JETRO Invest Japan Report 2015

Introduction Message from the Chairman

In the Japan Revitalization Strategy the government outlined its target of
doubling inward foreign direct investment stock (from ¥17.8 trillion as ofthe end of 2012 to ¥35 trillion by 2020) by attracting foreign companies
and improving the business environment, in order to attract excellent
human resources and technologies to Japan for creation of employment
and innovation. Prime Minister Abe promised to foreign investors that hewill make Japan a country with "the greatest ease of doing business in thewhole world" and worked out various policies to attract foreign companies.
Corporate tax reform, strengthening of corporate governance andother improvements in the business environment, regulatory reform inpharmaceutical/medical appliances, power/energy and other area, andestablishment of National Strategic Special Zones have steadily expandedbusiness opportunities in Japan. Conferences of ministers concerned(Council for Promotion of Foreign Direct Investment in Japan) were held
for the whole government to work on the improvement of the businessenvironment to attract foreign companies. In March 2015, the conference
attended by Prime Minister Abe committed "Five Promises for Attracting
Foreign Businesses to Japan," which include establishing a system for State
Ministers to act as advisors to foreign businesses that have made significant
investment in Japan, and overcoming language barriers in retail stores. In
April 2015, the Tokyo One-Stop Business Establishment Center was openedin the JETRO headquarters for centralized and simplified procedures forbusiness setup in the Tokyo Area.
Japan was broadly recognized as a high-cost country for many years,
but this is not true today. Now, office and house rents in Tokyo are low
compared with Hong Kong and Singapore. Similarly, managers’ salaries inTokyo are lower than those in Singapore. This way, Japan has developed abusiness environment on par with other countries in terms of access to themarket, business environment and costs.
Since 2003, JETRO as the core investment promotion organizationof Japan has provided support for setting up business in Japan. During
these years, JETRO has provided support for more than 12,000 projects
and helped in the success of 1,245 company establishments. Experienced
staff members and specialists in industry, law, accounting and other fields
address the challenges faced by foreign companies starting up in Japan,
including language, business practice, rules and regulations. In the previous
fiscal year, JETRO greatly increased the number of staff members handlinginvestment in Japan and strengthened the efforts to stimulate projects offoreign affiliates in Japan and in many other places in the world so that
we can provide support for more customers at home and abroad. We areworking to realize more projects by providing finely-tuned and highlyreliable services taking advantage of the network with the central and local
governments.
The inward foreign direct investment stock that had been stagnant since
Lehman Brothers' bankruptcy sharply increased by 19% from a year earlier
and exceeded 20 trillion yen for the first time in 2014 where investment inJapan was vigorous. We will work in concert with the government of Japanto maintain the momentum and make Japan a global hub and a hub of
Asia.
This report compiles the situation of foreign direct investment in Japan,
trends of related policies, activities and perception of foreign affiliates
in Japan as well as JETRO’s activities. This is the first publication. I hope
this report will be useful for consideration of starting business in Japan orproviding support for various activities to invest in Japan.

Hiroyuki Ishige
Chairman & CEO
Japan External Trade Organization (JETRO)CONTENTS

Why Japan? 5 Reasons to Invest in Japan

2

Ⅰ Expanding Direct Investment in Japan6

1. Inward FDI stock exceeded 20 trillion yen for the first time.........................................................6
2. Europe accounts for the largest part of the inward FDI in Japan.................................................7
3. Inflow of direct investment in Japan exceeded outflow for three consecutive years....................8
4. Increasing presence of investments from Asia............................................................................9
5. M&A greatly increased on a year-on-year basis..........................................................................9
6. Foreign-affiliated companies are expanding business in manufacturing and R&D......................10

Ⅱ Toward Improvement of the Business Environment

12

1. Efforts of the government to promote investments..................................................................12(1) Reduction of the effective corporate tax rates.....................................................................12(2) Regulatory reform..............................................................................................................12(3) Setting tourism as a key industry........................................................................................16(4) Strengthening corporate governance.................................................................................16(5) National Strategic Special Zones.........................................................................................18(6) Promoting activities by foreign professionals.......................................................................20(7) Further integration into the world economy.......................................................................22
2. Measures to attract foreign companies....................................................................................23(1) The Council for Promotion of Foreign Direct Investment in Japan........................................23(2) Incentives............................................................................................................................23
3. Conception of the business environment in Japan among foreign-affiliated companies〜From the Survey on Japan’s Investment Climate 2015 results〜.............................................25(1) One-third of the companies are feeling improvement in the business climate......................25(2) Nearly 80% of the companies are planning investment expansion.......................................25(3) Attractions of doing business in Japan.................................................................................28(4) Obstacles to doing business in Japan: significant reduction in answers choosing “high business costs”...29

Ⅲ Regional Revitalization and Direct Investment in Japan32

1. Creating attractive regions- The government’s efforts for regional revitalization –..............................................................32
2. More than 70% of foreign affiliates are in the Tokyo Metropolitan area...................................32
3. Foreign affiliates contributing to local communities..................................................................33

Ⅳ Investment Promotion Projects of JETRO

34

1. Achievements of JETRO (attracting investment)........................................................................34
2. Finding and supporting companies interested in investing in Japan..........................................36
3. Collaboration with local governments......................................................................................37
4. Strengthening support: smooth support from primary to subsequent investments....................38
5. Sending out information contributing to FDI in Japan..............................................................40
6. Examples of foreign companies that have successfully entered the Japanese market...................41

Why Japan? 5 Reasons to Invest in Japan

1

Japan’s Re-emergence
The appeal of the Japanese market isincreasing through the economic growth of
Abenomics.
The government is strengthening its efforts
to attract foreign companies and foreign
visitors, aiming to open the Japanese market
and further business expansion.

Why Japan

Japan’s FDI ratio is once again showing a turnaround.
In 2014 it was 8.2%, and higher than most of the developed countries.
The investment environment for foreign companies continues to improve.

International comparison of FDI ratios
Jana’s FDI ratio was 8.2% in 2014, and it maintained the same level as in2013 (8.4%). On the other hand, the average of Japan’s FDI ratio between

Attracting foreign companies- Designation of National Strategic Special Zones- Easing the requirements for accepting highly skilled
foreign professionals
Requirements for annual income, research achievements,
and accompanying parents/domestic servants have been
eased.

Decision made to hold Tokyo Olympic
Games and Paralympic Games in 2020
The economic ripple effect is estimated at approximately
3 trillion yen, and job creation at approximately 150,000
jobs nationwide. People from all around the world willvisit Japan,and a boom in related businesses such as
tourism, construction, and services is expected.
〔Source〕Tokyo Metropolitan Website

2006 and 2013 was 6.3%. It is lower than the emerging economies in Asia,
but it is higher than the UK (6.0%), Germany (4.0%), the US (3.8%).
（％）
14.0
12.0
10.0
8.0

China
Korea

6.0

US

4.0

Germany2.00Foreign travelers to Japan increasing rapidly
The number of foreign visitors to Japan exceeded 10

Japan

06

07

08

09

10

11

12

easing of requirements for issuing visas. The goal is 20〔Source〕"JETRO Global Trade and Investment Report 2015" (JETRO)
Data source: "BOP, June 2015" (IMF), "Balance of Payment Statistics," "National Net International

million by 2020. The growth of businesses targeting

Investment Position" (Ministry of Finance, Bank of Japan)

foreign travelers is expected.

5.2

million people

2014

2020（Goal）

million people

million people

13.41

In 2015, the number of foreign visitors in Japan
reached 19,737 thousand. This is the highest
number in history and a 47% increase year-on-year.
〔Source〕Japan National Tourist Organization (JNTO)

2

Invest Japan Report 2015

14（year）〔Note〕 1）FDI ratio = This term's direct investment ratio/foreign direct investment term ﬁnal balance x 100 (%)2）China is until 2013

million in 2013, a result of new LCC flights and the

2003

13

20

The 20million target is looking
to be achieved early on!

A huge and sophisticated market exists in Japan.

3rd

GDP is ranked 3rd in the world

RANK

Why Japan?

2

Sophisticated Market

Why Japan

International comparison of Japanese regionalgross production (nominal, FY2012)(Unit $1 billion)

Hokkaido/Tohoku region 698.4
Switzerland
631.2

in the world

Japan’s GDP is around 500 trillion yen.
A leading world economy that boasts largescale economic power.

Chubu region 917.5
Turkey788.9
Kinki region 936.5
Indonesia
919.0
Chugoku region 333.4
Denmark
315.2〔Source〕"World Statistics 2015"

Kanto region 2,400.8
UK
2,461.8
Shikoku region 162.2
Vietnam
155.6(Statistics Bureau, Ministry of Internal Affairs and Communications); Cabinet Office

Kyushu region 571.5
Sweden523.9〔Source〕"Report on Prefectural Accounts 2012" (FY2015)(Cabinet Office)Japan is where global enterprises aggregate

3rd

No. of global companies's HQ

RANK

Attractive market for foreign companies

Nearly 60% of foreign companies see
the massive size of the market as
Japan’s attractiveness.

in the world

112 foreign companies out of 203 cited "size of the market" as
the advantage of Japan’s business environment.
〔Source〕"Survey on Attitudes of Foreign-Affiliated Companies toward Direct Investment

55companies out of the "Fortune Global 500"
have their HQ in Japan.
Following the US and China, Japan is ranked
3rd in the world.
〔Source〕"Fortune Global 500 2015"(Fortune)in Japan Report 2014"(Ministry of Economy, Trade, and Industry (METI))Tokyo maintains 1st place from surveys previous to2014, and will still be 1st in 2030 (projection).

World ranking of megalopolis populations "Tokyo:1st, Kinki area:7th"
City

Country

Tokyo
Delhi
ShanghaiCiudad de México(Mexico City)São Paulo
Mumbai(Bombay)
Kinki(Osaka)
Beijing
New York・Newarkal-Qāhira(Cairo)

Japan
India
China
MexicoBrazil
India
Japan
China
US
Egypt

Population (1,000 people)
1990
2014
2030
32,53037,83337,1909,726
24,95336,0607,823
22,99130,751
15,642
20,84323,865
14,776
20,831
23,444
12,436
20,741
27,797
18,38920,123
19,976
6,788
19,52027,706
16,086
18,591
19,885
9,892
18,41924,502

1990
1
12
20
4
5
6
2
23
3
11

Rank
2014
1
2
3
4
5
6
7
8
9
10

2030
1
2
3
10
11
4
13
5
14
8

〔Source〕"World Urbanization Prospects, the 2014 Revision"(Created from United Nations)

Invest Japan Report 2015

3

3

Innovation Hub
Japan has an intellectual accumulationthat generates innovation.
World-class in research funding and numberof researchers

1st

RANK

in the world

Science and technology related research is
conducted spiritedly in Japan.
"Research funding as a percentage of GDP" and"Number of researchers per 10,000 people" areamong the largest in the world.

Why Japan

Innovation from Japan
Supercomputer "K computer"

RANK 1st in the world 2015 Graph500
Many Nobel Prize winners produced. 24 winners up to date.
Satoshi OMURA: 2015 in Physiology or Medicine for discoveries concerning anovel therapy against infections caused by roundworm parasites.
Takaaki KAJITA: 2015 in Physics for the discovery of neutrino oscillations, whichshows that neutrinos have mass.
Isamu AKASAKI, Hiroshi AMANO, Shuji NAKAMURA: 2014 in Physics on blue LED
Shinya YAMANAKA: 2012 in Physiology or Medicine for research on iPS cells

Nobel Prizewinners (all time)

24（Breakdown）
Physics
Chemistry
Physiology or Medicine
Literature
Peace Prize

11
7
3
2
1

7th in the World, 1st in Asia

Research funding by country
and percentage of GDP (G8 comparison)
CountryJapan
Germany
US
FranceUK
Canada
Italy
RussiaResearch funding($100 million)
1,802
1,010
4,570
552
399
246
265
407

Percentage of GDP
(%)
3.87
2.85
2.73
2.23
1.63
1.62
1.26
1.12

Number of researchers per 10,000 people(G8 comparison)
CountryJapan
CanadaGermany
UK
US
FranceRussiaItaly

Number of
researchers(unit: 10,000)
68.3
15.7
36.0
25.9
126.5
26.5
44.1
11.8

Number of
researchers per
10,000 people
53.8
45.0
43.9
40.5
40.3
40.2
30.8
19.5

〔Source〕Created from "Survey Result on Science and Technology
Research 2015"(Ministry of Internal Affairs and Communication)
Data source: "Main Science and Technology Indicators," (OECD)etc.

A country where you can live
A safe and peaceful country
Global Peace Index 2014

1st

RANK

Invest Japan Report 2015

〔Source〕INSTITUTE FOR ECONOMICS & PEACE"Global Peace Index 2014"

in Asia

OECD Better Life Index"Safe" category

1st

RANK

4

Measured in 23 categories such as
crime rate, terrorism, and homicides
Ranked 1st in Asia

Ranked 1st for "Safe", scoring
10 points out of 10〔Source〕OECD "Better Life Index(2015)"

in the world

Why Japan? 5 Reasons to Invest in Japan

Foreign companies validate Japan’s infrastructure

Easy environment for business

1st

Nearly 60% of foreign companies see
the well-maintained infrastructure

Business sophistication

RANK

as an attractiveness of Japan.
123 foreign companies out of 203 cited "well-maintainedin the world

infrastructure" as an advantage of Japan’s business environment.
〔Source〕"Survey on Attitudes of Foreign-Affiliated Companies toward Direct Investment
in Japan Report 2014"(Ministry of Economy, Trade, and Industry (METI))

Ranked 1st in the world for"Business Sophistication".
Evaluated on business networkand quality of company
operation/strategy.
〔Source〕"The Global Competitiveness Report 2014-2015"(World Economic Forum)safely and pleasantly 5

Why Japan

A country where you can live with peace of mind
Longest life expectancy in the world
Average life expectancy is

Why Japan

ranked 1st in the world.

Expectancy for women (87 years) is ranked 1st in the world.
Expectancy for men (80 years) is ranked 8th in the world.
〔Source〕"World Health Statistics 2014"(World Health Organization (WHO))〔Source〕"OECD Factbook 2014"(OECD)

Well-developed medical infrastructure
Number of hospital beds per 1,000 people (13.4) isranked 1st among OECD countries.

〔Source〕OECD

Abundance of nurses
Ratio of nurses to number of physicians isranked 1st among OECD countries.
〔Source〕"OECD Factbook 2014"(OECD)

Most livable Japanese cities aschosen by the world Tokyo 1st

Japan’s stable infrastructure service
Internet:
Wireless broadband subscriptions per 100 inhabitants

ranked 3rd among OECD countries
Communication:
Percentage of population in mobile phone service area is99.95%

Water:
Providing world-class water service on a constant 24-hour basis

Water leakage rate is only 3% (Tokyo).
Diffusion rate of water and sewer service, simple water-supply
system, and private water supply is

100% (Tokyo).

〔Source〕OECD〔Source〕"4th-Generation Mobile Communication System"(Ministry of Internal Affairs and Communications)〔Source〕"Pursuing Water Loss Reduction," 2012
(Tokyo Metropolitan Government Bureau of Waterworks)〔Source〕"Water Supply Population and Water Service Diffusion Rate 2012"(Ministry of Health, Labor, and Welfare)World-class transportation infrastructure
Airports:
Airports with international flights in service:
Railways:
Annual passengers :51

23 billion

Shinkansen:
Number of departures from Tokyo station per hour:
Average delay time:

36 seconds

15〔Source〕"Tokyo/Osaka Civil Aviation Bureau Outlook Summary Sheet of Airport
Utilization Situation 2013"(Ministry of Land, Infrastructure, Transport, and Tourism(MLIT) )〔Source〕"Civil Aviation Bureau Ideal of the Future Metropolitan Airport 2013"(MLIT)〔Source〕"Railway/Railroad Passenger Transport Summary Chart Passenger
Volume 2014"(MLIT)〔Source〕Material from the "Expert Advisory Panel Round-Table Conference on theConstruction of the New ’Grand Design of the Country’ "hosted by (MLIT) on November 27, 2013"〔Source〕"White Paper on Land, Infrastructure, Transport and Tourism in Japan, 2013"(MLIT)〔Source〕Nikkei Business Online, January 2013

〔Source〕MONOCLE, UK

Invest Japan Report 2015

5

Why Japan?

4

Business Friendly Infrastructure

Ⅰ

Expanding Direct Investment in Japan

2014 was a very active year in terms of inward foreign direct
investment (FDI) into Japan. The stock of inward FDI, which wasstagnant for the past 5 years, increased greatly and the flow of
inward FDI (the remaining balance after deducting the outflow fromthe inflow (net)) has also been positive in the past 3 years.

attractiveness as an investment market was recognized anew as aresult of the recovering exchange rate, progress of the regulatory
reforms in the fields of electricity, pharmaceuticals and medical
equipment, revitalization of tourist-related industries thanks to therapid increase in tourists visiting Japan and many other factors.
The ratio of foreign direct investment in Japan to its nominal GDP
was around 4.0% for the past several years but increased to 4.8%
in 2014 (Chart 1-2). By statistics definition, “direct investment inJapan” includes only capital coming across the border to Japan.
It has been pointed out that the amount of investment in Japan
is small considering the number and business scale of the foreigncompanies in Japan because they can easily obtain capital with low
interest in the well-developed financial market in Japan. However,investment in Japan compared with other countries remains low
considering the market size and maturity.
On the other hand, comparing inward and outward investment stock,
while inward investment increased greatly, outward direct investment
stock also increased by 20%. As a result, the inward-outward ratio was
1:6.2, maintaining the large gap of the previous year.

1. Inward FDI stock exceeded 20 trillion yen
for the first time
At the end of 2014, Japan’s inward direct investment stock was
23,343.9 billion yen, exceeding 20 trillion for the first time (Chart 1-1).
The stock increased by 3,792.9 billion (19.4%) from 19,551.0
billion yen at the end of 2013. A little under 2.8 trillion of theincrease was attributable to the change in statistic criteria, andapproximately one trillion was the net increase according to a
provisional calculation by the Bank of Japan.
The biggest factor contributing to the increase in direct investment
in Japan is believed to be increased investment by foreign companies
responding positively to the economic recovery, while Japan’s

Record highChart 1-1 The stock of inward FDI and its portion in the nominal GDP（Trillion Yen）（%）

23.3 Trillion Yen 6.0

25

19.4

Amount (Tillions of JP Yen)
20

Percentage of GDP (%)

5.0
4.0

15

3.0
10

6.1

2.0

5

1.0

0

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

0.0

2014

〔Source〕"Balance of Payments"(Ministry of Finance)

Chart 1-2 International comparison of the inward FDI's ratio in
nominal GDP

（％）
60.0

56.5

（Billion yen）
160,000
140,000

50.0

120,000

40.0

100,000

31.1

30.0

80,00025.6

60,000

19.3

20.0
10.0

4.8

0.0

Japan

10.5

12.8

20,000China

South Korea Germany

Invest Japan Report 2015

Japan's inward and outward direct investment balance

1：6.2

FranceUSUK0143,940

inward direct investment (stock)outward direct investment (stock)

62,41640,000〔Source〕"World Investment Report 2015"(UNCTAD) (except Japan)
Japan: "Balance of Payments"(Ministry of Finance),"National Accounts of Japan"(The Cabinet Office)6

Chart 1-3 Japan's outward and inward direct investment
balance

23,344

15,703
2007

2008

2009

2010

2011

2012

2013

2014

〔Source〕"Balance of Payments"(Ministry of Finance)

2. Europe accounts for the largest part of theinward FDI in Japan
By region, Europe has the largest direct investment stock in Japan
at 10,924.2 billion yen (46.8%) followed by North America (6,873.0
billion: 29.4%) and Asia (3, 611.6 billion: 15.5%).
By country, the United States ranks first with 6,688.1 billion yen,followed by the Netherlands (3,053.7 billion) with a large numberof multinational companies, France (2,797.7 billion) and the United
Kingdom (1,798.1 billion). The countries that follow are Singapore(1,724.3 billion) that is the only Asian country with investment
stock exceeding one trillion, Switzerland (1,099.2 billion), Germany(1,065.2 billion) and the Cayman Islands (1,052.8 billion) that is a
tax haven in Latin America. These are the countries with investment
stock exceeding one trillion yen (Chart 1-5). The majority of thestock of the US is in finance and insurance industries followed bywholesale/retail and communication, while the ratio of finance andinsurance is high for Singapore and that of electric/transportation
machinery and equipment is high for the European countries.

