Corporate Japan looks overseas for growth opportunities


As has been widely reported, the Japanese economy has stagnated in the last 20 years, but what is the cause? International competition, conservative fiscal policies and a declining home market have all contributed to the slump. This last factor has been driven by demographic conditions not seen anywhere else in the world - close to zero immigration, a low birth rate and an aging population.

Taken together these factors means that Japan's population has fallen from a peak of over 128 million to its current level of 126 million - a loss equivalent to the population of Birmingham. If the current trend is maintained it will fall to 95 million by the year 2050.

What does population decline mean for Japanese business?
As a result Japanese corporates, regardless of size or sector, are looking to expand their overseas markets, to compensate for declining revenues at home. This can be achieved either 'organically' - by increasing production of goods and services for overseas customers - or 'inorganically', by acquisition of established overseas businesses and / or by setting up new operations, sometimes in collaboration with overseas partners.

This trend is particularly evident in developing markets. For example, in Africa, Japanese corporates are acutely aware of the head start that China already has. As a result, they are setting up sales and marketing outlets and collaborating with local enterprises, both State and private, to develop their businesses.


What does this mean for professional services providers?
This determination by corporate Japan to invest overseas should result in significant opportunities for advisors in the target market places. This is particularly true in relation to international merger and acquisitions (M&A), as advisors will need to be agile to this change by considering their existing operating models and how they might integrate new operations into their existing corporate structures. 

Some of the corporate investment decisions may of course prove to be unsuccessful, in which case a whole different suite of professional services - turnaround, disposal or even closure - will be required and in high demand going forward.


Are you a UK professional services firm looking to explore opportunities in new territories? How is your existing corporate structure likely to fare in the new environment? Share your thoughts below or schedule a meeting to discuss your situation in confidence.

 

Paul Meitner | Corporate Simplification & Exit specialist
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