More than four fifths (82%) of German companies doing business in Japan generated profits last year, with close to a quarter (23%) achieving pre-tax margins exceeding 10%, a new study by AHK Japan and KPMG has found.
According to the ‘Economic Outlook – German Business in Japan 2025’ report, some 64% of German companies trading in the Asian country increased their sales over the past ten years, while 26% tripled them or achieved even more growth.
Looking forward, 73% of companies anticipate sales growth in 2025, with 80% expecting further growth in 2026.
Japanese economic stability remains a significant draw for German companies, the study found, with 95% of respondents praising the country’s economic stability, 93% valuing Japanese business relationships, and 87% appreciating the social stability.
Moreover, 90% of companies highlighted the high qualifications of Japan’s workforce, while 87% cited the country’s advanced infrastructure. Japan’s openness to technology and innovation also plays a role, with 76% of respondents noting this factor.
In compiling the study, the two firms surveyed 148 Japanese subsidiaries of German corporations.
Direct competition
“As the third and fourth largest economies, German and Japanese companies are in direct competition globally – especially in key sectors such as automotive, mechanical engineering, and high-tech,” commented Andreas Glunz, head of international business at KPMG in Germany. “At the same time, cooperation is growing, for example in hydrogen technology and Industry 4.0. This increasing cooperation strengthens our position in the geopolitically driven competition with the USA and China.
“German and Japanese companies cooperate particularly in their respective home markets in Asia and Europe.”
Increased cooperation
According to the study, cooperation between German and Japanese companies is on the rise, with 61% of German firms want to increase their involvement in Japan’s business networks, an increase of 14 percentage points from the previous year.
However, German companies also cite challenges involved in trading with Japan, with 82% reporting difficulties in recruiting qualified staff, while 77% are concerned about currency risks.
“Japan is not a 100-meter sprint, but a marathon,” Glunz added. “Anyone who wants to be successful here must invest years in building business relationships. But those willing to master the long haul will find a stable and trusting foundation—both in the Japanese market and for joint success in third markets.” Read more here.
