FY2013 Survey (the 25th) Report on Overseas Business Operations by Japanese Manufacturing Companies

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November 29, 2013
  1. The Japan Bank for International Cooperation (JBIC; Governor: Hiroshi Okuda) released today the FY2013 Survey Report on Overseas Business Operations of Japanese Manufacturing Companies, the results of an annual survey on Japanese manufacturers'overseas business operations (the survey). The survey was conducted by sending questionnaires to 992 companies in July which were returned from July through September 2013, and 625 companies returned valid responses (response rate: 63.0%). Its objective is to identify the current trends as well as future outlook of overseas business operations by Japanese manufacturing companies with an extended record of overseas business. This year's survey is the 25th of an annual series that began in 1989. (please click here)
  2. As has been conducted in the past, the survey examined "medium-term business prospects", "evaluations of overseas business performance" and "promising countries or regions for overseas business operations". This also treated individual themes such as "business prospects in China", "infrastructure needs and issues in business operation countries" and "global management issues and future strategies". 
  3. Summary of results for this survey is as follows:

    (1) Voting ratios of Indonesia, India, Thailand and China balance out in promising countries over the medium term

    The rankings for the most promising countries have fluctuated greatly among promising countries over the medium term. For the first time since this survey began, China has fallen from 1st place to 4th place while Indonesia, for which market expansion expectations are high, took 1st place for the first time. India stayed in 2nd place but its voting ratio fell sharply. The voting ratios of the top 4 countries, including the 3rd ranked Thailand, balance out at around 40%. However, India and China remained in 1st and 2nd place as promising countries over the long term (the next 10 years or so) and both countries are recognized to be major destinations for business operations in the future.

    (2) Companies that don't choose China as a promising country are most concerned about "increasing labour costs/difficulties in securing a workforce". On the other hand, companies that choose it as a promising country evaluate China by market size and growth potential

    The number of companies that named China as a promising country in both this survey and the previous survey falls by almost half. However, very few companies that don't choose China as a promising country in this survey respond that they will scale-back/withdraw their businesses in China. Further, more than 40% of companies that don't choose China as promising are most concerned about"increasing labour costs/difficulties in securing a workforce" while companies that choose China as a promising country evaluate it for its market size and growth potential, showing that the results for China are divided depending on its point of view.

    (3) Japanese manufacturing companies'overseas operations are on track to expand

    Overseas production ratios have started to expand again and over 80% of responding companies continue to have a stance of strengthening/expansion for overseas business. Just less than 90% of companies that will strengthen/expand overseas businesses have a stance of maintenance or expansion in their domestic businesses. Overseas business contributes to domestic business by providing overseas information for domestic development, improving organizational strength by increasing the number of people with experience in overseas business and streamlining domestic business, etc.

    (4)Efforts of Japanese manufacturing companies in emerging markets have had certain results

    Major customers in emerging markets will continue to be mostly Japanese manufacturers but there is a tendency towards a certain amount of expansion in sales to non-Japanese manufacturers. Approximately 15% of companies conduct consumer-oriented businesses such as B to C transactions but there are also many companies that include the middle-income band in their target customers. Japanese companies are evaluated as having higher product competitiveness in Asian emerging markets than Chinese, Korean and Indian companies. It was indicated that advances in transferring partial control of headquarter functions to emerging countries and introducing global IT systems will be made in the future.

    (5) Many respondents noted that, among emerging countries, India has issues with its electricity infrastructure

    Approximately 30% of companies that have business operations in emerging countries responded that there were issues with electricity infrastructure and India had the highest ratio out of the most promising countries at approximately 60%. Meanwhile, only approximately 10% of companies responded that there were issues with industrial water supply. With respect to transportation/communications infrastructures (roads, railways, ports and harbours, airports, communications networks), the greatest needs were for improvements in roads across the whole region.

  4. Based on the findings of this survey, JBIC will support the overseas business activities of Japanese companies operating under tough international competition, while conducting dialogues with governments and relevant authorities in foreign countries and regions in an effort to improve their investment climate.

    Appendix 1: (Extract) Ranks Promising countries/Regions for Business Development over Medium Term (the next 3 years or so)

    Appendix 2: (Extract) Trend of Overseas Production Ratio and Overseas Sales Ratios

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