Kegler Brown, in conjunction with Ohio Development Services Agency (DSA), presented a breakfast briefing on July 30, 2014, on export and business opportunities in Japan. The seminar covered topics important to companies looking to export products and services, and expand business operations in Japan. Topics for the seminar included DSA's services for Ohio companies interested in exporting their products and services to the Japanese market, key legal and business issues and an overview of the economic and business environment in Japan. Speakers included Vinita Bahri-Mehra, Asia Pacific team leader and global business attorney at Kegler Brown, Mindy McLaughlin, manager of foreign direct investment at JobsOhio, and Terrie Lloyd, CEO of Japan Inc. and managing director of the Ohio Japan Office.

1. z

2. 30/July/2014
Conducting Business in Japan:
An Overview of Export Opportunities
“How to Take Advantage of Japan’s
Rebounding Economy”

3. 30/July/2014
Introduction

4. 30/July/2014
Country Overview
Population
127,103,388 (July 2014 est.)
Ohio population
11,536,504 (2010 est.)
Area
Total: 145,902 sq mi
Ohio area
Total: 44,825 sq mi
Capital
Tokyo
Terrain
Mostly rugged and mountainous
Official language
Japanese
National holiday
Birthday of Emperor Akihito, 23 December (1933)
Chief of State
Emperor Akihito (since 7 January 1989)
Prime Minister
Shinzo Abe (since 26 December 2012)

5. 30/July/2014
Economy Overview
Currency yen
GDP (PPP) $4.729 trillion (2013 est.) *data are in 2013 US dollars
GDP - real growth rate 2% (2013 est.)
Inflation rate 0.36% (2013 est.)
Unemployment rate 4.1% (2013 est.)
Exports
$697 billion (2013 est.)
Sectors: transport equipment, motor vehicles, semiconductors,
electrical machinery, chemicals
Partners: China 18.1%, US 17.8%, South Korea 7.7%, Thailand 5.5%,
Hong Kong 5.1% (2012)
Imports
$766.6 billion (2013 est.)
Sectors: machinery and equipment, fuels, foodstuffs, chemicals,
textiles, raw materials
Partners: China 21.3%, US 8.8%, Australia 6.4%, Saudi Arabia 6.2%,
UAE 5% (2012)
Exchange rate 1USD yen (JPY) per US dollar – 101.38 (23 July 2014)
Time difference UTC+9 (14 hours ahead of Washington, DC during Standard Time)

6. 30/July/2014
• Population: 127.1 million
- 75% in the 0-65 age group
- Population growth rate: -0.13%
• Gender ratio: Total population
- 0.95 male/female
DEMOGRAPHIC PROFILE
• Literacy rate: 99%
• Languages:
- Japanese
• Religions:
- Shintoism 83.9%, Buddhism 71.4%,
Christianity 2%, Other 7.8%
*Total adherents exceeds 100%
because many people belong to both
Shintoism and Buddhism.

7. 30/July/2014
• Government type: A parliamentary government
with a constitutional monarchy
• Cabinet: Cabinet is appointed by the prime minister
• Elections: The Diet, bicameral legislature
POLITICAL PROFILE
Chief of state: Emperor Akihito
Prime Minister: Shinzo Abe
Government: Led by the Liberal
Democratic Party (LDP)

8. 30/July/2014
ECONOMIC PROFILE
Gross Domestic Product (2013 est)
•PPP (Purchasing Power Parity) terms:
US$ 4.729 trillion, 5th largest in the
world
•GDP growth rate: 2 %
•The services sector continues to be a
star performer with a 73% share in GDP
Per Capita GDP (2013 est)
•PPP terms: US$ 37,100
*data are in 2013 US dollars Services,
73%
Industry,
26% Agriculture
, 1%
Sectoral composition of GDP (2013 est)

9. 30/July/2014
ECONOMIC PROFILE
• Labor force: 65.62 million (2013 est)
9th largest in the world
• Labor force by occupation
- Services: 69.8%
- Industry: 26.2%
- Agriculture: 3.9%
• Unemployment rate: 4.1% (2013 est)
• Budget (2013 est):
- Revenues: US$1.739 trillion
- Expenditures: US$2.149 trillion
Services,
70%
Industry,
26%
Agriculture
, 4%
Labor force by occupation (2013 est)

