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EU-Japan Trade: Your opportunity for growth?

28 Aug 2017
After years of stagnation, there is finally progress in the trade treaty between Europe and Japan. Once implemented, exporting to and importing from Japan will become easier. The prognosis is that the export of goods and services to Japan will increase by 24%. The agreement also removes the biggest part of duties paid by European businesses, resulting in a total saving of €1 billion per year.

In this blog post, I’ll explain the details of the EU-Japan Economic Partnership Agreement. Then, I’ll discuss the four steps for making your business ready to enter the Japanese market.

Details of the Agreement

The EU-Japan Economic Partnership Agreement makes buying and selling goods and services from Japan to Europe and from Europe to Japan easier. The treaty will also open up different markets. Let’s discuss some details from the Agreement.

Import tariffs

Some import tariffs will be removed. This has significant implications for the agriculture sector (with tariffs up till 40%) as it will reduce the barriers to export products like cheese, wine, and pork. It is estimated that the export of processed food will increase by 180%.

Approval procedures

Approval procedures for export to Japan will be aligned with the proceedings in Europe. If selling a product in Europe is authorised, selling it in Japan is automatically approved as well. Moreover, approval procedures for importing products from Japan will be made easier. This makes it more appealing to launch new products in Japan.

Movement of people

There will be free movement of individuals for work purposes. This simplifies setting up a business in Japan, since current employees can start it up locally. Although the movement of people will not be as free as within Europe, it is still a huge step forward.

4 step preparation

The Economic Partnership Agreement between Europe and Japan leads to several possibilities. But before you jump in, make sure you investigate its potential thoroughly. Moreover, double check if your business is ready for entering this new market by following the next steps:

1. Develop a commercial proposition

In the first step, set up your monetization strategy. Investigate which supply channels you want to use for reaching your ideal customers. If you encounter bottle necks, what are the alternatives? Also, think about which service you need to offer to be attractive to potential clients.

2. Set up local distribution

After developing your commercial proposition, set up the distribution. The main question is how you’re going to put the commercial plan into practice. Consider these options:

  • Set up your own organisation (allows full control, but you should integrate sufficient local knowledge/expertise)
  • Contract a distributor (can be a good first step, provided it keeps the option of own organisation open)
  • Hire an agency (if you want to minimise the hassle and involvement, and don’t really care about the commercial proposition other than revenue)

3. Make sure you oblige with the necessary legal requirements

Although some regulations are smoothed out, you still need to make sure to dot the i's and cross the t's. Make sure you understand what legal obligations are relevant for your particular situation and what their consequences are.

4. Develop the supply chain

Finally, develop your supply chain to support all this. Key is how you deal with the complete chain of exporting and importing. Think of:

  • Processing orders
  • Managing delivery
  • Handling transportation into Japan
  • Dealing with complaints

Are you ready for Japan?

Here at M3, we have assisted many businesses entering new markets. The Agreement offers new possibilities, but in our opinion, the key for a successful outreach is to be thoroughly prepared. When you’ve accomplished these four steps, your business is ready – on paper – to enter the Japanese market.

Want to know more? You can read the principle agreement here. For more explanation, see the website of the European Commission and this infographic.

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