As New Zealand’s fourth largest trading partner, Japan remains a key export partner, with 50% of New Zealand exports in the food and beverage category.
According to the recent Japan Market Report by MFAT, New Zealand exports to Japan in July were 8.3% lower than the same time last year but fared better than the overall 22% drop in Japan’s imports from all countries. Looking back at the first half of 2020 (Jan-June) New Zealand goods exports to Japan increased by 10.3% to $2,063 million, the highest total export value for this period since the previous record in 2001.
Key reasons for the relative success of New Zealand exports into Japan have been the fact that the majority of our exports are essential products such as food - our food exports are seen as Healthy and our exporters have been nimble in adapting to changing sales channels.The reduction in tariffs agreed under CPTPP has also added an extra boost in some sectors.
Despite border restrictions and the global economic slow-down, three Japanese companies have announced major new investments in New Zealand over the past few months, according to a report from the Ministry of Foreign Affairs and Trade.
A recent spike in COVID-19 cases indicates the emergence of a second wave of infections, which would likely setback Japan’s economic recovery efforts.
Tourism and education service exports continue to be severely hit by COVID-19, and look set to remain this way in the short to medium-term due to border restrictions.
The announcement by Rio Tinto that it will wind up its operations at the Tiwai Point aluminium smelter in August 2021 will have a significant impact in the medium term, with aluminium making up approximately 16% of New Zealand’s goods exports to Japan.
At this stage, there are no major changes to supply chain and logistics within Japan.
Japanese corporates have been focused on maintaining business as-is and securing stability for the current products and relationships they have. This is a difficult time to introduce new products and concepts in Japan, given the importance placed on developing relationships in person and over a long period of time.