Outline of Survey of Trends in Business Activities of Foreign Affiliates 1. Outline of the Survey

(1) Purpose of the survey The purpose of the Survey of Trends in Business Activities of Foreign Affiliates is to understand the business trends of foreign affiliates in Japan to help advance the Country’s industrial and trade policies. (2) Legal basis for the survey and protection of confidentiality This survey is conducted by the Ministry of Economy, Trade and Industry (METI), pursuant to the Statistics Act. The confidentiality of information provided in response to the survey is protected under the Statistics Act (Article 41 of the Statistics Act). (3) Survey target The survey covers companies that satisfied the following conditions as of the end of March of the year 2019. (a) A company in which more than one third of shares or holdings is owned by foreign investors, and in which the principal foreign investor's direct investment ratio is more than 10%. (b) A company funded by a domestic company (in Japan) in which more than one third of shares or holdings is owned by foreign investors, in which the total ratio of the foreign investors' direct and indirect investment is more than one third of the shares or holdings of the company concerned, and in which the principal foreign investor's direct investment ratio is more than 10%.

(Note 1) In this survey, the term "foreign investor" refers to non-resident individuals, companies and other groups established under the jurisdiction of foreign laws; or companies and other groups with headquarters located overseas.

(Note 2) Direct investment ratio means the ratio of a foreign investor’s shares or holdings to the total capital. Indirect investment ratio means the ratio of investment in a holding company by foreign investors multiplied by the ratio of the holding company’s investment in the company in question.

(4) Survey method This survey was delivered using the Japan Postal Service and Online system survey (Including email response). The survey forms are mailed to the subject companies from METI and are then returned after being completed by the respective companies. (5) Date The survey was conducted on August 1, 2020, in connection with business for FY 2019. (6) Number of respondents Survey targets: 5,748 (5,701 in the previous survey) Respondents: 2,978 (3,449 in the previous survey) Response rate: 51.8% (60.5% in the previous survey) Valid respondents: 2,808 (Including the finance and insurance industry and the real estate industry)

: 2,642 (Excluding the finance and insurance industry and the real estate industry) (Note 1) Since the FY2010 survey, the “finance and insurance” industry and the “real estate” industry were added to

the targets of the survey. (Note 2) Since the FY2011 survey, it covers not only indirect investments through holding companies, but also

indirect investment from all Japanese domestic companies including operating companies.

2. Instructions for Use (1) Note on survey results

(a) Only valid answers are included. Therefore, the number of respondents varies per item. (b) When comparing the results of the current survey with previous surveys, it is necessary to take into account the

differences in the response rate and the number of foreign affiliates covered, as some companies that fell outside the scope of previous surveys were included in the current survey, and vice versa.

(2) Definition of regions Unless otherwise specified, for the purpose of this survey, region of origin refers to the country or region where the foreign investor is located. (3) Classification of industries The industrial classifications used in the survey are based on the Japan Standard Industrial Classification. (4) Note on survey results

(a) Notes on the terminology used in the Summary “Number of Foreign affiliates”: Number of Companies that are currently in operation (excluding those with less

than 1 million yen in capital) “All incorporated enterprises”: All domestic corporations (refers to “Financial Statement statistics of corporations

by Industry / Ministry of Finance”) (b) Notes for the symbols in tables and figures

The “x” signifies that the data is hidden because only 1 or 2 companies fall into the category. This method is used even where there are 3 or more companies, if a simple calculation using these disclosed figures would help identify the company corresponding to the “x”. The “–” indicates that there is no relevant figure. “0” indicates that the figure has a value of less than one.

(c) There may be discrepancies between the exact sums of individual items and the totals provided, due to the numbers being rounded off to the nearest number.

(d) Year-on-year comparisons and ratios mentioned in the text have been calculated in millions of yen, the counting unit of this survey, unless otherwise indicated.

(5) Ratio calculation formula Calculated based on foreign affiliates that responded to questionnaires for both denominator and numerator. Ordinary profit to sales ratio= Ordinary profit/Sales × 100 Ratio of equity to total assets = Total net assets/Total assets × 100 (6) Miscellaneous When reprinting the statistical figures given in this survey, the source must be cited as “Survey of Trends in Business Activities of Foreign Affiliates (2019)” (Ministry of Economy, Trade and Industry).

Investment Facilitation Division Trade and Economic Cooperation Bureau Ministry of Economy, Trade and Industry

Email: gaishi-chosa@meti.go.jp

The 54th Survey of Trends in Business Activities of Foreign Affiliates (Summary) ○ The percentage of Asian affiliates increased while U.S. affiliates and European affiliates decreased. ○ The number of regular employees decreased, when limited to companies that responded in both the

previous fiscal year and the current fiscal year. The total number of responses was the same. ○ Sales and ordinary profits and capital investment decreased, when limited to companies that responded

in both the previous fiscal year and the current fiscal year. The total number of responses also decreased. ○ As for the factors that made expanding business in Japan attractive, the top answer was “large market”. ○ As for factors inhibiting the expansion of business in Japan, the top answer “High cost of doing

business” increased again. The second largest factor, “The difficulty of securing human resources” turned from an increasing trend in recent years to a decrease one.