Compared with other regions, the investment balance of European
countries increased greatly from the previous year. While thegrowth rate of North America and other regions is around 10%, thegrowth rates of France, Spain, Belgium and Luxembourg exceeded
70%, making their investment stock record-high. Recently, direct
investment stock from Asia is greatly increasing. Direct investment
from Asia increased seven-fold from 517.0 billion yen at the end of
2000, exceeding the increase of western countries, with an increaseby three and half times. The presence of Asia in inward investment isincreasing (Chart 1-6).
Among Asian countries, the amounts of Singapore and Hong Kong(879.9 billion yen) stand out, followed by Taiwan (342.2 billion yen)and South Korea (255.7 billion yen). In terms of the rate of increase
from 2000, investment from Taiwan and Malaysia increased morethan thirty-fold and investment from China and Indonesia expanded
more than ten-fold. China accounts for only 1.5% of the total
investment in Japan, but the amount increased by 29% year-on-year.
Note: Rate of increase by country is calculated from the balance at the end of2013 using the calculation method of BPM6

Chart 1-4 Inward FDI into Japan by region (as of the end of 2014)

North
America

Europe10.9 trillion yen

6.9 trillion yen

Latin
AmericaAsia

1.4 trillion yen

3.6 trillion yen

Oceania
0.4 trillion yen〔Note〕The calculatuion method differs between regional and industrial statistics of the FDI stock〔Source〕"Balance of Payments"(Ministry of Finance)

Invest Japan Report 2015

7Ⅰ

Stock by industry is largest for the finance and insurance industries
at 7,738 billion yen followed by transportation equipment
manufacturing (2,781.3 billion yen) and electric machinery
manufacturing (2,309.0 billion yen) (Chart 1-7).
Chart 1-5 Inward FDI stock by country (as of the end of 2014) TOP10Country

Stock (billion yen)

Ratio (%)

3. Inflow of direct investment in Japanexceeded outflow for three consecutive years
Looking at the flow of direct investment in Japan in 2014, we seethat the inflow exceeded the outflow for three consecutive years,
increasing by 31% from the previous year to 954.8 billion yen. By
investment type, equity capital was 962.6 billion yen, reinvestmentof earnings was 328.7 billion yen and debt instruments were minus
336.5 billion yen (Chart 1-8). By industry, outflow was higher by
239.7 billion yen for the manufacturing industry, whereas inflow
was higher by 461.1 billion yen for the nonmanufacturing industry,
offsetting the excess outflow of the former.

1

US

6,688

28.7

2

Netherlands

3,054

13.1

3

France

2,798

12.0

4

UK

1,798

7.7

5

Singapore

1,724

7.4

Chart 1-8 Changes in the stock of inward FDI by investment type6

Switzerland

1,099

4.7

(Billion Yen)

7

Germany

1,065

4.6

3,000

8

Cayman Islands

1,053

4.5

9

Hong Kong

880

3.8

10

Luxembourg

628

2.7

2,500
2,000

〔Source〕"Balance of Payments"(Ministry of Finance)

1,500

Chart 1-6 Stock of Inward FDI by region (growth rate when

1,000

the stock as of 2000 is 100)

（％）
800

-500

North America

500

Europe

400

0

356

272

300

100

0

Asia

600

200

500
699

700

346

238

-1,000-1,50096 97 98 99 2000 01 02 03 04 05 06 07 08 09 10 11 12 13 14〔Source〕"Balance of Payments"(Ministry of Finance)

216

100

2000 01

Dept instruments
Net
Reinvestment of earnings
Equity capital

02

03

04

05

06

07

08

09

10

11

12

13

14

〔Note〕The stock for 2014 is calculated based on BPM6. The stock before 2013
was recalculated from BPM5-based to BPM6-based by JETRO.
〔Source〕"Balance of Payments"(Ministry of Finance)

Chart 1-7 Stock of inward FDI by industry (as of the end of 2014) TOP10
Industry

Stock

Ratio

(Billion Yen)（％）

Industry

Stock

Ratio

(Billion Yen)（％）

1

Finance and insurance

7,738

37.9

6

Service

671

3.3

2

Transportation equipment manifacturing

2,781

13.6

7

Communications

644

3.2

3

Electric machinery manufacturing

2,309

11.3

8

General machinery manufacturing

445

2.2

4

Wholesale and retail

1,646

8.1

9

Glass and ceramics manufacturing

362

1.8

5

Chemical and pharmaceutical manufacturing

1,121

5.5

10 Real estate

355

1.7

〔Note〕In the statistics of the inward FDI stock by industry, the investment made by a subsidiary to the parent company is counted as the withdrawal of investment by theparent company (Directional Princimple).Therefore the calculation method diffesf ftom that of the statiscics for inward inwestment stock by region and investment type.
〔Source〕"Balance of Payments"(Ministry of Finance)

8

Invest Japan Report 2015

Ⅰ Expanding Direct Investment in Japan

Looking at quarterly changes, we can see favorable growth since
the third quarter of 2012 (Chart 1-9). According to the fDi REPORT2015 (fDi Intelligence), which was compiled using the database of
the Financial Times of the UK, Japan is ranked among the top four
countries that are growing rapidly as direct investment destinations(the other three countries are India, Vietnam and Malaysia).

（Billion yen）

348.1

300
200

2012

China

6

14

Hong Kong

69

17

Taiwan

29

18

108

Korea

45

4

ASEAN

79

32

Singapore

77

33

-365
2013
726.6
billion yen

-200

2014
2015(Jan-Jun)
311.6
957.8
billion yen billion yen-300
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2
2011

2012

2013

2014

2015

〔Note〕Q1（Jan. ～ Mar.）、Q2（Apr. ～ Jun.）、Q3（Jul. ～ Sep.）、Q4（Oct. ～ Dec.）〔Source〕"Balance of Payments"(Ministry of Finance)

4. Increasing presence of investments from Asia
Investment from Asia was 576.8 billion yen, accounting for 60.4%
of all investment in 2014 (Chart 1-10). The growth of investment
from Asia is significant in flow as well as in stock. The largest
investing country is still the United States, but Asian countries rank
high (No.2 Hong Kong, No.3 Singapore, No.4 Taiwan, No. 7 China,
and No.10 Thailand)
Major investments from Asia in 2014 include: the strategic
partnership between the Singapore paint leader Wuthelam group
and Nippon Paint (162.2 billion yen in total), the business andcapital alliance between Thailand’s Charoen Pokphand (CP) Groupand Itochu Corporation (CP’s third-party allocation of share is about
102.4 billion yen) and the acquisition of Tokyo Star Bank by Taiwan's
CTBC Financial Holding Co. (about 52.0 billion yen). The acquisitionof Tokyo Star Bank is the first acquisition of a Japanese bank by aforeign bank (Chart 1-11).

577

year-onyear
growth
(%)

441

17%

62

26

-56%

211

109

40%

44

-52%

15

74

476%

182

189

38%

152

150

41%

△7

136

470

264

4%

△ 11

132

466

260

4%

△ 157

△ 131

23

△ 252

-

Oceania

10

37

59

16

-63%

Europe

74

97

△ 249

△ 908

-

EU

△ 243

128

△ 232

△ 876

-

World

138

225

955

△ 413

-155%

Latin America

-100

2015
Jan.-Sep.
(P)

2014

86

US

0

2013

229

North America

100

-400

(Billion Yen)

Asia

Chart 1-9 Changes in the quarterly flow of inward FDI
400

Chart 1-10 Changes in the inward FDI flow by region〔Note〕Because of the changes in the calculation method of the balance of
payments, there is no continuity between the data before 2013 and the data after
2014.The data for 2015 is provisional.
〔Source〕"Balance of Payments"(Ministry of Finance)

5. M&A greatly increased ona year-on-year basis
M&A in Japan in 2014 (completed) increased by 31.3% from ayear ago to 1,155.2 billion yen(data taken from Thomson Reuters).
By industry, the amount of M&A was largest in the chemicalindustry at 243.7 billion yen with the implementation of large
projects, followed by real estate rental/brokerage at 222.5 billion.
M&A by Asian companies spread from real estate to other fields in2014.
Among M&A by companies of the United States, the largest
investment partner of Japan, the acquisition of Panasonic Healthcare(an operating subsidiary of Panasonic) by Kohlberg Kravis Roberts(KKR) for about 165.0 billion yen stands out (Chart 1-11). Other
large M&As include the largest coffee chain Starbucks making its
Japanese arm a fully owned company (about 99.5 billion yen).

Invest Japan Report 2015

9ⅠChart 1-11 Top inward M&A trends (2014 ～ first half of 2015)
Date
Effective

Target Name

Industry Sector

Panasonic Healthcare
Precision instrument
Co Ltd1Mar. 20142

Sep. 2014

Itochu Corp

3

Dec. 20144

Acquirer Name

Parent Nation

Value% Owned After
Industry Sector （Billion ¥） Transaction

KKR & Co LP

United States

Investor

165.0

100.0

Wholesale Trade

Charoen Pokphand Group

ThailandFoodstuffs

102.4

4.7

Nippon Paint Co Ltd

Chemicals and Allied
Products

Wuthelam Holdings Ltd

Singapore

Chemicals

102.3

18.7

Dec. 2014

Bushu
Pharmaceuticals Ltd

Drugs

Baring Private Equity Asia Ltd

Hong Kong

Investor

77.3

100.0

5

Mar. 2014

Nippon Paint Co Ltd

Chemicals and Allied
Products

Wuthelam Holdings Ltd

Singapore

Chemicals

59.9

14.8

6

Mar. 2015

Pioneer Corp-DJ
Equipment

Electronic andElectrical Equipment

KKR & Co LP

United States

Investor

59.0

85.1

7

Jun. 2014

Tokyo Star Bank Ltd

Commercial Bank

Chinatrust Coml Bk Co Ltd

Taiwan

Banks

52.0

98.2

8

Mar. 2015

Mitsubishi Jisho
Invest-Aoyama

Real Estate

GreenOak Real Estate LP

United States

Real estate
investment trusts

50.0

100.0

9

Jan. 2014

Macromill Inc

Business Services(Internet Research)

Bain Capital LLC

United States

Investor

48.0

93.5

10

Sep. 2014

Tokyo 2 Logistic
TokuteiReal Estate

GLP Japan Advisors Inc

Singapore

Real estate
investment trusts

36.1

100.0

〔Note〕 1) As of July 2nd 2015 2) Ranking according to single transaction amount

6. Foreign-affiliated companies are expanding
business in manufacturing and R&D
According to the database of the Financial Times of the UK, thenumber of greenfield investments in Japan announced in 2014
was 196, the largest since 2003 where data of the database canbe traced. M&A is the main trend in the investment in Japan but
greenfield investment is also steadily increasing with some cases
amounting to 100 to 500 billion yen.

3) Acquirer Name is the name of the final acquirer (including corporate group）
4) Acquisition of less than 10% of the stocks is not included in the FDI statistics.
〔Source〕Thomson Reuters

In recent years, there have been moves to set up R&D sites inJapan to take advantage of the high technologies of the country.
Establishment of R&D sites by leading companies, including Appleof US, Nokia of Finland, Johnson & Johnson of US and BASF of
Germany, was revealed in 2014. Other large investments include a
100-billion yen investment by a leading semiconductor company,
Micron Technology of the US, in plants of the former Elpida Memorythat was made a fully-owned company in 2013 (Chart 1-12).

Chart 1-12 R&D base establishments by foreign-affiliated companies in recent years
Company

Overview

Apple Inc. (US)Apple plans to build a technical development center in a next-generation smart city, which is under construction in Yokohama,
Kanagawa. The operation will start in fiscal 2016.

Nokia (Finland)

An R&D center was established in Kawasaki, Kanagawa. The center will enhance the research and development of fifth-generation(5G) and cloud products for practical use. The results of the research will be introduced to the R&D centers in other countries.

Johnson & Johnson (US)"Tokyo Science Center" was established in the International Strategic Zone in Kawasaki, Kanagawa. The center, equipped with a surgery
simulation system, is expected to be utilized by Asian countries as a research and training facility for healthcare providers.

BASF (Germany)

The battery material research and development center was established in Amagasaki Research Incubation Center in Hyogo. The
laboratory is the first development base in the Asia-Pacific region specializing in lithium ion batteries, which conducts basic research,develops the products and provides customer support.

3M (US)

3M Health Care of the 3M Group has announced that it establishes a new R&D base that specialises in health care, in Sagamihara, Kanagawa in
September 2013. It aims to develop high-value products that appeals to the diversifying needs of the Japanese health-care market.

Umicore（Belgium）

The joint venture of Umicore and Nippon Shokubai completed its "Tokoname Test Center" in Tokoname, Aichi, in December 2013. It carriesout research and development in Aichi where the autoimotive industry is active, in order to make progress on its on-going research anddevelopment of exhaust fumes purification catalyst.
〔Source〕JETRO Global Trade and Investment Report 2015

10

Invest Japan Report 2015

Ⅰ Expanding Direct Investment in Japan

column

Revision of the Balance of Payments statistics due to the implementation of the sixth editionof IMF Balance of Payments and International Investment Position Manual (BPM6)
The recording standard for the balance of international payments
was changed from the fifth edition to the sixth edition of the
Balance of Payments and International Investment Position
Manual. The revision covered a broad range of changes including
recombination and expansion of major items, the change in thenotation method and recording standard and the introduction ofan annual revision system. For direct investments, especially inward
direct investments, new items were added pushing up the balance.
-Major changes regarding inward direct investment
The first point is a change of the principle to include“disinvestment” (Directional Principle → Asset and Liability
Principle). Under the old standard, investment by a Japanesesubsidiary in its overseas parent company was recorded as recovery
of investment, namely negatively posted as “disinvestment” to theinward direct investment stock. Under the new standard, however,investment from Japan in an overseas affiliate is recognized as
outward investment, while investments by an overseas affiliate
in Japan were recognized as inward investment regardless of theparent-subsidiary relationship between the companies, and there
is no negative posting as investment recovery, in principle. (Note:investment exceeding 10% by a Japanese subsidiary in its overseas
parent company was not negatively posted but posted as outward
direct investment under the old standard as well).
The second major change is an expansion of the scope of“reinvestment of earnings.” Under the old standard, internal
reserves of Japanese subsidiaries were posted to the balance but theinternal reserves of indirect investment destinations in Japan (subsubsidiaries, etc.) were not posted. Under the new standard, theinternal reserves of indirect investment destinations are also posted.
Third is an expansion of the scope of debt instruments. Under
the old standard, loan and bond trading between overseas parent
companies and their Japanese subsidiaries was posted, but thisdid not include transactions between a Japanese subsidiary andChart 1-14

an overseas subsidiary, between Japanese subsidiary and a subsubsidiary, and between other indirect investment destinations.
Under the new standard, loan and bond transactions between
indirect investment destinations are also posted.
In addition, the direct investment criterion is changed frompossession of “more than 10% of the outstanding stock” by foreign
capital to “10 percent or more of the voting power.” Furthermore,
the definition of direct investment was changed to include indirect
investment destinations.
The changes above are summarized in the table below as factors
to increase or decrease the statistical recording of inward direct
investment:
Chart 1-13
Change in the rules of the appropriation ofnegative investment

plus factor

Expansion of the scope of the reinvestmentof earnings

plus factor

Expansion of the scope of debt instrument

plus factor

Changing the "voting share capital" part of thedefinition of FDI to "voting power" basis.

minus factor-Impact on the stock at the end of 2014
These changes are estimated to have pushed up the stock of direct
investment in Japan at the end of 2014 by about 2.8 trillion yen.
For adjustment in response to the change in the posting principleof disinvestment, the balance at the end of 2013 was changed
from about 18 trillion to 19.6 trillion yen. About 2.8 trillion of the
3.8 trillion yen year-on-year increase at the end of 2014 is believed
to be due to the adjustment for the 2nd and 3rd changes. The
remaining 1 trillion yen is the net increase through transaction flow.
The influence of exchange rates is estimated to be about 0.1 trillion
yen.

Adjusted amoutn
by modiﬁcation No.1

Foreign exchange ﬂuctuation

＋3.8
20.4

+1.0

Net increase from transaction+2.8

Estimated to be the amountresulting from modiﬁcation No.
2 and 3, movement of liabilities
without transaction anddiﬀerences in the appropriationof transacion ﬂow.

19.6

＋1.6
18.0

(BPM5)(BPM6)
2013

+0.1

23.3

(Unit: Trillion yen)

(BPM5)(BPM6)
2014〔Note〕１）The numbers are rounded off, so the total may
not be matching. 2) The BPM5 value for 2014 is calculatedby the directional principle, usinf the BPM6 value.

〔Source〕"The balance of payments and the international investment position of Japan at the end of 2014" (The Bank of Japan),"The international investment position of Japan at the end of 2014, factors contributing to changes (trial calculations)" (Ministry of Finance)

Invest Japan Report 2015

11

Ⅰ

Ⅱ

Toward Improvement of the Business Environment

1. Efforts of the government to promote
investments
Since the start of the Abe administration, the government of Japan
has been strenuously working to increase inward FDI by attracting
foreign companies. After going through the stages of dispelling thedeflationary mindset through aggressive monetary policy (the firstarrow) and creating demand through flexible application of fiscal
stimulus (the second arrow), Abenomics has entered the stage of a
growth strategy to spark private investment through deregulation(the third arrow). The government is now driving forward the
reduction of corporate tax rate and reform of bedrock regulations tomake Japan the most attractive place in the world to do business.

(1) Reduction of the effective corporate tax rates
The tax reform in fiscal 2015 lowered the effective corporate tax
rates. The standard tax rate was lowered from 34.62% of fiscal
2014 to 32.11% in fiscal 2015. Furthermore, the Outline of theTax Revision of fiscal 2016 announced reduction to 29.97% in
fiscal 2016 and to 29.74% in fiscal 2018. This is based on the Basic
Policies for the Economic and Fiscal Management and Reform 2014,
which states: “We will strengthen Japan’s locational attractivenessand enhance the competitiveness of Japanese companies. In thiscontext, we aim to reduce the effective corporate tax rate to aninternationally-comparable level and embark on corporate tax
reform to be more growth-oriented. To that end, we aim to reduce
the percentage level of the effective corporate tax rate down to
the twenties in several years.” For foreign companies having an
impression that “business costs are high in Japan,” this reductionin the effective corporate tax rates means reduction of businesscosts. The reduction is expected to promote investments in Japanin addition to serving as a tailwind for capital investment and wage
increase by domestic companies.
As shown in Chart 2-1, Japan’s effective tax rate is one of thehighest after 40.75% of the state of California and 33.33% ofFrance. It is higher than 29.66% of Germany, 20% of the UK andthe rates of other European companies as well as the rates of other
Asian countries including 25% of China, 24.20% of South Korea
and 17% of Singapore.
Reduction of corporate tax rates is a global trend. Germany since
2000, for example, greatly reduced the rate that reached 60% in
the first half of 1990s to the current level of about 30% in 2008.
Singapore gives foreign capital various preferential treatments inaddition to lower rates.
Tax relief by reduction of corporate tax rates is effective inpromoting investment from abroad, while a high corporate tax rate
could cause overseas transfers of economic activities by Japanesecompanies. It is necessary to have the perspective of globallycompetitive conditions in the determination of corporate tax rates.

(2) Regulatory reform
The government of Japan has been strenuously working on theregulatory reform including simplification of procedures in various
fields, reform and acceleration of approval systems, shorteningof examination periods and market development. The expansion
and opening of markets and the improvement in the investment
environment through these reforms are generating opportunities
for new entry and business expansion. The sections below describe
the efforts in the medical/healthcare, energy and agricultural fields
where the reforms have advanced significantly.

