Summary of The 28th Survey of Overseas Business Activities (Gist)

1998Survey - fiscal '97 results

Key Findings of the Survey

Newly established Overseas Affiliated Companies fell in number for the second consecutive year in fiscal 1997, mainly in Asia, and those withdrawn increased in all areas.
Sales decreased at non-manufacturing Overseas Affiliated Companies, but increased at manufacturers, resulting in a 3.1% growth in all industries. However, the growth rate was much lower compared to the preceding year, weighed down by a sharp sales fall in Asia. Overseas production ratio rose to 12.4% due to the sluggish sales growth at domestic enterprises. The ratio is expected to rise to 13.8% in fiscal 1998.
Ordinary profit fell both at manufacturing and non-manufacturing Overseas Affiliated Companies, dragged down by a sharp fall in Asia, thus ending the growth trend since fiscal 1994. Sales and profit both trended down.
On the other hand, plant and equipment investment increased by 17.1% from the preceding year, mainly in the facilities for transport machinery in the U.S. and Europe, but the growth rate was much lower compared to the preceding year. Capital spending is expected to decline year-on-year in fiscal 1998, mainly in Asia.
As noted above, overseas business of Japanese companies deteriorated significantly in Asia in fiscal 1997. It can be attributed to the economic crisis in Asia which began with the drop in the value of the currency in the 1997 summer. The sharp deterioration in Thailand and Indonesia led to current account deficit in ASEAN4. It was "Local-sales type " industries that suffered serious setback. However, the impact of the Asian economic crisis was still limited as of fiscal 1997.
Under such circumstances, Overseas Affiliated Companies were taking countermeasures, such as increasing local procurement and lifting the ratio of Japan-bound exports (= reimport) to offset the fall in local sales. As Japanese companies have positive stance towards business in Asia, Japanese-affiliated companies will play an important role in the recovery of the Asian economies with their weighty presence in these countries.

MAY 1999
MINISTRY of INTERNATIONAL TRADE and INDUSTRY
ENTERPRISE STATISTICS DIVISION RESEACH and STATISTICS DEPARTMENT,
and INTERNATIONAL BUSINESS AFFAIRS DIVISION INDUSTRIAL POLICY BUREAU

E-Mail:qqcebh@meti.go.jp

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Last Update: January 31, 2008

Ministry of Economy, Trade and Industry
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