Posted on May 31, 2013 at 5:05 PM
In an attempt to escape stagnating domestic markets, major Japanese law firms have begun a campaign of expansion into nearby markets abroad. Over the last two years, there has been a marked increase in Japanese overseas investment, and Japan’s biggest law firms are not looking to be left behind. In the last year alone, all four of Japan’s “Big Four” corporate law firms have opened new offices abroad in locations such as Singapore or Vietnam hoping to attract business from corporations seeking to expand internationally.
In particular there has been an expansion of Japanese firms into Southeast Asia where there is less competition from U.S. firms. Japanese firms have been capitalizing on the already friendly relationship between Japan and the region; Japan is the single largest source of foreign investment in the countries of the Association of Southeast Asian Nations (ASEAN). In 2011 alone, Japan invested nearly $15 billion dollars in the region, 9 billion dollars more than the United States. Japan is also the top investor in many individual countries in the region. Japan invested $3 billion in Thailand in the first three months of 2013 alone. This increased flow of investment is what has convinced many Japanese corporations to begin investing abroad rather than struggle with slowing domestic markets.
Japanese law firm offices abroad are relatively small, usually counting only one to two partners. But with the expansion of foreign investment, they are beginning to expand. The hope is to take advantage of the flow of new money, and help companies structure and negotiate these investment deals.
While some remained concerned about the potential competition from already-established international practices in the region, expanding firms remain confident. Yoshinobu Fujimoto, a partner in one of Japan’s biggest firms Nishimura & Asahi, believes that Japanese firms will have a natural advantage working with Japanese corporations seeking to invest internationally. “Japanese corporates really appreciate having someone overseas that they can reach out to in Japanese and communicate,” he tells americanlawyer.com. “We know the clients very well. We have more experience [serving them] than any other non-Japanese law firm.”
Much of the new investment has come from the Bank of Japan’s new “cheap-yen” policy. In April of this year, the Bank of Japan enacted a radical antideflation policy with the intention of inserting over 62 trillion yen, or $630 billion dollars, into the Japanese economy. Much of money has found its ways overseas, as a devalued yen has attracted businesses who hope the yen might continue to fall. If the yen continues to fall then the businesses will receive a foreign-exchange gain as they can repay their loans in a cheaper yen. The antideflation action is part of a broader set of policies set by Japanese Prime Minister Shinzo Abe, colloquially called “Abenomics”. Abe hopes that by increasing foreign investment, he can jump-start Japan’s ailing domestic market. Whether his policies will be the cure Japan needs is to been seen, but Abenomics has already provided expanded opportunity abroad for Japanese firms.
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