Chart 2-1 Reduction of the corporate tax rate（％）

Further
reduction
towards the
20% range

50
40

40.75
34.62

32.11

30

29.97

29.74

33.33

29.66
25.00

24.20

20

20.00

17.00

10
0

2014

2015

2016

2018

Japan

12

Invest Japan Report 2015

US
France(California）

Germany

China

Korea

UK

Singapore〔Note〕The tax rates for countries except Japan are as of April 2015
〔Source〕Website of the Ministry of Finance and "FY 2016 Tax Reform Outline"•Medical/healthcare fields – Introduction of
innovative approval systems
The first thing that requires attention in the medical care field is aneffort to promote the practical application of regenerative medicine.
A new legislative system concerning regenerative medicine wasenforced in November 2014. A new category of “regenerative
medicine products” was set up in the pharmaceutical screening andan early approval system (time-limit and conditioned approval) was
introduced. In addition, outsourcing of cell culture and processing
to external facilities was permitted. The reform greatly improved
and virtually eliminated the problem of Drug Lag (the issue where
drugs already approved abroad are not available for patients inJapan due to the delay of their approval). Because Japan has
developed an environment for practical application of regenerative
medicine first in the world, regenerative medicine companies acrossthe globe have a strong motivation to conduct business in Japan.
Reform of the approval system is advancing also in the medical
equipment field where commercialization used to take a long time.
Here, efforts are made to eliminate the Device Lag. The law of
November 2014 simplified the regulation and system including the
introduction of approval using a third-party private institution to
specially controlled medical devices that had been approved only by
the Minister of Health, Labor and Welfare. The revision facilitates
the commercialization of medical equipment and generates
opportunities for the expansion of the Japanese medical equipment
market and for companies to gain market share.
Aiming at early commercialization of innovative pharmaceuticalproducts, medical devices and regenerative medicines, thegovernment established a system for priority examination to promote
their development and started its trial operation in April 2015. This isa measure to promote practical application of innovative medicinesand other medical products ahead of other countries. Designatedmedicines receive (1) prioritized consultation, (2) substantial preapplication consultation (de facto review before application), and (3)prioritized examination. With this system, the time to approval andto place the product on the market will be reduced.
In addition, in order to promote cooperation among medical
institutions for smooth response to medical needs and enable
the provision of high-quality and efficient medical services incommunities, the government created a system of medical
corporations to promote local medical care cooperation (The Act on
the Partial Revision of the Pharmaceutical Affairs Law was establishedin September 2015 and will be enforced in fiscal 2017). The systemenables integrated management of multiple medical corporations.
The government also created a “patient-requested cure system.”Through this system, it is made possible to combine insured and uninsured medical services which allows utilization of non-approved
medicines on a request from a patient. This system shortened theassessment period from 6 months to 6 weeks in principle and thegovernment will further improve medical services and revitalize themarket by making these medicines available earlier.

Future efforts in the medical/healthcare field- Spread electronic clinical record system in 90% of large hospitals by 2020
- Form nationwide Regional Medical Information Cooperation
Networks by 2018 FY- Provide information on hospitals which accept foreign patients(“Japan International Hospitals (tentative name)”)- Certify agents which support foreign patients comprehensively

Ⅱ•Energy field ~ Increase business opportunities
through market expansion and energy conservation
The government of Japan has embarked on an integrated energy
system reform beyond the boundaries of the energy markets ofelectricity, gas and heat supply. Behind the move is an urgent task
to cope with various energy issues including reduction of electric
power costs, improvement of self-sufficiency and reduction of
GHG emissions in light of the increased electric power costs due
to increased import cost of fossil fuels and the increase in GHG
emissions.
In April 2015, the government set up the Organization for Crossregional Coordination of Transmission Operators (OCCTO) for thefull liberalization of the power retail market scheduled in April
2016, legal separation of the power transmission/distribution sector
scheduled in April 2020 and the abolishment of the rate regulationthat will follow. Entry to the power retail market is active with
the number of newcomers increasing 2.6 times in 2 years and 5
months after the Cabinet Decision on the Policy on Electricity System
Reform (April 2013). Further expansion of business opportunities is
expected. Enterprise partnerships across regions and industries arealso progressing in power generation.
The comprehensive energy policy of the government includes
regulatory reforms in wind power/geothermal power generations,fuel cell and other fields. The efforts include simplification of theprocedure, a shorter examination period, support for business
operators and development of markets. A large number ofdemonstration projects are carried out in these fields providing good
opportunities for foreign companies to enter the market.

Invest Japan Report 2015

13

The government also gives high priority to negawatt transaction(the amount of electricity saved by consumers through conservation
or in-house power generation may be sold as power generation in
the market), which triggered entry by foreign companies one after
another. A full-fledged demand response market is emerging toward
April 2016, as Smart City demonstration projects have been carriedout and the Guidelines for Trading Negawatts have been compiled.
Demand of around 10 million kW of saved electricity is expected
in Japan for the future, which can expand the demand response
mediation services to a market of tens of billions of yen.
Future efforts in the energy sector- Full liberalization of the power retail market scheduled in April
2016 and full liberalization of the gas retail market in 2017
- Legal separation of the power transmission/distribution sector in
April 2020, separation of the infrastructures of the three major
gas companies in April 2022.

•Agriculture – Strong agriculture through businessdevelopment and efficiency improvement
The government of Japan embarked on various reforms forpromotion of large-scale farming including the improvement offarmland use through concentration/consolidation of farmland andincorporation of agricultural production. The goal is to improve
productivity through the economy of scale to produce internationallycompetitive high-quality agricultural, forest and fishery products.
First, the government set up a Farmland Intermediary Management
Institution in each prefecture to work on the transfer andconsolidation of farmland for productivity improvement. In addition,
the Agricultural Affairs Committee system was reformed for the
first time in 60 years. Committee members are now selected by the
major to promote optimization of local farmland use.

14

Invest Japan Report 2015

Future efforts in the agricultural sector- Focus on the countries and items with more potential in orderto achieve 1 trillion yen in export earlier than 2020
- Integrated reform of agricultural cooperatives, Agricultural
Affairs Committees and agricultural corporations for the firsttime in 60 years; encourage independent activities of local
agricultural cooperatives to increase added value- Revision of rice production adjustment from the rice produced in 2018
- Enhance the function of the Farmland Intermediary Management
Institutions for concentration and consolidation of farmland- Develop export organizations by item
Japanese agricultural products and processed foods are rated
highly abroad and their export is increasing. In order to encourage
the trend, the government is working to promote exports with thegoal of one trillion yen in exports by 2020 for the expansion of themarket and international sales for Japanese agricultural products.
As a result, the export of agricultural, forest and fishery products
increased by 11.1% year on year to a record 669.0 billion yen in
2014. The total for the period from January to November of 2015
increased by 22.0% on a year-to-year comparison, which promises a
significant expansion of the market.
Regarding the incorporation of agricultural production, therequirement of corporations to own farmland was eased (the bill
was enacted in 2015). The government will promote partnership
between companies and farmers, expansion of the business scale,innovation of management and technologies and increase in added
value. Establishment of agricultural corporation producing andprocessing farm products is already permitted in National StrategicSpecial Zones. In response to these reforms, companies fromdifferent industries are entering into agriculture-related businesses
and a new market is developing.

Ⅱ Toward Improvement of the Business Environment

columnEasing the requirements for establishment of subsidiaries by foreigners
The "Second Report of Recommendations on Regulatory Reform" (the Regulatory Reform Council, June 13, 2014) and the “Implementation
Plan for Regulatory Reform” (Cabinet Decision in 2014) include a review of the requirement for a foreign company trying to register acompany in Japan to have at least one representative resident in Japan.
In the past, when a foreigner tried to register a subsidiary (Japanese arm), at least one representative was required to be resident in Japan.
However, for a foreigner to obtain a visa to be resident in Japan, a certificate of the registered matters of the subsidiary where the person
would work was required. Consequently, a foreigner sent from the head office alone could not register a subsidiary.
For the abolishment of the requirement, JETRO summarized requests from foreign companies for regulatory reform that were sent to its“Invest Japan Hotline (described later)” and requested improvement through the Hotline on Regulatory Reform of the Cabinet Office.
After consideration in the Ministry of Justice through a working group of the Regulatory Reform Council, the ministry abolished therequirement that at least one representative needs to be resident in Japan for registration of subsidiaries in Japan by foreigners. The
abolishment enabled establishment of subsidiaries in Japan by foreigners alone, which facilitates business launch in Japan (see Chart 2-2).
Chart 2-2 Setting up a subsidiary by foreigners who do not reside in Japan

Visa ⇒ Register to local government to get address
Visa application
Ministry of JusticeJapanese subsidiary

Required
document for visa
application
Certiﬁcate ofRegistration

Foreign executive directors

No longer
requiredCompany
registration
application

Address of executive
director in japan

Immigration
BureauCivil Aﬀairs
BureauInvest Japan Report 201515

Ⅱ

176,168 yen or 16.5% increase from 151,174 yen of 2014.
The total amount of travel expenditure by foreigners visiting Japan
also reached a record high at 3,477.1 billion yen in 2015 greatly
exceeding 2,027.8 billion in 2014 (71.5% increase compared withthe previous year) (Chart 2-3). According to the survey conducted by
the Japan Tourism Agency, what the visitors most want to do during
their trip in Japan is “eat Japanese food” followed by “shopping”.
Business opportunities are expanding for the food service industry
and duty-free shops. With the increase of tax-free items, foreignaffiliated duty-free shops are attracting attention for their ability
to attract customers and have succeeded in attracting a large
number of foreign tourists taking advantage of their network withforeign travel agencies and serving customers with their respective
languages.

(3) Setting tourism as a key industry
Inviting foreign tourists is one of the effective means to increase
domestic consumption and revitalize local economy. The governmentof Japan is making various efforts including tourism infrastructuredevelopment and promotion in order to create a society attracting
many people from around the world, taking advantage of thepotential of Japan’s tourist attractions.
The government set a goal to increase foreigners visiting Japan
to 20 million and worked to ease visa requirements. First, visa
requirements were relaxed for 14 countries with focus on ASEAN,
followed by an increase in the slots for international routes in
Haneda Airport by 30,000 (60,000 → 90,000) and increase of thelanding slots at Narita Airport to 300,000. Furthermore, exemptionof consumption tax for foreign tourists is expanded to coverconsumables including foods, drinks and cosmetics.
These efforts contributed to the increase of foreigners visiting
Japan by nearly 30% year-on-year to 13.41 million in 2014. In 2015,
the number increased by 47% year-on-year to a record-high 19.74
million, almost reaching 20 million that is the goal by 2020.
The increase has big ripple effects expanding the market including
LCC (Low-Cost Carrier), hotel businesses and OTA (on-line travel
agencies). Restrictions were removed in the travel-related fields andforeign-affiliated companies entered the market one after another.
Investment is active especially in the hotel industry with a 2,137.9
billion yen market where shortage in guest rooms has been an issue
in recent years. Foreign-affiliated LCCs are also expanding theirroutes to gain the market.
In addition, expenditure of foreign tourists in Japan increased
greatly. According to a survey of expenditure by foreigners visiting
Japan conducted by the Japan Tourism Agency, the average total trip
expenditure per foreigner visiting Japan in 2015 was a record-high(4) Strengthening corporate governance
The idea that a stock company is owned by the investors/
shareholders and that its stakeholders are shareholders is firmly
established in the UK and US. In Japan, a company is regarded
to be a public institution that has a wide range of stakeholders
including employees, business partners and customers in addition
to shareholders, and obligation to contribute to society including
maintaining employment. As a result, against the background of amanagement system unique to Japan such as the board of directors
consisting of internal members, the main bank system, stock crossholding and lifetime employment, financial institutions, business
partners and employees often have a certain influence on thecompany management.
To be a global enterprise attractive for investors, however, it isnecessary to have a transparent “system” to respond to diverse
values.

Chart 2-3 Foreign visitor arrivals and their consumption amount（Thousand people）

19,73720,000Foreign visitor arrivals
15,0003,477

Consuimption amount

13,413(Billion yen)
4,000

3,000

10,36410,000

8,358
6,219

5,000
816
0

2011

1,085

2012

2,000

2,028
1,417

2013

1,000

2014

2015

0

〔Source〕"2015 Foreign Visitors & Japanese Departures"(Japan National Tourist Organization),"Consumption Trend survey for Foreigners Visiting Japan"(Japan Tourism Agency)

16

Invest Japan Report 2015

Ⅱ Toward Improvement of the Business Environment

The government is creating a system to change the mindset ofmanagement and back aggressive business judgment to win global
competition by strengthening corporate governance in line with thegrowth strategy, so that institutional investors and companies cancooperate to increase “earning power” that is medium- to longterm profitability and productivity of Japanese companies.
In February 2014, the “Principles for Responsible Institutional
Investors” «Japan's Stewardship Code» were formulated as a codeof conduct for institutional investors investing in listed companies
in Japan. They are expected to deeply understand the companies
in which they invest as “shareholders” while creating a process forsharing a common purpose (by encouraging companies).
Furthermore, the Companies Act was revised in June 2014 to urge
companies to introduce outside directors (the revised Companies Act
was enforced in May 2015).
In addition, the Tokyo Stock Exchange started application of the“Corporate Governance Code,” which compiles key principles
contributing to effective corporate governance and, together with
the Stewardship Code, demands a new discipline from companies.
The “Corporate Governance Code” has two characteristics: (1) aprinciple-based approach instead of a rule-based approach; and (2) aComply-or-Explain approach. In (1) the Corporate Governance Codeis applied according to the situation of the individual companies,
while in (2) the companies should comply with the principles or
explain why they do not comply. The body text includes a strict
statement: “Offering a superficial explanation using boiler-plate
expressions would be inconsistent with the concept of ‘comply or
explain.’”
The Corporate Governance Code provides Principles andSupplementary Principles under the five General Principles:(1) Securing the Rights and Equal Treatment of Shareholders;(2) Appropriate Cooperation with Stakeholders Other Than
Shareholders; (3) Ensuring Appropriate Information Disclosure andTransparency; (4) Responsibilities of the Board; and (5) Dialogue
with Shareholders, and calling for discipline including appointment

of at least two outside directors at listed companies (Chart 2-4). In
reaction to this, the number of companies that appointed outside
directors increased greatly (chart 2-5).
Chart 2-4 Formulation of codes and Companies Act
modifications regarding corporate governanceJapan's Stewardship Code (formulated on Feb. 26, 2014)
・Monitoring investee companies to understand their situation
・Constructive engagement with investee companies to solve
problems
・Clear policy on voting and disclosure of voting activity
・To contribute positively to the sustainable growth of investee
companies through appropriate engagement and proper
judgments, etc.

Ⅱ

Companies Act modification (effective from May 1, 2015)
・Founding companies with auditing committee governancestructure
・Stricter conditions for becoming independent outside director
・Mandatory explanation if it is not appropriate to appoint outside
directors

Corporate Governance Code (applied from Jun. 1, 2015)
・Securing the rights and equal treatment of Shareholders- Disclosure of the policy regarding cross-shareholdings
・Appropriate cooperation with stakeholders other thanshareholders- Ensuring diversity, including active participation of women
・Ensuring appropriate information disclosure and transparency- Full disclosure of business strategies and policies on
remuneration of the senior management and directors
・Responsibilities of the board- Appointing at least two independent directors
・Dialogue with Shareholders- Senior management and directors to engage in dialogue withshareholders etc.
〔Source〕Japan's Stewardship Code, Corporate Governance Code etc.

Chart 2-5 Appointment of outside directors and independent directors by TSE-listed companies

（％）
100
90
80
70

Ratio of companies with two or more independent directors
61.4

60
50
40
30

31.5

20
10
0

87.0

Ratio of companies with independent directors

12.9
2010

34.6

38.8

46.9

48.4

15.0

16.7

18.0

2011

2012

2013

21.5
2014

2015

〔Source〕"Appointment of Outside Directors and Independent Directors by TSE-Listed Companies", (Tokyo Stock Exchange)

Invest Japan Report 201517

(5) National Strategic Special Zones
In order to enhance the international competitiveness of theindustries and promote the formation of bases for international
economic activities through intensive structural reform of economic
society, the government designated National Strategic Special
Zones and is promoting regulatory reform and other measures in acomprehensive and focused manner.
National Strategic Special Zones have been created to make abreakthrough for bold regulatory reform in various fields (education,
medical care, agriculture, employment, etc.) in order to realize thegrowth strategy. Six zones were designated as the first step. In
addition, three Regional Vitalization Special Zones and four National
Strategic Special Zones were designated in September 2015 andDecember 2015, respectively (Chart 2-6).
There are many approved special zone plans that are advantageous
for foreigners and foreign companies as described below.

<Examples of the projects based on the approved special zone plans>(1) The Tokyo One-Stop Business Establishment Center was set up in
the Tokyo Area for further improvement of one-stop procedurefor business establishment (the details are to be described later).
(2) A system for quick provision of advanced medical care with the
combined use of both services covered by public health insurance
and advanced healthcare services not covered by the insurance isintroduced in the special zones in the Tokyo and Kansai areas. The
system covers all technologies using medicines already approvedin the US, UK, France, Germany, Canada or Australia but not
approved or applicable in Japan.
(3) An eye hospital (with 30 new beds) will be opened in the Kansai
area with the aim of promoting practical application of cuttingedge medical technologies related to iPS cells taking advantage ofthe special provision of the Medical Care Act concerning hospital
bed rules. Research and development will be conducted using
the special provisions for taxation on iPS cell–derived platelet
preparations.

Opening of the Tokyo One-StopBusiness Establishment Center
In April 2015, the Tokyo One-Stop Business
Establishment Center (operated by the state
and the Tokyo Metropolitan Government) under
the Council on Tokyo Area National StrategicSpecial Zones was opened in JETRO headquarters(Akasaka, Tokyo).
In October 2015, a counter of notaries forcertification of articles of incorporation wasadded. The center handles all procedures forbusiness establishment (support for preparation
and acceptance of application for registration, tax
matters, pension/social insurance, immigrationc o n t ro l , a n d o t h e r m a t t e r s n e c e s s a r y f o r
incorporation and business launch) by foreignaffiliated and other companies in the Tokyo
metropolitan area.
The opening ceremony on March 31, 2015,
was attended by Prime Minister Abe (third fromthe left of the photo), Tokyo Governor Masuzoe(second from the left), Minister of State for the
National Strategic Special Zones Ishiba (at the farleft) and JETRO Chairman Ishige (at the far right).
Their attendance demonstrated the government’s
commitment to the promotion of investments inJapan.

