survey report on overseas business operations by ......2020/03/25 · “survey report on overseas...

スポット研究

56　 2020.3

1. Introduction

Japan Bank for International Co-

operation (JBIC) has released a

“Survey Report on Overseas Busi-

ness Operations by Japanese

Manufacturing Companies”. In

this survey, questionnaires were

sent out at the end of June 2019,

and response forms were collected

from July to September (1004 tar-

get companies, 588 valid respondents,

58.6% response rate). We would

like to express our gratitude to the

companies that cooperated.

In this survey, in addition to the questions asked each

year, such as “Overseas Business Performance”, “Busi-

ness Prospects”, and “Mid-term Promising Countries/

Regions”, unique themes such as “Influence of Friction

Between the US and China” and “Overseas Expansion of

Open Innovation” were also asked.

2. Overseas Production/Sales/Revenue Ratios

The overseas production ratio1 for FY2018 was 36.8%,

the highest value since the start of the survey. In the medi-

um-term plan (FY2022), it is expected to increase to

39.2%, suggesting a continued stance on overseas pro-

duction.

On the other hand, the overseas sales ratio2 in FY2018

was 38.7%, down slightly from the previous year, and the

overseas revenue ratio3 was 36.4%, down from the previ-

ous year’s record high (37.3%). The decline in the

overseas sales ratio and overseas revenue ratio seems to

have been affected by the prolonged friction between the

US and China and the economic slowdown in China.

Against this background, the forecast for FY2019 is ex-

pected to be almost the same as the result for FY2018,

indicating the cautious attitude of companies (Figure 1).

Note 1: (Overseas Production)/(Domestic Production + Overseas Production)Note 2: (Overseas Sales)/(Domestic Sales + Overseas Sales)Note 3: (Overseas Operating Revenue)/(Domestic Operating Revenue +

Overseas Operating Revenue)

3. Mid-Term Prospects for Overseas &Domestic Operation

In the mid-term, 401 companies (71.4%) answered that

they would “Strengthen/expand” their overseas business.

According to a recent survey, the attitude of strengthen-

ing/expanding overseas business has continued to be a bit

lean toward the status quo, and the attitude of strengthen-

ing/expanding this year has remained relatively low

(Figure 2). In the medium-term outlook for domestic

Figure 1. Overseas Production/Sales/Revenue Ratios

36.8%

20%22%24%26%28%30%32%34%36%38%40%42%44%

14 15 17 18 191601 02 03 04 05 06 07 08 09 10 11 12 13

32.9%

37.3%

36.4% 36.6%

（FY）

35.4%

37.5% 37.9%39.6%

38.5%39.3% 38.7% 38.8%

34.2%35.2% 35.1%

35.6% 35.0% 35.6%

37.1%

39.2%

24.6%26.0%

27.9%29.1%

33.5%34.0% 34.7% 34.2% 34.7%

28.0%29.2%

30.5% 30.8% 31.0%33.3%

31.3%

33.7% 34.3%

36.4% 35.7%

30.6%

26.1%

Medium-term plans (FY2022)

FY2019Projected

Actual

Overseas Revenue RatiosOverseas Production RatiosOverseas Sales Ratios

Survey Report on Overseas Business Operations by Japanese Manufacturing Companies—Results of the JBIC FY2019 Survey:

Outlook for Japanese Foreign Direct Investment(31st Annual Survey) —

KASUGA Takeshi,Director OGAWA Natsuka

Strategic Research Department, Corporate Planning GroupJapan Bank for International Cooperation

※この記事は、一般財団法人海外投融資情報財団（JOI）機関誌「海外投融資」2020年3月号に掲載されたものです（www.joi.or.jp）。

2020.3 　57

【スポット研究】 Survey Report on Overseas Business Operations by Japanese Manufacturing Companies

business, “Strengthen/expand” slightly declined to 42.8%

from the previous year but remained at a high level (Fig-

ure 3). As for the areas to be strengthened, “Increasing

added value of products (72.9%)” continues to be promi-

nent as in the previous fiscal year, and nearly half of them

are “Acquiring new customers (45.8%)” and “Enhancing

production facilities in Japan (45.0%)”. This indicates

that some companies are trying to raise its domestic busi-

ness. In the interviews, “Our technology is first-rate.

