FY2014 Survey (the 26th) Report on Overseas Business Operations by Japanese Manufacturing Companies

The Japan Bank for International Cooperation (JBIC; Governor: Hiroshi Watanabe) released today the FY2014 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 1,021 companies in July which were returned from July through September 2014, and 617 companies returned valid responses (response rate: 60.4%). 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 26th of an annual series that began in 1989. (Please click here.)
 

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 year, it had additional individual themes such as "competitiveness of Japanese manufacturing companies and trends in  global production system" and "involvement of Japanese manufacturing companies in overseas infrastructure-related business".
 

　Summary of results for this survey is as follows:

(1) Japanese manufacturing companies' stance of continuing expansion for overseas business operation

Overseas production and sales ratios are reaching close to a 40% level respectively and the importance of overseas business is increasing. About 80% of companies that responded continue to have a stance of strengthening/expansion for overseas business and about 90% of them also have a stance of maintenance or expansion in their domestic businesses. Out of the total companies that responded, just less than 30% have a stance of strengthening/expansion and about 60% are maintaining the present level of domestic businesses.

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

In the survey of the most promising countries over the medium term, as of the last survey, the ranking continued to fluctuate, and for the first time since this survey began, India with high expectation for its market expansion ranked 1st place. Indonesia that ranked 1st place in last year's survey fell to 2nd place and China that ranked 4th last year advanced to 3rd place. The top three countries competed for the voting ratios at approximately 45%. Contrarily, Thailand has fallen to 4th place with much fewer votes this year from last year's 3rd place. Upon the research of the reason for not voting this year for last year's top five countries (India, Indonesia, China, Thailand and Vietnam) as the most promising countries over the medium term, many companies responded that they did not vote for them since they already have a certain scale of businesses in China and Thailand. With regard to the recent political and social conditions of countries and regions, they tend to be widely concerned by the countries and regions that have close economic relations with them, not limited to the countries and regions where it has occurred.

(3) In sales power evaluation of competitors, Chinese and Korean companies are declining. While the local production and delivery in Asian countries and within the region are expanding, the prospect for the division of labor in production within the region differs by industry.

With regard to the assessment by Japanese companies of the sales power of their competitors, European and North American companies were rated more highly than in the FY2012 survey, but the assessment of Chinese and Korean companies has been decreasing, which suggests that Japanese companies are regaining their confidence. In Asian countries and within the Asian region, the local production and delivery are expected to increase centering China and ASEAN countries. Also, the division of labor in production within the Asian region is expected to expand, but the responses were different depending on industry.

(4) While strengthening of functions at overseas bases by Japanese companies progresses gradually, Japanese domestic bases continue to play important roles in both production and R&D.

For roles that are required for production bases, while the stance is toward strengthening the functions of overseas bases, there were many views that domestic bases will continue to play a important role in terms of innovation and human resource development. With regard to research and development(R&D), Japanese domestic bases have been shown to continue to play a central role in all stages of basic, application and development.

Based on the findings of this survey, JBIC will support the overseas business activities of Japanese companies operating under 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 Ratios, Overseas Sales Ratios and Overseas income ratios