18

Invest Japan Report 2015

Health insurance
Pension insurance
Labor insurance
Employment
insurance
Immigration(Visit on March 31, 2015)

Tax matters(national/metropolitan taxes)

Company
registration
Certification of articles
of incorporation(Inside of the center)Ⅱ Toward Improvement of the Business Environment

Chart 2-6 National Strategic Special Zones

National Strategic Special Zones(designated in Sep. to Dec. 2014)

Niigata City, Niigata Prefecture

Regional Vitalization Special Zones

Center for Agricultural Reform in Large-Scale Farming(designated in September 2015)• Special provisions (SP) on agricultural production corporation• SP on the roles of agricultural committees and local municipalities• SP on restaurants in farmland• Application of the credit guarantee system to farming• Creation of Employment Consultation Center (ECC)

National Strategic Special Zones(designated in December 2015)

Kansai Area (Osaka, Hyogo and Kyoto prefectures)

Center for innovation in medical care, entrepreneurial support• SP on medical treatment combining insured and uninsured services• SP on regulations on number of hospital beds
• SP on road law about area management• SP on hotel business law about utilization of historic buildings• SP on taxation for capital investment• Creation of ECC• SP on act on securing a stable supply of safe blood products• SP on Child Welfare Act concerning nursery teacher qualifications

Semboku City, Akita Prefecture

Center for reform of agriculture and forestry/
medical care
• SP on act concerning utilization of national forest land
• SP on agricultural production corporation

Yabu City, Hyogo Prefecture

Sendai City, Miyagi Prefecture

Center for agricultural reform in hilly andmountainous areas

Center for reform on women’s active social
participation and start-ups• SP on roles of agricultural committee and local
municipality• SP on agricultural production corporation• Application of credit guarantee system to farming• SP on hotel business law about utilization of historicbuildings• SP on law concerning stabilization of employmentof older persons

Kitakyushu City,
Fukuoka Prefecture• SP on act to promote specified non-profit
activities• SP on Child Welfare Act concerning nurseryteacher qualifications

Chiba City,
Chiba Prefecture

Tokyo Area (Tokyo, Kanagawa Prefecture, Narita City of Chiba Prefecture)
International business and innovation hub

Hiroshima
Prefecture
Imabari City,
Ehime Prefecture

Fukuoka City, Fukuoka Prefecture
Center for employment system reform forbusiness start-ups• SP on road law about area management• SP on regulations on number of hospital beds
• Creation of Employment Consultation Center (ECC)

Okinawa Prefecture

Center for international sightseeing• SP on road law about area management• SP on Child Welfare Act concerning nursery teacher qualifications• SP on the Act on Special Measures Concerning Urban Renaissance• SP on the City Planning Act• SP on road law about area management• SP on medical treatment combining insured and uninsured services• SP on regulations on number of hospital beds
• Medical activities allowed for foreign doctors through bilateral agreement• Creation of ECC• Creation of the One-stop Business Establishment Center• SP on the Notary Act• SP on Child Welfare Act concerning nursery

Aichi Prefecture

The center for general reform for education, employment andagriculture for fostering industry leaders• SP on the roles of agricultural committees and local municipalities• Application of the credit guarantee program to farming• SP on agricultural production corporation• SP on restaurants in farmland• SP on medical treatment combining insured and uninsured services• SP on business concerning road management by public corporation

Source: created based on the National Strategic Special Zone pages of the Office of the Prime Minister

Invest Japan Report 201519

(6) Promoting activities by foreign professionals
The government is making various efforts for utilization of foreign
professionals to address the decline in the production-age populationaccompanying the declining birthrate and aging population, while
creating innovations through introduction of diverse values toworkplaces.
First, the Points-Based System for Highly Skilled Foreign Professionals,
introduced in May 2012, was reviewed in December 2013. Points forresearch performance and professional degree are raised or added
and the conditions for bringing parent(s)/a domestic worker and otherpreferential treatments are eased so that more people are certified as
skilled professionals to enjoy the preferential treatments.
In April 2015, a new status of residence named “Highly Skilled
Professional (i)” was created with preferential treatment equivalent
to that granted to highly skilled foreign professionals who have astatus of residence of “designated activities.” After staying in Japanfor a certain period of time, they are designated as “Highly Skilled
Professional (ii)” and limitations on their activities are greatly reduced(Chart 2-7).
However, according to a questionnaire survey for foreign companies
conducted by JETRO (to be described later), only 2% of the companies
used the system. So, it is necessary to further publicize the system.
From 2000 to 2012, the ratio of foreign workers increased by only 0.2
points (from 0.8 to 1.0%) with the ratio still remaining low. The ratioof foreign workers in other countries is 37.0% for Singapore, 16.2%
for the US, 8.0% for the UK and 1.8% for South Korea. Against thisbackground, the government announced the following policy:- Promote settlement in Japan 5 to 10 years from now by
granting permanent residency more flexibly to highly skilled
persons and those who completed higher education in Japan- Create success stories of foreign professionals working
actively in various fields in Japan- “300,000 foreign students plan” and doubling the number offoreign IT engineers coming to Japan from 30,000 to 60,000- Clarify the requirements for residence in the IT and tourism
sectors (hotel and inn front desk workers)
The development of a legal system for strengthening the activities
of foreign professionals has been steadily advanced. The revisionof the Act on the National Strategic Special Zones (enforced in
September 1, 2015) includes the easing of the requirements forthe status of residence to promote acceptance of diverse foreign
nationals including entrepreneurs, and the utilization of “foreign
human resources for domestic work support.” Employment of
human resources taking advantage of the Economic Partnership
Agreement (EPA）and the system of technical intern training
for foreigners are also spreading. Fundamentally reviewing thesystem of technical intern training for foreigners, the government
tightened the control and extended the period from three to five
years. Addition of the field of nursing care will be considered in the
future. Efforts to strengthen the activities of foreign workers arealso incorporated in the Japan Revitalization Strategy 2014 (Cabinet
Decision in June 2014). As an urgent and temporary measure towardthe 2020 Tokyo Olympic and Paralympic Games, employment offoreign workers in the construction and shipbuilding fields started in
April 2015.

Chart 2-7 Revision of the "Points-based Preferential Immigration Treatment for Highly Skilled Foreign Professionals"“Points-based Immigration System for Highly Skilled Foreign Professionals” was introduced in May 2012, and was enhanced in
December 2013 in order to make the system better and easier to get higher points. In April 2015, a new status was created.

Enlargement of Principal conditions

Example of point calculation

Principal Revised Benefits

・Lower the minimum level of annual income
to 3 million yen.
・Higher points for achievement in advanced
academic research.
・Higher points for Japanese proficiency.
・Higher points for degree of Japanese
academic institution.
・More points given for certain qualifications (eg.
MBA, MOT).
・Additional points for SMEs to utilize thesystem.
・Professionals who are planning to stay lessthan 1 year can also benefit from the system.

A total of more than70 pts qualifies as skilled
professional.

・Lower the minimum level of annual income forgetting permission for bringing a parent(s).
・Permission for bringing a parent(s) for both
men and women and spouse in case of
pregnancy.
・Lower the minimum level of annual income
from 15 million to 10 million yen for permission
for a domestic worker to accompany.
・Salary of spouse and that received fromoverseas employer can be counted to get
permission for parent residence.
・Highly Skilled Professional(i) → Highly Skilled
Professional(ii)（Granted an indefinite periodof stay）（April 2015 ～）Master’s degree : 20pts
MBA：additional 5pts
7 year experience :15 pts
6 mill. JPY salary : 20 pts
Published papers : 25 pts

Total : 85 pts● Permission to engage in multiple types of activity during stay in Japan ● Granting of 5-year period of stay ● Relaxation of

Principal
Benefits

residence requirements for granting of permission for permanent residence (eligibility for permanent residence in around 5 years)● Preferential processing of immigration and residency procedures ● Permission for spouse of highly skilled foreign professional towork ● Permission for bringing a parent(s) to accompany the highly-skilled foreign professional to Japan under certain conditions● Permission for a domestic worker to accompany the highly-skilled professional to Japan under certain conditions〔Source〕“Points-based Preferential Immigration Treatment for Highly Skilled Foreign Professionals” （Immigration Bureau of Japan）

20

Invest Japan Report 2015

Ⅱ Toward Improvement of the Business Environment

Increasing the attractiveness of Japan – Labor market reform
Problems of low productivity and labor shortage due to thedeclining birthrate and aging population have been often suggested
in discussions on the labor market in Japan. To address these
problems, the government emphasizes the promotion of activities offoreign workers (see the preceding page), women’s empowerment,
improvement of the labor force participation rate of the elderly andother efforts to use diverse workforces, and improvement of laborproductivity through improvement of work-life balance represented
by reduction of long hours and introduction of various values andworking styles to promote innovation.
As a result, Japan’s labor force increased by 0.1 million comparedwith the previous year to 65.87 million (as of January 1, 2015) while
the total population of Japan is decreasing. Workforce over 65
years old reached a record-high 6.96 million (0.46 million increaseyear-on-year). The number of female workers was 28.24 million(0.1 million increase year-on-year) contributing to the increase of
the total workforce (reference: Labor Force Survey by the Ministryof Internal Affairs and Communications). During the two and halfyears since the launch of the Abe administration, female employees
increased by 0.78 million and about 30% of 1,300 member
companies of Keidanren announced a plan to increase female
executives and managers.
Promotion of women in workplace• Support balance of work and childcare (arrange childcare formore children)• Reduce long working hours• Promote women to managerial posts• A new law to require companies to formulate an action planfor promotion of women in the workplace (The Act to Promote
Women in Workplace) was established (companies employing
more than 300 workers are obliged to set and publish numericalgoals including the ratio of female new recruits and managers.
A listed company should promise to appoint at least one female
executive.)columnReforming working styles and enhancing the capabilities ofindividuals• A proposal to revise the Labor Standards Act incorporatinga system of payment not based on working hours but basedon results has been submitted to the current Diet session.
An advanced professional labor system where employees areevaluated based on results rather than working hours wascreated (applicable from April 2016).
• Strengthening the efforts to prevent overworking• Promoting variable working styles through reexaminationof the flex-time/discretionary working systems (“the way ofrecommendation on salaries and points of the recommendationof the year” compiled by the National Personnel Authority inAugust 2015 also recommended expansion of the flex-timesystem).
• Introducing the Self Career Check (tentative name) system
to create a desired career path through regular self-check of
capacity to perform duties• Establishing new higher education institutions for practical
vocational education as colleges for professionals• Introducing “evening activities” to encourage starting work at
half past seven in Kasumigaseki, Tokyo, where ministries andagencies of Japan are concentrated, in July and August 2015
The initiatives above are advanced by the government. The
move to introduce systems enabling diverse working styles
including reduced working days, short-time work and telework/
telecommuting is spreading also among private companies aiming
to control overworking and improve business efficiency.

news・pickup
Abe administration announced “New Three Arrows”
First
arrow

strong economy

Secondarrow support for childrearing

Third
arrow

improved social security

In September 2015, the Abe administration announced its new three arrows focusedon the three fields of strong economy, support for childrearing and social security.
They will be compiled as a plan for “Promoting Dynamic Engagement of All Citizens”
toward 2020 as a driving force for economic growth.
- First arrow: strong economy
Aiming to reach a GDP of 600 trillion yen, resolutely advancing revolution in
productivity and policies to attract investments and human resources to Japan- Second arrow: support for childrearing
Eliminating childcare waiting lists, expanding the free preschool education andraising the birthrate from 1.4 to 1.8- Third arrow: improved social security
Assisting workers in balancing work and family care to eliminate the case of leaving
a job to take care of a family member

Invest Japan Report 201521

Ⅱ(7) Further integration into the world economy
The government of Japan is promoting further integration into
the world economy with the aim of promoting the developmentof Japan’s external economic relationships and domestic structuralreform through establishment of global rules of trade andinvestment, infrastructure export and overseas expansion by
Japanese companies and inward direct investments.
The government is implementing various measures for integration
into the world economy and incorporation of global economic
growth by promoting the TPP (Trans-Pacific Strategic Economic
Partnership), RCEP (Regional Comprehensive Economic Partnership),Japan-China-South Korea FTA, the Japan-EU FPA and other economic
partnerships.
Japan’s participation in the TPP accelerated the negotiations ofother mega FTAs (refers here to FTAs participated in by two or morecountries/regions with a large economy). The TPP, which reachedagreement in principle in October 2015, decided to establish rules inan unprecedented wide range of areas including trade, investment/
service liberalization, government procurement and protection of
intellectual properties. Participation in an open framework of thislevel is expected to expand overseas business opportunities forJapanese companies while attracting more investments into Japan
from abroad with the increased attractiveness of Japan as a businesshub. Because member countries of other mega FTAs are sharply
conscious of the TPP, the TPP agreement in principle is expected toaccelerate the negotiations of RCEP and other FTAs.
RCEP countries also participating in the TPP negotiations are
Japan and four ASEAN countries (Singapore, Malaysia, Vietnam
and Brunei), Australia and New Zealand. The United States is notparticipating in the RCEP negotiations but its investment in the
RCEP region is larger than Japan’s investment in the region. For
these reasons, Japan has the potential to become a node of multiple
economic integration areas (Chart 2-8).

Chart 2-8 The member countries of the TPP negotiations and the RCEP negotiations

Countries joined in the negotiations of both

TPP and RCEP

China
India
South Korea
Myanmar
Laos
ThailandPhilippines
Cambodia
Indonesia

RCEP

22

Invest Japan Report 2015

Japan

Vietnam
Malaysia
Singapore
Brunei
Australia
New ZealandUnited States
CanadaMexico
Peru
Chile

TPP

Ⅱ Toward Improvement of the Business Environment

2. Measures to attract foreign companies
At the end of 2012 when the Abe administration was installed, thegovernment set a goal to double the stock of inward FDI in Japan to
35 trillion by the end of 2020. The comprehensive measures for thispurpose demonstrate the government’s commitment to attractionof foreign capital. In addition to the measures listed below, thegovernment is providing individual support for foreign companies
launching business in Japan and widely dispatching information
to encourage investment in Japan. These efforts are introduced in
Chapter 4 “Investment Promotion Projects of JETRO.”(1) The Council for Promotion of Foreign Direct
Investment in Japan
In order to promote FDI in Japan, the Council for Promotionof Foreign Direct Investment in Japan was established with the
purpose of contributing to the initiatives by the relevant government
ministers and committees aimed at realizing necessary regulatory
reforms in addition to acting as a "control tower" for activities
aimed at discovering and attracting investments while hearing

opinions directly from foreign enterprise managers and others. The
council consists of the Minister of State for Economic and Fiscal
Policy, the Minister of State for Regulatory Reform, the Minister forInternal Affairs and Communications, the Minister of Foreign Affairs,
the Minister of Economy, Trade and Industry, the Minister in Chargeof Regional Revitalization and other members.
The members reaffirmed the importance of the attraction offoreign companies and shared the ministries’ commitment to
the promotion of inward FDI in Japan. Representatives of foreigncompanies appreciated the government’s efforts but pointed out
insufficient overseas efforts for publicity of the changes in Japan.
The members also confirmed the importance of attracting foreigncompanies in regional vitalization.
The Council (held on March 17, 2015) adopted the "Five Promises
for Attracting Foreign Businesses to Japan" (Chart 2-9) including
improvement of the convenience of public Wi-Fi which is often
requested by foreigners, enrichment of the educational environment
for children from overseas and breaking down of language barriers.
Since then, public and private efforts have been accelerated
to realize the promises: results include free Wi-Fi in public andcommercial facilities and use of foreign credit cards.

Chart 2-9 "Five Commitments for Attracting Foreign Businesses to Japan"

1. Overcome language barriers
Retailers
Set the standard for QR codes for mobile phones to read productinformation in English and other languages
Restaurants
Make multiple-language menus widely available

3. Accommodate business jets at local airports
Customs, Immigration and Quarantine (CIQ)
Consider accepting business jets if CIQ offices are notified one
week prior to the flight at local airports (currently requiring twoweek advance notice)

2. Facilitate better Internet connectivity
Free Wi-Fi
Create an environment in which foreign visitors can use freepublic wireless LAN (Free Wi-Fi) simply and easily at various
locations around cities

4. Enhance educational environment for foreign children
International schools
Encourage prefectures to loosen their criteria for
accrediting international schools as Miscellaneous Schools

5. Strengthen services to support foreign enterprises
Consultation services

Establish a system for State Ministers to act as advisors for foreign businesses〔Source〕"Abenomics is progressing" (The Cabinet Office), June 2015(2) Incentives
The government provides various incentives including subsidies to attract foreign companies.
- Subsidy Program for Projects Promoting Foreign Direct Investment, Site Location and Regional Development in Japan (Subsidy
Program for Global Innovation Centers) <2015 supplementary budget>
Subsidy to establishment of innovation centers in Japan by foreign companies and experimental studies and F/S conducted in collaboration
with Japanese companies and other organizations in the fields of regenerative medicine and IoT where growth is expected.
- The Act on Special Measures for Promotion of Research and Development Business, etc. by Specified Multinational Enterprises (Actfor Promotion of Japan as an Asian Business Center) <Enforced in November 2012>
The incentives (income tax breaks, reduction of patent fees, shortened investment procedures, assistance for fund raising and accelerationof entry examinations applied for by foreign nationals who intend to work in Japan) are applicable to new R&D and regional headquarters
operations conducted in Japan by global companies.
(For details, visit the website of the Ministry of Economy, Trade and Industry at:
http://www.meti.go.jp/english/policy/external_economy/investment/act_information.html)

Invest Japan Report 201523

Ⅱ

In recent years, local governments provide big incentives to attract foreign companies. Below is a list of their incentives for foreign affiliatedcompanies:
Chart 2-10 Incentives of local governments for foreign-affiliated companies
Prefecture/city Name of subsidies/incentives

As of July 2015

Incentives of local governments for foreign-affiliated companies

Fukushima
Pref.

Subsidy for Investment Support
Subsidizing portion of rent expenses, consultant commissioning fees, expenses required for incorporation
Project for Foreign Corporations(registration of corporation, acquisition of resident status, etc.) Eligible companies are those establishing facilities forEntering into Fukushima Prefecture manufacturing, R&D and/or sales in Fukushima Prefecture for the first time in the fields of pharmaceuticals, medical
for Businessequipment, renewable energy and/or robotics (Subsidy rate of 3/4, with up to 28m yen per company)

Chiba Pref.

Office Lease Subsidies for ForeignSubsidizing portion of rent for offices or other facilities (1/3 of annual rent x 1 year, maximum 600,000 yen for
Affiliated Companies in Chiba
companies with a number of employees between 1- 5 and 1.8m yen for more than 5)
Prefecture

Chiba City

Facility Rent Subsidy for ForeignAffiliated Companies

Subsidizing portion of rent (1/2 of rent x 3 years, cumulative total limit of 3m yen), reduction of corporate inhabitanttax (municipal tax) (1/2 x 3 years)

Tokyo
Metropolis

Special Zone for Asian
Headquarters Subsidy

Subsidizing portion of expenses related to the establishment of a new Asian regional headquarters or R&D center (upto 1/2 of actual expenses paid to experts such as administrative scriveners and recruitment agencies, maximum 5m yen
per company)

Kanagawa
Pref.

Financing grant to promote newlocations of foreign businesses

Subsidizing portion of rent for factories or research laboratories (1/3 of monthly rent x 6 months, maximum 3m yen)

Shizuoka Pref.

Office rent subsidy for foreignaffiliated or foreign companies

Subsidizing portion of office rent (1/2 of monthly rent x 1 year, maximum 500,000 yen in total)

Niigata Pref.

Subsidy for Office Rent for ForeignSubsidizing portion of rent (1/2 x 3 years, maximum 3m yen [up to 1m yen per year for 3 years])Affiliated Companies

Niigata City

Foreign company businesspromotion subsidy

Subsidizing registration fees (maximum 150,000 yen per company) and rent (1/2 of monthly rent x 2 years, maximum
50,000 yen per month)

GNI Business Start-up Support
Program for foreign-affiliatedcompanies

Subsidizing expenses for incorporation and commencement of operations of foreign-affiliated companies in Greater
Nagoya Area
(1. Expenses required for the establishment of corporations. 2. Expenses for recruitment advertising, brokerage cost
paid to real-estate agents, market research, etc.). Maximum 500,000 yen each for #1 and #2 per company)

Subsidy for foreign affiliatedenterprises planning to establish
an Asian base in Mie

Subsidizing 20% of depreciable assets invested by foreign-affiliated companies when establishing manufacturingbases (factories) (maximum 500m yen)

Aichi Pref.
Gifu Pref.
Mie Pref.
Nagoya City
Mie Pref.

Osaka Pref.

Osaka Prefecture's Subsidies for
Subsidizing portion of investment of foreign-affiliated companies establishing new corporate headquarters or AsianInvestment Promotion (Subsidy for regional headquarters in Osaka Prefecture (5% of investment on building and capital goods or 1/3 of office rent, with
Foreign-affiliated Companies)
limitation depending on number of full-time employees)
O-BIC Support Program for Foreign Subsidizing expenses for registration (up to 100,000 yen per company) and acquisition of resident status (up to 50,000
Companies
yen per company)

Hyogo Pref.

Subsidies for Office Rent for
Foreign-Affiliated Companies

Subsidizing portion of office rent (up to 1/2 x 3 years, maximum 1,500 yen/square meter per month and 2m yen per
year)

Kobe City

Subsidy for Office Rent

Subsidizing portion of office rent (up to 1/2 x 3 years, maximum 1,500 yen/square meter per month and 2m yen per
year)

Subsidy for Visit to Fukuoka

Subsidizing portion of travel expenses by foreign-affiliated companies to or within Japan (eligible companies are thosein fields of automobiles, IT, semiconductors, biotechnology, environment and robots, which are considering entry into
Fukuoka Prefecture).
1. Travel from regions in Japan other than Fukuoka Prefecture: up to 100,000 yen per company 2. Travel from foreigncountries other than Europe/America: 150,000 yen per company 3. Travel from Europe/America: up to 200,000 yen
per company

Incentives to encourage
establishment of its subsidiary inJapanSubsidizing portion of registration fee (foreign-affiliated companies in fields of automobiles, IT, semiconductors,
biotechnology, environment and robots; 1/2 of registration fee, maximum 150,000 yen)

Fukuoka Pref.

Subsidies for Promoting BusinessFukuoka City Establishment (Business TargetingAsia)

1. For investment in the priority areas: For ownership: subsidizing 30% of acquisition cost of land, 10% of acquisition
cost of buildings, machinery and equipment up to 3b yen
For lease: subsidizing 1/3 of annual rent of buildings, machinery and equipment for 4 years (cumulative total limit of
100m yen and annual limit of 25m yen)
2. For foreign and foreign-affiliated companies entering Japanese market for first time: subsidizing 1/2 of cost formarket research, obtaining approvals and registration for licenses, interpretation fees and recruiting employees (up to
3m yen)Subsidy for Business Setup for
Foreign Affiliations in Kumamoto
Prefecture

Subsidizing 5% of investment amount by foreign-affiliated companies in R&D or in manufacturing in 5 targeted fields(semiconductors, mobility, environment, food and life, social systems) (maximum 150m yen)

Kumamoto
Pref.

