Japanese companies are lagging far behind their foreign rivals in terms of their presence in Africa, the government said in its annual white paper on trade, which was released Tuesday.

Japanese firms should aim for a stronger presence on that continent — which is home to promising markets with rich natural resources and a sharply increasing population — but they are "losing by default" while China's presence grows, the paper says.

Japanese businesses should try to generate "as many successful business cases as possible" in Africa, the paper adds, while calling for more efforts to help create a safe environment in the region to conduct business so companies will be encouraged to invest.

On the Chinese and Southeast Asian markets, the paper says Japanese automakers and electronics manufacturers have been facing intense competition from overseas rivals but have been able to maintain solid market shares.

The report states there is a need to pursue free trade agreements, including the U.S.-led Trans-Pacific Partnership, to boost the domestic economy.