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Japan's Biggest Industries Worth Investing In

Feb. 22, 2021 3:44 AM ET
Please Note: Blog posts are not selected, edited or screened by Seeking Alpha editors.

Seeking Alpha Analyst Since 2017


  • Japan's economy has a long history of deflation and stagflation, which has caused many foreign investors away.

But that's not the case anymore! The country is now, more than ever before, appealing to investors. A combination of structural changes, political stability, and a more flexible corporate governance has made Japan ripe for growth these days.

Today, Japan has a market-oriented and highly developed economy. And, this is obvious from the fact that it is the third-largest economy in the world by gross domestic product. According to the International Monetary Fund, Japan has a GDP of about 5 trillion.

Besides the country's obvious economic performance, there are plenty of reasons why investors may consider investing in Japan over the coming years. For example, one major reason why Japan is so popular among investors these days is that it is a technology leader. The country is known as a leader in robotics and technology.

If you began to pay attention to the Japanese market, you're likely wondering, "But where to invest?". Well, we have some great news because there are plenty of sectors in the country that are performing incredibly well these days and are worth investing in. Here are Japan's biggest industries that foreign investors should pay attention to.

Pharmaceuticals industry

Last year, in 2020, the pharmaceuticals industry in Japan was perceived as the most appealing sector by investors, according to data from Statista.

Japan's pharma market is one of the world's biggest, coming strong after the US and China, valuing about $95 billion according to data from the country's Ministry of Health, Labor and Welfare. What's more, according to Statista, in 2018, the production value of prescription drugs in the country was worth nearly 6.17 trillion Japanese yen.

One of the pretty obvious reasons why Japan's pharmaceutical sector performs so well is the fact that the country has a rapidly ageing population. And, as expected, older people need more medicine.

Foreign or local investors can take advantage of the country's population increasing need for medications. Besides the increased demand, the government's efforts to address these needs involve easing various life science regulations and encouraging faster approval of innovative new drugs. These efforts result in helping current pharma companies in the country and attracting new companies to the Japanese market.

Telecommunications industry

Globally, the telecommunications sector is skyrocketing as data infrastructure is becoming more critical by the day in a connected world. The Japanese telecommunications industry is no exception to the rule.

In fact, the Japanese telecommunications sector is the third-largest market in the world by revenue, having three major fixed and mobile network providers that have made massive investments in towers and fiber infrastructure over the past decades.

The country is experiencing a growing mobile phone penetration and high fixed broadband take-up in households across the country.

2018 data from Statista shows that the sales of the telecommunications sector in the country accounted for nearly 13.9 trillion Japanese yen. What's more, in 2020, the sector was the second most appealing industry for investors.

Technology industry

We've already mentioned that Japan is seen as a global leader in technology thanks to the country's advancements in robotics and high-end technology.

For some years now, the country's government has worked to encourage collaboration between digital commerce and regulation. Only last year, the country signed a digital trade agreement with Washington and made huge efforts to encourage global data governance through its Data Free Flow with Trust (DFFT) framework. The country has all the motives and means to mitigate all obstacles to digital cooperation.

But that's not all. The country's biggest companies reported last year that they were planning to invest 15.8% more in information technology. With investment in technology accelerating these days across the country, the tech sector is only expected to skyrocket over the next few years.

Online gambling industry

If you have an online casino, now it's the time to expand and invest in offering your services to the Japanese gamblers as well because the Japanese online gambling industry is booming these days.

The country still has some strict and complex laws and rules on gambling in the country. However, in 2018, some regulatory changes have made it possible for land-based traditional gambling venues to be opened across the country. But, that's only going to happen in a few years from now.

Until then, Japanese gamblers turn to non-Japanese online casinos. For this reason, with online gambling growing in popularity among Japanese players, a variety of online casinos have joined the country's market. These foreign providers are particularly appealing to younger generations who engage with such games online.

Why is online gambling thriving in the country these days? Because the government can't deter its citizens from playing casino games, poker games, or slot machine games using online foreign bookmakers. There is no legal framework to forbid that.

Suppose you were to read the latest online casino information. In that case, you'd find that in Japan, virtual casinos are really popular here as they are tailored to cater to Japanese players, including colorful color schemes, great animations, and many tech features to enhance and personalize each gambling experience.

Real estate industry

The real estate industry in the country is also performing great in the eyes of foreign investors who are targeting Japan for its living sector. Changing lifestyles and demographics have driven new niches in Japan's residential market: multifamily senior housing, student accommodation, and co-living.

The country's aging population is driving the increased demand for senior housing, particularly in the aged care sector. What's more, as the country is targeting an increase in international students who will study here, investing in student housing also make sense in a nation with an aging and declining population. Specialists believe that modern specialist student accommodation will help attract not only Japanese students but also international students.

Analyst's Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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