1JETRO Global Trade and Investment Report 2020

A global economy with increasing uncertainty and the futureof digitalization -Overview-

July 30th, 2020
Japan External Trade Organization (JETRO)
Overseas Research Department
Copyright (C) 2020 JETRO. All rights reserved.

2

Contents
Chapter 1: World trade and Japan’s trade3• Section 1: Current State of the world economy• Section 2: World trade• Section 3: Japan’s trade• Section 4: Impact of US-China friction on world trade

4
8
14
19

Chapter 2: Global FDI and Japan’s FDI

23• Section 1: Global FDI• Section 2: Japan’s outward FDI• Section 3: Japan’s inward FDI• Section 4: Impact on business activities of changes in the business environment amidst
increasing uncertainty
Chapter 3: Trends in global trade rule formation• Section 1: Trade policies of major countries/regions• Section 2: Current situation and challenges of the multilateral trading system• Section 3: Current situation of FTAs in the world and Japan
Chapter 4: Digital trade• Section 1: Global digital trade• Section 2: Trends in global digital business• Section 3: Trends in digital-related rule formation• Digital Business and Rule Formation Trends by Country and Region

24
28
31
34
49
50
60
62
64
65
71
80
85

Copyright (C) 2020 JETRO. All rights reserved.

3

Chapter 1

World trade and Japan’s tradeChapter 1 Section 1 Current State of the world economy

4

World economic growth slows in 2019 and drops sharply in 2020
 According to the IMF, the world’s real GDP growth rate (hereafter, growth rate) in 2019 was 2.9%, down from
3.6% in 2018. This was the lowest level since the global financial crisis in 2008 (3.0%) and 2009 (-0.1%). The
large slowdown was seen in the euro area among developed countries, as well as in India and China among
emerging and developing countries.
 The global growth rate for 2020 is expected to be -4.9%, surpassing 2009’s (-0.1%). The assumption is that thecoronavirus disease (hereafter, COVID-19) pandemic will settle in the latter half of 2020 and that containment
measures will be gradually lifted. However, it is highly likely that this will be “the worst economic downturn
since the Great Depression.”
Trends in world real GDP growth rate

Real GDP growth rate/contribution by economies(%)
2018
Growth
rate
World

2019

Contribution

Growthrate

Contribution

2020

(%)

（Projection）
Growth8.0

Contribution

rate

6.0

Real GDP growth rate
Projection (2020-2021)

3.6

3.6

2.9

2.9

-4.9

-4.9

2.2

0.9

1.7

0.7

-8.0

US

2.9

0.4

2.3

0.4

-8.0

-3.2 4.0-1.2Euro area

1.9

0.2

1.3

0.1

-10.2

Japan

0.3

0.0

0.7

0.0

-5.8

-1.1 2.0-0.2

Emerging and developing Economies

4.5

2.7

3.7

2.2

-3.0

-1.8 0.0

Emerging and developing Asia

6.3

2.1

5.5

1.8

-0.8

-0.3

China

6.7

1.2

6.1

1.1

1.0

0.2 -2.0-0.1 ％

India

6.1

0.5

4.2

0.3

-4.5

-0.4

（2009）

ASEAN-5

Advanced economies

5.3

0.3

4.9

0.3

-2.0

-4.0
-0.1

Latin America and Caribbean

1.1

0.1

0.1

0.0

-9.4

-0.7

Emerging and developing Europe

3.2

0.2

2.1

0.1

-5.8

-0.4

Middle East and Central Asia

1.8

0.2

1.0

0.1

-4.7

-0.4

Sub-Sahara Africa

3.2

0.1

3.1

0.1

-3.2

-0.1

Note :

1)

The definitions of advanced/emerging and developing economies follow the World Economic

5.4％（2021）-4.9％（2020）

1980
82
84
86
88
90
92
94
96
98
2000
02
04
06
08
10
12
14
16
18
20

-6.0
（Year）

Source: "WEO, April /June 2020" (IMF)

Outlook (WEO). ASEAN-5 refers to Indonesia, Malaysia, Philippines, Thailand, and Vietnam.
2)

For India, the data and forecast are presented on a fiscal-year basis.

3)

Contributions are calculated using the purchasing power parity (PPP) of the previous year, which was
released in April 2020.

Source :"WEO, April/June 2020" (IMF)

Copyright (C) 2020 JETRO. All rights reserved.

Chapter 1 Section 1 Current State of the world economy

5

Commodity prices impacted by decline in economic activity due to COVID-19
 Economic activity stagnated as a result of measures taken on a global scale such as restrictions on outings andinternational travel to combat COVID-19. This resulted in a decline in demand for commodities, significantly
reducing energy prices and especially for crude oil.
 While economies are expected to be supported by stimulus measures, budget deficits are predicted toincrease worldwide. Particularly in oil-producing countries, the current account balance is expected todeteriorate due to the drop in oil prices as well as the deterioration in the fiscal situation due to the measuresagainst COVID-19. It is difficult to determine how to stabilize the resumption of economic activities while
implementing public health policies and other measures.
Trends in commodity price index (Monthly)

Fiscal and current account balance status and prospectsof fuel exporting countries[Current account balance (as a percentage of GDP), %]

180
160
140

15

-30

120

Saudi Arabia(2020)

100
80

All index

60

EnergyIran(2020)

Non-energy

40
1
2016

10

UAE
(2020)

7

1
2017

7

1
2018

7

Note: Until June 2020.
Source: "Primary Commodity Prices"（IMF）

1
2019

7

1 (Month)2020 (Year)

Nigeria(2020)

Russia(2020)

2020

2019

-30

[Fiscal balance (as a percentage of GDP), %]（2016=100）

Note: 1) Of the fuel exporting countries as defined by the IMF (50% of
exports are fuel), 26 countries for which data are available areplotted.
2) Fiscal balance is the general government net lending (+)/ net
borrowing.(-)
Source: "WEO, April 2020" (IMF)
Copyright (C) 2020 JETRO. All rights reserved.

Chapter 1 Section 1 Current State of the world economy

6

Increasing uncertainty in global economy with COVID-19
 Currently, some countries and regions are easing measures designed to prevent the spread of COVID-19.
However, a second wave of the pandemic could constrain economic activity and further depress global
economic growth.
 With the expansion of COVID-19, indicators of global uncertainty have reached their highest levels since 1960,
when data first started to be collected. And there are many matters spreading uncertainty aside from COVID19, such as (1) the tension between the US and China increasing in many areas; (2) the frayed relationshipwithin “OPEC Plus,” consisting of OPEC and major non-member oil-producing countries; and (3) the spread ofsocial unrest throughout the world.
Trends in the regulatory strength index for COVID-19
prevention measures
100

Trends in world uncertainty index (Quarterly)
60000

World Uncertainty Index (WUI)
World Pandemic Uncertainty Index(WPUI) (right axis)

80

Uncertainty:
High

15

40000

10

20000

5

60

20

0
2020/1/1

China

US

Germany

BrazilJune 30 (daily)

Note: Index of the strength of government measures to prevent the spread of COVID-19.
100 is the strictest.
Source: "Oxford COVID-19 Government Response Tracker" [Hale Thomas, Sam Webster,Anna Petherick, Toby Phillips, and Beatriz Kira (2020), bsg.ox.ac.uk/covidtracker(accessed on July 10, 2020)]

0

0

1996
97
98
99
2000
01
02
03
04
05
06
07
08
09
10
11
12
13
14
15
16
17
18
19
20/Q1

40

（Year）

Note: The WUI is constructed based on the frequency of the use of words related to“uncertain," and WPUI based on the number of times uncertainty is mentioned in
proximity to a word related to "pandemic," in the country reports of approximately
140 countries and regions by the Economist Intelligence Unit (EIU). The WUI uses
indicators weighted by GDP.
Source: Ahir, H, N Bloom, and D Furceri (2018), “World Uncertainty Index,” Stanford
mimeo (accessed 17 July 2020).

Copyright (C) 2020 JETRO. All rights reserved.

Chapter 1 Section 1 Current State of the world economy

7

Number of foreign visitors to Japan down 99.9% due to COVID-19
 In 2019, the number of foreign visitors to Japan reached a record high of 31.9 million. However, it began
declining year-over-year in February due to the impact of COVID-19. It further declined 99.9% in April andMay.
 The tertiary industry activity index, a measure that comprehensively shows the production activity levels ofsectors in the tertiary industry, was 96.9 in March 2020 (2015=100). Specifically, this amounted to a 4.2%
decline month-over-month and marked the second consecutive monthly fall and a record low as identified
under the current standard. Looking at tertiary industry categories, the passenger transportation sector among
tourism segments plunged 50.1% month-over-month.
Impact of COVID-19 on tourism-related industries(March 2020)

Trends in the number of foreign visitors toJapan and growth rate
(10 thousand)

(%)

4,000

60.0

Number of foreign visitors to Japan

3,500

Growth rate (right axis)

40.0

3,000

20.0

2,500

0.0

COVID-19

2,000

Industry

Indices of tertiaryindustry activity
Monthly comparison
by industry [Note ]Major impacts

Passenger
transport-50%

・ Cancellations of international flights, cruise ships,
tourist buses, etc. have occurred one after anotherresulting in a decrease of the number of flights,
voyages, and bus trips.

Accommodations-46%

Eating and drinking
places, take out anddelivery services-24%

Retail trade (dry goods,
apparel and apparelaccessories)-17%

・ Requests for suspension of operations atamusement parks, sports facilities, etc.
・ Shortening of business hours-3%・ Requests for closure of department storesand other facilities
・ Partial closures of large-scale duty-freestores

-20.0

1,500

Great East Japan
Earthquake

1,000

-40.0
-60.0

Note: Figures for April and May are estimates.
Source: Japan National Tourism Organization (JNTO) (as of June 2020)

2020…

2019

2018

2017

2016

2015

2014

2013

2012

2011

2010

2009

2008

2007

2006

2005

2004

2003

0

2019…

500

-80.0

・ Cancellation of lodging reservations intourist areas
・ Requests to refrain from hosting large
events・ Cancellations of large group reservations
such as tours, etc.
・ Requests from the governors of eachprefecture to refrain from going out

2019 2020
1-5 1-5

Other retail trade

Note : The indices of tertiary industry activity is a comprehensive index of the production
activities of industries belonging to tertiary industries (2015 = 100, seasonally adjusted).
Source : Ministry of Economy, Trade, and Industry.

Copyright (C) 2020 JETRO. All rights reserved.

Chapter 1 Section 2 World Trade

8

World trade in 2019 decreased in both trade value and volume
 In 2019, world trade (trade in goods, nominal export value) decreased by 2.9% from the previous year
to $18.5 trillion (JETRO estimate). This is because of an increase of uncertainty caused by tradedisputes, a decline in demand due to slowing global economic growth and a decline in fuel prices.
 The trade volume (export basis) also decreased by 0.1% year-on-year, a down turn from the previous
year in terms of both value and volume. It was the first time in ten years, since 2009, that both sides
had negative growth.
World trade related indicators

Note: 1) Both trade values and nominal growth rates are estimated by JETRO. See Appendix
Annotation II regarding the method of estimation. 2) The real growth rate is from the WTO. 3) The
price growth rate was calculated by dividing the nominal value by volume index. 4) All commodity
prices are indicated in the growth rate of the annual average. Crude oil prices are the average ofDubai, Brent and WTI. Natural gas prices are from the Europe/Japan/US index.
Source: Trade statistics of respective economies, OECD data (June 2020), "IFS (June, 2020)" (IMF),"PCPS (June 2020)" (IMF) and WTO data

Trends in world trade (export basis)(Billion USD)
25,000

Export value
Nominal growth rate (right axis)
Real growth rate (right axis)

(%)

25.0
20.0
15.0
10.0
5.0
0.0
-5.0
-10.0
-15.0
-20.0
-25.0
-30.0

20,00015,00010,000
5,000
0

2001
02
03
04
05
06
07
08
09
10
11
12
13
14
15
16
17
18
19

(Unit: % for growth rate and change rate)
2015
2016
2017
2018
2019
World trade (export) (100 mil USD)
161,825 156,646 173,484 190,654 185,047
Nominal growth rate
-13.0
-3.2
10.7
9.9
-2.9
Real growth rate
2.3
1.7
4.3
2.5
-0.1
Price growth rate
-15.0
-4.8
6.2
7.2
-2.8
World trade (import) (100 mil USD)
164,769 160,008 177,732 196,293 190,290
Nominal growth rate
-13.0
-2.9
11.1
10.4
-3.1
Real growth rate
2.2
1.0
5.1
3.2
-0.2
Price growth rate
-14.9
-3.9
5.7
7.0
-2.9
Industrial production index growth rate（OECD)
0.6
0.4
3.0
2.3
-0.3
Fuel price index growth rate
-44.1
-16.5
23.9
27.3
-17.3
Crude oil price growth rate
-47.2
-15.7
23.3
29.4
-10.2
Natural gas price index growth rate
-34.8
-28.6
16.1
26.4
-36.7
Metal price index growth rate
-27.3
-5.3
22.2
6.6
3.7
Iron ore price growth rate
-42.4
4.3
21.5
-1.4
33.5
Food and beverage price index growth rate
-16.2
1.1
3.1
-1.7
-3.1
Growth rate of nominal effective dollar exchange rate
14.7
0.5
-1.0
-2.4
3.4

（Year）

Source: JETRO's estimates based on the trade sitatistics of respective countries, and
WTO data

Copyright (C) 2020 JETRO. All rights reserved.

Chapter 1 Section 2 World Trade

9

Trends by country: Negative trade value in many countries and regions compared to 2018
In 2019, the trade value declined from the previous
year in many countries and regions, mainly in Europe
and East Asia. In exports, Germany (4.6% decrease
YoY), Korea (10.4% decrease), and Japan (4.4%
decrease) contributed to the slowdown. The export
value of commodity exporters also declined by 6.5%
from the previous year due to the impact of falling
resource prices.



The export value of China, now the largest exporter,
rose 0.3% to $2.4979 trillion. $98 billion of that was
the export to Vietnam, up 17.1% from 2019. Although
China’s exports to Vietnam accounted for only 3.9% of
the total, China increased its exports of electricalequipment and general machinery.



Chinese exports to major countries/regions and export
product (2019, component ratio)(Unit: %)Destination

Product
Total
General machinery
Computer and peripheral equipment

Electrical equipment
Communication equipment

Transport equipment
ChemicalsIndustrial chemicals
Textiles and related products

World

US

Japan

Korea ASEAN

100.0
16.7

16.7
3.5

5.7
1.1

4.4
0.5

14.4
2.0

3.9
0.4

3.2
0.7

7.9
26.9
9.1

2.1
4.2
1.9

0.5
1.3
0.4

0.2
1.5
0.4

0.5
3.5
1.0

0.1
1.2
0.3

0.4
0.7
0.2

4.5
9.5
5.2
10.4

0.7
1.3
0.6
1.7

0.2
0.5
0.3
0.8

0.1
0.5
0.4
0.3

0.6
1.5
0.8
1.6

0.1
0.4
0.2
0.6

0.2
0.3
0.2
0.3

VietnamGermany

Note : 1) Listed only the top 5 countries with the largest Chinese exports in 2019 and ASEAN. ASEAN
consists of 10 countries. 2) Shaded figures represent countries, regions, and products where its share in total
Chinese exports increased compared to 2018.
Source : Chinese trade statistics

World trade by country and region (2019)（100 million USD, ％）ImportExport
Value

Share

Growthrate

Contributi
onVolumegrowth
rate

Value

Share

Growthrate

Contributi
onVolumegrowth
rate

NAFTA
US
CanadaMexicoEU
Germany
Netherlands
FranceItaly
UK
Australia
Japan
East Asia
China
Korea
TaiwanASEAN6Singapore
Thailand
Malaysia
VietnamIndonesia
Philippines
India
BrazilRussiaTurkeySouth Africa

25,533
16,452
4,470
4,611
62,637
14,892
7,094
5,697
5,327
4,691
2,709
7,057
47,20824,9795,422
3,051
13,756
3,904
2,453
2,382
2,643
1,670
703
3,242
2,254
4,228
1,808
898

13.8
8.9
2.4
2.5
33.8
8.0
3.8
3.1
2.9
2.5
1.5
3.8
25.5
13.5
2.9
1.6
7.4
2.1
1.3
1.3
1.4
0.9
0.4
1.8
1.2
2.3
1.0
0.5

-0.6
-1.2
-0.8
2.3
-3.0
-4.6
-2.4
-2.1
-3.1
-3.6
5.4
-4.4
-1.8
0.3
-10.4
-0.9
-1.9
-5.2
-2.1
-4.3
8.4
-7.3
4.2
-0.2
-5.8
-6.0
7.7
-4.3

-0.1
-0.1
0.0
0.1
-1.0
-0.4
-0.1
-0.1
-0.1
-0.1
0.1
-0.2
-0.5
0.0
-0.3
0.0
-0.1
-0.1
0.0
-0.1
0.1
-0.1
0.0
0.0
-0.1
-0.1
0.1
0.0

1.0
-0.3
2.4
4.4
n.a.
-2.3
1.6
0.7
-0.6
-2.6
0.7
-2.0
n.a.
1.9
-1.8
2.7
n.a.
-1.2
-3.0
-2.0
10.5
-3.4
3.5
2.8
-3.2
-1.5
6.8
-0.1

34,07024,9844,533
4,553
62,871
12,345
6,364
6,512
4,735
6,896
2,138
7,208
41,935
20,686
5,033
2,864
13,352
3,591
2,400
2,050
2,534
1,704
1,074
4,839
1,773
2,438
2,102
881

17.9
13.1
2.4
2.4
33.0
6.5
3.3
3.4
2.5
3.6
1.1
3.8
22.0
10.9
2.6
1.5
7.0
1.9
1.3
1.1
1.3
0.9
0.6
2.5
0.9
1.3
1.1
0.5

-1.7
-1.7
-1.4
-1.9
-3.2
-3.9
-1.4
-3.0
-5.9
2.4
-5.8
-3.7
-2.5
-1.9
-6.0
0.9
-2.7
-3.1
-3.8
-6.0
7.0
-9.3
-1.4
-5.9
-2.1
2.2
-5.7
-5.2

-0.3
-0.2
0.0
0.0
-1.1
-0.3
0.0
-0.1
-0.2
0.1
-0.1
-0.1
-0.5
-0.2
-0.2
0.0
-0.2
-0.1
0.0
-0.1
0.1
-0.1
0.0
-0.2
0.0
0.0
-0.1
0.0

-0.4
-0.5
1.3
-1.4
n.a.
-0.4
2.7
0.2
-1.6
5.2
-1.4
0.3
n.a.
0.0
-1.3
4.6
n.a.
-1.2
-4.8
-3.0
9.8
-6.7
-2.9
-2.0
2.2
4.0
-5.0
-0.4

World
Advanced economies

185,047

100.0

-2.9

-2.9

-0.1

190,290

100.0

-3.1

-3.1

-0.2

Emerging/developing economies

110,853
74,194

59.9
40.1

-3.3
-2.4

-2.0
-1.0

n.a. 117,885
n.a. 72,404

62.0
38.0

-3.1
-2.9

-1.9
-1.1

n.a.
n.a.

Commodity exporters

28,160

15.2

-6.5

-1.0

n.a.

23,290

12.2

-2.3

-0.3

n.a.

Fuel exporters
Nonfuel exporters
Commodity exporters Dev.
Commodity exporters Adv.

19,414
8,746
19,111
9,049

10.5
4.7
10.3
4.9

-8.7
-1.2
-8.7
-1.3

-1.0
-0.1
-1.0
-0.1

n.a.
n.a.
n.a.
n.a.

15,704
7,586
14,574
8,716

8.3
4.0
7.7
4.6

-0.4
-5.9
-1.8
-3.0

0.0
-0.2
-0.1
-0.1

n.a.
n.a.
n.a.
n.a.

Note: 1) Figures of "World," "EU," "Advanced economies," "Emerging/developing economies" and "Commodity exporters" were estimated by
JETRO. 2) Figures of "EU" include those of intraregional trade. 3) Member countries of ASEAN 6 are Singapore, Thailand, Malaysia, Vietnam,
Indonesia and the Philippines. 4) East Asia includes China, Korea, Taiwan and ASEAN6. 5) See footnote in the main text regarding the definitionof "Commodity exporters" (39 emerging/developing economies and seven advanced economies). Figures of small countries which were
unavailable or unable to be estimated were excluded. 6) Advanced economies include 37 economies based on the definition of DOTS (IMF).
Figures for "emerging/developing economies" are calculated by subtracting "advanced economies" from the "world." 7) Volume growth rate
data are from the WTO.
Source: Trade statistics of respective economies and WTO data

Copyright (C) 2020 JETRO. All rights reserved.