〔Note〕Only listing the incentives that are relevant to foreign companies〔Source〕Website of each municipality

24

Invest Japan Report 2015

Ⅱ Toward Improvement of the Business Environment

3. Conception of the business environment inJapan among foreign-affiliated companies～ From the Survey on Japan’s Investment
Climate 2015 results~
JETRO conducted a survey on the investment environment in Japan
from July to August of 2015 and analyzed the attractions of doing
business in Japan, and issues and obstacles to entering the market.
The questionnaire was sent to about 1,000 companies with focus on
foreign affiliates supported by JETRO in their entry into the Japanesemarket. 150 companies responded.
Regarding the future investment plan, nearly 80% of themanswered that they will expand their business, while over 70%
answered that they will increase number of employees, showing
strong motivation to invest. The sharp decline in the ratio ofcompanies choosing “high business costs” that had been indicatedto be the biggest obstacle to investing in Japan confirmed theirrecognition that Japan is no longer a high-cost country.

(1) One-third of the companies are feeling
improvement in the business climate
32.9% of the companies answered that the business climate is“becoming somewhat better” or “becoming significantly better”
recognizing already the effect of the government’s efforts (Chart 2-11).
As especially effective measures, each of “regulatory reform” and“simplified administrative procedures” were chosen by about half ofthe respondents (Chart 2-12). Other factors leading to the improved
business climate chosen by them include “introduction of premium
to promote the development of new drugs and a transparent
examination and approval system” as specific regulatory reforms in
addition to “weaker yen” and “an optimistic mood.”(2) Nearly 80% of the companies are planninginvestment expansion
To the question about business plans within the next 5 years,
77.0% of the companies answered they will “expand business,”while companies answering they will “scale down business” or “exitJapan” were only 1.4% (two companies), respectively (Chart 2-13,p.26). The results show prosperous business of foreign affiliatedcompanies and a prospect for active investment in the future.
Similarly, 74.0% of the companies answered they will “increase
employees,” while only 4.1% answering they will “decrease” (Chart
2-14, p.26).

Chart 2-11 Do you feel that the Japanese business climate has become better?
It's becoming signiﬁcantly better+
It's becoming somewhat better

It's becomoing signiﬁcantly better

32.9%

It's becoming somewhat better

It hasn't changed much

It's becoming worse

2.0％

30.9%
61.7%

5.4%

n=149

Chart 2-12 Most effective measures (top two answers)

50.0%

regulatory reform

45.2%

simpliﬁed administrative procedures
33.3%

tax reduction
other

n=84

15.5%

Invest Japan Report 201525

Ⅱ

Chart 2-13 Business plans within 5 years

77.0%

We will expand our business

18.9%

We will maintain the status quo
We will scale down our business

1.4%

We will exit Japan

1.4%

other

1.4%

We will move from Japant to another country

0.0%

Chart 2-14 Projected number of employees in Japan

Number of employees
will remain the same
Number of employees
will decrease

Chart 2-15 Number of the increase

74.0%

Number of employees
will increase
21.9%
4.1%

n=148

n=108

(people)
1〜9

67.6%

10 〜 29
30 〜 49
50 or more

22.2%

n=146

1.9%
8.3%

Companies answering that they are planning business expansion in Japan were asked a question on concrete plans and reasons. Somecompanies plan to increase employees by hundreds while others showed a strong investment intention as follows:• “Looking for additional retail locations” (other services, North America)• “For sales increase and expansion in scale” (pharmaceuticals and cosmetics, Europe)• “Expand our Japan operation” (other manufacturing, Europe)• “Because of increasing sales and number of customers” (IT devices, Europe)• “Strengthen the function of our branch in Japan and strengthen its support system” (electric machine, Asia)• “Expecting sales increase” (vehicle parts, North America)• “Increase volume in Tokyo and open new offices in Osaka, Nagoya and Kobe.” (transportation, Europe)• “Planning to move to a larger office (twice the size) in October to strengthen business in Japan” (other services, Europe)• “Planning to add 1-2 domestic hubs in Japan within 5 years because of sales increase” (electric machine, Europe)• “Expecting sales increase” (vehicle parts, Europe)• “Planning to open another office in Kansai within 2 years” (information/software, North America)• “Hire additional staff due to the introduction of new products” (pharmaceuticals and cosmetics, North America)• “Because of increasing sales and number of customers” (information/software, Oceania)• “Planning to open a sales hub in Kansai to cover West Japan effectively” (electronic device, information/software, Europe)• “Planning to sell products through volume retailers across the country within 5 years. Sales are increasing” (precision instrument, Asia)• “Expansion of new offices to main cities other than Tokyo” (information/software, North America)• “Planning to expand the sales department and open a new branch office in Osaka” (other service, Europe)• “Because of expansion of market share in Japan and increase of sales” (information communication machinery/device, trade and wholesale, Asia)• “Planning to open an R&D center within 1-2 years” (electronic device, North America)• “Planning to open 5 stores within 2 years” (food/retail, Asia)• “Planning to add staff in logistics and sales due to the increase of sales across Japan within 5 years” (other services, Asia)(And many other answers)

26

Invest Japan Report 2015

Ⅱ Toward Improvement of the Business Environment

columnThe results of the survey on where to make subsequent
investment<Where to make subsequent investment (prefectures)>other 9.5％

In the survey conducted by JETRO, Tokyo, Osaka, Kanagawa
and Hokkaido ranked high on the list as specific places(prefectures) where the companies are planning to open offices
or shops as their subsequent investment.
Also, to the question about the factors which the companies
consider the most important when deciding on an investment
destination, “distance from customers” was chosen by morethan half of the respondents. After that, “ease of hiring good
employees,” “access or distance from other offices or places inJapan” and “costs (land, personnel, etc.)” ranked high on thelist.

Hiroshima 2.6％
Kyoto 4.3％
Hyogo 5.2％

Ⅱ
Tokyo 39.7％

Aichi 6.9％
Hokkaido 7.8％
Kanagawa 8.6％

Osaka 15.5％
n=116（project）<Most important factors when deciding on an investment destination>
0

10

20

30

40

50

60

（％）

distance from your customers

57.3%

ease of hiring good employees(multiple answers)
n=103

access or distance from other oﬃces or places in Japan
costs (land, personnel, etc.)
infrastructure
incentives and services of local governments
gatherings of partner companies or organizations
access from the global head oﬃce
market size (market chracteristics)
living conditions
image of the location
few natural disasters
other

Invest Japan Report 201527

(3) Attractions of doing business in Japan〜 The greatest appeal is “Japanese market” and “infrastructure” 〜
As attractiveness of doing business in Japan, 73.6% of thecompanies answered “Japanese market” while 73.5% chose “welldeveloped infrastructure (transportation, logistics, ICT, energy, etc.”

They are followed by “existence of good partners, companies oruniversities with outstanding technologies or products,” “highquality of R&D” and “everyday living conditions.”
As especially attractive factors of the Japanese market, an
overwhelming 72% answered “market size” followed by “suitable
for test marketing new products or services.”

Chart 2-16 The attractiveness of the Japanese market

73.6%① the Japanese market② well-developed infrastructure

73.5%(transportation, logistics, ICT, energy, etc.)③ existence of good partners, companies or universities
with outstanding technology or products

56.8%
52.1%

④ high quality of R&D⑤ existence of world famous global companies

45.8%⑥ everyday living conditions

45.1%⑦ possibility of ﬁnding highly
talented human resources

37.4%
36.8%

⑧ well-structured/eﬀective legislationsuch as a sophisticated IP system⑨ expected increase in demand and salesleading up to the 2020 Tokyo Olympics

33.6%⑩ deregulation

32.4%⑪ Japanʼs location (e.g. position as a gateway to Asia,
advantages as a base for regional headquarters, etc.)

29.5%⑫ attractive business systems and structures(business support systems, ﬁnancial incentives, etc.)

27.1%⑬ ease of raising fundsItʼs attractive

20.5%

Itʼs largely attractive
38.1%⑭ other

n=148（①）
、n=147（②⑦）
、n=146（③⑪⑬）
、n=144（⑥⑧⑫）
、n=143（⑨）
、n=142（④⑤⑩）
、n=84（⑭）

Chart 2-17 Two of the options which you think are most attractive in the “Japanese Market”

market size

38.9%

suitable for test marketing new products or services
consumer purchasing power

29.9%

advantageous for doing business in other markets (e.g. Asian countries)

27.8%

decrease in business costs
other

28

Invest Japan Report 2015

2.1%
9.7%

71.5%
n=144

Ⅱ Toward Improvement of the Business Environment(4) Obstacles to doing business in Japan:
significant reduction in answers choosing“high business costs”
As obstacles to doing business in Japan, more than 40% of thecompanies chose “complicated administrative procedures andbusiness permits,” “difficulty in finding human resources,” and“difficulty in communication in non-Japanese languages,” whereas
answers choosing “high business costs” decreased sharply.
In the previous survey in February to March 2013, “high businesscosts” was the No.1 obstacle but moved down to No.5 in this survey,
showing a big change in the perception of business costs in Japan.
Factors contributing to the improvement of business costs include,in addition to the weaker yen, office rent and housing rent for
expatriates in Tokyo that is far lower than that of Hong Kong andSingapore (Chart 2-20, 2-21, p.30).
By breakdown of business costs, payroll was chosen as an obstacleby the largest number of companies (Chart 2-25, p.31). However,compared with other Asian cities, manager’s salaries in Tokyo arelower than those in Singapore (Chart 2-22, p.30). The nominal wage
growth rate of these cities is 3% to 7%, which is higher than therate of Tokyo. The wage in the cities that is now lower than thelevel of Tokyo is expected to rise to the same or a higher level withinseveral years.
In wage comparison of developed countries made by OECD, labor
cost in Tokyo is lower than the level in major developed countries(Chart 2-23, p.30). In the 2014 survey, it declined by 1,100 dollars
from the results of the 2011 survey (Chart 2-24, p.31).

Chart 2-19 Obstacles in doing businessComparison of the 2013 and 2015 surveys
Rank

2013 Survey

2015 Survey

1High business costs

Complicated businesssystems and structures2

Particularities of JapanesemarketDifficulty in finding humanresources3

Difficulty incommunicating in nonJapanese languages

Difficulty in communicating
in non-Japanese languages(in business)

4

Complicated businesssystems and structures

Particularities of Japanesemarket5

Difficulty in finding humanresources

High business costs

Chart 2-18 Obstacles in doing business in Japan（those who chose the top two options）① complicated administrative procedures and business permits

46.3%② diﬃculty in ﬁnding human resources

44.9%③ diﬃculty in communicating in non-Japanese languages (in business)

44.2%④ particularities of Japanese market

35.4%⑤ high business costs

34.2%
22.6%

⑥ diﬃculty in ﬁnding business partners⑦ diﬃculty in living conditions for foreign people⑧ concern about natural disasters such as earthquakes or tsunamis

16.1%
11.8%

Itʼs an obstacleItʼs a very large obstacle

n=147（①②③④）、n=149（⑤）
、n=146（⑥）
、n=143（⑦）
、n=144（⑧）

Invest Japan Report 2015

29

Chart 2-20 Comparison of cost between Asian cities(office rent 2015)

Chart 2-21 Comparison of cost between Asian cities(housing rent for expatriates 2015)

Hong Kong

Singapore

154

Singapore

Hong Kong

87

Seoul

54

Tokyo

Shanghai

54

Seoul

Tokyo

Oﬃce rent (monthly ) / per sq.m
Unit: US$

15
0

3,094
2,263
2,076

Taipei33

Taipei

4,421

50

100

150

1,875

Shanghai

1,633
0

200

4,362

Tokyo

4,227

1,556
0

1,000

2,000

40
30

47.9
31.6

48.5

54.4

56.5

57.1

UK

Canada

US

38.0

20
Managers (department chief level)in manufacturing (monthly)
Unit: USD
3,000

4,000

5,000

〔Source〕"The 25th Survey of Investment Related Costs in Asiaand Oceania (June 2015)" (JETRO)

Among business costs, tax rate was chosen as an obstacle by thesecond largest number of companies (Chart 2-25). Because thegovernment of Japan has started to reduce corporation tax rates,
foreign affiliated companies can also expect lower tax burdens.
Regarding the extension of the period for carryover of losses
requested by a large number of foreign affiliates, the government
decided to extend the period from the current 9 years to 10 years
for the losses generated in the fiscal years starting on April 1, 2018,
and after.
- Other obstacles
Whereas fewer foreign affiliates consider high cost an obstacle,“complicated administrative procedures and business permits (No.1from No.4 in the previous survey),” “difficulty in finding humanresources (No.2 from No.5 in the previous survey),” and “difficulty incommunication in non-Japanese languages (No.3 in both surveys)”

30

5,000

70.1

70

50

3,439

Shanghai

80

60

3,832

2,137

4,000

（Thousand US$）Singapore

Taipei

3,000

Chart 2-23 International comparison of yearly salary (2014)

Chart 2-22 Comparison of cost between Asian cities(managers (department chief level) salary 2015)

Seoul

2,000

〔Source〕"The 25th Survey of Investment Related Costs in Asiaand Oceania (June 2015)" (JETRO)〔Source〕"The 25th Survey of Investment Related Costs in Asiaand Oceania (June 2015)" (JETRO)

Hong Kong

1,000

Housing rent for expatriates(monthly ) / per sq.m
Unit: US$

Invest Japan Report 2015

10
0

Korea

Japan

France Germany

Australia〔Note〕Constant prices at 2014 USD exchange rate
〔Source〕OCED Website

were chosen as obstacles by over 40% of the companies. The
issues pointed out in the previous survey are suggested again. Their
breakdowns are in the charts on the next page.
To address “complicated administrative procedures” and “unclear
points of contact for administrative applications,” the Tokyo OneStop Business Establishment Center for one-stop procedures andconsultation concerning business establishment was set up at JETRO
in Akasaka, Tokyo, as described previously. As measures to improve“too many legal restrictions” and “rigid business permits/licenses,”
the government is promoting structural reform and deregulation invarious fields. The efforts are expected to facilitate an environment
where going through procedures and obtaining permits/licenses iseasier also for foreign-affiliated companies.
In the breakdown of “difficulty in finding human resources,”“difficulty in finding global human resources” is recognized as an
obstacle by 74% of companies, followed by “difficulty in findingⅡ Toward Improvement of the Business Environment

specialists” at about 50%, ”low mobility in labor market” at 35%
and “labor regulation” at about 21%. In the breakdown of “difficultyin communication in non-Japanese languages in business,” “external
company communications” is high at about 73% followed by“communications with the government” and “internal company
communications” both at 42%.
“Difficulty in finding global human resources” leads to “difficultyin communication in non-Japanese languages.” In addition to thepromotion of active roles by foreign professionals explained earlier,raising the level of foreign language skills of the Japanese people
as well as fostering human resources with communication skills in
foreign languages are keys to securing necessary human resources.

Chart 2-24 International comparison of yearly salaryComparison of 2011/2014
2011 (Thousand US$)2014 (Thousand US$)

Korea

31.6

31.6

Japan

39.1

38.0

France46.9

47.9

Germany

46.9

48.5

UK

54.5

54.4

Canada

53.8

56.5

US

56.2

57.1

Australia

71.5

70.1

Ⅱ

〔Note〕Constant prices at 2011 and 2014 USD exchange rates〔Source〕OCED Website

Chart 2-25 The largest obstacles in high business costs

Chart 2-26 The largest obstacles in “complicated(top two answers)

business systems and structures” (top two answers)

payroll
tax rates

48.1%

commodity
pricescomplicated administrative
procedures

n=131

internationally unharmonizedbusiness permit/licenses

31.4%

rigid businesspermit/licenses

29.9%

29.0%

raising
funds
other

69.5%

54.0%

too many legal restrictions

20.6%

24.8%

insuﬃcient informationor support

9.2%

unclear points of contact foradministrative applications/permits
other

n=137

21.9%
16.8%
7.3%

Chart 2-27 The largest obstacles in “difficulty in finding

Chart 2-28 The largest obstacles in “difficulty in communicating

human resources” (top two answers)

in non-Japanese languages (in business)” (top two answers)

diﬃculty in ﬁnding
global human resourcesdiﬃculty in ﬁnding
specialists

49.6%

low mobility inlabor market

35.1%
21.4%

labor regulations
other

3.8%

74.0%

external company
communications

n=131

communications withthe government

42.0%

internal company
communications

42.0%

other

73.3%
n=131

5.3%

Invest Japan Report 201531

Ⅲ

Regional Revitalization and Direct Investment in Japan

1. Creating attractive regions- The government’s efforts for regional revitalization –Each region in Japan has many untapped resources. By maximizing
their potential, they have the capacity to develop domestic andoverseas markets. As a part of the structural reform, the government
established the Headquarters for Overcoming Population Decline
and Vitalizing Local Economy in Japan in November 2014 with theaim of helping each region to address falling population and birthrate decline and create an autonomous and sustainable society
taking advantage of regional characteristics. The government aims
to vitalize attractive regions, put a brake on heavy concentrationin Tokyo, solve problems according to the regional characteristics
and help the young generation in their employment, marriage andchildrearing. The Regional Vitalization Grant was established in
the supplementary budget for fiscal 2014 and more than 15 local
governments started initiatives to promote FDI in Japan.
In addition, Regional Vitalization Special Zones were introduced in2015. In these zones, attraction of enterprises, tourism promotion,
job creation and other regional vitalization measures are supported
through deregulation and other means. In March 2015, Semboku
City in Akita Prefecture (agriculture/forestry and medical treatment
exchange), Sendai City in Miyagi Prefecture (women’s active role insociety and social business creation) and Aichi Prefecture (fostering
industry leaders) were designated as the zone.

2. More than 70% of foreign affiliates are in
the Tokyo Metropolitan area

Tokyo Metropolitan area (Chart 3-2)
Most of the locations outside metropolitan areas are subsequent
investments. Many of them are marketing, sales, customer service,
R&D, or production bases of foreign affiliates that have bases alreadyin Tokyo or other big cities.
Chart 3-1 The location of foreign affiliated companies in Japan (by area blocks)（number of companies）

2,598

286
250
200

152

150
100
50
0

26

11
Hokkaido

Tohoku

22
Kanto

Chubu

Invest Japan Report 2015

3

Shikoku

Kyushu〔Source〕"FY2014 Survey of Trends in Business Activities of Foreign Affiliates"(METI)〔Note〕The companies referred here are not in company group unit (such as
consolidated subsidiaries) but each subsidiaries and associated companies arecounted as one. However, regional offices, branches and representative offices are
not included (the same applies to chart 3-2)

Rank
1
2
3
4
5
6
7
8
9
10

Prefecture
Tokyo
Kanagawa
Osaka
Hyogo
Aichi
Chiba
SaitamaShizuoka
Fukuoka
Ibaraki
Total

Rank

All Industries
(%)
2,131
67.6
299
9.5
168
5.3
81
2.6
67
2.1
66
2.1
59
1.9
33
1.0
29
0.9
21
0.7
3,151 Companies〔Source〕"FY2014 Survey of Trends in Business Activities of Foreign Affiliates"(METI)

Number of companies with bases in prefectures other than Tokyo

32

ChugokuChart 3-2 No. of foreign-affiliated companies by prefecture (Top 10 prefectures)

Need to attract foreign-affiliated companies to local regionsis increasing because of its importance for vitalization of thelocal economy in terms of job creation and introduction of newtechnologies and innovative management. According to the 2014
Survey of Trends in Business Activities of Foreign Affiliates by the
Ministry of Economy, Trade and Industry (METI), however, lessthan 100 foreign-affiliated companies are in regions other than
Kanto (2,598 companies), Kinki (286 companies) and Chubu (152companies) (Chart 3-1.)
By prefecture, 2,131 companies are in Tokyo followed by
Kanagawa with 299 companies. Tokyo and Kanagawa account for
77.1%, showing the heavy concentration of foreign affiliates in the

As of 2014, only 739 of 3,117 foreign affiliates
in Japan have their headquarters outside Tokyo.
Furthermore, 75% of them, 551 companies,
are in Kanagawa, Osaka, Hyogo, Chiba or
Saitama prefecture. There is a strong tendencyof concentration of head offices in big cities.
Production sites tend to be in local cities close
to a metropolitan area with a large population.
31 companies have their R&D site in Kanagawa
that is eager in attracting R&D sites and has goodaccess to Tokyo. As a logistics base, regions with aninternational airport, highway or other locational
advantages are favored. Other sites are also mostly
located in metropolitan areas.