10. 30/July/2014
EXPORTS PROFILE
• US$697 billion (2013 est)
6th largest in the world
• Exports - commodities
- Motor vehicles: 13.6%
- Semiconductors: 6.2%
- Iron and steel products: 5.5%
- Auto parts: 4.6%
- Plastic materials: 3.5%
- Power generating machinery: 3.5%
• Exports – partners
- China: 18.1%
- US: 17.8%
- South Korea: 7.7%
- Thailand 5.5%
- Hong Kong 5.1%
China 18.1%
US 17.8%
South Korea 7.7%
Thailand 5.5%
Hong Kong 5.1%
Others 45.8%
Exports - partners

11. 30/July/2014
IMPORTS PROFILE
• US$766.6 billion (2013 est)
6th largest in the world
• Imports - commodities
- Petroleum: 15.5%
- Liquid natural gas: 5.7%
- Clothing: 3.9%
- Semiconductors: 3.5%
- Coal: 3.5%
- Audio and visual apparatus: 2.7%
• Imports – partners
- China: 21.3%
- US: 8.8%
- Australia: 6.4%
- Saudi Arabia 6.2%
- UAE 5%
China 21.3%
US 8.8%
Australia 6.4%
Saudi Arabia 6.2%
UAE 5%
Others 52.3%
Imports - partners

12. About us
Market Entry and Operations Support
in Japan

13. 30/July/2014
Japan Inc Holdings
Corporate Overview
 Japan Inc Holdings Co.,Ltd. (JIH)
Address: 4F Roppongi OG Bldg, 1-3-4 Nishi-Azabu, Minato-ku, Tokyo 106-0031
Phone: 03-4588-2674, Fax: 03-3404-5015, HP: http://www.japaninc.com
 Established 1st August, 2007
 Mission
– To help open up Japan to foreign governments, businesses, capital, ideas, and know-how
– We will do this by using our intrinsic foreign viewpoint, brand and image, extensive networks, experience, and
bilingual/bicultural skills to create and execute business opportunities between Japan and the rest of the world
– We are primarily interested in media, human communication, and the application of technology
– We will execute our plan with guts, integrity, and a commitment to get results
 Areas of business
– Investment in wholly owned subsidiaries – achieved by start-ups and turn-arounds
– Partial investments in foreign start-ups in Japan, typically for cash or sweat equity
– Market entry, company operations, and fund-raising consulting
– Buy and sell side M&A consulting for foreign and Japanese companies
– Acquiring IP rights for Japan of new foreign technologies
– Promoting entrepreneurship (especially foreign entrepreneurship) in Japan

14. 30/July/2014
JIH Consulting Business
“Helping Japan to Innovate and Communicate”
 As well as functioning as a holding company for various assets and investments, JIH also maintains a consulting
team. The functions of this team are:
– Perform a portfolio management, business development, and incubation function for its subsidiaries.
– Market entry consulting
 Market entry consulting provides a tailored solution for each client, and ranges from searching for business
partners, distribution partners, Japan joint-venture partners, and/or acquisition targets. Client companies range
from small start-ups, to large multinationals.
– Well-known clients include:
 JIH is also the trusted partner, and official Japanese office for the US’s Ohio State Department of Development
– Both parties have committed to attract over 30 Ohio State companies to Japan over the next 2 years
– JIH also has superb relationships with the trade departments of Australia and New Zealand

15. 30/July/2014
3 Business Styles
 Distributor (abdication of control)
– Little effort, little control, little brand development
– Distributors trust-worthy but busy
– Recommend sending company rep to push things along
 Rep Office
– No registration required – very free format
– Only business promotion
– Can’t offer staff benefits, so hard to recruit
 Branch Office
– Simplest form of registered operation
– But denotes lack of commitment to market
– Opens HQ up to Japan law
 Full Independent Operation
– High risk, but full control, may still use sub-distributors/sales channels
– Entity allows outside co-investment, IPO opportunities
– Need to learn regulatory and procedural issues in Japan
– Commits company to Japan, strengthens relationships
– Recommend fully funded co., to hire locally and work CEO’s contacts hard – proper
funding will speed up returns to 12-18 months for profits
Revenue
focus
only
Business
develop-
ment
Brand
and
revenue
control

