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Content - Foreign business mood barometer slightly down

  • May 15, 2018

Foreign business mood barometer slightly down

Tokyo (SCCIJ) – The latest Business Confidence Survey of the Foreign Chambers in Japan (FCIJ) shows a small decrease in the outlook for the Japanese economy short term as well as long term compared to the previous survey conducted in October 2017. At the same time, the strong and steady recovery of Japan’s economy was mirrored in profits and sales of chamber member companies. As the biggest challenges in the Japanese market, the respondents mostly cited labor issues, mainly hiring, and retaining good, bi-lingual staff. 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.

Spring in Japan

Confidence index still strong

According to the survey results summary made by the Finnish Chamber of Commerce in Japan, the responding members of foreign chambers in Japan remain positive about the Japanese economy. For the next six months, the confidence index – on a scale from +2 (strong improvement) to -2 (strong decline) - was now at +0.61, compared to +0.67 in October. Looking 12 months ahead, the respondents see a further improvement in the economy but slightly lower than forecast in the previous survey. This index was now at +0.63, compared to +0.73 in the previous survey.  

The positive views on the economy were also reflected in the performance of the companies. The index for reported sales performance in the past six months now stood at +0.86, the highest reported since spring 2006, compared to +0.77 in the previous survey. Also the index for profitability growth increased slightly, going up from +0,61 in October to now +0.65.  

Sales expectations are up

In the sales forecast for the coming six months the respondents have become more optimistic compared to the survey results of October. The index was now standing at +0.96, the highest index since fall 2006 and 0.03 points higher than in October. The survey forecast for profitability fell marginally from +0.78 in the October survey to +0.74.  

The optimism reflected in the company performance data also clearly shows that foreign-affiliated companies in Japan continue to have a bullish outlook in their strategic goals. 77% are looking for further growth and 22% are expecting to sustain their current level. Only one of the respondents is planning to downsize and only one respondent is considering withdrawing from Japan.

©2018 FCIJ & Finnish Chamber of Commerce in Japan (click to enlarge)

©2018 FCIJ & Finnish Chamber of Commerce in Japan (click to enlarge)

Alternating questions about free trade

This time the survey included two alternating questions. For the European Chamber members, the questions were regarding the EU-Japan Economic Partnership Agreement. As for how the agreement would affect their business, 9% reported “strongly positive”, 42% “some positive” and 47% expected it “not to affect”. Three respondents expected some strong negative influence.  

For others than the Europeans, one question aimed at the effect of a possible increase in interest rates on the respondents’ business. 26% expected “negative” effects, 15% “positive” (mainly financial sector) and 47% reported that it would not affect their business. The second question was regarding President Trump’s announced trade policy measures and the influence on businesses if they would be implemented. An overwhelming majority of 83% expected a negative effect.  

Strong Swiss participation in survey

20 responses of the FCIJ business confidence survey came from the Swiss Chamber of Commerce and Industry in Japan (SCCIJ). This corresponds to almost 12% of the whole survey participation. Only the German chamber (38) gave more answers than the SCCIJ. Behind Switzerland, there were Australia and New Zealand (17) and Austria (16). 

Compared to spring 2017, the engagement of the Swiss Chamber with then 29 responses declined, though. An overview of SCCIJ members' answers can be viewed here.

72% of SCCIJ survey participants in spring 2018 saw “some improvement” in the Japanese economy in the next six months, but 28% expected “no change”. 65% were predicting “some improvement” in the next twelve months, with 25% predicting “no change”. 

The sales performance of the last six months was judged by 32% as “strong improvement”, by 53% as “some improvement” and 11% as “no change”. Sales in the next six months will “strongly improve” (20%), see “some improvement” (65%) and will “not change” (10%).

The profitability outlook of SCCIJ respondents for the next six months was also very positive: 10% stated “strong improvement” and 55% “some improvement”. 

About the survey

This 33rd survey was conducted between April 18 and 27, 2018, and received 172 valid responses from members of 17 foreign chambers of commerce in Japan. This survey, conducted twice a year, has become a barometer of foreign business in Japan. 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).  

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

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.  

 

Text: SCCIJ partly based on FCIJ material; Photo: Pixabay/DeltaWorks CC0

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