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1 © Copyright 2003 Kevin Newman – [email protected]
Investment in Japan: Realities & Opportunities
Kevin NewmanDecember 11, 2004
2 © Copyright 2003 Kevin Newman – [email protected]
Background Eight years in Japan Work with the Japanese Government
– Hokkaido Governor’s Office (Sapporo – ’72 Winter Olympics)– Ministry of Home Affairs (Tokyo)– Mainly responsible for organizing Japan’s local government international
cooperation and exchange programs Graduate education focus on Economic Development
Why Japan? Watched Japan’s economy leap forward with Plaza Accords (’85) – doubling of Yen
strength– Wanted to know ‘Why?’ was Japan such a powerhouse– Same time as the book by James Abegglen – KAISHA – the Jpn Corporation: New
Competitors in World Business Began researching - WAKON YOSAI (Japanese Spirit, Western Things) Developed Senior Thesis at UNC on Japan
– “Business – Gov’t Cooperation – Key to Japan’s Success?” After arriving in Japan, fascinated by degree of Income Equality (low Gini Coefficient )
around Japan
3 © Copyright 2003 Kevin Newman – [email protected]
Executive Summary
Investment in Japan: Realities and Opportunities
Opportunities – Fast growing market
Key Success Factors
Barriers
Goals of Partnering and Alliances
Resources for Case Study and Research
4 © Copyright 2003 Kevin Newman – [email protected]
Opportunities – USD $16.2 billion Medical Devices Market
“Greying of Japan” Leading OECD countries Top national issue Medical devices 40% imported Nat’l Health Care expenditures
7.1% of GDP & rising Japan 2x spending of other
OECD countries on pharma-ceuticals & drugs – 30%of total
World’s longest life expectancy
– By 2015, 25.2% over 65!
Source: http://www.nikkeibp.co.uk
Assisted Living Market – Fastest growing
• By 2025, 5.2 million people – bed-ridden or in nursing care
• Disabled health products – wheelchairs, medical kits – soaring
• Institutional nursing care services from USD $65.8 billion in 2000 to USD $85.56 in 2010
• UK, German, and Nordic countries well established as foreign providers of health care products
5 © Copyright 2003 Kevin Newman – [email protected]
Key Success Factors – Partnering with / Investing in Japan
Who Succeeds? GE Citibank IBM Proctor & Gamble Dupont Microsoft AFLAC Renault, BMW, Mercedes McDonald’s Starbucks Coke 7-11
How Succeed? Understand Market Potential
– Ex. 75,000 dentist – only 10% use dental implants
Advertisement Strategy– Non-traditional avenues – partner
with food products Product Innovation
– Japanese have high willingness-to-pay index for innovation
Language and Culture– Most Successful Companies
become “Japanese”
6 © Copyright 2003 Kevin Newman – [email protected]
Who’s already there – Since 2002 ?
Medical Care IndustryAlcon Japan Ltd. Switzerland 2003.12Fresenius Medical Care Japan K.K. Germany 2003.12 Nippon Hexal Corporation Germany 2003.12 Widex Co., Ltd. Denmark 2003.12 PAREXEL International U.S. 2003.11 KARL STORZ Endoscopy Japan K.K Germany 2003.7 Draeger Medical Japan Germany 2003.5 ELA Medical Inc. France 2003.5 Nobel Biocare Japan Sweden 2003.3 Haemonetics Corporation U.S. 2003.3 Peter Brehm Japan Germany 2003.1 Becton Dickinson U.S. 2002.10
7 © Copyright 2003 Kevin Newman – [email protected]
National Health Care
Breakdown of national healthcare expenses
Note :Not including childbirth, health checkups, and other expenses not related to illness or injury
Source :Ministry of Health, Labour and Welfare of Japan
8 © Copyright 2003 Kevin Newman – [email protected]
Barriers and Reasons for Failure
Bureaucracy daunting Ministry of Health, Labor and Welfare
– Pharmaceutical and Food Safety Division – Long waits for Applications and large amounts of paperwork– Require individual, case-by-case approvals, not batched like FDA
PMDEC – Pharmaceuticals and Medical Devices Evaluation Center JFMDA – Japan Federation of Medical Devices Associations Antiquated health system – crumbling but protected
Business Practices Rotating Presidents often – bad practice No focus on Supplier / Client relationships – mimic Keiretsu Not committed to localization of product Consumer / Client Education lacking
Concerns IP protection Distribution Agreements International Patent Litigation Who controls product development How protect from consumer lawsuits?
9 © Copyright 2003 Kevin Newman – [email protected]
Goals of Partnering
Explore Long-term Japanese Market Opportunities Learn about Domestic Market structure How to select partners for long-term Alliance or greenfield (AFLAC) Demographic Changes in Geriatri-fying of Asia – new needs
– Ultrasound – CT technologies (2006 - $4bl global mkt)
Expand new products and services to 3rd markets China India Entering emerging markets
– Japanese partner has est. distribution networks Global scale for R&D
10 © Copyright 2003 Kevin Newman – [email protected]
FDI recognized as key for growth
12 © Copyright 2003 Kevin Newman – [email protected]
Resources – Case Studies & Research
Case Study Considerations
http://www.investjapan.org
http://www.jetro.go.jp/en/invest/whyjapan/month_2003nov.html
http://economist.com/displaystory.cfm?story_id=2571689
http://strategis.ic.gc.ca/epic/internet/inimr-ri.nsf/en/gr-75328e.html
http://www.mckinsey.com/knowledge/mgi/Japan/cases/healthcare.asp
http://www.nikkeibp.co.uk/pages/info_medandhea.htm
http://www.oecd.org/infobycountry/0,2646,en_2649_37407_1_70531_119684_1_37407,00.html
http://www.atoz.org/oxford.html (dated but informative)
http://www.accj.or.jp/content/advocacy/FDI/content/advocacy/FDI/fdi_casestudies
http://www.findarticles.com/p/articles/mi_m3570/is_n10_v20/ai_20043174
Research Options http://www.searchenginecolossus.com/Japan.html
– Goo Best Domestic Search Engine
– Yahoo! Japan Most powerful namebrand
– Japan.co.jp Best for commercial research
13 © Copyright 2003 Kevin Newman – [email protected]
Where to visit
In Tokyo :
Akihabara
Harajuku's Takeshita-dori on a Sunday
Meiji Shrine (next to Takeshita-dori)
Shinjuku Station @ 8am on any weekday morning
Shibuya (anytime)