Kinki

53

Headquarters

Production

1 Kanagawa（267）Shizuoka（39）R&D

columnLogistics

Kanagawa（31） Osaka（22）OthersOsaka（523）

2 Osaka（115）

Kanagawa（34） Hyogo（16）Chiba（20）Aichi（371）

3 Hyogo（80）Shizuoka（15）Ibaraki・Chiba（24）Aichi（13）Hyogo（15）

Fukuoka（248）

Aichi・Kanagawa（14）

Hokkaido（202）

4 Chiba（49）5 Saitama（40）6 Aichi（33）Aichi・Saitama（23）

Ibaraki（10）Tochigi（8）Saitama（11）Hiroshima（150）

7 Shizuoka（17）Tochigi（22）Osaka（6）Fukuoka（10）Miyagi（145）

8 Ibaraki（12）Hyogo（18）

Saitama（5）Hiroshima（9）Shizuoka（93）9 Hiroshima・
10 Fukuoka（10）Mie（15）

Fukuoka・Fukushima（4）Shizuoka・
Hokkaido（７）Hyogo（91）

Gunma（11）Kanagawa（162）

Saitama（83）〔Note〕Excluding retail stores, insurance sales offices and undisclosed sites.
〔Source〕"2015 Foreign Affiliated Companies in Japan" (Toyokeizai)

3. Foreign affiliates contributing to local
communities
Foreign affiliated companies are contributing to the local
communities in various forms. Attracting them has generated various
benefits in many places in Japan.
(Created based on JETRO website “Foreign affiliates contributing
to local economy”)(1) Delivering local products to the world
Limex Japan, the Japanese arm of Deysan Intl Co., Ltd, aTaiwanese trading firm of agricultural products and materials,
exports foods of various regionsof Japan including rice and tea of
Shimane and Ishikawa prefectures
to Taiwan. KoiBito Japan, a global
nishikigoi exporter of the Netherlands,
set up offices in Okayama Prefecture
and Ojiya of Niigata Prefecture thatare its largest suppliers, purchases
carps also in Kyushu and exports to
Photo provided by: Limex Japanwestern countries and more than adozen Asian countries.

(2) Spreading renewable energy to the region
Solar Power Network, a rooftop solar power generationcompany of Canada, constructed photovoltaic stations renting
rooftops of a purification center in Fuji City, Shizuoka, DIY storesin Isezaki City, Gunma, and otherbuildings. The company contributes
to the promotion of distributed
energy, CO2 emissions reduction
and local companies’ revenue fromsales of electric power in Japantaking advantage of local resources
Photo provided by:
and idle lands.
Solar Power Network(3) Employing local people
Sweden’s IKEA, the world’s leading furniture chain, opened its
Funabashi (Chiba Prefecture) store in 2006 followed by six stores in
Kanto, Kansai and Kyushu, and additional stores in Tachikawa andSendai in 2014, followed by IKEA Touchpoint Kumamoto in October
2015. The number of employees
has reached 2,800. LUSH, a leading
cosmetics retailer/manufacturer of
the UK, has 143 stores across Japan.
The company established a plantin Kanagawa prefecture, procuresmaterials and produces products in
Photo provided by: LUSH
Japan, employing 1,800 workers
across the country.

(4) Bringing foreign tourists to the region
Mingly Corporation of Hong Kong (establishing Osbert Hotels inJapan) transformed a bankrupt Japanese inn at a hot spring resort(Chikusenso at Togatta hot spring of Zaomachi, Katta-gun) into a highend hot-spring/spa resort, not only attracting foreign travelers but
also employing local people. An increasing number of LCCs (low-costcarriers) are providing local routes as represented by Spring Airline
and Juneyao Airlines of China, Air Busan and T'Way Airlines of
Korea and Air Asia X of Malaysia.
They bring a large number of tourists
mostly from Asia. Foreign affiliatedtravel agents, agents for wealthy
travelers and agents specialized in ski
tours plan local tours, while foreign
affiliated hotel reservation sites are
Photo provided by:publicizing local tourist attractions,
Osbert Hotels
hotels/inns and other tourist resources to the world.

(5) Providing know-how to Japanese companies
Juwi Natural Power operates photovoltaic power, wind
power generation and other renewable energy businesses. Taking
advantage of its global purchase network and the latest construction
know-how, the company is expanding projects in Akita, Wakayama,
Yamaguchi, Kumamoto, Tochigi and other parts of Japan. Mikado
Kyowa that is a part of Vilmorin & Cie of France since 2001
has five bases in Japan (Chiba,
Hokkaido, Aichi, Kumamoto andTokyo) undertaking improvement,
production and sales of vegetableseeds. Taking advantage of bio
technologies including DNA markers
developed by Vilmorin, the company
Photo provided by:introduces cutting-edge research
MIKADO KYOWA
tools and equipment.

(6) Establishing R&D site in the region
Japan Cabot Microelectronics, a manufacturer of cuttingedge semiconductor abrasive materials and cloth with its head
office in the United States, established a R&D center in Tsu, Mie
Prefecture. In 2013, the company transferred the function todevelop abrasives for super-hard materials to the center to makeit the hub for sales expansion in
the emerging markets in Asia. A
Belgian nonferrous and functional
material manufacturer, Umicore,established a manufacturing sitein Kobe, Hyogo, to meet theincreasing demand for lithium-ion
Photo provided by:battery cathode material in Japan.
Umicore Shokubai
In 2012, the company establishedUmicore Shokubai through joint investment with a Japanesecompany and opened an automobile catalyst R&D site (Tokoname
Test Center) in Tokoname, Aichi Prefecture.

(7) Saving the region’s employment
In 2013, Micron Technology, a US-based leading semiconductor
company, acquired Elpida Memory which had filed for bankruptcy
protection under the Corporate Rehabilitation Law. It succeeded
to the operation of Elpida, including Hiroshima factory (Higashi
Hiroshima), the company’s main manufacturing hub, as well as Akita
Elpida Memory, a subsidiary which assembles semiconductors. If all
production bases and subsidiaries are included, Micron Technology
has saved approximately 3,500 jobs as well as numerous business
partners in Japan. It has reported additional investment in Japan for
two consecutive years from fiscal 2014 to fiscal 2016.

Invest Japan Report 2015

33

Ⅲ

Ⅳ

Investment Promotion Projects of JETRO

Under the Abe administration’s plan to double inward FDI in Japan,
JETRO is conducting various publicity projects and activities to attract
foreign companies including identification of companies interested
in investment in Japan using a network of 73 overseas offices in 54
countries worldwide, as well as the Tokyo and Osaka headquarters,
the Institute of Developing Economies and 43 regional offices (as ofJanuary 2016: Chart 4-1.)
Positioning (1) Life Science, (2) Environment and Energy, (3) ICT,
(4) Manufacturing and Infrastructure, (5) Tourism and (6) Service
as target fields where foreign companies have a strong interest
and growth is expected, JETRO is stepping up its efforts to attract
R&D sites by calling attention to the large pool of researchers,
technological strength and favorable business environment
complying with rules for intellectual property rights in Japan.
In fiscal 2015 (Apr. 2015 – Mar. 2016), JETRO is strengthening thesystem and working on new initiatives including 1) strengtheningof domestic and overseas systems to attract investment, 2) creating
opportunities for matching of domestic companies with foreigncompanies, 3) top-level sales, and 4) contribution to regional
vitalization (collaboration with local governments to attract
investment in the region), to expand and reinforce existing activities.

1. Achievements of JETRO (attracting investment)
In 12 years since 2003 when it started to promote inward
FDI, JETRO has provided support to more than 12,000 overseas
companies interested in investment in Japan, of which over 1,200
have successfully established operations in Japan (Chart 4-2, p.31.)
By region, each of North America, Europe and Asia accounts for
one-third of them. By industry, ICT, telecommunication, the PCrelated devices industry and electric/electronic and precision devices
together with service constitute more than half of them (see charts
4-4 and 4-5 in P.31 for the past performance of JETRO).

•Top-level sales and overseas seminars
In May 2014, JETRO held
a top-level sales seminar on
investment in Japan inviting
Prime Minister Abe who wasvisiting the United Kingdom.
In the seminar, governors
and mayors from Hiroshima
and Mie Prefectures and thecities of Kobe and Fukuoka
joined PM Abe to invite
investment in Japan. In
September of the same year,
a seminar on investment
in Japan was held in New
York, taking the opportunityof the Prime Minister’s visit
to the United States. This
time again, heads of local
governments (Wakayama
Invest Japan seminar in Los Angels ,May 2015
p re f e c t u re , K y o t o C i t y,
Tokamachi City, Niigata, andMimasaka City, Okayama) called attention to their respective regions.
In May 2015, the Japan-US Economic Forum was held in Los
Angeles, inviting Prime Minister Abe, US Secretary of Commerce
Pritzker and US Ambassador to Japan Kennedy. The forum wasjoined by approximately 500 attendees from the US and Japanesebusiness communities (see photo). In September, another seminar
was held inviting Prime Minister Abe in New York.
In addition to the top-level sales in western countries, more than
30 seminars on investment in Japan are scheduled in Asia infiscal 2015. Through these activities, JETRO aims to attract morethan 47 investment projects from Asia within the fiscal year (1.5times more than the FY2014 goal).

Chart 4-1 JETRO's activities to promote inward FDI
Overall Flow

Providing information
on Japanese businessenvironment

Finding anddeveloping businesses
interested in investingin JapanSupporting businessstartups throughthe IBSC

Increasing business
opportunities withJapanese companies

Services provided■ Invest in Japan website■ Seminars and symposia■ Visiting companies andexhibitions■ Individual consultation■ Providing information■ Temporary offices■ Advice from specialists■ Business matching events
between Japanese andforeign companies.

JETRO Headquarters (Tokyo)
JETRO
Government

34

JETRO's Overseas Office

Invest Japan Hotline

JETRO’s Domestic Offices

Cooperation

Cooperation

Cooperation

Janpanese Embassies Abroad

Government Ministries

Local Governments

Regulatory Reform Hotline

Invest Japan Report 2015

Chart 4-2 Investment projects supported by JETRO (FY 2003-2014)

Chart 4-3 Investment projects supported by JETRO(by location in Japan)
Saitama 14
Fukuoka 25
Chiba 33

Central and South America
1％Middle East
Oceaniaand Africa
4％1％

Supported

12,000projects

overForeign companiesʼ startups

Asia
31％

1,245

Hyogo 48

Aichi 78

North
America
32％

Osaka 88
Kanagawa 131

38.6%

Tokyo
765

61.4%

Chart 4-5 Investment projects supported by JETRO (by industry)

Total: 1,245 companies
North America: 399 Europe: 389
Asia: 382 Other regions: 75

Nations
US
China
Germany
Korea
UK
FranceAustralia
Singapore
TaiwanHong Kong

Other than
Tokyo
480

Europe31％

Chart 4-4 Investment projects supported by JETRO (by country)

Rank
1
2
3
4
5
6
7
8
9
10

Other 63

1st：ICT・telecommunications・PC-related devices

293

companies

Number of cases
369
127
107
84
76
64
44
38
38
34

24％

2nd：Electric/electronic and precision devices

232

companies

3rd：Service

216

companies

4
5
6
7
8
9
10

19％
17％

Vehicle and parts
ApparelMedicine・medical devices
Food
EnergyTourism
Finance

79
62
55
42
21
20
17

6%
5%
4%
3%
2%
2%
1%

Chart 4-6 Investment projects supported by JETRO Changes in the ratio of regions（％）
50
North America 40％

Asia 38％

40
30

Europe 31％

Europe 33％

North America 29％

20
10
0

Asia 16％

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

Invest Japan Report 2015

35

Ⅳ

2. Finding and supporting companies
interested in investing in Japan
Outside Japan, persons in charge of attracting investment at
JETRO overseas offices and external specialists grasp information on
promising companies and encourage them to start business in Japan.
We cooperate with diplomatic missions abroad and trade/investment
promotion organizations of other countries by holding seminars
and jointly visiting industry groups to provide information on
the investment environment in Japan, identify promising companies
and provide support including information.
In Japan, we provide overseas companies interested in entering
Japan with information on the market, industries and approval/
permits through individual consultation by dedicated staff of
JETRO and market specialists. In addition, five foreign staff members,
most of them with experience working in our overseas office, arecontinuously assigned to desks dedicated to the US, China,
South Korea, Singapore, Taiwan and other countries so thatthey can respond to inquiries from these countries and support
overseas companies in their respective languages.
•Invest Japan Business Support Center (IBSC)JETRO has set up Invest Japan Business Support Centers in
six major cities (Tokyo, Yokohama, Nagoya, Osaka, Kobe andFukuoka). There, experienced dedicated staff and specialists provide
one-stop service for entry into Japan, including information througha broad network covering the public and private sectors and freeconsultations tailored to individual companies. The centers also
provide office space for preparation for establishing a company inJapan (free of charge for 50 business days) (Charts 4-7 and 4-8).

Chart 4-8 Locations of Invest Japan Business Support Centers (IBSCs)

IBSC Osaka
IBSC Kobe
IBSC Fukuoka

IBSC TokyoIBSC Yokohama

IBSC Nagoya

Proactive invitation activities

columnStrengthening efforts to find and attract large projects using industry specialists

Chart 4-7 JETRO IBSC（Invest Japan Business Support Center)

Consulting Consultation for each company for free of charge
・Legal consulting
・Finding human resources
・Tax consulting
・Finding office and factory spaces
・Cost estimates
・Support on the application for
subsidy programs
・Information on relevant legal systems
・Consultation on business customs

Facilities Temporary office space for free of charge
・Office space available for free for up to 50 business days
・Offices in 6 major cities in Japan・Equipped with desks, chairs, telephone and broadband
・Common reception available
・PC room equipped with prineter and scanner
・Meeting rooms and conference hall available

Information Providing information that is necessary for business・Market reports
・Business advisors
・Online database36

・Information on service providers
・Supporting access to government agencies
・Accepting request for regulation reforms

Invest Japan Report 2015

In order to gain the attention of overseas companies withbusiness potential to investment in Japan, JETRO uses external
experts named “Invest Japan Industrial Specialists,” persons
with experience in the industry, to ensure more active efforts
including identification of key persons such as executives ofglobal companies, proposal of individual business models andcontinuing information provision.
In fiscal 2014, we pursued attraction vigorously by individuallycontacting over 3,000 overseas companies using 60 Industrial
Specialists who have expert knowledge and a network withexecutives of global companies. Specifically, we made a listof over 3,000 leading overseas companies with potential forlarge investment in Japan in eight priority areas (life science,
environment and energy, ICT/electronics, tourism, infrastructure,
financial business/service, agriculture and education) andconducted a hearing survey to ascertain their interest. Based on
the survey, we identified 300 promising companies and madenegotiations, resulting in investment by 10 companies.
In fiscal 2015, we strengthened our efforts on promisingprojects through a focused approach by Industrial Specialists
abroad who are on the front line of invitation. In order to support
materialization of promising companies’ plans to invest in Japan,
we will provide more detailed information on the domestic
market and propose business models.

Ⅳ Investment Promotion Projects of JETRO• Invest Japan Hotline
JETRO has set up Invest Japan Hotline (Chart 4-9) to receive
requests for regulatory reform and consultations from overseas
companies, make recommendations to the government andarrange interviews, so that the requests and consultations arecommunicated to the government. We provide comprehensive
support including language support for the process from arrangementof and presence at meetings with relevant ministries/agencies
according to the content of the consultation, and follow-up on therequest of regulatory reform and reporting back on the results.
The abolishment of the requirement that at least one representativeneeds to be resident in Japan for registration of subsidiaries in Japanby foreigners (see Chapter 2) was realized through the process.
Chart 4-9 Invest Japan Hotline
https://www.jetro.go.jp/en/invest/hotline
JETRO supports foreign companies by- Giving consultation regarding administrative procedures required for FDI into Japan.
- Arranging meetings with officials of regulatory agencies if needed.
- Relaying requests for regulatory reforms to the Japanese government.
Consultation regarding investing in Japan and regulatory reform requests from foreign companies
・Consultation regarding and investing in Japan(Administrative procedures and information on regulations and systems)
・Requests for regulatory reforms
Service available in languages other than Japanese

One stop service provided by JETRO

Invest Japan Hotline

Hours:9:00 ～ 12:00/13:00 ～ 17:00

Days: Monday to Friday（Closed on Saturday and Sunday, national holidays）

03-3582-4684

・Accepting inquiries
・Collating content of inquiries(translating into Japanese when necessary)
if able to answer the matter, JETRO will answer questions directly.

Consultation regarding investing in Japan(within the same day)

JETRO will arrange meetings with therelevant authorities.

JETRO will arrange meetings withthe relevant authorities and provide
comprehensive support including
language support

1. After the relevant authorities receive
the request, they will coordinate
with JETRO on a date and time for
consultation. within the same day
2. In principal, a JETRO staff will escort
the foreign company, representativeand provide language support
during the consultation with therelevant authorities. within one week
(excluding weekends and public
holidays)

ForeignCompany

Requests for regulatory reforms(when necessary)

when necessary, JETRO will submit
requests for regulatory reforms to the
Cabinet Office and METIJETRO will follow up on each case fromthe time the request is received to thetime the result is reported

1. After examining the request, theCabinet Office will ask the relevant
authorities to consider possibilities ofreform.
2. Certain answers from the relevant
authorities may be reported to
the Regulatory Reform Council for
discussion. As a general rule, theCabinet Office report the result of thedeliberation at the Council to JETRO
prior to the official announcement.
3. The result of the deliberation at
the Council will be reported to theforeign company through JETRO if it
is to be released to the public.

JETRO
Meeting
ReportOfficial in charge

JETRO

Foreign Company• International business matching support
JETRO provides opportunities for business matching to help
Japanese companies utilize sales channels and technologies ofoverseas companies, while helping overseas companies enter theJapanese market by increasing business with Japanese companies.
In May 2014, a business matching event for medical appliances
was held in Tokyo inviting GE Healthcare Japan, 3M Healthcare
Japan, Japan BD, Japan Medtronic and other global manufacturersof medical appliances, and Japanese SMEs who provides products
and technologies utilized for medical appliances, in order to facilitatebusiness alliances. In the field of tourism, JETRO organized apresentation seminar titled “Partnership with Japanese Companies”
in July 2014. During the seminar, 5 global tourism companies
in Japan including Spring Group, Air Asia and TripAdvisor gave
presentations on services targeting foreign travelers and possible
cooperation with Japanese companies. Japanese SMEs including
inns, hotels, travel agencies and food service as well as local banks
and local governments joined the seminar and participated inbusiness interaction with the foreign affiliates. A business matching
event was held not only in Tokyo but also in Kyoto, where specificcontracts were concluded and foreign affiliates visited a local tourist
association.

3. Collaboration with local governments
With contribution to regional vitalization in mind, JETRO is
working together with local governments actively attracting
overseas and foreign-affiliated companies including subsequent
investments.
For example, JETRO proposed to include attraction of overseas
companies in the local governments’ industrial development
strategy, provided support for formulation of attraction strategies
and proposed effective approaches to target companies and offer
of incentives to overseas companies. We cooperate with local
governments in top-level sales, subsequent investment seminars,
analysis of the attractiveness of each region, development of bases
for regional support and other initiatives (Chart 4-10.)
Chart 4-10 Examples of cooperation between JETRO and local
governments
Company A (Europe, medical appliances) in Fukushima
・Fukushima prefecture is aiming to promote inward investment by manufacturersof medical appliances<JETRO's support>
・JETRO created an "incentive package" together with the prefecture
・The chief director of JETRO's office in Europe presented the investment package
to the CEO of the company, and proposed a business plan to invest in Japan・The CEO commented that they will make use of the plan in deciding on
subsequent investment plans
Company B (Aisa, pharmaceuticals) in Toyama
・Toyama prefecture is aiming to create a cluster of pharmaceuticals industry
・The representatives of the prefecture participated in the mission to the
Asian country organized by JETRO. They visited associations related topharmaceuticals, and concluded an MOU.
・The prefecture prepared an incentive package that supported the set up of newor subsequent research facilities, and employment of researchers<JETRO's support>
・The chief director of JETRO's office in the Asian country held a meeting with
the CEO of the mother company
・JETRO provided information on the pharmaceutical industry in Japan and about
the incentive package, and raised interest.

