EU-Japan business relations

Presentation in Chatham House seminar; Going for Growth , The Future of the EU-Japan Partnership

March 9 th , 2012 Takayuki SUMITA Japan Machinery Center Brussels Office

1 Current win-win partnership 1-1 Japanese industry as a contributor to the EU Huge Job Creation by Japanese Companies in Europe The EU: No. １１１ Investor to Japan €60 billion Japan: No.3 Investor to the EU €140 billion (outstanding amount as of 2010) MOF ，BOJ balance of payments statistics

Japanese overseas affiliates in the EU Survey of Overseas Business Activities as of 2009(FY) , METI (100 million yen) Total: Total: Number of employees: over 446,000 * Total: Total: 682,097 676,911 618,584 617,400 Sales: 220 bln EUR Total: 534,760 Intraregional procurement ： 39 bln EUR Total: 456,054 *Number of Employees by Japanese affiliates UK 132,532 Netherland 89,551 Germany 61,965 Belgium 29,612 France 24,519 Italy 16,540 3 Spain 13,854 Source: Bank of Japan

JapaneseJapanese Automakers’ Automakers’ Production Production/R&D and R&D Facilities Facilities in ithen the EU EU

(11) Toyota (12) Toyota @Walbrzych @Jelcz Laskowice (b) Nissan (j) Subaru @London (13) Toyota (k) Toyota @Zebentem @Kolin @Zabentem, (e) Mazda (a) Honda Bernaston @Swindon @Oberursel (8) Mitsubishi @Born ・Production: 13 plants in 8 countries (g) Toyota @Koln ・R&D: 12 centres in 5 countries (1) Nissan @Sunderland ・Employment: 136,000 people (c) Honda @Offenbach ・Purchases of EU Parts*: €9.73 billion (2) Toyota @Burnaston (*In FY 2009) (f) Mitsubishi @Trebur (3) Honda @Swindon (h) Subaru @Ingelheim am Rhein (4) Toyota @Valenciennes (k) Nissan @Cranfield,Barcelona, Madrid,Brussels,Bruhl (6) Toyota @Ovar (i) Toyota (5) Nissan @Nice (9)Suzuki (10) Isuzu (d) Isuzu @Barcelona, Avila, (7) Mitsubishi @Esztergom @Tychy @Gustavsburg Fuso Cantabria @Tramagal : Production Facilities : R&D Facilities Japanese IT industy Operations and Employment in the EU

Sweden Luxembourg Finland Denmark 7 / 708 1 / 42 2 / 416 2 / 347

Netherlands 12 / 2,157 Germany 26 / 21,132 Belgium 6 / 2,380 Finland Czech 9 / 4,760

UK Sweden 35 / 30,575 Poland Ireland 11 / 3,662 4 / 562 Denmark Ireland • More than 140 operations Slovakia France UK in 22 countriesNetherlands Poland 6 / 5,162 28 / 6,010 Belgium Germany Luxembourg • More than 100,000Czech employeesSlovakia Romania Austria Hungary Romania in 22France countries 2 / 37 Slovenia Spain Italy Bulgaria 15 / 2,812 Bulgaria 1 / 12 Portugal Spain Greece Slovenia Greece 1 / 10 1 / 2

Others Portugal Italy - / 14,733 3 / 327 14 / 1,552 Austria Hungary 7 / 1,725 5 / 2,935 Number in the box: Operations of the companies of Japanese IT industries association / Employees of the companies of Japanese IT industries association

1-2 Excellent European Companies in Japan High performance of European Companies in Japan

(100 mil JPY) Sales in Japan ( by main foreign investers) (100 mil JPY) Direct Investment Income in Japan ( by region) 250,000 : Survey of Trands in Business Activities of Foreign affiliates[METI] 9,000 :Balance of Payment[BOJ]

8,000 200,000 Europe, 7,000 55.3% EU, 6,000 63% 150,000 5,000 USA, 4,000 100,000 24.3% 3,000 USA, 33% 50,000 Others, 2,000 20.4% 1,000 Others, 4% 0 0 00FY 01FY 02FY 03FY 04FY 05FY 06FY 07FY 08FY 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

6 European Cars Good result in Japan

New Registrations of Imported Vehicles in Japan

New Registration of Imported Vehicles from Europe in Japan, in particular from Germany , increased compared from 2010 to 2011.

Group 2011 2010 %Change

VW (VW , Audi) *1 71,801 63,561 12.9%

BMW (*BMW, BMWmini) *1 48,545 43,764 10.9% Daimler (Mercedes, smart) 34,426 32,037 7.5%

FIAT (Fiat, Alfa Romeo, Maserati, Lancia) *2 8,554 8,226 4.0%

*1; Including brands that their headquarters are located in Germany.Source: JAPAN AUTOMOBILE IMPORTERS ASSOCIATION(JAIA) *2; Including brands that their headquarters are located in Italy. (Passenger cars, trucks and buses)

Share of import cars (Passenger cars) 5.9% Share of European imported Cars in the Japanese Market. new car registrations of 2010 in Japan: 2,927,602 imported cars from Europe : 172,571

4.3% Share of import Cars from Japan in the EU Market new car registrations of 2010 in the EU: 13,360,599 imported cars from Japan : 575,057

Active business of EU companies in Japan (eg.Clean Tech)

Solar Cell Wind Power Energy Conservation Smart City

Vestas ISOVER SAP Q-CELLS Denmark France Germany Germany Maintenance of wind power Manufactures and sells Develops and sells IT solutions Sells solar cells and modules; facilities insulators (glass wool); In 2011, collaborated with Incorporated in Japan in 2010. Has 3 factories across Japan; Itochu, Mitsui Fudosan, and Also, in 2011, announced other companies in the Smart establishment of a 4 th factory City Project of Chiba in Mie Prefecture. Prefecture.

