JETRO Invest Japan Report 2021

Introduction

JETRO Invest Japan Department has compiled a comprehensive report on foreign investment in Japan, “JETRO Invest Japan Report 2021.” The key points are as follows.

1．FDI in Japan reached a record high in 2020, but sluggish in the first half of 2021

In 2020, inward foreign direct investment (net, flow) rose 61.8% from the previous year to 7.1 trillion yen, the highest amount since 2014, for which comparable data is available. By region, Europe was the largest at 4.1 trillion yen, up 351.3% from the previous year.
The stock of foreign direct investment in Japan at the end of 2020 was 39.7 trillion yen, a record high for the seventh consecutive year.
The amount of FDI in Japan from January to August 2021 decreased by 64.4% from the same period of the previous year. The number of Greenfield investments (83) during the same period was also lower compared to the previous year (144), and it is necessary to closely monitor the trend in new investment projects in the future.

2．Set a new target of 80 trillion yen or 12% of GDP in FDI in Japan by 2030

In June 2021, the Council for the Promotion of FDI in Japan decided on the “Strategy for Promoting Foreign Direct Investment in Japan,” and set a new target of "aiming to increase the stock of FDI in Japan to 80 trillion yen or 12% of GDP by 2030."
The strategy has three pillars: (1) Creation of new digital and green markets and construction of innovation ecosystems; (2) Acceleration of the development in business environments in response to global environmental changes; and (3) Improvement of the investment environment through public-private partnerships that take advantage of regional strengths.

3．More than half of foreign-affiliated companies responded that they "maintain the status quo" in terms of their business in Japan

According to the Ministry of Economy, Trade and Industry's “Survey of Trends in Business Activities of Foreign Affiliates”, few foreign affiliates are considering downsizing their business in the future, while more than half are planning to "maintain the status quo." Approximately 30% of the repondents" intend to expand sales, promotion and marketing functions."
Regarding the impact of COVID-19 on their business, about 60% of the respondents replied "Decrease in sales/orders." If these effects continue, over 60% of foreign-affiliated companies responded that they would have to retain customers and develop new customers as their business challenges.

4．In fiscal 2020, JETRO's support for foreign companies recorded 96 successful cases.

In fiscal 2020, JETRO provided support to 1,020 companies through its Japan Investment Promotion Project, of which 96 companies established their bases in Japan or expanded their business in Japan.
Looking at successful projects in fiscal 2020 by region of origin of the parent company, 37.5% were from Asia, 29.2% were from Europe, and 28.1% were from North America.
Among the companies that established bases in Japan with support from JETRO in fiscal 2020, we can also see companies that contribute to solving social challenges in Japan, in response to the demand for automation due to the declining birthrate, aging population, and regional disparities.

*This report was compiled in November based on the data as of October 2021.