Increasing number of Japanese companies expanding overseas

The number of Japanese companies expanding overseas is increasing year by year. For example, there is “Survey of Japanese Overseas Residents” by the Ministry of Foreign Affairs. This data also shows that the number of Japanese living and working overseas is increasing.

According to the survey conducted in October 2017, the total number of Japanese living abroad was 1,351,970. This is an increase of about 1% over the previous year.

In the “Survey of Japanese Companies Overseas”, the total number of Japanese companies was 75,531, an increase of approximately 5.2 percent from the previous year. Both results in the most recent data ever.

Also, according to the “Outline of Basic Survey of Overseas Business Activities” conducted on July 1, 2018, the number of employees at overseas subsidiaries increased by 6.5% from the previous year and sales at overseas subsidiaries increased by 11.8% from the previous year in fiscal 2017.

Changes by region include a decrease in the number of employees in North America and Europe but an increase in the number of employees in Asia. It accounts for 66.5 percent of the total area of Asia. However, the percentage in China is decreasing.

Industries with a large overseas presence

There are differences in the number of overseas business sites (Number of companies) for Japanese and Japanese companies in each industry. There is a tendency that some industries are active or suitable for overseas expansion while others are not.

Among Japanese and Japanese companies, the manufacturing industry and wholesale industry are often seen to expand overseas. followed by the service industry and the IT and telecommunications industry.

As many companies consider overseas plants as a base for the manufacturing industry, the proportion of the manufacturing industry remains high. But there are other industries that are gaining momentum.

That’s the IT industry. Countries that are proactive in developing engineers find it easier to hire engineers and reduce labor costs.

Therefore, in the field of IT development, expectations for overseas expansion are increasing. In addition, an increasing number of companies are finding foreign countries attractive as a consumer market for apparel and other products.

industries with few overseas expansion

On the other hand, overseas business expansion in industries other than those listed above is growing at a slower pace in number and proportion.

Especially in the primary industry, agriculture, forestry and fisheries account for 0.7 percent of the total according to the data above. The mining and construction industries recorded the second lowest level.

Also, logistics, human resources, and financial and insurance industries are not flourishing. On the other hand, some companies have started delivery services overseas. In particular, with the globalization of the economy and the improvement of living standards, they seem to find hope in the development of services in Asia.

We cannot say that the trend toward overseas expansion will not change in the future as a result of this different trend.

Attractiveness and superiority of overseas expansion by industry and country


The differences in the pace of overseas expansion among industries are related to the attractiveness of overseas expansion depending on the characteristics of the industry.

In the manufacturing industry, for example, it has become possible to reduce costs by using overseas labor. Vietnam is also focusing on the development of IT engineers, which has attracted attention as a target for overseas expansion in the IT and telecommunications industries. In China, an increasing number of companies are expanding in anticipation of consumption related to apparel. In the United States, because of the Japanese food boom, related companies have increased their business.

As you can see, there are different ways to feel the advantages of going abroad. By analyzing these companies and learning about their specific merits, we can think of it as an opportunity to expand overseas.

Risks and cautions of overseas expansion by industry

When considering overseas expansion, it is necessary to consider the countries that are suitable or not suitable for each industry because the types of risks vary from country to country. In Viet Nam, as mentioned earlier, rising labor costs have made it difficult for the manufacturing industry to enter the country.

Also, if you are thinking about expanding overseas, it might be better to start with the neighboring area. The United States and other countries are likely to attract attention because they can see their global market share if they expand overseas, but it would be a good idea to consider Asian countries as well.

Companies that don’t want to go overseas

There are many obstacles to overcome in thinking about expanding overseas from Japan. Some companies seem to hesitate because they have to clear them one by one.

What is needed for overseas expansion is funds, human resources, and know-how for doing business overseas. Companies that cannot afford to invest that much money, cannot develop human resources, and are too burdened with their current business in terms of both financial and human resources.

In the manufacturing industry, there are some companies that are particular about made in Japan. Or, there is an idea that we can respond to overseas markets by exporting.

The idea is that we can make use of overseas markets without having to invest human resources and funds to set up bases overseas.

Summary

“Although overseas expansion is on the rise as a whole, the judgment varies by industry and company.”. By carefully examining the implications of overseas expansion for each company while recognizing overall trends, we can take a step closer to expanding our business.

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