A new trade deal with Japan
On 23 October 2020, the UK Government signed the Comprehensive and Economic Partnership Agreement (CEPA) with Japan. This agreement is projected to boost trade by £15.7 billion over the next 15 years.
Also, the UK concluded negotiations to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) on 31 March 2023 and signed the Protocol of Accession on 16 July 2023. Japan is a member of the CPTPP.
Opportunities to build partnerships with Japanese companies
The new deal with Japan will benefit UK companies across several sectors, such as agriculture, food and drink, manufacturing, digital, and financial services sectors.
As a stable country with a large, wealthy, and highly educated consumer market, premium high-quality goods and services are in demand. Japanese companies are also extremely loyal and open to building long-term business relationships.
Strong support for trade with Japan
To help businesses trade with Japan, the Department for Business and Trade (DBT) has launched our Export to Japan hub, for free information on trading with Japan, including detailed market research, events, industry guides, and practical step-by-step exporting advice.
Top five UK goods exported to Japan , in the four quarters to the end of Q3 2023
| Goods | Value (£ million ) |
|---|---|
| Cars | |
| Mechanical power generators (intermediate) | |
| Medicinal & pharmaceutical products | |
| Non-ferrous metals | |
| Miscellaneous electrical goods (intermediate) |
Source:
ONS Trade in goods: country-by-commodity exports
Last updated: February 2024
Download the latest trade and investment factsheet for Japan.
Top five UK services exported to Japan , in the four quarters to the end of Q2 2023
| Service | Value (£ billion ) |
|---|---|
| Other Business Services | |
| Financial | |
| Telecommunications, computer and information services | |
| Insurance and Pension | |
| Transportation |
Source:
ONS UK trade in services: service type by partner country, non-seasonally adjusted
Last updated: January 2024
Download the latest trade and investment factsheet for Japan.
Total import value (into the UK from Japan) and export value (from the UK into Japan) over time
| Year | Imports (£ billion ) | Exports (£ billion ) | Total trade (£ billion ) |
|---|---|---|---|
| 2016 | 12.8 | 10.6 | 23.3 |
| 2017 | 14.4 | 11.7 | 26.1 |
| 2018 | 15.2 | 13.4 | 28.6 |
| 2019 | 15.9 | 13.9 | 29.8 |
| 2020 | 12.8 | 13.0 | 25.8 |
| 2021 | 11.5 | 13.9 | 25.4 |
| 2022 | 14.1 | 13.6 | 27.7 |
Source:
ONS UK total trade: all countries, seasonally adjusted
Last updated: January 2024
Total trade is the sum of all exports and imports over the same time period.
Download the latest trade and investment factsheet for Japan.
Japan: at a glance
Economic growth
1.0%
Actual figure (IMF, 2022)
The UK is 4.1% (IMF, 2022, actual figure)
GDP per capita
$33,854
Actual figure (IMF, 2022)
The UK is $45,461 (IMF, 2022, projected figure)
Currency
Japanese yen
Business languages
English is widely spoken in business
Time zone
GMT + 9
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Opportunities for exporters
Japan is an advanced economy, with a large, rich and highly-educated consumer market who are early adopters of new products and services.
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Home to many world-renowned technology companies including Sony and Fujitsu, Japan has been at the forefront of new technologies for many years. Japan is pushing ahead with its Society 5.0 initiative, which aims to integrate cutting-edge technology into society to address social challenges like the ageing population.
Open innovation
Japan is consistently at the forefront of anything new, from robotics and unmanned aerial vehicles (UAVs) to additive manufacturing and autonomous systems. Japanese companies are always scanning the horizon for new technologies to add to their arsenal.
Joint digital market
Within the UK-Japan agreement, new provisions have been agreed on issues like source code protection and net neutrality to bring the UK and Japan – two of the world’s most technologically advanced nations – into a joint digital market. This will create new opportunities for UK tech firms and foster innovation across both countries.
Robust demand for UK digital exports
The UK digital industry exported £675 million worth of services to Japan in 2018. £265 million of this was in computer programming, consultancy, and related activities. Globally, our industry is seeing a rapid rise in demand, with a 14.7% increase in UK digital services exports between 2017 and 2018.
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Japan has a very sophisticated food and drink market. Although traditional Japanese culinary culture remains a strong part of national identity, Japanese consumers enjoy a diverse range of food and drink, valuing the country of origin and stories behind individual products.