○ As for the employment outlook, 94.6% of affiliates answered “Maintain current condition”. ○ Future business expansion in Japan, More than 50% of affiliates will “Maintain current condition”. 〇 As for Impacts of COVID-19, the top answer was “Decrease in orders/sales”. ○ By region of origin, the percentage of Asian affiliates increased while U.S. affiliates and European affiliates

decreased. ・ Asian affiliates accounted for 29.3%, a 1.9% points increase from the previous fiscal years. European affiliates accounted

for 42.6%, a 0.6% points decrease (id.), and U.S. affiliates accounted for 21.6%, a 1.5% points decrease (id.).

○ The number of regular employees decreased, when limited to companies that respondent in both the previous fiscal year and the current fiscal year. The total number of responses also decreased.

・ The number of regular employees decreased 0.3% from the previous fiscal year, when limited to companies that respondent in both the previous fiscal year and the current fiscal years. The manufacturing sector decreased 1.9% from the previous fiscal year, and non-manufacturing sector increased 0.7% from the previous fiscal year. The total number of respondents is 510,081 decreased by 7.7% from the previous year. And 185,383 in the manufacturing industry decreased by 7.5% from the previous year, and 324,698 in the non-manufacturing industry decreased by 7.7% from the previous year.

○ When limited to companies that respondent in both the previous fiscal year and the current fiscal year, Sales and

ordinary profits and capital investment decreased. The total number of responses was the same. ・ Sales decreased 1.1% from the previous fiscal year. (The total number was 36.5 trillion yen, decreased 18.3% from the

previous fiscal year.) ・ Ordinary profit was a 4.4% decrease from the previous fiscal year. (The total number was 2.0 trillion yen, decrease 31.4%

from the previous fiscal year.) ・ Capital investment was a 35.2% decrease from the previous fiscal year. (The total number was 1.1 trillion yen, decrease

35.2%) ○ “Large market” was the top answer as for the factor that made expanding business in Japan attractive. ・ “Income levels are high. Customer volume for products and services is high.” was the response of the majority of

affiliates (61.0%). “Extensive infrastructure” was 47.6%. “Trendy, able to test the competitiveness of new products and services” continues at 47.3%.

○ As for factors inhibiting the expansion of business in Japan, the top answer “High cost of doing business” increased

again. ・ The top answer continues to be “High cost of doing business” (75.1%), the proportion of answers of which increased by

3.2% points from the previous year. The second largest factor, “The difficulty of securing human resources” (53.6%), turned from an increasing in recent years to a decrease one.

○ As for the employment outlook, 94.6% of affiliates answered “Maintain current conditions”. ・ As for the employment outlook for this year, the top answer was “Maintain current conditions,” accounting for 69.9% of

the total. In the meantime, “Will increase staff” accounted for 24.7%. ○ Future business expansion in Japan, More than 50% of affiliates will“Maintain current conditions”. ・ As for future business expansion in Japan, affiliates that answered “maintain current condition” were the largest in number,

accounting for 57.0%, followed by affiliates that answered “Planning business expansion(sales and marketing)”, which accounted for 35.5%.

○ Impacts of COVID-19, the top answer was “Decrease in orders/sales”. As for Impacts of COVID-19, the top response among affiliates was “Decrease in orders/sales”, accounting for 59.0% of answers, followed by affiliates that answered “Negative impact on distribution of products, goods and services”, which accounted for 33.0%.

1. Distribution

・The survey, covering until the end of March 2020, covered 2,808 foreign affiliates (a 14.6% decrease from the previous fiscal year), with 489 (a 5.2% decrease (id.)) in the manufacturing sector and 2,319 (a 16.3% decrease (id.)) in the non-manufacturing sector. The manufacturing sector covered 17.4% of all industries, while the non-manufacturing sector accounted for 82.6% (Fig. 1-1 and Table 1-1).

・By industry, wholesale trade numbered the highest at 1,096, accounting for 39.0%, followed by services, and information & communications industry (Fig. 1-1).

・By region of origin, European affiliates reached 1,197, accounting for 42.6% (an decrease of 0.6% points from the previous fiscal year), U.S. affiliates came to 607 (21.6%, an decrease of 1.5% points from the previous fiscal year, and Asian affiliates came to 822 (29.3%, an increase of 1.9% points from the previous fiscal year) (Table 1-1).

・By headquarter offices in Japan per region, there were 2,270 foreign affiliates in the Kanto area. By prefecture Tokyo numbered the highest at 1,829 (65.1%), followed by Kanagawa (10.6%) and Osaka (5.1%) (Fig 1-2 and Table 1-2).

