Building and construction to Japan
Trends and opportunities
The Japanese building and construction industry generated total revenues of JPY23.5 trillion in 2012. The general construction segment represent 59 per cent of the JPY13.9 trillion, the residential construction segment represent 33 per cent of the JPY 7.68 trillion and the remaining 8 per cent or JPY 1.91 trillion is the civil construction segment.
The Japanese building and construction industry was in a state of decline until 2010 dues to numerous factors, but has since recovered due to reconstruction demand from the 2011 Tohoku earthquake and tsunami and an increase in capital investment in the private sector.
The 2011 Tohoku earthquake and tsunami escalated the interest of new house holders in solar power system, LED lightings, earthquake resistant houses, all-electric houses, fireproof houses and eco-friendly/energy saving houses. Japanese consumers are expressing strong interest in environmental and safety issues as well as the energy efficiency of their homes.
Since 2011, the industry has gradually picked up due to increase of new housing starts and housing equipment generated total revenues of JPY8.23 trillion in 2012.
Since the end of 2012, the more favorable factors of “Abenomics” an increase to public works project investment has pushed the industry up and the 2020 Tokyo Olympics will increase infrastructure development including railways and highways and the economic effect in general construction sector is estimated to JPY 475 billion by Tokyo Metropolitan Government.
The overall population of Japan was 127.3 million in 2013 (Source from: Statistics Bureau, Result of the Population Estimates). The elderly population aged 65 and over became 31.9 million, the highest ever, and the proportion of the elderly in the overall population grew to exceed 25 per cent. This fact has generated more renovation work to provide “barrier free” amenity for the elderly sector.
As part of a stimulus package in 2009, the Japanese Government reduced the housing loan tax rate, leading to strong performance in terms of “barrier free” properties for the elderly, earthquake resistance and energy saving, which resulted in growth in the housing sector.
There are a number of key market factors that will help improve the prospects for Australian suppliers:
- Less expensive and better quality is of considerable interest as average construction costs in Japan are relatively high.
- Innovative products to help reduce construction times are in demand, as construction times for up-market, hi-tech buildings are usually twice that of other advanced countries.
- Greater recognition of Australian building material brands is driving an increasing interest in Australian suppliers.
(All external material has been sourced from: Gyokai Doko Search, General construction Industry, Civil construction, Housing Construction 2013-2014).
The potential opportunities for Australian suppliers are:
- Eco, green and environmentally friendly products, excluding recycled products
- Heat resistance products e.g. paints and Insulation
- Landscaping materials e.g. used and new sleepers, bricks, pavers, stones, rocks, pebbles and decorative concrete
- Renovation products
Tariffs, regulations and customs
Tariffs on imported building materials vary and are controlled by the Ministry of Finance, where individual tariff rates can be found.
Depending on the applications, the standards and/or regulations will vary. Laboratory tests to demonstrate proof of a product’s performance to comply with the regulations may be required or no standards apply.
Japan Industrial Standards, Housing Performance Assessment based on the Quality Assurance Law and local building codes are the most relevant regulations.
Note: Partnership or Joint Venture with a registered Japan based firm is essential to do architectural design and/or construction work.
Marketing your products and services
Researching the standards, trends, pricing and product acceptance are essential to understand the market and six main considerations:
- Have clear information of price, quality and delivery
- Focus on building long-term relationships with potential customers as it is a relationship-based market, especially in the building sector
- Being flexible to meet market requirements
- Demonstrate commitment to your customers
- Providing prompt responses to enquiries
- Appoint capable agents and work with them flexibly, being prepared to modify products if required to meet local standards
Successful marketing of products and services in Japan requires a reliable and well-connected distributor.
Trade exhibitions such are also a good way to gauge market acceptance. To market effectively consider:
- Producing brochures/flyers in Japanese
- Examining alliances with manufacturers
Distribution channels in Japan often follow the pattern of the exporter selling to an importer (distributor), who then sells directly to the builders/construction companies, contracted distribution agents and end users. In some case, the builders/construction companies import for their own use.
Links and industry contacts
The Building Center of Japan
Institute of International Harmonization for Building and Housing
Japan Housing and Wood Technology Center
The Ministry of Land Infrastructure, Transport and Tourism
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