Survey Results: Reaction of Japanese Companies in the US to COVID-19 - Part 3
May 15, 2020
(Japan External Trade Organization) USA has been conducting surveys over the past month regarding the business concerns and reactions of Japanese businesses to COVID-19 in the US. We are thankful for the many positive responses we have received from federal, state, and local officials to the previous two surveys, and we appreciate the Japanese companies continuing to participate in these surveys.
JETRO conducted Part 3 of the between April 28-30. The research team expected a decrease in the response rate since the first survey; however, they received a total of 954 valid responses across the US - higher than - with close to a third of the responses coming from the Southern Region. There was also a slight increase in responses from companies in the range of 101~500 employees compared to of our survey.
For this round, key findings focused on the overall sentiment of private companies nationwide during this pandemic. Nearly 75% of companies stated that sales have decreased in the past month - a significant increase from the previous survey (54.5%) conducted on April 6~8.
80% of respondents stated that their production has reduced or halted completely, with most reasoning that there was a decrease in domestic demand. However, 15% stated that they ramped up production due to the increased demand for PPE products, medical device, and online sales. On supply chain trends, 10% of companies with reduced production stated they have been affected by the delays in receiving materials, mainly from the US (64%) and Mexico (44%). To reduce the problem of delays, some companies are faced with decisions like changing suppliers to a different region, adjusting production volume, and responding to tariff increases and more.
On employee retention topics, 68.7% of companies still plan on retaining their employees, while 50% of employers offered furloughs to retain employees and additionally provide healthcare benefits. On the other end, 24.1% of employers whom suspended operations laid off employees.
Many US states have begun lifting stay-at-home orders and allowing businesses to re-open. According to our survey, 71.6% of respondents stated that the stay-at-home order in their area has already been lifted. 34.8% of respondents said they expect to reopen their business in May, with another 31.4% expecting to reopen in June. Another 31.1% responded that they are unsure of the timeline as they are waiting on the stay-at-home order in their area to be lifted. Common challenges to reopening businesses include: alleviating employee concerns, securing PPE, preparing for cases if employees get infected, and defining a guideline for reopening business (in accordance with the state guidelines).
There are many more challenges ahead and that are defined in the report from JETRO. Issues around federal and state assistance programs continue to be apparent, as 30% of respondents have already applied and 10% are still interested but are experiencing issues applying.
As subsidiaries of wholly owned operations in Japan, many of these companies also deal with visa and immigration restrictions, issues renewing passports or driver licenses, and many other factors unique to foreign subsidiaries and employees.
Finally, JETRO asked about companies’ business outlooks for 2020, and over 60% of companies have stated they will maintain their current operations, while 20% stated they will reduce operations. Over 10% stated they are still uncertain. The Japanese companies will be cautiously observing and determining how to handle their businesses for the remainder of 2020. As of this report, 0.01% reported exiting the country and returning to Japan.
Questions or comments? Reach out to the JETRO USA office in your region.