“Survey on Business Operations of Foreign-affiliated Companies in Japan”Summary of Survey Results
Mar 29, 2022
JETRO conducted a survey of 6,582 foreign-affiliated companies based in Japan from September to October 2021, and received valid responses from 1,315 companies (valid response rate: 20.0%). This survey was conducted by JETRO for the first time this fiscal year to assess the current status of foreign-affiliated companies in Japan, the Japanese business environment, and the state of collaboration/cooperation with Japanese companies and other entities. The key findings of the survey will be presented as follows: 1) Current status and trends of foreign-affiliated companies in Japan, 2) Attractiveness and challenges of the business environment in Japan and support needed, and 3) Collaboration/cooperation with Japanese companies and other entities.
Three points of the survey results
- 1.Current status and trends of foreign-affiliated companies in Japan
- Companies of wholesale trade / general trade industry accounted for the highest percentage of the responded foreign-affiliated companies at 38.6%, followed by services and others at 30.3%, manufacturing at 15.0%, and retail trade at 3.8%.
- As to the foreign parent company of the responded foreign-affiliated companies, US companies accounted for the highest at 20.1%, followed by German companies at 12.7% and Chinese companies at 10.3%. By region, 40% are from Europe, over 30% from Asia, and 20% from North America.
- Over 70% of the head offices of the responded foreign-affiliated companies in Japan are located in the Kanto region, and nearly 60% of them are concentrated in Tokyo. In addition, nearly 80% of their corporate planning and management functions are concentrated in the Kanto region.
- Looking at sales for the most recent fiscal year by timing of entry (i.e. when the company was established or invested) , about 70% of the companies that entered the market in or before 1980 had sales of "over JPY 1 billion," while 20% of them had sales of "over JPY 10 billion." On the other hand, about half of the companies that entered in or after 2016 had sales of "JPY 100 million or less", indicating that companies that have been in the market for longer tend to have larger sales.
- As for future business plans in Japan, about 50% to over 60% of the respondents answered that they would "strengthen or expand" regardless of company size, and the percentage was over 90% when including "maintaining the status quo."
- 2.Attractiveness and challenges of the business environment in Japan, and support needed
- Regarding the attractiveness of the Japanese business environment, "Japanese market size" was the most common response at 60%. On the other hand, "growth potential of the Japanese market" accounted for just over 30%, with some industries tending to rate it even lower.
- As for changes in the Japanese business environment perceived over the past year or two, more than 70% of companies responded "no change" for most of the nine items surveyed, while more than 20% of respondents answered that "Strictness and complexity in the immigration control system" and "ease of securing human resources" are getting worse.
- Around 90% of the respondents, regardless of industry or company size, answered that they are "recruiting Japanese mid-career workers in Japan," indicating a strong preference for hiring industry-ready workers.
- Among government measures, "one-stop system and digitization of labor and tax-related procedures" attracted attention from a wide range of respondents, regardless of industry or company size. "Promotion of digital transformation (DX)" and "policies for a carbon-neutral society" also received more than 30% of the attention, and both exceeded 50% especially among large enterprises.
- Overall, the top public support services that have been used or intended to use were "subsidies and incentives," "provision of information," and "arrangement for recruiting human resources."
- 3.Collaboration/cooperation with Japanese companies and other entities
- More than half of the large enterprises are implementing or considering collaboration/cooperation with Japanese companies and other entities. Overall, 22.5% of respondents answered that they "have implemented" collaboration/ cooperation.
- Regarding partners for collaboration/cooperation (including those under consideration), "small and medium-sized enterprises," "universities," and "large enterprises" were all at the 40% level. "Small and medium-sized enterprises" was the most common partner for Asian companies at over 50%, while "universities" was the most common for North American companies at over 50%. More than half (52.6%) of the respondents selected "strong technological capabilities" as a factor they look for in a partner.
- The biggest challenge in conducting collaboration/cooperation was "gathering information about potential partners. “Delay in decision-making of partners" and "lack of partners' communication skills aside from Japanese" were also cited as challenges, especially among relatively small and new companies.
- Attachment: "Survey on Business Operations of Foreign-affiliated Companies in Japan" Summary of Survey Results (PowerPoint slide deck)
- Invest Japan Promotion Division, Invest Japan Department, JETRO
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