European Business Council

Members of  AHK Japan have the opportunity to be become active in the European Business Council (EBC).

The European Business Council (EBC) is the trade policy arm of 18 European National Chamber of Commerce and Business Associations in Japan and has been working to improve the trade and investment environment for European companies in Japan since 1972. The EBC was registered with the Ministry of Economy, Trade and Industry (METI) in 2008 as the European (EU) Chamber of Commerce in Japan.

The EBC has 25 committees devoted to improving the business environment for European companies in a variety of different sectors. Each EBC Committee is unique, reflecting the varied make-up of the EBC membership and the issues they deal with on a day-to-day basis. Some committees have memberships constituting a significant share of the Japanese market and are officially recognized by the Japanese Government as a primary industry contact while others are devoted to increasing market access opportunities for their members. Other committees address cross-sector issues such as human resources and taxation, which affect all firms in Japan, regardless of their line of business.

The following list covers the committees that have traditionally been of highest interest to the German companies in Japan.

Automobile

The Japanese domestic car market is in crisis. Sales, which have declined for the last three consecutive years, are some 60% lower than in the peak year of 1990 and are still declining.

Nonetheless, Japan is still the world’s fourth largest passenger car market after the US, the EU and China. European importers are particularly strong in the luxury segments of the market.

Car ownership by household is broadly comparable to that in the EU, but as a result of the declining birth-rate and the ageing population, the overall market is unlikely to expand in the mid-term. Changes in the pattern of consumer spending, higher petrol prices and environmental concerns will affect the mix of car models sold in Japan.

The committee works to achieve regulatory changes that can reduce the cost of doing business and ensure that European safety and environmental technology is available to the Japanese consumer in a timely manner. 

Automotive Components & Aftermarket

European automotive component and systems manufacturers continue to face difficulties in promoting European technical expertise to the Japanese automobile industry, mainly due to continued reluctance in the industry to outsource product development on a global basis.

This means it is still often necessary to provide "Japanese solutions" to customers in order to adhere to company-specific requirements, which defies the global trend towards single platform development and volume production.

Against this background, the committee engages in ongoing, regular dialogue between European component manufacturers and Japanese carmakers as a vital mechanism for sharing information and promoting understanding, with the aim of fostering increased opportunities for mutually beneficial business development. 

Asset Management

Professional management of pooled assets is becoming increasingly important in Japan, as the financial basis of the social security system steadily weakens.

With the birth-rate at its lowest level ever and the post-war baby-boom generation starting to retire, even a sustained economic upturn with a potentially increased tax base would be unlikely to reverse the trend of decreasing revenues.

The proportion of Japan’s financial assets managed by investment management firms is relatively low compared to other major economies. By providing professional advice and innovative services in an increasingly complex market, global professional asset management companies are proving they can contribute to the more effective allocation of resources in the economy at large.

The committee aims to bring changes to the regulatory and business environment to markedly increase the currently low level of penetration by investment management firms.

Financial Reporting

The Financial Reporting Committee aims to promote the convergence of Japanese accounting standards with international standards through limiting or reducing reconciling items between IFRS/US GAAP group reporting and JGAAP statutory reporting.

In correspondence with the standard setters and other relevant bodies, the committee seeks clarification on grey areas or the implications of new standards from a JGAAP, IFRS, or US GAAP perspective, and also aims to provide input to the JIFRS standard setting process.

Food & Agriculture

Japan’s food market ranks second in the world and the food retail market is worth about 38 trillion yen (about Euro 240 billion).

Japan’s packaged food market is worth about Euro 140 billion, which is about 11% of the world total of Euro 1.2 trillion. The food processing industry is estimated to have a value of about Euro 150 billion, making it the third largest sector in Japan after electronics and car manufacturing.

According to FAOSTAT (2005-06), Japan is the largest importer in the world of pork, maize and canned chicken, the second largest importer of beef, soybeans and wheat, and a major importer of fruit and vegetables. Rice is the principal domestically produced crop.

Japan depends on imports for about 60% of its food supply on a calorie basis. Its self-sufficiency ratio has steadily declined, dropping recently to just below 40%. This is very low compared with France at 130%, the US at 119%, Germany at 91% and the UK at 74%. Japan is seeking to improve this ratio and has set a target of 45% by 2015.

