Economic stability, openness to technology and innovation, the reliability of business relationships as well as a highly developed infrastructure and qualified specialists – these and other factors make Japan an attractive location for German companies. 82 percent of the companies that we surveyed together with the German Chamber of Industry and Commerce in Japan (AHK Japan) for the current business climate survey "German Business in Japan 2025" generated a profit in 2024, and the outlook for the future is also optimistic: 73 percent expect sales to increase in 2025, and as many as 80 percent expect this to be the case in 2026.
Accordingly, just under one in three companies (31%) are planning higher investments in 2025; a good one in two (52%) want to hire additional employees. For 2026, these figures will rise even further to 46% and 59% respectively.
Important local market and partner in third markets
For almost half of the companies surveyed (47%), Japan is one of the five largest sources of sales and earnings for the group as a whole. For 86% of the companies surveyed, Japan's high sales potential is the most important reason for their involvement in Japan – an increase of 5% compared to the previous year. The importance of Japan as a partner for expansion into third markets is also increasing: 61% cite participation in the global business networks of Japanese companies as the second most important reason. 63 percent work together in third markets. Cooperation is not regionally limited, but encompasses the whole of Asia, Europe, China, North America and India. Cooperation is increasing particularly strongly in the European domestic market, with an increase of twelve percentage points.
Andreas Glunz
Managing Partner International Business
KPMG AG Wirtschaftsprüfungsgesellschaft
Jörg Grünenberger
Partner, Tax, Head of Country Practice Japan
KPMG AG Wirtschaftsprüfungsgesellschaft
As the third and fourth largest economies, German and Japanese companies are in direct competition globally – particularly in key sectors such as automotive engineering, mechanical engineering and high technology. At the same time, cooperation is growing, for example in hydrogen technology and Industry 4.0. The increasing cooperation strengthens the position in the geopolitical competition with the USA and China.
The openness of Japanese companies to cooperation with foreign partners has grown significantly over the past ten years. 61 percent of respondents confirm this.
"The Global South is playing an increasingly important role in the context of business potential in third markets. While Japan's and Germany's trade volumes with the G77 countries of the Global South are on a comparable level, Japan's investments in these countries will be around USD 638 billion in 2023, a good 50 percent higher than Germany's. It is very worthwhile to follow Japanese investment strategies in these regions in order to derive business and cooperation potential from them."
Learning from Japan
61% cite the recognition of new trends in technology and innovation as the reason for their involvement in Japan. Observing Japanese competitors is relevant for 57% of companies, as German companies are in competition with them worldwide.
Commitment in Japan promotes resilience
Although the geopolitical upheavals do not stop at Japan, the German companies operating here are less unsettled by them than companies in Germany: 22% of respondents expect President Donald Trump's re-election to have a positive impact on their business in Japan, 39% remain neutral and 39% are also skeptical. Compared to the survey results for Trump's first election as US president in 2017, the confidence of German companies in Japan has also increased by 10 percentage points.
The USA has a similarly high trade deficit with Japan as it does with Germany – around 70 billion US dollars. Nevertheless, the view of German companies in Japan towards the new US administration remains noticeably more relaxed. One key factor is the strategic partnership between the USA and Japan in Asia. This is another reason why companies in Germany should consider establishing and expanding their presence in Japan.
To the business climate survey
For the business climate survey "German Business in Japan 2025", which you can download now, we surveyed 148 Japanese subsidiaries of German companies together with the AHK Japan. The survey was conducted between January 31 and February 16, 2025.
