          
          
                   BEST U.S. EXPORT PROSPECTS
          
          Many areas in the Japanese market have substantial 
          opportunities for U.S.  exporters to Japan. Today, 
          exporting American goods and services, as well as 
          investment in Japan, is a wise course for many businesses 
          planning expansion.  The competition is intense, but when 
          an American firm correctly identifies a competitive window 
          in a Japanese product sector and has the capability to 
          effectively export a quality product to Japan, it will 
          likely find an opportunity for successful sales.  A great 
          effort must be made to gain initial market share.  However, 
          a firm with long-range goals is well-positioned to find 
          eventual profitability.
          
          The following ten product areas are considered to offer 
          significant export opportunities to American firms.  They 
          were chosen because they offer (1) short-term growth 
          potential or (2) a large market receptive to additional 
          U.S. suppliers.  The list highlights product areas where 
          Japanese demand is strong, and American suppliers are 
          competitive and have the greatest likelihood of expanding 
          exports to Japan.  For many of these sectors, a brief 
          Industry Subsector Analysis (ISA), which provides more 
          information, is available.  For a list of ISAs, contact the 
          Japan Export Information Center (JEIC) at (202) 377-2425.
          
          Note, however, that the term "promising export areas" does 
          not necessarily mean that U.S. companies in these sectors 
          can successfully enter the market or that they are 
          better-positioned to satisfy market demand and to take a 
          market share over other competitors.  Rather, it more 
          specifically means that various commercial environmental 
          factors indicate that there is increasing demand in such 
          sectors and that after having identified the opportunities 
          for growth, domestic companies are aggressively entering 
          the market, as well as other Asian and European firms. 
          Therefore, competition in promising export product areas is 
          very intense, with domestic companies especially inclined 
          to rush into these market sectors irrespective of the 
          effect on short-term profitability.
          
          The name of each product sector is followed in parentheses 
          by:  (1) estimated market size in 1991, (2) estimated 
          market growth rate from 1991 to 1993, (3) estimated U.S. 
          imports in 1991, and (4) estimated average growth rate of 
          U.S. imports in 1991.
          
          Pharmaceuticals
            ($50 billion, 3 percent, $900 million, 5 percent)
          
          Japanese physicians and other medical specialists look to 
          the United States for the most advanced products.  However, 
          in the over-the-counter market, U.S. brands are not very 
          well known.  Japanese drug manufacturers have stepped up 
          their R&D activities, and European suppliers are 
          consolidating their distribution networks.  Importation and 
          sales, as well as local production, of pharmaceuticals is 
          one of the most tightly regulated areas.  There are two 
          interrelated Japanese governmental approvals necessary:  a 
          "shonin" for a product based on its efficacy and safety and 
          a "kyoka" for the business of manufacturing or importing, 
          which requires a minimum level of personnel and facilities. 
          Pharmaceuticals account for approximately 30 percent of 
          Japan's total medical expenditures. Products for an aging 
          society, including diagnostic and therapeutic drugs for 
          elderly diseases, have high growth potential.  The most 
          promising subsectors are in-vitro diagnostic test reagents 
          and home tests, with an estimated market size of 
          approximately $2 billion and $35 million, respectively.
          
          
          Telecommunication Services
            ($60 billion, 8 percent, $2.7 billion, 10 percent)
          
          The Japanese Telecommunications Law (TBL) was liberalized 
          to allow competition with the traditional common carriers, 
          Nippon Telegraph and Telephone (NTT) and Kokusai Denshin 
          Denwa (KDD).  As a result, there are some 40 Type I 
          (common) carriers competing with them.  The TBL also allows 
          one-third foreign equity participation in the common 
          carrier business.  In particular, Regional Bell Operating 
          Companies (RBOC) should have an excellent opportunity to 
          participate in Type I business.  The market for land mobile 
          communications services will grow rapidly in the future, 
          which should present further opportunities in the next 
          generation of services for cordless telephones. A most 
          promising subsector is cordless telephone 
          licensing/Japan-wide services with an estimated market size 
          of approximately $800 million.
          
          
          Marine Fishery Products 
             ($30 billion, 1.5 percent, $2.5 billion, 12 percent)
          
          Demand in this sector remains basically strong.  The total 
          Japanese domestic catch in 1990 decreased from 1989 by 9 
          percent to approximately 11 million metric tons.  Notable 
          decreases are seen in sardines, 12 percent to 3.6 million 
          tons; Pacific mackerel, 47 percent to 248,000 tons; Alaskan 
          pollock, 23 percent to 883,000 tons; squid, 28 percent to 
          532,000 tons; bonito, 12 percent to 299,000 tons; and tuna, 
          7 percent to 278,000 tons.  Total imports in 1990 improved 
          by 6 percent to about $11 billion from 1989.  Imported 
          seafood comprised approximately 30 percent of total seafood 
          consumption.  Notable increases were seen in fresh and live 
          seafood such as shrimp, salmon, and tuna.  Processed 
          seafoods, such as eel and pollock roe, also increased.  The 
          top seafoods imported from the United States include frozen 
          Pacific salmon ($650 million), frozen snow crab ($260 
          million), frozen surimi ($240 million), frozen sablefish 
          ($110 million), frozen king crab ($100 million), frozen 
          salmon roe ($93 million), frozen cod/pollock roe ($90 
          million), frozen herring ($75 million), frozen cod ($70 
          million), and live or fresh sea urchin ($67 million).  The 
          most promising subsectors include fresh and frozen salmon 
          (an estimated market size of approximately $2 billion), 
          frozen crab ($850 million), and frozen mackerel ($100 
          million).
          
