Post on 13-Mar-2020
Copyright (C)2015 JETRO. All rights reserved. 1
Results of JETRO’s 2014 Survey on
Business Conditions of Japanese-Affiliated Firms
in Canada
January, 2015
Japan External Trade Organization (JETRO)
Overseas Research Department
North America Division
Copyright (C) 2015 JETRO. All rights reserved. 2
About the Survey
This survey has been conducted since 1989 by the JETRO Canada office, with this
being the 25th implementation (there was no survey conducted in 2004.)
1. Purpose
To survey and analyze the state of Japanese-affiliated companies in Canada (business
confidence, performance, management challenges, etc.) with the aim of facilitating
business activities and management strategy planning for Japanese-affiliated
companies.
2. Survey coverage
The definition of a “Japanese-affiliated company” is one for which “the investment
from the Japanese parent company is at least 10%,” including both direct and indirect
investments. For example, consider a Company A, which is an American subsidiary
with a Japanese parent company that holds a 20% share. If Company A itself holds a
50% share of a subsidiary, Company B, then the parent Japanese company for Company
A owns a 10% share of Company B (0.2 x 0.5 x 100), so that Company B would also be
regarded as a “Japanese-affiliated company.” (Company B is a sub-subsidiary of the
parent Japanese company.) The same type of calculation applies to sub-sub-subsidiaries
as well.
3. Method
The target companies were informed by the Toronto office of an Internet address
(URL) where the questionnaire was posted. Respondents entered their answers directly
onto the survey form on this website.
4. Period
September 3 to October 17, 2014
5. Response rates
The requests were made to 233 Japan-affiliated companies in Canada, with responses
received from 136, for a response rate of 58.4%.
Note: The number of companies responding is an aggregate based on the cooperation of
each company, using information sources regarded as reliable by the JETRO office, but
the absolute accuracy and completeness of the information cannot be guaranteed.
Copyright (C) 2015 JETRO. All rights reserved. 3
1. Business Conditions
○ The indicator of business confidence for 2014 (DI value 21.8) improved in
comparison to the previous year (DI 14.3). Since there was an increase in product
demand, there were many responses indicating that “it feels like the economy is
recovering” and “the economy seems stable.”
- The diffusion index (DI) that indicates business confidence (proportion of
businesses reporting increased operating profits minus those reporting decreased
operating profits compared to the previous year) was 21.8 for 2014 (Fig. 1). There
were many companies indicated that they expected improvement in the categories
of processed food, agricultural or fishery products, and the key industries of
transportation machines (cars and motorcycles) and parts for these machines.
- With regard to the operating profit for 2014, 42.9% reported an increase compared
to 2013, with 36.1% reporting that it would remain the same, and 21.1% expecting a
decrease (Fig. 2). In addition, 74.4% of the companies indicated that they are
expecting to be profitable in 2014 (Fig. 5). The reasons given for the improvement,
in order of frequency (multiple answers permitted) were “Sales increase in local
markets” (78.6%), “Sales increase due to export expansion” (21.4%), and “Effects of
exchange rate fluctuation” (19.6%) (Fig. 3). In comparison, the main reasons given
for worse results were “Sales decrease in local markets” (59.3%), and “Sales
decrease due to export slowdown” (18.5%) (Fig. 4).
- The answers about forecasts for operating profit in 2015 compared to 2014 show
that slightly more companies expect an increase (45.1%) rather than remaining the
same (44.4%) (Fig. 2). The reasons for the improvement, in order of frequency
(multiple answers permitted) were “Sales increase in local markets” (70.0%),
“Improvement of sales efficiency” (20.0%), and “Sales increase due to export
expansion” (16.7%) (Fig. 6). Reasons for an expected decrease were “Sales decrease
in local markets” (57.1%) and “Increase of other expenditures (e.g.,
administrative/utility/fuel costs)” (21.4%) (Fig. 7).
<Performance is strong, particularly in the automotive industries. Many view that
the economy is now strong and stable>
* The comments indicated by arrowhead bullet points in the main text (type of industry
indicated in parentheses) are quotes from interviews with the firms that responded to
the questionnaire, and, in part, comments on the survey questionnaire.
The economy seems strong because overall demand is growing for car sales.
[Transportation machines (cars and motorcycles)]
There is a feeling that the economy is recovering in the aluminum industry. [Metal
goods (including plated products)]
Copyright (C) 2015 JETRO. All rights reserved. 4
The industry is maturing for cameras/ business-related equipment. For Canada as
a whole, however, things vary in different business categories, but there are
industries looking for growth. With the influx of immigrants, and the low yet
continuing growth of GDP, the economy is considered to be stable. [Electric
machines and electronics]
Although there is no feeling of an economic downturn, it does not seem to be better
than the economic situation in the U.S. [Trading]
2. Future Business Plan
○ With regard to future business expansion, nearly 50% indicated that they would
remain the same, and the percentage of those expecting to expand is higher than in
the previous year.
- Regarding the directions for business development in the next one or two years,
49.3% indicated that they expect things to remain the same, while 46.3% expect to
expand, which is higher than last year (38.9%) (Fig. 8). The reasons for expected
expansion, in order of frequency (multiple answers permitted), include “Sales
increase” (85.5%), “High growth potential” (43.5%), and “High receptivity for
high-value added products” (19.4%) (Fig. 9). The specific functions that respondents
want to expand are “Sales functions” (67.2%), “Production (high-value added
products)” (29.5%), and “Production (ubiquitous products)” (21.3%) (Fig. 10).
