**2. Changes in the trading volume of licorice between Japan and other countries**

Licorice is used in the manufacture of various pharmaceutical products and is indispensable for pharmaceutical industries in many countries, including Japan [2]. There is no variety of licorice that is indigenous to Japan [2]. Licorice used in the manufacture of pharmaceutical products is usually found in the grasslands and sandy soils of southern Europe, Central Asia, and China [4].

Because of this, Japanese pharmaceutical firms have had to rely on imports from abroad [2].

**Table 1** shows the cumulative total amount of licorice imported into Japan, in tons, from its 12 major trading partners in the period 2007–2015.1

Among the trading partners listed in **Table 1**, China is by far the largest exporter. This indicates that Japan is highly dependent on China for its supply of licorice.

A closer investigation of **Table 1** also reveals that among the listed trading partners, only China and Afghanistan continuously exported licorice to Japan during this period. China's large and continuous supply of licorice played an important role in the Japanese market.

On examining other data from **Table 1** (i.e., Japan's licorice imports from countries other than China), we find that a large proportion of imports is from Central Asian countries, such as

<sup>1</sup> **Table 1** is derived from Trade Statistics of Japan conducted by the Japanese Ministry of Finance (http:// www.customs.go.jp/toukei/srch/index.htm?M=01&P=0) [Accessed: 2016‐09‐17].

Afghanistan, Uzbekistan, and Turkmenistan. This is likely due to these countries' agricultural suitability for licorice (i.e., native strains of licorice grow well in sandy soils) [4]. However, closer examination reveals that the supply of licorice from these countries is not stable but varies from year to year. In addition, the amount of licorice supplied by these countries is much smaller than that supplied by China.

will become difficult for the Japanese pharmaceutical industry to continue to purchase Chinese

To avoid this situation, consumers of Chinese licorice in Japan must seek an alternative source. However, this is not an easy task since other countries are hardly able to supply a substitute for Chinese licorice. This study focuses, instead, on attempts to cultivate licorice as a means to

In this paper, we examine data, such as the price and trading volume of licorice between China and Japan, to analyze the licorice market from an economic perspective. While numerous publications have analyzed the various properties of licorice, studies incorporating economic ideas are rare. To make this study understandable to readers who are unfamiliar with eco‐ nomics, we attempt to limit ourselves to basic economic concepts rather than more special‐

The rest of this paper is organized as follows. In Section 2, we consider the recent situation surrounding Japanese licorice imports from China by examining relevant trade data. In Section 3, we briefly explain some basic economic ideas, which are then discussed in Section 4. Section 5 considers potential solutions, such as efforts to cultivate licorice, and Section 6 concludes the

**2. Changes in the trading volume of licorice between Japan and other**

Licorice is used in the manufacture of various pharmaceutical products and is indispensable for pharmaceutical industries in many countries, including Japan [2]. There is no variety of licorice that is indigenous to Japan [2]. Licorice used in the manufacture of pharmaceutical products is usually found in the grasslands and sandy soils of southern Europe, Central Asia,

Because of this, Japanese pharmaceutical firms have had to rely on imports from abroad [2]. **Table 1** shows the cumulative total amount of licorice imported into Japan, in tons, from its 12

Among the trading partners listed in **Table 1**, China is by far the largest exporter. This indicates

A closer investigation of **Table 1** also reveals that among the listed trading partners, only China and Afghanistan continuously exported licorice to Japan during this period. China's large and

On examining other data from **Table 1** (i.e., Japan's licorice imports from countries other than China), we find that a large proportion of imports is from Central Asian countries, such as

<sup>1</sup> **Table 1** is derived from Trade Statistics of Japan conducted by the Japanese Ministry of Finance (http://

continuous supply of licorice played an important role in the Japanese market.

licorice. In the worst case, the supply of Chinese licorice will be severely constrained.

mitigate the high price of Chinese licorice.

38 Biological Activities and Action Mechanisms of Licorice Ingredients

major trading partners in the period 2007–2015.1

that Japan is highly dependent on China for its supply of licorice.

www.customs.go.jp/toukei/srch/index.htm?M=01&P=0) [Accessed: 2016‐09‐17].

ized ones.

chapter.

**countries**

and China [4].


**Table 1.** Cumulative Total Amount of Licorice Imported to Japan, in tons,from its Major Trading Partners (2007–2015).

In addition to the listed Asian and Middle Eastern countries, Australia and Russia also export licorice to Japan. Australia and Russia are attractive trading partners for Japan since these countries are large, with abundant natural resources. However, the sharp fluctuations of trading volume seen in **Table 1** indicate that stable trading between those countries and Japan remains difficult.

As demonstrated above, China is Japan's most important trading partner for licorice.

This is not only due to China's large and stable supply of licorice but also because of its geographical advantage, that is, China is closer to Japan than other suppliers, thus reducing the time and cost of transportation.

However, there is a point of concern in the licorice trade between Japan and China. Particularly, on examining the data in **Table 1**, we find that the volume of Japanese imports of licorice from China peaked in 2012. This is likely an indication of a decrease in the supply of licorice in China.

From 2007 to 2015, Japanese imports of Chinese licorice far exceeded imports from Asia and the Mideast.

**Figure 1A** and **B** shows the proportions of Japanese imports of licorice from the exporters in 2007 and 2015, respectively. The latter figures incorporate data from **Table 1**.