16. 30/July/2014
Market Entry: Preselling
 My company helps 5-10 companies enter Japan market every year
 I believe in pre-selling
– Pre-selling provides a much better impression to a potential partner/customer than does standard market
research
– A company with hot technology and that is already on its way to Japan puts pressure on a prospect to
actively engage the company before a competitor does
– Ideally you get sales even before setting up in Japan
 Method
– Informal, responsive approach – lets the market define the product positioning
– Requires an empowered local (in-Japan) consultant to learn, respond to client, feedback to HQ, re-cast
value proposition
– Takes about 150-200 hours to approach 15-20 potential distributors
– It’s a numbers game, more approaches equals more candidates
– Winnowing 20->5 will produce some viable candidates
 Post Tie-up
– May have to do early seeding of sales to addict distributor to your product/service
– Selling for distributor allows you to structure your support and refine pricing

17. 30/July/2014
Market Entry: How to Get Results
 International inbound trade conduits are few
– You need to get their attention
– Once you get it, you need to impress them by your follow-up
– Play the role as a foreigner and get out there to open doors
– You don’t have to speak Japanese, but you need an assistant/salesperson who does
 You need to have earthshaking technology, patents, and/or global brand
– Major Japanese companies receive proposals from all over the world, every hour
– So you products/know-how have to stand out – just highlight key features
– Best chance is those products embeddable in another brand
– Can be sold by someone who is not Japanese – if value is there
 If you don’t
– You need connections, self-start will add 3-5 years
– If no connections, buy them (consultants or investors)
– Show commitment, send a single 30+ year old manager for 3 years
– Seed sales force – consider bringing in your country manager from start
– Create a story and make it interesting, concepts can really work in noise-filled Japan

18. 30/July/2014
Market Entry: Engaging Distributor
 The Japanese approach is one of trust and familiarity
– Painful initially, BUT very rewarding once relationship established (HF)
 Engaging a distributor candidate requires a local representative
– This inevitably means repeat visits and contacts
– 1-3 visits by local person before your visit
– Your visit
– 3-5 visits and multiple requests filled for information
– Another 1-2 visits by you
– Contract
– Process will take about 3-6 months
 Proactive business development by your rep/consultant
– Idea is to create an impression of commitment early on
– Japanese firms value repeated communications – 10 visits for hard core firms
– Local rep/consultant’s personality and credibility very important
• Should be Japanese, save yourself, other foreigners for shock value
• Good if the person can go drinking

19. 30/July/2014
Vitamix Story
 Vitamix have two channels in Japan: Commercial and Consumer
 Commercial has always done well
 When asked to support Vitamix, Consumer business was languishing
– Only 300 units sold a year
 Vitamix challenge was that distributor was convinced brand was unsellable
– Too big, too noisy, and too expensive
– Raw foods to blend also expensive
 Vitamix had us survey market and report back on competition
– We found there was no competition and there was a major opportunity
 Vitamix changed distributors, and new company completely understood the need for market endorsement
– Bloggers, celebrities, natural health players, etc.
 We continued to supply market research and content support
– Controlled focus group, web surveys, recipes development and recipe book, other market intelligence
support
 Vitamix in 2012 sold 15,000 blenders, for a retail value of approximately US$12MM
– Still going strong today

20. 30/July/2014
Contacts
Japan Inc Holdings Co.,Ltd.
CEO: Terrie Lloyd terrie@japaninc.com
Consultant: Makoto Kagawa makoto.kagawa@japaninc.com
Address: 4F Roppongi OG Bldg, 1-3-4 Nishi-Azabu, Minato-ku,
Tokyo 106-0031
Phone: 03-4588-2674, Fax: 03-3404-5015
HP: http://www.japaninc.com

21. z
presented by Vinita Bahri-Mehra
July 31, 2014
Legal Issues to Consider in
Exporting + Doing Business in
Japan

