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2017 White Paper on Small and Medium Enterprises in Japan and 2017 White Paper on Small Enterprises in Japan Released

The Small and Medium Enterprise Agency (SMEA) of the Ministry of Economy, Trade and Industry (METI) compiled and hereby releases reports titled “Trends among Small and Medium Enterprises (SMEs) in FY2016” and “SME Policies in FY2017” (“2017 White Paper on Small and Medium Enterprises in Japan”), as well as “Trends among Small Enterprises in FY2016” and “Small Enterprise Policies in FY2017” (“2017 White Paper on Small Enterprises in Japan”), which were approved by the Cabinet on April 21, 2017.

Key Points of the 2017 White Paper on Small and Medium Enterprises in Japan

Part I of the report analyzes recent trends related to SMEs, concluding that, despite  moderate improvement in business conditions, SMEs are facing difficulties in business investment and sluggish sales growth, along with varied levels of progress in improvement depending on company scale or type of organization. Based on this fact, the report further analyzes the life cycles and productivity of SMEs, and the employment environment and current availability of labor for SMEs.

Part II of the report focuses on the life cycles of SMEs, with analyses of startups and new businesses, business succession, and growth through developing new business streams. Regarding startups and new businesses, the report shows that in the preparatory stages of starting a business, the owners face a variety of challenges depending on their gender, age and other factors, and that in the subsequent, post-startup phases of the business, it is significant for new startups to allocate sufficient resources to undertake appropriate fund raising, human resources and other efforts in order to achieve smooth growth. Concerning business succession, the report lists a variety of significant issues, including: the importance that friends and business acquaintances can have in encouraging business owners to start preparations for business succession; the need to establish a support system under which business owners can consult with experts to handle the variety of challenges involved in business succession including asset transfers, sale, and integration (merger and acquisition); and the importance of establishing a positive cycle in which management resources can be passed on to the next generation as a measure to address situations in which business owners may intend to close their own business and transfer their businesses and assets to other companies. Concerning the development of new business streams, the report shows that: proactive engagement is vital in developing new business streams with an eye on the utilization of external resources when internal management resources are limited and that new, advanced technologies (e.g., IoT, and new economic systems, including the  sharing economy) bring about opportunities for SMEs to grow, based on the fact that in actuality, SMEs utilizing such technologies and systems recognize the benefits of doing so, including sales growth and operating cost reductions, even though the number of such SMEs is relatively small.

Moreover, the report focuses on a common issue through the entire life cycle of a company,  human resources, and highlights various keys to success in both securing and keeping human resources, including: clearly presenting management policies to candidates during recruitment, correctly ascertaining human resource requirements and utilizing a variety of employment methods (from diversity of human resources to maintaining a positive workplace environment to improving operating processes and beyond); appropriately applying IT and mechanization; and effectively utilizing external resources. The report shows that these efforts are important for SMEs to achieve growth despite shortages in human resources.

Key points of the 2017 White Paper on Small Enterprises in Japan

Part I of the report analyzes recent trends related to SMEs and small enterprises, concluding that despite a trend of moderate improvement in business conditions, SMEs and small enterprises are facing difficulties in business investment and sluggish sales growth, along with varied levels of progress in improvement depending on company scale or type of organization. Based on this fact, the report further analyzes the life cycles and productivity of SMEs and small enterprises, and the employment environment and current labor shortage of SMEs and small enterprises.

Part II of the report focuses on the life cycles of small enterprises, with analyses of startups and new businesses, business succession, and efforts to increase sales. Regarding startups and new businesses, the report shows that in the preparatory stages of starting a business, the owners face a variety of challenges depending on their gender, age and other factors, and that in the subsequent, post-startup phases of the business, it is significant for new startups to be committed to the appropriate utilization of support measures and other means in respective steps for business growth. Concerning business succession, the report lists a variety of significant issues, including: the importance that friends and business acquaintances can have in encouraging the business owners to start preparations for business succession; the need to establish a support system under which business owners can consult with experts to handle the variety of challenges involved in business succession including asset transfers, sale, and integration (merger and acquisition); and the importance of establishing a positive cycle in which management resources can be passed on to the next generation as a measure to address such situations because, among small enterprises, most business owners who opt to close their business operate sole proprietorship, and some may intend to transfer their businesses and assets to other companies. Concerning efforts to increase sales, the report explains that some small enterprises ascertain customer needs and their strong characteristics, cultivate new markets and develop new products, as well as engage in public relations activities, thereby successfully increasing sales. The report also points out that it is important for small enterprises to take advantage of their flexibility in business (a factor which is unique to small enterprises), embrace diversity in hiring human resources, (e.g., women and the elderly), and use external management resources through outsourcing, irrespective of internal management resources, so as to achieve sustainable development and lead to business growth.

Appendices:

Release date

April 21, 2017

Division in Charge

Research Office, Policy Planning Division, Business Environment Department, Small and Medium Enterprise Agency

Ministry of Economy, Trade and Industry1-3-1 Kasumigaseki, Chiyoda-ku, Tokyo 100-8901, Japan Tel: +81-(0)3-3501-1511
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