More than half of firms (58.0%, down 1.5 points from last year) plan to expand their business in the future, on the back of this year’s strong performance. Other firms plan to "maintain current status" (up 2.6 points to 39.5%) or "reduce scale of business" (down 1.1 points to 2.5%).
The survey also polled firms about challenges to setting up/expanding business in Japan. The majority of respondents cited "difficulty in securing personnel" (up 13.3 points to 66.6%), reflecting increased competition for qualified staff amidst the general climate of strong business performance. By category, "skilled workers and engineers" (27.8%) were the most difficult to secure (mostly among firms in IT and telecommunication devices, general machinery/devices, IT and telecommunication services sectors), followed by "top management/management staff" (26.4%), mainly in medical/pharmaceutical/cosmetics, finance/insurance, stationery/toys/sports sectors. Firms in transportation-related machinery/devices, medical/pharmaceutical/cosmetics and chemical sectors reported difficulty securing "workers in research and development" (9.6%).
Firms also cited "high standards for products demanded by users" (up 8.6 points to 66.5%) as another possible challenge.
According to the survey, 41.5% of respondents increased their number of personnel, while 13.6% trimmed staffing levels. More than half of respondents (52.4%) plan to hire new employees, while just 1.9% will reduce their number of personnel. Those firms with difficulties securing appropriate staff are turning to their Japanese partners for introductions (of prospective employees) and temporary staffing loans.
More than half of respondents (55.9%) reported that they have business partnerships with Japanese firms, while 38.4% reported that they did not. The majority of these tie-ups (multiple answers allowed) are in sales (63.9%), followed by R&D, product development/technology development (22.0%), production and licensing (21.0%), capital tie-ups (16.3%), distribution (e.g., cooperative buying, cooperative delivery) (12.8%), and other (9.9%). Alliances are mainly in chemicals, medical/pharmaceutical/cosmetics and plastic products sectors.
Nearly half of all respondents (47.3%) viewed business alliances with Japanese firms as important to their success in the Japan market. The figure rises to 71.9% when combined with the 24.6% figure for firms viewing such alliances as "somewhat necessary." Among respondents with business alliances with Japanese firms, a full 93.7% view them as necessary to their success in Japan; 47.1% of firms with no such alliances still view them as necessary, according to the survey.
*In the survey, a foreign-affiliated firm refers to a Japanese branch of a foreign company or a company with more than a third of its shares held by a foreign company, as of data for 2006.