Right now, we are focusing on gathering issues that re-

quire our technology from home and abroad (rather than

going outside)” (Precision machinery).

The percentage of companies which would strengthen

overseas business was 71.4%, while the percentage of

companies which would strengthen domestic business

was 42.8%. Both overseas and domestic decreased from

last year. In addition, the difference between the points

gained in strengthening overseas business and domestic

business was reduced to 28.6 points, which is even small-

er than last year (29.7 points). From these facts, you can

see that overseas business attitudes remain relatively

weak (Figure 4).

4. Effects of Brexit

Questions were asked about the business development

attitude in the UK and EU14, and the responses were

summarized in a distribution table (Figure 5). As a result,

in the UK, “Maintain the present level” was the highest

with 104 companies, and in the EU14, “Strengthen/ex-

pand” was the highest with 118 companies. As for “Scale

back/withdrawal”, the UK (13 companies) was twice as

large as the EU14 (6 companies), confirming the differ-

ence in business development attitudes between Europe

and the UK. Looking at the breakdown of the UK’s con-

traction and withdrawal by industry, auto parts makers are

dominant.

According to the distribution table, 7 companies re-

ported that they “Strengthen/expand” EU14 and “Scale

back/withdraw” the UK at the same time. Although the

number is small, there are also moves to shift the center of

gravity of European business to the EU side. On the other

hand, 41 companies “Strengthen/expand” the UK, mainly

in machinery, electrical equipment & electronics and

food companies. It is presumed that the companies have

penetrated the UK market.

We asked about the factors that had a significant effect

on the business development outlook (Figure 6). As a re-

Scale back/withdraw

Maintain present level

Strengthen/expand

1.5%

80.5%

18.0%

0.5%

76.6%

23.0%

1.2%

72.1%

26.7%

1.5%

75.6%

22.9%

2.0%

71.4%

26.7%

100%

0%

20%

40%

60%

80%

2015（594）

2016（623）

2017（592）

2018（582）

2019（562）

（FY）（No. of Companies）

Figure 2. Mid-Term (Next 3 Years) Prospects for Overseas Business Expansion

0%10%20%30%40%50%60%70%80%90%100%

01 02 03 04 05 06 07 08 09 10 11

61.3％

12 13 14 15 16 17 18 19

71.4%

42.8%

28.6%

(Difference) Overseas "Strengthen/expand" ratio - Domestic

"Strengthen/expand" ratio

Domestic "Strengthen/expand" ratio

Overseas "Strengthen/expand" ratio

（FY）

Overseas "Strengthen/expand" ratio

Domestic "Strengthen/expand" ratio

FY2019

Figure 4. Trends in Stances towards Strengthening/Expansion (FY2000 - FY2019)

Figure 3. Mid-Term (Next 3 Years) Prospects for Domestic Business Expansion

Undecided

Scale back


Strengthen/expand

4.2%

3.5%

34.0%

58.3%

6.1%

5.7%

29.6%

58.6%

3.6%

3.6%

37.7%

55.2%

3.1%

2.3%

45.9%

48.7%

3.9%

50.2%

100%

0%

20%

40%

60%

80%

2015（592）

2016（623）

2017（591）

2019（568）

2018（577）

42.8%

3.2%

（FY）（No. of Companies）

58　 2020.3

sult, the largest numbers of both the UK and EU14

companies listed the “Current market size” as a factor,

which shows the local market had a big effect on invest-

ment decisions in both countries.