Chapter 1 Section 2 World Trade

10

Trends by product: Commodity-related products and machinery negatively impacted exports
 The growth rate of world trade by product in 2019 (onan export value basis) was negative for many
products. The slowdown in commodity-related
products, general machinery, chemicals, transport
equipment, and electrical equipment negatively
impacted world trade.

 The demand cycle for semiconductor-related
products bottomed out in the fourth quarter of 2019.
According to the World Semiconductor Market
Statistics (WSTS), the semiconductor market is
expected to recover to $426 billion in 2020, up 3.3%
from the previous year (as of June 2020).
(%)

Export growth rate of semiconductor-related products byquarter

70.0
60.0
50.0
40.0
30.0
20.0
10.0
0.0
-10.0
-20.0
-30.0

Electron tubes, semiconductors, etc.
Integrated circuit
Semiconductor production equipment

World trade by product (export basis, 2019)

Mineral ore (c)Mineral fuels etc. (d)Base metal and its products (e)Commodity-related products (total)

50,542

27.3

-6.1

-1.7

21,24829,295
14,17615,118

11.5
15.8
7.7
8.2

-9.7
-3.3
-5.6
-1.0

-1.2
-0.5
-0.4
-0.1

Total exports
Machinery and equipment
General machinery
Turbines
Computer and peripheral equipment
Semiconductor manufacturing equipment

Industrial robots
Electrical equipment
Communication equipment
Electronic tubes and semiconductors
Integrated circuits
Lithium-ion storage batteries
Transport equipment
Automobiles
Hybrid vehicles
Plug-in hybrid vehicle
Electric vehicles
Automobile parts (excluding engines)
Precision equipment
Chemicals
Pharmaceuticals and medical supplies
Food (a)Oils, fats, and other animal and vegetable products(b)

I

II

III

2016

IV

I

II

III

2017

IV

I

II

III

2018

IV

I

II

III

2019

IV

I
2020

Note: 1) Changes in growth rate of export value (compared to the same period of theprevious year). 2) Due to the limitation of data, created based on data from 32
countries/regions (see next page for details).
Source: Trade statistics of respective country/region（100 million USD, ％）Share Growth rate Contribution
100.0
-2.9
-2.9
40.1
-1.7
-0.7
11.9
-2.8
-0.3
0.8
8.2
0.1
3.1
-5.8
-0.2
0.4
-6.7
0.0
0.0
-9.8
0.0
14.7
-1.1
-0.2
3.2
-3.1
-0.1
0.6
1.0
0.0
3.9
1.2
0.0
0.2
15.6
0.0
9.9
-1.9
-0.2
5.0
-0.8
0.0
0.2
49.9
0.1
0.1
13.4
0.0
0.1
122.3
0.1
2.2
-5.1
-0.1
3.6
0.3
0.0
13.6
-2.3
-0.3
3.4
5.3
0.2
7.2
-0.3
0.0
1.0
-5.2
-0.1
1.3
11.0
0.1
11.5
-9.7
-1.2
6.4
-8.4
-0.6

Value
185,047
74,113
21,983
1,485
5,718
802
55
27,119
5,891
1,158
7,195
347
18,361
9,249
443
149
256
3,999
6,650
25,194
6,234
13,2481,870
2,350
21,248
11,826

Fuel (d)Non-fuel (metal, food and beverages)
Metal（c + e）
Food and beverages（a + b）

Note: 1) JETRO estimates. See Appendix Annotation II regarding the method of estimation. 2)
See Appendix Annotation I regarding the product classification
Source: Trade statistics of respective economies

Copyright (C) 2020 JETRO. All rights reserved.

Chapter 1 Section 2 World Trade

11

World trade in the first quarter of 2020 dropped sharply due to COVID-19
 The trade value of 32 countries and regions for which trade data by product through the first quarter of 2020
is available (export basis) decreased by 5.8% year-over-year in the same quarter. Transport equipment (10.7%
decrease) and general machinery (9.1% decrease) contributed to the decline. Exports of pharmaceuticals andmedical supplies, meanwhile, rose 13.9% maintaining positive growth.
 Looking at the growth rate in the first quarter of 2020 by country, China's exports fell sharply by 13.4% yearover-year. Exports from the US, Germany, Japan, and ASEAN5 were negative. As for trade between majorcountries and regions, the decline in exports and imports of China and the EU countries appears to be greaterthan other countries.
Trade for 32 major economies by product, on quarterly
basis (YoY growth rate)
World trade
coverage ratio（2019）

Total (exports of 32 countries/regions)
Machinery and equipment
General machinery
Mining and construction machines
Turbines
Computers and peripheral equipment
Semiconductor manufacturing equipment

Industrial robots
Electrical equipment
Communication equipment
Electronic tubes and semiconductors

Integrated circuits
Transport equipment
Automobiles
Automobile parts (excluding engines)

Precision equipment
Chemicals
Pharmaceuticals and medical supplies

Commodity-related products (total)*
Fuel*
Non-fuel products (metal, food and beverages)*

76.1
82.1
83.8
87.5
70.5
85.4
98.1
95.4
83.8
80.7
94.0
93.6
76.1
74.4
74.2
85.7
83.3
86.6
72.0
72.6
71.4

2019
I
-2.9
-3.8
-3.1
-1.2
10.2
-3.6
-18.8
-11.5
-3.7
-5.5
-5.4
-2.9
-5.5
-6.3
-6.7
-2.1
-1.2
3.4
-4.7
-5.8
-3.9

II
-3.5
-4.0
-4.3
-7.0
9.4
-7.6
-12.9
-11.7
-3.8
-4.5
-0.5
-3.0
-5.0
-4.1
-7.3
-1.9
-2.2
3.6
-3.6
-3.2
-3.9

III
-2.3
-2.2
-4.6
0.5
11.0
-11.5
-15.1
-5.2
-2.5
-2.1
2.5
-2.1
0.8
5.1
-4.8
0.5
-1.3
10.2
-7.5
-15.2
-0.7

IV
-2.0
-1.5
-2.9
-10.6
6.0
-7.4
23.6
-8.5
-0.7
-4.4
4.7
3.6
-1.8
0.4
-6.9
1.0
-3.0
7.9
-7.5
-14.7
-1.3

（％）
2020 Contributi
onI(Q1, 2020）
-5.8
-5.8
-6.9
-3.0
-9.1
-1.2
-13.6
-0.1
1.0
0.0
-13.4
-0.5
9.1
0.0
-3.2
0.0
-3.3
-0.5
-11.4
-0.4
-3.6
0.0
8.1
0.4
-10.7
-1.1
-10.3
-0.5
-9.5
-0.2
-4.2
-0.2
-0.4
-0.1
13.9
0.5
-4.9
-1.4
-7.4
-0.9
-3.0
-0.5

Note : 1) The 32 economies are Argentina, Australia, Austria, Belgium, Brazil, Canada, China, Denmark, Finland,
France, Germany, Greece, Hong Kong, Indonesia, Ireland, Italy, Japan, Luxembourg, Malaysia, the Netherlands, thePhilippines, Portugal, Russia, Singapore, South Africa, Korea, Spain, Sweden, Switzerland, Taiwan, Thailand and theUS. 2) Figures for products marked with an asterisk (*) are based on imports, those for other products are basedon exports.
Source : Trade statistics of respective economies

Quarterly change in trade values of major countries andregions (YoY)(Unit: %)
I
China
US
GermanyJapan
ASEAN5

1.0
1.3
-5.5
-5.7
-3.8

Export
2019
II
III
-0.7
-0.3
-3.3
-1.8
-7.1
-3.0
-6.2
-1.3
-5.2
-4.5

IV
1.2
-1.4
-2.5
-4.4
-3.0

2020
I
-13.4
-3.0
-6.1
-4.4
-1.7

I
-1.1
0.0
-2.6
-3.5
-1.4

Import
2019
II
III
-3.4
-6.0
0.7
-1.4
-4.8
-5.0
-0.8
-1.2
-3.7
-7.1

IV
3.3
-5.4
-3.1
-8.6
-6.2

2020
I
-2.3
-4.9
-5.7
-6.2
-2.8

Note : 1) Growth rate against world exports and imports. 2) Figures for ASEAN5 are totals for Indonesia, Malaysia,
the Philippines, Singapore, and Thailand.
Source : Trade statistics of respective country/region.

Export growth rate for 32 major economies（2020 Q1,
YoY % change）

Import Total: 32
East
economies Asia-10
ExportTotal: 32 economies
-5.8
-4.8
East Asia-10
-7.9
-4.9
Japan
-5.2
-3.7
China
-15.8
-10.7
Korea
-2.5
-3.5
Taiwan4.0
5.2
ASEAN-5
-0.1
-0.9
US
-2.9
-3.5
EU-14
-4.9
-6.0
France-10.3-22.9
Germany
-6.4
-6.8
Italy
-3.4
-11.3

Japan
-8.0
-9.9
-16.1
0.2
0.3
-4.2
-0.5
-4.6
-27.3
-11.9
7.0

China
-5.6
-4.6
-4.1
-8.4
6.0
-5.2
-14.6
-8.0
-36.1
-10.9
-18.5

Korea Taiwan ASEAN-5
-2.4
2.6
-0.4
-6.5
3.8
-1.1
-6.4
6.5
-5.7
-11.3
2.2
-2.1
-5.2
4.5
-5.7
6.1
6.9
6.0
1.2
6.4
10.3
4.6
14.9
-1.3
-7.2
-1.9
-7.1
-0.7
23.3
9.3
-9.3
-5.4
-0.6
-5.4

US

EU-14

-4.9
-13.0
-8.1
-25.1
5.5
3.7
4.4

-7.3
-13.4
-7.8
-17.5
-6.0
-5.4
-4.8
0.0
-6.4
-9.5
-8.0
-4.0

2.7
-6.1
-4.5
7.5

France Germany
-7.8
-6.7
-15.9
-14.7
-7.2
-7.4
-15.9
-20.1
0.8
-0.7
-16.1
-12.9
-13.2
-9.8
1.4
1.4
-8.2
-5.4
-10.6
-11.3
-6.2
-4.1

(%)
Italy
-8.6
-14.4
-7.2
-17.6
-18.4
-11.7
-3.3
-3.8
-7.4
-11.3
-10.2

Note : 1) Chart was created on an export basis. 2) The figure for 32 economies is same as left chart. The figure for East Asia is the sum of Japan,
China, Korea, Taiwan, Hong Kong, and ASEAN-5. ASEAN-5 includes Indonesia, Malaysia, the Philippines, Singapore and Thailand. EU-14 includes
Austria, Belgium, Denmark, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, the Netherlands, Portugal, Spain and Sweden. 3) The
figure for EU-14 includes the amount of intra-regional trade. 4) Shaded cells indicate countries/regions of which growth rates (year-on-year) were
negative. The blue cells indicate countries with growth rates of -10% to -5%, and dark blue cells with white letters indicate countries/regions ofwhich growth rates are below -10%.
Source : Trade statistics of the respective economies

Copyright (C) 2020 JETRO. All rights reserved.

Chapter 1 Section 2 World Trade

12

World trade of COVID-19-related products
 Looking at the world trade in products required to prevent the spread of COVID-19 and medical supplies for
its treatment, in the first quarter of 2020, trade of testing kits/instruments and apparatuses used in diagnostic
testing rose 12.5% year-over-year, protective garments rose 15.9%, and disinfectants and sterilization productsrose 17.4%. Among protective equipment, the growth rate of masks was especially large, increasing by 56.8%.
 Looking at export share by country, China accounts for nearly 40% of the world share in exports of masks,
protective garments, etc. On the other hand, European countries have a large share in the export of COVID-19
test kits/instruments and apparatuses used in diagnostic testing and disinfectants and sterilization products.
Quarterly export value of products related to Covid-19 (Year-onyear change rate)(Unit: %)
2020
I
II
III
IV
I
Test kits/ Instruments and apparatus used in Diagnostic Testing
92.9
10.0
2.5
21.0
6.2
12.5
Protective gear
79.3
-2.7
-0.8
0.3
0.1
15.9
Masks
76.0
2.2
2.9
5.4
4.3
56.8
Protective garments
75.3 -11.1
-7.6
-3.0
-0.3
1.8
Disinfectant/sterilization products
83.6
-1.5
6.6
13.9
7.1
17.4
Therapeutic respiration apparatus
79.2
4.7
6.1
7.9
3.5
1.0
Other medical devices and equipment
77.9
0.5
2.0
6.5
7.1
3.8
Other related medical supplies to Covid-19
81.0
2.3
2.8
7.5
8.3
-0.4
Total
83.8
2.1
4.1
12.2
6.4
10.8
Note : 1) This was created based on the classification of medical products related to Covid-19(the version of April 30, 2020), announced by the World Customs Organization (WCO). For
details, see "Note 2." 2) This is based on data from 32 countries/regions due to data restrictions.
See the previous page for details of the 32 countries/regions.
Source : Statistics of each country/region.
World
trade
coverage2019

Top five countries/regions for import/export ofproducts related to Covid-19 (2019)(Unit: Million USD, %)ImportExportItems

Rank Countries
Value/ region
1 Switzerland 30,468
Test kits/
2 Germany
26,653
Instruments and
3 US
22,169apparatus used in
4 Ireland
19,821
Diagnostic Testing
5 Belgium
11,4471 China
5,518
2 Germany
1,183
Masks
3 US
1,164
4 Mexico606
5 Vietnam
470
1 China
5,825
2 Vietnam
1,327
Protective
3 Italy799
garments
4 Belgium
542
5 Germany
515
1 Germany
46,661Disinfectant/
2 Switzerland 42,534
sterilization
3 Netherlands 25,251
products
4 Belgium
23,261
5 US
21,791
1 US
12,218
Therapeutic
2 Netherlands 7,092
respiration
3 Mexico
5,377
apparatus
4 Ireland
4,779
5 Germany
4,766

Growth Countries
Value
rate
/ region
19.2
20.8 US
26,711
16.8-7.0 Germany
14,38714.0
9.0 China
12,06012.5
33.8 Belgium
9,851
7.2
15.3 Japan
8,551
39.5
6.2 US
4,676
8.5-0.8 Japan
1,338
8.3
7.0 Germany
1,282
4.3
11.6 France
651
3.4-14.0 UK
485
41.5
-9.4 US
3,114
9.5
44.1 Germany
990
5.7
0.2 Japan
863
3.9-4.2 France
840
3.7
6.7 UK540
15.0
1.1 US
63,922
13.7
5.8 Germany
28,1738.1
16.6 Belgium
19,2187.5
4.8 Switzerland 15,999
7.0
8.8 Netherlands 15,633
20.8
0.8 US
12,94612.1
9.1 Netherlands 4,988
9.1
43.0 Germany
3,940
8.1
11.4 China
3,306
8.1
2.4 Japan
3,217

Share

Growth
rate
17.5
36.6
9.4
4.3
7.9
18.3
6.5
2.5
5.6
22.0
30.4
8.1
8.7
4.3
8.3
3.1
4.2
7.4
3.2
6.3
23.5
-2.7
7.5
1.6
6.5
1.0
6.3
-1.1
4.1
-3.8
19.1
9.3
8.4
6.5
5.7
23.0
4.8
8.3
4.7
10.2
24.3
10.7
9.3
3.5
7.4
7.1
6.2
16.0
6.0
6.9

Share

Note : 1) Only the top five countries/regions are listed here in terms of import/export value in 2019. 2) This was createdbased on the classification of medical products related to Covid-19 (the version of April 30, 2020), announced by theWorld Customs Organization (WCO). 3) The composition ratio is the share of the global total of each product(estimated value by JETRO). 4) Vietnam and Mexico's trade values are estimates.
Source : Trade statistics of each country/region

Copyright (C) 2020 JETRO. All rights reserved.

Chapter 1 Section 2 World Trade

13

World trade in 2020 is expected to decrease due to COVID-19


The growth rate of world exports in the first quarter of 2020 decreased by 5.8% year-on-year. Looking at
the breakdown, EU25 (-1.7 percentage points), China (-1.6 percentage points) and commodity exporters(-1.0 percentage points) made a large contribution to the decrease in exports.

 According to the WTO outlook in April and June 2020, world trade (average export and import) is expected todecrease by 12.9% from the previous year in 2020. World trade in 2020 will experience a sudden decline, but it
is unlikely that the world will experience the pessimistic scenario which is a decline of 31.9% from the previous
year.
Growth rate and contribution of exports by economies, on aquarterly basis

World trade in goods (real) growth rate (year-over-year)(Unit: %)（Year-on-year % change）
15.0

Optimistic scenario Pessimistic scenario

Export North America

2020
-12.9
-17.1

2021
21.3
23.7

2020
-31.9
-40.9

2021
24.0
19.3

Latin America
EuropeAsia
II III IVI
II III IV
IOther regions
2018
2019
2020 Import North America
Commodity exporters
Latin America
China
Europe

-12.9
-12.2
-13.5
-8.0
-14.5
-22.2
-10.3

18.6
20.5
24.9
8.6
27.3
23.2
19.9

-31.3
-32.8
-36.2
-8.0
-33.8
-43.8
-28.9

14.3
22.7
36.1
9.3
29.5
19.5
24.5

Asia
Other regions

-11.8
-10.0

23.1
13.6

-31.5
-22.6

25.1
18.0

10.0

World trade in goods (real) growth rate

5.0

0.0
-5.0
-10.0

I

II

III

IV

I

2017
OthersASEAN6
Japan
UK
World exports (growth rate)

US
EU25

Note: 1) World exports cover 210 economies. 2) See the footnote in the report regarding
the definition of "commodity exporters." EU25 includes all EU member economies
excluding two commodity exporters (Greece and Cyprus). 3. The value of each country andregion indicates the contribution rate.
Source: "DOTS (June 2020)" （IMF）

Note : 1) Figures for the world trade in goods are the average values for exports
and imports. 2) Figures for 2020 and 2021 are projections. 3) Other regions are
Africa, Middle East, and CIS.
Source : "WTO press release" (April 8, 2020)
Copyright (C) 2020 JETRO. All rights reserved.

Chapter 1 Section 3 Japan’s trade

14

Further challenges to weakening Japanese trade Concerning Japan's trade (customs clearance basis) in 2019, its exports decreased by 4.4% compared to theprevious year to $705.7 billion, and the imports decreased by 3.7% to $720.8 billion. Both imports and exports
declined for the first time in four years since 2015. The trade balance recorded a deficit of $15.1 billion,
marking the second consecutive year of trade deficit.
 Japan’s export growth has remained negative since the end of 2018. It had begun to show signs of bottoming
out. However, the rate of decline has increased in 2020 due to the impact of COVID-19. Meanwhile, Japan’s
imports fell sharply in February 2020 with a sudden decline in imports from China followed, by a slight decline
in March and April. They declined sharply again in May due to a fall in resource prices.
Japan’s import & export growth (year on year change)

Japan’s trade trends(Million USD, %)Total exports(Growth rate)
Total imports(Growth rate)

2020
Mar
58,931

20182019

737,846

705,682

5.8

-4.4

-14.0

-2.8

-0.8

-9.0

-20.0

-25.8

-25.3

748,109

720,765

319,206

61,71747,62758,81056,51746,921

47,614Jan-Jun(P)298,509Jan
49,695

Feb
57,729Apr
47,951

May
39,092June(P)
45,111

11.5

-3.7

-10.1

-3.6

-13.8

-2.2

-4.9

-23.4

-13.4

Trade balance-10,263-15,083-20,697-12,022

10,101

121-8,566-7,829-2,503(Year-on-year difference)-36,513-4,820-12,778

838

7,130

-4,520-9,070778-7,934

107.7

103.0

86.2

86.2

99.8

101.6

84.1

67.7

77.8

1.7

-4.3

-15.3

-1.6

-2.4

-11.2

-21.3

-27.3

-27.1

105.8

104.6

96.4

108.5

78.6

102.1

105.0

90.7

94.1

2.8

-1.1

-5.9

-1.7

-17.3

-2.5

1.5

-14.5

-0.8

72.8

66.8

49.1

70.3

70.6

62.2

42.2

24.9

24.4

Export volume index(Growth rate)
Import volume index(Growth rate)
Crude oil import price(Dollar/barrel, growth rate)

34.3

-8.2

-27.4

12.2

13.4

-5.4

-38.7

-65.9

-66.5

Exchange rate (yen/dollar)

110.4

109.0

108.2

109.3

110.0

107.3

107.9

107.3

107.6

(Yen appreciation, %)
1.6
1.3
1.6
-0.4
0.4
3.7
3.5
2.3
Note : 1) Yen-based values are converted to dollar-based values by JETRO. 2) The volume index is on a 2015 basis.
3) Exchange rates are the interbank rate average for each period. 4) Growth rates are a year-on-year comparison.
Source : "Trade Statistics" (Ministry of Finance), "Foreign Exchange Rate" (Bank of Japan)

0.5

20.0
15.0
10.0
5.0
0.0
-5.0
-10.0
-15.0
-20.0
-25.0
-30.0

(%)
ExportVolume basis
Jan

Apr

Jul

Oct

Jan

Apr

2017

Value basis
Jul

Oct

Jan

Apr

2018

Jul

Oct

Jan

2019

Jun(P)
2020

Note: Change rates on volume basis were calculated from the 2015-based volume index.
(%)
Source: "Trade Statistics" by the Ministry of Finance, Japan

25.0
20.0
15.0
10.0
5.0
0.0
-5.0
-10.0
-15.0
-20.0
-25.0
-30.0

ImportVolume basis
Jan

Apr

Jul
2017

Oct

Jan

Apr

Value basis
Jul
2018

Oct

Jan

Apr

Jul
2019

Oct

Jan

Jun(P)
2020

Note: Change rates on volume basis were calculated from the 2015-based volume index.
Source: "Trade Statistics" by the Ministry of Finance, Japan

Copyright (C) 2020 JETRO. All rights reserved.

