ブラック ジャック ブラック クイーン Updates

ブラック ジャック ブラック クイーン's 2017 Survey on Business Conditions of Japanese Companies in Asia and Oceania

Dec 21, 2017

"Improvement of business confidence in Asia and Oceania, recovery of enthusiasm toward business expansion in China"

From October to November 2017, the Japan External Trade Organization (JETRO) conducted its latest survey on the business conditions of Japanese companies in 20 countries and regions in Northeast Asia, Southeast Asia, Southwest Asia, and Oceania. The results are as follows.

Survey outline

Method Questionnaire
Period From October 10 to November 10, 2017
Destination of questionnaire Japanese companies active in a total of 20 countries and regions including five Northeast Asian countries and regions, nine Southeast Asian countries, four Southwest Asian countries and two Oceanian countries. (Valid responses came from 4,630 companies with a valid response rate of 38.6%.)
Question items 1. Operating profit forecast, 2. Future business plan, 3. Management matters, 4. Rising costs of production and services, 5. Procurement of raw materials and parts, 6. Exports/imports, 7. Efforts at local market development, and 8. Wages

Key points of the results

  1. Companies expecting surplus increased, while those expecting deficit decreased
  2. Improvement of business confidence mainly in Southwest Asia
  3. Motivation to expand business steady in Southeast and Southwest Asia, while recovering in China
  4. Rate of increasing wages remain biggest operational issue, but generally decreasing from previous year
  5. Manufacturing: Local procurement rate increasing in Southeast Asia, but still much lower than that in China
  6. Non-manufacturing: Shift in target of market development from "Japanese affiliates" to "local companies"

Summery points

1. Companies expecting surplus increased, while those expecting deficit decreased

  • The percentage of companies which estimated an operational profit for 2017 marked 67.4% of the total respondents, increasing by 4.6 points in 2016. Conversely, that of companies estimating a deficit was 18.3%, decreasing by 3.5 points from the 21.8% in 2016.
  • By country and region, the percentage of profitable companies was high in Korea (82.1%) and Taiwan (81.7%), which are followed by those in the Philippines, Australia and Malaysia. Meanwhile, the rate is below 40% in countries where many companies have comparatively shorter operational histories such as Sri Lanka (31.0%), Myanmar (33.8%) and Cambodia (35.4%).

2. Improvement of business confidence mainly in Southwest Asia

  • More than 40% of companies predicted an improved operating profit for 2018, reflecting the proportion of companies predicting the same for 2017 a year before. The percentage of companies estimating a decline in profit for 2018 was 9.9%, a 9.6-point decrease in 2017.
  • The diffusion index (DI)*, which is used to gauge business confidence, for 2018 marked 38.2 points, an 11.5-point increase compared to estimates for 2017. Among reasons for the improvement, "increased sales in local markets" ranked first, followed by "improvement of productivity" and "increased sales due to expansion of exports."
    * The proportion of businesses reporting increased operating profits minus those reporting decreased operating profits compared to the previous year
  • Comparing the diffusion indices for 2017 and 2018 by country and region, all countries and regions saw an improvement except for Laos and Cambodia, of which levels were the same. In particular, the 2018 diffusion indices of Bangladesh, India, Sri Lanka and Pakistan in Southwest Asia, plus Vietnam and Laos, exceeded 50 points, indicating a remarkable improvement of business confidence.

3. Motivation to expand business steady in Southeast and Southwest Asia, while recovering in China

  • Regarding inclinations toward expanding business within the next one or two years, the percentage of companies planning to expand came to 53.7% of all respondents, increasing by 1.5 points in 2016. The percentage of companies in China expecting to expand business reached 48.3%, increasing by a significant 8.2 points. Meanwhile, that in Southeast Asia marked 55.7%, indicating a slight increase by 0.3 points.
  • Comparing changes in the percentage of respondents answering that they would expand business over the years between Southeast Asia and China, the percentage for China plummeted in 2012, with that for Southeast Asia surpassing it every year since. While the gap between the two regions had widened by 16.2 points in 2015, it shrank to 7.4 points in 2017.
  • Business motivation was particularly high in Pakistan (81.3%), Myanmar (70.7%), India (69.6%) and Vietnam (69.5%).

4. Rate of increasing wages remain biggest operational issue, but generally decreasing from previous year

  • Among operational issues, increased wages was the most commonly cited at 66.7%, a 1.4-point increase from a year earlier.
  • By country and region, the percentage in Cambodia came out on top overtaking that in Indonesia (80.8%) and China (75.3%), which were followed by Vietnam (75.2%) and India (72.1%).
  • High rates of increased wages for 2018 (year-on-year average for all industries) were seen in Pakistan (9.9%), India (9.5%), Bangladesh (9.1%) and Myanmar (8.6%), in that order. While these four countries have remained at the top, the level for Bangladesh overtook that for Myanmar since the previous year.
  • The rates of increase in wages have generally decreased compared to the results from the previous year. In China, the rate has been shifting in the single digit range since 2013, estimated to settle at 5.9% in 2018.

5. Manufacturing: Increase in local procurement rate in Southeast Asian countries, but gap still wide with that in China

  • Material costs accounted for approximately 60% of local production costs.
  • The percentage of companies indicating a policy of increasing the local procurement rate marked 72.8% of all respondents.
  • By country and region, high local procurement rates were seen in New Zealand (67.9%) and China (67.3%), with that for motor vehicles and motorcycles in China in particular reaching 71.3%.
  • Regarding yearly changes in the local procurement rates in major countries, those in Thailand, India, Indonesia, Vietnam and the Philippines have increased compared to the results in 2012. However, the rates for each of these countries is still at least 10 points lower than that in China.

6. Shift in target of market development from "Japanese affiliates" to "local companies"

  • Regarding activities to expand business in the local market by non-manufacturers, the percentage of companies targeting local companies for sales (74.9%) was higher than that targeting Japanese-affiliated companies operating locally (49.4%). This trend is expected to continue.
  • In providing products and services preferred by local consumers, the percentage of companies which are selling them in a manner "customized to the local market" was 8.8 points higher than that in a manner "oriented to the Japanese market." By country and region, companies in Australia and India tended to select the former, and those in Taiwan, Hong Kong and Macau the latter.
  • The percentage of companies selecting "social networking services" as an effective means of advertisement in terms of market development came to over 60% in Cambodia, Myanmar, Vietnam and New Zealand. The breakdown includes Facebook (94.3%), Instagram (37.3%) and Twitter (17.9%).

China and North Asia Division
Mr. Hideki Shimada
Tel: 03-3582-5181

Asia and Oceania Division
Mr. Hideki Fujie
Tel: 03-3582-5179