The Japan External Trade Organization (JETRO) surveyed Japanese businesses operating on the continent in 2018.
It found that Chinese companies were cited as the top competitors by 22.9 percent of Japanese firms polled, compared with only 3.7 percent in a 2007 poll. China is also noted for its huge infrastructure investments and aggressive selling of a variety of goods.
However, JETRO Executive Vice President, Katsumi Hirano, says Chinese firms are not simply rivals. He says it is natural for Japan and China, as industrialized nations in Asia, to collaborate outside the region. He says they should overcome their conflicting interests to support African development.
He points out that Japanese investment overseas is still focused on Asia and North America, and says Japan must make inroads elsewhere in the world, including in Africa, to become a truly global player.
The JETRO survey also asked Japanese firms about collaborating for business in Africa with companies from third countries. Chinese companies ranked fourth as offering the most promising potential alliances, after firms from South Africa, India and France.
CEO of consulting firm Double Feather Partners, Kohei Muto, offers some insights. His firm is based in Rwanda and provides services across the continent.
Muto has his eye on Djibouti as a linchpin in China's Belt and Road initiative. China established a strategic partnership with Djibouti in 2017, and has been financing major projects there, including a rail link to neighboring Ethiopia and construction of a large trade port.
Muto's advice to business clients is that they take advantage of investment by their rivals to set up in the region. He says all this Chinese investment gives Japanese companies a foundation on which to build, at lower cost and with less risk. Of course, the Djibouti government's eagerness to attract foreign investment and promote new industries is also key.
By 2050, Africa is expected to be home to one-quarter of the world's population, but Japanese investment and trade there has been on a declining trend.
Japan and China haven't always seen eye to eye. But in the current environment in Africa, collaboration could reap rich rewards -- not just for Tokyo and Beijing, but for Africans as well.