Reasons given for future reduction, location transfer, or withdrawal were “Sales
decreases” (66.7%) and “Low growth potential” (33.3%).
○ On the question of issues faced in promoting management localization, the
answers concentrated on “Little progress in delegating authority from
headquarters to the local offices” and “Difficulty recruiting local candidates for
executive positions.” There is a concern about communication with the
headquarters, and how to secure the talented personnel who can become future
management candidates.
- Measures being implemented to encourage localization of management, in order of
frequency (multiple answers permitted) include “To strengthen system to
train/cultivate local human resources by focusing on localization of corporate
management” (52.2%), “To assign local staff to a general manager/manager position”
(44.0%), and “To encourage mid-level hiring activities to obtain competent local
staff by focusing on localization of corporate management” (41.0%) (Fig. 11). On the
question of issues faced in promoting management localization, the indicated issues
with headquarters/Japan side were “Little progress in delegating authority from
Copyright (C) 2015 JETRO. All rights reserved. 5
the headquarters to local offices” (17.6%), “Difficulty in reducing the number of
Japanese expatriate staff” (17.6%), and “Inadequate language skills of the Japanese
expatriate staff (English and local languages)” (16.8%) (Fig. 12). Issues on the local
side include “Difficulty in recruiting local candidates for executive positions”
(35.9%), “Insufficient performance/awareness among local staff” (29.0%), and
“Insufficient capabilities for local planning and marketing” (12.2%) (Fig.12).
- Over the last year, 31.1% of the respondents indicated that the number of local
employees had increased, and 51.5% said there was no change. There were 17.4%
indicating a decrease. With regard to future plans on the number of local employees,
34.9% said they planned to increase the number, 56.6% had no changes planned,
and 8.5% expect to decrease (Fig. 13).
- For the Japanese expatriate staff, 75.6% of the companies indicated that there was
no change since last year. For the future as well, 76.2% indicated that no changes
were planned (Fig. 14).
<There are still issues with communication with the head office in Japan affecting
the promotion of delegation of authority to local personnel>
More than a difficulty in recruiting people, it seems to be harder to effectively plan
human resource development under the Canadian system where there is no fixed
retirement age. [Transportation machines (cars and motorcycles)]
Our problem is that the systems at the head office in Japan have not kept up with
the localization of the subsidiary. There has been improvement in the conversations
and e-mail with the local staff in English, but it is still not sufficient, and
communication through expatriate staff is still needed. [Transportation machines
(cars and motorcycles)]
We have no problem with delegation of authority. We have tried hiring and training
executive candidates, but the turnover is pretty severe. The more talented the
people are, the more likely it is that they leave during training. [Transportation
machines (cars and motorcycles)]
We have local employees in more than half of the management positions, so I think
our localization is more advanced. With regard to the difficulty with hiring
executive candidates, I think we can only continue to be proactive in all areas, and
diligently work on hiring, education/training, evaluation and compensation.
[Electric machines and electronics]
3. Sales and Procurement
○ Approximately 60% of products manufactured in Canada were sold domestically,
while around 20% were exported for sales to the U.S. Regarding future direction of
Copyright (C) 2015 JETRO. All rights reserved. 6
sales policy, “maintaining the present conditions” accounted for the majority of
responses.
- 63.5% of products manufactured in Canada were sold domestically (Fig. 15).
Followed by the U.S. (19.4%) and Japan (12.5%).
- For future sales policy, 37.3% of the companies indicated that they intend to expand
in Canada. Overall, the most selected answer was “stay the same” (Fig. 16).
<In many cases, the Canadian corporation does not have the authority to decide to
engage in sales in other regions>
Since group sales companies have jurisdiction in other countries, like Mexico and
Central/South America, we don’t have any plans to expand. [Electric or electronic
machines]
Our company buys finished products from a U.S. company and sells them in the
Canadian market. We only sell in Canada. Any expansion of sales destinations is
handled by the U.S. company. [Transportation machines (cars and motorcycles)]
○ For the procurement of raw materials and parts, 38.5% are procured within
Canada, followed by 32.8% from the U.S., and 16.7% from Japan. Many of the
respondents indicated that they planned to expand procurement from Asia.
- For the breakdown of procurement sources for raw materials and components,
38.5% is procured from within Canada (9.0% from Japanese-affiliated local
companies, 28.4% local companies, and 1.1% other foreign-affiliated companies).
Other main sources are the U.S. (32.8%) and Japan (16.7%) (Fig. 17).
- Target countries often indicated by those planning to expand their procurement
sources include the currently low procurement source level regions of ASEAN
(71.4%), and Taiwan/Korea/Hong Kong (44.4%) (Fig. 18).
<There are many companies in Canada that procure materials and components from
U.S. entities and their Japan headquarters. Some Canadian companies also indicated
that there is no intent to change the procurement policies.>
Basically, the products we are selling are almost all obtained from our group
companies, and most are purchased through the Japan headquarters. We have no
plans to shift our suppliers. [Electric machines and electronics]
4. Management Challenges
○ As general managerial issues, “recruiting executive officers and general staff” was
ranked at the top. Primary factors of increasing costs included “Increase in labor costs
including salaries and bonuses” and “foreign exchange risks of the Canadian and the
U.S. dollar.” On the other hand, as key factors suppressing sales, many firms stated the
Copyright (C) 2015 JETRO. All rights reserved. 7
same reasons as last year, such as “severity in price competition” and “difficulty in
developing differentiated products.”
