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1.2 Global Strategies for Emerging Countries

Japan has a per capita GDP of more than $50,000, and a population of over 100 million. It is a superior market from the global perspective, but it lacks prospects for exponential future economic expansion. On the other hand, developing market economies such as China and India are experiencing rapid growth. In 2010, China's nominal GDP was approximately CNY 40 trillion, compared with Japan's JPY 480 trillion. Considering the March 2012 exchange rate of CNY/JPY 13, China's GDP was greater than Japan's at approximately JPY 520 trillion, replacing Japan as the second largest economic superpower in the world. Since the bursting of Japan's bubble economy in 1991, Japan has experienced stagnation on a nominal basis, while the Chinese economy has experienced a phenomenal growth of approximately

2.7 times in real terms in 2000–2010 (an annual growth rate of 10.4 %) and approximately 4.9 times on a nominal basis (an annual growth rate of 17.3 %) (Fig. 1.1). As of 2010, the Indian economy was positioned at approximately one-third the size of Japan's, and is experiencing profound economic growth as well. During the 2000– 2010 period, the Indian economy averaged at a 7.4 % economic growth in real terms

Fig. 1.1 GDP of Japan, the US, China, and India (USD in billions)

Fig. 1.2 UN population estimates (in order of highest population as of 2010)

(13.3 % on a nominal basis), which, while not as spectacular as that of China, is still consistently strong.

A country's GDP can be subdivided into per capita GDP by dividing the GDP value with the total population. Compared with developed countries such as Japan and the US, China, India, and other developing countries present a higher rate of economic growth because of the improvements in the standard of living and the increase in the per capita GDP exceeding that of the population. This trend is forecasted to continue, and population forecasts for developing nations are optimistic on the whole. Figure 1.2 lists the top 10 countries by population; the US and Japan are the only developed nations that feature on that list. While the US population is estimated to increase in the future, population of Japan is estimated to shrink to the 12th most populous country in the world by 2030. Conversely, while China's one-child policy has resulted in lowering the population growth, India, Indonesia, and other highly populated countries are expected to grow in the future.

Although Japanese markets have reached maturity, developing countries are expected to grow, thereby making their markets attractive. In addition, the world is flattening, and many Japanese companies are taking on the challenges of running global businesses. However, in reality, national borders are still proving to be high barriers, and many companies struggle with operating environments different from those found in Japan. Creating global strategies and a path on the international stage is unavoidable if Japanese companies are to grow in the future, and this growth is possible in developing countries such as China, India, Indonesia, and Brazil rather than developed regions of Europe or the US. With significant differences in taxation, regulations, and other aspects of business environments from developed countries, the barriers of national borders in developing countries are higher. Accordingly, overcoming these barriers and seizing business opportunities requires the creation of solid global strategies and innovative business solutions rather than expanding overseas as a simple extension of domestic business models.

 
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