Japan’s cross-border e-commerce booms thanks to cheaper yen

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Japan’s cross-border e-commerce is booming again, with many small businesses joining the market to take advantage of the sharp drop in the yen and advances in information technology, which makes it easier to communicate with buyers and manage paperwork. customs.

The United States and China are the biggest markets for Japanese products. Online sales to China reached 2.13 trillion yen ($14.37 billion) in 2021, up 10% from a year earlier, while sales to the United States increased by 26% to reach 1.22 billion yen, according to the Ministry of Economy, Trade and Industry. The combined total equates to around 10% of Japan’s overall exports to the two countries for the same year, although online transactions under 200,000 yen are excluded from the statistics.

Overall sales are also growing. The yen sales index in the first six months of 2022 rose 80% from the same period in 2020 and was up 3.7 times from five years earlier, driven by orders from from Southeast Asia, Europe and North America, according to Beenos. , Japan’s leading cross-border e-commerce service provider. The Tokyo company helps more than 3,000 companies sell goods overseas.

Strong demand for Japanese diapers and other everyday items created a cross-border e-commerce boom around 2015. But this time sales are dominated by luxury items, including accessories and watches, according to Shota Naoi, Chairman of Beenos.

Thanks to the strong depreciation of the yen, Japanese products are now cheaper abroad. Despite inflation, average spending per customer on Japanese goods has only increased by 4% in two years since the first half of 2020 when converted to local currencies using effective exchange rates, according to Beenos, which has compiled data from its trading partners. According to Beenos, about 26% of American consumers who buy goods online from abroad have increased their spending on Japanese products.

The yen briefly dipped above 149 against the dollar on Oct. 17, hitting a new 32-year low.

Kurenai, a curtain manufacturer in Osaka, enjoys strong sales on Amazon in the United States. In particular, the company has noted strong demand for its high-end “one-way” curtains that allow users to see out but not the other way. “The depreciation of the yen helps us make profits,” Kurenai Chairman Yoshiro Tsuda said.

This article is from Nikkei Asia, a global publication with a unique Asian perspective on politics, economics, business and international affairs. Our own correspondents and outside commentators from around the world share their views on Asia, while our Asia300 section provides in-depth coverage of 300 of the largest and fastest growing listed companies in 11 economies outside of Japan. .

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Bertrand, a Kyoto-based operator of an e-commerce site selling bento boxes, has seen monthly sales rise 20 to 30 percent year-to-date, from 12 million to 13 million yen. The company’s chairman, Thomas Bertrand, said the weak yen allowed him to pump more money into marketing and building inventory.

Advances in information technology have also lowered barriers to entry for small businesses in cross-border activities. Previously, if they wanted to sell overseas, they had to deal with the complexity of translating product descriptions, communicating with customers, and filing delivery and customs documents. But now they can use the services offered by major e-commerce operators and support agents.

A Japan External Trade Organization survey found that 48% of small businesses had started or were planning to do cross-border e-commerce, about 10 percentage points higher than among large businesses.

Productivity tends to improve when companies start exporting, according to the annual report on Japan’s economy and public finance published by the government’s Cabinet Office. “Cross-border e-commerce provides opportunities for small businesses to change business structure and management,” said Hideo Kumano, chief economist at the Dai-ichi Life Research Institute.

Japan lags behind other countries when it comes to e-commerce. An OECD survey found that only 22% of small businesses in Japan sell goods or services online, which is below the global average of 31%. This means there is still room for Japanese e-commerce to grow, although the cheaper yen may not last forever.

A version of this article was first published by Nikkei Asia on October 27, 2022. ©2022 Nikkei Inc. All rights reserved.

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