- General management issues indicated, in order of frequency (multiple answers
permitted) were “Recruiting workers for management positions” (33.1%),
“Recruiting regular workers” (32.2%), and “Retention of workers” (27.1%) (Fig.
19). For Japanese-affiliated companies in Canada, the big issues appear to be
securing and managing employees.
- The factors contributing to rising costs in order of frequency (multiple answers
permitted) were “Increase in labor costs (including salaries and bonuses)”
(65.4%), “Foreign exchange risks (Canadian dollar/U.S. dollar)” (50.4%), and
“Increase in raw material, natural resource and commodity prices” (35.4%) (Fig.
20).
- Factors attributed to contributing to weaker sales, like the previous year were
“Severity in price competition” (79.8%), “Difficulty differentiating ourselves from
competitors” (45.4%), and “Popular products from competitors” (38.7%) (Fig. 21).
<Although there are many job-seekers, it is difficult to find quality personnel>
There is no concern about personnel shortages, but the aging of employees is an
issue. [Parts for transportation machines (cars and motorcycles)]
There tends to be insufficient human resources in Calgary where the economy
continues to be strong. [Non-ferrous metals]
Many of the expatriate staff who have experiences working in other countries
consider the Canadian workers to be honest and reliable. The issues with securing
general staff are less about a lack of ability, and more about high attrition rates
related to compensation, such as working hours and salary. [Electric machines and
electronics]
On the subject of securing management and executive level personnel, there is
always a lot of competition for the talented people, but when the business
environment is changing significantly, it is necessary to respond immediately to the
uncertainties and changes, further increasing the demand for even higher quality
and activity of the leaders. This is what is behind the accelerating competition for
human resources. [Electric machines and electronics]
<As a measure to handle personnel costs, early retirement schemes are also being
introduced>
(As a labor cost policy) Wage increases are kept at about the same level as the
inflation rate, and wage levels are set as needed for each post, with consideration of
the levels in other industries. [Transportation machines (cars and motorcycles)]
Since they (employees) try to continue working indefinitely, we have created an
Copyright (C) 2015 JETRO. All rights reserved. 8
early retirement program offering incentives of about one year’s worth of salary to
gradually induce people to retire. This is contributing to a decrease in labor costs.
[Other manufacturing]
Reduction of personnel requirements through improved operations efficiency.
[Transportation machines (cars and motorcycles)]
<Since many of the Japanese-affiliated companies in Canada settle their accounts in
U.S. dollars, the Canadian dollar/U.S. dollar exchange rate fluctuations impact the
bottom line.>
Products from the U.S. companies are purchased with U.S. dollars, and sold to
Canadian customers priced in Canadian dollars, so there is an impact from the
exchange rate. [Parts for transportation machines (cars and motorcycles)]
The prices for feed grains used as a raw material and for the pork for export that
constitutes a large portion of the products are quoted in U.S. dollars, so the
exchange rates have a big influence on the business. [Processed food, agricultural
or fishery products]
Since purchases are made in U.S. dollars, there is a certain influence from changes
in the exchange rate. We recognize that handling exchange rate fluctuations is a
management issue. [Electric machines and electronics]
<Intensifying price competition puts pressure on business operations. Factors include
competition from Asian companies and industry maturation >
Our main competitors are Japanese makers. The products themselves have been
commoditized, leading to large price drops. [Precision machines and apparatuses]
There is very little competition from Asian companies. The competition for our
products (pork) mainly comes from the U.S., Japan and parts of Europe. [Processed
food, agricultural or fishery products]
Although sales are increasing, there is intensifying competition from Korean auto
makers using pricing as their advantage to expand sales. [Transportation machines
(cars and motorcycles)]
The main factor behind the intensifying price competition is the maturation of the
industry. [Electric machines and electronics]
5. Capital Investment
○ About 60% of the respondents indicated that capital investment remained the same
in 2014 in comparison to 2013. However, the percentage indicating an increase over
the previous year was higher.
Copyright (C) 2015 JETRO. All rights reserved. 9
- For the comparison of capital investment in 2013 and 2014, 58.9% responded that it
remained the same (Fig. 22). However, the percentage of those indicating an
increase over the previous year was higher (28.8% this year, 19.8% in 2013). The
main uses of the capital investments in order of frequency (multiple answers
permitted) were “Modernization and efficiency improvement of the plant
(include expanding or renewing of machines and facilities)” (53.1%) and
“Enhancement of technology and R&D” (23.4%) (Fig. 23).
6. Changing Business Environment
○ With regard to the effects of the shale revolution, 19.4% indicated that the effects
were positive, far exceeding the number indicating a negative effect (6.0%).
However, answers of “no effect” and “effect unknown” accounted for more than half
of the responses. For the specific effects, in addition to “Increase of product
demands,” negative effects like “Increase of raw material prices (including crude
oil-related)” were also cited.
○ With respect to utilization of FTAs, high use rates were indicated for import/export
activities with the U.S. and Mexico, who are NAFTA members.
○ The fields most expected to have market growth in the next few years (multiple
answers permitted) include Shale gas, Environment, Health, and Medical.