22. z
Introduction to Japan
Unemployment rate (as of May 2014)
Largest export market for U.S. goods +
services
U.S. exported $70 million in goods to Japan (in 2012)
World’s largest economy: GDP of $5.8 trillion
Largest foreign investor in the U.S.
More than $257 billion invested

23. z
Importing + Exporting
+ Imports: mineral fuels (34%); machinery (21%); food (8%);
manufactured goods (8%); chemicals (8%) and raw materials (7%)
+ Top importers: China, the U.S., South Korea, Taiwan, and Hong
Kong
+ Exports: cars, electronic devices and computers
+ Top exporters: China, the U.S., Australia, Saudi Arabia, the UAE,
South Korea, and Indonesia

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Japan’s Strategy >

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“Abenomics”
+ A three-pronged strategy of bold monetary loosening, fiscal
stimulus centered on infrastructure spending, and growth-
oriented structural reform
+ Participation in the Trans-Pacific Partnership (TPP)
+ With Japan’s participation in the TPP, its members account for
nearly 40% of World GDP
+ Japan and ASEAN entered into an agreement on a
Comprehensive Economic Partnership

26. z
+ Visa requirements generally: valid passport containing a visa
corresponding to his/her purpose of entry into Japan
+ A visa is not required for US passport holders visiting Japan for
a short-term stay of less than 90 days with the purpose of tourism
and business
+ “Intracompany transferee” or “investor/business manager”
+ Other temporary visas available for:
+ short courses + briefings organized by companies
+ conferences + other meetings
+ negotiations + contract signing
Getting Started in Japan

27. z
+ Use of Agents or Distributors
+ Consider establishing an exclusive relationship
+ Establishing an Office
+ Direct Marketing
+ Joint Ventures/Licensing
+ Most U.S. commercial exports to Japan do not require export
licenses
Selling U.S. Products + Services

28. z
Japanese Entities
+Joint stock corporation (Kabushiki-Kaisha (K.K.))
+Limited liability company (Godo-Kaisha (LLC))
+Limited liability partnership (Yugen Sekinin Jigyo
Kumiai (LLP))
+Unlimited partnership (Gomei-Kaisha)

29. z
+ Face-to-face contact
+ Contract Negotiations
+ Electronic Commerce
+ Leading e-commerce sites are (1) Rakuten, (2) Amazon Japan
and (3) Yahoo! Japan
+ Trade Promotion + Advertising
+ Very expensive in Japan
Selling Techniques

30. z
+ Japan provides generally strong IP protection and enforcement
+ But U.S. companies must register their intellectual property
+ First-in-time, first-in-right
+ Protection is available for:
+ Patents
+ Expires after 20 yrs.
+ Member of Paris Convention
and World Trade Organizations
+ Trademarks
+ Copyrights
+ Trade secrets
Intellectual Property

31. z
+ The export of goods, technology, and software are controlled
and require licenses from the Minister of Economy, Trade, and
Industry.
+ Leading sectors for U.S. Export and Investment:
+ Aerospace
+ Education/corporate training
+ Medical equipment
+ Pharmaceuticals
+ Renewable energy
+ Telecommunication equipment
Exports to Japan

32. z
+ Low applied tariff rates
+ Most favored nations tariff rate: 4.6%
+ Zero duties on autos, aircrafts, software, computers, industrial
machinery and works of fine art
+ Member of the Harmonized System Convention
+ Goods from the U.S. are charged WTO rates
(unless a lesser “temporary rate” exists)
+ No bilateral free-trade agreement with the U.S.
+ Japanese firms engage in business activities with countries
against which the U.S. currently has embargoes
Trade Regulations, Customs +
Standards

33. z
+ Narcotics, firearms (and parts), materials for chemical
weapons, goods that violate IP rights
+ Restrictions on: medical products, pharmaceuticals,
chemicals
+ Japanese Customs reviews and evaluates for import suitability
before shipment to Japan (“positive list” approach)
Prohibited + Restricted Imports

34. z
+ Declaration to the Director-General of Customs
+ Obtain import permit
+ Imports are valued according to their c.i.f. value
+ Difficulties result from first time applications
+ Employ import agent or customs broker to facilitate customs entry
+ Timeline:
+ 2-3 days for sea cargo
+ 1 day for air cargo
+ Possible to file preliminary declaration online
Export Procedure

