Sometimes the hype around China overshadows the importance of Australia’s relationship with Japan – our most mature partnership in Asia.

Japan is the world’s fourth-largest global economy (on a purchasing power parity basis), and Australia’s second-largest trading partner (after China), and the Australia-Japan relationship is fundamental to the strategic and economic interests of both countries.

Australia is Japan’s largest supplier of strategic raw materials, selling Japan almost $12 billion of coal a year along with significant exports of iron and copper ores.

Japan’s large market of affluent consumers is also a natural fit with Australia’s high-quality food exports. Beef is Australia’s third-largest export to Japan.

Predictably, Australia’s largest import from Japan is passenger motor vehicles, followed by refined petroleum, gold and goods vehicles. But despite the ubiquity of Japanese cars on Australian roads, the total value of our imports from Japan is a little over half that of our exports to Japan, giving Australia a significant trade surplus.

Relations between Australia and Japan have proved incredibly durable despite numerous sore points over the years. The historic 1957 Agreement on Commerce, signed by Japan’s then prime minister Nobusuke Kishi (grandfather of current Japanese Prime Minister Shinzo Abe), was controversial at the time. Coming just 12 years after the end of World War II, during which Japanese forces had attacked Sydney and Darwin, it made Australia the first nation to welcome Japan as a trading partner after the war. Japanese whaling, and Australia’s refusal to act against the controversial Sea Shepherd Conservation Society, have also created tension.

The relationship between Australia and Japan is strong enough to handle these pressures. The Japan-Australia Economic Partnership Agreement, which entered into force on 15 January 2015, is the most liberalising trade agreement Japan has ever concluded. On a more personal level, the 2017 Lowy Institute Poll found that 86 per cent of Australians trusted Japan “to act responsibly in the world”, second only to our confidence in the UK at 90 per cent.

Doing business in Japan

By Laura Mattiazzi, Head of Asia Business Development, NAB Business & Private Bank

• Japanese companies display strong loyalty to their business partners, once acquired, but Australians need to show patience when building these relationships. Allow time for small talk at the beginning of meetings, and don’t push aggressively for immediate outcomes. Often it will be at evening dining and drinking sessions, rather than during daytime meetings, that the most useful information is exchanged.
• Learn how to read the non-verbal cues. Japanese people are extremely polite, respectful and non-confrontational, and communicating indirectly is seen as having good manners. Polite means of refusal may include staying silent, changing the subject or indicating that something may be difficult.
• Don’t misuse the word sayonara. There is a reason it’s often heard in movie scenes just before someone gets killed. It means farewell, not goodbye.
• If you don’t understand the social intricacies of bowing, avoid the bow. A small bend at the waist can show that you respect the culture.
• Filling in silences is polite in many Western cultures, but Japanese culture values silence and modesty. Avoid asking a lot of personal questions when first getting to know a potential business partner, and turn the volume down rather than up during times of tension.
• Pay attention to formalities when exchanging business cards. Take the other person’s card with both hands and place it on the table for the duration of a meeting. Don’t obscure it with documents or put it away in your pocket until the meeting is over.

This article was first published in Business View magazine (Issue 24).