“Brexit” is the second most important factor in the

UK’s business decisions (63 companies), and in fact, six

of them chose “Scale back/withdraw”. On the other hand,

in the EU, the UK’s decision to leave the EU is the fourth

issue (30 companies), which shows Brexit had a relatively

limited impact on EU business. According to a hear-

ing,“we were originally considering a move to Central

and Eastern Europe, and the uncertainty of the Brexit

problem was prolonged, so Brexit boost us and decided to

withdraw from the UK”

(Non-ferrous metals) .

5. Ranking of Promising Countries

The respondents were

asked to choose five coun-

tries and regions in the

Mid-term promising busi-

ness, and the results are

shown in Figure 7. In this

fiscal year’s survey, the

number of respondents de-

creased from 431 to 404,

indicating that overall their

activeness in overseas busi-

ness development was

somewhat bearish. Under such circumstances, India has

returned to the top position in 193 companies (up 1.6

points in vote rate) for the first time in three years since

2016. On the other hand, China has fallen significantly

from 225 last year to 180 companies. This may be due to

the rebound from a surge in expectations for China in last

year’s survey, as well as increased caution over US-China

friction and the economic slowdown. Behind China’s re-

treat, Vietnam (147), the Philippines (48), and Malaysia

(41) rose. Although the number of votes obtained was al-

most the same as last year, it has relatively emerged as

uncertainty has increased worldwide. On the other hand,

0 50 100 150

29 50 587

52 52 115

131713

23 105 111

16 58

9

44 6

32 8

54 5

1

1

14

UKEU14

UKEU14

UKEU14

UKEU14

UKEU14

UKEU14

(Companies)

Current size of local market

Trends of major clients

Brexit

Trends of other companies

Japan-EU EPA

Local R&D environment

(No. of respondent companies =

EU14: 214, UK: 150)

Strengthen/expand


Scale back/withdraw

No. of respondentcompanies =EU14: 223,UK: 158

UK

Strengthen/expand


Scale back/

withdraw

No response Subtotal

EU14

Strengthen/expand 36 47 7 28 118


0 51 4 44 99

Scale back/

withdraw0 3 2 1 6

No response 5 3 0 13 21

Subtotal 41 104 13 86 244

（%）100

0

20

40

60

80

1992 93 94 95 96 97 98 992000 （FY）01 0203 04 05 06 07 08 09 10 11 12 13 14 15 17 191816

IndiaChinaVietnamThailandIndonesiaUSPhilippinesMexicoMyanmarMalaysiaBrazilRussia

Figure 7. Potential Countries/Regions in the Mid-Term (Next 3 Years) - Trends in Votes

Figure 5. Business Prospects for EU14 / UK Figure 6. Factors Influencing Business Prospects for EU14/UK

2020.3 　59


Thailand (133 companies) and Mexico (47 companies)

dropped the number of votes. The US did not change po-

sition in this ranking. However, this year, it didn’t follow

the upward trend in recent years and the number of votes

dropped greatly from last year (124→93), as in China.

However, although not shown in the figure, the US had

the highest number of companies choosing it as their top

prospect after China and India, and there was a relatively

small number of firms who ranked the US as their top

choice and then select other countries as potential coun-

tries. This reveals that many companies still see the US as

a firm prospect.

6. Influence of Friction Between the US and China

The number of firms reporting that the rise in tensions

over international trade, including the US-China trade

dispute, had a negative effect on their profits, up nearly

half to 45.2% this year, compared to 33.9% last year (Fig-

ure 8). On the other hand, “No impact” and “Not sure” are

decreasing, indicating that more companies are beginning

to recognize the impact on revenue.

For companies that reported a decline in profits, the

breakdown by industry was compared to last year (Figure

9). The following points were revealed: (1) automobiles

(59 companies last year →56 companies) was the swift-

est at responding, and; the results of this year’s survey

show that (2) increased number of companies were ex-

pecting decreased profit in a wider range of industry

types, including chemicals (22 companies→39 compa-

nies), electrical equipment & electronics (26

companies→32 companies), general machinery (21 com-

panies→30 companies), and metal products (4

companies→12 companies).