○ Effects of the shale revolution in North America
- With regard to the effects of the shale revolution, 19.4% indicated that the effects
were positive, far exceeding the number indicating a negative effect (6.0%) (Fig. 24).
However, 39.6% responded that there was no effect and 35.1% said “effect
unknown,” which accounted for more than half of the responses. Specific effects
cited, in order of frequency, included “Increase in product demands” (45.5%),
“Increase in raw material (including crude oil-related) prices” (12.1%), and
“Decrease in fuel costs” (9.1%) (Fig. 25). There seems to be some negative impact
from the shale development, such as rising prices for raw materials.
<There is expected to be growth in the businesses related to shale development >
(Shale development) is expected to lead to greater business opportunities, like
construction of liquefied natural gas (LNG)-related facilities. [Trading company]
For B to B transactions, focusing mainly on office equipment, the growth of
Canadian business (accompanying shale development) is a business opportunity
for us. [Electric machines and electronics]
○ Utilization of bilateral or multilateral FTAs
Copyright (C) 2015 JETRO. All rights reserved. 10
- For trade with the U.S. and Mexico, both NAFTA members, companies indicated
that high utilization of FTAs. For the U.S. they are used for export 55.6% and
import 56.3%. With Mexico the utilization rates are export 57.1% and import
53.8% (Fig. 26).
<There were comments indicating expected business expansion as a result of CETA
(Comprehensive Economic and Trade Agreement) establishment between the EU and
Canada>
We are hoping that CETA will contribute to exports of aluminum to the EU.
[Non-ferrous metals]
We have high expectations for more opportunities as tariffs are reduced and
restrictions are eased on the export of pork (when CETA is enacted). [Processed
food, agricultural or fishery products]
* Canada and the European Union (EU) reached an agreement for CETA in October 2013. It
is planned to enter into force after being ratified in Canada.
○ Fields in which the markets are expected to grow in the next two or three years
- The Canadian markets expected to experience growth in the next few years selected
by the respondents (up to a maximum of three fields), in order of frequency, were
Shale gas/Shale oil (52.4%), Environment (42.1%), Medical (27.0%), Health (27.0%),
and Cloud & mobile (storage, Big Data, mobile devices, SNS, etc.) (19.8%) (Fig. 27).
<There are signs that demand for environmentally-friendly products is growing in
Canada>
The environmental standards for products have become stricter recently, so there
seems to be a stronger demand (for environmentally-friendly products). [Precision
machines and apparatuses]
The keywords for the automotive industry are safety and peace of mind, so I think the
demand for environmentally-conscious products is growing. [Transportation
machines (cars and motorcycles)]
The characteristics of aluminum make it something that contributes a lot to “eco”
products. For example, the lighter cars have really increased demand, so we can see
the increased demand for environmentally-conscious products. [Non-ferrous metals]
There seems to be potential for eco-products, but the reality is that we are not there
yet. [Processed food, agricultural or fishery products]
At this point we don’t recognize any increased environmental consideration for
automobiles. Of course the cars with good gas mileage sell, but that is directly related
to gasoline prices. I don’t think there is any growing concern for the environment in
Canada. [Transportation machines (cars and motorcycles)]
Copyright (C) 2015 JETRO. All rights reserved. 11
Copyright (C) 2015 JETRO. All rights reserved. 12
Fig. 1: Changes in year-to-year operating profit as indicated by DI and real Canada's
GDP growth rate
27.8 26.5
37.4
12.9
-2.6
20.0
10.4
22.1 21.5
8.6
-5.1
-35.8
30.5
-3.1
17.8
14.3
21.8
34.6
4.3 4.1
5.0 5.1
1.7
2.8
1.9
3.1
3.2
2.6 2.0
1.2
-2.7
3.4
2.5
1.7 1.6 1.6
2.2
-5
-4
-3
-2
-1
0
1
2
3
4
5
6
7
△ 40
△ 30
△ 20
△ 10
0
10
20
30
40
50
97 98 99 00 01 02 03 04
*
05 06 07 08 09 10 11 12 13 14 15
(est.)
DI change (left scale)
Real GDP growth rate (yr-to-yr、right scale)
(DI value) (%)Fig. 1 Changes in year-to-year operating profit as indicated by DI and real Canada's GDP growth rate
Note: DI is an abbreviation for diffusion index calculated as the proportion of businesses reporting increased
operating profits minus those reporting decreased operating profits compared to the previous year. It is an indicator
of the direction of changes, such as business confidence. 2014 and 2015 are IMF estimates (announced Oct. 2014).
* There was no survey in 2004.
Respondents: 133 companies
Copyright (C) 2015 JETRO. All rights reserved. 13
Fig. 2: Year-to-year operating profit changes
54.3 52.4 51.6
35.3 35.5
41.3
37.7
39.8
42.5
36.7
29.6 21.8
50.6
32.7
42.5
37.3
42.945.1
19.2
21.8
34.2
42.3
26.4
37.5 35.1
42.5
36.6 35.2
35.7
20.6
29.3
31.4
32.9
39.7 36.1
44.4
26.5 25.9
14.2
22.4
38.1
21.3
27.3
17.7
21.0
28.1
34.7
57.6
20.1
35.8
24.7 23.0 21.1
10.5
0
10
20
30
40
50
60
70
97 98 99 00 01 02 03 04
*
05 06 07 08 09 10 11 12 13 14 15
(est.)