Invest Japan Report 2015

37

Ⅳ

4. Strengthening support: smooth support
from primary to subsequent investments
JETRO’s Invest Japan Department set up a new section, theForeign Affiliate Support Division, in April 2015. The new section
for foreign affiliate supports promotes subsequent investment byforeign affiliates that already have presence in Japan. JETRO has
worked to attract foreign companies with focus on startup support
for their first entry into the Japanese market. However, expecting
greater economic effects from expansion (subsequent investment)
in Japan by companies with a base in Japan and relatively stable
management, we actively provide seamless support for primary andsubsequent investment by foreign affiliates.
The activities include (1) grasping needs by visiting foreign
affiliates, (2) providing support for business expansion, (3)support for subsequent investment in local areas, in particular,and (4) summarizing challenges faced by companies, make policy
recommendations and help regulatory reform. Through these
activities, we will expand business by foreign affiliates, improve theretention rate and increase and help the success of subsequent
investment, and thereby attract more foreign capital contributing
to regional vitalization. We will provide broad support so thatcompanies that have established bases using IBSC can continuesmooth activities in Japan, for example.
In addition, we strengthened our system to support investment inJapan by adding about 40 staff members specialized in investment
in Japan at overseas offices in key countries; and at the headquarters
we increased staff members specialized in matching with domestic
companies and stimulating additional investment by foreign affiliates
established in Japan. As a result JETRO’s overseas and domestic
staff responsible for investment in Japan has doubled (160 persons
including external specialists engaging in investment attraction.)

Developing New Scheme to Promote Investment Alliances with Foreign Companies- Global Alliances for Japanese Mid-ranking Companies and SMEs -columnIn order to promote overseas business
Consultation
SME Support,
The Shoko
expansion of mid-ranking companies and
SBIC, etc.
JETRO
JAPAN
Chukin Bank
SMEs by exploring their potentials, as well as
by utilizing the excellent business resources
Investment
which foreign companies have, including
ForeignInvestment
know-how for practical applications andcompanies
overseas networks, a new scheme started
Investment Limited
Investment
Financingunder the leadership of the Ministry ofPartnership
Investment
Economy, Trade and Industry (METI).
business partnership
Investment
JETRO will serve as a coordinator to convey
foreign companies’ requests etc. to relevantorganizations including the Organization forJapanese mid-ranking companies and SMEs
Small & Medium Enterprises and Regional
Innovation, JAPAN (“SME Support, JAPAN”),
the Central Bank for Commercial andIndustrial Co-operatives (“Shoko Chukin
Bank”), and the Small and Medium Business Investment & Consultation CO., LTD. (“SBIC”), and thereby support investment alliances withforeign companies.
For cases where foreign companies’ participation in investment or management will likely lead to the expansion of overseas sales channels
and the promotion of open innovation, the utilization of the SME Growth Support Fund (with which SME Support JAPAN participates ininvestments) will be encouraged. The Fund can be utilized, for example, in the following ways.
(1) Investment in mid-ranking companies and SMEs from the Fund, in which foreign companies such as financial companies and SME Support,
JAPAN jointly invest.
(2) Joint investment in mid-ranking companies and SMEs by foreign companies and the Fund.
As the first step, in 2015, METI will establish Global Alliance Promotion Offices (tentative name) at SME Support, JAPAN, the Shoko Chukin
Bank, and the SBIC, respectively, and develop a matching system for foreign companies and Japanese mid-ranking companies and SMEs incollaboration with JETRO.
Establishment of this scheme is expected to contribute to increased overseas expansion of Japanese mid-ranking companies and SMEs aswell as the creation of domestic employment and the revitalization of regional economies through an increase in FDI in Japan. The publicprivate fund will facilitate investment by foreign companies and the fund.

38

Invest Japan Report 2015

Ⅳ Investment Promotion Projects of JETRO

columnEstablishing an investment fund for business tie-up with foreign companies

Investment fund to promote business tie-up of Japanese mid-ranking companies and SMEs with foreign companies

Let us introduce efforts by Japanese mid-ranking companies and SMEs to improve company value through business tie-up, overseas market
development or fostering of venture companies utilizing funds of the Organization for Small & Medium Enterprises and Regional Innovation,
JAPAN (“SME Support, JAPAN”) and other means.

Malaysia
The SME Growth Support Fund signed a contract to invest 2.4 billion yen in an investment limited partnership of PNB Inspire
Partners Corporation
SME Support, JAPAN, agreed to invest 2.4 billion yen in an investment limited partnership whose unlimited reliability partner is PNB Inspire
Partners Corporation (“IPP”) and signed the contract in April 2014 (the total volume of the fund is 5.15 billion yen including the investment of
SME Support, JAPAN, PNB (government-affiliated investment bank) and other institutional investors and local banks).
The partnership is Japan’s first Shariah-compliant PE fund with the aim of supporting expansion into ASEAN and Islam markets where
significant growth is expected. The fund will invest in SMEs with products/services competitive in the global market. Utilizing the overseas
network of IPP, the fund will support overseas expansion of the investee companies by promoting their business tie-up with foreign companies
and strengthening local organizations, and providing hands-on support for localization of products and overseas market development.

Investment
Limited Partner(LP)
SME Support,
JAPAN

LP investment

PNB-INSPiRE Ethical Fund 1
Investment Limited Partnership

Dividend

Gain on sale

Investee company

Ⅳ

Japanese SMEs
Investment

Overseas expansion
Administration reward
Fund management

Local banks

Institutional
investors

Reward for success

Overseas JV, etc.
GrowthSupport

Overseas network

General Partner (GP)Fundmanagement
reportPNB Inspire Partners Corporation

Business tie-up
Capital tie-up

Introduction ofoverseas network

Local partners〔Source〕From SME Support, Japan website

TaiwanEstablishing an investment fund for unlisted bio ventures with focus on drug discovery in Japan and Taiwan
DCI Partners Co., Ltd. (“DCIP”), a group company of Daiwa Securities Group, Inc. and wholly owned by Daiwa Corporate Investment Co.,
Ltd.(“DCI”), announced the first closing of the Daiwa Taiwan-Japan Biotech Fund Investment Limited Partnership (total capital commitmentof JPY 9.3 billion, the "Fund") with the participation of the SME Support, JAPAN, National Development Fund, Executive Yuan ("NDF"), aTaiwanese government fund, and other investors in and outside Japan. Total Fund’s commitment size may be increased to around JPY 12
billion at the subsequent closings.
In Japan, since the global economic turmoil triggered by the Lehman bankruptcy in 2008, the supply of risk capital for biotech companies
has been reduced. Due to these funding constraints, many startups have faced funding difficulty for growth. Venture capital firms, theprimary providers of such risk capital to venture business, have also experienced a difficult time of fundraising throughout the period. In thiscontext, DCIP has successfully launched one of the largest biotech funds in Japan with strong support from SME Support, JAPAN, NDF andother investors in and outside Japan. DCIP aims to provide risk capital for growth through the Fund to Japanese and Taiwanese biotechnology
companies moving into a period of growth and will endeavor to promote their research and development efforts and to enhance theirenterprise value, in pursuit of high investment returns.
In its Healthcare Policy and Japan Revitalization Strategy, the Japanese government is firmly promoting development of the healthcare
industry.
Particularly for the drug development environment centered on regenerative medicine, various forms of support are being provided bydeveloping new regulatory frameworks (e.g., enforcement of the Pharmaceuticals and Medical Devices Act (revised Pharmaceuticals AffairsAct) and the Act on the Safety of Regenerative Medicines, and launch of the Drug Discovery Support Network). Drug discovery ventures havealso been steadily building a track record of out-licensing deals and successful launch of drugs to the market in recent years.

Invest Japan Report 201539

5. Sending out information contributing to FDI
in Japan
In addition to high-profile top-level promotion of investment inJapan, JETRO is sending out information through various
media including websites, email newsletters, seminars andcompany visits.
JETRO introduces the attractiveness of the Japanese market,
incentive information and success stories of foreign companies
investing in Japan, and actively provides information on proceduresfor setting up business and various support programs of JETRO
through websites and other media. We also publish “Attractive
Sectors,” a PR pamphlet conveying the appeal of the environment/
energy, life science and ICT markets through market overview of therespective industry.

such information,the site hase been very popular. The total numberof accesses to the Japanese and English sites in the first half of fiscal
2015 (Apr-Sep) exceeded 280,000.
(Both materials are compiled in Japanese, English, French, German,
Chinese (simplified and traditional) and Korean.)“Regional Information” enables search for local investment
environment, industry information, incentives and supports by
local governments, distribution infrastructure, living conditions
for foreigners by prefecture and target industry. You can also viewcomparison of data of local governments.

Chart 4-12 Support for investing in regions
http://www.jetro.go.jp/invest/region

Information provided on the website “Invest in Japan”- Success Stories- Incentive Programs- JETRO’s support- Invest Japan Hotline- Regional Information- How to Set up Business in Japan/Initial Cost Estimation- Invest Japan Business Support Center (IBSC)- Email Newsletter "Success in Region”- Industry Information/Report
Chart 4-11 JETRO Invest Japan Website〔Source〕JETRO Website

Chart 4-13 “Success Stories”– stories of foreign companies
successfully entering the Japanese market
http://www.jetro.go.jp/en/invest/success_stories〔Source〕JETRO Website“Laws & Regulations on Setting Up Business in Japan”
compiles information on registration, visas, taxes, human affairs/
labor and trademark/design systems and procedures accompanying
company establishment in Japan. Since there is a strong need for〔Source〕JETRO Website

40

Invest Japan Report 2015

Ⅳ Investment Promotion Projects of JETRO

6. Examples of foreign companies that have successfully entered the Japanese market(Pickups from JETRO’s six strategic fields)- JETRO’s strategic fields in FDI
JETRO supports investment in Japan regardless of the field but emphasizes the following six fields that promise market growth, employment
creation, utilization of resources and technologies and greater contribution to Japanese society (from JETRO’s website “Success Stories” and“Business Activities of Foreign Affiliates”)

1

Environment/Energy

Next-generation automobile and new energy(Lithium-ion battery, solar cell, etc.)4Service

Large-scale retailers (fast fashion, membershipbased mass retailers, etc.) e-commerce, BPO

Foreign companies (manufacturers of parts, components,etc.) complement formation of domestic industrial clusters ofinternationally competitive Japanese companies.

Contributing to domestic demand expansion and employment
creation through provision of new business models and added
values.

2

5Life science

Pharmaceutical products, medical
appliances, regenerative medicine

ICT

Data centers, cloud solutions,software packages

Foreign companies play an important role in the field where
domestic demand is growing.

Foreign companies play an important role in the field where
domestic demand will grow.

3

6

Tourism

Investment targeting foreign tourists(Airlines, hotels, travel agencies, etc.)
Domestic demand is expanding thanks to increasing flow ofpeople from abroad and it is greatly contributing to regional
vitalization.

Manufacturing/Infrastructure

Aircraft-related industry, auto parts, airport,
water and sewage, road operation, etc.
Foreign companies (manufacturers of parts, components,etc.) complement formation of domestic industrial clusters ofinternationally competitive Japanese companies.

Invest Japan Report 2015

41

Ⅳ

1

Environment & Energy

Ciel Terre Japan

FranceThe French company Ciel & Terre, which is involved in floating
solar power generation, established Ciel Terre Japan, KK in Tokyoin 2013. Through expanding its business in Japan and Asia, thecompany aims at the spread of floating solar power generation.
Business Description
S i n c e its estab lis h m ent
in 2006, Ciel & Terre has
managed the installation ofover 55 solar power plant on
roofs and grounds around theworld. It is involved in various
aspects of solar systems: landdevelopment, solar platform
sales, design, operation,
finance, etc. With that
Photo provided by: Ciel Terre Japan
experience, it is aggressively
expanding its presence overseas by operating through local subsidiaries,
representative offices or agents in Japan, UK, US, Brazil, Southeast Asia,etc. Ciel & Terre installs the Hydrelio floating solar platform it developed(it obtained patents for this technology, and by setting solar panels on the
floating units, one can generate power on water). At the first floating solar
PV project in Japan, Ciel & Terre delivered a floating platform and provided
technology, using a reservoir in Okegawa City, Saitama Prefecture; thisstarted operating in July 2013.
Japan Entry Outline
While land availability for mega solar projects in Japan is limited, there
are many reservoirs and artificial lakes dotting around the country. Thus,
Ciel &Terre established its Japanese subsidiary this time in anticipationof the exploration of new business opportunities and the deploymentof this technology. In addition, one of the reasons why the company
decided to enter the Japanese market is the existence of an FIT (Feed-In
Tariff) scheme for renewable energy. Under the scheme, the purchase ofelectricity generated with renewable energy is guaranteed at fixed prices
for an extended period of time. Thus, renewable energy operators’ risk ofentering the business is sharply reduced.
Future Development
The success of the project in Okegawa City (1.2MW) in July 2013 hasbeen a major topic in various quarters, and has attracted interest fromall over Japan. In 2014, Ciel & Terre deployed 3 projects, in Kawagoe
City in Saitama Prefecture, Ono City in Hyogo Prefecture and Yasugi Cityin Shimane Prefecture. In 2015, it started manufacturing in Okayama,and participated in 14 projects in Hyogo Prefecture, Saitama Prefecture,etc. Ciel & Terre also does business with major Japanese companies suchas Kyocera, JFE Electrical & Control Systems, and Mitsubishi Chemical
Engineering, and is working to build its system for cooperating with suchcompanies. In 2016, it plans to participate in the world’s largest floating
solar power plant (13.5MW), the Yamakura Dam project at Ichihara Cityin Chiba Prefecture. Ciel & Terre has worked on over 20 projects in Japan
until now.
JETRO’s Support
When Ciel & Terre was establishing its business in Japan, JETRO provided
free temporary office space in Tokyo, and information on the market forsolar systems in Japan, the Feed-In Tariff system, forms of entry into Japan(differences between a branch and Japan corporation, and an outline ofcosts to establish them), incentives for entry into Japan (local government
assistance projects, solar PV related, funding related), etc. JETRO also
provided consultation on labor and human resources recruiting by a Laborand Social Security Attorney, and consultation on consumption tax, dutyfree operators, and tax refund procedures by a tax accountant, etc.
Comment by the Company“Even now, I often read the materials provided by JETRO over again.
Without JETRO’s support, we could not have concentrated on our work at
the beginning of the establishment of our Japanese subsidiary, and would
not have been able to build a foundation this fast in Japan” (Mr. Hajime
Mori, Representative Director of Ciel Terre Japan)

42

Invest Japan Report 2015

“Environment & Energy” Sector Topics
Introduction of wind power is progressing
Since the Feed-In Tariff system started in 2012, the amount ofwind power generation in Japan has been increasing. At the end of
fiscal 2014, the amount of its power generation reached 2,940,000
kW, with about 2,000 turbines installed.
Along with efforts to encourage its spread, foreign companies
are entering the market one after another. Since earlier, foreigncompanies have been participating in wind power projects and theturbine parts sector. In May 2015, Zurich Insurance announced it
would start selling insurance products for renewable energy power
generation facilities construction. Other foreign companies are also
participating: Statoil (Norway), RES Japan (UK), Pattern Energy (US),IDEOL (France), etc.

Wind Power Generation Volume and Number of Turbines in Japan(10,000 kW)
350
Power generation amount
300
Number of turbines installed(No. of turbines)
2,500

250

1,500

200
150

1,000

100

500

50
0

2,000

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

0〔Source〕Compiled from the New Energy and Industrial Technology
Development Organization Website

Demonstration projects by the government
As part of its “Japan Revitalization Strategy,” the government
raised “realizing clean and economical energy demand andsupply” as its Strategic Market Creation Plan. To do this, in 2010
it implemented large-scale smart city demonstration projects invarious cities (Yokohama City in Kanagawa Prefecture, Toyota
City in Aichi Prefecture, Kansai Science City in Kyoto Prefecture
and Kitakyushu City in Fukuoka Prefecture). In these 4 cities, its
investigations ranged from technology for smart grids and smart
cities, to systems and business models, and implemented anelectricity fee type demand/response demonstration project in eachcity.
Awaiting full scale deregulation of retail electricity sales, based onthese demonstration results, the government created its “Guideline
on Negawatt Transactions” in March 2015. In fiscal 2015’s
negawatt transaction demonstration projects, it confirmed theireffectiveness. Foreign companies that built experience in Europe
and the US are also newly active in showing moves to enter theJapan market.

Ⅳ Investment Promotion Projects of JETRO

2Life Sciences

Jiangsu Hengrui Medicine

China

Jiangsu Hengrui Medicine is engaged in the production
and sales of generic drugs (such as antineoplastic andangiomyocardiac drugs). As the pharmaceutical industry is
expected to expand due to the aging of the population andgovernment policies in Japan, the company entered Aichi
Prefecture, Japan, to manufacture, sell, import and export
pharmaceutical products.
Business Description
Since its establishment in 1997,
the company has engaged in the
production and sales of genericdrugs (such as antineoplastic andangiomyocardiac drugs). The
company has been approved by the
US Food and Drug Administration(FDA) for some of its products,
and has become the first Chinesecompany permitted to sell
pharmaceutical products to the US
and Europe. The company also won
the “Asia’s 200 Best Under A BillionAward” from Forbes Asia in 2013,an award granted to 200 blue-chipcompanies in the Asia-Pacific region.

Photo provided by:
Jiangsu Hengrui Medicine

Japan Entry Outline
In addition to the head office, Jiangsu Hengrui has R&D bases in
China and the US. As the pharmaceutical industry is expected to
expand due to the aging of the population and government policies
in Japan, the company plans to manufacture, sell, import and export
pharmaceutical products. It established its Japan subsidiary in May
2014, and commenced business operations on a full scale starting inJuly 2014 when its pharmaceutical business was authorized.
JETRO’s Support
To support the company in setting up their Japanese subsidiary,
JETRO provided a range of services such as free temporary officespace and consultation with experts in the fields of company
registration, tax and labor matters. JETRO also introduced them tothe local government and provided information on its subsidies aswell as on real estate information.

Johnson & Johnson

USTokyo Science Center (TSC) was established in August 2014as a research and training facility by the leading US medical
device manufacturer Johnson & Johnson. Accepting doctors
not only from Japan, but also from abroad, the center isbecoming a global hub of the medical device field.
Business Description
Johnson and Johnson( J & J ) h a s m o re t h a n 2 6 5operating companies in over
60 countries throughout theworld, with approximately
126,500 employees in total.
In its 2014 business year,
the company posted sales of
Photo provided by: Johnson and Johnson
approximately 74.3 billion US
dollars. It is one of the largest
healthcare companies in the world. Since the start of its businessin Japan in 1961, J&J has been providing a wide range of products
including consumer goods, medical devices and pharmaceuticals.
For medical devices, J&J covers diverse medical fields from surgery tointernal medicine, as well as contact lenses.
Japan Entry Outline
In August 2014, J&J established the TSC in Kawasaki City in theKing Skyfront Strategic Zone, an area designated as a national
strategic special zone. TSC is a research and training facility for
healthcare professionals, with state-of-the-art medical training
equipment such as a simulation device for minimally-invasive surgery,a training simulator for the treatment of cardiovascular disease andthe musculoskeletal system, and remote video conference systems,
etc. These devices enable healthcare professionals to learn cuttingedge medical technology. TSC functions as a center that collects
knowledge and experiences from domestic and Asian healthcare
professionals for further improvement of medical devices, as well as
to reflect them in product development that address the needs ofthose countries. As of the end of November 2015, the facility saw
more than 29,000 visitors from Japan and abroad. It is expected to
become a hub in Asia as well as globally.
JETRO’s Support
For the establishment of TSC, JETRO provided a variety of incentive
information. As a result, J&J applied to and was selected for theSubsidy Program for Projects Promoting Asian Site Location in Japanfor fiscal year 2011.

Life Science Sector Topics
The Ministry of Economy, Trade and Industry is studying a target to
expand the market size of Japan’s bio industry to about 20 trillion yen by
2030, about 6 times its current size. This ministry’s 2013 report estimatesthat the market size of regenerative medicine will be about 1 trillion yen
by 2030.
The Pharmaceutical and Medical Device Act and Regenerative Medicine
Safety Assurance Act were enforced starting November 2014, andregenerative medicine (not medical equipment nor pharmaceuticals) is
now categorized independently as a cell therapy item. Commercial sales
are now approved with the condition that it is at the stage where its
safety is recognized and effectiveness can be estimated. Initially, it used
to take 6 years until commercial sale, but the third trial was eliminated,
and regenerative medicine products can be released in a minimum of 2
to 3 years, which is the fastest approval system among Japan, the US andEurope.