With regard to the impact on FDI, the number of com-

panies responding that they were expecting a “Decrease”

accounted for 13%, doubled from the previous fiscal year.

By industry, both automobiles (23%) and general ma-

chinery (14%) responded that this was a factor in

Automobiles（59→56）

General Machinery（21→30）

Electrical Equipment & Electronics（26→32）

Chemicals（22→39）

Metal Products（4→12）

Precision Machinery（9→12）

Nonferrous Metals（14→18）

Proportion of companies by industry that answered “Expect to see decrease”(Numbers within brackets are number of companies: FY2018 → FY2019)

80％80％

40％20％20％

0％0％

60％

FY2018FY2019

FY2018549 companies

Increase, 10 companies,

1.8%


1.4%

No impact, 135 companies,

24.6%

Not sure, 218 companies,

39.7%

Decrease, 186 companies,

33.9%Not sure,

187 companies,33.7%


19.6%


45.2%

FY2019555 companies

FY2018543 companies

0 20 40 60 80（％）100

22.5 21.6 49.0

7.8 36.4 51.9

13.8 39.7 44.8

9.6 36.1 50.6

6.9

3.9

1.73.6


5.2%


6.1%


46.6%

Not sure, 248 companies,

45.1%


42.2%


37.3%


13.3%


4.4%

(By industry, FY2019)

Automobiles (102 companies)

Electrical Equipment & Electronics

(77 companies)

General Machinery (58 companies)

Chemicals (83 companies)

FY2019550 companies

Decrease

No impact

Increase

Not sure

Figure 8. Impact of Friction Between US and China on Profits

Figure 10. Effects on Direct Investment Overseas

Figure 9. Proportion of Companies Answered “Decrease”(By Industry)

60　 2020.3

decreasing direct investment (Figure 10).

Regarding the increase/decrease in direct investment,

companies were also asked about investment destination.

For investment in the US, 4 more companies responded

“Decrease” over “Increase”, while for investment in Chi-

na 60 more companies responded “Decrease” over

“Increase”. This indicates that the trade friction between

these countries is leading to a large decrease in investment

in China (Figure 11).

As mentioned above, although a decrease in direct in-

vestment is expected in both the US and China, there is a

steady tendency towards increasing direct investment in

countries other than the US and China. This worked as an

opportunity for countries such as Thailand and Vietnam

in particular to welcome more investments.

Companies who responded that the trade friction had

“No impact” on their overseas direct investment were

asked to give reasons(Figure 12). As a result, the majority

of respondents (56 companies) answered “We can reorga-

nize/relocate existing supply chains flexibly”, excluding

the group of respondents who had no impact. On the oth-

er hand, only 12 companies tried to get through the

situation by “price pass-through” (“We can shift the in-

creased costs to the sales price”). A comparison of the

results suggests that companies are trying to respond flex-

ibly to this trade friction.

In the interviews, “We can flexibly cope with the

US-China trade friction by flexibly adjusting the produc-

tion volume between bases, such as reducing production

in China and increasing production in Malaysia” (non-fer-

rous metals). “We have been making frequent changes to

our local subcontracting companies in China. Taking ad-

vantage of that experience, recombining supply chains is

relatively easy for us” (precision machinery company).

When asked about trade restrictions with particular

companies, 53 companies responded that there would be

“Impacts on overseas business”, 124 companies respond-

ed with “No effect for now but will affect future business

plans”, together accounting for 30% of the total. Regard-

ing future measures, while “Suspending/reviewing

business with specific companies” was small at 33 com-

panies, many companies chose to implement and

consider strengthening information management such as

“Strengthen internal information management” (64 com-

panies), “Tightening control of technology transfer” (59

companies), and “Strengthening management of data dis-

tribution within the company and with trading partners”

(51 companies) (Figure 13). With most of the respondents

having offices in China, it can be seen that risk manage-

ment and information management are being strengthened

in response to rising political risks, assuming business

continuity in both the US and China.

