1 © copyright 2003 kevin newman – [email protected] investment in japan: realities &...

1 © Copyright 2003 Kevin Newman – [email protected]

Investment in Japan: Realities & Opportunities

Kevin NewmanDecember 11, 2004


Background Eight years in Japan Work with the Japanese Government

– Hokkaido Governor’s Office (Sapporo – ’72 Winter Olympics)– Ministry of Home Affairs (Tokyo)– Mainly responsible for organizing Japan’s local government international

cooperation and exchange programs Graduate education focus on Economic Development

Why Japan? Watched Japan’s economy leap forward with Plaza Accords (’85) – doubling of Yen

strength– Wanted to know ‘Why?’ was Japan such a powerhouse– Same time as the book by James Abegglen – KAISHA – the Jpn Corporation: New

Competitors in World Business Began researching - WAKON YOSAI (Japanese Spirit, Western Things) Developed Senior Thesis at UNC on Japan

– “Business – Gov’t Cooperation – Key to Japan’s Success?” After arriving in Japan, fascinated by degree of Income Equality (low Gini Coefficient )

around Japan


Executive Summary

Investment in Japan: Realities and Opportunities

Opportunities – Fast growing market

Key Success Factors

Barriers

Goals of Partnering and Alliances

Resources for Case Study and Research


Opportunities – USD $16.2 billion Medical Devices Market

“Greying of Japan” Leading OECD countries Top national issue Medical devices 40% imported Nat’l Health Care expenditures

7.1% of GDP & rising Japan 2x spending of other

OECD countries on pharma-ceuticals & drugs – 30%of total

World’s longest life expectancy

– By 2015, 25.2% over 65!

Source: http://www.nikkeibp.co.uk

Assisted Living Market – Fastest growing

• By 2025, 5.2 million people – bed-ridden or in nursing care

• Disabled health products – wheelchairs, medical kits – soaring

• Institutional nursing care services from USD $65.8 billion in 2000 to USD $85.56 in 2010

• UK, German, and Nordic countries well established as foreign providers of health care products


Key Success Factors – Partnering with / Investing in Japan

Who Succeeds? GE Citibank IBM Proctor & Gamble Dupont Microsoft AFLAC Renault, BMW, Mercedes McDonald’s Starbucks Coke 7-11

How Succeed? Understand Market Potential

– Ex. 75,000 dentist – only 10% use dental implants

Advertisement Strategy– Non-traditional avenues – partner

with food products Product Innovation

– Japanese have high willingness-to-pay index for innovation

Language and Culture– Most Successful Companies

become “Japanese”


Who’s already there – Since 2002 ?

Medical Care IndustryAlcon Japan Ltd. Switzerland 2003.12Fresenius Medical Care Japan K.K. Germany 2003.12 Nippon Hexal Corporation Germany 2003.12 Widex Co., Ltd. Denmark 2003.12 PAREXEL International U.S. 2003.11 KARL STORZ Endoscopy Japan K.K Germany 2003.7 Draeger Medical Japan Germany 2003.5 ELA Medical Inc. France 2003.5 Nobel Biocare Japan Sweden 2003.3 Haemonetics Corporation U.S. 2003.3 Peter Brehm Japan Germany 2003.1 Becton Dickinson U.S. 2002.10


National Health Care

Breakdown of national healthcare expenses

Note :Not including childbirth, health checkups, and other expenses not related to illness or injury

Source :Ministry of Health, Labour and Welfare of Japan


Barriers and Reasons for Failure

Bureaucracy daunting Ministry of Health, Labor and Welfare

– Pharmaceutical and Food Safety Division – Long waits for Applications and large amounts of paperwork– Require individual, case-by-case approvals, not batched like FDA

PMDEC – Pharmaceuticals and Medical Devices Evaluation Center JFMDA – Japan Federation of Medical Devices Associations Antiquated health system – crumbling but protected

Business Practices Rotating Presidents often – bad practice No focus on Supplier / Client relationships – mimic Keiretsu Not committed to localization of product Consumer / Client Education lacking

Concerns IP protection Distribution Agreements International Patent Litigation Who controls product development How protect from consumer lawsuits?


Goals of Partnering

Explore Long-term Japanese Market Opportunities Learn about Domestic Market structure How to select partners for long-term Alliance or greenfield (AFLAC) Demographic Changes in Geriatri-fying of Asia – new needs

– Ultrasound – CT technologies (2006 - $4bl global mkt)

Expand new products and services to 3rd markets China India Entering emerging markets

– Japanese partner has est. distribution networks Global scale for R&D


FDI recognized as key for growth


ACCJ – JETRO best objective

resources


Resources – Case Studies & Research

Case Study Considerations

http://www.investjapan.org

http://www.jetro.go.jp/en/invest/whyjapan/month_2003nov.html

http://economist.com/displaystory.cfm?story_id=2571689

http://strategis.ic.gc.ca/epic/internet/inimr-ri.nsf/en/gr-75328e.html

http://www.mckinsey.com/knowledge/mgi/Japan/cases/healthcare.asp

http://www.nikkeibp.co.uk/pages/info_medandhea.htm

http://www.oecd.org/infobycountry/0,2646,en_2649_37407_1_70531_119684_1_37407,00.html

http://www.atoz.org/oxford.html (dated but informative)

http://www.accj.or.jp/content/advocacy/FDI/content/advocacy/FDI/fdi_casestudies

http://www.findarticles.com/p/articles/mi_m3570/is_n10_v20/ai_20043174

Research Options http://www.searchenginecolossus.com/Japan.html

– Goo Best Domestic Search Engine

– Yahoo! Japan Most powerful namebrand

– Japan.co.jp Best for commercial research


Where to visit

In Tokyo :

Akihabara

Harajuku's Takeshita-dori on a Sunday

Meiji Shrine (next to Takeshita-dori)

Shinjuku Station @ 8am on any weekday morning

Shibuya (anytime)

1 © copyright 2003 kevin newman – [email protected] investment in japan: realities &...

Documents