Not Made in Japan | Trends in Japan

NOT MADE IN JAPAN:
Industrial Imports Continue to Boost Market Share

APRIL 18, 1996

Owing to an increase in the import of industrial products, the share of imported goods in Japan's domestic markets continues to rise (on a quantitative basis). According to the Ministry of International Trade and Industry, despite a halt to the appreciation of the yen and a tendency for the yen to fall in value against the dollar, the market share of imported goods in the fourth quarter of 1995 increased to 15.5%, up 0.3 percentage points over the previous quarter. As a result, the share of imported goods has risen to record highs for eight consecutive quarters since the first quarter of 1994. Many economists believe that this trend is a reflection of developments in the international division of labor and very likely will continue.

All-Round Increases
The largest increase in the market share of imported goods in the fourth quarter of 1995 was posted by chemical products, which saw a rise of 1.3 percentage points over the previous quarter to 15.5%. The main reason for this increase was the rise in imports of cheap fertilizer. Since some Japanese companies are planning to build fertilizer plants overseas and then reimport, the imported goods share can be expected to further increase.

In the case of general machinery, the market share of imports rose by 0.5 percentage points over the previous period to 7.5%. Processing machinery for food products and injection molding machines had especially marked increases. There were several influential factors here, including increased parts procurement from overseas by large automakers and active importing by machine tool makers keen to enhance their product lineups.

As for electrical goods, the market share of imports rose 0.3 percentage points over the previous period to 12.9%. The increase was especially striking for personal computers, their components, facsimile machines, and semiconductors. Because Japanese PC manufacturers are increasing their consignment production of components to companies in other Asian countries, low-price competition is sweeping Japan's PC business. As long as the depreciation of the yen does not go to extremes, this international division of labor can be expected to further develop.

Temporary Slowdown
Against this overall trend toward an increase in imports, market share has actually declined for some products. In the case of precision machinery, for example, it dropped 15.3 percentage points from 53.9% to 38.6%. The main reason for this decline is that, because of the economic slump in European countries, exports of Japanese-made cameras fell sharply. Therefore, the unexported items were included in domestic inventories, meaning that the domestic share rose suddenly. As domestic inventories are adjusted, this temporary phenomenon can be expected to disappear.

Note: The market share of imported goods is calculated using the following formula: imports/(domestic products - exports + imports)

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