64

59

51

39

33

13

22

Strengthening information security in overseas business

Tightening control of technology transfer in overseas countries

Strengthening data management (within the office/with clients)

(No. of respondent companies = 188)

Securing traceability in global supply chains

Suspending/reviewing business with specific companies

Reexamining the electronic devices used in office

Other

US ChinaOther than the

US/China

FY2018 FY2019 FY2018 FY2019 FY2018 FY2019

Increase 20 6 11 7 12 18

Decrease 13 10 11 67 3 8

Difference 7 ー4 0 −60 9 10

■ Specific countries for investment “Other than the US/China” in the FY2019 survey (free entry)Increase: Thailand (6), Vietnam (4), Mexico (3), India (2), Myanmar, Czech Republic,Malaysia, Italy, Spain, France, ASEAN countries (1 each)Decrease: Europe, Southeast Asia, the Philippines, Japan, Mexico, Indonesia, EU (1 each)

100

63

56

12

15


Our supply chain doesn’t expand over China and the US

Our dealing goods/materials aren’t affected

We can reorganize/relocate existing supply chains flexibly

We can shift the increased costs to the sales price

Other

Figure 11. Comparison with US, China, and Other than US/China

Figure 12. Reasons for Not Affecting Overseas Direct Investment

Figure 13. Countermeasures Introduced/Under Consideration

2020.3 　61


7. Overseas Expansion of Open Innovation

We asked about the present and future efforts to create

innovation (Figure 14). “In-house personnel/knowledge”

(73.2%) and “Japanese universities/research institutions”

(58.4%) gained high response rates for current partners,

indicating that current efforts are centered around collab-

oration within Japan, being implemented mainly through

internal R&D functions and joint research in convention-

al fields. Collaboration with overseas partners seems to be

in a low tone at the moment.

On the other hand, when comparing “Now” and “Fu-

ture”, the response rate decreased for both “In-house” and

“Universities/research institutions” in Japan, while for the

“Future”, partnerships with “Other Japanese companies”

and Japanese “Startups” increased. In-house research and

joint research with Japanese educational institutions

seems to be over-saturated, and it is likely that coopera-

tion with more diverse players such as other industries

will expand in the future. Overall, the growth of overseas

partners is more remarkable than that of domestic part-

ners, indicating that expectations for cooperation with

overseas companies, ventures, and research institutes are

high. In interviews, one chemical company said, “Since it

is unlikely that domestic business will grow in mass, we

are looking for cooperation with overseas partners in an-

ticipation of developing new markets”. Looking at the

responses by industry, Chemicals industry had a particu-

larly high response rate (total response number: 86); not

only the large general chemical manufacturers and phar-

maceutical companies, but also those from various fields

are included (resins, agrochemicals, and cosmetics).

When asked about which are promising as a place for

delivering open innovation, and Shanghai won the top

spot with 71 companies responding. It established a lead

to Silicon Valley (53 companies). This reveals the strong

expectations toward China as a place to accelerate open

innovation (Figure 15).

865551

43212019

12864430

50

73.260.958.455.3

38.048.5

16.827.7

14.224.0

20.037.4

11.719.8

0 20 40 60（％）80

(Number of respondent companies = 490)


In-house personnel/knowledge

Japanese universities/Research institutions

Overseas universities/Research institutions

Overseas companies

Overseas startup companies

Companies wishing to work with overseas partners in the future (by industry, total number of responses)

Chemicals

Automobiles


General Machinery

Nonferrous Metals

Precision Machinery

Food

Transportation Equipment

Metal Products

Textiles

Ceramics, Cement & Glass

Paper, Pulp & Wood

Steel

Petroleum & Rubber

Other

Japanese companies

Japanese startup companies

FutureNow

26971

5326232221201918131311111010108764333222

62

TokyoShanghai

Silicon ValleyBeijing

MumbaiBoston

Los AngelesBerlin

BangaloreNew Delhi

LondonSeoul

AmsterdamNew York

Tel AvivParis

SeattleHoustonTorontoSydney

São PauloStockholmBarcelonaVancouver

TallinnDenverAustinOther

(companies)