Lithium Ion/Fuel Cell Member

UMICORE SGL Carbon SE Johnson Matthey Belgium BASF Germany U.K. Develops, manufactures, and sells Germany Manufactures and sells graphite Develops, manufactures, and sells lithium ion battery materials; Develops, manufactures, and materials for fuel cells; fuel cells, etc.; In 2011, started operating a new sells fuel cell catalysts; In 1997, incorporated in Japan. In 1995, incorporated in Japan. factory in Kobe. Planning to establish a new facility for promoting open innovation.

Industrial Gas Water Business LED Lighting

EVONIC AIR LIQUIDE Germany Philips France Manufactures and sells VEOLIA WATER The Netherlands Manufactures and sells silane gas; France In Nov. 2011, started selling phosphine gas and silane; In 2009, constructed a Water treatment In 1930, incorporated in Japan; energy-saving LED lighting factory in Mie Prefecture. engineering; Has over 10 factories across for vegetable and plant Has 3 subsidiaries in Japan; Japan. growing facilities. Provides sewage plant operation, maintenance, and management services to Hiroshima Prefecture and Source: created by JETRO based on Saitama Prefecture, etc. company websites 1-3 Successful collaboration in many areas

PSA – TOYOTA Motors Daimler – TORAY Isagro – SUMITOMO Chemical

PSA – Mitsubishi Motors FIAT – Toshiba Areva – Mitsubishi Heavy Industry

& etc.…

2. Visible effect even before negotiation Success in EU-Japan Sector Discussion EU and Japanese industries have started the discussion on EU-Japan EPA . - Establishing common aim on EU-Japan EPA - Identifying NTBs for both sides and seeking for possible solutions or the enhancement of market access Business Europe - Keidanren - Chairman’s meeting in July 2011 (Agreed on starting the discussion on EU-Japan) - Planning a joint event for EU-Japan in early 2012 Automobile : ACEA-JAMA - Meetings in September and December2011 - Discussing on the Non-Tariff Issues such as safety standards, zoning ICT : Digitaleurope - JEITA - Trade policy chairman’s meeting in September 2011 - Publishing joint statement for promoting EU-Japan EIA in November 2011 - Discussing on the Non-tariff Issues (ex. Environmental regulation, intellectual property, movement of people etc. ) Railway : EU railway manufacturers - Japanese railway companies - Meeting in October 2011 organized by JR East and Tokyo Metro in response to the EU side’s requests - Exchanging views constructively on enhancing market access (ex. Japan’s non-discriminatory procurement.) 10 3. Expected benefit of FTA+++

-Market Penetration, based on progress in NTM and better understanding of each market. In the case of Japan, 1) response to various needs of consumers with curiosity, 2) long-term reliance achieved especially from after sales activities are key factors for success.

-Increase in presence (example of auto sector in slide 12 )

-Investment and employment in partner country especially through the possible increase in on-site manufacturing in a better business environment through FTA+++

-Innovation based on the mentality of co-existence, or respecting the other’s strength (see slide 13)

-Collaboration in third countries (business, IPR rule and its implementation, standard---)

11

Impact of EU-Japan EIA to auto industries (report by Mitsubishi Research Institute)

EU Auto Market Japanese Auto Market

ProjectedProjected sales sales in in 2020: 2020: ProjectedProjected sales sales in in 2020: 2020: 16.316.3 million million units units 4.34.3 million million units units ImplementationImplementation of of anan EU-Japan EU-Japan EIA EIA ProjectedProjected sales sales in in 2020: 2020: ProjectedProjected sales sales in in 2020: 2020: 17.017.0 million million units units 4.44.4 million million units units (+742,000(+742,000 units units / /4.6% 4.6% increase) increase) (+97,000(+97,000 units units / /2.2% 2.2% increase) increase)

EuropeanEuropean brands: brands: +470,000 +470,000 units units (+3.9%) (+3.9%) EuropeanEuropean brands: brands: +48,000 +48,000 units units (+25.1%) (+25.1%) JapaneseJapanese brands: brands: +177,000 +177,000 units units (+9.2%) (+9.2%) JapaneseJapanese brands: brands: +47,000 +47,000 units units (+1.2%) (+1.2%)

Implementation of an EU-Japan EIA will facilitate automobile market expansion in the EU and Japan, bringing benefits for both European and Japanese brands.

1212 Japan’s Innovation Efforts

France Japan Germany U.K. China Korea

ＧＤＰＧＤＰＧＤＰ (2010, bil. euros)

ＧＤＰＧＤＰＧＤＰ per capita (2010,euros) Patent application (patented) Patent application (patented)/100,000 people R&D Expense, 2009 mil. euros) Nobel Prize Winners in Science Nobel Prize Winners in Science 4 9 6 8 0 0 (‘00-’10) Expense for Consumption, 2009 (bil. euros) Consumption per capita, 2009 (euros) License fee paid, 2010 (mil. euros) License fee received, 2010 (mil. euros)