Investing in Japan
JETRO Invest Japan Report 2016 (Summary) 4. Perception of Business Environment in Japan among Foreign-affiliated Companies
- A questionnaire was sent to about 1,300 companies with a focus on foreign affiliates supported by JETRO in their entry into the Japanese market. 197 companies responded.
- Over 40% of the companies answered that the business climate was “becoming significantly better” or “becoming somewhat better.” The ratio increased nearly 8% from the 2015 survey.
- As especially effective measures for improving the business climate, “corporate tax reduction (38.9%),” “regulatory reform (37.2%),” ”reform of immigration rules (33.6%),” “reform of administrative procedures (20.4%)” and “corporate governance reform (8.8%)” were chosen.
Do you feel that the Japanese business climate has become better?
- To the question about business plans within the next 5 years, nearly 80% of foreign-affiliated companies answered that they “will expand business.”
- Similarly, more than 70% of the companies answered that they “will increase the number of employees.” The results reflect prosperous business by foreign-affiliated companies and prospects for active investment in the future.
- The major purposes of investment expansion are divided into three categories: (1) consolidation/expansion of business locations, (2) acquisition of markets outside the Tokyo Metropolitan Area and (3) function enhancement.
Business plans in Japan (within the next 5 years)
Projected number of employees in Japan
- When deciding on the location of additional investment, “proximity to customers” is considered as the most important factor. Tokyo, Osaka, Aichi, Fukuoka and Hokkaido were chosen as locations for the expansion of trade.
- Meanwhile, Kanagawa, Kyoto and Aichi were chosen for “R&D,” Fukuoka and Hiroshima for “Asian regional headquarters,” Hokkaido and Okinawa for “back offices” and Kanagawa and Aichi for “logistic bases,” revealing the particular advantages of each region.
Where to make secondary investment (prefecture) and the type of business
|Rank||City||No. of Projects||Type of business, Rank 1||Rank 2||Rank 3|
|1||Tokyo||85||Sales||Regional head office (Japan head office)||Manufacturing, Research & Development|
|2||Osaka||40||Sales||Customer service||Liaison services/PR/Collecting information|
|3||Aichi||28||Sales||Manufacturing, Research & Development, Customer service, Logistics|
|4||Kanagawa||27||Sales||Research & Development||Manufacturing|
|5||Fukuoka||11||Sales||Manufacturing, Regional head office (Asian head office)|
|6||Hokkaido||7||Sales||Back office, Customer service, Regional head office (Japan head office)|
|7||Kyoto||6||Research & Development||Sales, Manufacturing|
|8||Hiroshima||5||Manufacturing, Research & Development, Customer service, Regional head office (Asian head office)|
The attractiveness of doing business in Japan (those who chose the top two options among the available four options*) ( ( ) indicates % in 2015 survey)
- As obstacles for foreign-affiliated companies doing business in Japan, “Difficulty in finding human resources,” “Difficulty in communicating in non-Japanese language (in business)”, “High business cost”, and “Complicated administrative procedures” are ranked high.
- “Complicated administrative procedures and regulations” (1st in 2015) decreased nearly nine percentage points in 2016. It can be viewed that the Japanese government’s initiatives toward “the greatest ease of doing business in the world” is producing effects little by little.
Top five obstacles – Comparison of the 2013, 2015 and 2016 Surveys
*The percentage of the 2013 survey is not included above because the research method was different from that of the 2015 and 2016 surveys.
The percentage in the 2015 and 2016 surveys indicates those who chose the top two options among the available four options.
*The four options available were: "It’s a very large obstacle," "It’s an obstacle," "It’s a small obstacle," and "It’s not an obstacle."
- There is persistent demand for improvement of “complicated administrative procedures,” ”too many legal restrictions, rigid business permit/licenses,” “internationally unharmonized and incompatible business permit/licenses” and “inconvenience caused by the lack of online procedures.”
- As specific procedures and regulations needing reform, “procedures for acquiring visas,” “procedures for tax matters” and “procedures about safety standards/regulations of products” ranked high.
Obstacles and the related Procedure/regulations
|Procedure / regulations related to obstacles||Complicated administrative procedures||Too many legal restrictions, rigid business permits, licenses||Internationally unharmonized and incompatible business permits/licenses||Unclear points of contact for administrative applications/permits||Insufficient information on incentives and support||Inconvenience caused by the lack of online procedures||Others||Blank||Total|
|Procedures for company registration (article of incorporation etc.)||13||5||0||1||1||4||0||1||25|
|Procedures for tax matters (corporate tax, inhabitant tax etc.)||19||7||7||3||8||7||1||0||52|
|Procedures for social insurance (employment insurance, pension etc.)||12||6||3||9||1||7||0||0||38|
|Procedures for labor matters (agreement on overtime, work rules etc.)||13||10||7||3||2||0||1||1||37|
|Procedures for acquiring visas||15||15||8||4||3||8||1||0||54|
|Procedures about IP (application for patent, review process etc.)||6||3||1||2||2||3||1||0||18|
|Procedures for international trade (customs, export/import declaration etc.)||6||9||10||2||4||5||0||1||37|
|Procedures for construction permit||3||6||2||2||1||3||0||0||17|
|Procedures for environmental regulations (environmental impact assessment etc.)||1||3||4||1||1||0||0||0||10|
|Procedures about safety standards/regulations of products||5||19||16||3||1||4||2||0||50|