          
          Biotechnology Products 
             ($700 million, 15 percent, $10 million, 10 percent)
          
          Japanese look to the United States for innovative 
          technologies and products in this field. Historically, 
          Japan has had good fermentation technology.  Large 
          nontraditional biotechnology companies which have abundant 
          financial resources are also making inroads.  It is widely 
          believed in Japan that biotechnology could trigger a second 
          technological revolution, following in the wake of the 
          electronic revolution.  According to the Bioindustry 
          Association, the market by the year 2000 will be 
          approximately 15 trillion yen (roughly $107 billion at 140 
          yen/US$).  Both the Japanese Government and private sector 
          are accelerating their R&D in biotechnology.  The most 
          promising subsectors include pharmaceuticals and chemicals, 
          with market sizes of approximately $460 million and $100 
          million, respectively.
          
          
          Medical Equipment and Supplies 
             ($10 billion, 5 percent, $1.5 billion, 10 percent)
          
          Japanese medical professionals generally look to the United 
          States for innovative and advanced products, but some 
          criticize the lack of good after-sales service from U.S. 
          suppliers.  Competition from local manufacturers, followed 
          by German and Swedish suppliers, is strong.  Japanese 
          technology is said to be superior to other countries in 
          areas such as ultrasonic equipment and fiberscopes.  The 
          United States dominates markets for implantable devices 
          including pacemakers, artificial heart valves, and 
          artificial joints.  Importation and sales, as well as local 
          production of medical equipment, are tightly regulated.  
          There are two interrelated Japanese governmental approvals 
          necessary:  a "shonin" for a product based on its efficacy 
          and safety and a "kyoka" for the business of manufacturing 
          and importing, which requires a minimum level of personnel 
          and facilities.  The Japanese market for products in this 
          sector is steadily expanding.  Products for the elderly 
          and, in particular, cost-effective diagnostic and 
          therapeutic products have high growth potential.  The most 
          promising subsectors include diagnostic imaging equipment 
          and implantable devices.
          
          
          Industrial Chemicals
             ($160 billion, 3.5 percent, $6.5 billion, 10 percent)
          
          Imports from the United States constitute approximately 
          one-third of Japanese chemical imports. Many Japanese 
          trading companies are aggressively seeking opportunities to 
          develop new businesses with U.S. chemical companies, even 
          for very small market niches.  Innovation is the key factor 
          which they want to see in these types of products.  Even 
          large trading companies, which need at least $15 million in 
          annual sales to sustain one employee, look for new business 
          with as little as $300,000 in annual sales potential.  For 
          small to medium-sized Japanese trading companies, the 
          prospective sales figure can be as low as $150,000.  Small 
          to medium-sized U.S. chemical companies with unique 
          technology should have good opportunities.  The most 
          promising subsector is specialty chemicals, with a market 
          size of approximately $100 million.
          
          
          Aircraft and Parts
             ($8.9 billion, 8 percent, $4 billion, 10 percent)
          
          The number of U.S. manufacturing firms in the aircraft 
          sector is limited and virtually all have offices in Japan.  
          These companies are constantly evaluating the balance 
          between competition and cooperation with Japanese 
          manufacturers involved in aerospace.  The number of 
          cooperative efforts among American, European, and Japanese 
          firms has increased markedly in recent years.  While the 
          United States still maintains a commanding lead in aircraft 
          and components, demonstrated by the U.S. bilateral trade 
          surplus, Japanese aircraft exports have been expanding in 
          recent years.  Another important competitive factor is the 
          entry of European manufacturers into the Japanese market. 
          Their aggressive marketing efforts pose a possible threat 
          to the long-standing dominance of U.S. products in the 
          Japanese market.  The most promising subsectors are 
          military and civil aviation aircraft with market sizes of 
          approximately $2.9 billion and $3.4 billion, respectively.
          
          
          Architectural/Engineering/Construction Services
             ($620 billion, 5-12 percent, N/A, N/A)
          
          On May 25, 1988, the U.S.-Japan Major Projects Arrangement 
          (MPA of 1988) became effective. The MPA designated 17 major 
          projects as special-measure projects offering opportunities 
          for U.S. firms in architectural design, engineering 
          consulting, construction, and goods procurement.  The 
          estimated value of these projects is $17 billion.  In June 
          1991, the U.S. and Japanese Governments completed a 
          two-year review of the MPA and reached an agreement to 
          renew and revise the MPA of 1988.  The new arrangement 
          expanded coverage to 17 additional projects, as well as 6 
          pending projects.  These 23 additional projects are worth 
          an estimated $26.7 billion.  The most promising subsectors, 
          along with an estimate of their market size in millions of 
          U.S. dollars, are architectural services for private 
          projects ($7,800), resorts in western Japan ($28,000), 
          Sports Island ($850), Kyoto Station Building ($700), and 
          Synchrotron Projects ($300).
          
