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THIS REPORT CONTAINS ASSESSMENTS OF COMMODITY AND TRADE ISSUES MADE BY USDA STAFF AND NOT NECESSARIL... - page 16 / 38

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layoffs, consolidation of offices and factories, and cutbacks in corporate fringe benefits. However, long-term prospects are brighter as higher demand from contract caterers serving the hospital and social welfare segments is expected. This growth will be driven by an increasing aging population.

Food Processing Sector Appendix C lists important food manufacturers in several food sectors. These food processors offer a number of

opportunities to U.S. exporters and they have the capacity to buy the following types of products from overseas: Ingredients for production in Japan; Finished products to be sold under their own labels; Finished products to be sold under the exporter‘s brand, but distributed through the importer‘s channels. Dealing with food processors offers advantages as follows: They often buy in large volumes; They have sophisticated distribution systems; They have a good understanding of their suppliers‘ businesses.

Exporters should be prepared for requests from Japanese manufacturers, as they are very demanding regarding the release of data on product quality, origin of ingredients, and other related information. In large part, regulations from the Government of Japan require manufacturers to protect themselves from risks. Such information is also increasingly important because of recent food scandals in Japan and growing concerns about food safety and traceability among Japanese consumers. U.S. exporters must be prepared to deal positively and promptly with these issues to compete in this market.

Online Sales in Japan In 2009, the total number of Internet subscribers in Japan reached 99 million, more than doubled what it was in 2000 when the number of users recorded was 48 million. Nowadays, online shopping is becoming more and more popular among the Japanese and e-commerce is gaining popularity as well.

The Japanese Ministry of Economy, Trade and Industry stated that the market size for e-commerce was approximately $55 billion in terms of annual sales in 2009. Japan‘s largest online mall, Rakuten, experienced a 19.4% increase in net sales from FY2008-2009. It appears that other online-based retailers are also experiencing continuous growth in Japan. While online sales are often dominated by electronics and clothing, food is a growing sector within the area of e-commerce.

According to a survey conducted by Yano Research Institute in 2009, the food sales of GMS, supermarket, and CVS through the Internet was also increasing, totaling $248 million in CY2008, with its sales expected to grow 26% to reach $312 million in CY2009. According to the Japanese Ministry of Internal Affairs and Communications, online sales are expected to continue to expand as customers cite that internet shopping has many advantages such as that it can be done 24/7, saves time with no transportation cost, makes comparing products and prices easy, and allows for a larger selection. Currently, it appears that growth of food sales on the

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