TABLE OF CONTENTS In the aftermath of the Second World War, Japan experienced an economic miracle with the economy growing at an average rate of around ten per cent a year from the mid-1950s until the Arab oil shocks of the early 1970s. Following the bursting of the bubble in the early 1990s Japan entered into the period of economic stagnation which some commentators have dubbed the 'lost decade', from which Japan is now rapidly emerging. In the first quarter of 2004 the Japanese economy experienced a year-on-year growth rate of 5.6 per cent, faster than that of the US.
One reason is that Japan has benefited from the rise in intra-Asian trade over the past few years. For example, trade with China expanded by 28.6 per cent in 2003. In addition, however, the economy has been increasingly driven by domestic demand. Business investment has rebounded and household investment spending rose by 7.2 per cent in the year ending April 2004. The banking sector is also returning to health, the level of non-performing loans on banks' books has halved to five per cent, while restructuring has at last engendered a real revival of competitiveness at Japan's biggest firms. In view of the current trends it is important to include an overview of the approach to business in Japan, bearing in mind its traditional culture, as well as the clear needs of due diligence, risk management and corporate governance that the global regulatory framework requires.
