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Content - Business mood at foreign chambers in Japan up again

  • April 25, 2017

Business mood at foreign chambers in Japan up again

Tokyo (SCCIJ) – The latest Business Confidence Survey of the Foreign Chambers in Japan (FCIJ) shows further improved sentiments across the board among managers of member companies when compared to the previous survey conducted in October 2016. The Japanese economy outlook index for the next six months grew from +0.1 in October to +0.4 in April on a scale ranging from +2 (strong improvement) to -2 (strong decline). The outlook index for the next twelve months indicates even more growth. It increased from +0.27 in October to +0.55 in April. The FCIJ survey, conducted twice a year, has become an acknowledged bellwether for the business confidence of foreign companies in Japan over the past fifteen years.

Foreign chambers in better mood

Strong Swiss participation in survey

29 responses of the FCIJ business confidence survey came from the Swiss Chamber of Commerce and Industry in Japan (SCCIJ). This corresponds to almost 10% of the whole survey participation. Only the chambers of Germany (53), Australia and New Zealand (44) and USA (38) gave more answers than the SCCIJ. The engagement of the Swiss Chamber with 29 responding managers of member companies also grew strongly compared to only eight participants in the survey of spring 2016. (The SCCIJ did not participate in the survey of October 2016.)  

31% of SCCIJ survey participants in April 2017 see “some improvement” in the Japan economy in the next year (spring 2016: 13%). 66% (38%) of them registered “some improvement” in the sales performance of their company. The profitability outlook of SCCIJ respondents jumped from 38% expecting “some improvements” in April 2016 to 76% in April 2017. 66% (63%) of SCCIJ participants attribute the reason for improved profits to their own efforts, and only 3% (13%) to effects of the exchange rate.

©2017 FCIJ & Finnish Chamber of Commerce in Japan

©2017 FCIJ & Finnish Chamber of Commerce in Japan

Europeans less positive than Americans

Regarding the whole survey (overview here), 45% of all respondents expect for the next six months (some or strong) improvement, while 6% of the respondents see “some decline” and nobody “strong decline”; 48% expect no change. The North American companies were more positive (+0.56) than the Europeans (+0.39) with the ANZ (Australia/New Zealand) companies least positive (+0.36). By type of business the differences were small, the Sales & Trading sector was most positive (+0.43), while Manufacturing least (+0.26).  

The reported performance of the companies reached a clearly higher level. The index for reported sales performance in the past six months and for profitability growth each almost doubled since the last survey to +0.70 and +0.66 respectively. The North American affiliates reported better sales performance (+0.92) than the Europeans (+0.76) while ANZ was trailing at +0.36. By sector, Finance had the most positive result (+0.93) with Manufacturing lowest (+0.52).  

Bullish strategies for growth and hiring

In the sales forecast for the coming six months the respondents were also more optimistic, with the index climbing from +0.63 to +0.87. The forecast for profitability grew from +0.54 to +0.75. The North American affiliates (+1.03) see the sales development more positively than the Europeans (+0.90) while ANZ was lowest at +0.59. By sector the differences were rather significant: Sales & Trading was most optimistic (+0.91), followed by Service (+0.82), Finance (+0.80), and Manufacturing (+0.52).  

The optimism reflected in the company performance data also clearly shows that the strategies of the foreign-affiliated companies in Japan continue to be bullish. 77% (compared to 72% in the October survey) are looking for further growth and 19% are expecting to sustain their current level. Only 2% of the respondents are planning to downsize and 1% is considering to withdraw from Japan.  

Differences between areas were rather significant. The North-Americans and Europeans were pretty similar: 85% and 82% seek further growth, compared to 70% and 76% respectively in the fall. Notable was that none of the North Americans plan to downsize nor consider to withdraw from the market. Of the Europeans, 15% would maintain current level, 2% downsize and 1% considers to withdraw.  

This survey included also a question about the hiring policies. Here, 46% reported that they were going to hire additional staff during the next 12 months, 46% expect no change and only 6% plan to reduce their workforce. In addition, there was an open question regarding the biggest challenges in the Japanese market. By far the most cited challenge was labor issues, mainly hiring, and retaining good staff. Detailed answers to the challenges question can be found here.  

About FCIJ and the survey

The Foreign Chambers in Japan (FCIJ) is an informal organization comprised of foreign chambers of commerce and business groups in Japan mainly for the purpose of information exchange and enhancement of the activities of the component organizations.  

The FCIJ conducted the first Business Confidence survey in April 2002, based on a format developed by the Finnish Chamber of Commerce in Japan (FCCJ). The 31st survey was conducted between April 12 and 21, 2017, and received 296 valid responses from members of 19 (record number) foreign chambers of commerce and business organizations.  

Participating organizations included the ACCJ (American Chamber), ANZCCJ (Australian and New Zealand), ABC (Austrian Business Council), BCCJ (British), BLCCJ (Belgian-Luxembourg), CCBJ (Brazilian), CCCJ (Canadian), FCCJ (Finnish), CCIFJ (French), DIHKJ (German), GrCCJ (Greece), IJCC (Irish), ICCJ (Italian), NCCJ (Dutch), NoCCJ (Norwegian), SACCJ (South African), CCHJ (Spanish), SCCJ (Swedish) and SCCIJ (Swiss Chamber).    

 

Text: SCCIJ based on FCIJ material; Photo: flickr/Toshihiro Gamo CC BY 2.0 

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