The committee aims to eliminate all tariff and non-tariff barriers to trade in the food sector. 

Logistics & Freight

A well-functioning freight forwarding and logistics services market is crucial for the global integration and competitiveness of Japanese industry.

All companies active in Japan, whether foreign or Japanese owned, with customers and/or operations outside of the country, depend on efficient freight services both domestically and across borders.

European companies offering Japanese consumers access to their worldwide logistic operations have largely been successful, but still face serious regulatory challenges.

The committee aims to eliminate distorted competition caused by a discrepancy in the rules and regulations applied to carriers providing the same services, prohibitive costs, insufficient infrastructure at airports, and restrictions on foreign-owned carriers as these problems ultimately result in inefficiencies and higher prices for users. 

Medical Equipment

Healthcare in Japan is generally of a high standard, as suggested by the country enjoying the highest average life expectancy and lowest infant mortality rates in the world. However, inefficiencies in the system, such as structural over-consumption of certain services and unparalleled long stays in hospital, need to be addressed urgently.

The method of financing the healthcare system and demographic changes are leading to lower contributions and higher consumption. Consumers expect higher quality medical equipment services, which will come under increasing strain in the years ahead.

However, the current regulatory structure and reimbursement regime constitute an obstacle to introducing such equipment to the Japanese market and deprive Japanese consumers of access to products available in other industrialised countries, including China and South Korea.

The committee seeks solutions to these problems and is working towards achieving mutual acceptance of certifications for medical equipment. 

Railways

Since the Tohoku Earthquake 2011 still much remains to be rebuilt and progress is slow.

The EBC Railway Committee believes that in rural areas the train station plays a vital role and an increased focus on a Bus Rapid Transit (BRT) system will weaken communications and communities alike. The EBC, with its particular expertise in urban planning and rail technology, believes that a Light Rail Transit (LRT) system should be introduced.

Moreover, the EBC believes that the EU-Japan FTA/EPA should enable Japan to work jointly with Europe to promote open integrated systems built on harmonised standards. Furthermore under the FTA/EPA, test data from internationally recognised certification bodies should be accepted without further delay and references from Europe should be fully recognised and accepted.

Retail & Wholesale

The Japanese retail market is one of the largest and most vibrant in the world.However, unlike in many markets, non-franchised outlets of overseas retail chains are rare.

Successful entries into Japan by European retailers have been few and the failures have been given considerable coverage by the local and international media.

This has led to a perception that Japan is simply ‘too difficult’: competition is intense, costs are high, the threat of a rise in consumption tax is real, and regulatory requirements and enforcement are opaque.

Many retailers looking to expand internationally pass over Japan in favour of other markets that provide examples of non-local retail success. Nevertheless, a number of European retailers that have made careful studies of the Japanese market have elected to ‘set up shop’. It is important that they be allowed the opportunity to succeed. Their success benefits the Japanese consumer by offering them greater choice.

The committee is working to encourage Japan to establish mutual acceptance of standards and certification of consumer products, to minimise restrictions on large-scale retailing, and to reduce the impact of construction, safety and environmental regulations, which differ markedly from those of the EU.

Tax

A vital and robust economy is impacted by rules and regulations in the tax regime. The Government of Japan deserves credit for undertaking far-reaching tax reforms in recent years; however further measures are needed to create a tax system compatible with the globalisation of corporations and increased capital mobility.

European firms continue to encounter inconsistent and arbitrary treatment from tax authorities and regulations that impede market access and growth.

The committee aims to eliminate the discrepancies in the interpretation of common tax concepts between European and Japanese tax laws, deviations in the progress of tax treaty re-negotiations between Japan and European countries, inconsistent interpretation of OECD-based transfer pricing policies, and the lack of clarity in the rules pertaining to capital gains from cross-border mergers. 

Please note: To become active within the EBC and its committees, a separate membership with the EBC is necessary. Members of AHK Japan are eligible for membership as "EUROPEAN NATIONAL CHAMBER COMPANY".

For further information on membership and the EBC itself, please contact:

Ms. Allison Murray

Executive Director

European Business Council in Japan

+81-(0)3-3263-6225
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Ansprechpartner

Herr Bastian Lidzba

Team Leader
Member Services

+81-(0)3-5276-8703
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