Despite Chinese presence, Japanese companies looking to tap African market

Japanese companies have geared up to operate in Africa in recent years, with demand for products such as food and medicine growing in the resource-rich continent on the back of population booms in many countries.

At the Japan-led Tokyo International Conference on African Development (TICAD)that convened in Nairobi over the weekend, Prime Minister Shinzo Abe pledged that Japan will bolster measures to boost investment in Africa.

But Japan is likely to lag behind Europe that has historical relations with African nations, as well as China, which has rapidly expanded its presence in the continent, some economists say.

Nearly 400 Japanese firms have been operating in Africa and many of them have started to do so since 2011, according to the Japan External Trade Organization.

The global financial crisis in 2008, which dragged down growth in the advanced and emerging economies, apparently prompted more Japanese companies to tap into the new market.

Countries such as Kenya and Nigeria, with dense populations, are popular among Japanese firms.

Honda Motor Co. opened a plant in Nigeria in July last year, its first in Africa. While it has assembled some 1,000 vehicles there annually, Japan’s third-biggest carmaker by volume believes that the four-wheel vehicle market in Nigeria will grow.

Sojitz Corp. is trying to beef up its water business in Africa.

The Japanese trading house began a desalination business in Ghana in February 2015 in tandem with local and Spanish partners. The joint venture is scheduled to supply up to 60,000 tons of water a day.

Another Japanese trading house, Toyota Tsusho Corp., and French supermarket operator Carrefour SA, launched a shopping mall in Cote d’Ivoire last December. They have agreed to open shopping centers and supermarket outlets in eight African nations by 2020.

Despite such efforts, Japanese firms are expected to face a rocky road to survive in the African market, as Chinese firms have already sent more than 1 million workers to the continent, 100 times more than Japanese companies have, an official of a major trading house said.

In Africa, Japan should compete with China in fields such as geothermal power generation technology, in which Japan is a world leader, the official said.

At this weekend’s TICAD event, Abe announced Saturday that Japan will mobilize a total of $30 billion in private- and public-sector funds to invest in Africa over three years.

Leave a Reply