with one-third of the population (over 37 million people) living in and around Tokyo on the central plain (Kanto Plain). The most populous cities are Tokyo<\/b> (9.7 million), Yokohama<\/b> (3.7 million), and Osaka<\/b> (2.7 million).<\/p>\n

Japan is a parliamentary constitutional monarchy. It is divided into 8 regions, which are subdivided into a total of 47 prefectures, including the capital city of Tokyo. Municipalities are responsible for local administration.<\/p>\n

Japan is located in East Asia in the Pacific Ocean. To the north and northwest lie Russia and Korea, with Taiwan and China<\/a> to the south and southwest. It takes around 11 hours to fly from central Europe to Japan, and the time difference is 8 hours<\/strong>. That means that, when it is 10:00 in Berlin, it is 18:00 in Tokyo.<\/p>\n

The Japanese currency is the yen (JPY), which is divided into 100 sen. Over the past 5 years, the exchange rate has varied from around 115 yen to 150 yen per euro<\/strong>.<\/p>\n

Language and Localization<\/h2>\n

Japanese is the official language of Japan and the native language of nearly all Japanese people \u2014 meaning there are approximately 127 million native speakers<\/strong>. There are several different Japanese dialects, but standard Japanese is understood throughout Japan because it is used in media and the educational system.<\/p>\n

To successfully enter the Japanese market, it’s essential that you localize all your consumer-facing texts.<\/strong> Although English is taught in most schools in Japan, many Japanese people have difficulty communicating in English. According to Education First, Japan ranks 80th out of 112 countries in terms of English proficiency<\/strong>. Also, Japanese law requires that all labels and packaging of foreign products must be translated<\/a> into Japanese.<\/p>\n

It is worth noting that Japanese is based on a complex writing system made up of three different alphabets: hiragana, katakana, and kanji<\/strong>. Japanese can be written horizontally from left to right, or vertically from right to left, which is sometimes seen in literature, manga, and formal types of documents.<\/p>\n

Economy, Import and Export<\/h2>\n

Japan is the world’s third-largest economy<\/strong>, with a gross domestic product (GDP) of approximately US$4.9 trillion, with a GDP per capita of US$ 39,304. Its large population makes it a major economic center and popular target market for foreign businesses. Historically, Japan has had a strong industrial sector, and this still accounts for 29.02% of the country\u2019s economy. However, the service sector<\/strong> is currently the most important economic sector, contributing 69.47% to the GDP<\/strong>. Agriculture only contributes 1.04%. Japan’s main trading partners are the United States<\/a> and China. Around 40% of Japanese exports go to these countries. In 2021, goods worth approximately US$ 769 billion were imported into Japan.<\/p>\n

Internet Usage Trends<\/h2>\n

According to data from Statista, there are around 116 million internet users in Japan<\/strong>, making it one of the countries with the highest internet penetration rates.\u00a0 The conditions for e-commerce could hardly be better: the Japanese population is digitally savvy and loves to use the internet on smartphones and mobile devices. On average, Japanese people spent more than 168 minutes online per day<\/strong> in 2020.<\/p>\n

However, although Japanese consumers spend a lot of time online, they are cautious about online shopping. Survey respondents named data security as one of their major worries \u2014 the majority of them would like to see more secure digital shopping channels. Nonetheless, 53% of households with two persons or more made an online purchase in 2021.<\/p>\n

As of September 2021, Google had a market share of over 75%<\/strong> and was the most popular search engine in Japan, followed by Yahoo! with almost 20%.<\/p>\n

Shopping Behavior Trends<\/h2>\n

According a Statista study, 67% of Japanese people aged 30 to 39 used the internet to purchase goods and services<\/strong> in 2021. Entertainment items such as books, CDs and DVDs were most popular. When asked why they prefer shopping online, 52% of Japanese people surveyed in February 2023 said that they appreciate the flexibility that online shopping offers.<\/p>\n

In 2022, the average Japanese household spent 2,650 yen on online food purchases each month, or around 17,000 yen in total each month on e-commerce purchases.<\/p>\n

Online marketplaces offering a wide range of goods and services are particularly popular in Japan. Rakuten Ichiba (41%), Amazon, and Yahoo! Shopping<\/strong> are the top three online marketplaces.<\/p>\n

Many Japanese people still prefer cash<\/strong> as their primary payment method and use it frequently for small everyday purchases \u2014 including online shopping. Here’s how it works: the customer buys something online and prints out their invoice. They then take the invoice to a convenience store (konbini<\/i>) of their choice within the next six days and pay the total in cash. The convenience store forwards the payment to the online shop and the items are shipped to the customer.<\/p>\n

However, it isn\u2019t all cash in Japan: in 2022, 40% of consumers reported using cash less frequently than in the previous year, and 12% of e-commerce purchases were made using digital or mobile wallet payments<\/strong> in 2021. The prepaid cards Suica and Pasmo are also popular, particularly in Tokyo.<\/p>\n

Important Import and Customs Regulations<\/h2>\n

The EU and Japan entered into an Economic Partnership Agreement (EPA)<\/strong> on 1 February 2019, and Japan is also a member of the World Trade Organization (WTO). The EPA means that nearly all EU products are duty-free in Japan<\/strong>, and vice versa. Some dairy products, meats and other agricultural products are still subject to import tariffs, although these are reduced for European exporters. Tariff rate quotas (TRQs) are applicable to many of these items. TRQs are specific volumes of goods that are entitled to preferential tariffs in a given time frame.<\/p>\n

Summary<\/h2>\n

As the third-largest economy in the world, Japan is definitely an interesting target market for digital commerce. And the basic requirements for market entry are fulfilled: an advanced IT infrastructure<\/strong>, technology loving consumers, and nearly-universal internet access make it easy to sell products online<\/strong> here.<\/p>\n

Companies who plan to expand to Japan must ensure that their products can be imported into the country without restrictions, and that all advertising materials, documents, and consumer information must be translated into Japanese. This is not only legally required, but also important because many Japanese people speak only Japanese. Websites should definitely be localized<\/a> for Japanese consumers. However, thanks to the trade agreement between the EU and Japan, European businesses will generally pay little or no import tariffs, which makes it easier to be competitive in the Japanese market<\/strong>. Overall, Japan is an attractive market for European businesses to expand into.<\/p>\n
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Sources<\/h2>\n