News & Updates

FY2023 JETRO Survey on Business Conditions for Japanese Companies Operating Overseas (North America)

Feb 09, 2024

Overview of FY2023 Survey

  • In September 2023, JETRO has conducted an online survey on the state of Japanese companies operating in the U.S. and Canada (those that are at least 10% owned by a Japanese parent, directly or indirectly, and branches of Japanese firms in the U.S. and Canada). 829 responses (724 in the U.S., 105 in Canada) received from 1,874 survey sent (1,694 in the U.S., 180 in Canada, response rate 44.2%).
  • This survey is conducted once a year to ascertain the management situation and changes in the local business environment of Japanese companies operating in the U.S. and Canada. This is the 42nd annual survey for the U.S. and the 34th for Canada. Branch offices of Japanese companies were added to the scope of survey this time.
  • Topics: 1. Sales Forecast, 2. Future Business Direction, 3. Business Efforts on ESG, 4. Employment Environment, 5. Management Challenges and Countermeasures, 6. Trends in Reviewing Supply Chains (Procurement, Production, Sales), 7. Federal Government Policies (U.S. only)

Survey Results Summary

1. The percentage of Japanese-affiliated companies expecting to be profitable was in the mid-60% range, still below before the COVID-19 pandemic levels
The percentage of Japanese-affiliated companies expecting to be profitable in 2023 was in the mid-60% range in both the U.S. (64.8%) and Canada (65.4%). Both results were still below the 2019 levels (66.1% and 77.1%) before the COVID-19 pandemic. The diffusion index (DI) for business sentiment in both the U.S. and Canada was significantly lower than the previous year.
On the other hand, the percentage of companies that will “expand” their business in the next 1-2 years was around 50% in both the U.S. and Canada. In the U.S., expansion is expected in California, Texas, and other states with large economies.
2. Strong employment challenges, such as increasing wages and labor shortages
Management challenges included (1) increasing employee wages, (2) difficulty in recruiting and retaining employees due to shortage of human resources, and (3) increasing procurement costs due to continued high inflation.
70% of companies in the U.S. and 60% in Canada indicated that they were facing a shortage of human resources. By occupation, the shortage was particularly serious for factory workers and specialty occupations such as engineers.
3. Noticeable shift in procurement source to ASEAN
The trend towards supply chain restructuring continues. More than 40% of companies in the manufacturing sector in the U.S. were reviewing their procurement sources. The largest number of new procurement sources were within the U.S. (72 cases), followed by ASEAN (24 cases), with an increase from the previous year (14 cases). The shift from China to ASEAN (15 cases) was particularly notable.
4. The percentage of companies that recognizing human rights and decarbonization as an important management challenge increased
Around 80% of companies in both the U.S. and Canada recognized human rights issues as an important management challenge, up more than 20 points from the previous year. On the other hand, less than 30% of the companies in the U.S. conducted human rights due diligence. In addition, differences between large companies and small or medium-sized companies were highlighted in terms of the percentage of companies conducting human rights due diligence and decarbonization.

Japan External Trade Organization (JETRO)
Americas Division, Research & Analysis Department (Representatives: Hiroya Tanimoto, Shinichiro
Takimoto, Shinichi Isobe, Misako Ito)
Tel: +81-3-3582-5545