JETRO Invest Japan Report 2018 (Summary) 1. Recent Situation of Inward FDI in Japan

Inward FDI stock marked a record high for four consecutive years

  • Japan’s inward FDI stock at the end of 2017 was 28.6 trillion yen (up 323 billion yen from the previous year), renewing a record high for four consecutive years.
  • Inward FDI stock as a proportion to nominal gross domestic product (GDP) remains 5.2%.
  • Inward FDI stock at the end of June 2018 (preliminary estimate) marked 29.9 trillion yen (announced in September 2018 by the Ministry of Finance).

Inward FDI stock and its proportion to nominal GDP (based on Sixth Edition of the IMF's Balance of Payments and International Investment Position Manual (BPM6))

It covers data from 2000 to preliminary estimates at the end of June 2018. At the end of 2017, Japan’s inward FDI stock was 28.6 trillion yen, and reached a record high for the fourth consecutive year. The proportion of FDI stock to its nominal GDP was 5.2%. The preliminary estimate of the FDI stock at the end of June 2018 is 29.9 trillion yen.

[Source] "International Investment Position of Japan" (Ministry of Finance and Bank of Japan), "National Accounts of Japan" (Japan Cabinet Office)

By region, ten-fold increase in FDI stock from Asia since 2000

  • Europe accounted for 49.4% (about 14.1 trillion yen) of inward FDI stock in Japan, contributing the largest share, followed by North America, accounting for 24.0% (6.9 trillion yen), and Asia, 18.6% (5.3 trillion yen).
  • FDI stock from Asia has risen by a factor of 10.3 compared to 2000 levels, making it the fastest growing player and third largest investor in Japan following Europe and North America.

Share of inward FDI stock in Japan by region
(as of end of 2017)

Europe has the largest share at 49.4%, followed by North America at 24.0%, Asia at 18.6%, and all other regions at 8.1%.

[Source] "International Investment Position of Japan" (Ministry of Finance and Bank of Japan)

Inward FDI stock in Japan by country/region Top 10
(as of end of 2017)

Rank Country/region Stock (Billion yen) Ratio (%)
1 US 6,670 23.4
2 Netherlands 4,595 16.1
3 France 3,500 12.3
4 Singapore 2,542 8.9
5 UK 1,721 6.0
6 Cayman Islands 1,414 5.0
7 Switzerland 1,259 4.4
8 Hong Kong 960 3.4
9 Germany 894 3.1
10 Luxembourg 857 3.0

[Source] “International Investment Position of Japan” (Ministry of Finance and Bank of Japan)

Changes in inward FDI stock in Japan by region (indexed to end of 2000 level = 100)

The level in 2017 was: 345 for North America, 459 for Europe, and 1,025 for Asia. Countries in Asia have stepped up their presence.

[Note] Based on BPM6 (figures before 2014 have been converted by JETRO from BPM5-based to BPM6-based)
[Source] “International Investment Position of Japan” (Ministry of Finance and Bank of Japan)

Inward FDI saw a sixth successive year of excess inflow, marking fourth highest record

  • 2017 saw net flow of inward FDI in Japan of 2.12 trillion yen, the sixth successive year of surplus.
  • By region, Asia recorded inward FDI in Japan at 632 billion yen, North America 646.5 billion yen and Europe 505.3 billion yen.
  • Inward FDI in Japan from January to June 2018 shows at 1.40 trillion yen, up around 30% in annual terms.

Changes in net flow of inward FDI into Japan by country/region
(Billion yen) (-: no data is available)

Country/region 2014 2015 2016 2017 2018
Jan-Jun Year-on-year
growth (%)
Asia 678 677 933 632 328 △ 26.7
Subcatergory 1 China 80 77 △ 11 108 23 327.8
Subcatergory 1 Hong Kong 228 119 159 △ 27 49 361.7
Subcatergory 1 Taiwan 126 85 256 84 24 △ 37.4
Subcatergory 1 Korea 70 113 65 109 66 29.3
Subcatergory 1 ASEAN 174 281 465 357 167 △ 51.2
Subcatergory 2Singapore 144 229 394 385 58 △ 84.7
North America 759 524 689 647 24 △ 92.6
Subcatergory 1 US 758 527 688 657 20 △ 94.0
Latin America 73 △ 240 181 298 553 240.8
Oceania 62 △ 77 88 28 236 -
Europe 441 △ 284 2,406 505 120 △ 4.0
Subcatergory 1 EU 376 △ 263 2,300 348 104 2.6
World 2,075 627 4,317 2,118 1,403 31.6

[Note] △ indicates negative figure.
[Source] "Balance of Payments" (Ministry of Finance and Bank of Japan)

Changes in quarterly net flow of inward FDI into Japan

The total of net flow was 2.07 trillion yen in 2014, 0.63 trillion yen in 2015, 4.32 trillion yen in 2016, and 2.12 trillion yen in 2017. The total net flow from the first quarter to the second quarter of 2018 is 1.40 trillion yen.

[Note] Q1 = Jan-Mar, Q2 = Apr-Jun, Q3 = Jul-Sep, Q4 = Oct-Dec
[Source] "Balance of Payments" (Ministry of Finance and Bank of Japan)

The advent of new fields of investment such as the sharing economy

  • Investment from Asia expanded in B to C sectors including the sharing economy.
  • Investment from North America was characterized by US investment funds’ active deals and so-called IT platformers and startup incubators.
  • Europe continues to provide investment in the manufacturing sector, particularly by companies using IT, and in the FinTech sector.

Major inward M&A deals in Japan from 2017 to first half of 2018
(-: no data is available)

Date effective Target Target Industry Acquirer Acquirer
Parent country/region 		Acquirer
Industry 		Value (billion yen)
2017 May Calsonic Kansei Autoparts Kohlberg Kravis Roberts (KKR) US Investment firm 498.2
2017 Apr USJ Leisure Comcast NBC Universal US Media 254.8
2017 Jul Hitachi Koki Machinery Kohlberg Kravis Roberts (KKR) US Investment firm 147.1
2017 Mar Accordia Golf Leisure MBK Partners Korea Investment firm 85.3
2017 Sep Coca-Cola Bottlers Japan Beverage Coca-Cola Japan US Beverage 54.1
2017 Aug TASAKI Retail (Jewel) MBK Partners Korea Investment firm 31.5
2017 Apr AIG Fuji Life Insurance Finance FWD Group Hong Kong Finance 39.2
2018 Jun Toshiba Memory Electronics Bain Capital (US), SK hynix (Korea) and others - Investors group 2000.0
2018 Apr Takata Transportation equipment Joyson Electronics China Transportation equipment 175.0
2018 Mar ASATSU-DK Advertising agency Bain Capital US Investment firm 152.3

[Note] (1)As of August 2018. (2)Ranked by single transaction value. (3)“Acquirer” is the ultimate acquirer (including corporate group).
[Source] Thomson Reuters

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