Japan
ASIA’S LEADING POST-PANDEMIC ECONOMY
If 2023 marked Japan’s breakout, 2024 could herald the beginning of a decadelong ascent as Asia’s premier investment destination. Clear indicators abound, notably the Nikkei index’s historic surge beyond its late 1980s peak, surpassing 40,000 for the first time in history, alongside a significant rise in wages at major firms—the highest percentage increase seen in 33 years. Equally significant, albeit less apparent, is the 23% discount Japanese stocks offer compared to their US counterparts as the Nikkei index reached 40,000. Additionally, the minimum investment required to trade Japanese blue chips is now approximately oneseventh of what was needed during the Nikkei index’s previous peak. These indicators collectively affirm Japan’s ongoing economic resurgence with promising prospects ahead.
Speaking at the Goldman Sachs Global Macro Conference in January, Prime Minister Fumio Kishida emphasized the significance of investing in Japan in 2024: “Now Japan has a golden opportunity to completely overcome low economic growth and a deflationary environment that has persisted for a quarter of a century. We will demonstrate to all of you Japan’s transition to a new economic stage by mobilizing all policy tools.” Kishida proceeded to outline retail investment, corporate governance reforms, and Japan’s asset management industry as key focus areas. More recently, he has also hinted at plans to introduce “unprecedented tax incentives and support measures for capital investment” to lower barriers to entry.
For businesses, Japan’s robust talent pool, high productivity in technology-related sectors, and advanced manufacturing capabilities present an unparalleled opportunity in Asia. Furthermore, Japan’s regulatory framework offers a variety of pre-existing avenues for exploration. These include the Regulatory Sandbox, established in 2018 to expedite cross-sector innovation and help entrepreneurs test products in a live market environment. Additionally, the Digital Agency fosters public-private collaboration and facilitates digital transformation (DX), propelling companies into emerging 4.0 verticals.
The semiconductor industry stands out as a key beneficiary of Japan’s economic resurgence, with the government striving to position it as a global leader in chip manufacturing. Notably, Japan has already attracted industry giants such as TSMC – the world’s largest chipmaker – and Samsung Electronics. Takahisa Amemiya, CEO and president of FICT, a leading semiconductor package substrates manufacturer, underscores the government’s enthusiasm: “The government is excited about the semiconductor supply chain’s growth. There are numerous examples, from TSMC establishing a subsidiary in Kumamoto Prefecture and recently announcing plans to open a factory here, to IBM transferring technology to a Hokkaido-based company. All of these initiatives were incentivized by the Government of Japan.”
Another catalyst for dynamism is the government’s ambitious goal of achieving net zero emissions by 2050. Japan has committed JPY 2 trillion over the next decade to finance innovations in renewable energy, energy efficiency, and cleaner sources, while also outlining a roadmap for international collaboration. Additionally, Tokyo and several other major cities have positioned themselves as global hubs where sustainability investors can discover new opportunities within Japan’s cutting-edge environmental technology ecosystem. To enhance the momentum of the green transformation (GX) initiative, the government is introducing Economy Transition Bonds, totaling JPY 20 trillion, marking the world’s inaugural issuance of such bonds.
As the government unites the resurging economy towards its steadfast vision of prosperity, one undeniable truth emerges: Japan stands at a pivotal historic turning point, poised for unprecedented growth and opportunity. With bold initiatives driving innovation and investment across sectors, Japan is primed to lead Asia into a new era of economic prominence.
D.Nagata
CELEBRATING 145 YEARS OF TECHNICAL EXCELLENCE
Japanese craftsmanship is prized for its meticulous attention to detail and unique blend of traditional techniques with cutting-edge technologies. And for good reason: Japanese technicians and associate professionals’ vocational skills were found to be the best in the world, according to the latest Global Talent Competitiveness Index (GCTI).
These proven strengths have established Japan as a prestigious manufacturer of auto parts, with the export market alone valued at around JPY 3.85 trillion, according to Statista. Through continuous innovation and a reputation for reliability, Japanese part exporters have cemented themselves in key markets such as North America.
One such company is D.Nagata, a supplier of high-performance engine and motorcycle engine components to the USA and Europe.
D.Nagata’s history stretches back to 1879, when it began manufacturing bamboo fishing poles. After moving production to Taiwan in the 1970s, the company pivoted to domestic industrial engineering in the 1980s, specialising in R&D for engine-related equipment and components. Most notably, it was one of the first Japanese players to transfer its domestic success to the US market, catering to demand for traditional 2-cycle engine and motorcycle engine technology.
Today, D.Nagata’s product line-up encompasses everything from automotive engine and transmission components – electronic and mechanical – to industrial and agricultural equipment, specialty vehicles, and petrochemical products. D.Nagata also imports defence parts for domestic clients, including the Japanese Ministry of Defence, as part of a highly successful venture run by an all-female team.
By partnering with US firms, D.Nagata and Nagata Technology Chicago have positioned themselves at the cutting edge of the industry. “We have to be doing something different all the time,” explains D.Nagata’s president, Yosuke Nagata. “We’re currently supplying engine components and technologies to US companies; our business is growing.” As part of his relationship-building strategy, Nagata reveals he visited 49 US states; today, the company boasts a nationwide network in the USA. Going forward, Nagata is confident more overseas partnerships will help unlock its full potential. “We’re open to any partnerships abroad, with a focus on finding companies we can trust and who share our philosophy.”
Aside from global partnerships, Nagata credits the dedication of D.Nagata’s talented employees as a defining factor in its success. By encouraging them to think outside the box, D.Nagata can develop unique, customer-orientated products at rapid speed. “We used to be in fishing poles, then we switched to engineering. We’re constantly changing and innovating. Escape from the ordinary – that’s our mission,” says Nagata.
Above all, D.Nagata embodies the Japanese spirit of craftsmanship. More specifically, it represents how companies are reimagining it for the modern, globalised era. For Nagata, the appeal is simple: “You can trust Japanese companies. We’re reliable, and you know what you’re getting.”
Mizuho Leasing
EMPOWERING GLOBAL GROWTH THROUGH STRATEGIC PARTNERSHIPS
Consumer confidence in Japan has shown a notable rebound, evidenced by the Cabinet Office’s official index reaching 38.0 in January 2024. This marks a significant increase from the previous year’s figure of 31.3 and nearly doubles the index of 22.1 recorded in April 2020 during the COVID-19 pandemic.
Anticipated to be a pivotal economic driver this year, domestic spending is poised to fortify Japan’s expansive and progressively international financial services sector. According to McKinsey, banks made a substantial contribution of $180 billion to the economy in 2022. The consultancy suggests that