Figure 1-2 Number of companies by Area in Japan

Table 1-2 Ranking of number of headquarter offices in Japan (by Prefecture)

Table 1-1 Percentage by Region of Origin and by Industry Figure 1-1 Distribution of Foreign Affiliates by Industry

(Companies, ％, point)

Year-on-year

changes

Total 2,808 100.0 100.0 100.0 －U.S. 607 23.1 23.1 21.6 ▲ 1.5Asian 822 27.4 27.4 29.3 1.9

Chinese 317 10.5 10.3 11.3 1.0European 1,197 43.1 43.2 42.6 ▲ 0.6Others 182 6.3 6.3 6.5 0.2

Manufacturing 489 16.5 15.7 17.4 1.7Non-manufacturing 2,319 83.5 84.3 82.6 ▲ 1.7

FY2019Number of

foreignaffiliates

FY2017 FY2018 FY2019

(Companies, ％)

Ranking Prefecture Companies Percentages1 Tokyo 1,829 65.12 Kanagawa 297 10.63 Osaka 143 5.14 Aichi 82 2.95 Hyogo 80 2.86 Chiba 59 2.17 Saitama 51 1.88 Fukuoka 31 1.19 Shizuoka 21 0.710 Kyoto 17 0.6

2,808 100.0Total

2. New entries

・Of the total number of companies listed, there were 48 newly established / participated companies (note) in FY2019. Breakdown: 14 companies in manufacturing and 34 companies in non-manufacturing (Table 2-1).

・By industry, services sector and wholesale trade sector are each the highest with 10 companies, followed by information & communications sector 8 companies (Table 2-1).

・As for reasons why the ratio of shares or equity owned by foreign investors has surpassed one-third of the total shares, the top answer was “Mergers & Acquisitions” (a ratio of 38.3%), followed by “Newly established by a single company” (36.2%) (Figure 2-2).

Table 2-1 Trends in number of New Entries by Industry

Figure 2-1 Trends in the Reasons for which the ratio of shares or equity owned by foreign investors has surpassed

one-third of the total shares (Note) "Trends in the Reasons for which the ratio of shares or equity owned by foreign investors has surpassed one-third of the total shares"

counts only responses of new entries.

74.3

50.0

55.8

60.0

36.2

8.1

11.5

11.5

13.3

17.0

16.2

26.9

23.1

17.8

38.3

1.4

11.5

9.6

8.9

8.5

FY2015(N=74)

FY2016(N=26)

FY2017(N=52)

FY2018(N=45)

FY2019(N=47)

Newly established by a single company Newly established as a joint ventureMergers & Acquisitions Other

3. Dissolution, withdrawal, or foreign capital ratio reduction

・The number of companies that dissolved, withdrew, or reduced their foreign capital ratio (Note) in FY2019 was 86, of which 19 companies were in the manufacturing sector and 58 companies were in the non-manufacturing sector (Table 3-1).

・By industry, wholesale trade sector and services sector numbered the highest 14 companies, followed by information & communications sector 13 companies (Table 3-1).

Table 3-1 Trends in number of Withdrawals

(Note 1) Foreign capital ratio reduction means that the ratio of capitalization by foreign investors has fallen to one-third or less, or the ratio of

capitalization by principal foreign investors has fallen to less than 10%. (Note 2) The total number of companies which withdrew their foreign capital ratio for all industries is different from the sum of manufacturing and

non-manufacturing companies, due to the fact that some companies did not identify their type of industry.

4. Employment

・When limited to companies that responded in both the previous fiscal year and the current fiscal year, the number of regular employees decreased 0.3% from the previous fiscal year. The manufacturing sector recorded a 1.9% decrease (id.), and the non-manufacturing sector saw an increase of 0.7% (id.).

・By industry, the transport equipment sector, which has the largest number of regular employees in manufacturing, decreased 0.6%. In the non-manufacturing sector, the service sector with the highest number of regular employees recorded a 3.8% increase.

・The total number of regular employees was 510,081, an 7.7% fall from the previous fiscal year (Fig. 5-1). Manufacturing was 185,383 (decrease 7.5%), non-manufacturing was 324,698 (decrease 7.7%)

・By industry, the Information & communications equipment sector was recorded at 18,434(a decrease of 39.3% fall from the previous fiscal year), Wholesale trade sector was recorded at 60,452 (a decrease of 15.7% fall from the previous fiscal year), and Retail trade sector was recorded at 75,246 (a increase of 19.6% up from the previous fiscal year). (Fig. 4-2).

・The number of regular employees by prefecture that entered the survey (based on location of establishments location in Japan) is the highest in Tokyo with 125,325 people (composition ratio is 31.1%), followed by 51,753 in Kanagawa prefecture (12.8%) and 42,877 in Osaka prefecture (10.6%) (Table 4-3). Compared to the ratio of the Percentage of regular employees (based on headquarter office location in Japan), the ratio was lower in Tokyo and Kanagawa prefecture (Table 4-4).

