29 July 2021

Key points

Japan – The Japanese government has declared a fourth State of Emergency for Tokyo. It commenced on 12 July and will continue until at least 22 August. The Olympics are being held without spectators at venues in Tokyo and its neighbouring prefectures of Saitama, Chiba and Kanagawa. 

Japan –  COVID-19 vaccination rates have risen rapidly in the last month with the addition of workplace vaccination schemes. 30% of the population has now had at least one shot and 19% are fully vaccinated. There are reports of stock shortages at the municipal level, with several local governments suspending new appointments.

Korea – Social distancing rules in Seoul rose to Level 4 (of 4) on 12 July in response to the largest daily number of new cases (1600+) nationwide since the outbreak began. This sees home schooling, limitations to gatherings, and 30% of the workforce encouraged to work from home.  

Market opportunities


Transport & logistics

  • Australian exporters are increasingly notifying their customers in Japan of additional freight surcharges as they are no longer able to absorb freight increases within their current price structures. One client has reported a 46% increase in the freight surcharge for shipments of pet food to Japan, starting from July 2021.    


  • There is considerable interest across corporate Japan in working with overseas partners on clean energy projects to offset domestic emissions. This is driven by Japan’s adoption in April of a 46 per cent emission reduction target by 2030 (over 2013 levels). 

  • Many top tier companies have developed or are working on roadmaps to reach carbon-neutral corporate operations that meet Japan’s 2050 target for net zero emissions. This is creating significant momentum for green businesses.


  • Approximately 1,000 branches of major Japanese banks face planned closure over the next few years, according to research by the Daiwa Research Institute.  This is equivalent to 10% of branches operated by those banks. Japanese banks have accelerated plans to digitalise their banking operations as a result of the COVID-19 pandemic.  

  • Japan’s Ministry of Economy, Trade and Industry (METI) says that one of its key priorities is ensuring the digital transformation of Japanese businesses. Concrete policy proposals will be formulated by year end. The announcement underlies an expected surge in demand for ICT and digital solutions in Japan, especially for tools and software that facilitate remote working.

  • The Japanese Bankers Association is considering opening up access to Japan’s bank transfer system to fintech companies. This would encourage competition and potentially lower transfer fees. Access is currently limited to deposit-taking financial institutions (banks and credit unions) operating under strict regulations. This would create a major opportunity for Australian fintech companies that specialise in money transfers and payments. 

  • The Financial Services Agency is trying to promote a more efficient financial settlement system in Japan, including through the Zengin Data Telecommunications System. Customers of this interbank money-transfer system have traditionally incurred high commission fees.


Japanese universities are developing online programs in collaboration with their overseas partner institutions as an alternative to study-abroad programs. For example, Meiji University confirmed it will recognise credits that its students obtain through online courses delivered by partner institutions. 


  • Competition in the frozen food sector is intensifying as a result of COVID-19. Increased consumption at home has led major supermarkets such as Aeon to refresh their offerings of processed foods and expand their range of healthy products using fresh fish and meat. In 2020, household sales exceeded industrial sales for the first time. 

  • Reduced crop yields combined with disruption in global supply chains have increased prices for the raw materials used in cooking oil, according to the Japan Food Journal. The price of buckwheat has also increased. Manufacturers are passing on price increases to consumers. 

  • Cheese sales have soared. This is due to increased alcohol consumption, which apparently triggers increased demand for cheese.

Food Service 

  • Unmanned, ‘no direct customer contact’ food-service options are taking off. Lockers have been established at set locations for ‘no-contact’ take-away food pick-up after pre-ordering and pre-paying via an app. 
  • Demand for take-out/delivery products such as fast-food is expected to increase. As a result, the demand for certain types of imported beef is expected to change.
    • demand from supermarkets will remain strong, with a gradual increase
    • demand for take-out delivery products is likely to increase at a more rapid pace 
    • demand for food services is expected to return towards more normal levels in the latter half of 2021.


  • Foodtech is gaining interest from investors. Investment by companies developing alternative protein foods rose by 1.6 times year-on-year in September 2020. In recent years, the number of people who avoid eating meat has increased, particularly among the younger generation. The vegan population in Japan has more than doubled in two years. 

  • Retail sales for chilled and frozen meat are on a slight upward trend thanks to an uptake in e-commerce. However, retail is not consuming sufficient volumes to cover the losses in the food service sector. Industry representatives assess that it will take time to clear the huge meat inventory currently sitting in warehouses. 

Food retail & consumption habits

  • Unmanned retail stores are becoming more popular. NTT DoCoMo will enter the unmanned store business and develop food vending machines for this purpose. Seven-Eleven Japan aims to set up unmanned sales offices in 1,000 locations nationwide, including in schools, by the end of 2025.  