Chapter 1 Section 3 Japan’s trade

15

Exports of general machinery and transport equipment declined Looking at Japan’s exports by country and region, its export to China decreased for the first time in four years.
Among the exports to China, production equipment (semiconductor manufacturing equipment, machine tools,
industrial robots, etc.), electronic parts such as semiconductors and automotive parts struggled due to sluggish
production and investment in China. In the leading US market, Japan’s exports of automobiles, the main export
products, declined in the second half of the year.
 Regarding Japan’s export by product in 2019, semiconductor manufacturing equipment in general machinery
decreased from 2018, and machine tools, mining and construction machines also declined. In transport
equipment, Japan’s export of automobiles for the US decreased due to the US’s reshoring of production, while
its export of automobile parts for China and ASEAN also decreased. This downward trend continues for 2020.
Japan’s exports and imports by majorcountry/region（％）

Japan’s exports by main product(Unit: Million USD, %)20.0

Export2019

Y-o-YchangeContribution705,682

-4.4

-4.4

10.0

Total exports
General machinery

0.0

-10.0

-20.0

-30.0

Y-o-Y
changeContribution253,398

-11.6

-11.6

136,969

-7.5

-1.5

48,776

-15.0

-3.0

10,440

-6.6

-0.1

3,521

-28.1

-0.5

Machine tools

6,736

-15.8

-0.2

2,064

-31.2

-0.3

Semiconductor manufacturing equipment

22,621

-8.6

-0.3

8,748

-3.8

-0.1

103,051

-5.8

-0.9

39,451-1.2-0.2

US (19.8％)

Electronic parts such as semiconductors

36,667-2.0-0.1

14,8148.2

0.4

China （19.1％）

Communication equipment

3,920

-22.2

-0.2

1,278

-21.2

-0.1

167,838

-2.8

-0.7

52,724

-24.3

-5.9

Automobiles

109,160

-1.5

-0.2

33,243

-25.7

-4.0

Automobile parts (excluding engines)

ASEAN （15.1％）-40.0

Year-on-year change

Mining and construction machines

Electrical equipment

World

Jan-Mayin 2020

Transport equipment

EU （11.6％）

33,024-8.7-0.4

10,495

-22.9

-1.1

Precision equipment

40,002-5.3-0.3

14,908-4.8-0.3

Chemicals

97,124-0.7-0.1

38,383-3.1-0.4

Iron and steel products

36,424-9.5-0.5

14,158-4.5-0.2

Jan Feb Mar Apr May

-50.0
Q1

Q2

Q3

Q4

Q1

2017

Q2

Q3

2018

Q4

Q1

Q2

Q3

Q4

2019

Q1

Q2(P)

2020

（Year/Quarter）
Note: 1) Figures in parentheses indicate share in total export in 2019. 2) Growthrate of EU after the 1st quarter of 2020 is a comparison of 27 countries.
Source: "Trade Statistics" (MOF)

Note : Yen-based values are converted to dollar-based values by JETRO
Source : "Trade Statistics" by the Ministry of Finance, Japan

Copyright (C) 2020 JETRO. All rights reserved.

Chapter 1 Section 3 Japan’s trade

16

Imports impacted by decline in energy prices
 Regarding Japan’s imports in 2019, its imports from ASEAN countries such as Indonesia and Malaysia shrank
due to the decline in resource prices. Its Imports from the US and China, which are Japan’s major trading
partners, also decreased. On the other hand, the imports from the EU increased year-over-year due to anincrease in aircraft, pharmaceuticals and medical supplies, and food such as wine.

 In the first quarter of 2020, China‘s production activity stagnated due to the impact of COVID-19, and Japan’s
imports from China decreased sharply, returning to a positive level in the second quarter.
 As for Japan’s import by product, a drop-off in mineral fuels was significant, accounting for about 70% of thetotal decline in imports in 2019. This was led by a continuing downward trend of energy prices throughout
2019. The impact of price stagnation continues in 2020.
Japan’s imports and imports by majorcountry/region
25.0Japan’s imports by main product(Unit: Million USD, %)

（％）

2019

Import20.0

Total imports-3.7

271,592

-9.5

-9.5

Mineral fuels

155,362

-11.0

-2.6

53,233

-21.4

-5.1

Crude oil

73,045-9.3-1.0

23,055

-25.6

-2.8

LNG

39,876-7.0-0.4

15,148

-16.5

-1.0

70,521-3.3-0.3

27,425-8.8-0.9

24,3238.7

0.3

10,105-2.1-0.1

Electrical equipment

98,817-2.2-0.3

37,944-5.1-0.7

China （23.5％）

Cellular phones

15,440

-12.4

-0.3

5,747

-7.9

-0.2

ASEAN （15.0％）

Electronic parts such as semiconductors

23,562

-7.0

-0.2

9,701

2.3

0.1

Transport equipment

33,1593.4

0.1

10,829

-18.9

-0.9

Chemicals

85,954-2.9-0.3

35,797-0.5-0.1

27,3366.4

0.2

12,167

12.4

0.5

Food

66,6700.5

0.0

26,081-3.8-0.4

Textile and its products

37,164-1.5-0.1

15,293

3.9

0.2

5.0

General machinery

0.0

Computer and peripheral equipment

WorldUS (11.0％)-15.0

EU （12.4％）

-20.0
Q1

Q2

Q3

2017

Year-on-year change

Y-o-Y Contri
Jan Feb Mar Apr May
change bution

-3.7

10.0

-10.0

Jan-Mayin 2020

720,765

15.0

-5.0

Y-o-Y Contrichange bution

Q4

Q1

Q2

Q3

2018

Q4

Q1

Q2

Q3

2019

Q4

Q1

Q2(P)

2020

（Year/Quarter）
Note: 1) Figures in parentheses indicate share in total import in 2019. 2) Growth rate of EU
after the 1st quarter of 2020 is a comparison of 27 countries.
Source: "Trade Statistics" (MOF)

Pharmaceuticals and medical supplies

Note : Yen-based values are converted to dollar-based values by JETRO
Source : "Trade Statistics" by the Ministry of Finance, Japan

Copyright (C) 2020 JETRO. All rights reserved.

Chapter 1 Section 3 Japan’s trade

17

Rapid increase in imports of COVID-19-related products such as masks and protective garments
 Looking at Japan’s imports of COVID-19-related products, the US has a large share of Japan’s import of
medical devices such as testing kits and therapeutic respiration apparatus. Europe, including Germany, has alarge share for disinfectants and sterilization products. China has a large share for protective gear such asmasks and protective garments. Specifically, China has a nearly 80% share of Japan’s import of masks.

 In 2020, the demand for masks and protective garments increased in Japan. Once the production in China, amajor supplier, resumed, the Japan’s import of masks soared and increased significantly from April.
Import of masks, protective garments,
disinfectants and sterilization products

Japan's import of products related to Covid-19(Unit: Million USD, %)Value of Imports
2019

Jan-May
2020

Y-o-YchangeTop Supplier(2019)

Test kits/ Instruments and apparatus
used in Diagnostic Testing

8,551

4,028

27.3

US
（23.8％）

Protective gear

3,422

3,750

175.9

China
（57.7％）

Main Products

Test kits, Swab and Viraltransport medium set

Masks, Protective garments,
China（75.3％） Surgical rubber gloves
China
Protective garments
863
408
28.3
（56.8％）
Germany
Alcohol solution, Hand
Disinfectant/sterilization products
14,6506,563
9.2（15.9％） sanitizer
US
Pulse oximeters, Artificial
Therapeutic respiration apparatus
3,217
1,256
-4.5
（33.3％） respiration apparatus
USCT, Multiparametric Patient
Other medical devices and equipment
3,387
1,373
-3.8
（38.5％） Monitoring devices, Infrared
Other related medical supplies to
China
Medical oxygen, Wadding,
4,318
1,812
2.0
Covid-19（44.4％） gauze, Tubular metal needles
Note : Based on the classification of Covid-19-related medical supplies by the World Customs Organization (WCO).
Source : "Trade Statistics" by the Ministry of Finance, Japan
Masks

1,338

2,842

426.9

Copyright (C) 2020 JETRO. All rights reserved.

Chapter 1 Section 3 Japan’s trade

18

Japan’s agricultural, forestry, and fishery exports in 2019 roughly triple that of 2000
 In 2019, Japan's exports of agricultural, forestry, and fishery products increased by 0.6% from the previous year
to 912.1 billion yen, a record high. After the growth rate turned positive in 2013, it increased for the seventh
consecutive year but fell short of the government's target of achieving 1 trillion yen in exports by 2019.
 Exports of agricultural, forestry, and fishery products in 2019 roughly tripled since 2000. Many food exporters
are paid in yen, so they are not susceptible to exchange rate fluctuations. Exports have been growing steadily
due to growing popularity of Japanese food overseas and the expansion of inbound consumption. In the
future, the key will be to build a stable supply system toward the high target of 5 trillion yen by 2030.
Export value of Japan’s agriculture, forestry and fisheryproducts(100 million yen)
10,000Fishery products
Forestry products
Agricultural productsComparison to previous year (right axis)(%)

Export value of Japan’s agriculture, forestry and fisheryproducts and exchange rate trends(2000 = 100)

(Yen/USD)

300

125
Exports of agricultural, forestry andfishery products

250

115

8,000

200

105

150

95

6,000

4,000

100

2,000

85

Exchange rate(right axis)

Overall exports

0

2015

2016

2017

2018

2019 (Year)

Note: Including alcoholic beverages, tobacco, and pearls.
Source: "Overview of Foreign Trade of Agricultural, Forestry and Fishery Products" (Ministryof Agriculture, Forestry and Fisheries)

19

18

17

16

15

14

13

12

11

10

09

08

07

06

05

04

03

02

01

2000

50

75
(Year)

Note: The exchange rate is the average of the mid-term rates of interbank rates.
Source: "Overview of Foreign Trade of Agricultural, Forestry and Fishery
Products" (Ministry of Agriculture, Forestry and Fisheries), "Trade Statistics"(Ministry of Finance), "Foreign Exchange Rates" (Bank of Japan)

Copyright (C) 2020 JETRO. All rights reserved.

Chapter 1 Section 4 Impact of US-China friction on world trade19

US-China trade continues to shrink
 US-China trade has continued to shrink due to additional tariff measures between the US and China since July
2018. The US imports from China slowed down due to the implementation of part of the additional tariffmeasures during the fourth round taken in September 2019. In 2020, the impact of COVID-19 was added, forcing
February and March imports down by more than 30%. But the decline has slowed since April 2020.

 China’s imports from the US bottomed out in January 2019 and turned to a positive year-on-year increase in
November. In 2020, however, China’s imports from the US became negative again due to the impact of COVID-19.
Trends in US imports from China (Year-on-year change)
20.0

（％）

Trends in China imports from US (Year-on-year change)
30.0Year-on-year change

Year-on-year change

Fourth round*on September 1

10.0

（％）

20.0

Fourth round* on
September 1

10.0

0.0

-10.0

0.0

First roundon July 6-10.0

Second roundon August 23-20.0

Second roundon August 23-30.0

Third round on
September 24
-30.0

-40.0

First roundon July 6

-20.0

-40.0

First

SecondThird

Fourth*Fourth**OthersJul

Jan

Third round on
September 24

Apr

Jul
2018

Oct

Jan

Apr

2019

Oct

May
2020

Note: "Fourth*" includes target products which were imposed in
September 2019. "Fourth**" includes other remaining products.
Source: "Trade Statistics" by the DOC, "Biznews" by JETRO

SecondThird

Fourth*Fourth**Others

-50.0
Jan

Jan

First

Apr

Jul
2018

Oct

Jan

Apr

Jul
2019

Oct

Jan

May
2020

Note: 1. "Fourth*" includes target products which were imposed in September 2019. "Fourth**"includes other remaining products. Each figure was calculated from the import values excluding
products which overlap with those in the first to third round. 2. The figure of January 2020 is acumulative value of January and February. (To compare with that in the same period of last year.)
Source: "Trade Statistics" by China Customs, "Biznews" by JETRO

Copyright (C) 2020 JETRO. All rights reserved.

Chapter 1 Section 4 Impact of US-China friction on world trade20

US imports: Increased import substitution from China to Mexico, Vietnam and Taiwan
 China has a large presence in US imports. It was found that Chinese share was more than 50% in about 40% of
all the items subject to the additional tariff measures by the US.

 Although US’s imports from China decreased due to the additional tariff measures, its imports increased inparts for electronics, automobiles, etc. from Mexico, wooden chairs and footwear from Vietnam, and computer
parts and bicycles from Taiwan. Given that all the items above are subject to the additional tariff measuresagainst China, this increase seems to be a result of US’s shift of import partners from China to third countries.
Changes in US imports of target products after
additional tariff measures against China

Increase in US imports of target products subject to additional tariffmeasures by country and region, 2019
(Million USD ,%)Increase in US(Billion USD)

Total import oftarget products

0

50

100

150

200

250

300

imports350

2017

Intermediategoods(2019)-61,917

Mexico+ 40,544 870870 Road wheels and parts and accessories for motor vehicles

854442 Cables for communication and power supply (with connectors）
2019

0

Capital goods

Import shareadditional tariff products

China

20

40

60

80

100

120

140

160

Vietnam

2019

Taiwan20172019

Canada
2017

2019

India
Not more than 50%

Note: 1) The definition of each commodity is based on the UN (BEC Classification).
2) The products covered by the first to fourth round (imposed in September 2019)were consolidated at HS 6-digit level. Value of imports from China is calculated
based on China's import share in 2017 for each commodity.
Source: "Trade statistics" (US Department of Commerce), "Biznews" (JETRO), etc.

27.1

+ 1.7

27.6

+ 4.8

3.9

+ 2.6
+ 13.1

Footwear (outer soles of rubber/plastic, uppers of leather, not for

25.5

+ 5.2

640419 materials, not for sports)

Footwear (outer soles of rubber/plastic, uppers of textile

33.8

+ 9.0

847330Parts and accessories for computer, such as printed circuitboards24.6+ 18.3

26.9

+ 6.5

871200 Bicycles

39.2+ 10.1940510 Chandeliers and other electric ceiling or wall lighting fittings

10.9

+ 3.0

940161 Seats with wooden frames, upholstered2017

Chinese import share of 50% or moreParts and accessories for computer, such as printed circuitboardsChange inimport share2017 → 201925.2

847330(Billion USD)

Consumer
goods

Major increased imports from each country/region among2017 → 2019

+ 10,945 640391 sports)+ 10,659 950691 Equipment for general physical exercise+ 8,027 940340 Wooden furniture (kitchen)

19.8

+ 4.3

940161 Seats with wooden frames, upholstered

3.5

+ 0.0

681099 Cement/artificial stone products (excluding tiles, etc.)

14.3+ 11.9

13.7

+ 2.4

3.1

+ 0.2

+ 7,137 940490 Bedding (excluding mattresses and sleeping bags)
640391

Footwear (outer soles of rubber/plastic, uppers of leather, not for
sports)

Note : 1) The target products of additional tariff measures in the United States covered by the first to fourth round (imposed in
September 2019) are consolidated at HS6-digit level (approximately 5,000 items). Top 5 countries/regions with increase in imports
by country for target products subject to additional tariff measures (2017 → 2019). 2) Major products with an increase in value ofimports by country and an increase in share of imports of country/region, targeting products with a Chinese share of at least
50% in 2017 (top value of imports).

Source : "Trade statistics" (US Department of Commerce), "Biznews" (JETRO), etc.

Copyright (C) 2020 JETRO. All rights reserved.

Chapter 1 Section 4 Impact of US-China friction on world trade21

China’s imports: Procuring resources and food from the Middle East,
Russia and Brazil instead of the US Among all the items subject to the additional tariff measures by China, it was only in 10% of the items that the
US accounted for more than 50% of the total China’s import.

 With regard to China’s imports from the US which declined due to additional tariff measures, the import shareof food-exporting and resource-exporting countries replaced the US; commodity-related items such as liquid
propane gas and light oil from Saudi Arabia and Russia, and soybeans and swine from Brazil instead of the US.
Changes in China imports of target products after
additional tariff measures against the US

Total import oftarget products

0

20

40

60

Increase in China's imports of target products subject to additionaltariff measures by country and region, 2019
(Million USD, %)Increase in(Billion USD)
100
120

80

US

2019

Saudi
(Billion USD)

Intermediate
goods

0

Capital goods

Major increased imports from each country/region among

Import shareadditional tariff products(2019)

2017 → 20192017

ArabiaConsumergoods

China'simports

10

20

30

40

50

60

70

80

Russia2017

2019

BrazilChange inimport share2017 → 2019

-26,141290250

Styrene32.7+ 22,148 271112 Liquid propane gas+ 12.29.4+ 3.4290711

Phenol (hydroxybenzene)

33.9+ 29.7030367

Alaska pollack (Frozen)

92.9

+ 4.6

+ 19,081 271012 Light oil and preparations (gasoline, kerosene, etc.)

19.6

+ 2.9

261690Precious metal ore (excluding silver ore)

20.4

+ 5.6

120190

Soybeans, other than seeds

65.1+ 12.326.1+ 20.5+ 16,513 520100 Cotton, not carded or combed

2017020329 Meat of swine (Frozen, with bone excluding carcass）

16.4

+ 9.5

2019

853890 Switches for electrical control/distribution, protective equipment

7.0

+ 6.2

+ 8,092 851762 Voice, image data transmission / reception devices (switching, routers, etc.)

3.5

+ 0.7

Vietnam2017

8708402019

US import share of 50% or more

Gear boxes for motor vehicles

870323 Passenger cars with engine over 1,500 cc but not over 3,000 cc

Germany

Not more than 50%

Note: 1) The definition of each commodity is based on the UN (BEC Classification).
2) The products covered by the first to fourth round (imposed in September 2019)were consolidated at HS 6-digit level. The value of imports from the United States
is calculated based on the US import share of each commodity.
Source: "Trade statistics" (China Customs), "Biznews" (JETRO), etc.

+ 6,407 848180 Cock (of iron or steel, and copper)
848390Transmission elements presented separately and parts (crank shafts, etc.)

4.5

+ 2.0

38.6

+ 8.2

23.5

+ 0.7

28.6

+ 2.9

Note : 1) The products of additional tariff measures in China covered by the first to fourth round (imposed in September2019) are consolidated at HS6-digit level (approximately 4,500 items). The top 3 countries with increase in imports bycountry for target products subject to additional tariff measures (2017 → 2019), and the top 2 countries for increased
imports for target products other than commodity-related items (HS26-27). 2) Major products with an increase in value ofimports by country and an increase in share of imports of country/region, targeting products with a US's share of at least 5%
Source : "Trade statistics" (China Customs), "Biznews" (Jetro), etc.

Copyright (C) 2020 JETRO. All rights reserved.

