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.
Despite the serious economic impact that the COVID-19 pandemic is having in Japan, New Zealand goods exports continued to perform strongly in March and April, increasing by 28% compared to April 2019; the highest-ever level of exports on record from New Zealand to Japan during the month of April.
A State of Emergency was called in early April, but has now been lifted across Japan.
Tokyo has moved into Step 1 of a 4-step reopening process, allowing the reopening of museums, libraries and indoor sporting facilities, as well as extending the business hours for restaurants and bars until 10pm.
There will be a transitional period assessed every three weeks, and requests for people to stay at home and avoid large gatherings may be eased only gradually. People are asked to refrain from crossing prefectural borders for the rest of the month and the request will be relaxed in stages. Prime Minister Abe plans to end all restrictions by August 2020.
The country still faces challenges in tackling economic recession, caused not only by the effects of COVID-19, but by slower consumer activity following a sales tax increase to 10% in October 2019 and the postponement of the 2020 Tokyo Olympics.
Government statistics from May 2020 confirm Japan’s recession and decreases in key economic indicators, but it is not as bad as previously forecast. Whether these statistics will catch up to the predictions mid-year remains to be seen.
At this stage, there are no major changes to supply chain and logistics within Japan. Air New Zealand has re-started direct air freight flights from 19 May and plans to have two flights per week depending on freight loads. Sea freight has been mostly unaffected during this time.
Supermarkets, in particular, are seeing growth in food and beverage categories, but department stores and food service channels continue to be negatively impacted.
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.
Even with densely populated cities, Japan's acceptance of social discipline and a well equipped health system have helped it manage the impact of COVID-19 better than some other markets, making it an important partner for New Zealand to focus on. When a reset occurs, some of the revenue impacted by COVID-19 will be recovered, as the Japanese start going out and treating themselves and others again.