Growing demand for authentic British products
Authentic products that are emblematic of British culture are particularly popular among Japanese consumers. The demand for goods such as beer, black teas, whiskies, biscuits and shortbread, and Scottish smoked salmon have seen particular growth in recent years. The new UK-Japan trade agreement ensures iconic UK goods will receive enhanced protections.
Fewer restrictions under new trade agreement
The UK Government has agreed improved Rules of Origin (RoO) under the UK-Japan trade deal, potentially allowing £88.2 million more of UK exports to receive preferential tariffs in Japan. Restrictions have been removed for manufacturers of high-potential exports such as pet food and baked goods, meaning manufacturers have greater freedom when sourcing their ingredients.
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Japan has one of the world’s largest fashion markets, with dynamic demand for new trends driven by fashion-savvy and affluent consumers. In Asia, Tokyo is a hub of creative fashion, with Japanese designers and foreign designers rubbing shoulders in the ultra-trendy neighbourhoods of Harajuku, Shibuya, Daikanyama, and elsewhere.
A respect for heritage
Many Japanese consumer consider the ‘Made in the UK’ label to be a sign of true authenticity. There is particularly strong demand for British fashion brands with a heritage, and those brands with Royal Warrant association.
High demand for British textiles
In 2019 alone, the UK exported more than £175 million worth of textiles and leather products to Japan. As part of the new UK-Japan trade agreement, enhanced customs provisions have been negotiated that minimise costs and administrative burdens, meaning Japanese customers can get more of the British products they enjoy.
Simplified Rules of Origin
Under the new UK-Japan trade deal, UK clothing exports to Japan have become easier. Producers may now undergo a single manufacturing process in the UK – for example, sewing together imported fabrics into one coat – and then export to Japan under tariff preference, provided 50% of the inputs are sourced domestically.
Check for trade barriers
Trade barriers, such as tariffs or taxes, can raise costs, cause delays, or even stop you from exporting. Check for any issues that may impact your business when exporting.
Check duties and customs
Find information on how to export goods from the UK. View the duties, rules, restrictions, and the documents you need for your products.
Doing business in Japan
Businesses aiming to enter or expand in Japan may find differences in social and business customs daunting. To support your journey, DIT have partnered with Export to Japan to provide step-by-step exporting guides, bespoke tools, resources, and events.
Preparing to export
Tax
You can find information on tax in Japan for businesses in JETRO’s guide on taxes in Japan.
Customs
The Japan Customs website introduces the customs system and trade procedures. It also provides links to regional offices.
Standards and technical regulations
Japanese domestic standards often differ from international norms.
The Japanese Standards Association has responsibility for Japanese industrial standards, covering a wide range of business areas and topics.
Intellectual property
Intellectual property (IP) rights are territorial. Rights granted in the UK do not provide protection elsewhere. You should consider getting IP protection abroad if you want to trade overseas or sell to overseas customers via the internet.
The Intellectual Property Office’s International IP Service provides practical information to help you protect, manage and enforce your IP abroad. Further support can be accessed through the service’s network of IP attachés. Based in key UK export markets, they provide guidance to British businesses on local IP matters.
Trade barriers
Check for any reported barriers to trading with Japan.
Report any trade barriers that are affecting your business so we can help fix them.
Operating in Japan
Routes to market
The Japanese market is unique, as are its methods of doing business and building client relationships. It's important to perform thorough research before deciding on a strategy for operation in the market.
Options which may work well for you are:
- establishing direct relationships over time - doing business in Japan can be profitable, but you'll find things can move more slowly than Western Europe or the US. Commitment and stability matter. It’s likely to take time to meet with the buyer, receive a first trial order, and when trust has been established, become a supplier. This process can take up to a couple of years, even for local Japanese salespeople.
- using agents and distributors - as in other overseas markets you can appoint an agent or distributor who can assist with negotiating the difficulties of language and culture.
- setting up a company - many exporters find that appointing their own manager or setting up a company, rather than using a representative, is a more focussed and successful way to break into this complex market
JETRO (Japan External Trade Organization), the government agency responsible for inward investment, can provide free office space in central Tokyo and several other locations. Whilst Tokyo would seem to be the obvious location, Osaka is an excellent option with lower start up costs.
Business relationships
You will work best with Japanese cultural differences if you:
- make a long term commitment and do not expect to generate short term results
- demonstrate your commitment to the market through regular engagement
- are very information-oriented
- are not deterred by the bottom up and consensus building decision-making process
- take trial orders seriously as this is a key element of building relationships
- build personal relationships
Read the Department for Business and Trade (DBT) Japan’s business etiquette guide for more details on business behaviour in Japan.
Next steps
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