**Figure 1.** (A) Proportions of cumulative Japanese imports of licorice 2007 (in tons). (B) Proportions of cumulative Japa‐ nese imports of licorice 2015 (in tons).

**Figure 1A** and **B** reveals that Japan strongly relies on China to procure licorice. In addition, comparison of the latter figures also reveals that a proportion of Japanese licorice import from China increases from 2007 to 2015. In other words, in the period between 2007 and 2015, Japanese reliance of China to procure licorice became stronger.

To understand the current trading situation of licorice between Japan and other countries, we can also look at the total amount of money spent importing licorice. **Table 2** shows the cumulative total value (in 1000 yen) for the data presented in **Table 1**. 2

As seen in **Table 2**, the cumulative total value of Japanese licorice imports from China is much greater than that from other countries and reflects the large trade volume with China.

In addition, we also provide **Figure 2A** and **B** which shows the proportions of Japan's cumu‐ lative total spending for importing licorice from the trading partners in relation to the data presented in **Table 2** in 2007 and 2015, respectively.

As can be seen from **Figure 2A** and **B**, in both 2007 and 2015, Japan's cumulative total spending for importing licorice is mostly for the one from China. However, as compared from the proportions in **Figure 1A** and **B**, the proportions of cumulative total spending for importing licorice from China in **Figure 2A** and **B** are larger. The latter indicates that, as compared from other trading partners, such as Afghanistan, Australia, Russia, and Uzbekistan, the price of licorice from China is relatively higher.

<sup>2</sup> **Table 2** is derived from Trade Statistics of Japan conducted by the Japanese Ministry of Finance (http:// www.customs.go.jp/toukei/srch/index.htm?M=01&P=0) [Accessed: 2016‐09‐17].


**Table 2.** Cumulative total value of Japanese licorice imports, in 1,000 yen, from its major trading partners (2007–2015).

**Figure 1.** (A) Proportions of cumulative Japanese imports of licorice 2007 (in tons). (B) Proportions of cumulative Japa‐

**Figure 1A** and **B** reveals that Japan strongly relies on China to procure licorice. In addition, comparison of the latter figures also reveals that a proportion of Japanese licorice import from China increases from 2007 to 2015. In other words, in the period between 2007 and 2015,

To understand the current trading situation of licorice between Japan and other countries, we can also look at the total amount of money spent importing licorice. **Table 2** shows the

As seen in **Table 2**, the cumulative total value of Japanese licorice imports from China is much

In addition, we also provide **Figure 2A** and **B** which shows the proportions of Japan's cumu‐ lative total spending for importing licorice from the trading partners in relation to the data

As can be seen from **Figure 2A** and **B**, in both 2007 and 2015, Japan's cumulative total spending for importing licorice is mostly for the one from China. However, as compared from the proportions in **Figure 1A** and **B**, the proportions of cumulative total spending for importing licorice from China in **Figure 2A** and **B** are larger. The latter indicates that, as compared from other trading partners, such as Afghanistan, Australia, Russia, and Uzbekistan, the price of

<sup>2</sup> **Table 2** is derived from Trade Statistics of Japan conducted by the Japanese Ministry of Finance (http://

greater than that from other countries and reflects the large trade volume with China.

2

Japanese reliance of China to procure licorice became stronger.

presented in **Table 2** in 2007 and 2015, respectively.

www.customs.go.jp/toukei/srch/index.htm?M=01&P=0) [Accessed: 2016‐09‐17].

licorice from China is relatively higher.

cumulative total value (in 1000 yen) for the data presented in **Table 1**.

nese imports of licorice 2015 (in tons).

40 Biological Activities and Action Mechanisms of Licorice Ingredients

**Figure 2.** (A) Proportion of cumulative Japanese imports of licorice 2007 (in 1,000 yen). (B) Proportion of cumulative Japanese imports of licorice 2015 (in 1,000 yen).

However, closer investigation reveals a problem that Japan may face in the near future.

**Figure 3** shows the import price of Chinese licorice per kilogram (in 1,000 yen).3 These data show that the import price of licorice from China has been increasing for several years. In particular, the dramatic rise in the price of imported Chinese licorice after 2012 is remarkable, with the price in 2015 being nearly three times that in 2007.

**Figure 3.** Trend in the import price of Chinese licorice (2007–2015).

As shown in **Figure 3**, there has been an increase in the price of licorice imported from China. As seen in **Tables 1** and **2**, Japan relies heavily on China for its supply of licorice, with the result being that the high price of licorice imported from China has led to high prices for licorice in the Japanese market.

Because licorice is an important raw material for manufacturing pharmaceutical products, the high price of licorice in the Japanese market causes increased costs for the manufacturing of pharmaceutical products. If this high price continues, then the pharmaceutical industry in Japan may be affected by budget constraints in the production of medical products containing licorice.

<sup>3</sup> **Figure 3** is derived from Trade Statistics of Japan conducted by the Japanese Ministry of Finance (http:// www.customs.go.jp/toukei/srch/index.htm?M=01&P=0) [Accessed: 2016‐09‐17]. Import prices in **Figure 3** are calculated as cumulative amount spent on Japanese imports of licorice from China in **Table 2** divided by the cumulative total volume of Japanese import of licorice from China in **Table 1**. For detail, we amend per‐unit data in **Table 1** from tons to kilograms.
