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Japan Trade Organization Surveys International Operations of Japanese Firms

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The Japan External Trade Organization JETRO today released the results of its latest annual survey on the international operations of Japanese firms. The survey, conducted between November and December 2009, received replies from 935 firms, or 30.1% of 3,110 companies sent questionnaires.

Firms were polled on their international and domestic operations, plans to expand business in China, utilization of FTAs and views on business environments in Asia. According to the survey, the majority of respondents 62.1% have overseas bases, of which 74.9% have bases in China, 44.8% in the US and 38.0% in Thailand. By location and function, China ranked highest in the sales base and production base categories, at 49.2% and 46.8%, respectively.

Notably, the percentage of respondents with a sales base in China rose 2.7 points from the 2008 survey. The percentage of respondents planning to expand their business overseas make new/additional investments in the coming three years or so was 56.0%, a 5.7-point jump over last year’s survey. For overseas expansion plans by country/region and function, China ranked at the top in all categories. After China, locations registering increased interest as a sales base included the Asian NIEs, Indonesia and Vietnam. When comparing current and future sales targets in developing countries, firms showed increasing interest in expanding sales to local firms, while the new rich & middle class and low-income segment remained important consumer targets.

Asked about their business plans including trade, outsourcing and direct investment in/with China in the coming three years or so, the percentage of respondents planning to expand/start new business rose 13.4 points from last year to 60.6%. By category, firms plan mainly to “increase exports” up 13.9 points to 53.6% and “establish or expand sales base” up 8.7 points to 41.3%. Regarding utilization of preferential tariff schemes under Japan’s FTAs with nine countries/regions ASEAN, Chile, Indonesia, Malaysia, Mexico, the Philippines, Switzerland, Thailand and Vietnam, 33.8% of respondents including those not engaged in trade said they were “utilizing or planning to utilize” such schemes.

This was a 6.3-point increase over the previous survey, which asked about the utilization under FTAs with five countries Chile, Indonesia, Malaysia, Mexico and Thailand, indicating an upward trend in the utilization of FTAs by Japanese firms. Looking at the use of preferential tariff schemes under each FTA by imports and exports, the Japan-Chile FTA ranked at the top for both categories: 36.1% for imports 13 out of 36 firms; and 36.8% for exports 25 out of 68 firms. If the firms considering an FTA’s utilization are included, the portion for exports would rise to nearly half 44.2% for the Japan-Chile FTA and to around 40% for the Japan-Thailand and Japan-Mexico FTAs. Similarly, if firms considering FTA utilization are included in the figure for imports, the percentage would be about 40% for both the Japan-Vietnam and Japan-ASEAN FTAs, suggesting firms’ likelihood to increase utilization of FTAs in the future for both imports and exports.

Among third-party FTAs in effect within the Asia Pacific region, the ASEAN Free Trade Area AFTA was the most utilized, with about a third of firms engaged in trade 33.3%, or 45 out of 135 firms citing its use; if firms considering AFTA’s utilization were included, the percentage rises to 51.9% 70 out of 135 firms. Polled on plans to utilize the ASEAN-India, ASEAN-Australia and ASEAN-New Zealand FTAs, all of which were entering into force about the time of the survey November 2009, almost half of respondents 46.8% or 37 out of 79 firms were planning to utilize the ASEAN-India. The percentage was highest among firms in chemicals 84.6%, or 11 out of 13 firms and cars/car parts and other transportation machinery 70%, or 7 out of 10 firms.For more information, please contact:International Economic Research Division Phone: 03 3582-5177

via JETRO Releases the Results of its Survey on International Operations of Japanese Firms – Press Release – JETRO.

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