It might seem like Australia’s agricultural trade success in Asia is largely all about burgeoning China’s hunger for food and investment, but Japan is back on the radar in a big way.
The world’s third biggest economy – and Australia’s oldest major trading partner in Asia – is again looking offshore for new business growth and investment opportunities, including food and beverage partnerships.
“Japan is Asia’s not-to-be-forgotten gem,” said Austrade commissioner in Tokyo, Julianne Merriman.
“Keep in mind it’s already our second biggest export market, our third biggest trading partner and the fourth biggest overseas investor in Australia.”
As a red meat market alone, Japan’s combined supermarket appetite for our beef ranks just behind Australia’s big buyers, Woolworths and Coles.
The home of high-tech, and a market obsessed with premium quality and safe food, Japan imports almost two thirds of its food needs.
Those needs are diverse and ballooning, partly because the nation is opening up to an explosion of inbound tourist traffic.
Foreign visitor numbers jumped 30pc in the past four years, hitting 24 million in 2016.
They will break the 40m mark within the next four years as Tokyo hosts 2020 Olympics and the 2019 Rugby World Cup.
At the same time an external corporate investment push is targeting overseas opportunities, with significant focus on the Asia-Pacific region.
Japanese direct and passive financial investment totalled about $6.2b in Australia and New Zealand last year and is rising according to ANZ Banking Group’s Japan general manager, Grant Knuckey.
He noted investment last year ranged from beer and dairy giant Kirin buying Byron Bay Brewing, to forestry and property acquisitions by the Sumitomo conglomerate, and on-farm ag technology activity by the likes of technology giants Hitachi and Fujitsu.
“Japanese companies are leaders in their fields and they’re showing strong interest in partnering with agriculture in Australia,” he said.
“The ag tech segment is providing a particularly interesting opportunity for technology companies.”
Conversely, Japanese farmland even represented an opportunity for savvy Australian investors.
Mr Knuckey pointed to NZ kiwifruit giant Zespri International now growing crops in Japan.
Gradually easing impediments to outside ownership or farmland leases were enabling new investors to take over and merge traditional small holdings, potentially revolutionising agriculture’s tiny 1pc contribution to the Japanese economy.
“Japan has a lot of farmers, but they’re basically only supporting themselves,” he said.
Although it remained a heavily regulated market, greater Australian involvement in Japan’s food and beverage sector, particularly via joint ventures, would deliver more than just sophisticated sales options in metropolises like Tokyo (the world’s richest city).
Ms Merriman told a delegation of Australian farmers and ANZ agribusiness bankers last week, the powerful position of many Japanese food and supply chain businesses across Asia meant an Australian supplier’s market foothold and acceptance in Japan automatically translated into new business openings almost everywhere.
“We see big opportunities across Asia if you can get involved with Japanese retailers – it’s a real opportunity to think about because being in Japan opens doors across Asia,” she said.
While Japan did not boast the same sort of “wow factor” market growth which made headlines for China and India, it was a long-term, stable, reliable, corporate powerhouse “and a great place to do business”.
“Given all the activity and talk around China in the past decade or so, many Australians seem to have looked past Japan and possibly overlooked its potential.”
Mr Knuckey acknowledged almost two decades of flat economic growth in Japan had somewhat soured overseas expectations of trade opportunities, but business profits were now breaking records not seen since the 1980s.
“Corporate profits in the non-financial sector grew an average 21pc last year – companies are booming – and a lot of that’s because they are making good money here and overseas.”
Unemployment was just 2.8pc and Tokyo had almost two job vacancies for every job seeker.
Australia’s 2015 free trade agreement with traditionally “protectionist” Japan typified increasingly bullish attitudes to inbound trade, plus outward-looking investment policies and even structural reforms and deregulation within the economy.
Japan had also taken a lead position in supporting the Trans-Pacific Partnership (TPP) and continued to champion the super-sized trading alliance despite the US going cold on the idea.
Victorian Farmers Federation president, David Jochinke, one of the 25-strong delegation, said it was “pretty obvious we should not forget about Japan” in the drive to maximise farm profit opportunities.
“I think the Japanese attitude around joint venture investment in markets and productivity initiatives is also the kind of language producers are more likely to be responsive to,” he said.
“It all boils down to maximising our farm returns.
“If Japanese investors or expanded market options help us do that I think producers will jump at the chance, particularly if our industry skills here are recognised in joint venture arrangements.”
- Andrew Marshall travelled to Japan as a guest of ANZ