Professor Kozo Kiyota, Keio Economic Observatory and the Gratitude School of Economics of Keio University
Overseas Investment Seminar 2018
The Japan Bank for International Cooperation (JBIC; Governor: Akira Kondoh) and the Japan Institute for Overseas Investment (JOI) jointly held a seminar titled "FDI Seminar 2018：Recent Trend of Japanese FDI and Characteristics of Japanese FDI" on January 22, 2018.
This joint seminar was attended by about 140 people, including ambassadors and ministers of foreign embassies in Tokyo. Following the opening remarks by Akira Kondoh, Governor of JBIC, Shin Oya, Senior Advisor for Policy and Strategy Office for Financial Operations at JBIC, presented the results of the "FY2017 Survey Report on Overseas Business Operations by Japanese Manufacturing Companies" (the "FY 2017 JBIC Survey"), which marked the 29th year since it was first conducted in 1989. Another presentation titled "Characteristics of Japanese Foreign Direct Investment" was delivered by Professor Kozo Kiyota of the Keio Economic Observatory and the Graduate School of Economics of Keio University.
Shin Oya started the seminar by explaining the results of the FY2017 JBIC Survey. He presented the results of surveys that examined "Services provided and received by Japanese manufacturing companies outside Japan" and "Business management of overseas affiliates," in addition to the regularly covered topics such as "Evaluations of overseas business operation and performance," "Overseas business prospects" and "promising countries or regions for overseas business operations."
His presentation showed that overseas investment by Japanese manufacturers appear to be in a slowdown and that China and India remain in the top two places in the rankings of promising countries or regions for medium-term overseas operations. He also added that Mexico's ranking among promising countries or regions was overtaken by the U.S. due to factors such as the start of the trump administration. He continued his presentation by discussing the servitization by Japanese manufacturers outside Japan and the challenges that they face in delivering those services abroad. Additionally, he described how Japanese manufacturers use and evaluate legal, accounting and logistics services provided by local companies, while explaining the challenges they face and efforts that are taken to overcome those challenges when transferring their headquarter functions abroad or using local human resources.
Professor Kiyota followed with his presentation on the characteristics of Japanese companies expanding overseas, using quantitative research data on overseas investments.
He stated that, regardless of their company size or industry, Japanese companies which make foreign direct investments not only tend to have high productivity but also tend to proactively conduct research and development (R&D) activities. In particular, Japanese companies performing R&D activities overseas tend to see increased efficiency in innovation, he explained. His presentation also showed that studies show that Japanese companies consider countries with large market size, low country risk and large economies of agglomeration as attractive investment destinations. He also added that such countries with favorable investment environments would attract more foreign investments by making it easier even for the companies with low productivity to invest in. Finally, he mentioned the possibility of reshoring of the Japanese manufacturers, which has been reported on in the media in recent years, and pointed out that since it is difficult to identify reshoring by data we have to be careful to generalize phenomenon seen in some individual cases as an overall manufacturing trend.
JBIC will continue to provide Japanese companies with useful information that can help them expand their businesses overseas.