The Size of Japan’s Regenerative Medicine Market(US$B)

8
6
4
2
0

2012

2020

2030

〔Source〕"Final Report on the commercialization and Industrialization of Regeneration Medicine" （Ministry of Economy, Trade and Industry）, 2013

Invest Japan Report 2015

43

Ⅳ

3

4

Tourism

Ctrip JAPAN

China

Services

GUESS JAPANUS

Ctrip is the largest online travel agency in China, and it islisted on NASDAQ. The company is working to expand its
operations in Japan, in order to meet the needs of the quickly
increasing number of Chinese visitors to Japan.

The US apparel brand Guess opened its first Japanese shop in
Harajuku, Tokyo. It continues to be proactive in opening new
locations. Guess aims to show its presence in the Japan market,
and enhance its value as a global brand.

Business Description
Ctrip is an online travel
agency established in
Shanghai, China in 1999.
Users can book hotels,
flights, package tours andmore via the company’s
website or smart phone
application. It was listedon the NASDAQ (a USstock exchange) in 2003.
Photo provided by: Ctrip JAPANCurrently, the company is
one of the largest travel
agencies in China with over 300 million members mostly in themainland, 17 locations throughout the country including Beijing,
Guangzhou and Shenzhen, and approximately 30,000 employees.

Business Description
Guess was founded in 1981 by the Marciano brothers who
immigrated to California from France. They created a new style ofjeans by integrating their European style with traditional American
fabric, and received support from customers both in the US andall over the world. At present, the company offers a wide rangeof products such as bags, watches, accessories and fragrances in
addition to apparel products such as denim, its main product, thus
offering a total coordination.

Japan Entry Outline
Ctrip began sending Chinese tourists to Japan in 2007. At thattime, group tours were the mainstream, but from around 2012 theneeds for independent travelling to Japan significantly increased
due to the more relaxed visa requirements for Chinese citizens
and other factors. And the fact that Tokyo was chosen to hostthe 2020 Olympics made the company decide to start operationsin Japan. Ctrip started preparing for operations in Japan in 2013,
and established Ctrip Japan in Tokyo in May 2014. Currently, theJapan subsidiary functions as the point of contact for negotiatingwith Japanese companies such as hotels, tourist facilities and airline
companies throughout Japan, and supports the headquarters in
China. In order to meet the needs of the quickly growing numberof Chinese visitors to Japan, Ctrip Japan has been going into morepartnerships in addition to those already established, by entering
into direct contracts with hotels and other travel-related companies.
Recent Initiatives
Ctrip has started new initiatives in Japan as well. One of them isthe souvenir shopping service being provided in partnership with
the Japan Post Group, which enables users to order items online
beforehand and have them delivered to their hotels, to save on
their time spent shopping while travelling. The company establisheda new department called the Destination Services Department,
which collects information for tourists such as that on restaurants,sightseeing spots and optional tours throughout Japan, and sends it
out on the website and smart phone app.
JETRO’s Support
When the company established its Japanese arm, JETRO provided
temporary office space and various support to the company,
including consultation on incorporation in Japan, such as on tax
matters, and corporate registration and permits by a Certified
Administrative Procedures Legal Specialist. It also introduced services
providers such as a Certified Administrative Procedures Legal
Specialist and tax accountant, and provided support for opening a
corporate bank account.
Comment by the Company“We had difficulties when opening a bank account in particular,
but succeeded thanks to the support from JETRO.” (Mr. Liang,
Representative Director and President)

44

Invest Japan Report 2015

Japan Entry Outline
Guess opened its firstJapanese shop in Harajuku,
Tokyo in February 2014. It
has since avidly gone on toestablish new shops in Namba,
Osaka and Urayasu, Chiba in
April and in Hakata, Fukuoka
in May. Ahead of the openingof its first shop in Harajuku,
Photo provided by: Guess Japan
Guess established Guess Japan
LLC in Tokyo in February 2013.
At present, for Guess, which is advancing it’s global business withapproximately 1,623 shops in 92 countries worldwide, it was agreat loss to have no base in Tokyo. Thus, it was just a matter oftime before Guess entered the Japanese market. Guess expressed
its expectations for the Japanese market as follows: “Japan ranks
second in the world for the average number of jeans owned perperson (about 0.7 pairs) after the US (about three pairs) on acountry basis. In addition, Japanese customers are highly sensitive tofashion and have a great deal of knowledge on brands and a strong
willingness to buy. Thus, we believe that the Japanese market is aneasier market for a new brand like us to compete.”
Future Development
Going forward, Guess plans for aggressive expansion, targeting “40directly-managed shops in five years with six billion yen in sales.”The company plans to conduct continuous publicity toward fashionconscious Japanese consumers and further promote awareness of
its brand through a number of activities such as selling a limited
collection of prints of adopted animals at certain stores.
JETRO’s Support
In order to set up its Japanese subsidiary, JETRO provided thecompany with a range of support and services, such as offering
free temporary office space in Tokyo, consultations with expert
advisors in the fields of tax and labor matters related to establishinga corporation, provided information on apparel markets by apparelindustry advisors, and introductions to a tax accountant and Certified
Administrative Procedures Legal Specialist. JETRO also helped with
opening a corporate bank account, and arranged meetings withJapanese companies where GUESS wants to open their shops.
Comment by the Company“We greatly appreciate JETRO’s support in simplifying cumbersome
procedures on the establishment of a subsidiary and with otherareas. Introductions provided, such as to a business property
provider, were also helpful.” (Mr. Tatsuo Yata, Country Manager)

Ⅳ Investment Promotion Projects of JETRO

5

6

ICT

ACE JAPAN

Myanmar

ACE Data Systems Ltd. (ACE), a company in Myanmar which
provides software development and offshore IT outsourcing
services for corporations, established ACE Japan KK in Tokyo in
January 2014, as a joint venture with USE Information System
Development Co., Ltd. (USE), a systems development company
in Japan.
Business Description
ACE develops software for money transfers, payment, humanresource management and customer management for its clientsin Myanmar such as national and private banks and distribution
companies, and sells such software to these clients. The company
also provides offshore IT outsourcing services to overseas companies.
Since its foundation in 1992, the company has been steadily
expanding its business to become one of the largest IT companies
in Myanmar with approximately 420 employees and annual sales ofabout 22 million dollars within the group (2014 business year). ACE
has grown to be one of the largest IT companies in Myanmar.
Japan Entry Outline
ACE gives “a growing needfor offshore development
services among Japanesecompanies” as a reason
why it expanded its businessin Japan. There are many
Japanese companies whowish to partner with ACE
having a high profile in
the Myanmar offshore
market. ACE and USE
Photo provided by: ACE Japan
cooper a te d t o g e th e r i n
a project by a major research institute in Japan, which led to theestablishment of the joint venture this time. The companies agreed
on making “building a win-win relationship,” the top priority intheir management attitude, and have built a medium-to-longterm relationship by signing an MOU before the establishment of
the Japanese subsidiary. This relationship of mutual trust that thecompanies built came to fruition as “establishment of ACE Japan”.
Future Development
The company is receiving more and more inquiries about offshore
services in Myanmar. The company currently has six Myanmar
employees working in Japan, but in the future, in order to expand
the offshore business in Myanmar with Japanese companies, thecompany will increase the number of Myanmar employees working
in Japan up to 10 to 20. In addition, they are planning to work on
the development of infrastructure in Myanmar through the projectsof the Japanese government, such as ODA.
JETRO’s Support
In order to set up its Japan subsidiary, JETRO provided the company
with a range of support and services, such as consultations withexperts in the fields of company registration, visa, tax and labormatters. JETRO also introduced a Certified Administrative Procedures
Legal Specialist.
Comment by the Company“JETRO’s advice on establishing a company was a great help to us.
On every occasion, they were very considerate in their guidance sothat we could complete the procedures smoothly.” (Ms. Funabashi,
CEO of USE and President and CEO of ACE Japan)

Manufacturing & Infrastructure

Airbus Helicopters Japan

France, Germany

Japanese subsidiary of French and Germany based helicopter
manufacturer has established an R&D center in Japan. It is thefirst R&D base established in Japan by the foreign affiliatedaircraft manufacturer.
Business Description
Airbus Helicopters Japan (former Eurocopter Japan) provides
total services for helicopters ranging from sales, logistic service,
maintenance, repair, overhaul, conversion, technical support andtechnical publications to training. The company holds a 55% shareof the turbine helicopters in Japan. They are used for a variety of
purposes such as firefighting,disaster prevention, media
coverage, emergency
medical services, policing,coast guard and maritime
lifesaving activities, transportof personnel and supplies.
They are also deployed by
Ground Self Defense Forces as
VIP carriers and by Maritime
Photo provided by:
Defense forces for training
Airbus Helicopters Japanpurposes.
Japan Entry Outline
Eurocopter Japan was established in April 2009. In April 2012,
the company set up an R&D center on the ground of the aircraft
maintenance facilities and training center in Kobe Airport. It plays
a key role in developing optional equipment for special-mission
helicopters, designing onboard installation and installing equipment.
Special-mission helicopters are currently used for a variety of
purposes including firefighting, disaster prevention, search andrescue, policing and media coverage.
Since the Great East Japan Earthquake in 2011, demand forthe special-mission helicopters from local governments has been
mounting in order to reinforce disaster prevention measures. The
R&D center has been handling the helicopters for search and rescue
as well as helicopters equipped with cameras for policing and media
coverage.
Future Development
Special equipment and designs are necessary for the activities inthe demanding environment and securing safe flight, as is in thecase in firefighting against fires in skyscrapers or mountains andmaritime search and rescue operations. In Japan, local manufacturersof aviation parts, equipment and systems undertake to provide
special processing and high-mix low volume production, which isnormally demanded for such high value added products. Airbus
Helicopters Japan aims to meet the growing and expanding needs of
the Asian market, accelerating the development and design of the
products through alliances with these local manufacturers.
JETRO’s Support
For the establishment of the base in Japan, JETRO provided
information on incentives and others. As a result, Eurocopter Japan(current Airbus Helicopters Japan) applied for and was granted theSubsidy Program for Projects Promoting Asian Site Location in Japan.
Comment by the Company“Thanks to JETRO’s kind support, including provision of
information and advice on subsidy, we went through a smoothprocedure for setting up a base.” (Mr. Olivier Tillier, Head ofOperations)

Invest Japan Report 2015

45

Ⅳ

The attractiveness of the Japanese market -Voices of ExecutivesAXA Life Insurance Co., Ltd.

Delta Air Lines, Inc.

(November 2014)(December 2014)

Mr. Jean-Louis Laurent Josi
President and CEO of AXA Life Insurance Co., Ltd.

Mr. Vinay Dube
Senior Vice President – Asia Pacific for Delta Air Lines

The first one is the market size. Japan’s life insurance market isthe second largest in the world, and Japan has the third largest
GDP scale in the world. Japan is an important market for us,
as we deploy business globally. I believe that we will be able tocontinue contributing to more customers.
We also consider the issue of aging population in Japan asa new business opportunity. Japan is a very important market
when we consider how we will respond to the needs of theelderly segment, which will grow in the future. The aging
population is an issue that other countries in Europe and Asia
can potentially face in the future, and we will be able to utilize
what we have learned in Japan. …
We will further expand the business scale in Japan andcontinue to make investments.

One is that there are many demands for the travel industry,creating a big market. Such conditions have allowed us tosteadily expand. We operate a hub at Narita. For passengers
from the US, Narita is geographically well situated to connect
to all cities in Southeast Asia, not just to Japan. Another big
benefit is that we can “export” the operation efficiency,
safety and service quality offered by our Japanese staff toother countries. Every customer and colleague who has
experienced Delta’s service in Japan always comments on thelevel of operation efficiency, safety and service quality, fromhow customers are greeted and checked in to how issues
are handled are exceptional. We are trying to establish this in
Delta’s bases throughout the world.

Coca-Cola (Japan) Company, Limited

IKEA Japan KK（November 2014）(January 2015)

Mr. Tim BrettRepresentative Director and President of Coca-Cola (Japan) Company, Limited

Mr. Peter List
President and CEO of IKEA Japan“Aquarius” sports drink is a product that was made in Japanfor Japanese consumers, but has now traveled around theworld and it’s extremely successful in some markets in Europe,such as Spain, etc., and also some markets in Latin America, as
well as Asian countries.
“Georgia,” which is a coffee drink, was invented and releasedin Japan in 1975. It’s now a very core part of our business inJapan, and it’s also sold in other markets. “Ayataka” green tea
has also been very successful in other markets for the reason
that it’s a high quality good tasting product.
Another good example of Japan’s original products is “I
LOHAS,” which is a mineral water bottle. This is a very ecofriendly plastic bottle, which uses plant-based materials, andcan easily be crushed for recycling. This bottle technology wasdeveloped in our R&D facility in Tokyo and is now introduced
throughout the Coca-Cola system around the World. This is an
example of a great combination of Japanese great “desire to be
eco-friendly” being combined with Japanese “innovation” andthe two working very well together.

Japan is the second biggest retail market in the world. It also
has the third largest GDP in the world. These two factors alone
make it very appealing. Also, there is very high literacy level inJapan as well.
In addition, many people live in small spaces in Japan and wehave a lot of business experiences for areas with small spaceliving like Japan, for example, New York, Paris, London, andso we have opportunities to apply that know-how that we
acquired in other countries into Japan. … For example, we used
to make our sofas in the same size around the world, but wemade them smaller so that they fit life at home in Japan. I havevisited homes across Japan so that we can develop our productrange that is unique but relevant for Japan, based on their life
styles and opinions. And it’s a trend, and people like to havethese sorts of products anywhere in the world. Not only sofas
but also chopsticks and firmer mattresses, and cooling products
developed in Japan are sold around the world. The Japanesemarket plays an important role in growing Ikea globally. So we
can say that it’s been a win-win relationship.

46

Invest Japan Report 2015

Selection from "Success Stories / Voices of Foreign Company Executives in Japan" on JETRO's website

Merck Ltd.

Ticket Experience Co., Ltd.
(December 2014)(July 2015)

Dr. Karl Roeser
Representative Director, Chairman and President of Merck Ltd.

Mr. Javier Corbacho
representative of Ticket Experience Co., Ltd.

First of all, Japan is a big market in itself. It’s the third biggest
economy in the world, and there is a lot of buying power inthe population. Also, people respect quality and intellectual
properties. Now that the whole Japanese economy is matured,
the Japanese GDP will not grow at double digits in the future,
but with growing social needs for the aging society andtreatments of chronic diseases, areas such as drugs and life
science have significant growth potential. So I think that ourcompany has many growth opportunities in the Japanesemarket.
Also, Japan has one of the most advanced scientific andtechnological capabilities in the world and can deliver unique
technologies to the world. Many of the technologies used in ourcore products have been developed together with our Japanese
partners such as universities and our customer companies.

It’s not just that the Japanese e-commerce market is verylarge. It also has one hundred million online users and morethan 75 million e-commerce users, and many startup companies
are entering the market now. These factors made us thinkvery positively about doing business in Japan. … Japan, with
its well-developed online market and numerous events, is avery important and attractive market for us. … Currently, thenumber of foreign visitors to Japan is increasing. Japanese
baseball, sumo, kabuki and J-pop are becoming very attractive
contents not only for Asian visitors such as those from China
and South Korea, but also for European and North American
visitors. We would like to contribute not only to achieving theforeign-visitor target by the Japanese government, but also to
the dissemination of Japanese media content to the world andto the increased number of foreign tourists attending events inJapan.

Schneider Electric Japan Inc.

ZF Japan Co., Ltd.

(November 2014)(June 2015)

Mr. Philippe Bouchet
Vice-President of Schneider Electric Japan Inc.

Mr. Richard Kracklauer
President of ZF Japan

It has been approximately 50 years since we started doing
business in Japan. There are three reasons why we operate inJapan. Firstly, Japan has a large economy and a big demand forhigh-tech products. Secondly, there are wonderful partners thatare operating domestically and internationally. And the third
reason is that Japanese customers accept high-quality products
and technologies.
The Japanese subsidiary is one of the top five companies
within the Group in terms of sales, but this is not the only
benefit that we receive by operating in Japan. First of all, we
can improve the quality of our products and customer service as
customers’ demands are high in the Japanese market. What we
experience in Japan becomes benchmarks in the global market.
Also, partnering with technologically-accomplished Japanesecompanies enables us to expand the business into countries
other than Japan, which is another benefit of operating inJapan. Furthermore, talking about recent trends, benefits
brought by Japan in the energy sector are also significant. For
companies focusing on the energy sector such as smart grids
and smart cities, business development in the Japanese market
will be an important step towards entering the global market as
Japan is one of the leading countries in terms of energy.

We have never felt any major obstacles when operating inJapan. We don’t have any problems in terms of regulations
either.
…Under the policy of making a long-term commitment in theJapanese market, we will set up a technical center in Japan.
Moreover, we are also keeping the view of establishing an
R&D base. Japan is facing the serious issue of a declining birthrate and an aging society and thus it has stronger needs fore-mobility than other countries, so we feel that we need todevelop products with the perspective of technologies five to
10 years ahead. When thinking that there is a high possibility
that other countries will also face the issue of a lower birth rate
and aging population, it can be said that the Japanese market isoffering many opportunities to us, because we can work on theworld’s issues before anyone else.

Invest Japan Report 2015

47

The government's efforts and JETRO's inward investment promotion activities
The transition in 13 years
2003

Jan The government decided on the target to "double the inward FDI stock compared to the value as of the end of 2001, in 5 years"
May

The government held up "Invest Japan" as slogan and set up "Invest Japan Offices" in the relevant ministries. The "Invest Japan
Business Support Center (IBSC)", a one-stop center for information about investing in Japan, was set up in JETRO.

2006

Mar The government set up a new goal to "double the inward FDI stock as percentage of GDP (to about 5%) by the end of 2010"

2007

May The regulation on "flexible merger consideration (triangular merger)" in the Companies Act was enforced

2010

Jun "New Growth Strategy" was approved by the cabinet (it's goal was to "double the flow of people, things and money into Japan")

2011

Jan "Subsidy Program for Projects Promoting Asian Site Location in Japan" was created (the secretariat was placed in JETRO)

2012

Aug

The "Comprehensive Special Zone Law" was enforced (creting industrial clusters in regions through taking preferential measures
such as tax and regulation reforms)

Dec

The "Great East Japan Earthquake Reconstruction Special Zone Law" was enforced (providing incentives such as tax and regulation
refoems regarding investment in the affected areas)

Dec"Program for Promoting Japan as an Asian Business Center and Direct Investment into Japan" was approved. Goals were set toincrease the numbers of high added-value business bases and doubling the number of employees at foreign-affiliated companies

Apr The corporate tax rate was lowered (40.69% → 38.01%）
May The Points-based Preferential Immigration Treatment for Highly Skilled Foreign Professionals was started

2013
2014

Jun

The "Japan Revitalization Strategy" was approved by the cabinet (it set up clear goal to increased the inward FDI stock to 35trillion
yen by 2020, and included the strengthening of industrial specialist program and Invest Japan Hotline in JETRO)Mar The reconstruction special tax was abolished. (corporate tax: 38.01% → 35.64%）
Apr

The Council for Promotion of FDI in Japan was founded (it clearly stated the role of JETRO to cooperate with Japanese embassies
and local governments to attract FDI into Japan)

Jun The "Japan Revitalization Strategy (Revised in 2014)" was announced
2015

Mar

The second meeting of the Council for Promotion of FDI in Japan was held, and Prime Minister Abe announced the "FiveCommitments for Attracting Foreign Businesses to Japan"

Apr

The "Tokyo One-Stop Business Establishment Cernter (TOSBEC)"was opened in the Tokyo Area of the National Strategic Special
Zones

Jun The "Japan Revitalization Strategy (Revised in 2015)" was announced
Sep

The "New Three Arrows" of Abenomics was announced, aiming to create a strong economy, more support for childcare and social
security

JETRO HQ(Akasaka,Tokyo)

48

Invest Japan Report 2015

JETRO Invest Japan Business Support Center(IBSC)

Talk to
JETRO
First
about business in Japan!

Invest Japan Report 201549

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February, 2016