Chapter 1 Section 4 Impact of US-China friction on world trade22

Changes in world trade flows due to US-China trade friction
 Among all the items subject to the US’s additional tariff measures, it was in computer parts that the US
witnessed the biggest change in its import partner countries. Looking at the world trade of computer parts,
Taiwan and Korea in particular increased its export to both the US and China. At the same time, while China's
exports of the item to the US shrunk, its exports to Korea and other areas of Asia expanded.
 China’s additional tariffs aimed at the US have changed the world trade in soybeans. The US share of global
exports to China has shrunk sharply, and instead, those from Central and South America such as Brazil to China
have expanded. The US exports to Mexico, Europe, and Africa increased their global share.
Changes in global share of trade in major countries and regions (2017-2019)【Soybeans】【Parts and accessories for computer, such as printed circuit boards】(Unit: % point)(Unit: % point)
Import

Asia

NAFTA
Japan

China

Korea Taiwan ASEAN

+ 1.6

+ 1.0

Europe Others
US

+ 1.7

- 0.9

- 1.3

- 4.0

- 4.0

+ 1.1

+ 1.1

+ 0.9

+ 1.3

+ 1.0

- 0.8

+ 0.7

+ 0.8

+ 0.8

Japan
China

+ 0.7

+ 0.8

Korea

+ 1.5

+ 1.5

Taiwan

+ 1.8

+ 1.1

ASEAN

- 1.1

- 0.6

- 7.9

+ 0.7

+ 0.7

+ 0.7

+ 1.2

- 5.8

- 6.6

+ 0.7

+ 0.7

+ 0.7

+ 1.2

+ 2.7

+ 3.1

Argentina + 1.3

+ 1.3

+ 1.8

+ 2.1

Latin America

BrazilEuropeOthers

Mexico

- 6.6

- 0.6

EU

US

Africa Oceania

US

+ 0.8

EuropeJapan China

Latin Europe Middle
America
East

NAFTA

Vietnam
US

NAFTA

Asia

Thailand
NAFTA

Asia

ExportExportAsia

Import

+ 1.0

- 0.9

+ 0.9

EU
RussiaUkraineOthersNote: 1) World trade and trade by country/region were calculated on an export basis. The world trade value is estimated by JETRO. The HS codes for each productare as follows; computer parts and accessories: HS847330, soybeans: HS120190. 2) The colors of the cells show the increase/decrease in the share of world trade incountries/regions in four stages. (For only the change of 0.5% points or more, the differences are indicated.)
Increase [Blue]: Dark: plus 0.5% points or more, light (shaded): plus 0.0% to less than 0.5% points
Decrease [Red]: Dark: minus 0.5% points or less, light (cross-hatched): minus 0.5% to 0.0% points
Source: Data created by JETRO from trade statistics of respective economies.

Copyright (C) 2020 JETRO. All rights reserved.

23

Chapter 2

Global FDI and Japan’s FDI

Chapter 2 Section 1 Global FDI

24

Continued stagnation of global FDI
 According to the United Nations Conference on Trade and Development (UNCTAD), global inward FDI in 2019
(on a balance of payment basis, net, flow) increased by 3.0% from the previous year to $1.5399 trillion. This ismainly due to an increase in the EU. Although the global inward FDI increased slightly from 2018, it hasremained well below the peak of $2.0418 trillion in 2015 since 2017, showing a stagnant trend.
Trends in global inward FDI

Inward FDI (Net and Flow) for Major Countries and Regions in 2019

（Billion USD）
2,200

(Million USD, %)Inward FDI

2,000

2018

1,800

Developed economies

1,600
1,400
1,200
1,000
800
600

FDI in developed countries
FDI in emerging and developing countries
Global cross-border M&A
Global cross-border greenfield investment

400
200

05

06

07

08

09

10

11

12

13

14

15

16

17

18

Top 10 countries/regions in the world interms of FDI (2019)(Unit: Million USD)
Inward FDI

Outward FDI

1 United States

246,215 Japan

226,648

2 China

141,225 United States

124,899

3 Singapore

92,081 Netherlands

124,652

4 Netherlands

84,216 China

117,120

5 Ireland

78,234 Germany

98,7006 Brazil

71,989 Canada

76,602

7 Hong Kong, China

68,379 Hong Kong, China

59,2798 United Kingdom

59,137 France

38,6639 India

50,553 Korea, Republic of

35,531

10 Canada

50,332 Singapore

33,283Note : 1) Excluding the financial centers in the Carribean region2) Due to the difference in the accounting principle, the figure for Japan in thistable does not exactly match that for "Japan's foreign direct investment" below.
Source : Data of UNCTAD

19（Year）

Increase

2019

US253561246215

Canada

43459

EU28

Composition

rate

-2.9

16.0

50332

15.8

415117446896

Netherlands

114306

Ireland-28089UK

Contrib
ution

2018

2019

Increase rate Composition

Contrib
ution

-0.5

-90623124899

-

9.5

3.3

0.5

49879

76602

53.6

5.8

2.7

7.7

29.0

2.1

345280455245

31.8

34.7

11.1

84216

-26.3

5.5

-2.0

-18843124652

-

9.5

14.5

78234

-

5.1

7.1

727

18103

2388.5

1.4

1.8

65300

59137

-9.4

3.8

-0.4

41425

31480

-24.0

2.4

-1.0

Germany

73570

36359

-50.6

2.4

-2.5

78813

98700

25.2

7.5

2.0

FranceSwitzerland

38185-5315133965-21740

-11.1
-

2.2
-

-0.3
2.1

105636
60782

38663
11097

-63.4
-81.7

2.9
0.8

-6.8
-5.0

Australia

68048

36156

-46.9

2.3

-2.1

6362

5397

-15.2

0.4

-0.1

Japan
East Asia

9858
41061614552
384108

47.6
-6.5

0.9
24.9

0.3
-1.8

143161344382226648279830

58.3
-18.7

17.3
21.3

8.5
-6.5

China

138305141225

2.1

9.2

0.2

143040117120

-18.1

8.9

-2.6

Hong Kong104246

68379

-34.4

4.4

-2.4

82201

59279

-27.9

4.5

-2.3

Korea

12183

10566

-13.3

0.7

-0.1

38220

35531

-7.0

2.7

-0.3

TaiwanASEAN

6998
1488858213
155726

17.4
4.6

0.5
10.1

0.1
0.5

18058
62862

11861
56039

-34.3
-10.9

0.9
4.3

-0.6
-0.7

Singapore

79738

92081

15.5

6.0

0.8

29761

33283

11.8

2.5

0.4

Indonesia

20563

23429

13.9

1.5

0.2

8053

3380

-58.0

0.3

-0.5

21.9

Vietnam

15500

16120

4.0

1.0

0.0

598

465

-22.2

0.0

0.0

India

42156

50553

19.9

3.3

0.6

11447

12104

5.7

0.9

0.1

Central and South America

148920164236

10.3

10.7

1.0

127

41598

32539.1

3.2

4.2

Brazil

59802

71989

20.4

4.7

0.8

-16336

15515

-

1.2

3.2

Mexico

34746

32921

-5.3

2.1

-0.1

7712

10228

32.6

0.8

0.3

25834

46437

79.8

3.0

1.4

36648

22939

-37.4

1.7

-1.4

CIS
Russia

13228

31735

139.9

2.1

1.2

35820

22530

-37.1

1.7

-1.3

Middle East

30169

27915

-7.5

1.8

-0.2

50415

35506

-29.6

2.7

-1.5

Turkey

12981

8434

-35.0

0.5

-0.3

3607

2841

-21.2

0.2

-0.1

UAE

10385

13787

32.8

0.9

0.2

15079

15901

5.4

1.2

0.1

Africa

50577

45368

-10.3

2.9

-0.3

8157

5337

-34.6

0.4

-0.3

8141

9010

10.7

0.6

0.1

324

405

25.2

0.0

0.0

South Africa
5450
Developed economies
761391
Emerging and developing economies
733831
World
14952234624
800239739641
1539880

-15.1
5.1
0.8
3.0

0.3
52.0
48.0
100.0

-0.1
2.6
0.4
3.0

4076
534,028452,323
986,3513119
916,879
396,891
1,313,770

-23.5
71.7
-12.3
33.2

0.2
69.8
30.2
100.0

-0.1
38.8
-5.6
33.2

Egypt

Total

2003 04

Emerging and developing economies0Outward FDI

Note: 1) The figures for developed economies are totals for 38 countries/regions based on UNCTAD category of inward FDI.
2) The figures for emerging and developing countries derived by subtracting developed countries from world (excluding Caribbean financial centers).
3) The figures for East Asia are totals for China, South Korea, Taiwan, Hong Kong, and ASEAN. 4) Figures for Central and South America exclude Caribbean financial centers.
5) Due to differences in FDI data compilation, the figures for Japan (Directional Principle) in the table do not agree with the "Japan's FDI" (Asset and Liability Principle) in Table 12 attached to the Report.

6) "-" before the values indicates withdrawal excess.
Source : the United Nations Conference on Trade and Development (UNCTAD)

Copyright (C) 2020 JETRO. All rights reserved.

Chapter 2 Section 1 Global FDI

25

Global cross-border M&A turns downward Global cross-border mergers and acquisitions conducted in 2019 fell 24.5% from 2018 to $1.0503 trillion.
Affected by COVID-19, Q1 2020 was down 29.8% to $206.5 billion and Q2 was down 6.0% to $240 billion.
 The number of cross-border M&A deals worldwide was 1,781 in the second quarter of 2020, down about 1,000
from the same period in 2019. This was below the level of Q2 2009 (1,946 cases) during the global financial
crisis, and the lowest level in about 16 years since Q3 2004 (1,730 cases). In 2020, the numbers of acquisitionsof foreign companies by American, Chinese and Japanese investors have declined respectively.

Global cross-border M&A deals and number of deals(quarterly)(cases)(100 million USD)

5,000

3,500

Global cross-border M&A deals(cases)

Cross-border M&A deals by American, Chinese andJapanese companies(monthly, from January 2000 to June 2020)

300

China

No. of deals (right axis)

Japan

US

4,500
3,000

250

4,000

2,500

3,500

200

3,000
2,000

150

2,500

1,500

2,000

100
1,500

1,000

50

1,000
500

500

0
0

0

(Year)

Year

Note : The nationality of the acquiring company is the nationality of the ultimate parent company.
Source : Thomson One (Refinitiv) (as of July 3, 2020)

Source : Thomson ONE (Refinitiv) (as of July 3, 2020)

Copyright (C) 2020 JETRO. All rights reserved.

Chapter 2 Section 1 Global FDI

Despite stagnation in Asian markets, Chinese and Taiwanese companies
are investing more in ASEAN

26

 An overview of cross-regional greenfield manufacturing investments shows that 2019 was characterized by adecline in investment toward Asia. However, Chinese and Taiwanese companies expanded their investments in
ASEAN in the same year. This is because ASEAN members like Vietnam are becoming host states for Chineseand Taiwanese companies to insulate themselves from additional tariffs between the US and China.
Number of Greenfield Manufacturing Investments Between Major Regions Worldwide (2019)(Upper: Number of cases, Lower: Year-on-year change (%))
Investee → Asian andNorth
America

Pacific↓ Investors

CentralandSouth
America

Western

Other

MiddleEuropeEurope

East

92

88

110

-18.5

31.4

-19.3

53

29

42

-11.7

-21.6

61.5

UnitedCountries

China

ASEAN

India

311

66

147

54

108

106

-31.3

-26.7

-27.2

-37.2

-21.7

109

28

57

17

53

-20.4

0.0

-9.5

-43.3

-18.5

StatesAfrica

World

26

77

812

22.2

85.7

-2.5

-14.8

35

2

16

286

-18.6

0.0

77.8

-10.3

Asian and
Pacific
Countries
Japan
China
Taiwan
ASEAN

India
North
America
US

64

-

29

20

12

11

33

19

35

8

38

209

-19.0

-

16.0

-23.1

-40.0

-42.1

120.0

-40.6

66.7

300.0

-7.3

-0.5

59

21

31

6

1

1

3

1

6

0

0

70

28.3

0.0

106.7

-25.0

-83.3

-83.3

0.0

-80.0

20.0

-

-

7.7

25

6

7

5

5

5

2

4

2

4

2

44

-51.9

100.0

-79.4

66.7

-37.5

-37.5

Total
increase

-50.0

-66.7

300.0

-60.0

-45.0

5

1

1

-

9

9

3

12

12

8

14

63

-61.5

-75.0

-75.0

-

-10.0

12.5

-25.0

50.0

33.3

-11.1

27.3

-1.6

566

121

41

27

27

70

53

138

131

60

15

31

-22.9

-26.8

-15.6

-32.5

62.8

60.6

27.8

84.5

-55.2

7.1

93.8

4.2

109

35

27

27

17

-

112

115

54

14

20

441

-26.4

-31.4

-15.6

-28.9

70.0

-

27.3

74.2

-56.1

7.7

33.3

-4.8

3

2

0

1

13

11

21

8

3

1

2

51

-62.5

-60.0

-

-50.0

-23.5

-26.7

-27.6

33.3

-75.0

Central andSouthAmerica

WesternEuropeOther
EuropeMiddle East

Africa

-29.2

252

92

47

72

215

204

154

310

320

18

88

1,357

-17.9

-20.7

-4.1

-19.1

-3.6

6.3

-3.1

-20.7

-13.3

28.6

15.8

-11.8

28

2

2

3

6

6

3

11

26

4

12

90

21.7

-33.3

100.0

0.0

200.0

200.0

-66.7

-86.7

85.7

300.0

33.3

-36.2

15

2

3

5

13

13

15.4

100.0

-25.0

25.0

44.4

62.5

0

0

0

0

1

1

-50.0

Total
reduction

World

Total
Total
increase increase

2

10

8

3

13

64

-41.2

0.0

-25.0

8.3

1.6

1

3

2

1

16

24

-50.0

-50.0

-25.0

-50.0

-66.7

14.3

-25.0

Total
increase

Total
-

-

reductio
n

730

205

226

162

426

394

411

561

529

68

239

2,964

-24.3

-24.4

-21.8

-28.6

-1.8

3.1

9.0

-17.6

-16.2

36.0

16.0

-11.3

Note : 1) Counted investments are limited to those in the manufacturing/production of goods. 2) The figures in bold and shaded indicate more than
10 investments and a year-on-year increase. 3) Regions are classified according to FT.
Source : fDi Markets (FT)

Copyright (C) 2020 JETRO. All rights reserved.

Chapter 2 Section 1 Global FDI

27

Global FDI slows further
 The number of cross-border greenfield investments by American, Chinese, and Japanese companies has been
declining markedly since February 2020. In addition to the prolonged US-China conflict, uncertainty has
increased due to the unexpected emergence of COVID-19. As a result, global FDI is expected to slow down
further in the future.
 According to UNCTAD, global FDI in 2020 is expected to be between $920 billion and $1.08 trillion (down 30%40% from the previous year) due to COVID-19. It could potentially cause damage that is greater in magnitude
than that in 2009 during the global financial crisis ($1,236.1 billion).

Monthly Cross-Border Greenfield Investments by
American, Chinese, and Japanese Companies, January
2003-May 2020

Forecast of Inward FDI in 2020 (net, flow)(Billion USD)

(cases)

2017

400

2018

2019

US

350

Japan
China

300
250
200

100
50

1700

1495

1540

920～1,080

Developed economies

950

761

800

480～600

Europe

570

364

429

240～300

North America

304

297

297

190～240

701

699

685

380～480

Africa

42

51

45

25～35

Asia

502

499

474

260～330

Central and South America

156

149

164

70～100Transitional economy

50

35

55

30～40

Note : 1) Figures for 2020 are projections based on UNCTAD estimates.

0(Year)
Source : fDi Markets (FT) (as of July 6, 2020)(Forecast)World

Emerging and developing economies

150

2020

2) Geographic classifications are based on UNCTAD classifications.
Source : "World Investment Report 2020" (UNCTAD)
Copyright (C) 2020 JETRO. All rights reserved.

Chapter 2 Section 2 Japan’s outward FDI

28

Japan’s FDI dropped sharply in 2020 from a record high in 2019
 Japan’s outward FDI in 2019 increased by 57.0% from 2018 to $248.7 billion (on a balance of payment basis,
net, flow), reaching a new record high. By region, Japan’s investments in Europe, the country’s most popular
destination, doubled while those in North America also expanded (a 2.6-fold gain).
 However, Japan’s investment in January-May 2020 (preliminary figures) fell 44.5% YoY. This is because theincrease in investment in 2019 was largely due to large-scale M&A deals, and because COVID-19 has
decreased investment incentives.
Trends in Japan’s outward FDI by type

Japan's outward FDI by country/region(Unit: Million USD, %)（Billion USD）
260

Debt instruments

240

2019

Reinvestment of earnings

220

Equity capital

200

Total

180
160
140
120
100
80
60
40
20
0

19.1-5

Note: 1) The yen-based value is converted to dollars by quarter, using the average quarterly Bank of Japan
interbank rate. 2) Figures are based on BPM6. 3) The cumulative total for 2020 is a preliminary figure.
Source: "Balance of Payments Statistics" (Ministry of Finance, Bank of Japan)

20.1-5(P)

19

18

17

16

15

14

13

12

11

10

09

08

07

06

05

04

03

02

01

99

2000

98

97

96

-20

Share

Growthrate

Jan-May,
2020 ( P)Share

Growth
rate

Asia
China
ASEAN
Singapore
Indonesia
India
North America
US
Latin America
BrasilOceania
Australia
EuropeEU
UK
Switzerland

60,69014,371
34,745
15,671
8,391
5,074
51,652
48,26914,6352,569
11,86011,308110,757
72,744
5,799
37,529

24.4
5.8
14.0
6.3
3.4
2.0
20.8
19.4
5.9
1.0
4.8
4.5
44.5
29.3
2.3
15.1

9.6
19.8
11.1
-5.3
157.1
53.2
159.1
180.8
-41.9
48.8
522.8
251.7
106.9
52.7
-71.1
921.8

19,310
5,897
9,732
2,789
1,484
1,414
22,941
21,587
8,388
1,382
3,601
3,346
22,213
15,232△ 1,807
6,331

25.0
7.6
12.6
3.6
1.9
1.8
29.7
28.0
10.9
1.8
4.7
4.3
28.8
19.7
8.2

-23.2
-3.2
-35.5
-8.5
-75.0
-23.2
-19.3
-18.4
843.9
50.2
1.4
5.0
-72.4
-81.5

World

248,675

100.0

57.0

77,231

100.0

-44.5

Note : 1) The yen-based value is converted to dollars by quarter, using the average quarterly Bank of Japan interbank
2) The cumulative total for 2020 is a preliminary figure.
3) The cumulative total for the EU in 2020 was calculated based on its 27 member countries. (The growth rate is acomparison based on the 27 member countries.)
Source : “Balance of Payment Statistics” (Ministry of Finance, Bank of Japan)

Copyright (C) 2020 JETRO. All rights reserved.

Chapter 2 Section 2 Japan’s outward FDI

Downturn in 2020 mainly due to reactionary decline following a largescale M&A deal, number of deals also decreased29 Japanese companies’ cross-border M&A activities targeting overseas markets (outward M&A) increased 2.2
times to $148.8 billion in 2019, marking a record high. The main contributing factor was Takeda
Pharmaceutical's acquisition ($76.9 billion) of a sector peer company in Ireland in January. The deal accounted
for about 50% of Japan's total external M&A in 2019.

 In 2020, however, the total amount of outward M&A decreased significantly in the first half of the year due tothe reactionary decline, and the number of M&A transactions decreased significantly due to the impact of
COVID-19.
Changes in Japan’s Outward M&A values and cases(cases)(Billion USD)
160

800

EU
North America

140

700

East Asia
120

200
180

160
600

Other
Number of deals (right scale)100

Quarterly trends in the number of Japan’s outward
M&A deals by region(Cases)

500

80

400

60

300

40

200

20

100

140

120

World
East Asia
North America
EU

100
80

60
40

20
0

0

2000 01

02

03

04

05

06

07

08

09

10

11

12

13

14

15

16

17

18

19

19
1-6

20
1-6

(Year)
Note : 1) Figures for East Asia are the totals for China, Korea, Taiwan, Hong Kong, and ASEAN. 2) The EU figuresfor 2020 (cumulative) are based on 27 countries.
Source ：Thomson ONE (Refinitiv) (as of July 3, 2020)

0(Year)
Note : 1) Figures for East Asia are the totals for China, Korea, Taiwan, Hong Kong, and
ASEAN. 2) The EU figures for 2020 are based on 27 countries.
Source : Thomson ONE (Refinitiv) (as of July 3, 2020)

Copyright (C) 2020 JETRO. All rights reserved.

Chapter 2 Section 2 Japan’s outward FDI

30

The reacceleration of ASEAN shifting under US-China friction
 Looking at Japan’s FDI in Asia, due to rising manufacturing costs in China and other factors, Japan’s FDI in
ASEAN has exceeded its FDI in China since 2013. In addition, since 2018, intensified conflict between the US
and China has encouraged Japanese companies to further invest in ASEAN. The gap of Japan’s FDI between
ASEAN and Chinese investment increased from $10.2 billion in 2017 to $20.4 billion in 2019.
 Among Japanese companies, the proportion of those choosing Vietnam continues to increase as a target for
future overseas business expansion, exceeding 41.0% (an increase of 5.5 percentage points from 2018 fiscal
year) in fiscal year 2019. It is the first time for the proportion to surpass 40%.

