More than 60% of overseas affiliates of Japanese companies expect to post operating profits in 2021, rebounding from a record low of 48.0% the previous year but still the second-lowest level in the last decade, according to a survey.
The reading of 62.6% suggests performances by Japanese businesses operating abroad — which slumped significantly in 2020 due to the impact of the novel coronavirus — “have shown an upswing globally, but the momentum of the recovery lacked strength,” said an online survey by the Japan External Trade Organization.
By region, 57.1% of Japanese businesses operating in the 10-member Association of Southeast Asian Nations forecast they will chalk up profits, while the profits of those operating in Europe and North America have yet to recover to 2019 pre-pandemic levels, it said.
According to the survey released Nov. 30, 85.3% in South Korea expect to register profits, followed by 72.2% in China, 66.3% in Germany, 63.4% in Indonesia, 62.6% in Thailand, 59.2% in the United States and 54.3% in Vietnam.
JETRO conducted the survey from Aug. 24 to Sept. 30, before the first case of the omicron coronavirus variant was confirmed in South Africa in November.
A total of 18,932 local subsidiaries of Japanese firms, as well as branches and offices of Japanese companies, in 82 countries and territories were polled, with 7,575, or 40%, giving valid responses.
By sector, 82.0% of respondents in the banking sector and 79.0% of those in precision machinery expect to log profits, while 85.1% of respondents in the hotel and travel businesses forecast otherwise.
Citing survey results, the government-backed trade promotion agency said that when businesses resumed operations, they were affected by semiconductor shortages and rises in steel and other material costs, as well as an increase in ship transportation costs.
“We are continuing to see a difficult situation for many companies,” JETRO Chairman Nobuhiko Sasaki said at a Nov. 30 news conference.
Looking ahead, 48.3% of the respondents across the world expect their profits to increase in 2022 from a year earlier, 42.1% see them as unchanged and 9.6% expect they will fall, according to the survey.
By country, 63.7% of the respondents in Mexico forecast their profits will rise, followed by 60.2% in Indonesia, 56.2% in Vietnam, 51.3% in the United States, 46.6% in Thailand, 44.6% in Britain and 43.0% in China.
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