Figure 4-1 Number of Regular Employees

22.2 19.5 17.4 17.5 20.0 18.5

41.6 42.9

34.5 32.0 35.2

32.5

63.8 62.4

51.9 49.5 55.2

51.0

0

10

20

30

40

50

60

70

FY2014 FY2015 FY2016 FY2017 FY2018 FY2019

10,000persons

Manufacturing Non-manufacturing ＿All industries

Figure 4-2 Number of Regular Employees by Industry

Table 4-3 Number of Regular Employees based on establishments’ location

Table 4-4 Number of Regular Employees based on headquarters’ location

(Persons, ％)Ranking Prefecture Persons Percentages

1 Tokyo 125,325 31.12 Kanagawa 51,753 12.83 Osaka 42,877 10.64 Aichi 15,913 3.95 Shizuoka 15,429 3.86 Mie 13,985 3.57 Saitama 13,310 3.38 Hyogo 12,576 3.19 Chiba 11,033 2.710 Fukuoka 9,020 2.2

(Persons, ％)Ranking Prefecture Persons Percentages

1 Tokyo 285,085 55.92 Kanagawa 80,092 15.73 Osaka 42,773 8.44 Gunma 29,761 5.85 Saitama 12,253 2.46 Shizuoka 9,400 1.87 Hyogo 8,593 1.78 Chiba 7,513 1.59 Aichi 6,962 1.4

10 Ibaraki 2,942 0.6

5. Breakdown of establishment owned in Japan by function

Table 5-1 Top 10 establishment functions in Japan

・The distribution of functions of establishment owned in Japan is largest in Tokyo, followed by Kanagawa and Osaka. ・Among prefectures that do not always rank high in the composition ratio of the number of employees (Table. 4-3),

Ibaraki, Hokkaido, and Hiroshima rank in the top 10.

Ranking Corporate Planning Sales and MarketingResearch anddevelopment

Manufacturing andprocessing

Distribution

1 Tokyo Tokyo Tokyo Tokyo Tokyo

2 Kanagawa Osaka Kanagawa Kanagawa Kanagawa

3 Osaka Aichi Osaka Aichi Osaka

4 Hyogo Kanagawa Aichi Osaka Hyogo

5 Saitama Fukuoka Saitama Saitama Chiba

6 Aichi Hyogo Ibaraki Hyogo Saitama

7 Chiba Saitama Chiba Chiba Aichi

8 Fukuoka Hokkaidio Hyogo Shizuoka Ibaraki

9 Shizuoka Chiba Shizuoka Ibaraki Fukuoka

10 Ibaraki Hiroshima Fukuoka Fukuoka Shizuoka

6. Sales, exports, and Sales to Principal foreign investors

・When limited to companies that responded in both the previous fiscal year and the current fiscal year, sales figures decreased 1.1% from previous fiscal year. The manufacturing sector decreased 3.2% (id.), and the non-manufacturing sector decreased 0.3% (id.). By industry, in the manufacturing sector, the Information & communication equipment sector decreased 1.5% (id.). In the non-manufacturing sector, Finance & insurance decreased 5.6% (id.).

・On the other hand, the total sales of all responses was 36.5 trillion yen, a 18.3% decrease from the previous fiscal year (Fig. 6-1). The manufacturing sector was 10.1 trillion yen, decreased 35.1% (id.), and the non-manufacturing sector was 26.4 trillion decreased 9.4% (id.). By industry, the Information & communication equipment sector is the largest in manufacturing sector, decrease 1.6% from the previous fiscal year to 3.6 trillion yen, and the Finance & insurance sector in the non-manufacturing sector is the largest at 9.8 trillion yen, decreased 6.0% from the previous fiscal year It became). (Fig. 6-2).

・Exports decreased 6.2% from the previous fiscal year when limited to companies that responded in both the previous fiscal year and the current year.

・On the other hand, the total exports of all responses was 3.9 trillion yen, a 33.9% decreased from previous fiscal year (Table 6-1).

・Looking at the ratio of the value of sales to principal foreign investors to the value of total sales, the manufacturing sector posted 0.9%, a 0.1% points increase from the previous fiscal year, while the non-manufacturing sector posted 0.5% (a 0.2% points increase (id.)). By region of origin, 1.1% of Asian affiliates are the highest (a 0.4% points increase (id.)). (Table 6-1).

Figure 6-1 Sales

Figure 6-2 Sales by Major Industry

Table 6-1 Sales and Exports, and Sales to Principal Foreign Investors, and their Proportion to Total Sales

20.4 16.5 13.5 15.9 15.6 10.1

27.3 28.2

27.2 24.4 29.1

26.4

47.7 44.740.7 40.3

44.8

36.5

0

10

20

30

40

50

FY2014 FY2015 FY2016 FY2017 FY2018 FY2019

（Trillion yen）

Manufacturing Non-manufacturing ＿All industries

(100 million yen, ％)

FY2019Year-on-

yearchanges

FY2019Year-on-

yearchanges

FY2019Year-on-

yearchanges

Total 365,472 ▲ 18.3 38,908 ▲ 33.9 2,261 9.7Manufacturing 101,367 ▲ 35.1 30,888 ▲ 38.9 907 ▲ 23.4Non-manufacturing 264,105 ▲ 9.4 8,020 ▲ 3.7 1,353 54.5U.S. 106,029 ▲ 17.2 7,988 109.8 357 ▲ 29.1Asian 111,968 ▲ 1.9 15,377 ▲ 11.0 1,184 58.5European 126,752 ▲ 32.6 7,085 ▲ 77.1 646 ▲ 16.0

