Release of Results of FY2018 Follow-up Survey on the Progress in the Voluntary-based Action Plans of the Industries and Results of Door-to-door Survey by Inspectors who Monitor Subcontracting Business
December 21, 2018
The Small and Medium Enterprise Agency (SMEA) hereby releases the results of its FY2018 follow-up survey on the progress made by industrial associations in their voluntary-based action plans that the associations have formulated to promote fair trade between subcontracting enterprises and SME and other subcontractors.
In addition, since 2017, SMEA has been conducting door-to-door surveys of SMEs by dispatching Inspectors who Monitor Subcontracting Business to interview SME subcontractors. SMEA also hereby releases the FY2018 survey results.
In light of these results and other conditions surrounding SMEs, SMEA will advance efforts to further improve trade practice between subcontracting enterprises and SME and other subcontractors.
1. Overview of the follow-up survey
A voluntary-based action plan is a compilation of actions that respective industrial associations have decided to tackle across the industry aiming to improve added value and promote fair trade between or improve added value for both main subcontracting enterprises and subcontractors. As of December 2018, 30 associations in 12 industries have prepared such action plans. From September to November 2018, SMEA conducted a follow-up survey on progress in the action plans targeting 26 associations in eight industries* under the jurisdiction of the Ministry of Economy, Trade and Industry (METI) and generated a report of the survey results.
*Note: The survey targeted eight industries: the automobile, automobile parts, construction machinery, machine parts and tooling, textiles, electrical and information communication equipment, information services and software, machine manufacturing (industrial machinery and machine tools) and retail sales and distribution industries.
Overview of the survey:
- The Basic Policies for Future-oriented Trade Practices, which was released by METI in September 2016, designate three prioritized challenges: improvement of trade practices that unreasonably require subcontractors to reduce costs; more appropriate management of molds; and improvement of terms of payment. In the FY2018 survey, SMEA targeted the progress in industries’ efforts for addressing these challenges, the current situations of price pass-through, i.e. whether or not SME and other subcontractors could pass their manufacturing costs on to the trade price between their subcontracting enterprises, and other facts concerning trade practices.
Overview of the results:
- In the FY2018 survey, SMEA sent a questionnaire sheet to 7,065 member companies belonging to industrial associations that have prepared a voluntary-based action plan and received responses from 2,416 companies. The response rate was 34%.
- Looking at the results concerning the three prioritized challenges, an improvement is seen in: efforts by the subcontracted side for the improvement of trade practices that unreasonably require subcontractors to reduce costs; and efforts by both the subcontracting and subcontracted sides involving the cash payment to subcontractors.
- Meanwhile, efforts by the subcontracted side to improve management of molds are found sluggish.
- Regarding the current situation of price pass-through, a gap of 30% or more is seen in the respondents between the subcontracting and subcontracted sides as for labor cost and raw-material cost.
- Looking at respective industries, the automobile and construction machinery industries improved the trade practices concerning all of the challenges. In particular, the subcontracting side in the construction machinery industry responded that it dramatically improved the payment method, i.e. payment to subcontractors by cash.
- Concerning the more appropriate management of molds, efforts for improvement are sluggish on the subcontracted side in the machine parts and tooling industries.
2. Overview of the door-to-door surveySince 2017, SMEA has been dispatching Inspectors who Monitor Subcontracting Business across Japan to conduct interviews with SME and other subcontractors and uncover their trade practices. As an FY2018 effort, these inspectors conducted 3,012 interviews with such subcontractors from April to October 2018 and SMEA generated a report of the survey results.
Overview of the results:
- Approximately 30% of the interviewees recognize the voluntary-based action plans that each industry prepares and industrial efforts for making trade practices appropriate, showing a low rate of awareness.
- Looking at the efforts concerning the three challenges, a steady improvement is seen in the terms of payment.
- Meanwhile, the progress in efforts for improving the management of molds is sluggish, and related industries should enhance efforts for overcoming this challenge.
- A growing number of companies are enjoying an increase in sales, while 80% or more of the interviewees responded that they were facing an increase in costs, e.g., raw-material cost and labor cost.
Division in Charge
Fair Trade Division, Business Environment Department, SMEA