(Last updated: 24 Nov 2011)

Trends and opportunities

The market

The Japanese building and construction industry has been in a state of decline since 2006, and this is set to continue to decline over the forecast period. The Japanese building and construction industry generated total revenues of $299 billion in 2009, representing a decrease of two per cent on the previous year’s value.

The general construction company segment represents 72 per cent of the $299 billion, or $216 billion (the total revenue of the Top 67 companies), and the remaining 18 per cent, or $83 billion, is the housing construction company segment (the total revenue of the Top 31 companies).

(Data sourced from Gyokai doko search)

(Note: The currency exchange rate of AUD1 = JPY80 was applied)

The graph above shows that the building/housing and construction industries gradually grew until 2007, remained at the same level for two years, but has gradually been decreasing since.

In a market where the population is decreasing, it is clear that the major factors contributing to this decline are a reduction in the number of new residential projects and a decrease in new civil construction works, with both factors being exacerbated by the global economic crisis.

While the housing industry is still suffering from the backlash, the Tohoku earthquake in March 2011 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 housing as well.

In April 2009, as part of a stimulus package, the Japanese Government reduced the housing loan tax rate to favour housing, which performs well in terms of energy saving, earthquake resistance and barrier free properties, resulting in some growth in the housing sector.

There are a number of key market factors that will help improve the prospects for Australian suppliers:

• Innovative products to help reduce construction times are in demand, as construction times for up-market, hi-tech buildings in Japan are usually twice that of other advanced countries.
• Less expensive, high quality imports are of considerable interest as average construction costs in Japan are relatively high.
• Greater recognition of Australian building material brands is driving an increasing interest in Australian suppliers.

Opportunities

The potential opportunities for Australian suppliers are:

• Eco-related products
• Heat resistance paints
• Insulation (glass wool must have JIS) 
• Timber products (eg. sleepers, fixed length floorings) 
• Landscaping materials (eg. 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. The individual tariff rates can be found on the Ministry’s website.

Industry standards

Depending on the applications, the standards and/or regulations will vary, and in some cases laboratory tests to demonstrate proof of a product’s performance to comply with the regulations may be required, while in other cases, no standards apply.

The Japan Industrial Standards, the Housing Performance Assessment based on the Quality Assurance Law and local building codes are the most relevant regulations the builders refer to.

Marketing your products and services

There are five main considerations for entering the building and construction market in Japan:

• Research the standards, pricing, distribution channels and product acceptance
• Have clear price and quality advantages over domestic competition
• Focus on building long-term relationships with potential customers as Japan is a relationship-based market, especially in the building sector
• Demonstrate commitment to your customers
• 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 you need to consider:

• Producing brochures/flyers in Japanese
• Being flexible to meet market requirement
• Examining alliances with manufacturers
• Providing prompt responses to enquiries
• Having a regular presence in-market to support your agent

Distribution channels

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

Building-related resources

The Building Center of Japan – www.bcj.or.jp/en/index.html
Institute of International Harmonization for Building and Housing – www.iibh.org/index_e.htm
Japan Housing and Wood Technology Center – www.howtec.or.jp/
The Ministry of Land Infrastructure, Transport and Tourism – www.mlit.go.jp/en/index.html

Contact details

The Australian Trade Commission – Austrade – is the Australian Government’s trade and investment development agency.

Through Austrade’s network of offices in over 50 countries, we assist Australian companies to succeed in international business, attract productive foreign direct investment into Australia and promote Australia's education sector internationally.

For more information on how Austrade can assist you, contact us on:

Australia ph: 13 28 78 | Email: info@austrade.gov.au

A list of Austrade offices (in alphabetical order of country) is also available.