Increase Remain the same Decrease•
(%)
* There was no survey in 2004. Respondents: 133 companies
Copyright (C) 2015 JETRO. All rights reserved. 14
Fig. 3: Reasons for increased operating profits forecast for 2014 (Multiple answers)
21.4
78.6
19.6
14.3
14.3
16.1
14.3
10.7
7.1
29.4
70.6
26.5
14.7
5.9
14.7
23.5
11.8
8.8
9.1
90.9
9.1
13.6
27.3
18.2
0.0
9.1
4.5
0% 20% 40% 60% 80% 100%
Sales increase due to export expansion
Sales increase in local markets
Exchange rate fluctuation
Reduction of procurement costs
Reduction of labor costs
Reduction of other expenditures (e.g.,
administrative/utility costs)
Improvement of production efficiency (Manufacturing)
Improvement of sales efficiency
Other
Total (56 companies)
Manufacturing (34 companies)
Non-manufacturing (22 companies)
Copyright (C) 2015 JETRO. All rights reserved. 15
Fig. 4: Reasons for decreased operating profits forecast for 2014 (Multiple answers)
18.5
59.3
3.7
7.4
11.1
3.7
0.0
7.4
25.9
14.3
57.1
7.1
14.3
14.3
0.0
0.0
7.1
28.6
23.1
61.5
0.0
0.0
7.7
7.7
0.0
7.7
23.1
0% 20% 40% 60% 80%
Sales decrease due to export slowdown
Sales decrease in local markets
Exchange rate fluctuation
Increase of procurement costs
Increase of labor costs
Increase of other expenditures (e.g.,
administrative/utility costs)
Rising interest rates
Production costs insufficiently reflected in selling price
of goods
Other
Total (27companies)
Manufacturing
(14companies)
Non-manufacturing
(13companies)
Copyright (C) 2015 JETRO. All rights reserved. 16
Fig. 5: Changes in operating profit and Canada's real GDP growth rate
72.3 71.3
78.2
81.6 72.5
67.5 64.9
74.1 73.1
75.8
67
51.5
65.2
64.2
75.9
75.474.4
11.4
7.6
10.9
7.1
12.2
22.5
18.8 18.5 17.7
14.6 18.3
22.2
25.6
19.5
11.7 12.714.3
16.3
21.1
10.9 11.3
15.3
10.0 16.2
7.4
9.1 9.6
14.7
26.3
9.1
16.4
12.4 11.911.3
4.3 4.1
5.0
5.1
1.7
2.8
1.9
3.1 3.2
2.6
2.0
1.2
-2.7
3.4
2.5
1.7
2.0
2.3
-3
-2
-1
0
1
2
3
4
5
6
0
10
20
30
40
50
60
70
80
90
97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14
Profit Break-even Loss Real GDP growth rate (right axis)
Profit
Real GDP growth rate (over previous year)
Loss
Breakeven
(%)(%)
Note: The GDP growth rate for 2014 is the IMF estimate (announced Oct. 2014). There was no survey in 2004.
Respondents: 133 companies
Copyright (C) 2015 JETRO. All rights reserved. 17
Fig. 6: Reasons for increased operating profits forecast for 2015 (Multiple answers)
16.7
70.0
6.7
10.0
8.3
15.0
11.7
20.0
6.7
20.6
61.8
5.9
11.8
2.9
11.8
20.6
17.6
8.8
11.5
80.8
7.7
7.7
15.4
19.2
0.0
23.1
3.8
0% 20% 40% 60% 80% 100%
Sales increase due to export expansion
Sales increase in local markets
Exchange rate fluctuation
Reduction of procurement costs
Reduction of labor costs
Reduction of other expenditures (e.g.,
administrative/utility costs)
Improvement of production efficiency
(Manufacturing)
Improvement of sales efficiency
Other
Total (60 companies)
Manufacturing (34 companies)
Non-manufacturing
(26 companies)
Copyright (C) 2015 JETRO. All rights reserved. 18
Fig. 7: Reasons for decreased operating profits forecast for 2015 (Multiple answers)
14.3
57.1
0.0
14.3
14.3
21.4
0.0
7.1
21.4
0.0
83.3
0.0
0.0
33.3
33.3
0.0
16.7
16.7
25.0
37.5
0.0
25.0
0.0
12.5
0.0
0.0
25.0
0% 20% 40% 60% 80% 100%
Sales decrease due to export slowdown
Sales decrease in local markets
Exchange rate fluctuation
Increase of procurement costs
Increase of labor costs
Increase of other expenditures (e.g.,
administrative/utility costs)
Rising interest rates
Production costs insufficiently reflected in selling
price of goods
Other
Total (14 companies)
Manufacturing (6 companies)
Non-manufacturing
(8 companies)
Copyright (C) 2015 JETRO. All rights reserved. 19
Fig. 8: Business development in the next one or two years
Expansion
46.3%Remain the same
49.3%
Reduction
3.7%
Withdrawal or transfer
to a third
country/region
0.7%
Respondents: 134 companies
Expansion
46.3% Remain the same
49.3%
Reduction
3.7%
Withdrawal or
transfer to a third
country/region
0.7%
(注)回答企業数:134
社
図 2 今後 1~2年の事業展開の方向性
Copyright (C) 2015 JETRO. All rights reserved. 20
Fig. 9: Reasons for the future business expansion in the next one or two years (Multiple
answers)
85.5
43.5
19.4
14.5
3.2
1.6
17.7
16.1
4.8
90.6
43.8
21.9
18.8
6.3
3.1
6.3
12.5
3.1
80.0
43.3
16.7
10.0
0.0
0.0
30.0
20.0
6.7
0% 20% 40% 60% 80% 100%
Sales increase
High growth potential
High receptivity for high-value added products