Overseas business expansion targets for the next
three years (multiple responses)

Comparison of FDI by Japan in ASEAN and China(Net, Flow)
400

(%)

(100 million USD)
2011

2012

2013

2014

2015

2016

2017

2018

2019

(1,602)(1,149)(1,119)(1,001)

(895)

(992)

(938)

(1,050)(1,028)Difference fromthe previous
fiscal year

350

China

67.9

59.2

56.9

56.5

53.7

52.3

49.4

55.4

48.1

-7.3

ASEAN6

56.3

69.0

74.8

73.5

73.2

70.5

69.2

67.3

71.1

3.8

200

Vietnam

20.3

25.9

29.6

28.7

32.4

34.1

37.5

35.5

41.0

5.5

150

Thailand

27.9

41.2

47.0

44.0

41.7

38.6

36.7

34.8

36.3

1.5

Indonesia

24.7

32.0

35.0

34.4

31.8

26.8

24.8

23.4

23.6

0.2

India

21.8

19.4

19.2

16.1

20.1

18.5

18.2

20.9

20.2

-0.7

US

21.1

26.0

25.4

31.3

33.7

33.5

29.0

32.3

31.6

-0.7

Mexico

3.1

5.6

7.6

10.1

10.9

8.5

6.9

4.6

5.4

0.8

ASEAN

300

China
250

100
50
0
05

06

07

08

09

10

11

12

13

14

15

16

17

18

19

-50
-100
Note: 1) The figure excludes Thai flooding-related financial and insurance investments (2011 Fourth Quarter $3.924 billion, 2012
First Quarter -$3.674 billion).
2) Figures from January 2014 onward are based on new IMF standards (Balance of Payments Manual, 6th Edition).
Source: "Balance of Payments Statistics" (Ministry of Finance, Bank of Japan).

19

20

1-5

1-5(P)

Note :1) Figures in parentheses are the number of companies counted for each year. Companies that responded "Expansion of new investment or overseas existing business" in FY2011
and FY2012 exclude those that did not respond regarding functions expanding overseas. From FY2013 onward, companies that "currently have overseas bases and intend to further
expand in the future" exclude those that have not responded regarding functions that will expand overseas. 2) Percentage of companies that expand 1 or more functions in each country
or region. 3) Shaded figures show year-on-year increase.

Source : FY2019 JETRO Survey on Japanese Enterprises' Overseas Business Development

Copyright (C) 2020 JETRO. All rights reserved.

Chapter 2 Section 3 Japan’s inward FDI

31

2019’s inward investment in Japan was the second highest level ever
 Japan’s inward FDI in 2019 totaled $37.2 billion, marking 51.0% increase from 2018. The inward FDI from North
America was $14.5 billion, about 2.5 times higher than 2018. For example, Johnson & Johnson Corp. of the USbought Ci:z Holdings Co., Ltd. which manages the cosmetic brand Dr. Ci:Labo.
 In 2020, Japan’s inward FDI shrank due to the decline and lowered interest in investment as result of COVID-19.

Japan’s inward FDI by major country and region (net, flow)

Trends in Japan’s inward FDI by type (net, flow)
45(Billion USD)(Million USD, %)Debt instruments

40

In 2018

Reinvestment of earnings

35

Equity Capital

In 2019 Composition
ratio

In 2020
JanuaryMay (P)Growthrate

Composition
ratio

Growth
rate

World

24613

37,175

100.0

51.0

5456

100.0

-73.4

North America

5880

14,536

39.1

147.2

1531

28.1

-68.9

5800

14,423

38.8

148.7

1512

27.7

-68.8

Central and South America

4424

3,670

9.9

-17.0

-93

-

-

20

Europe

6776

7,551

20.3

11.4

2367

43.4

-71.8

15

EU

4570

6,860

18.5

50.1

2273

41.7

-0.1

Asia

4674

8,989

24.2

92.3

2103

38.6

-16.9

China

805

1,911

5.1

137.6

317

5.8

-60.4

Hong Kong

749

2,091

5.6

179.2

-233

-

-

Taiwan

426

1,164

3.1

173.0

221

4.0

-27.3

Korea

1944

837

2.3

-57.0

200

3.7

-40.3

ASEAN

742

3,003

8.1

304.7

1590

29.1

233.1

Singapore

-630

1,452

3.9

-

1646

30.2

20807.7

Thailand

1211

1,044

2.8

-13.8

108

2.0

-65.7

1,500

1,715

4.6

14.3

-499

-

-

Net

30

US

25

10
5
0
-5

Oceania19.1-519

20.1-5(P)Note:1) The yen-based value is converted to USD by quarter, using the average quarterly Bank of Japan interbank rate.
2) BPM6 Criteria 3) The cumulative total for 2020 is a preliminary figure.
Source: "Balance of Payments Statistics" (MOF, BOJ)

18

17

16

15

14

13

12

11

10

09

08

07

06

05

04

03

02

01

99

2000

98

97

96

-10

Note : 1) The yen-based value is converted to USD by quarter, using the average quarterly Bank of Japan interbank rate.
2)The cumulative total for 2020 is a preliminary figure. 3) The cumulative total for EU in 2020 is on a 27-country basis(growth rates are compared on a 27-country basis).
Source: "Balance of Payments Statistics" (Ministry of Finance, Bank of Japan)

Copyright (C) 2020 JETRO. All rights reserved.

Chapter 2 Section 3 Japan’s inward FDI

32

Revised Foreign Exchange and Foreign Trade Act takes effect In May 2020, the revised Foreign Exchange and Foreign Trade Act came into force to cope with foreign
investments that could compromise national security and relevant concerns. The shareholding threshold, which
determines whether a prior notification is required at the time of acquisition of shares of listed companies withforeign capital, was reduced from 10% to 1%. On the other hand, deregulations including the standardizationof notifications by investment associations (funds) made it possible to raise funds more smoothly.
 The balance of inward investment in Japan in 2019 was 34 trillion yen, an increase of 3.2 trillion yen from theprevious year. The increase put the balance within reach of the government target of 35 trillion yen by the endof 2020.
Change in inward direct investment balance

Points of revision of the Foreign Exchange Act (May 2020)

Funding with a debt-like nature

notification(fund)
notification

investor

fund (Note 2)

1.0

1.0

19

15

14

0.0
13

0

0.6

12

Filed under the name of the

0.8 0.7

2.0

11

of each foreign

5

4.0

1.3

10

Filed under the nameinformation

1.2

09

association

to non-public technical

3.9 3.9

3.0

08

Investment

1007

system

3.7 3.8

2.5

06

management and no access

1.9 2.0 2.0

2.4

05

exemption

15

04

investment not under active

4.0

3.0

03

Prior notification

20

02

operations were added
Conditions include

3.7

01

etc.

5.0

4.6 4.7

25

99

notification

important business2000

business objective,

and transfer/abolition ofBalance/GDP (right axis)

30

97

prior

Appointment of directors

6.0

5.6
5.3 5.3

Share Capital

Action requiring Changes to company

7.0

6.1

Return reinvestment

35

18

1% (Note 1)

(%)

17

10%

(Trillion Yen)98

requiring prior

40

16

After revision

96

Relaxation of regulations

Tightening of regulations

Before revision
Investment ratio

Note: BPM6 Standards.
Source: "External Assets and Liabilities of Japan" (Ministry of Finance, Bank of Japan) and Cabinet Office statistics

Note :1) Standards for agenda proposals at general meetings of shareholders under theCompanies Act. 2) Foreign investors have a 50% stake or GP is a foreign investor.
Source : Ministry of Finance

Copyright (C) 2020 JETRO. All rights reserved.

Chapter 2 Section 3 Japan’s inward FDI

33

Possibility of attracting startups from Asia to Japan The investment recovery (exit) of Southeast Asian startups is concentrated on M&A because the stock market
is undeveloped, and IPOs (initial public offerings) are limited to 10% or less. Conversely, there areentrepreneurs who do not want to sell or transfer their own company.
 The market capitalization of companies listed on the Tokyo Stock Exchange is the third largest after the New
York Stock Exchange (NYSE) and Nasdaq, and its number of listed companies is the largest in the world with
3,657 companies. The listing of Asian startups with exits on the Tokyo Stock Exchange is expected tostrengthen collaboration between these startups and Japanese companies.
Global startup exit trends by region
20%

US

80%

31.9

93.2

33.0

(%)

100%

9.8

68.1

Southeast Asia

M&A

60%

90.2

Europe

Japan

40%

6.8

67.0

IPO (initial public offering)

Note: Europe includes sales to operating companies, while Southeast
Asia includes secondary sales in M&A.
Source: White Paper on Ventures, 2019, cento ventures"Southeast Asia
Tech Investment in 2019.

40.0

Ratio of foreign companies among listed companies

0%

Percentage of foreign companies on the world's major exchanges
The size of the bubble
represents the market
capitalization of listedcompanies

35.0
Singapore
30.0
25.0
NYSE
20.0
15.0

LSE group

10.0

Hong Kong

5.0

ShanghaiIndonesia

0.0
-5.0

Nasdaq0

Euronext

Japan

India

1,000

2,000

3,000

Number of listed companies
Source: World Exchange Federation (WEF)

4,000(Companies)

Copyright (C) 2020 JETRO. All rights reserved.

Chapter 2 Section 4 Impact on business activities of changes in the business environment amidst increasing uncertainty

US-China friction and COVID-19 are negatively affecting performance in awide range of industries

34

 Due to the US-China trade friction and other factors, there has been a negative impact on the performance ofcompanies in major countries in the materials and machinery fields since the second half of 2018.
 Since the beginning of 2020, the spread of COVID-19 infections has had a negative impact on a wide range ofindustries.
Average quarterly sales growth rate of listed companies by industry (YoY)

Copyright (C) 2020 JETRO. All rights reserved.

Chapter 2 Section 4 Impact on business activities of changes in the business environment amidst increasing uncertainty

35

Negative impact of US-China trade friction on 20% of SMEs
 According to a JETRO’s annual survey (Nov.-Dec. 2019),
the proportion of SMEs in Japan which responded that
protectionist trade friction between the United States andChina had a negative impact increased by 4.9 percentage
points from 2018 fiscal year with a total of 19.4% of
respondents.

Impacts of protectionism in US-China trade
friction
FY2018(n=3,234) 1.9
FY20191.8(n=3,435)

 In the interviews conducted in parallel with the survey, alarge proportion of SMEs said the negative impact
included a decline in orders from customers in addition
to the deterioration in the business conditions ofcustomers.

0

14.5

5.1

19.4

10

28.4

6.5

27.4

7.8

43.5

6.1

20

37.6

30

40

50

60

70

80

Overall positive impact

Overall negative impact

Same positive and negative impact

No impact

UnsureNo response

90

100

(%)

Note: n is the total number of responses by SMEs in this survey.
Source: 2019 Survey on Overseas Business Expansion of Japanese Companies (JETRO)

Negative impact
Deterioration in customer economy and decrease in sales■ I feel that the US-China friction is negatively affecting
us indirectly. Exports from Chinese factories to North
America decreased from the previous year. In the US
market, sales of new cars have peaked out due to theeconomic slowdown, and sales of passenger cars inparticular are declining. (Shikoku/Iron & Steel/Nonferrous Metals/Metal Products)■ Due to the tensions between the US and China,
exports from China to the US declined, which led to a
decline in demand for products in China. As a result,Chinese competitors have begun to allocate excess
inventory to Southeast Asia, our market, and thecompetitive environment surrounding us has intensified.
(Kyushu/Okinawa/Wood & wood products/furniture &building materials/paper & pulp)

Decrease in orders from customers■ Though our products were processed in Japan andexported to US base, they became subject toadditional tariff because they used parts originating in
China. The transaction with the Company will becompleted by the end of this year, partly becauseof the increase in procurement costs for customers.
(Hokkaido/Tohoku/General machinery)■ As other companies' parts supplied to US end-users
included parts made in China, the customer isrestraining capital expenditure and we are being
affected by this. (Hokuriku/Electric Equipment)

Other■ Our products became subject to additional US tariffs.
Higher prices in the US have prompted customers toswitch to US products made by local manufacturers.
(Kanto/Koshinetsu/Electric Machinery)■ Our products are exported to the US from our
production base in China and are affected by theadditional tariff measures taken by the US against China.
In addition to direct impacts, we are also indirectly
affected. For example, clerical costs are incurred forsearching for subcontracted manufacturers in ASEAN.
(Kansai/Other manufacturing)■ Indirect negative impacts are felt. The uncertainty
created by the US-China trade friction and other factors
has made it difficult to decide the timing of exchange
reservations and exchanges. (Kyushu/Okinawa/Others)

Positive impact
Increase in orders

Increase in market share

Decrease in purchase price■ US companies in China sought suppliers within China
under the influence of additional tariffs. Inquiries havebeen received from Chinese companies delivering tosuch US companies. (Kansai/General machinery)■ Competitors of a US company, our largest customer,
export finished assembled products to the US from
China, but are subject to additional tariffs from the US
against China. The tailwind for that customer. The
volume of orders to us, who supply parts, will
increase in the future. (Kansai/IT equipment/electronicparts & devices)■ Chinese companies are avoiding productprocurement from our US competitors. This created an
opportunity for us to expand our market share in
China. (Kanto/Koshinetsu/Steel/Nonferrous
Metals/Metals Products)■ Although there was price competition with Chinese
products, the additional tariff measures against
China made it advantageous for products exported
from Japan. (Kanto/Koshinetsu/Others)■ Decline in raw material prices in China due todeterioration in US-China relations. Emerge as a newsource of raw materials. (Shikoku/Textiles/clothing)■ Chinese companies are lowering their selling prices
because of declining US sales. For us, the purchaseprice of dies and tools from China is declining.
(Kanto/Koshinetsu/Coal & petroleum
products/plastics/rubber products)

Source: interviews with each company

Copyright (C) 2020 JETRO. All rights reserved.

Chapter 2 Section 4 Impact on business activities of changes in the business environment amidst increasing uncertainty

36

Supply chain restructuring from China to Vietnam and Thailand According to a JETRO’s survey, the major patterns of supply chain restructuring were all shifted from China.
Vietnam has been the leader as a destination for supply chain transfer/change. Since the 2000’s, global
companies such as the Samsung Electronics Group and Canon have established factories in Vietnam,
increasing its presence as a base for exports to the US.

 Companies that transfer production often change their supply chains partially, rather than completely closing
factories or building new facilities. Companies are seeking optimal supply chains by utilizing existing assets.
Major supply chain restructuring patterns and company opinions

Major supply chain restructuring patterns(Multiple responses)

Production(n=142)

Procurement(n=161)Sales(n=79)

BeforechangeAfter change

Number of
cases

China

VietnamThailand
Japan

37
21
9

Vietnam36

Thailand

14

TaiwanJapan

109Vietnam

9

Thailand
Japan

7
3

Taiwan

3

China

China

Note : n is the total number of patterns of restructuring among SMEs. The
number of cases is the total number of cases of transfer/change that havealready been or will be implemented.
Source : 2019 Survey on Overseas Business Expansion of Japanese Companies(JETRO)■ Full-fledged decision wasmade to transfer production of
products exported to the US,
which are manufactured at theCompany's own Chinese plant,
after the additional tariff was
imposed by the US. By the firsthalf of 2020, the entire
manufacturing of export
products to the US will betransferred from China to its own
factory in Thailand.
(Kanto/Koshinetsu/Other
manufacturing)■ Under the additional tariff measures, production of someproducts for the US market was temporarily transferred from
China to Japan. (Kanto/Koshinetsu/Other manufacturing)■ Products manufactured at the Chinese plant and exported to
the United States were subject to additional customs duties
imposed by the United States against China. As a result, semifinished products from China are exported to Japan, the final
process is carried out in Japan, and the product is exported fromJapan to the United States. (Chugoku/Coal & petroleum
products/plastics/rubber products)■ We pay all additional customs
duties. Transfer to selling prices
is difficult and profits are
depressed. Production waspartially transferred from China
to Thailand, and exports to the
US have been switched toThailand.
(Kanto/Koshinetsu/Iron &steel/non-ferrous
metals/metal product)

Transfer of production: 14.8%
Changes in suppliers: 8.7%
Changes in sales destinations:
8.9%

Transfer of production: 6.3%
Changes in suppliers: 5.6%
Changes in sales destinations: 3.8%

Transfer of
production: 26.1%
Changes in suppliers:
22.4%
Changes in sales
destinations: 11.4%

Note: The percentages indicate the percentages when the transfer/change patterns of
SMEs are taken as 100.
Source: 2019 Survey on Overseas Business Expansion of Japanese Companies (JETRO)■ The factory in China maintains thecurrent status and specializes in
production for the domestic market. The
Company plans to transfer the export
portion to Mexico and other North
American countries to the Vietnameseplant. (Shikoku/Iron & steel/non-ferrous
metals/metal product)■ There is room for consideration for thetransfer of the production base from
China to Vietnam, and we have begun
investigating whether we can securesuppliers in Vietnam. (Kansai/Iron &steel/non-ferrous metals/metal product)
Copyright (C) 2020 JETRO. All rights reserved.

Chapter 2 Section 4 Impact on business activities of changes in the business environment amidst increasing uncertainty

80% of Japanese companies operating overseas expect decreased sales in2020 due to COVID-19

37

 According to a survey conducted by JETRO in collaboration with Japanese chambers of commerce and industry
in each country/region, about 80% of Japanese companies operating overseas expect sales in 2020 will decline
from 2019.
2020 full-year sales forecast of Japanese companies in major countries/regions (year-on-year)(c) Ratio of(a) Target
companies(d) Target fiscal (e) Target
country/region
which
term
industry(n = Number ofanswered
respondent companies)"decrease"(a) Target country/region(n = Number of respondentcompanies)(b) Survey
periodChina/East China（n=942）

Jun. 28-Jul. 2

76.0% Full year of 2020

All US（n=937）

China/South China（n=355）

Apr. 2-10

93.2% Full year of 2020

All Canada（n=86）(b) Survey
period(c) Ratio ofcompanies(e)(d) Target fiscal
which
Targetterm
answeredindustry"decrease"Jun. 26-Jul. 1

71.7%

Jun. 2020

All

May 26-28

69.8%

Apr. 2020

All

At time of survey(Comparison to
90.4%
figures before
Covid-19)
This term (no80.7%
time specified)

Hubei, China（n=83）

May 11-18

96.4% Full year of 2020

All Mexico（n=188）

Jun. 25-29

Vietnam（n=582）

Jun. 18-24

71.0% Full year of 2020

All Germany（n=238）

May 6-20

Thailand（n=498）

Mar. 9-13

88.4% At time of survey

All Czech Republic（n=69） May 28-Jun. 5

95.7% First half of 2020

All

Philippines（n=226）

Jun. 8-11

85.3% Full year of 2020

All UK（n=87）

May 18-21

66.7%

Apr. 2020

All

Malaysia（n=132）

May 12-15

Mar.18-20

94.9%

Full year of 2020

All

Indonesia（n=347）

Jun. 8-16

84.4%

Apr-Jun, 2020

All UAE（n=127）

Jun. 2-4

97.6%

Not specified

All

Apr. 24-28

91.4%

Apr-Jun, 2020

All

India（n=430）

89.4% Full year of 2020 Manufacture Russia（n=118）

All

All

Note : 1) Figures under (c) in bold and underlined indicate 80% or more. 2) Regarding (c), while questions and the number of options differ depending on the survey,
JETRO has grouped them into the following three categories: “decrease,”“remain the same (no effect)” and “increase.” (Replies of “Unknown (not sure)” were excluded
from the total.) Regarding the drop in sales in the UAE, the figure was calculated with replies other than "No impact." 3) Although definitions such as of "sales,""revenue" and "performance," differ depending on the survey, “sales” is used here (Respondent companies may have answered by including business in other locations).
Source : Survey on the impact of COVID-19 conducted by Japan's Chamber of Commerce and JETRO's overseas offices in each country.
Copyright (C) 2020 JETRO. All rights reserved.