(％, point)

FY2018 FY2019

Total 0.5 0.6 0.1Manufacturing 0.8 0.9 0.1Non-manufacturing 0.3 0.5 0.2U.S. 0.4 0.3 ▲ 0.1Asian 0.7 1.1 0.4European 0.4 0.5 0.1

SalesExports

Sales to principal foreigninvestors

Proportion of sales to principalforeign investors to the total sales

Year-on-year

changes(point)

7. Profit

・When limited to companies that responded in both the previous fiscal year and the current fiscal year, the value of ordinary profit decreased 4.4% from the previous fiscal year. The manufacturing sector recorded a 9.1% decrease (id.), and the non-manufacturing sector saw an decrease of 3.1% (id.).

・By industry, the largest number of Chemicals in the manufacturing sector an decrease of 13.3% (id.), in the largest number of finance and insurance in the non-manufacturing sectors an decrease of 13.3% (id.).

・On the other hand, total Ordinary profit was 2.0 trillion yen, a 31.4% decrease from the previous fiscal year. The manufacturing sector marked a increase of 60.0% from the previous fiscal year to 0.4 trillion yen, and the non-manufacturing sector recorded a decrease of 16.8% (id.) to 1.6 trillion yen (Fig. 8-1).

・By industry, in the manufacturing sector, the medicine sector account for the largest number a decreased 45.3% from the previous fiscal year to 88.1 billion yen. In the non-manufacturing sector, the finance and insurance sector account for the largest number a decreased 17.8% (id.) to 804.9 billion yen (Fig. 7-2).

・The ordinary profit to sales ratio (Note), (excluding the finance and insurance sector), was decrease 0.9% points from the previous fiscal year to 4.7%. This was 0.1 points lower than that for incorporated enterprises as a whole in Japan (Fig. 7-3).

・By region of origin, U.S. affiliates decreased 1.5% points from the previous fiscal year to 6.6%, whereas the number of. European affiliates decreased 1.1% points, from the previous fiscal year to 5.9%. Asian affiliates increased 0.8% points from the previous fiscal year to 3.2% (Fig. 7-4).

Figure 7-1 Ordinary Profit

Figure 7-2 Ordinary Profit by Major Industry

1.5 1.2 1.2 0.9 1.0

0.4

1.6 1.7 1.5

1.6 1.9

1.6

3.0 2.9 2.7

2.4

2.9

2.0

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

FY2014 FY2015 FY2016 FY2017 FY2018 FY2019

（trillion yen）

Manufacturing Non-manufacturing ＿All industries

874 1,610

629

4,372

1,810

4,145

926 1,987

9,794

130 782 881

67 382 501

2,566

1,349 1,688

8,049

307 0

2,000

4,000

6,000

8,000

10,000

12,000

Chemicals Medicine Information&

communicationsequipment

Transportationequipment

Information&

communications

Wholesaletrade

Retailtrade

Services Finance&

insurance

Realestate

（100million yen）

FY2018 FY2019

Figure 7-3 Changes in Ordinary Profit to Sales Ratio

Source: All incorporated enterprises: "Financial Statement Statistics of Corporations by Industry" (Ministry of Finance) (Note 1) Ordinary profit to sales ratio = Ordinary profit / Sales × 100.0 (Note 2) All values exclude the values for the finance and insurance industry.

Figure 7-4 Ordinary Profit to Sales Ratio (by Region of Origin)

Source: All incorporated enterprises: "Financial Statement Statistics of Corporations by Industry" (Ministry of Finance) (Note 1) Ordinary profit to sales ratio = Ordinary profit / Sales × 100.0 (Note 2) All values exclude the values for the finance and insurance industry.

6.8 7.0 7.0

5.7 5.6

4.7 4.5 4.8 5.2 5.4 5.5

4.8

0

1

2

3

4

5

6

7

8

FY2014 FY2015 FY2016 FY2017 FY2018 FY2019

（％）

Foreign affiliates All incorporated enterprises

10.7 10.7

9.2

7.48.1

6.6

3.42.3 1.9

3.7

2.43.2

7.56.6 8.3

6.3 7.0 5.94.5

4.8 5.2 5.4 5.5 4.8

0

2

4

6

8

10

12

14

FY2014 FY2015 FY2016 FY2017 FY2018 FY2019

(％)

U.S. Asian European All incorporated enterprises

8. Equity to total assets ratio

・The ratio of equity to total assets (Note) was 10.1%. This was 10.0% points lower than that for incorporated enterprises as a whole (Fig. 8-1).

・The ratio of equity to total assets, excluding the finance and insurance sector, was 38.5%. This was 3.6% points lower than that for incorporated enterprises as a whole in Japan (Fig. 8-1).

