Japan: Samurai-sharp approach delivers positive outlook

With their focus on innovation and strategic business, Japanese companies in the UAE are faring well on a variety of fronts

Iona Stanley | Special to GN Focus
05:01 February 28, 2017
Japan sectors for web

Late last year, the Japan External Trade Organisation (JETRO) surveyed Japanese-affiliated companies in the UAE, Saudi Arabia and Turkey on their operations, business outlook and the investment environment. The findings, released this month, show that despite an uncertain global outlook, nearly 60 per cent of organisations surveyed expect business expansion and market growth. Companies in the UAE cited advantages besides free zones and non-taxation system, such as the living environment for Japanese employees and stable political and social conditions. 

GN Focus hand-picked a few key sectors where Japanese companies are making their mark in the UAE.

Electronics and technology 

Jebel Ali Free Zone (Jafza), the UAE’s flagship trade and logistics hub, has long been a distribution focal point for Japanese goods and products and is now focusing on business development and growth. “Over the past three decades, Japanese companies have played a pivotal role in stimulating trade between Jafza and various regional countries,” COO Talal Al Hashimi said in September while hosting a Japanese business forum. “Trade figures worth $2.7 billion [Dh9.9 billion], a growth of 36 per cent over the past five years, and the annual addition of new Japanese companies reflect the positive movement of the trade within Jafza.” 

The forum drew leading Japanese companies including Sony, Nissan, Panasonic, Nippon Steel, Sumitomo, Komatsu, Toshiba and Brother International. 

Dubai Silicon Oasis Authority (DSOA) has also been promoting opportunities and incentives to the Japanese tech community. At the Japan IT Week held last May at Tokyo Big Sight, a DSOA delegation led by Muammar Al Katheeri, Executive VP of Engineering and Smart City met with Japanese firms and potential investors in Dubai’s smart city initiatives such as the Silicon Park and the Dubai Technology Entrepreneurship Centre. “With Japan’s track record in technology innovation and as part of our commitment to position Dubai as the ideal hub for high-tech companies, we have targeted the Japanese market to brief them about the great potential that the region offers for technology companies to start their operations,” said Al Katheeri.

Motoring and automotive parts

Spurred by ongoing demand, a Japanese country pavilion made its first appearance at the Automechanika Dubai trade fair in May. The fair’s catchment market, primarily the GCC, Asia, Africa and India, trades about Dh5.5 billion worth of Japanese auto products every year, organisers said. Within the UAE, Japanese brands accounted for nearly 69 per cent of passenger vehicle sales in 2015, according to Frost & Sullivan. 

The Economist Intelligence Unit’s report, Japan’s Outlook in 2017, predicts rising growth for the country’s auto industry: “We forecast that car sales will rise by 3 per cent in 2017, as they rebound from two years of slump. However, growth will tail off again in 2018, until they finally get a bump upwards from the tax rise in 2019. For commercial vehicles, this year’s growth is projected at 1.5 per cent, and the industry will have to wait until 2019 for faster growth.” 

Industry and enterprise

Last month, the UAE Ministry of Economy signed a Memorandum of Cooperation (MoC) with its Japanese counterparts on innovation, joint initiatives, technology transfer and the streamlining of operations for small and medium enterprises in the UAE. 

Another MoC was signed between the RAK Investment Authority and Takenaka Middle East for a joint venture in Ras Al Khaimah, for an anti-rust material manufacturing plant deploying precision technology. Sultan bin Saeed Al Mansouri, UAE Minister of Economy, said at the event that the country is keen on capitalising on Japan’s leading position in advanced industries and its unique experiences in developing sectors related to innovation and scientific research. In focus are public-private partnerships between the two countries in fields such as renewable energy, infrastructure, construction, transportation, space and high technology. 

Fashion and retail

Japanese-origin retailers have long excelled at introducing UAE residents to specialty products, among them the minimalist lifestyle store Muji, fast fashion brand Miniso and mega bookstore Kinokuniya. Auto accessory superstore Yellow Hat has opened several outlets across the Emirates since 2008, while online retailer Butio.ae specialises in nappy brands Merries, Goo.n and Moony, as well as cosmetic brands Shu Uemura, Konnyaku, Shiseido and Kanebo. 

With its affordable Dh7 entry price point, Daiso is arguably the best-known Japanese retailer in the UAE, with no less than 31 outlets, and several new ones scheduled to open this year. “Japanese quality is globally well-known,” explains Manu Mulchandani, COO of Daiso Japan GCC. “Most of our customers view it as quality, efficiency and innovation at a low price. Walking through the aisles makes you realise that there are so many things to make your life easier, neater and more manageable. Another attraction is the range of innovative products that you always thought of, but never knew existed. The Dh7 price point enhances Daiso’s universal appeal and makes shopping more affordable.”

Food and beverages

Kyodo News recently reported that Japan’s exports of agricultural, forestry and fishery products in 2016 grew 0.7 per cent from the previous year to ¥750.3 billion (about Dh24.3 billion), a record high for the fourth straight year. According to the Farm Ministry, this reflects rising demand from health-conscious overseas consumers who are contributing to the popularity of washoku or Japanese food, notably beef, grapes, green tea and soy sauce. 

Junji Nakao, Director of the Japanese Food Department at JETRO Dubai, confirms that the global export of Japanese foods crossing the $7-billion mark in 2016 is mirrored in the UAE. “Japan’s food exports to UAE were valued at $51 million in 2016, and the value of premium Wagyu beef exports registered a 70 per cent increase,” he tells GN Focus. “Exports of food ingredients are also showing good increase, reflecting the increase in the knowledge and acceptance of Japanese foods and their health benefits.” 

Japanese food exports to the UAE in 2016 were led by carbonated drinks valued at $29 million, followed by confectionery, meat and its products, seafood and various ingredients. These growing interests will be represented at this week’s Gulfood Japan pavilion, which will be 1.5 times larger, with 44 participants and a separate Wagyu pavilion.

Healthcare technology

Several Japanese healthcare companies — some 100 years old — made their presence felt at the recently concluded Arab Health exhibition in Dubai, under the aegis of the Japan pavilion. The largest contingent to date since 2010 was notable for including 11 first-time and nine repeat participants. On display were infection control products, rehabilitation and physiotherapy equipment, hydrotherapy medical devices, automatic labelling systems, disposable surgical needles and gentle lighting. 

In a statement, Masami Ando, Managing Director of JETRO Middle East and North Africa, said the event aimed to showcase Japan’s advanced healthcare tech. “These include ultra-thin needles that reduce patient discomfort, a new anti-decubitus air mattress system and micro blades with uniquely shaped edges for fine incision. This calibre of innovation is why Japan has been a long-time pioneer in the industry.”