Chapter 2 Section 4 Impact on business activities of changes in the business environment amidst increasing uncertainty

Main reason for operational decline in relation to COVID-19 was thedecrease in both domestic and overseas demand38

 The main reason for the operational decline of Japanese companies in relation to COVID-19 was the decreasein both domestic and overseas demand. This was followed by the supply disruption due to the division ofdomestic and overseas supply chains. In terms of external shocks to global supply chains, it is said that theGreat East Japan Earthquake and the 2011 Thailand floods caused a “supply shock,” while the Asian currency
crisis and the global financial crisis caused a “demand shock.” Although the COVID-19 crisis contains elementsof a "supply shock," it seems that it has had a larger "demand shock" impact.
Factors behind operational decline of Japanese companies in major countries/regions(in order of response ratio, multiple answers)(a) Target
country/region(n = Number of
respondentcompanies)

China/East China（n=719） China/South China（n=131）

All

Industry

Indonesia（n=289）

Manufacturing

All

All

India（n=259）

US（n=288）

Manufacturing

Manufacturing

1 Decrease in domestic demand

1 Decrease in domestic demand

1 Decrease in foreign demand

1 Decrease in domestic demand

Operational regulations by the
1 government

2 Decrease in foreign demand

2 Decrease in foreign demand

2 Decrease in domestic demand

2 Decrease in foreign demand

2 Decrease in domestic demand

2 Shortage of human resources

3 government

3 Disruptions of domestic SC

3 government

Operational regulations by the

3 Disruptions of overseas SC

3 Disruptions of domestic SC

3 Disruptions of overseas SC

4 Disruptions of overseas SC

4 Shortage of human resources

4 Disruptions of domestic SC

4 Shortage of human resources

4 Shortage of human resources

4 government

5 Disruptions of domestic SC

5 Disruptions of overseas SC

5 Shortage of human resources

5 Disruptions of domestic SC

5 costs

6 Shortage of human resources

6 government

6 Disruptions of overseas SC― government

Operational regulations by the

Factors

Malaysia（n=109）

Operational regulations by the
Logistics constraints and high―Logistics constraints and high costs ―costs

Logistics constraints and high― costs

Operational regulations by the― Logistics constraints and high costs

6

1 Decrease in domestic demand

Operational regulations by the

Logistics constraints and high

5 Disruptions of domestic SC

Decrease in foreign demand

6 costs

Disruptions of overseas SC― Decrease in foreign demand

Logistics constraints and highNote: 1) While questions and the number of options differ depending on the survey, JETRO has grouped them into the above seven categories. If there are multiple options in the same category, the one
with the highest response rate was compared. Where a hyphen ("-") is used, no option was established. 2) "SC" stands for "supply chains." "Disruptions of SC" refers to incidents such as the delay orsuspension of delivery of products, parts and raw materials. "Shortage of human resources" means shortage of labor. 3) The survey period was as follows: China/East China (June 28-July 2), China/South China(April 2-10), Malaysia (May 12-15), Indonesia (June 8-16), India (April 24-28), US (June 26-July 1).
Source: Survey on the impact of COVID-19 conducted by Japan's Chamber of Commerce and JETRO's overseas offices in each country/region.

Copyright (C) 2020 JETRO. All rights reserved.

Chapter 2 Section 4 Impact on business activities of changes in the business environment amidst increasing uncertainty

70% of businesses considering a change in sales strategy as part ofrevisions to their business strategies and models

39 In response to COVID-19, about 60% of Japanese companies operating overseas are considering revisions totheir business strategies and models. Specifically, procurement and production accounted for about 20% and
10% of responses respectively, while changes in sales strategy accounted for roughly 70%. Other significant
revisions include changes to HR practices such as employment and benefits, and financial aspects.

Business strategies and review of business models by Japanese companies overseas
in response to Covid-19 (multiple answers)（％）

China/East China

90.0（n=354）Singapore（n=151）

60.0

Indonesia（n=265）
Mexico（n=81）

30.0

Brazil（n=68）
0.0

Financial review

Localisation ofstaff (reduction ofJapanese staff)

Review of
employment andemployment
requirements

Change of sales
strategy

Review of
production bases

Review of supply
sources

Russia（n=53）
UAE（n=58）（Reference）Japan（n=81）

Note: 1) The survey periods are as follows: June 28 - July 2 (China/East China), June 9-12 (Singapore), June 8-16 (Indonesia), June 25-29 (Mexico), June 12-22 (Brazil), May 20-29 (Russia), June 2-4(UAE), May 29 (Japan). 2) The content and number of answers to questions vary depending on the survey. The aggregated figures in this graph are solely based on companies which answered
this question. The survey in Indonesia does not include "Review of employment and its terms" nor "Financial review," and the survey in Mexico does not include "Localisation of staff." "Supply
sources," "production bases" and "sales destinations" does not necessarily mean the countries surveyed, given the possibility that respondents took into account business other than that in the
countries surveyed. 3) The subject industries in all surveys include manufacturing and non-manufacturing.
Source: Survey on the impact of COVID-19 conducted by Japan's Chamber of Commerce and JETRO's overseas offices in each country. Questionnaire from JETRO's ASEAN Webinar on May 29.

Copyright (C) 2020 JETRO. All rights reserved.

Chapter 2 Section 4 Impact on business activities of changes in the business environment amidst increasing uncertainty

Northeast Asia: Impacts on logistics during the post-peak period and on
the return of expatriates during the recovery

40 Japanese companies operating in China faced business management issues due to various restrictions on theresumption of operations, restrictions on transfers across provinces and cities, and the suspension of visas. Asof the end of June, in particular, due to the suspension of visas and the decline in flights, Japanese expatriates
and business travelers are unable to travel to China, and businesses cannot be operated smoothly.

 In Northeast Asia, large budgets have been allocated in each country and region to control the spread of
infection and normalize economic activities. Efforts to reopen the economies of Northeast Asia including therelaxation of restrictions on travel will serve as a test for the rest of the world. As economic activity has
normalized, some Japanese companies are expanding their businesses in response to the spread of COVID-19.
Major challenges for Japanese companies in China
Time

Main Issues

Expansion of
infections(January to midFebruary)

・ Shortage of masks, disruptive solutions and other quarantine
products required for resumption of operations
・ Discrepancy between notifications at the central and provincial
level and actual operations at the site level・ Transfer restrictions across provinces and cities, due to 14-day
sequestration measures, etc., and the accompanying disruptions
Post-peak period of in domestic logistics. Effects on supply chains
infections
・ Discrepancies between the period of proof of force majeure(from late February - and the date of actual resumption of operations
March)・ Valid period of visa and residence permit expires during
temporary return to Japan, and procedures for extension cannot
be carried out.
・ Due to the decline in air flights between Japan and China andthe impact of the suspension of visas, expatriates temporarily
returned to Japan, new employees scheduled to be dispatched toChina, and business travelers are unable to enter China, andcompanies are forced to continue their business on the
Period of economic assumption that these employees are not there.
recovery・ International logistics centering on air cargo became(from April)bottlenecks
・ Factory utilization rates in China, etc. have not recovered due
to sluggish domestic and external demand.
・ The Health Code of the Health Management App does not
respond to applications from foreign nationals, hindering the livesof Japanese expatriates.

Source: Questionnaires by the Japan Chamber of Commerce and Industry, andinterviews conducted by JETRO.

Examples of business expansion by Japanese companies due
to COVID-19
Company Name

Contents

MOSHI MOSHIHOTLINE DALIAN,
INC.

A 100% subsidiary of BPO giant Relia, Inc. With the increase intelecommuting work worldwide, inquiries from other countries,
such as those from Japan headquarters and Vietnam, increased
sharply.

Yale Japan Co., Ltd.

Support for advancement into major e-commerce platforms
such as China. Purchases in cross-border e-commerce in China
increased sharply due to increased stay-at-home consumption
and restrictions on visits to Japan as a result of the spread of
COVID-19. The number of listing support projects has also
doubled.

Terumo Corporation

Demand for temperature monitors soared due to the impact of
COVID-19. Production is increasing at a plant in Hangzhou City,
Zhejiang Province. Demand increased sharply due to anincrease in use of thermometers at companies and hotels in
addition to household demand.

Suzuran Medical Inc.

Manufacturer of medical products. Demand for masks andother medical products in China is expected to continue, andthe company invested 3.5 billion yen to build a new plant in
Jiangsu Province. The company plans to secure space at the
new plant to accommodate increased production of masks inthe event of an emergency.

Source: JETRO from various media

Copyright (C) 2020 JETRO. All rights reserved.

Chapter 2 Section 4 Impact on business activities of changes in the business environment amidst increasing uncertainty

ASEAN: Changing sales strategies over reorganizing production andprocurement41

 In Southeast Asia, the number of infections was particularly high in Singapore, Indonesia, the Philippines,
Malaysia, and Thailand. Since mid-March, entry and operational restrictions have been imposed in the region.
This affected the supply chains of Japanese manufacturers in Malaysia and beyond. In Vietnam, some said theimpact on production and sales was smaller than that of other countries and regions.

 As a countermeasure against these impacts, local Japanese companies are focusing more on responding to thedecline in sales by, for example, revising their sales strategies rather than reorganizing their production bases
and suppliers. The recovery of the domestic and overseas markets and the relaxation of restrictions on travel
remain hopes for the future. It is also conceivable that COVID-19 will be used as an opportunity to localize
human resources.
Impact on Japanese companies’ supply chains in ASEAN countries
ImpactSummary(Apparel manufacturer in Indonesia) Regarding sales in Indonesia, half of the retail stores that handle our products suspended operation

Decline in production and orders

from late March. This is because the retail facilities themselves were temporarily closed or shortened operating hours.

due to economic contraction(Transport equipment manufacturer in Thailand) Impact of production adjustments by customers, orders in Thailand decreased significantly.
The company manufactures products for export, but the factory operation rate is 30%. (late April)

Decrease in production efficiency due to (Electrical equipment manufacturer in Vietnam) In early April, production was temporarily suspended due to the installation of
measures to prevent infections at plants partitions in work spaces, etc., in order to prevent infectious diseases following Prime Minister Decision No. 16.
Able to operate, but difficult or
impossible for employees to commutedue to suspension of public transportation(Non-manufacturing in the Philippines) Though the business was permitted during the enhanced community quarantine (ECQ), it was notpossible to secure the store staff because of the suspension of public transportation, and only about 30% of the stores could be operated.

(Headquarters of electric and electronic manufacturer in Singapore) Malaysia's mobility restriction directive makes it impossible
Production is difficult due toto procure raw materials from our suppliers. Cost increase due to conversion of orders to other companies is inevitable. (Early

shutdown of domestic and overseas April)
suppliers of raw materials, packaging(Parts supplier in the Philippines) The best supplier for the sourcing of raw materials is located in the area where the modified

materials, etc.

enhanced community quarantine (MECQ) is in place. We can secure parts from other suppliers, but if it is prolonged, it will leadto a decline in our competitiveness. (late May)

Increased transportation costs due
to reduced flights, difficulties inarranging flights, and the suspension ofairline flights, making it impossible toimport/export
Customs personnel system was kept to aminimum, resulting in a slowdown in customs
clearance speed and delays in logistics.

(Distribution-related company in the Philippines) Products made in the Philippines can be delivered on land, but air freightshipments cannot be used due to reduced flights and higher freight rates. Ship flights can be secured. (Early April)(Electric and electronics manufacturer in Malaysia) Due to the flight cancellation, the lead time to Japan is 0.5 to 1.5 days behindschedule at the shortest, and 2.5 to 5.5 days behind schedule at the longest. (Mid-May)(Distribution-related company in Cambodia) Due to the congestion of borders, it has been taking about 3 days for imports
from Vietnam, which used to take only a day or so. (late March)

Source: Interviews with Japanese companies in each country, “Biznews” (JETRO)

Copyright (C) 2020 JETRO. All rights reserved.

Chapter 2 Section 4 Impact on business activities of changes in the business environment amidst increasing uncertainty

Southwest Asia: 80% of Japanese manufacturers are interrupted due tolockdown in India

42

 In Southwest Asia, infections were confirmed in Sri Lanka and India in late January followed by Pakistan in
February and Bangladesh in March. In April, the number of people infected increased sharply reaching about
1.4 million people in mid-July. 70% of cases are in India. Since mid-March, these four countries have imposed
restrictions on entry, movement, and operations, influencing the operations of Japanese companies.
Restrictions began to be relaxed in early May.
 80% of Japanese manufacturers discontinued production due to the lockdown in India. The impact of thecountry's lockdown has been reported by Japanese manufacturers in ASEAN, and COVID-19 has affected theemerging supply chain in India. Conversely, in a survey of Japanese companies in India, few responded thatthey would discontinue investment.
Impact on Japanese companies’ supply chains in major Southwest Asian countries
ImpactSummary

Difficult to operate due to shrinkage
of market, including export
destinations(Manufacturer in Pakistan: The problem is that products will not sell due to the economic downturn. The government's economic stimulus
measures are expected. Our financial position is difficult, but we are concerned that our clients' financial position will become tighter andbankruptcy may occur. (late April)(Textile-related company in Bangladesh) Overall, the order after autumn has declined dramatically, making it difficult to operate on the same
scale as in the past. It is expected that difficult conditions will continue until the consumer market recovers. (late June)(Distribution company in India) Although marine transportation is operated, it takes time for quarantine andDelay in customs clearance due toreduction in the number of customs
personnel

customs clearance due to shortage of workers, etc. In air transportation, cargo aircraft are partially operated, but
in principle only fresh goods are handled, and general cargo is not accepted. (Early April)(Distribution company in Bangladesh) Customs clearance is carried out. However, because the number ofcustoms clearance staff is limited, the work has been delayed compared to normal times.

Higher transportation costs due toreduced flights and difficulty inarranging(Distribution company in India) Cargo aircraft are partially operated, and general cargo is accepted,
but freight costs remain high due to the balance between supply and demand. (Mid-June)

Impact on the company caused by(Manufacturer in India) Packaging material supplier ceased operation, and if lockdown continues insuppliers not being allowed to operate the future, production will be affected. (late March)(Transport equipment manufacturer in India) We can operate the factory, but the movement across states isrestricted, and enough number of personnel cannot not collected. (late May)

Non-attendance by employees due to(Transport equipment manufacturer in India) In order to completely return to the production system, it will be
restrictions on domestic travelnecessary to have 3 shifts (including production at night shifts), but since the ban on overnight stays from 9:00
p.m. to 5:00 a.m. continues, it is difficult to establish a system for night shift. (mid-June)

Source: Interviews with companies in each country

Copyright (C) 2020 JETRO. All rights reserved.

Chapter 2 Section 4 Impact on business activities of changes in the business environment amidst increasing uncertainty

North America: Ensuring the safety of employees when resuming
operations and diversifying procurement within the region

43

 The number of COVID-19 infections in North America has increased sharply since March, and there are nosigns of troughs as of the end of June. Around 30% of Japanese companies in the United States and Canada
suspended production at the end of April, however, many of them resumed production at the end of May.
Ensuring the safety of employees became an important issue for each company in resuming operations. 70%
of companies maintain employment utilizing federal government COVID-19 support measures (e.g., PPP,
unemployment insurance).
 The impact of COVID-19 on the supply chain with Asia is limited because the procurement ratio in North
America has been high. Conversely, in order to reduce procurement risk caused by the US-China tensions,
there are moves to consider strengthening supply chains and diversifying suppliers in North America.
Trends in sales and production of Japanese companies operatingin North America
End of

Impact

March

68.8%
54.2%
28.5%
78.9%
68.9%
37.9%

Sales decline in the past month
Production suspension or
production cutbacks

US

Production discontinuation
Sales decline in the past month
CanadaEnd of April

Production discontinuation or
production cutbacks
Production discontinuation

73.9%
80.4%
28.2%
70.7%
84.0%
40.0%

End of May

End of June

75.5%
78.0%

71.7%
71.3%

3.3%
69.8%
87.5%
3.1%

1.7%
55.3%
44.0%
0.0%

Note: Percentage of companies that responded. The survey was conducted at the end of March,
April, and May. The United States (March 24-26, April 28-30, May 27-June 1, June 26-July 1, 2020),
Canada (March 24-26, April 29-May 1, May 26-28, June 29-July 3, 2020), respectively.
Source: JETRO’s quick survey

Procurement ratio of Japanese companies operating in North
America by region
Procurement
sourceJapanesecompanies in the

US

CanadaMexico

Japan

China

ASEAN

Other

59.1%

0.9%

2.2%

24.7%

5.0%

3.1%

5.0%

US
Japanesecompanies in

Examples of impact on Japanese companies operatingin North America
FieldsComments on impacts and issues obtained through hearings with individual companies

Automotive
Industry

Many auto parts manufacturers reduced or suspended production due to the suspension of
production by automobile manufacturers. From mid-May onward, production byautomobile manufacturers will resume gradually, but full-scale operations are expected tostart from summer onward.
The procurement rate of parts from Japan and North America was high while the rate forparts from China was low, so supply chains were relatively unaffected.

Challenges include ensuring social distance within the factory and thoroughly wearing
personal protective equipment are crucial. Concerns about whether employees temporarily
Manufacturing laid off will return to work after business resumes due to an increase in unemployment
industry
insurance.
The price of airfare from Japan dramatically increased, and with longer lead times, someshipments were significantly delayed. The situation, however, is improving.

Restaurant

Demand increase as stay home was recommended led production volume increased. On
Food
the other hand, it is a temporary special demand, and demand is expected to decrease as
Manufacturing
the economy resumes.
Finance

23.2%

31.5%

1.4%

22.6%

8.2%

4.4%

9.0%

CanadaNote: Proportion of raw materials and parts procured by manufacturing companies in the UnitedStates
Source: JETRO 2019 Survey of Japanese Companies Establishing Operations in the US and Canada

Although some restaurant shifted to to-go and delivery-oriented operation, sales declined.
Even after the resumption, customer capacity in the restaurant will be forced to be limited.
Therefore, they cannot expect the level of sales before COVID-19, and it is essential toexpand sales tools outside the store.

Real estate

Unlike the Great recession, financial institutions have not been damaged. They have anenvironment in which it is easy to raise funds and lend money amid zero interest rates.
New store openings, such as restaurants and retailers, were postponed or discontinued. On
the other hand, the impact of COVID-19 caused land and property prices to decline,
leading to an increase in inquiries from investors and other buyers.

Source: JETRO's quick survey and interviews with individual companies

Copyright (C) 2020 JETRO. All rights reserved.

Chapter 2 Section 4 Impact on business activities of changes in the business environment amidst increasing uncertainty

Central and South America: Even after resumption, operating rate has
been sluggish, and drug import procedures are to be simplified.

44

 In Argentina, Colombia and Chile, restrictions on going out will continue after July. Mexico and Brazil, on theother hand, resumed their economies in stages from June while continuing social-distancing measures. Even
after the resumption of operations in Mexico, capacity utilization rates remained sluggish due to sanitation
regulations and shrinking demand. There is no government support for companies, and some Japanesecompanies face financial difficulties. In Brazil, the government's emergency economic stimulus measures,
including compensation for salaries, tax reductions, waivers, and deferrals, as well as the relaxation of labor
regulations, alleviated the negative impact on Japanese companies.
 In addition to COVID-19, Mexico was also required to respond to USMCA (effective July 1) which required an
extremely high rate of procurement in the automotive sector in the region. In Brazil, many Japanese companies
will review their sales strategies under the new circumstances. COVID-19 simplifies Brazilian import proceduresfor pharmaceuticals and medical devices providing a tailwind for Japanese companies.
Quarantine policies of major Central and South American countries
Country

MexicoBrazilArgentina

Colombia

Details of main quarantine policies
・ Declaration of state of emergency on March 30. Prohibit operations except
in essential industries.
・ Automobiles were designated as essential industries on May 15. Gradualoperation resumption starting on the 18th.
・ From June 1, the operation is allowed to resume according to the spread
warning level of each state.
・ State-by-State measures. In Sao Paulo, operation was prohibited other thanin essential industries from March 24.
・ From June 1, the operation is allowed to resume according to the spread
warning level of each state.
・ On March 19, travel restrictions were issued. Excluding some exceptions, itwill continue from July onward.
・ Some industries including automobiles were permitted to resume
operations from May 20.
・ Declaration of state of emergency on March 17. Except for daily
necessities, bans on going out. It continued after July.
・ Industries resumed operations from the second half of April, specifying
detailed industries by region.

Peru・ Declaration of state of emergency on March 15. Except for daily
necessities, bans on going out. Only the high-risk age group will be prohibitedfrom going out from July.

Chile

・ On March 18, the President declared a state of disaster emergency.
Beginning on the 26th, people were not allowed to go outside except fordaily necessities. The ban continues for most of the metropolitan provinces
even after July.

Source : Various government announcements

Survey Results for Japanese Affiliates
Difficulties encountered when Japanese companies operating in
Mexico resumed operations (excerpt)
Response

Contents

rate

Change in sales strategy
Review of Employment and Terms of Employment

Review of suppliers

61.8%
42.7%
25.0%

Note: Valid responses: 208 companies. Multiple answers
Source: A survey conducted by JETRO and the Japanese Chamber ofCommerce and Industry in Mexico (June 25-29)
Review of business strategies of Japanese companies operatingin Brazil due to COVID-19
Response
rate

Contents
Shrinking demand

49.5%

Implementation of sanitary measures designated by the authorities

Financial Position

46.2%
19.2%

Note: 68 valid respondents. Multiple answers
Source: A survey conducted by JETRO and the JapaneseChamber of Commerce and Industry in Brazil (June 12-22)

Copyright (C) 2020 JETRO. All rights reserved.