Figure 8-1 Equity to Total Assets Ratio

Source: All incorporated enterprises: "Financial Statement Statistics of Corporations by Industry" (Ministry of Finance) (Note) Ratio of equity to total assets = Total net assets / Total assets × 100.0

44.9 46.1 45.3

39.9

42.2

38.5

16.8 17.916.6

14.5 14.010.1

38.9 39.9 40.6

41.7

42.0

42.1

19.4 19.7 19.7 20.6 20.7 20.1

0

10

20

30

40

50

FY2014 FY2015 FY2016 FY2017 FY2018 FY2019

(％)

Foreign affiliates (Excluding the finance and insurance industry)Foreign affiliates (Including the finance and insurance industry)All incorporated enterprises (Excluding the finance and insurance industry)All incorporated enterprises (Including the finance and insurance industry)

9. Capital investment

・When limited to companies that responded in both the previous fiscal year and the current fiscal year, the value of capital investment decreased 35.2% from the previous fiscal year. The manufacturing sector recorded a 43.8% decrease (id.), and the non-manufacturing sector saw a decrease of 1.3% (id.). By industry, the largest number of information communication equipment in manufacturing decreased by 57.1%, and the largest number of wholesale in non-manufacturing increased by 6.6%, information and communication decreased by 41.2%.

・On the other hand, total capital investment was 1.1 trillion yen, a 35.2% decrease from the previous fiscal year. The manufacturing sector recorded a decrease of 40.2% from the previous fiscal year to 745.9 billion yen, and the non-manufacturing sector recorded a decrease of 23.1% (id.) to 390.0 billion yen (Fig. 9-1).

・By industry, in the manufacturing sector, the information communication equipment sector account for the largest number at 402.9 billion yen (decrease 54.1% compared to the previous fiscal year). In the non-manufacturing sector, the wholesale sector account for the largest number at 101.6 billion yen (decrease 30.6%) (Fig. 9-2)

・The proportion of capital investment by foreign affiliates to the total capital investment by all incorporated enterprises in Japan was 2.5% (decrease 1.0% points from the previous fiscal year) (Fig. 9-1).

Figure 9-1 Capital Investment

Source: All incorporated enterprises: "Financial Statement Statistics of Corporations by Industry" (Ministry of Finance)

Figure 9-2 Capital Investment by Major Industry

7,013 7,900 6,144 10,262

12,464

7,459

4,381

8,027 7,556

4,681

5,070

3,900

11,394

15,928 13,700

14,944

17,534

11,359

4,131 4,421 4,442

4,724 5,056

4,514

0

1,000

2,000

3,000

4,000

5,000

6,000

0

4,000

8,000

12,000

16,000

20,000

24,000

FY2014 FY2015 FY2016 FY2017 FY2018 FY2019

（10billion）（100million yen）

Manufacturing Non-manufacturing＿All industries All incorporated enterprises (Right scale)

171 259

8,772

1,799 1,072 1,464

313 616 859 206 170

4,029

1,830

532 1,016 484 742 262

01,0002,0003,0004,0005,0006,0007,0008,0009,000

10,000

Chemicals Medicine Information&

communicationsequipment

Transportationequipment

Information&

communications

Wholesaletrade

Retail trade Service Finance&

insurance

（100 million yen）

FY2018

FY2019

10-1. Attractiveness of business expansion in Japan

・Regarding whether the business environment is attractive for business expansion in Japan, it varies depending on the type of industry, but as a whole, continuing from the previous survey, the top response was “Income levels are high Customer volume for products and services is high,” accounting for 61.0% of the total. By industry, the manufacturing industry composition ratio of the response is lower than the non-manufacturing industry composition ratio.

・About 50% affiliates also said, “Extensive infrastructure (transportation, energy, communications, etc.)” (a ratio of 47.6%), and, There is “Sensitive to added value and trends in products and services. It is a proving ground for measuring the competitiveness of new products and services)” (47.3%).

Figure 10-1 Attractiveness of Business Expansion in Japan (Multiple answers: top 5 responses per company)

61.0

47.6

47.3

36.8

34.8

23.9

19.8

18.2

13.1

10.4

9.8

6.9

3.9

3.2

1.9

1.5

6.6

51.4

47.6

49.8

35.9

33.7

34.7

22.5

18.4

15.8

22.7

11.5

4.5

3.3

3.3

1.9

1.9

5.7

63.0

47.7

46.8

36.9

35.1

21.7

19.3

18.2

12.6

7.9

9.5

7.4

4.0

3.2

1.9

1.4

6.8

0 10 20 30 40 50 60 70

Income levels are high. Customer volume for productsand services is high (large market).

Extensive infrastructure (transportation, energy,communications, etc.).

Sensitive to added value and trends in products andservices. Proving ground for measuring…

Concentration of global companies and affiliates.

Developed living environment.

Availability of quality personnel.

Gateway to the Asian market. Optimal location forregional headquarters.

Geographical advantage for accessing headquarters andcountries your company manages.

Solid financial environment, financing opportunities.

High quality research and development environment.