  • There is growing demand for ultra-local grocery shopping. For example, Cookpad Mart provides pre-ordered grocery pick at apartment buildings, office blocks and various types of stores. 

  • Eating habits have changed significantly since the onset of COVID-19. Spending on frozen foods, pasta and instant noodles has increased by around 20% year-on-year. Meanwhile, spending on dining out has decreased by 33%. Spending on drinking outside the home has decreased by 65%.


  • Japan's land prices dropped for the first time in six years in 2020 as the coronavirus pandemic impacted demand for hotels and houses. Prior to the pandemic, an influx of foreign tourists and low interest rates had helped boost land prices in big cities and regional areas. Average land prices slipped 0.5% last year, according to the land ministry's survey. 


Food & Agriculture

  • There may be timeline delays and/or potential quality issues arising from the shortage of refrigerated shipping containers and some oversupply at seaports. This could impact initial shipments of Australian table grapes this season.

  • Consumer sales of US beef are increasingly executed via e-commerce sites. According to local sources, this trend will likely persist after current pandemic-related dislocations have ceased.  

Food retail & food service

  • Korea's Sommelier Times recently reported on the rapid and significant growth of Korea's imported wine market during COVID. This growth is driving a micro-level restructure in Korea's wine distribution channels where more buyers are opting to combine the importation and distribution functions. This means new Australian wine exporters looking to enter Korea will be dealing with fewer intermediaries. 

  • Korean conglomerates are exiting family restaurant businesses and focusing more on home meal replacement (HMR) offerings. Demand for HMR and new F&B services models such as shared kitchens will continue to increase.  

  • The Korean government has formed the Global Vaccine Production Hub Task Force. Its objective is to encourage vaccine manufacturing in Korea. Austrade is seeking opportunities for collaboration with the Australian biotech industry in research and development, including mRNA vaccines. 

  • Korean demand for edtech is growing and the Korean Government plans to invest KRW 1.3 trillion (A$1.5 billion) to digitalise Korean education delivery by 2025. So far, content quality, server issues and copyright have been bottlenecks. According to EdTechX Global, Korea’s edtech market was worth KRW 4.0 trillion (A$4.6 billion) in 2019. Korean edtech is projected to grow substantially in the next three years.


  • Under the Green New Deal project action plan, the Korean government pledged to invest KRW 73.4 trillion (A$85.5 billion) in renewable energy infrastructure and eco-friendly businesses. However, there’s a concern that local companies are relatively new to the green industry and may not be competitive against foreign firms. Australian service providers with expertise in offshore wind, electric vehicle (EV) infrastructure and green building could benefit.  

Transport & manufacturing

  • E-scooter and e-bikes are gaining popularity in Korea. The country’s major mobility players – which range from manufacturing (Hyundai Motors), internet (Kakao Mobility) to car-sharing (SoCar) – are investing continuously and conducting trial services to find new business opportunities. Korea’s micro-mobility market is expected to grow 20% on average per year and reach KRW 600 billion won (A$700 million) by 2022.

  • A total of 13 defence acquisition programs are on hold owing to defence budget cuts. These programs are worth KRW 5.6 trillion (A$6.9 billion). If the trend continues, the total number of defence projects on hold is expected to reach 36. Some of the leading programs on hold include P-8A Patrol Aircraft (A$2.3 billion) and B Batch Navy vessels (A$1.5 billion). 

  • Korea is actively looking for investment opportunities that will help the country to diversify input sources for its three key manufacturing industries – semi-conductors, cars and ship-building. The Korean Government’s investment-promotion agency, Invest Korea, is actively helping Korean companies to strengthen the supply security of key materials – especially in the field of mergers and acquisitions.


  • Lotte Group has formally expressed a corporate commitment to making environmental, social and governance (ESG)-oriented business decisions. Lotte will focus on three pillars: 
    • 1) 2040 net zero emission target
    • 2) Establishment of a group-wide ESG Committee
    • 3) Incorporation of ESG-related KPIs in CEO-level performance evaluation.

Australia’s strengths in clean, green and safe industry capabilities make us an ideal business partner for Lotte.

  • COVID 19 lockdowns have triggered huge demand for Korean consulting firms. The root cause is that major conglomerates are restructuring and devising new growth strategies. There is currently a boom in companies requesting digital transformation advice, and ESG (environmental, social, governance) management-related strategic roadmaps.


  • The Mongolian government now requires arrivals from countries where the Delta variant has occurred to undertake 14 days’ quarantine. This change will impact FIFO workers at Rio Tinto’s OT operations.


For more information, please contact: Liz Cox (Tokyo) or Sharon Bignell (Osaka)