          Sporting Goods
          
          ($14.1 billion, 4 percent, $365 million, 5 percent)
          
          The import market for sporting goods has grown by 6 percent 
          per year for the last several years, and this upward trend 
          is expected to continue until the end of this century.  
          Several factors are driving this growth, including resort 
          development, an increase in leisure time, the development 
          of new lightweight materials, and international competition 
          such as the Olympics which are to be held in Nagano in the 
          winter of 1998.  As a result of an increased interest in 
          nature, outdoor activities have become very popular, and 
          the market for outdoor equipment should continue to grow.  
          The most promising subsectors, along with an estimated 
          market size in millions of U.S. dollars, include golf 
          equipment ($2,700), outdoor equipment ($1,400), pleasure 
          boats ($600), and fitness equipment ($500).
          
          
          Computer Software and Services
             ($19 billion, 25 percent, $280 million, 30 percent)
          
          A shortage of computer software engineers forces computer 
          end-users to use packaged software more, and to seek 
          systems software to increase productivity of software 
          development.  To enter the Japanese market, "Japanization" 
          is a must, including localization, and translation of 
          computer software.  The software to be introduced to the 
          Japanese market should have a good sales record in the U.S. 
          market.  The most promising subsectors include personal 
          computer software and baseline software for mainframes, 
          with an estimated market size of $1.2 billion and $1.1 
          billion, respectively.
          
          Other promising export areas include the following sectors:
          
          (1)  Building Products
               ($6.7 billion, 3 percent, $1.1 billion, 2 percent)
          (2)  Laboratory Scientific Equipment
               ($4.1 billion, 7 percent, $720 million, 9 percent)
          (3)  Computers and Peripherals
               ($38 billion, 10 percent, $2.7 billion, 10 percent)
          (4)  Plastic Materials and Resins
               ($49 billion, 5 percent, $900 million, 17 percent)
          (5)  Automotive Parts
               ($92 billion, 5-10 percent, $680 million, 15 percent)
          (6)  Films and Videos
               ($1.5 billion, 3 percent, $425 million, 10 percent)
          (7)  Jewelry
               ($18.2 billion, 3 percent, $340 million, 4 percent)
          (8)  Telecommunications Equipment
               ($15.8 billion, 5 percent, $750 million, 35 percent)
          (9)  Apparel
               ($67 billion, 3 percent, $185 million, 6.5 percent)
          (10) Household Consumer Goods -- Interior Industry
               ($56 billion, 7 percent, $250 million, 20 percent)
          (11) Machine Tools and Metalworking Equipment
               ($7.9 billion, 20 percent, $195 million, 30 percent)
          (12) Industrial Process Controls
               ($3.5 billion, 5 percent, $120 million, 8 percent)
          (13) CAD/CAM/CAE Systems
               ($2.5 billion, 15 percent, $1.1 billion, 20 percent)
          (14) Processed Foods
               ($185 billion, 5 percent, $2 billion, 7 percent)
          (15) Paper and Paperboard
               ($56 billion, 3 percent, $600 million, (-)1-(+)2 percent)
          (16) Electronic Components
               ($33.8 billion, 13 percent, $6.2 billion, 20 percent)
          (17) Electronics Industry Production and Test Equipment
               ($17 billion, 7.6 percent, $1.5 billion, 6 percent)
          (18) Giftware
               ($25 billion, 5 percent, $125 million, 15 percent)
          (19) Veterinary Equipment and Supplies
               ($3.2 billion, 25 percent, $200 million, 30 percent)
          (20) Automobiles and Light Trucks/Vans
               ($90 billion, 5-10 percent, $510 million, 10 percent)
          (21) Advanced Ceramics
               ($7.3 billion, 9.6 percent, $65 million, 15 percent)
          (22) Pollution Control Equipment
               ($5 billion, 8 percent, $10 million, 9 percent)
          (23) Cosmetics
               ($14 billion, 5 percent, $64 million, 50 percent)
          (24) Health Care Services
               ($155 billion, 5 percent, $10 million, 10 percent)
          (25) Wooden Furniture
               ($19.2 billion, 10 percent, $86 million, 30 percent)
          (26) Air Conditioning and Refrigeration Equipment
               ($16.7 billion, 5 percent, $115 million, 10 percent)
          (27) Made-Up Textile Products
               ($9 billion, 4 percent, $90 million, 5 percent)
          (28) Security Equipment
               ($1.5 billion, 12 percent, $5 million, 23 percent)
          (29) Printing and Graphic Arts Equipment
               ($3 billion, 12 percent, $65 million, 15 percent)
          (30) Coal
               ($7.4 billion, 2 percent, $755 million, (-)5-(+)2 percent)
          
          
          