Legal provisions regarding intellectual property isextensive.

Increased demand is projected due to the OlympicParalympic Games 2020.

Very open business regulations.

Extensive business support organizations.

Low cost of doing business (labor, real estate, etc.).

Extensive breaks and incentives.

Other

All industries（n=2,468）

Manufacturing（n=418）

Non-manufacturing（n=2,050）

（％）

10-2. Factors inhibiting business expansion in Japan

・As for factors inhibiting business expansion in Japan, the top answer was “High cost of doing business (75.1%),” increase 3.2% points from the previous survey.

・“Difficulty securing personnel” (a ratio of 53.6%), decrease 4.0% points from the previous survey. ・Followed by “Exclusivity and distinctiveness of the Japanese market” (45.2%) and “High standard that users demand

from products and services” (44.3%).

Figure 10-2 Factors Inhibiting Business Expansion in Japan (Multiple answers: top 5 responses per company)

75.1

53.6

45.2

44.3

40.5

39.3

18.7

12.2

7.0

6.7

5.2

5.6

71.9

57.6

45.6

44.4

33.6

30.4

17.4

12.1

5.7

6.4

5.0

0 20 40 60 80 100

High cost of doing business(labor, tax, real estate, etc.)

Difficulty securing personnel.(management, engineers, persons with language skills,

common labor, etc.)

Exclusivity and distinctiveness of the Japanese market(intragroup transactions, connections, shortage of market

information in English, business practices, etc.)

High standard that users demand from products and services(quality, delivery, price, etc.)

Complicated administrative procedures(long time required from application to approval, complicated

procedures, etc.)

Strict regulations, permits and license system (legal restraints, product planning and inspection, etc.)

Insufficient tax- and other incentives(tax privileges, lack of available assistance, etc.)

Living environment for foreigners(admittance system of schools, hospitals, etc. for foreigners;

lifestyle differences, etc.)

Difficulty obtaining visas（Unclear status of residence, obtaining work visas and family

stay visas）

Difficulty securing financing(difficult loan conditions, regulations regarding financing)

Difficult M&A environment(legal system, resistance to foreign capital)

Other

2020 （n=2,476）

2019 （n=2,563）

（％）

11. Inhibiting factors with regard to the cost of doing business in Japan

・For inhibiting factors with regard to the cost of doing business in Japan, as with the previous survey, the top answer was “Labor costs” (with a ratio of 68.8%), followed by “Tax liability” (57.4%) and “Rent (offices space)” (47.2%). “Labor costs” was the response of the majority of affiliates, decrease 3.1% points from the previous survey.

Figure 11 Inhibiting Factors with regard to the Cost of Doing Business in Japan

68.8

57.4

47.2

22.7

21.4

14.7

4.8

4.0

3.5

1.1

4.9

71.9

56.0

46.6

22.5

19.8

14.2

4.9

2.6

3.7

0.6

4.7

0 20 40 60 80

Labor costs

Tax liability

Rent (office space)

Distribution costs

Social security costs

Facility costs (plant, information systems, officeequipment, etc.)

Land acquisition costs

Communication costs

Utilities (electric, gas, plumbing, etc.)

Land leasing costs

Other

2020 （n=2,468）

2019 （n=2,555）

（％）

12-1. Inhibiting factors in securing Japanese personnel

・As for inhibiting factors in terms of securing Japanese personnel, the top answer was “Business communication difficulties in English” (a ratio of 54.1%) (a decrease 1.5% points from the previous survey).

・“High standards of compensation, such as salary, etc.” (a ratio of 48.6%), “Lack of mobility in the labor market” (39.0%), “Recruiting and hiring costs Lack of mobility in the labor market” (37.6%), “Strict labor regulations” (25.4%) and “High standards of non-obligatory welfare costs” (20.6%) followed.

Figure 12-1 Inhibiting Factors in Securing Japanese Personnel (Multiple answers: top 3 responses per company)

54.1

48.6

39.0

37.6

25.4

20.6

8.2

6.0

55.6

50.9

37.5

37.8

24.2

18.1

8.1

6.6

0 10 20 30 40 50 60 70

Business communication difficulties in English

High standards of compensation such as salary, etc

Lack of mobility in the labor market

Recruiting and hiring costs

Strict labor regulations

High standards of non-obligatory welfare costs

Underdeveloped employment agency services

Other

2020 （n=2,466）

2019 （n=2,551）

（％）

12-2. Inhibiting factors in securing foreign personnel

・As for inhibiting factors in securing foreign personnel, continuing from the previous survey, the top answer was “Business communication difficulties in Japanese,” (a ratio of 64.9%).

・Then, “High standards of compensation such as salary, etc.” (a ratio of 32.2%), “Difficulties obtaining work visas” (27.4%), and “Difficulty finding residential accommodation” (19.6%) followed.

Figure 12-2 Inhibiting Factors in Securing Foreign Personnel (Multiple answers: top 3 responses per company)

64.9

32.2

27.4

19.6

18.8

16.2

14.3

10.0

4.1

3.5

11.5

65.5

30.9

29.5

20.9

19.5

16.0

12.8

9.5

4.1

4.2

10.0

0 10 20 30 40 50 60 70

Business communication difficulties in Japanese

High standards of compensation such as salary, etc.