Reduction of costs (e.g., procurement/labor costs)
Deregulation
Ease in securing labor force
Reviewing production and distribution networks
Relationship with clients
Other
Total (62 companies)
Manufacturing
(32 companies)
Non-manufacturing
(30 companies)
Copyright (C) 2015 JETRO. All rights reserved. 21
Fig. 10: Expanding functions in case of business expansion in the next one or two years
(Multiple answers)
67.2
21.3
29.5
11.5
4.9
18.0
9.8
3.3
58.1
35.5
48.4
16.1
6.5
9.7
6.5
0.0
76.7
6.7
10.0
6.7
3.3
26.7
13.3
6.7
0% 20% 40% 60% 80% 100%
Sales function
Production (ubiquitous products)
Production (high-value added products)
R&D
Function of regional headquarters
Logistics function
Administrative functions in providing services
(e.g., shared services, call center)
Other
Total (61 companies)
Manufacturing
(31 companies)
Non-manufacturing
(30 companies)
Copyright (C) 2015 JETRO. All rights reserved. 22
Fig. 11: Measures to encourage localization of corporate management (Multiple answers)
52.2
41.0
21.6
26.9
44.0
23.1
14.9
13.4
4.5
14.2
3.0
60.0
38.7
25.3
28.0
44.0
26.7
10.7
14.7
4.0
10.7
2.7
42.4
44.1
16.9
25.4
44.1
18.6
20.3
11.9
5.1
18.6
3.4
0% 20% 40% 60% 80%
Strengthen training/seminars focused on localization
Encourage mid-career hiring to obtain competent
local staff with focus on localization
Reform of personnel systems (merit-based
promotion, etc.) with focus on localization
Assign local staff to executive positions
Assign local staff to general manager/manager
positions
Strengthen R&D capacity to develop quality of
products/services for local markets
Strengthen authority in local office to allow
decision-making for sales strategies
Delegate authority to local office from headquarters
Obtain human resources/management resources
through M&A
No particular actions
Other
Total (134 companies)
Manufacturing
(75 companies)
Non-manufacturing
(59 companies)
Copyright (C) 2015 JETRO. All rights reserved. 23
Fig. 12: Issues faced in promoting management localization (Multiple answers)
6.1
17.6
10.7
17.6
12.2
16.8
8.4
35.9
9.9
3.1
29.0
12.2
10.7
7.6
20.6
6.7
18.7
9.3
17.3
9.3
18.7
8.0
33.3
6.7
1.3
30.7
14.7
10.7
6.7
20.0
5.4
16.1
12.5
17.9
16.1
14.3
8.9
39.3
14.3
5.4
26.8
8.9
10.7
8.9
21.4
0% 10% 20% 30% 40% 50%
Disagreement over recruitment policy between local
office and headquarters
Difficulty in reducing the number of Japanese
expatriate staff
Shortage of positions available to local staff
Little progress in delegating authority from the
headquarters to local office
Inadequate management capabilities of Japanese
expatriate staff
Inadequate language skills of Japanese expatriate staff
(English and local languages)
Other
Difficulty recruiting local candidates for executive
positions
High turnover rate of local candidates for executive
positions
Inadequate language skills of local staff (Japanese and
English)
Insufficient performance/awareness among local staff
Insufficient capabilities for local planning and
marketing
Insufficient capabilities to develop local products and
services
Other
There is no particular issue
Issu
e w
ith t
he
hea
dqu
arte
rs/J
apan
sid
eIs
sue
wit
h t
he
loca
l si
de
Total (131 companies)
Manufacturing
(75 companies)
Non-manufacturing
(56 companies)
Copyright (C) 2015 JETRO. All rights reserved. 24
Fig. 13: Changes in the last year and future plans for number of local employees
34.9
31.1
56.6
51.5
8.5
17.4
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Local hires
(future plan)
(n=129)
Local hires
(change in the last
year) (n=132)
Increase No change Decrease
Copyright (C) 2015 JETRO. All rights reserved. 25
Fig. 14: Changes in the last year and future plans for number of Japanese expatriate staff
7.9
8.7
76.2
75.6
15.9
15.7
0% 20% 40% 60% 80% 100%
Japanese expatriate
(future plan) (n=126)
Japanese expatriate
(change in the last year) (n=127)
Increase No change Decrease
Copyright (C) 2015 JETRO. All rights reserved. 26
Fig. 15: Breakdown of product sale destinations (By country/region and industry)
67.9
100.0
73.0
95.8
52.5
56.8
74.3
80.0
15.0
100.0
100.0
30.0
100.0
2.3
94.0
36.1
63.5
12.4
22.9
4.3
47.5
14.8
21.0
15.0
16.7
70.0
6.0
29.3
19.4
3.1
0.2
3.3
1.0
1.2
4.1
0.2
0.6
0.7
0.3
0.9
12.6
10.0
1.0
66.7
97.7
28.3
12.5
3.0
0.8
17.6
0.7
4.0
1.7
5.1
2.6
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Other manufacturing (n=12)
Print and publication (n=0)
