The fiscal 2006 government white paper on medium and small enterprises states that there are about 4.3 million such enterprises in Japan. Their employees account for about 70 percent of the nation's total employment. Given their weight in the economy, it is important that the government understand their situation and work out proper policies that meet their needs.
The government's monthly economic report for April shows that Japan's current economic expansion has continued for a record 63 months. But the Bank of Japan's "tankan" (short-term survey) report for January-March indicates that the economic expansion is mainly enjoyed by large enterprises. The white paper points out that medium and small companies are at a comparative disadvantage during the current economic expansion, which has been driven by exports and plant-and-equipment investment.
While pointing to the possibility that many medium and small firms do not have the power to pass the rises in the cost of raw materials and personnel costs on to the prices of their products, it says that smaller firms that have succeeded in differentiating their products and services through ingenuity have been able to set competitive prices.