Chapter 2 Section 4 Impact on business activities of changes in the business environment amidst increasing uncertainty

Europe: Decline in demand is the biggest challenge due to restrictions on
travel and production activities.

45

 The biggest challenge facing Japanese companies has been the decline in demand due to shift to work-fromhome and store closures. As a result of restrictive measures on travel implemented in many countries, Japanesecompany employees, mainly in administrative divisions, have been working from home. Border controls
among EU members were also introduced on an interim basis, temporarily restricting freedom of movement.
Many Japanese companies have established offices in one EU member state and they are in charge of
their business’s development in some other member states, so movement restriction has been also a big
challenge.
 In terms of hedging the risk, the importance of diversifying customer segments is prominent especially in thefood sector. Some companies have managed to offset their sales drop/decline to restaurants by sales to theretail sector. There is also growing interest in the development of new markets and the expansion of new
businesses. The European Commission has attached greater importance to the “European Green Deal” and“Digital Transformation” to be climate neutral by 2050 and sees them as a key driver to the post-COVID
recovery.
Impact of COVID-19 on Japanese companies
in Europe

Percentage of telecommuters among
Japanese companies operating in Europe
Survey period
UK

Mid-May

Czech Republic Late May and early June
Belgium

Mid-May and late May

0%～Less than
50%

50%～
Less than
100%

100%
(All at
Home)

14%
56%
25%

30%
32%

56%
12%
75%

Status of business operation of Japanese companies in
Europe after lockdown
Survey period

UK

Mid-May

Czech Republic Late May and early June
Belgium

Mid-May and late May

TemporarilyclosedContinuebusiness bydownsizing

Continuebusiness withthe same scaleof activity

2%
3%
4%

53%
64%
53%

44%
32%
44%

Source: A survey conducted by the Japanese Chamber of Commerce and Industry in the United Kingdom
and JETRO London (May 18-21, 2020), a survey conducted by JETRO Prague (May 28-June 5, 2020), anda survey conducted by the Embassy of Japan in Belgium and JETRO Brussels (May 14-27, 2020).

Survey period
UK

Mid-May

Germany

Early and mid-May

Netherlands

Late May and early June

Czech Republic

Late May and early June

Sales

Employment

declined

impacted

66%
81%

38%

83%
96%

38%

-

Source: A survey conducted by the Japanese Chamber ofCommerce and Industry in the United Kingdom and the
JETRO London (May 18-21, 2020), a survey conducted bythree JETRO offices in Germany (May 6 - 20, 2020), a survey
conducted by the Japanese Chamber of Commerce andIndustry in the Netherlands (May 29 - June 3, 2020), and asurvey conducted by the JETRO Prague (May 28 - June 5,2020).

Copyright (C) 2020 JETRO. All rights reserved.

Chapter 2 Section 4 Impact on business activities of changes in the business environment amidst increasing uncertainty

Russia: Economic conditions comparable to the aftermath of the global
financial crisis

46

 In Russia, restrictions on going out have been put into effect in major cities, creating serious restrictions on thebusiness operations of Japanese companies. Business confidence reached lows at similar levels to theaftermath of the global financial crisis. Some companies are focusing on credit and credit management. They
are also considering laying off or restricting hiring of local employees. On the other hand, the supply chain has
not suffered from serious business difficulties due to sluggish domestic consumption and economic activity.
 According to the Outlook for Business Operations in the Next 1-2 Years, 12% of companies responded "Shrinkor Withdraw," which was only about half of the level at the time of the crude oil price crash at the end of 2014.
The solid expectations of the market's potential over the medium to long term also became evident.
Trends in Business Conditions DI for Japanese Companies in
Russia and Business Outlook DI in 2 Months
The Company's Business Conditions

自社の景況（最近の状況）(Recent Situation)

Outlook for the Company's Business Conditions

自社の景況見通し（2ヵ月後の状況）(Situation in 2 Months)

Impact on Japanese companies in Russia following the
spread of COVID-19 infections(multiple responses as of late May 2020)

60

Ratio

Contents

70(%)

Suspension of new contracts, orders and shipments

60.4
35.6

30

Difficulty in collecting receivables due to businessdifficulties of business partners (including
bankruptcies)

20

Delays in logistics and customs clearance

28.7

10

-30

Reduction in workforce and layoffs of local employees
due to business downsizing
Lack of local employees due to the introduction of
non-working days
New contracts and an increase in the number oftransactions-40

Acceleration of logistics and customs clearance

2.0

-50

None

10.9

-60

Other

9.9

-70

Note: Survey period: May 20-29, 2020. Survey targeted
Japanese companies operating in Russia (about 240
companies), of which 101 companies responded.
Source: “Survey on Business Conditions of JapaneseCompanies in Russia” (May 2020) (JETRO)

50
40

0
-10
-20

4 6 8 10 1 3 5 7 9 11 2 6 9 12 2 7 12 2 6 11 2 6 11 4 9 1 4 9 2 6 9 1 4 9 1 4 9 1 5 (Month)(Year)
2009
10
11
12
13
14
15
16
17
18
19
20

Note: Survey period: May 20-29, 2020. Survey targeted Japanese companies operating in Russia (about 240
companies), of which 101 companies responded.
Source: “Survey on Business Conditions of Japanese Companies in Russia” (May 2020) (JETRO)

11.9
4.0
3.0

Copyright (C) 2020 JETRO. All rights reserved.

Chapter 2 Section 4 Impact on business activities of changes in the business environment amidst increasing uncertainty

Middle East: Continued stagnation in air cargo and other logistics,
restricted movement of people, and falling oil pricesIn the Middle East, the number of infections has increased again, and the second wave of COVID-19 can be linked to easing
restrictions such as the resumption of work and commerce after the end of Ramadan (end of May). In a survey conducted in Junetargeting Japanese affiliates in the UAE which serves as a regional hub, approximately 80% of companies responded that this had
an impact on the decline in sales. In addition, more than half of the companies responded that “there was a negative impact on
logistics.” Some people said the impact of the decrease in oil prices was a bigger factor in the decline of sales (compared to theimpact of COVID-19).



Regarding the outlook for the future, about 40% of respondents expect the COVID-19 pandemic to conclude enabling them tonormalize their operations in the first half of 2021. Approximately 40% of companies said they would review their businessstrategies, of which approximately 80% said they would change their sales strategies. While each company is considering revising
its strategy, other fields such as e-commerce grew due to the impact of stringent stay-at-home measures.
Impact of COVID-19 on logistics at
Japanese companies in the UAE

No impact
6.7%

N/A
11.9%

Significant
impact14.8%

n=135
Predict
futureimpacts
2.2%

Slightimpact25.9%

Some
impact38.5%

47Comments from Japanese companies in the UAE (related tohuman mobility and logistics)
Contents

Corporate Comments
Limitation of sales and marketing activities due to inability to travel
abroad.
Existing customers can meet via on-line tools (e.g. Zoom and Teams),

Movement but new business negotiations need direct interviews.
of people Only limited services can be completed in the UAE; it is difficult to visit

neighboring countries.
Candidates for investment cannot be inspected locally, and investment
decisions and implementation are delayed.
Delays in parts procurement from overseas affiliated factories andsuppliers have been remarkable, and this has had a major impact on
shipments and sales from the company.
Unless the transportation conditions from the exporting countries
Logistics(especially air shipments) are restored, conditions will remain severe.
Business restrictions of distributors in each country have affected theCompan's operation. In Africa in particular, logistics and banking are
not functioning and shipments are almost impossible.

Note: Survey period: June 2-4, 2020. Surveyed companies are
Japanese companies based in the UAE (135 companies responded)
Source: "Emergency Survey on COVID-19 Countermeasures andTheir Impact" (2nd) ) (The JETRO Dubai)

Note: Survey period is June 2-4, 2020. Surveyed companies are Japanese companies based in
the UAE (135 companies responded)
Source: “Emergency Survey on COVID-19 Countermeasures and Their Impact” (2nd) (The JETRO
Dubai)
Copyright (C) 2020 JETRO. All rights reserved.

Chapter 2 Section 4 Impact on business activities of changes in the business environment amidst increasing uncertainty

48

Africa: Concerns include restrictions on re-entry of expatriates andstability of local healthcare systems

In Africa, where there are more than 600,000 cases of COVID-19, countries responded fast with various measures including bordercontrols at the initial stage. However, economic activity gradually resumed from May onwards without controlling the spread ofthe disease. Concerns among Japanese companies include the risk of infection among employees upon resumption of
production at production sites, restrictions on re-entry for resident employees who have temporarily evacuated from offices, andthe stability of local healthcare systems.



The target markets of Japanese companies operating in Africa depend heavily on the local markets (approximately 80% in South
Africa and Nigeria, and approximately more than 50% in other countries), and activity restrictions in these countries directly affectthe companies. Due to the structure of exports and imports, supply chains in each country are susceptible to the economic
stagnation in Europe. Exports to Europe were sluggish for the Japanese automotive parts manufacturers operating in North Africa.
Share of trade with EU and China in 54 African countries (3-year averagefor 2017-2019)2020 Real GDP Growth Rate (Forecast) of
Select African Countries
Predicted

Country Name value (%)
1 Egypt

22 Ethiopia

1.9

3 Cote d'Ivoire

1.8

4 Ghana
5 Mozambique

1.5
1.4

6 Kenya-0.3

100.0%

100.0%

Exports

Ratio to EU
80.0%

80.0%

60.0%

60.0%

7

7
40.0%

40.0%

7 Morocco-3.7

38 Nigeria

-5.4

1 4

9 South Africa-8.0

Note: Egypt and Morocco areclassified into the Middle Eastby the IMF. Figures as of April
2020
Source: The IMF World
Economic Outlook (revised
June 2020)

Imports

Ratio to EU

20.0%

5

9

6
0.0%
0.0%

20.0%

8
2

20.0%

Ratio to China
40.0%

60.0%

80.0%

100.0%

3

15
8
9
6
2 4

0.0%
0.0%

Ratio to China
20.0%

40.0%

60.0%

80.0%

100.0%

Note: Figures in the chart correspond to country names in the left-hand chart.
Source: "Direction of Trade Statistics“(IMF)

Copyright (C) 2020 JETRO. All rights reserved.

49

Chapter 3

Trends in global trade rule formation

50

Chapter 3 Section 1 Trade policies of major countries/regions

Impact of trade protectionism remains, but the number of cases declines According to the WTO’s Monitoring Report, the number of trade-restrictive measures introduced by G20
countries in 2019 was 54, the first decline in three years. Conversely, the trade value subject to trade-restrictive
measures was $417.5 billion, the third largest ever.
 Due to the intensified US-China trade friction, the global uncertainty index tended to trend in relation to US
trade policy. However, the US-China Economic and Trade Agreement (“Phase One Trade Deal”) went into force in2020 and led to a rapid decline in US trade policy uncertainty. Meanwhile, as COVID-19 spread widely in Europe,
the US, and other areas, the global uncertainty index rose again recording its worst ever level.
Number of trade-restrictive measures taken by G20 countries and their(cases)targeted trade value(cases)100
10Total number of measures
90

94

Other

83

80

76

57

60

Monthly average number of measures
introduced (right axis)

59

60000

1400
World Uncertainty Index (WUI)

8

Import restrictions

70

68

70

9

Export restrictions

Global uncertainty and US trade policy uncertainty

7

US Trade Policy Uncertainty
Index (right axis)

6

54

50

5

40

1200

50000

40000

1000

4
28

30

3

20

2

10

1

0

0
2012

5,000

13

14

15

16

17

4,809

(100 million USD)

18

19

Years

19/519/10

800

31

19/10- (year/
20/5 month)

4,604

30000
600
20000

400

10000

200

4,175
4,000
3,359

0

3,000

1990

470

2000

2005

2010

2015

0
2020 (Year)

Note: 1) The WUI is an index based on the frequency on term "uncertain" used in the Economist
Intelligence Unit (EIU)'s country reports for about 140 countries and regions. The WUI uses GDPweighted indicators. 2) The U.S. Trade Policy Uncertainty Index is an index based on the articles frommajor U.S. newspapers that contain certain terms related to trade policy. 3) Both are project-based
figures by IMF and universities. The larger the index, the greater the uncertainty.
Source: "Economic Policy Uncertaity Project" and "World Uncertainty Index"

2,000

1,000

1995

741
322

0
17th

18th

19th

20th

21st

22nd

23rd

(Oct 2016-May 2017)(May-Oct
2017)(Oct 2017-May 2018)(MayOct 2018)(Oct 2018-May 2019)(May Oct 2019)(Oct 2019-May 2020)

Note: This does not include trade facilitating measurese and those related to COVID-19. The number of times in the figure
below refers to the issue number of the report. Figures in parentheses are aggregation periods.
Source: WTO Secretariat

Copyright (C) 2020 JETRO. All rights reserved.

51

Chapter 3 Section 1 Trade policies of major countries/regions

Series of trade-related measures introduced in response to COVID-1930

In response to the spread of COVID-19, a series of trade-restrictive measures have been introduced around the world.
Particularly since March, export restrictions of sanitary supplies increased. On the other hand, there have been a series oftrade-facilitating measures such as reduction of tariffs and simplification of import procedures: a cumulative total to 97 asof May 2010, exceeding the total number of trade restrictive measures (82) based on JETRO’s research.



Trade restrictions necessary to protect human life or health are allowed as exceptions to free trade in several WTO rules,
such as Article XX(b) of GATT. However, the WTO and other organizations are increasingly wary that restrictions onexports of pharmaceuticals and food could threaten the lives and health of people in the global supply chain and partnercountries.
Trade-related measures in response to
COVID-19 (No. of cases)（Case）

Exception to trade liberalization associated with COVID-19（Case）
9082

25

Article

80

60

60

54
15

40
10

20

13

5
4

6

1

0

0
Jan

Feb

Mar

Apr

May

Trade restrictive measures

Jan

Feb

Mar

Apr

May

Trade facilitating measures

Americas

Europe, Russia and CIS

Middle East and Africa

Cumulative cases (Right axis)

Asia and Oceania

Note: 1) Only measures with clear relationships with Covid-19 are included. 2) Cumulative cases also
include the measures which have been lifted by May 2020. 3) Measures of which introduction dates are
unknown were replaced with the dates of notification to the WTO.
Source: WTO,WCO, "Biznews" by JETRO

Exceptions to liberalization

When applied to COVID-19

Relevant measures

Article XI Preventing and mitigating critical2(a)shortages of food and otherproducts essential for exporting
countries
Article Protecting the lives and health ofXX(b)humans, animals and plants
Article To acquire and distribute scarceXX(j)products
Article Supplies to military facilities
XXI(b)

Prevention and treatment of
infectious diseases by ensuring asufficient supply of medical andhygiene products such as masks
and other protective gears andsome medical devices such as
ventilators

Prohibiting or restricting exports tomeet domestic demand for medical
and sanitary supplies, or improving
access to these supplies by
eliminating tariffs and facilitating
import procedures

GATT

97

75

20

100

To mobilize military forces in cities
under lockdown and contingent
facilities

GATS
Article Protection of public morals and the Prevention of viral spread by
Prohibition and restriction of entry
XIV(a) maintenance of public orderhuman movementfrom infection-spreading areas
Article Protecting the lives and health of Prevention of deaths due toXIV(b) humans, animals and plants
medical care breakdown
SPS
Article 5, Ensuring the lives, physical safety Prevention and subsidence ofStrengthening sanitation andParagrap and health of the people based on pandemics based on the possibility quarantine measuresh7
evidencethat wildlife is an infectious source
TBT
Article Measures for legitimate policy
Ensuring prompt distribution of
Relaxation of certification and2.2
purposes (protection of human
medical devices andstandards of medical devices
health)pharmaceuticals
TRIPS
Article Patents may be exploited by third Restrictions on patent rights ofStrengthening of compulsory
31
parties without the consent of the pharmaceutical companies thatlicensing by some countries
patentee under certain conditions have developed specific drugs
Government Article
Protecting the lives and health of Rapid increase in demand forPurchase of goods and services by
procurement
III 2
humans, animals and plants
specified products such as
the government(plurilateral)pharmaceuticals and medical
devices
Source : WTO agreements

Copyright (C) 2020 JETRO. All rights reserved.

52

Chapter 3 Section 1 Trade policies of major countries/regions

Trade-related measures by each country/region in response to COVID-19
 The introduction of export restrictions and embargoes began early in Asia, starting in late January 2020. Europe
and the US also started export restrictions, reflecting the expansion of COVID-19 since March.
 In terms of trade-facilitating measures, there was also a temporary relaxation of standards and certifications, inaddition to border measures such as tariff elimination and the simplification of import procedures for the
purpose of expanding access to medical and sanitary supplies.
Trade-related measures by each country/region in response to COVID-19

ThailandJan. 30 Requested cooperation from manufacturers of protective equipment forviral infection to refrain from profit-seeking export sales (de facto export
restrictions).
Jan. 31 Full ban on export of masks.
Feb. 2 Instructed delivery services to suspend accepting medical masks,
disinfectant solutions, and other items for international delivery.
Feb. 5 Export controls for masks.

RussiaMar. 2 Temporary export ban on certain types of medical products such as masks,
protective clothing, and antiviral agents.
India
Mar. 3 Restricted exports of APIs and formulations made from these APIs.
TurkeyMar. 4 Modifications to the notice on goods, which export is prohibited or needs
an additional licence.
Vietnam
Feb. 28 Temporary export ban on commercial export of medical masks.
EU
Mar. 15 Temporary application making the exportation of certain products outsideof the EU subject to the production of an export authorization.
Indonesia Mar. 18 Provisional ban on personal protective equipment.
Australia Mar. 18 Temporary measure to prevent non-commercial exports of personal
protective equipment and sanitisers.
UK
Mar. 20 Ban on parallel export of certain categories of medicines.
Switzerland Mar. 26 Exportation of masks and gloves being subject to export authorization.
Indonesia Mar. 26 Prohibition of the export of ethyl alcohol.
US
Apr. 10 Temporary export authorization for certain personal protective equipment.

Source: WTO,WCO, "Biznews" by JETRO

Date

Details of measures

Vietnam

Import relaxation

Export restrictions and embargoes

India
Vietnam

Countries
andregions

Details of measures

Feb. 7 Temporary elimination of custom duties on products on the medical
products.
CanadaMar. 16 Measures to facilitate the importation of vital medical supplies.
US
Mar. 17 Elimination of masks and other medical products from additional tariff List
4A against China.
BrazilMar. 17 Elimination of import dutios on ventilators.
Indonesia Mar. 23 Temporarily exemption of pre-shipment inspections and submission of
inspection reports when importing medical and hygiene products.
MexicoApr. 6 Facilitation import procedures for pulmonary ventilators and the parts.
Thailand
Apr. 15 Machinery used for agricultural, civil engineering and other purposes is
exempted from tariffs.
RussiaQuarantine

Vietnam

Date

Jan. 30 Temporarily restricts import of certain animals, including insects, reptiles,
live fish and hydrobionts from China.
Mauritius Mar. 16 Temporarily restricts imports of live animals, including fish from China andother certain countries.
Indonesia Mar. 19 Target pets brought in from Hong Kong for testing
Switzerland Apr. 16 Relaxation of labelling requirements for food products.
SwitzerlandStandards

Countries
andregions

Brazil
US

Feb. 28 Granting a general authorisation for placing certain disinfectants on thebasis of alcohol or active chlorine on the market.
Mar. 13 Establishes exceptional and temporary criteria and procedure for thepetitions for the market authorization of medicines and biological products.
Mar. 26 Temporary policy regarding nutrition labeling of certain packaged food.

Copyright (C) 2020 JETRO. All rights reserved.