35. z
+ Revisions to Japan’s legal code encourage inbound FDI
through M+A activity
+ No discrimination against foreign investors
+ National Strategic Special Zones
+ Tokyo, Osaka, Fukuoka and three other Zones (since March
2014)
Foreign Direct Investments

36. z
+ Prior notification of intended transaction: If a foreign investor
wants to acquire over 10% of the shares of a listed company in
certain sectors
+ Agriculture, aerospace, petroleum, electric/gas/water
utilities, telecommunications and leather manufacturing
+ Most common M+A form: friendly transfer of wholly-owned or
majority-owned subsidiaries
+ Hostile takeovers are relatively uncommon
Screening of FDI

37. z
+ Income of corporations in Japan is subject to taxation,
regardless of where it was generated
+ Income tax treaty: “United States- Japan Income Tax
Convention”, amended in November 6, 2003, established the
avoidance of double taxation procedures
+ National consumption tax rate: 8%
+ Standard tax rate for individual capital gains: 20%
+ Current tax rate for corporate income: about 35%
+ Foreign Account Tax Compliance Act (FATCA)
Taxation

38. z
Conclusion
+ Due Diligence is the Key
+ Strategic Analysis
+ Avoid Cultural Misunderstandings
+ Relationship Building
“Think like a man, act like a
lady, and work like a dog.”
(Otoko-no youni kangaete redi-no youni
furumai inu-no gotoku hatarake. 男のように考
えてレディのようにふるまい犬のごとく働け。
)
» Ishihara Ichiko, first Japanese woman to
hold executive post, former director of
Takashimaya department store.
“Early bird gets the worm.”
(Literally: To wake up early gets you three
coins.)(Jp: Hayaoki-wa san mon-no toku. 早起
きは三文の徳。)
» Japanese proverb

39. z
Thank You!
Vinita Bahri-Mehra
Asia-Pacific Team Leader
vmehra@keglerbrown.co
m
614.255.5508
Katja Garvey
Associate
kgarvey@keglerbrown.com
614.462.5490

40. Relationships are Everything:
Doing Business with the Japanese
July 30, 2014
Mindy McLaughlin
Manager of Foreign Direct Investment

41. 41
Overview of JobsOhio
JobsOhio is a private, non-profit corporation created in
July 2011 by Governor John Kasich and the Ohio
legislature to lead the state’s economic development
efforts. It is significantly different from the state’s
previous approach and unique in the country.
Objectives
• Create, retain & expand jobs
• Attract new capital investments
• Client-focused and metrics-driven
Making it Work
• JobsOhio’s nine industries and four business functions are led by
general managers who are experts in their respective industries.
• Nine-member board, made up of dynamic business leaders who
operate on a global scale.
• Six regional network partners with deep ties to local businesses,
enhancing economic development opportunities.

42. 42
Ohio and Japan: A Framework to Build From
• Ohio’s Traditional Relationship with Japan
• Japanese Investment in Ohio
• The Art of Relationship Building

43. 43
Ohio’s Traditional Relationship with Japan
William Howard Taft
President of the United States,
1909-1913

44. 44
Ohio’s Traditional Relationship with Japan

45. 45
Ohio’s Traditional Relationship with Japan
James A. Rhodes
Governor of Ohio,
1963-1971 and 1975-1983

46. 46
Ohio’s Traditional Relationship with Japan

47. 47
Japanese Investment In Ohio

48. 48
The Art of Relationship Building

49. 49
The Art of Relationship Building
尊敬

50. 50
Summary
Ohio has a powerful story for the Japanese market – both for inbound investment into
Ohio and outbound exports from Ohio – that is based on strong relationships
ASSET BENEFIT
Strong historical ties to Japan
Strong "Name ID" and knowledge of the value
proposition
Home to 230 Japan-based businesses Familiarity and comfort level with our state
Engagement in economic diplomacy
Trust has been built that will yield dividends on
multiple fronts

51. 51
41 S. High Street, Ste. 1500 | Columbus, OH 43215
(614) 224-6446 | jobs-ohio.com
Mindy McLaughlin
Manager of Foreign Direct Investment
McLaughlin@jobs-ohio.com