Outline of Opportunities in Japan
An overview of the world’s third-largest economy
With a population of 127 million and imports of over 790 billion Canadian dollars (C$), Japan was the world's third-largest economy in 2016 after the United States and China. Japan is also one of Canada's most important economic and commercial partners. Japan was the fourth-largest importer of agri-food and seafood products in the world ,and Canada’s third-largest market for agri-food and seafood with exports of C$4.2 billion in 2016.
Japan is a long-standing and trusted regional ally, with a large consumer base that is willing to pay high prices for specialty seasonal imports. Japan is a trend setter in many areas and can be a gateway to other markets in Asia. Japanese consumers are renowned for placing enormous importance on consuming food that is both safe and of high-quality, and they perceive Canada as a country that produces food with these characteristics. The Japanese put a high value on long-term business relationships which need to be built and understood, given that there are significant cultural differences with North America when it comes to doing business.
Major sector opportunities in Japan
Discover more information, strengths, opportunities and considerations for Canadian agri-food and seafood. Read our Asian agri-food market intelligence!
How do we select priority sectors?
The sectors were prioritized through a quantitative analysis of the data available in the Global Trade Tracker database for 2016. The first step was to identify the top 100 products, amongst all agri-food and seafood products, ruling out the products which Canada does not have a capacity to produce. Each product was evaluated based on a series of quantitative criteria (i.e. size of market, market growth, Canada’s trade intensity, and tariff reductions), all of which were ranked over ten years of historical trade data. The top 100 products identified through this method represented, in 2016, 58% of Japan’s total imports from the world, and 78% of Canada’s exports to Japan.
Our analysis focused on assessing opportunities from a strengths and challenges perspective:
- Strengths were defined by high performance in large Japanese import sectors, and high growth.
- Challenges were defined by the issues that industry might face while trying to take advantage of market opportunities.
During phase two, the products were further categorized into nineteen super sectors. These have been assessed by Agriculture and Agri-Food Canada (AAFC), Global Affairs Canada, and ten provincial experts through a survey to further determine the opportunities and challenges associated with those product categories, in the Japanese context.
All priority agri-food and seafood products are both imported by Japan and within Canada’s capacity to produce and supply internationally.
Growth through processing
While Japan is an important market for commodity exports, it is one of the few markets of the world where Canada can grow exports of processed food. Japan's processed food imports increased at a compound annual rate of growth of 6.1% between 2013 and 2016. As of 2016, Canada supplied over C$ 1.6 billion processed food products to the Japanese market, which represents Canada’s third-largest market for processed foods. High-performing products include pork, beef, dog and cat food, frozen fries, malt and special crops.
Processed foods provide an income multiplier; exporters can compete in a growth environment that is less sensitive to market share and price point. Margins tend to be higher for processed food products. Exporting these products also tends to be less volatile than commodities would be.
In 2016, processed foods represented 41.6% of all Canadian agri-food and seafood products shipped to Japan.
It is in Canada’s interest to promote differentiated, high-value, unique and niche products. Beyond Canadian maple products, which represented 99.6% of the C$30 million maple products imported by Japan in 2016, exporters have an opportunity to position other products, such as beef, pork and lobster products, as having the same Canadian qualities and sharing the same positive image.
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|Malt (excl. roasted)||6%|
|Prepared or preserved pork, shoulders and cuts||6%|
|Others (beef, frozen lobsters, frozen fruits and nuts, etc.)||28%|
|Source: Global Trade Tracker – November 2017|
Canada has a significant comparative advantage in the production of many high-quality commodities in the grains and oilseed sectors as well as other areas, such as pulses. While the Japanese market has been very responsive to those Canadian products often sold in bulk, there are also great opportunities to extend the value of quality commodities.
With one of the oldest populations in the world, the dietary requirements of Japanese consumers are changing, requiring more innovative products, such as easy to use packaging or smaller portions. Health-related products, such as fortified and functional foods, are also of very high importance.
Furthermore, with a growing number of small and single-person households, growth in the number of professional females, and consumers' increasing time constraints, products offering a high level of convenience, such as ready meals and frozen processed foods are increasing in demand.
As of 2016, Canada was ranked fifth among the supplying countries to the Japanese food market and was responsible for 5.5% of the total C$ 88.7 billion agri-food and seafood market. The Japanese processed food imports valued at C$47 billion in 2016, with Canada representing 4.3% of that total. The United States, China, Thailand, Australia, and France were the largest suppliers of processed foods to Japan in 2016, providing 56% of the market.
|Country||Percent of total processed food imports of Japan||Top three processed food exports to Japan (% share of country's processed food exports)|
|United States||18.8%||Fresh meat of swine (15.0%), fresh beef, boneless (10.3%), fresh edible bovine offal (5.1%)|
|China||15.4%||Prepared meat or offals of fowls (12.8%), soya bean oilcakes (8.4%), prepared fish (6.5%)|
|Thailand||9.3%||Prepared meat or offals of fowls (37.1%), frozen cuts and edible offal of fowls (8.8%), dog or cat food (7.7%)|
|Australia||7.5%||Fresh beef, boneless (32.8%), frozen beef, boneless (21.2%), fresh cheese (6.4%)|
|France||4.5%||Wine of fresh grapes (24.8%), sparkling wine of fresh grapes (24.4%), mineral waters and aerated waters, no added sugar, (7.0%)|
Opportunities for Canada
Canada-Japan relations are underpinned by political, economic and cultural ties which are strenthgtened by common values and mutual positive perceptions. Today, Canada and Japan are partners in numerous international groups and organizations and are strongly committed to ensuring continued economic vitality, cooperative political relations, and development in the Asia-Pacific region.
An Economic Partnership Agreement (EPA) is currently being negotiated between Canada and Japan. Seven rounds of negotiations have taken place to date. Like a Free Trade Agreement (FTA), an EPA would enable Canadian businesses to compete on a more even playing field with local firms and international competitors. Under such an agreement, a range of Canadian goods and services would benefit from the reduction or elimination of tariff and non-tariff barriers to trade, such as quotas or technical barriers. Learn more about the Canada-Japan Economic Partnership Agreement (CJEPA) negotiations.
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Japan has strict import requirements for many products and Canadian exporters are responsible for determining these import conditions by working with their Japan importer. However, the Market Access Secretariat (MAS) of Agriculture and Agri-Food Canada is also available to assist in providing export-related information and support. This service offers a single point of contact with the goal of helping the Canadian food industry and businesses reach international markets.
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