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2018 White Papers on SMEs and 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 FY2017” and “SME Policies in FY2018” (“2018 White Paper on Small and Medium Enterprises in Japan”), as well as “Trends among Small Enterprises in FY2017” and “Small Enterprise Policies in FY2018” (“2018 White Paper on Small Enterprises in Japan”), which were approved by the Cabinet on April 20, 2018.

Characteristics of the 2018 White Paper on Small and Medium Enterprises in Japan and the 2018 White Paper on Small Enterprises in Japan

The 2018 White Papers (hereinafter refers to as the “reports”) explain a large number of case examples of leading SMEs and small enterprises committed to productivity improvement along with survey results, showing 113 case examples, more than double the number in the FY2017 reports. Focusing on the key points included below, the FY2018 reports, as practical documents, aim to provide clues for SMEs and small enterprises to improving productivity.

Key Points of the 2018 White Paper on Small and Medium Enterprises in Japan

Part I of the report describes the recent trends in SME activities and shows that operating profits of SMEs reached a record high level and that economic confidence is following a trend of improvement. In addition, it analyzes SME labor productivity, ideal approaches to management, and other issues.

Part II of the report presents analyses of the current situations of labor shortages, and based on this, it analyzes SMEs’ efforts for improving productivity. Specifically, it explains their efforts for revision of operating processes, ingenuity in making use of human resources, utilization of IT, business investment, and M&A-based business reorganization and mergers.

  1. The report shows that it is crucial for SMEs that intend to advance their efforts to improve productivity to reconsider their management efforts and to review their existing operating processes.
  2. The report mentions the importance of ingenuity in making use of human resources to guarantee smooth operations despite a limited number of workers, and to this end, it features the introduction of cross-trained or concurrently-appointed workers, new approaches that non-industrial fields have been adopting in recent years.
  3. Regarding IT utilization, the report includes and explains a large number of case examples in which costs and outcomes are specified and also shows the need for regional IT vendors and other familiar SME advisors to encourage SMEs to introduce IT. To enhance effects of IT utilization by SMEs, the report confirms the importance of advancing data collaboration between different operating areas, (e.g., data collaboration between financial accounting and payables, or between enterprises).
  4. The report shows that SME business investment is on a moderate upward trend, but this recent investment mainly aims at maintenance and renovation due to aging equipment. To address this, the report offers the need for SMEs to further promote investment that contributes to improving productivity, such as laborsaving investment.
  5. The report analyzes M&A by SMEs which are currently on an increasing trend against the backdrop of business succession and other issues, and explains that M&A is also a good opportunity for SME buyers to improve their productivity by taking advantage of synergistic effects brought out by partner enterprises.

Key points of the 2018 White Paper on Small Enterprises in Japan

Part I of the report explains recent business trends in small enterprises and shows their business conditions on an improving trajectory, as seen by operating profits, which are on track to recovery.

Part II of the report shows an analysis concerning the current situations of labor shortages, and based on this, it analyzes efforts of small enterprises for improving productivity. Specifically, it analyzes their efforts for revising operations, utilization of IT, business investment, and inter-company collaboration. It also shows that against the backdrop of labor shortages, in many small enterprises owners handle large portion of business operations and analyzes the need for such owners to focus their efforts on increasing the company’s long-term value-added by effectively implementing IT, especially in cases where transactions are still non-digital. In addition, it provides explanations of case examples which small improvements contribute to dramatic improvements in sales, to emphasize the significance of making these efforts for small enterprises.

Part III of the report includes case examples of small enterprises which are growing despite regional challenges or engaging in efforts to promote and utilize new working styles, such as freelancing. In addition, it mentions that mentoring or collaborative support provided by support organization acting between these organizations are important elements in improving the productivity of small enterprises, and explains case examples of such actions.

Appendix

Release date

April 20, 2018

Division in Charge

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

Related website

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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