Japan Economic Risk Analysis

Japan: On a fragile path

A2

LOW RISK for entreprise

  • Economic risk

  • Business environment risk

  • Political risk

  • Commercial risk

  • Financing risk

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GDP USD4872.137bn (World ranking 3, World Bank 2017)
Population 126.8mn (World ranking 11, World Bank 2017)
Form of state Parliamentary government with a Constitutional Monarchy
Head of government Shinzo ABE (PM)
Next elections 2019, House of Councillors
  • Current account surplus
  • Low public external debt
  • Good geographical location
  • Innovative industries and high quality products
  • Large financial surplus of nonfinancial corporations
  • Vulnerable to natural disaster
  • Ageing population
  • Huge public debt and large public deficit
  • Highly dependent on energy imports

Trade structure by destination/origin

(% of total)

Exports Rank Imports
United States 20%
1
26% China
China 18%
2
11% United States
Korea, Republic of 7%
3
5% Australia
Taiwan (PRC) 6%
4
4% Korea, Republic of
China, Hong Kong SAR 5%
5
4% Taiwan (PCR)

Trade structure by product

(% of total)

Exports Rank Imports
Road vehicles 22%
1
10% Petroleum, petroleum products and related materials
Electrical machinery, apparatus and appliances, n.e.s. 13%
2
9% Electrical machinery, apparatus and appliances, n.e.s.
Specialised machinery 7%
3
6% Telecommunication and sound recording apparatus
Other industrial machinery and parts 6%
4
6% Gas, natural and manufactured
Power generating machinery and equipment 4%
5
4% Articles of apparel & clothing accessories
The payment culture in Japan is excellent with only a minority of invoices remaining unpaid thanks to strong cultural particularities. However, excessive DSO and significant payment disparities may be observed from one sector to another.

  • Low

  • Medium

  • Sensitive

  • High

  • Payments

  • Court proceedings

  • Insolvency proceedings

Although domestic courts tend to be fairly efficient in delivering timely decisions, tribunals are time-consuming, expensive and complex. Therefore, conducting well-orchestrated pre-legal collection actions is essential.

Similarly, collecting debt from insolvent debtors is overall a challenging exercise and, even though insolvency proceedings could yield dividends, these would spread over years and generate significant costs.

Contact Euler Hermes

Economic Research Team

research@eulerhermes.com

Contact Mahamoud Islam

Senior Economist for Asia

mahamoud.islam@eulerhermes.com

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