Other Cities mentioned(Number within brackets: number of responses)

[Overseas] Singapore (5), Bangkok (5), Jakarta (2), Hanoi (2),Dresden, Ho Chi Minh, Baltimore, Munich, Andhra Pradesh, Edmonton, San Diego, Chicago (1 each)

[Domestic] Osaka Prefecture (2), Aichi Prefecture, Okayama Prefecture, Kyoto Prefecture, Tochigi Prefecture, Niigata Prefecture, Hiroshima Prefecture, Osaka City, Sendai City, Hamamatsu City, Himeji City (1 each)

(Number of responses: 317 companies)

Note: List of city names was created based upon the Global Tech Hub Report produced by CBInsights. Shenzhen and Singapore were not included in the choice.

Figure 14. Partners for Innovation (Multiple Answers Allowed)

Figure 15. Cities with Potential as a Place for Cooperation

62　 2020.3

In the three cities of Tokyo, Silicon Valley, and Shang-

hai, we examined whether the attributes of the responding

companies that looked promising each had any character-

istics (Figure 16). As a result, by industry, the ratio of

general machinery and automobiles was higher in Shang-

hai than in the other two cities, while the ratio of electrical,

electronic and precision machinery was higher in Silicon

Valley.

Companies choosing Silicon Valley showed good bal-

ance among the type of partners they want to collaborate

with. On the other hand, those that selected “Shanghai”

tend to select “Other companies” more to achieve innova-

tion. Amongst companies that selected Tokyo as a source

of domestic partners, the response rate of “Universities/

research institutions” is outstandingly high.

Among the companies who are working on partnering

with startups (domestic and overseas), the chemicals in-

dustry showed the most proactive present and future

stances (present: 31 companies, future: 48 companies).

There was also a very strong increase in the electrical

equipment & electronics industry from the present to the

future, indicating a possible increase in collaboration with

startups. Examples of partnerships with startups were di-

verse, including conducting venture capital investment by

CEO-led new groups, dispatching research staff to Sili-

con Valley, acquiring overseas startups, and providing

support for startups located close to their hometown. Al-

though many companies seek to gain technologies and

services which they lack from startups, one electronics

company stated, “Startups are a treasure box when it

comes to preempting our company’s needs. Supporting

them creates new business for us and allows our products

and services to be used in a broader world”.

8. Conclusion

This year’s survey clearly showed the stance of compa-

nies that diligently sought out solutions to disruptions,

despite the effects caused by the political and economic

situation. It was also confirmed that the respondent com-

panies also had a deep interest in future-focused open

innovation and a latent desire to expand overseas, while

demonstrating more traditional forms of flexibility. Go-

ing forward, companies are expected to gain more

business opportunities by appealing widely to the world

not only the development of next-generation technolo-

gies, but also the problem-solving abilities based on

technological capabilities

1. Industry 2. PartnersAutomobiles

General Machinery

Startup Companies


Precision Machinery

Chemicals

Other Companies

Universities/Research institutions

TokyoShanghaiSilicon Valley

TokyoShanghaiSilicon Valley

30％30％

20％20％

10％10％

0％0％

0％0％

60％60％

[Outline of the Study]1. Survey target: In principle, Japanese companies

which have three or more overseas affiliates (including at least one production base).

2. Number of companies surveyed: sent to 1004 companies, and 588 responded (response rate 58.6%)

3. Survey methods: Questionnaires were sent via post while e-mails were sent to request the respondents to complete the questionnaires online. During the survey period, telephone interviews and direct visits to individual companies were also performed.

4. Survey period: June 28, 2019 (surveys sent) to August 1, 2019 (*Surveys returned by September 27 were treated as valid)

Figure 16. Breakdown of Companies that Selected Tokyo, Shanghai, or Silicon Valley

survey report on overseas business operations by ......2020/03/25 · “survey report on overseas...

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