Difficulties obtaining work visas

Difficulty finding residential accommodation

Lack of medical facilities with English speakingstaff

Difficulties obtaining permanent residence

High standards of non-obligatory welfare costs

Difficulty finding employment for spouse

Lack of international schools

Difficulties obtaining visa for domestic workersand babysitters

Other

2020 （n=2,462）

2019 （n=2,531）

（％）

13. Employment outlook for this year

・As for the employment outlook for this year in foreign affiliates, continuing from the previous survey, the top answer was “Maintain current conditions,” accounting for 69.9% of the total, while “Will increase staff” accounted for 24.7% and “Will reduce staff” accounted for 5.4%.

Figure 13-1 Hiring Outlook for This Year

36.3

24.7

60.6

69.9

3.1

5.4

2019（n=2,580）

2020（n=2,486）

Will increase staff Maintain current conditions Will reduce staff

14. Future business expansion in Japan

・As for future business expansion in Japan, the top answer was “Maintain current condition,” (a ratio of 57.0%). ・Then followed by “Planning business expansion (Sales and marketing),” accounting for 35.5%.

Figure 14-1 Future Business Expansion in Japan

Plan

ning

bus

ines

s exp

ansio

n Pl

anni

ng to

dow

nsiz

e

7.2

35.5

7.1

7.1

57.0

0.4

1.6

0.2

0.8

0.6

7.5

41.3

7.7

7.7

51.7

0.3

1.0

0.1

0.3

0.7

0 10 20 30 40 50 60 70

Planning business expansion(Corporateplanning)

Planning business expansion(Sales andmarketing)

Planning business expansion(Researchand development)

Planning businessexpansion(Manufacturing and processing)

Maintain current conditions

Planning to downsize(Corporateplanning)

Planning to downsize(Sales andmarketing)

Planning to downsize(Research anddevelopment)

Planning to downsize(Manufacturing andprocessing)

Discontinue operations

2020（n=2,485） 2019（n=2,574）

（％）

15-1. Impacts of COVID-19 on your business

・As for Impacts of COVID-19 on your business, the top answer was “Decrease in orders/sales” (a ratio of 59.0%). By industry, the manufacturing industry composition ratio of the response is higher than the non-manufacturing industry composition ratio.

・Followed by “Negative impact on distribution of products, goods and service” (33.0%), “Reduced clients/consumers due to movement restriction” (32.5%) and “Increase in business costs due to COVID-19”(20.6%).

Figure 15-1 Impacts of COVID-19 on your business

(Multiple answers: top 3 responses per company)

59.0

33.0

32.5

20.6

18.1

13.5

9.9

6.7

4.1

13.4

71.1

28.2

24.6

22.3

20.6

18.7

21.8

5.7

3.3

7.3

56.5

33.9

34.1

20.3

17.5

12.5

7.4

7.0

4.3

14.7

0 10 20 30 40 50 60 70 80

Decrease in orders/sales

Negative impact on distribution of products, goods andservices

Reduced clients/consumers due to movement restriction

Increase in business costs due to COVID-19

Deterioration of cash flow

Difficulties in procuring supplies due to supply chaindisruption

Excessive workforce

Increase in orders/sales

Reduced workforce

Other

All industries（n=2,476）

Manufacturing（n=422）

Non-manufacturing（n=2,054）

（％）

15-2.If the impact of COVID-19 continues, what are the current difficulties in continuing your business in Japan

・In the case that the impact of COVID-19 continues, what are the current difficulties in continuing your business in Japan, the top answer was “Securing/increasing clients/consumers” (64.4%).

・Followed by “maintaining current and acquiring new customers/consumers” (61.9%), “communications via digital tools” (33.3%) and “securing adequate human resources”(17.4%).

Figure 15-2

If the impact of COVID-19 continues, what are the current difficulties in continuing your business in Japan (Multiple answers: top 3 responses per company)

64.4

61.9

33.3

17.4

11.2

9.4

6.8

6.6

5.2

7.5

65.8

60.5

31.6

20.3

12.2

17.2

3.6

8.1

4.8

7.2

64.1

62.1

33.7

16.8

11.0

7.8

7.5

6.3

5.3

7.6

0 10 20 30 40 50 60 70 80

Securing/increasing clients/consumers

Maintaining current and acquiring new customers /consumers

Communications via digital tools

Securing adequate human resources

Difficulty securing financing(difficult loan conditions,regulations regarding financing)

Disruption of supply chains and finding alternatives

Lack of informations, support （unable to access information in English, lack of support organizations, etc.）

Applying for new visa and renewing visas

Living environment for foreigners (admittance system ofschools, hospitals, etc. for foreigners; lifestyle differences,

etc.)

Other

All industries（n=2,465）

Manufacturing（n=418）

Non-manufacturing（n=2,047）

（％）