With an eye toward attracting more foreign direct investment in Japan as a means to invigorate the Japanese economy, the Ministry of Economy, Trade and Industry (METI) conducted a survey of 636 foreign-affiliated firms operating in Japan on their attitudes toward the investment environment and impediments to business. The results were compiled into a report, along with examples of the entry of foreign companies and capital in Japan that has contributed to the economic growth of Japan.

1. Survey outline

This attitude survey was conducted from November 2008 to January 2009 by sending questionnaires to 2,097 foreign-affiliated companies in Japan, and responses were returned from 636 of them (a 30.3% response rate). The results were compiled into a report, which includes a description of eight cases in which the entry of foreign companies and capital has contributed to the growth of the Japanese economy and businesses.

2. Report outline

(1) Summary of the questionnaire survey results

• Prospects for future cash flows reflecting the implications of the worldwide economic slump
  There was a significant reduction in the number of companies that expected improvements in cash flows in the next year or two in view of the performance of their products and services in the Japanese market. The overall results strongly reflect the impact of global economic conditions amid the financial crisis.
• Focus on Japan and China in the Asian region
  The majority of foreign-affiliated companies emphasize Japan and China among Asian countries and regions, in line with the intent of their parent companies. "Social and political stability" and the "presence of attractive partners" are considered as advantages of Japan, and "potential for market growth" and "production costs" as those of China.
• High business costs recognized as the greatest impediment
  Foreign-affiliated companies operating in Japan regard "high business costs" as the greatest impediment to doing business in Japan.
• Japan’s allergy to foreign capital posing no problem for many foreign-affiliated companies
  About 70% of the responding foreign-affiliated companies do not consider Japan’s allergy to foreign capital as an impediment to business.

(2) Examples of successful entry into Japan of foreign-affiliated companies

Attracting foreign companies and capital to Japan holds the potential to facilitate inflows of excellent technologies and new know-how and the creation of greater value from innovation and technology accumulation in Japan. Some companies, for example, have even expanded their overseas strategies by forming capital alliances with foreign companies.

To describe how such entries of foreign companies and capital have actually contributed to the growth of the Japanese economy and business, this report cites eight cases involving foreign-affiliated companies, from the following four policy perspectives.

• Foreign-affiliated companies that have brought new business models to the Japanese market
  ProLogis and Hewlett-Packard Japan brought new, unique and superior business models to the Japanese market and have succeeded in providing high value-added products and services.
• New trends in foreign direct investment in Japan (Asian region/service sector)
  Infoview Technologies Japan represents a growing trend in which Asian companies invest in Japan, and Veolia Water Japan is invigorating Japan’s service sector.
• Japanese companies actively taking advantage of foreign alliances
  Moritex Corporation, a Japanese company, gained access to new overseas markets through a capital alliance with a foreign firm, and Kito Corporation, another Japanese company, revived its business in partnership with a foreign fund management firm.
• Foreign-affiliated companies collaborating with Japanese companies
  Based on the concept of open innovation, Procter & Gamble Japan and GE Japan have been active in conducting joint research with Japanese companies possessing outstanding technologies and are implementing programs conducive to innovation in Japan.

 

• For reference (PDF:56KB)

April 16, 2009

Trade and Investment Facilitation Division, Trade and Economic Cooperation Bureau