Comparing Japan And American Food Markets Essay, Research Paper

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.

Conclusion

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-

packaged.

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.