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Essay/Term paper: Comparing japan and american food markets

Essay, term paper, research paper:  Economics

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Comparing Japan and American Food Markets

The Japanese Market has become vital to the U.S. Economy. Japan is the
number one export market for the United States. In 1993, Japan accounted for
37.6 percent of the total growth in U.S. value-added exports.
U.S. food products, in particular, are a huge market in Japan. American
agricultural exports to Japan in 1993 were $8.7 billion. About one-third of
Japanese agricultural imports come from the United States. However, there is
sometimes a mixed reception in Japan regarding products from the United States.
Japanese, on one hand, wish to do things "American" ever since the Second World
War. But, on the other hand, U.S. products are perceived as less sophisticated
than Japanese and European food products, in product formulation or packaging.
Also, U.S. products are considered not as safe as domestics ones, due to the use
of pesticides and chemical additives and the partiality of the Japanese consumer
to purchase Japanese items.
The reason for the large volume of exporting to Japan is due to United
State's comparative advantages. Food products are very expensive to produce in
Japan. Japan's current labor shortage, combined with import restrictions and
domestic price stabilization programs, have driven up domestic production costs.
The Japanese food consumption pattern consist of an openness to foreign
products and a strong interest in things international. All types of
international cuisine can be found in Japan. Many varieties of tropical and
imported fruits, such as Florida grapefruit, California cherries, New Zealand
kiwifruit, and Hawaiian papayas are readily available in supermarkets and
department stores, as are imported alcoholic beverages ranging from Kentucky
bourbon and Chinese beer to Russian vodka and California sake.
Japanese food consumption is marked by short-term trends. For example,
Korean and Mexican food became popular a few years ago and then unpopular.
There have also been Italian and Spanish food booms.
The Japanese economic recession has shifted the focus of many consumers
to the more affordable neighborhood restaurants that feature traditional
Japanese dishes. This has made consumers price conscious at grocery counters,
which benefits cheaper imported goods. As a result, imported foods account for
over half of Japan's average annual caloric intake. Moreover, with Japanese
agriculture contracting, Japan's reliance on (and openness toward) imported food
products will continue to increase.


In the future, the United States may no longer be considered to have a
comparative advantage for food products in Japan. Countries in the western
Pacific are likely to provide stiff competition for the U.S., due to the shorter
shipping distances and the ease of conducting long-distance business from with
in neighboring time zones. Offshore investment for processing exporting
consumer ready products to Japan is taking place in Australia. Highly processed
packaged specialty items are being predicted within the European Community.
These processors often put forth a greater effete to produce top-quality
packaging for their items than Americans. Southeast Asia challenges the U.S. in
products such as pet food.

2. Japanese place a high importance on appearance and invest heavily in
packaging. Americans view Japanese processed foods as being over-
3. Domestic processors package in smaller sizes. Smaller packages are
preferred by housewives who cater to the individual tastes of
different members of the family.
4. Japanese processors are closely in tune with changes in society and
evolving consumption patterns. Recently there has been an
increase in the health-conscious consumer. Fiber-enriched
foods and beverages have been created. Japan has been
investing in R&D projects and developing intensive marketing programs.

In addition to providing heavy competition for U.S. finished goods,
however, Japanese processors also provide a large potential customer base, for
U.S. suppliers of semi-finished and other high-value food inputs. The increase
in imports of processed food products has forced Japanese domestic food
manufacturers to search for ways to cut costs, particularly raw material and
labor costs which account for 59% and 11%, respectively, of total manufacturing
costs. In order to cut costs, many Japanese food processors have turned to
overseas suppliers for high-quality, competitively priced intermediate food
products. This is resulting in an agricultural processing industry that is more
accessible to exporters.
Exports of intermediate food products from the United States are a small
percentage of total U.S. agricultural exports to Japan. However, there are many
areas within the Japanese food processing sector where U.S. exporters could be
competitive, given U.S. processing technology and the ability to supply products
with uniform size, color and texture. An example is the bakery/confection
industry which uses large amounts of semi-processed fruits and nuts.


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