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Press Releases | JETRO Releases the Results of its Survey of Foreign-affiliated Firms in Japan | | Print | |
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TOKYO, Japan (February 19, 2008) - The Japan External Trade Organization (JETRO) released the results of its latest survey of foreign-affiliated firms operating in Japan. The survey, conducted between September and October 2007, received valid responses from 864 companies, or 31.2% of the 2,766 firms sent questionnaires*. According to the survey, 63.1% of respondents plan to expand their business in Japan in the future, up six points from last year’s survey. This is the highest level since the survey began in 1996, reflecting current favorable economic conditions and a strong market performance in Japan. The percentages of respondents planning to “maintain current status” or “reduce scale of business” were just 31.4% and 1.5%, respectively. Moreover, the percentage of respondents reporting increased year-on-year sales (for FY2006) reached 65.1%, the highest figure since the survey began; the percentage reporting decreased sales was just 15.7%, the lowest figure yet recorded. Among firms indicating plans to expand their business in the Japan market, 73.8% will do so to “strengthen their sales function”, followed by “launch a new product/service” (62.9%) and “enhance production capabilities and services” (52.3%). Asked about their R&D functions in Japan, 4.1% of firms replied they had a “basic research” function at the time of entry into the Japan market, 5.6% said they currently had one, and 6.4% said they would have one in the future. Figures for other R&D areas revealed a similar pattern: “product development” (9.5%, 12.7% and 15.4%) and “development base targeting Japan market” (14.1%, 17.0% and 21.6%), suggesting that firms are increasingly eyeing R&D functions—compared with other functions such as manufacturing, distribution or services—for their business expansion in the country. This latest survey included questions regarding legislation that now allows foreign firms to use the triangular merger method to acquire stakes in Japanese firms (introduced May 2007). A majority of respondents (57.6%, or 498 firms) are aware of the new legislation, among whom 8.0% (40 firms) are “thinking about using the scheme” and 2.8% (14 firms) “want to use the scheme but find it difficult.” The survey also polled firms about challenges in setting up/expanding business in Japan. As in last year’s survey, “difficulty in securing personnel” ranked highest, at 66.2%, suggesting that firms still struggle with increased competition for qualified staff amidst Japan’s improved business climate. Notably, such perennial challenges as “expensive business costs” (60.2%), “high demand level by users” (59.6%), and “closed nature and uniqueness of the Japan market” (50.6%) ranked lower in this year’s survey. In addition, compared to last year’s survey, lower percentages of firms cited “insufficient preferential treatment”, “financing”, “political procedures”, “infrastructure” and “lack of information and services” as obstacles to doing business in Japan, further demonstrating an improved business climate for foreign-affiliated firms in Japan. Asked about their future business expansion plans for Asia as a whole, the majority of respondents (75.5%) plan to expand, compared to just 17.1 % who plan to “maintain current status”. This suggests that more than 90% of respondents view Asia as a key business location. Asked to rank countries (other than Japan) by level of importance to their business (including view of parent company), mainland China ranked highest, at 63.8%, followed by India (28.7%), the Republic of Korea (26.4%), Hong Kong (14.0%), Taiwan (13.0%) and Singapore (11.6%). Notably, Vietnam ranked 7th in this latest survey, climbing from 8th in 2005 and 10th in 1997. According to the survey, 17.1% of respondents have their regional Asia headquarters in Japan. Firms without a regional headquarters in the country were asked what factors would entice them to consider Japan for such a base. At the top of the list was “increased availability of qualified personnel”, followed by “greater preferential treatment, compared to other countries”, and “lower corporate taxes”. This suggests that local and national governments, and also related organizations, need to continue working together to further enhance Japan’s human resource development and overall business climate. * Firms could complete the questionnaire by fax, mail or via the JETRO website. Questionnaires were sent to firms listed in the “Foreign Affiliated Companies in Japan (A Comprehensive Directory) CD-ROM 2007 Edition”(Toyo Keizai Inc.), and those assisted by JETRO at the time of their entry into the Japan market. In this survey, foreign-affiliated firms are defined as those having at least 1/3rd of their capital foreign-owned, affiliates of such firms, and also Japan branches of foreign firms. For more information, please contact: |
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