Medical devices (n=0)
Precision machines (n=1)
Parts for transportation machines (cars and
motorcycles) (n=19)
Transportation machines (cars and motorcycles)
(n=4)
Electric or electronic parts (n=2)
Electric machines or electronics (n=5)
Machines (including molds and power tools))(n=7)
Metal goods (including plated products) (n=1)
Non-ferrous metals (n=3)
Steel (including cast and wrought products) (n=0)
Ceramic, earth or stone products (n=3)
Rubber goods (n=1)
Pharmaceuticals (n=0)
Plastic products (n=3)
Chemical/petroleum products (n=1)
Paper and pulp (n=0)
Furniture and interior goods (n=0)
Timber and wood products (excluding furniture
and interior goods) (n=3)
Clothes and textiles (n=1)
Textiles (yarn, woven and chemical fiber products)
(n=0)
Processed food, agricultural or fishery products
(n=8)
All companies (n=74)
Canada U.S. Mexico South/Central America (ex. Mexico) Japan Other
Copyright (C) 2015 JETRO. All rights reserved. 27
Fig. 16: Future plans for changes in product procurement destinations (by
country/region)
Copyright (C) 2015 JETRO. All rights reserved. 28
Fig. 17: Breakdown of material/parts procurement sources (By country/region and industry)
5.0
13.5
23.8
6.4
25.0
9.0
31.6
18.4
13.8
8.6
45.7
80.0
80.0
50.0
68.3
10.0
28.1
28.4
2.1
0.8
3.3
3.8
1.1
17.6
100.0
46.5
40.8
100.0
25.8
20.0
15.0
11.7
45.0
30.0
50.0
70.0
30.0
60.0
10.0
32.8
0.3
3.6
0.9
0.30.03
1.5
0.8
3.8
2.1
4.3
1.4
4.5
0.1
2.4
10.0
8.8
2.3
6.0
1.5
19.0
8.6
1.7
3.3
2.9
4.0
0.5
1.6
2.2
2.1
3.3
15.0
2.5
1.5
30.9
13.4
21.8
24.2
15.0
5.0
21.7
70.0
15.0
1.7
30.0
14.5
16.7
14.0
20.0
1.9
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Other manufacturing (n=10)
Print and publication (n=0)
Medical devices (n=0)
Precision machines (n=1)
Parts for transportation machines (cars and
motorcycles) (n=17)
Transportation machines (cars and motorcycles)
(n=4)
Electric or electronic parts (n=1)
Electric machines or electronics (n=5)
Machines (including molds and power tools)
(n=7)
Metal goods (including plated products) (n=1)
Non-ferrous metals (n=3)
Steel (including cast and wrought products) (n=0)
Ceramic, earth or stone products (n=3)
Rubber goods (n=1)
Pharmaceuticals (n=0)
Plastic products (n=3)
Chemical/Petroleum products (n=1)
Paper and pulp (n=0)
Furniture and interior goods (n=0)
Timber and wood products (excluding furniture
and interior goods) (n=3)
Clothes and textiles (n=1)
Textiles (yarn, woven and chemical fiber
products) (n=0)
Processed food, agricultural or fishery products
(n=8)
All companies (n=69)
Canada (local Japan-affiliated company) Canada (local business) Canada (other foreign-affiliated company)
U.S. Mexico South/Central America (ex. Mexico)
Taiwan, Korea, Hong Kong ASEAN China
EU Japan Other
Copyright (C) 2015 JETRO. All rights reserved. 29
Fig. 18: Future plans for material/parts procurement sources (By country/region)
0.0
6.3
9.1
23.1
71.4
44.4
0.0
50.0
29.3
40.0
34.3
35.7
50.0
59.4
90.9
69.2
28.6
55.6
100.0
50.0
63.4
60.0
62.9
64.3
50.0
34.4
0.0
7.7
0.0
0.0
0.0
0.0
7.3
0.0
2.9
0.0
0% 20% 40% 60% 80% 100%
Other (n=2)
Japan (n=32)
EU (n=11)
China (n=13)
ASEAN (n=7)
Taiwan, Korea, Hong Kong (n=9)
South/Central America (ex. Mexico)
(n=2)
Mexico (n=4)
U.S. (n=41)
Canada (other foreign-affiliated
company) (n=5)
Canada (local business) (n=35)
Canada (local Japan-affiliated
company) (n=14)
Increase No change Decrease
Copyright (C) 2015 JETRO. All rights reserved. 30
Fig. 19: Management challenges: Management problems in general (Multiple answers)
Fig. 20: Management challenges: Factors for cost increases (Multiple answers)
Fig. 21: Management challenges: Factors for weak sales (Multiple answers)
Rank Item Respondents (118) Rate (%)
1 Recruiting workers for management positions 39 33.1
2 Recruiting regular workers 38 32.2
3 Retention of workers 32 27.1
4 Recruiting engineers 26 22.0
5 Acquiring work visas for Japanese expats 23 19.5
6 Employment procedures 11 9.3
7 Labor union related disputes including strikes 6 5.1
8 Safety measures (for automobiles, food, medicines, etc.) 5 4.2
9 Assisting Japanese expats (e.g. acquiring driver’s licenses, etc.) 3 2.5
10 Antitrust measures 2 1.7
Other 27 22.9
Rank Item Respondents (127) Rate (%)
1 Increase in labor costs (including salaries and bonuses) 83 65.4
2 Canadian dollar/U.S. dollar exchange risk 64 50.4
3 Increase in raw material, natural resource and commodity prices 45 35.4
