How to protect your business’s bottom line when importing from Japan
Does your business purchase goods and services from Japan? Understanding the Japanese yen's performance is a crucial step to manage the your importing costs.
27 april 2021 — 3 min read
Japan is one of the world’s top exporting countries. In 2019, Japan ranked fifth in countries with the highest US dollar value in exports, just behind China, the United States, Germany and the Netherlands. Businesses around the world import goods from Japan each year from companies such as Toyota Motor, Canon, Hitachi, Panasonic, Nippon Steel, and Kubota.
Which goods are most imported from Japan, and to where?
In 2020, US$641.4 billion worth of goods were imported from Japan to countries around the globe. The top 10 goods (by dollar amount shipped) were:
Vehicles
Machinery (including computers)
Electrical machinery and equipment
Optical, technical and medical apparatuses
Plastics and plastic articles
Iron and steel
Organic chemicals
Gems and precious metals
Other chemical goods
Ships and boats
The majority of Japanese exports are shipped to fellow countries in Asia, though some North American and European countries import Japanese goods as well. Some of the nations that import the greatest amount (by US dollar value) of goods from Japan include:
The United States
China
South Korea
Hong Kong
Thailand
Germany
Singapore
Vietnam
Australia
Indonesia
What your business should know about importing from Japan
Any time you deal with a currency other than your nation’s home currency, you need to be mindful of changes in the currency markets. Market volatility and changes in exchange rates have the potential to increase your importing costs, but with some preventative measures, you can protect your business and your bottom line. Working with an experienced international business payments provider and developing a foreign exchange strategy could reduce the risk of changes in the markets having a harmful effect on your business.
How did the Japanese yen perform in 2020?
If your business imports or plans to import goods and services from Japan, it’s crucial that you have an understanding of the Japanese yen’s (JPY) performance
US dollar (USD)
Between 2016 and 2020, the Japanese yen had an average appreciation rate of 1.9% each year against the US dollar. From 2019 to 2020, the yen saw a 2.1% increase against the USD. The USD-JPY rate saw a bump in the early months of 2021, reaching its highest since September 2020 in February 2021.
Canadian dollar (CAD)
In the final days of February 2020, the CAD-JPY rate plummeted, hitting a low point in mid-March 2020. After hitting its lowest point in May 2020, the rate has made a steady climb upwards, and has remained high through the first three months of 2021.
Australian dollar (AUD)
The AUD-JPY rate saw a sharp drop at the beginning of the COVID-19 pandemic, hitting a low on March 19, 2020. However, ongoing pandemic recovery efforts have bolstered the rate, with AUD-JPY making a steady climb through the latter months of 2020 and the beginning of 2021.
New Zealand dollar (NZD)
Much like AUD-JPY, NZD-JPY similarly plummeted at the start of the COVID-19 pandemic, reaching its lowest on March 19, 2020. After some ups and downs, the rate made a sharp jump upward in June 2020, and has maintained a fairly steady climb through the remainder of 2020 and the start of 2021.
How can Xe help?
At Xe, we know the currency markets. We’ve worked in the currency business for nearly 30 years, and we help over 13,000 businesses of all sizes across 100 industry sectors to make international payments and reduce their foreign currency risk. We can help your business to develop the right FX strategy to suit your operations and needs.
If you haven’t begun yet, we recommend you check out our guide to help you sign up for your account and get your first quote.
Have you already registered? Then you’re all set to get a quote for your first international payment.