A Change of Trade Commissioners

Kjell Fornander | 2010-02-18

Johan Rugfelt, Commercial Counselor at the Embassy of Sweden and head of the Swedish Trade Council in Japan, is leaving. After four and a half years in Japan, he says, “The timing of my tenure in Japan was perfect. The Japanese economy was really taking off just as I came to Japan in 2005,” he says. “Positive news started to be reported from Japan, and it was in the middle of the longest period of economic expansion since the war—altogether around six years of constant growth.” And, he adds, this was also a period of Swedish expansion in Japan.

“A total of 24 Swedish companies established subsidiaries in Japan during my period here,” Mr. Rugfeld says. “Of them, 19 did so with the help of Exportrådet (Swedish Trade Council). In 2005, the combined sales of Swedish subsidiaries in Japan totaled some SEK35 billion; in 2008 (the latest figures available), this was SEK79 billion.

Some of this growth came from a few very large investments, including the purchase of Nissan Diesel by Volvo Trucks, as well as the establishment of IKEA and H&M. But there has also been a lot of activity among small and middle-sized companies as well.

New companies entered Japan while other acquired Japanese companies, and much of this occurred without fanfare. For example, a few years ago the world’s leading chainsaw manufacturer, Husqvarna, bought its biggest Japanese competitor to gain a dominant market share in Japan. How many heard about this? Also, Swedish companies have continued to grow organically in Japan.

“Much of the focus today is on whether the Japanese GDP is going up or down,” Mr. Rugfelt says. “But my view is that this has relatively little impact on the potential for growth for Swedish companies here. The market is so huge, while the market share of Swedish companies is often small in proportion to their global size. The company that has a good product and dares to go for it will be successful in Japan.”

Relative to the size of the Japanese market, there are still few Swedish companies in the country. In major markets—Germany, France, the UK, etc.— there are typically 600 to 1,000 Swedish subsidiaries in each country; in Japan there is only about 120.

The new Trade Commissioner, Magnus Wetter, currently holds the same position in Seoul, South Korea. From March 1 he will take over the job in Tokyo, while keeping his job also in Seoul. But if that sounds like Sweden is downgrading its presence in Northeast Asia, Mr. Wetter assures that the opposite is true.

“The greater Tokyo area has some 33 million people, while greater Seoul has around 22 million people, the largest and the second largest metropolitan areas in the world” he says. “The distance between the two cities is no further than that of Stockholm and Copenhagen. We strongly think that it increasingly makes sense to consider this mega-urbanization as one market. Japan is relatively well known and relatively well covered by both the Swedish and international press, but South Korea is much less so.

“We think that we provide a better and more relevant service to our clients if we can talk both Japan and Korea in our meetings with Swedish companies,” Mr. Wetter continues. “After all, the Swedish Trade Commissioner in Beijing covers greater China, including Beijing, Shanghai, Guangzhou, as well as Hong Kong and Taipei.”

The Japanese and Korean markets are growing closer, and there are already many similarities. As a destination for Swedish exports, Japan and Korea combined is as big as China. “We think we provide more value by focusing less on national borders, and more on business and market logics and consumer behaviors,” Mr. Wetter says.

After leaving Japan, Mr. Rugfelt is returning to the world of business. He will be responsible for Asian markets for the Swedish medical technology firm Bactiguard, and will probably be based in Beijing.

Mr. Wetter, who came to The Swedish Trade Council just about a year ago from a managerial position and associate partner at a management consulting company in Stockholm, will be commuting between Tokyo and Seoul. Until August, he will continue to live in Seoul, but from the end of the summer he and his family will relocate to Tokyo.