Martin Donnelly, permanent secretary at the Department for Business, Innovation and Skills, travelled to Japan on a mission
to improve trading links. He told Director what happened
What was the main purpose of your visit?
Well, Japan is an economy twice the size of Britain and it's very important for us. So following on from the prime minister's visit in April, I was there to work on our trade and investment links with the automotive sector, science and innovation, and higher education – making sure they understood the offer of our globally outstanding universities and our higher education sector more generally.
I also wanted to build personal relations with companies like Toyota, Honda and those in the pharmaceutical sector – and build contacts with the very important second-tier automotive supply companies to encourage them to invest in and do business with companies here. I lead our relationship with these very important inward investors to the UK.
What makes Japan so important for UK businesses?
The Japanese economy is coming out of a tough period, not least
because of the earthquake and tsunami last year. Growth is returning, and it's important Japanese investors understand that the UK is the best place for them to invest in Europe – and also that British companies are encouraged to move into this market. It's not the easiest market, but it is a rich one – and also a good way into China. We already have a good position – getting nearly 20 per cent of all Japanese investment in Europe. But there's always more to do.
What were the highlight achievements of the trip?
It was great to pick up a sense in Japan of appreciation for the qualities of the UK economy, our political stability and our openness. Against that background we were able to seek specifics in areas like space and satellite technology, which we'll take forward through the UK Space Agency. And I was able to underline our global competitiveness in sectors like life sciences, creative and digital industries and ICT, encouraging Japanese companies to look for partners over here. I also focused on the wider Japan-EU Economic Partnership Agreement under discussion in Brussels, which could boost our exports to Japan by over €40bn (£32bn) a year. But it does need Japan to show it is prepared to move on some of the non-tariff barriers to trade, which still exist in some sectors.
What infrastructure is in place to help UK business in Japan?
What we've got now is a tailor- made partner network available to British business through our embassy in Tokyo and our consular general in Osaka, which can provide focused market research, lists of partners and organised network events. We've got a UKTI guide, Doing Business in Japan, available online, which is a great resource for new companies interested in learning more, giving them a route map of the way into the Japanese market. And UK Export Finance now offers a really good range of financial protection and insurance, and help with working capital for companies that might be taking on large export orders.
What advice would you give SMEs wanting to reach the Japanese market?
I'd underline three points: First, it's probably not the first market abroad for most companies but it is a very rich market. Second, it's a market where relationships are important and our UKTI team are very good at helping companies build those. Although it takes time, it's an investment worth putting in place. And third, it's a market that values quality – so selling to the Japanese market successfully is
a great badge to be able to use in wider Asian markets. I think there are a lot of companies which will find Japan more profitable than they might think, and I would therefore recommend getting in touch with UKTI – particularly if they're already exporting elsewhere and looking for opportunities. This is a growing market and a sophisticated one.
What are the UK's relationships in Japan like right now?
We have good relations that go back now over many years. I was talking to the chairman of Toyota, to Honda's senior management team and there's a lot of interest in Britain at the moment, not just in the strengths of our manufacturing base. Also, of course, with the Olympics coming up we're going to see a lot of senior businesspeople coming over to the UK. So we'll be looking to bring them together with British businesses, including SMEs, to make clear that, whether it's in the supply chain or developing new products, we have a huge amount to offer. I see the Olympics as a great chance of bringing together some of those big global investors with new groups of companies which can do business with them.
If you could say one thing to UK businesses about Japan, what would it be?
We already do a lot of business with Japan – in sectors like medical, pharmaceutical products, power generating machinery, business services and so on. But there is much more that British companies can do, and our UKTI team are ready and willing to help them. So I think more of our companies can really look at Japan as a market in itself and also as a way into China and the rest of Asia.