The recent victory of the Liberal Democratic Party in Japan’s lower house elections means Shinzo Abe will become one of the longest serving prime ministers in Japan’s postwar history. It is certain that ‘Abenomics’, the economic doctrine of the Abe Government, is set to continue.
Despite media debate over the long-term benefits of Abenomics and its economic reform effectiveness, it is hard to refute the evidence that Japan’s economy is on the move:
What does this mean for Australia?
With limited market growth in Japan, Japanese companies are looking to diversity their investments. Japanese investment in Australia has quadrupled in the last 10 years. The country’s cumulative investment into Australia now reaches US$91 billion – they’re our second largest investor after the US and ahead of the UK. Japan also remains our second largest export market – 2016 saw export sales exceed A$38 billion and two-way trade jump to A$61 billion.
The Japan-Australia economic relationship continues to be an interdependent powerhouse for both economies. Japan’s interest in mergers and acquisitions, particularly in the services sector, has shown strong growth in Australia over the last three years. We have seen a diverse range of acquisitions, including:
The last 60 years has seen Japan’s familiarity with the Australian market grow. Japanese investors are attracted to Australia’s stable transparent institutions, well-developed regulatory frameworks and openness to foreign investment. This presents a significant opportunity for Australia if we can get post-merger integration right.
Two recently released reports by Austrade and PwC Australia provide insights to assist with unlocking Japan’s potential.
To celebrate the significant and developing relationship between Australia and Japan, and mark the anniversary of the 1957 Australia-Japan Agreement on Commerce, Austrade released an investment report, Japanese Investment in Australia – a trusted partnership. Outlining the history, importance and enduring contribution to Australia’s economic prosperity, the report charts major investments and reinvestments in traditional sectors such as minerals, energy and agribusiness. It also highlights growth opportunities in medtech, services and renewable energy sectors.
PwC Australia also released a report, Unlocking Japan’s Potential, examining post-merger integration and ways to extract greater value from these increasingly common transactions. Interviews with CEOs of leading Japanese multinational companies have helped PwC pinpoint some of the biggest cultural challenges relating to either acquiring or operating subsidiaries abroad.
For Austrade’s report visit: austrade.gov.au/japaneseinvestment
For PwC Australia’s report visit: pwc.com.au/publications/pdf/unlocking-japans-potential.pdf
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© 2017 - Thu Oct 18 01:28:57 UTC 2018 PwC. All rights reserved. PwC refers to the PwC network and/or one or more of its member firms, each of which is a separate legal entity. Please see www.pwc.com/structure for further details. Liability limited by a scheme approved under Professional Standards Legislation.