Most foreign companies in Japan expect business confidence to remain flat over the next six months, although there are signs of improvement on the horizon, according to a joint survey recently released by foreign chambers of commerce.
The Business Confidence Survey, conducted in April by the Foreign Chambers Information Group, shows foreign firms continue to see Japan as a “land of opportunity,” with 77 percent adopting strategies for growth, the FCIG said Wednesday.
It was the first time a survey has been conducted jointly by foreign chambers of commerce in Japan. Fourteen chambers and business groups from North America and Europe took part, with 450 of the some 2,300 firms contacted responding to the poll.
The index ranges from 2 to minus 2 in accordance with five stages of business sentiment, ranging from a strong improvement to a strong decline.
The index for Japan’s economic situation for the next six months came to minus 0.18, reflecting that while 46 percent of respondents expect no change, they still see in the overall average a slight decline in the months to come.
Regarding the economy over the next 12 months, however, the index rose to 0.21, with 49 percent seeing some improvement and 3 percent a strong improvement.
The index for sales during the past six months stood at 0.22, but the index for the sales outlook for the next half-year jumped to 0.78.
The survey shows expectations of better profitability, with the index climbing from 0.14 for the past six months to 0.61 for the next six months.
Among the respondents, profitability outlook was the most brisk at companies operating in Japan for less than five years, at 0.85.
As for strategies in Japan, 77 percent replied they aim for growth and 20 percent said they plan to sustain their current level of business. Only one firm said it is considering withdrawal, and 3 percent said they were downsizing.
“While changes still need to take place, foreign businesses see Japan as a land of opportunity,” the FCIG said.
Asked about the regulatory environment, 64 percent replied there has been no change.
While 48 percent said they are not affected by regulations, 30 percent said they suffered negative effects, with 14 percent suffering many adverse effects.
Some respondents mentioned the persistent abundance of red tape and the difficulties of communicating with authorities, particularly the Financial Services Agency.
Fifty-one percent of respondents attributed changes in their business performance to their own efforts, and only 5 percent cited exchange-rate developments.
The FCIG said it plans to continue the online survey on a biannual basis and will involve more participants.
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