Building and construction to Japan
(Last updated: 19 Aug 2013)
Trends and opportunities
The Japanese building and construction industry has been in a state of decline since 2007, and this is set to continue. The industry generated total revenues of A$238 billion in 2011. The general construction segment generated 60 per cent or A$143.6 billion of total industry revenue (the total revenue of the top 64 companies), the residential construction segment generated 32 per cent or A$75.2 billion (the total revenue of the top 27 companies) and the civil construction segment generated 8 per cent or A$19.2 billion (the total revenue of the top 33 companies).
In April 2009, as part of a stimulus package, the Japanese Government reduced the housing loan tax, which resulted in some growth in the housing sector.
In 2011, the population of Japan reached 127.8 million. Of this, the elderly population (aged 65 and over) came to be the highest figure to date - 29.8 million people (23.3 per cent). This has led to an increase in renovation work to modify homes to accommodate residents’ changing needs.
The March 2011 Tohoku earthquake and tsunami increased new home owner interest in houses with solar power systems, LED lighting, earthquake resistant structures, electric-only usage, fire-resistant and eco-friendly/energy saving measures. Further, Japanese consumers are expressing a strong interest in environmental and safety issues, as well as energy efficient housing.
The fundamentals of Japan’s residential housing market are relatively healthy. The Japanese government plans to increase the residential mortgage tax credit from 2014 through 2018 in order to offset a proposed rise in the consumption tax rate in April 2014.
There are a number of key market factors for Australian suppliers:
- Average construction costs in Japan are relatively high, so there is interest in sourcing high quality products at competitive prices
- 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
- Greater recognition of Australian building material brands is driving an increased interest in Australian suppliers
(Source: Gyokai doko search)
(Note: The currency exchange rate of A$1 = JPY95 was applied)
The potential opportunities for Australian suppliers are:
- Eco/green/environmentally friendly products (excluding recycled products)
- Heat resistance products (eg. paints and insulation)
- Timber products (eg. hardwood decking and fixed length floorings)
- Landscaping materials (eg. used/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 Japanese Ministry of Finance. The individual tariff rates can be found on the Ministry of Finance’s website.
The standards and/or regulations will vary, depending on the application of a product. In some cases, laboratory tests may be required to demonstrate compliance with the regulations.
The most relevant regulations builders refer to are the Japan Industrial Standards, local building codes and the Housing Performance Assessment – which is based on the Quality Assurance Law.
Note: For architectural design and/or construction work in Japan, a partnership or joint venture with a registered Japan-based firm is essential.
Marketing your products and services
In order to understand the market in Japan, it is essential to research standards, trends, pricing and product acceptance. There are six key considerations for entering the building and construction market in Japan:
- Clear information on price, quality and delivery terms
- A focus on building long-term relationships with potential customers, as Japan is a market that places a lot of importance on relationships, especially in the building sector
- Flexibility to meet market requirements
- Demonstrated commitment to customers
- Provide prompt responses to enquiries
- Appoint capable agents and work with them flexibly. Be prepared to modify products to meet local standards.
Trade exhibitions are a good way to gauge market acceptance. To market your product/service effectively, you need to consider the following:
- Brochures and/or flyers in Japanese
- Alliances with manufacturers
- A reliable and well-connected distributor
Distribution channels in Japan often follow a pattern of the exporter selling to an importer (distributor), who then sells directly to the building/construction company, contracted distribution agents and end users. In some cases, the building/construction company imports the building materials for their own use.
Links and industry contacts
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
Please note: this list of websites and resources is not definitive. Inclusion in this list does not imply endorsement by Austrade. The information provided is a guide only.
The Australian Trade Commission – Austrade – contributes to Australia's economic prosperity by helping Australian businesses, education institutions, tourism operators, governments and citizens as they:
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Austrade provides information and advice that can help you reduce the time, cost and risk of exporting. We also administer the Export Market Development Grant Scheme and offer a range of services to Australian exporters in growth and emerging markets.
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