News & Updates
2020 JETRO Survey on Business Conditions of Japanese Companies (Global Edition) -Amid worst business climate ever with the COVID-19 pandemic, Japanese companies strive to establish new management and sales strategies-
Mar 18, 2021
Overview of the findings of this survey
- The loss of the global market due to the spread of coronavirus has caused unprecedented damage to the business performance of Japanese companies operating overseas. Based on the findings of this survey conducted on about 9,000 companies, the business climate of Japanese companies this year hit a record low, below the levels before and after the Asian currency crisis, “the Lehman shock”, and the Great East Japan Earthquake.
- Under these circumstances, more than 80% of Japanese companies surveyed are accelerating to establish new business strategies and business models in anticipation of business normalization by the end of 2021. In addition to aggressive use of digital technologies, this survey highlighted the companies’ strong willingness to shift to a “contactless” approach through remote operations and on-site automation, and to diversify risks through “diversification and multilateralization” of procurement and supply routes.
About this survey
- In September 2020, JETRO conducted a survey using a questionnaire distributed and collected online on 19,087 Japanese companies (local corporations with a 10% or higher stake in Japan, branches and representative offices of Japanese companies) in 86 countries and regions abroad. We received valid responses from 9,182 companies (valid response rate of 48.1%).
- This survey is conducted once a year, in principle, in each major region*, such as North America, Latin America, Europe, and Asia Pacific, to understand the actual activities of Japanese companies operating at the forefront of business. This year, in addition to setting the consistent survey period for all regions, we also standardized the questions on key themes in all regions, including outlook of operating profits, future direction of business development, and the impact of the COVID-19 pandemic.
- This enabled us to make a cross-sectional global comparison of the activities of Japanese companies operating abroad, which are in an unprecedented crisis due to the spread of COVID-19.
Key findings of the survey
- Outlook of operating profits
- Of the 9,000 Japanese companies throughout the world, 48% expect profits in 2020. The score was down by 17 points from 65% in the previous year, even lower than in 2009 immediately after “the Lehman shock”. The percentage of deficits also hit a record high (See Slide 1-1 of the handout).
- The loss of the markets into which they made inroads following the COVID-19 pandemic caused unprecedented damage to the business activities of Japanese companies worldwide (1-1).
- About 60% of the companies said that their operating profits would worsen year-on-year. The downturn was particularly severe in the transportation equipment/parts, accommodations/travel, restaurant, and worker dispatching/staffing industries. DI scores (see note), which indicate business climate, hit record lows in all target regions (1-3).
- As for the outlook for 2021, the year-on-year percentage “increase” considerably outperforms that of “decrease” due to the rebound increase (1-6).
- Future business development
- 40% of the 9,000 Japanese companies plan to “expand” their businesses in the next 1-2 years. However, due to the impact of the COVID-19 pandemic, the score was down by more than 10 points year-on-year. In most regions, the willingness to “expand” was the lowest ever (2-1).
- On the other hand, the combined score of business downsizing and transferring to a third country/region is less than 10%, showing no considerable increase, even amid the COVID-19 pandemic (2-1).
- Impact of the spread of COVID-19 and status of business review
- As for the timing of business normalization, slightly more than 30% of respondents cited the first or second half of 2021. Business recovery in Northeast Asia will take precedence (3-1).
- In the wake of the coronavirus, companies are shifting their business strategies and business models to digitalization. In addition to the expansion of the utilization of work from home and teleworking, respondents are strongly willing to promote virtual exhibitions and utilization of AI (3-2).
- They also aim to create management and business models with risk diversification and tolerance enhancement in mind. The keywords are a shift to “non-F2F/contactless,” “diversification and multilateralization” of sales and procurement, and promotion of “visualization” of the entire value chain (3-5).
- In the wake of the coronavirus, some progress was seen to pursue rationalization and improve efficiency by reducing the number of Japanese expatriates and localizing management (3-5).
(Note) DI stands for Diffusion Index, which subtracts the percentage of companies with “decreasing” operating profits from the percentage of companies with “increasing” operating profits.
Japan External Trade Organization (JETRO) Overseas Research Department
(Representatives: Ito, Nitta, and Kaino)