4 Increase in transportation costs (including gasoline price) 42 33.1
5 Yen/Canadian dollar exchange risk 31 24.4
6 Increase in healthcare costs 18 14.2
7Increase in costs due to tightened regulations on
distribution/logistics14 11.0
8 Increase in financing costs 13 10.2
9 Legal work-related costs (compliance-related matters) 12 9.4
10 Increase in tax 8 6.3
11 Visa application costs 7 5.5
12 Labor management costs (labor disputes/lawsuits) 4 3.1
Other 9 7.1
Rank Item Respondents (119) Rate (%)
1 Severe price competition 95 79.8
2 Difficulty in differentiation from competitors 54 45.4
3 Popular products from competitors 46 38.7
4 Difficulty expanding sales channels 40 33.6
5 Low awareness of company’s products and technologies 16 13.4
6Approval and authorization system for product sales in
Canada (e.g., safety standards, the Buy Canadian rules)11 9.2
7Increase in prices of products exported to the U.S. due to
strong Canadian dollar10 8.4
8 Pirated or counterfeit products 9 7.6
9Decrease in sales and disruption of distribution channels due
to natural disasters4 3.4
10 Approval and authorization system for product sales in the
U.S. (e.g., safety standards, the Buy American rules)1 0.8
Other 7 5.9
Copyright (C) 2015 JETRO. All rights reserved. 31
Fig. 22: Changes in capital investment in 2014, compared to 2013
Increase from previous
year
28.8%
Remained the same
58.9%
Decrease from
previous year
12.3%
Respondents in manufacturing: 73 companies
Copyright (C) 2015 JETRO. All rights reserved. 32
Fig. 23: Usage of capital investment in 2014 (Multiple answers)
Fig. 24: Effect of the North American shale revolution on business
17.2
53.1
1.6
23.4
6.3
14.1
18.8
0% 20% 40% 60%
Expansion of current production facilities
Factory modernization and efficiency improvement
(include expanding or renewing of machines and
facilities)
New plant construction
Enhancement of technology and R&D
Environmental measures
(reduction of greenhouse gases, conservation etc.)
Investment in IT for more efficiency
Other
Respondents in
manufacturing:
64 companies
Positive
19.4%
Negative
6.0%
No effect
39.6%
Don't know
35.1%
Respondents: 134 companies
Copyright (C) 2015 JETRO. All rights reserved. 33
Fig. 25: Specific effect of the shale revolution on business (Multiple answers)
6.1
12.1
9.1
3.0
6.1
9.1
45.5
3.0
3.0
3.0
3.0
30.3
0% 20% 40% 60%
Decrease of raw material prices
Increase of raw material (including crude oil-
related) prices
Decrease of fuel costs
Increase of fuel costs
Decrease of transportation costs
Increase of transportation costs
Increase of product demands
Decrease of product demands
Severity in price competition
Competition in recruiting skilled workers
Increase of labor costs
Other
Respondents: 33 companies
Copyright (C) 2015 JETRO. All rights reserved. 34
Fig. 26: Bilateral/Multilateral FTA utilization
* U.S. and Mexico are member states of the North American Free Trade Agreement (NAFTA)
* European Free Trade Association (EFTA) = Iceland, Norway, Switzerland, Liechtenstein
No. of
valid
responses
Using Studying
use
Not using
(not
planned)
No. of
valid
responses
Using Studying
use
Not using
(not
planned)
U.S. 5430
55.6%
5
9.3%
19
35.2%64
36
56.3%
9
14.1%
19
29.7%
Mexico 148
57.1%
0
0.0%
6
42.9%13
7
53.8%
2
15.4%
4
30.8%
Chile 52
40.0%
0
0.0%
3
60.0%2
0
0.0%
0
0.0%
2
100.0%
Costa Rica 11
100.0%
0
0.0%
0
0.0%0 0 0 0
Peru 20
0.0%
0
0.0%
2
100.0%2
0
0.0%
0
0.0%
2
100.0%
Colombia 31
33.3%
0
0.0%
2
66.7%1
0
0.0%
0
0.0%
1
100.0%
EFTA 0 0 0 0 22
100.0%
0
0.0%
0
0.0%
Panama 11
100.0%
0
0.0%
0
0.0%0 0 0 0
Israel 20
0.0%
0
0.0%
2
100.0%0 0 0 0
Jordan 0 0 0 0 0 0 0 0
For Imports, do you make use of /are you
investigating the use of FTA preferential
tariffs?
For Exports, do you make use of /are you
investigating the use of FTA preferential
tariffs?
Copyright (C) 2015 JETRO. All rights reserved. 35
Fig. 27: Industries for which the market is most likely to grow in the next few years
(Max. 3 answers)
52.4
42.1
27.0
27.0
19.8
18.3
11.9
7.9
7.9
7.1
5.6
5.6
4.8
4.8
2.4
1.6
0.8
0.8
0% 20% 40% 60%
Shale gas and oil
Environment
Health
Medical
Cloud and Mobile
Real estate
Transportation
Biotech
Information security
Utilities
Agriculture, Food processing
Educational services
Business services
Rail/Roads/Bridges
Nanotech
Accommodation, Food, Entertainment
Robotics, Mechatronics
OtherRespondents:126 companies