53

Chapter 3 Section 1 Trade policies of major countries/regions

The United States continues unilateral measures based on domestic law
 In 2019, the US continued to use additionaltariffs u nder Ar ticle 232 of the Trade
Expansion Act and Article 301 of the Trade
Act. Trade remedy measures (anti-dumping,offsetting tariffs) were also implemented in 53
cases, the highest level ever.
 The utilization rate of US FTAs is stable ataround 45%. The US-Japan Trade Agreement
and US-Japan Digital Trade Agreement
entered into force in January 2020, and the
USMCA entered into force in July 2020. The
administration is eager to negotiate bilateral
FTAs with an emphasis on individual
agreements with the United Kingdom, Brazil,
Kenya, and other countries.
70.0

(%)

FTA utilization rate in US imports

60.0

50.0
44.7

45.9

40.0

44.9

42.7 42.0 43.3 42.0

45.0 46.0 46.2 45.9

47.8 46.7

45.4 45.5

30.0

43.2

Major trade actions under the Trump Administration since 2019(excluding trade controls and investment regulation)
Yr

Date
Article 232 of the Trade Expansion Act of 1962 (Measures for Security)
May. 17 Announced to postpone the decision on automobiles and parts for as long as 180 days
Eliminated additional tariffs on steel and aluminum for imports from Canada andMay. 17
Mexico2Jul. 12 President denies security threat regarding uranium imports
0
Lifting the additional tariff on Turkey's steel to 50% again on account of military
1 Oct. 16
intervention in Syria → Lifted on October 23
944148
President's decision on automobiles and parts expires.
President announced the resurgence of additional tariffs on steel and aluminum
Dec. 2
imports from Brazil and Argentina
Feb. 8
Expanded tariff coverage for steel and aluminum2
Measures were not implemented although security threat was recognized on the import of titanium
Feb. 27
sponges0
2 May. 4 Investigation on transformer components initiated0 May. 6 Investigation on mobile cranes initiatedJun. 2
Investigation on vanadium initiated

Yr

Date
Article 301 of the Trade Act, 1974 (Measures Taken by Unfair Trade Practices)
May. 10 Increased the rate of the third round of additional tariffs on China from 10% to 25%
Jul. 10 Launched an investigation on the French Digital Taxation Act
Announcement to increase of the rates of the first to third round of additional tariffs
Aug. 23
on China to 30% and the fourth to 15%
2 Sep. 1
List 4A of additional tariffs on China implemented
0 Oct. 11 Deferred increase on the rate of the first to third round of additional tariffs on China
1
Implementation of tariffs against the EU in response to disputes over the provision ofOct. 189subsidies to Airbus
France's digital taxation is recognized as an unfair trade practice, implies retaliatory
Dec. 2tariffs
Agreed on phase one of the economic and trade negotiations with China andDec. 13
postponed the implementation of List 4B of additional tariffs on China
Agreed to accelerate discussions on the formulation of tax rules on digital taxation in
Jan. 22
FrancePhase One of the U.S.-China Economic and Trade Agreement entered into force. Reduction of the

20.0

10.0

Total

Canada (NAFTA)

Mexico (NAFTA)

Korea

DR-CAFTA

Chile

Note: 1) The top 5 countries and regions for which FTAs are used. 2) Calculated using annual
figures regardless of the effective month.
Source: US International Trade Commission

2 Feb. 14
additional tariff rate for List 4A from 15% to 7.5%
0Mar. 18 Increased additional tariffs on large EU aircraft from 10% to 15%
2
Announced the start of investigation on digital taxation in 10 countries and regions
0 Jun. 2
including the EU
Consider adding $3.1 billion worth of items as part of retaliatory tariffs on EU airbus
Jun. 26
subsidies

Note: Shaded areas are measures related to China.
Source: US President's Office, “Biznews” (JETRO), etc.
Copyright (C) 2020 JETRO. All rights reserved.

54

Chapter 3 Section 1 Trade policies of major countries/regions

The US-China trade tensions have temporarily stabilized, but the US has
not relaxed its warnings to China

 In January 2020, the US and China signed the Phase One Economic and Trade Agreement. Imposition ofretaliatory tariffs stabilized temporarily, but additional tariffs are still imposed on 70% of imports from China.
The US may take additional measures depending on China's future responses.
 The US has become increasingly cautious of China, its strategic competitor. It is unlikely that the US will soften
its hard-line stance against China, and the relationship between the two countries will likely become even moretense due to intensified competition in advanced technologies and dissatisfaction with their responses to
COVID-19.
Outline of Phase One of the US-China Economic and Trade Agreement

2. Technology
transfer

3. Trade in foodand agricultural
products

4. Financial
services
5.
Macroeconomic
policies andexchange rate
matters andtransparency
6. Expanding
trade

Contents
The two countries will establish rules on protecting trade secrets,
extending patent periods, drug-related patents, trademarks,
geographical labeling, and crackdowns on counterfeits andpirated copies, as well as strengthen their enforcement.

Progress (2020)--Discussions suspended
due to the spread of
Prohibit technology transfer as a condition for market entry and
COVID-19-government approval, and foreign investment for the acquisition of foreigntechnology by the government. Ensure that all law enforcement and○ US import performanceadministrative procedures are neutral, impartial, transparent and nonin January-March is below
discriminatory.
target level, and US
China will reduce non-tariff barriers to agricultural and food imports anddissatisfaction isincrease product imports. Improved methods for managing grain tariff
expressed. China does not
quotas.
formally request, referring
China adheres to the principles of fair, effective, and undifferentiatedto the invocation of Forcemarket entry in the financial services sector and abolishes the ceiling on
Majeure Clause (Article
foreign investment in securities and insurance by April 1, 2020.
7.6.2).
The two countries will comply with the relevant IMF rules to avoid ○ April: Reported thatmanipulating exchange rates, assuming that they respect each
China is consideringother's monetary policy autonomy. Both governments will adhere accelerating the import ofagricultural products
to the principles of market-based exchange rate determination,refrain from currency depreciation policy, and refrain from setting--Resumption oftarget exchange rates to strengthen export competitiveness.
US: Reduce some additional tariffs under Article 301 of the Trade Act (list
4A, from 15% to 7.5%).
China: More than $200 billion increase in imports from the US over the 2years through 2021, based on 2017 import performance.
The Trade Framework Group of the two countries will be established toensure the implementation of the agreement. The US Secretary of Treasury
and Vice-Prime Minister of China also resume macroeconomic dialogue.

50.0○ January: Agreement
signed2000

40.0
Share of total FDI in the world (%)

Chapter
1. Intellectual
property

Trade and Investment Positions of the US and China

China

US

30.0

2010

20.0

7. Bilateralevaluation anddisputeresolution
8. Final provisions The Agreement shall enter into force within 30 days of its signing.
It is possible to withdraw from the agreement by notifying theother country.
Source: Office of the US Trade Representative, Ministry of Finance of China, "Biznews" (JETRO), and various

2019

2019

10.0

2010

consultations--○ May: Both countries
reaffirmed their efforts for
implementation○ June: China made arenewed commitment tofulfill the agreement at an
external consultation
meeting

1990

1990

0.0
0.0

2.0

2000

4.0

6.0

8.0

10.0

Share of world exports (value) (%)

12.0

14.0

16.0

Note: The size of the bubble indicates nominal GDP (purchasing power parity basis).
Source: IMF, WTO and UNCTAD data

Copyright (C) 2020 JETRO. All rights reserved.

55

Chapter 3 Section 1 Trade policies of major countries/regions

Strengthening of trade and investment restrictions for national security
 Recognizing the need to strictly control the outflow of technologies critical to national security, export controls
and investment regulations under the 2019 National Defense Authorization Act (NDAA) were strengthened. In
February 2020, the Final Rules of the Foreign Investment Risk Review Modernization Act (FIRRMA) came into
force. Conversely, there is uncertainty in the planning of corporate strategies partly due to certain measures forwhich details have not yet been announced.

 US policy regarding a range of export controls, investment regulations, and government procurement
restrictions will remain unchanged as long as the NDAA, which forms their foundation, remains in force.
Companies need to take immediate measures such as investigating the nature of their business in order to copewith these restrictions.
Outline of export and investment regulations under the National Defense Authorization Act (NDAA) 2019 and specific measuressince 2019
Yr
Date
Summary
Export Control Reform Act(ECRA)

Foreign Investment Risk Review

Management(FIRRMA)(Article 889, NDAA)

Summary "Emerging technologies" (AI and

Strengthen the power of theCommittee on Foreign"Foundational technologies" were Investment in US (CFIUS) to
added to the scope of direct andreview foreign investment inindirect export restrictions fromUS.

Prohibit 1) US governmentUS.

products as key elements.

Unknown (public comments closed February 2020

1): August 20192): August 2020

13 other technologies) and

Date of

Enforcement in January 2019)

Items on the Department ofSpecificmeasures Commerce's Regulated Item List

Affectedbusiness

Government Procurement

Modernization Act

procurement of governmentdesignated products and services,and 2) contracts between US
government and firms using these

1. Expansion of scope of audit

Regulations cover video

2. Increased audit duration

surveillance and communication

governed by the Export

3. Establishment of the advanceequipment of five Chinese firms,

Administration Regulations (EAR)

notification system

including HUAWEI,; services

must be authorized in advance by

4. Introduction of examination fees provided by or used by these firms;

the Bureau of Industry and Security 5. Sharing information with allies,

and telecommunications and video(BIS). As for "emerging

state governments, and othersurveillance equipment or services

technologies" and "foundational

government agencies

provided by firms controlled by or

technologies," the authorities ofaffiliated with the Government of

ECRA are expected to be enforced

China designated by the Secretaryby announcing the proposed rules.

of Defense.

・ Exports by Japanese firms in US tocountries outside US
・ Exports from foreign countries to third
countries by Japanese firms
・ Technical disclosure by Japanese firms to
non-US nationals

・ Japanese firms investing in US Transactions with the US
・ Sale of US businesses bygovernment by Japanese firms
Japanese firms
using Chinese parts andtechnologies[Export control] Department of Commerce(DOC) added HUAWEI and its 68 affiliates
to Entity List (EL)[Export control] Signing of a presidential decree prohibiting the trading ofMay. 15 information communication technologies and services involving foreign adversaries
when the Secretary of Commerce determines that there is a security concern
2[Government procurement] Based on Article 889, government procurement from five
0 Aug. 13
high-tech firms in China, including HUAWEI, is prohibited.
1Aug. 19 [Export control] DOC added 46 HUAWEI-related firms to EL
9
Sep. 17 [Investment regulations] The Treasury Department announced a draft FIRRMA rule.
[Export control] DOC added 28 organizations, including local governments and firms
Oct. 7in China, to the EL.
[Government procurement] The Federal Communications Commission (FCC)
Nov. 22
prohibits the use of grants to purchase HUAWEI and ZTE products and services.
[Export control] DOC added AI technology for geospatial image analysis to export
Jan. 9control
Feb. 13 [Investment regulations] Treasury Department enforces final rules for FIRRMA[Investment regulations] Order to sell US IT firm StayNTouch to a Chinese company
Mar. 62that completed the acquisition in September 2018
0
[Export control] Stricter procedures for export permits for military applications and to
2 Apr. 26 mitary end users in China, Russia and Venezuela, and expansion of the definition of0"military applications"[Export control] DOC strengthened export controls to HUAWEI and its 114 affiliates,
May. 15
including non-US products using US technology[Export control] DOC added 33 organizations including Chinese government
May. 22organizations and AI-related firms to the EL
May. 15

Note: Shaded areas are measures related to China.
Source: US President's Office, "Biznews" (JETRO), etc.

Copyright (C) 2020 JETRO. All rights reserved.

56

Chapter 3 Section 1 Trade policies of major countries/regions

Negotiations on the UK-EU future relation reach a crucial moment
 For the trade relationship after the transition period, the UK and the EU share the common intention ofcompletely abolishing tariffs and quantity restrictions by signing an FTA. However, the EU requires the UK tobear treaty obligations to ensure level-playing fields as a condition for opening the EU market, which has been
the biggest sticking in the FTA negotiation.
 If the new FTA does not come into effect by the end of the transition period, trade between the UK and the EU
will take place under the WTO rules. Although both sides confirmed that they would accelerate the negotiationin order to avoid this situation, the outlook remains quite uncertain.
Timeline of negotiations between the UK and the EU
Year
2017
2018

Date
Mar. 29

Summary
The UK officially announces its decision to leave the EU.

Jun. 9Negotiations for the UK's withdrawal from the EU begin.

Nov. 14The European Commission reports the negotiation agreement
to the European Council.

Nov. 25

Withdrawal negotiations

2019

Jan. 15- Apr. 5
Apr.10Oct. 17

Oct. 29

The European Council agrees to postpone the deadline forwithdrawal up to October 31.
The UK and the EU agree on a new withdrawal agreement anda political declaration. The European Council endorses therevised withdrawal agreement and the revised politicaldeclaration.
The European Council extends the exit deadline to January 31,
2020, at the latest, in response to a repeated request by theUnited Kingdom.

2020

Jan. 23

Jan. 31
Future relationship negotiations

The European Council approves the proposed withdrawal
agreement.
The UK House of Commons rejects the proposed withdrawal
agreement three times. The UK government requests twice topostpone the exit deadline (Note).

Mar. 2- Jun. 5
Jun. 15

Dec. 31

The House of Commons approves domestic legislation in
response to the revised withdrawal agreement. The procedure
for approving the draft agreement on the UK side iscompleted.
The UK formally leaves the EU. Transition period starts fromthe following month.
Nagotiations on the future relationship between the UK and
the EU have officially begun. A total of four rounds ofnegotiations are held.
The UK and the EU agree to further hold negotiations
between July and September at summit meetings. They also
confirm the transition period will not be extended.
The transition period concludes.

Note : The original exit deadline was March 29, 2019.
Source : European Commission, UK Government, etc.

Comparison of negotiation policies between the UK and the EU
United Kingdom

EU・ Trade relations are defined through・ Define all areas, including commercial

Overall negotiation

comprehensive free trade agreements (FTAs).

relations, under a single partnershippolicy・ In other areas not covered by the FTA,

agreement.

(Positioning of trade

separate agreements will be concluded on a・ All sectors are negotiated in parallel.

negotiations)sectoral basis.

Trade in goods
Tariffs andquantitative

・ Eliminate tariffs and quantitative restrictions ・ Eliminate tariffs and quantitativeon all items.

that level-palying fields are ensured.

restrictions
・ Based on TBT/SPS agreements of the WTO,
Technical Barriers to
Trade (TBT)
Sanitary andPhytosanitary
Measures (SPS)

restrictions on all items. Provided, however,・ Develop more sophisticated rules based

the rules are stipulated in the same way as FTAs on WTO TBT/SPS agreements.
that have been signed by the EU in recent
years.
・ Establish a framework to approve theequivalence of both mandatory standards and
SPS measures.

Services

Overall・ Promote mutually balanced liberalization in・ Aim for liberalization beyond the level ofa number of fields.

the WTO, taking into account the existing・ Insert a Most Favored Nation Treatment

FTAs of the EU.

clause to ensure that both markets are always

・ In a number of areas, the aim is tothe most open. (Note 2))

eliminate virtually all discriminatory
measures. On the other hand, exceptions
and restrictions, such as exemptions frompublic services, will be properly secured.

Financial services

Conduct appropriate consultations for

・ The evaluation of equivalence in the UK's

regulatory cooperation. Appropriate

financial licensing is determined by the EU's

consultations and procedures will be followed

unilateral judgement.

when the equivalence recognition of financial
licensing is withdrawn.

Note : 1) The parts in bold indicate areas where differences in negotiation policies are observed. 2) However, the United Kingdom, in its draft agreement, puts
on hold the inclusion of the most favoured nation treatment clause in the services and investment area.
Source : European Commission and the UK Government

Copyright (C) 2020 JETRO. All rights reserved.

57

Chapter 3 Section 1 Trade policies of major countries/regions

The EU pushes forward a rule-oriented trade policy
 The European Commission, with the new Commission President Ursula von der Leyen, calls for strengthening
rule-based multilateral arrangements through WTO reforms. The Commission also takes a proactive stancetoward building rule-based trade relations at the bilateral level, by easing the requirement for implementing
countermeasures and monitoring the enforcement of FTA rules by counterparties.
 The EU, under the approval of the WTO, is expected to impose additional tariffs on the US due to a disputeinvolving subsidies for large aircraft that began in 2004 with the US. Both sides are to start negotiations on
new trade agreements, but if the EU implements countermeasures, this could have a significant impact on the
progress of the negotiation.
EU’s basic trade policies
Item

Summary

Strengthening the rule-based multilateral trading system
WTO reform
E-commercenegotiations

EU will lead WTO reforms, including on subsidies, mandatory
technology transfer, and dispute resolution systems, with a viewto reaching a comprehensive agreement by 2022.
Accelerate e-commerce negotiations in the WTO to further
promote the use of data.

Addressing unfair trade practices and defending strategic assets and technology
Relax the conditions for EU countermeasures against WTO
Strengthening
members and FTA partners that do not comply with disputecountermeasures
resolution procedures.
Balance the liberalization of foreign investment through theoperation of the investment screening system. It also
Strengthening
encourages all member states to adopt the system andinvestment screening
strengthens the operational structure of the investment
screening system among member states.

disputes over subsidy for large civil aircrafts between the US
and the EU in the WTO
DateOct. 2004

In order to promote compliance by partner countries with therules regarding the environment and worker rights stipulated in
the current FTAs, a new Chief Trade Enforcement Officer shallbe appointed to monitor the implementation of the rules.
Draft a carbon border adjustment mechanism consistent with
the WTO Agreement by 2021.

Source : European Commission

DateJun. 2005

EU → U.S (DS353)
The EU requests consultations with theUS.

Jun. 2010

The Panel identifies a breach of thesubsidy agreement by the EU.

Mar. 2011

The Panel identifies a breach of thesubsidy agreement by the US.

May 2011

The Appellate Body finds violations of
the subsidy agreement by the EU.

Mar. 2012

The Appellate Body finds violation of thesubsidy agreement by the US.

Jul. 2018

The US applies to the WTO arbitral
tribunal (DSB 22. 6) for approval ofcountermeasures.

Apr. 2019

The EU releases a list of provisional items
eligible for additional tariff measuresagainst the US.

Apr. 2019

The US releases a list of provisional items
eligible for additional tariff measuresagainst the EU.

Jun. 2019

The EU applies to the WTO arbitral
tribunal (DSB 22. 6) for approval ofcountermeasures.

Oct. 2019

The arbitral tribunal approves anadditional tariff charge equivalent to$7.5 billion. The US begins imposing
additional tariffs of 10% on largecommercial aircraft from the EU and
25% on EU products such as wine andcheese.

Second halfof 2020

The arbitral tribunal is expected toapprove countermeasures by the EU.

Dec. 2019

Concerning the measures implemented
by the EU following therecommendation of the originaldecision, the Panel (Article 21.5)
identifies it to be inadequate again.

Note : Shaded areas indicate where countermeasures
have been or are expected to be implemented.
Source : WTO, "Biznews" (JETRO)

Mar. 2020

The US increases tariffs on largecommercial aircraft to 15%. In addition,
the list of EU products subject to an
additional 25% tariff is partially changed.

Sustainable development and climate change measures
Strengthening
monitoring for the
implementation of
FTA rules
Introduction of acarbon borderadjustment
mechanism

U.S → EU (DS316)

The US requests consultations with theEU.

Copyright (C) 2020 JETRO. All rights reserved.

58

Chapter 3 Section 1 Trade policies of major countries/regions

Growing presence of FDI screening mechanisms
 Foreign direct investment screening mechanisms (“ISMs”) continue to gain popularity as governments
perceive greater national security and public order risks. As of the end of 2019, at least 30 countries
have introduced ISMs. As these countries account for more than 60% of global inward FDI stock,
trends related to ISMs will have a large impact on the world’s inward FDI.
 Under ISMs, countries can secure policy discretion and exclude inward foreign investments which
could pose national security threats, while maintaining the openness to foreign investors. On the other
hand, it is concerned that the reinforcement of ISMs could lower certainty and predictability forforeign investors.
Number of countries that haveestablished ISMs
30

70.0

Number of countries that haveestablished ISMs
25

Overview of ISMs in major countries（％）

Share of inward FDI of thecountries above (right axis)

20

60.0

15

10

50.0

5

0

40.0
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

Note: 1) The number of subject countries is caluculated based on reports by UNCTAD
and the European Comission. 2) In Belgium, only the Government of Flanders has
established the mechanism.
Source: UNCTAD; Euroepan Comission

Targeted investment

Aplicable laws
(illustrative)

Responsible authorities

Australia

Foreign Acquisitions andTakeover Act 1975

FIRB

5%

China

Anti-Monopoly Law

NDRC

50%

FranceFinancial and Monetary CodeMinistry for the Economy〇

25%

Germany

Foreign Trade and Payments Act

Federal Ministry for Economic
Affairs and Energy

〇*1

10%

Country

Sectorspecific

Ownership
threshold

Italy

Law of 11 May 2012

DICA

〇

3%

Japan

Foreign Exchange and Foreign
Trade Act

Ministry of Finance, otherrelevant Ministries〇

1%

RussiaFederal Law No. 57-FZ

FAS

〇

50%

United States

Foreign Investment Risk Review
Modernization Act of 2018

CFIUS

*2

n/a

Note : 1) Germany established both sector-specific and cross-sectoral ISMs. 2) Ownership threshold represents theminimum figure in each jurisdiction when the threshold varies depending on sectors. 3) The description does notreflect temporary changes of the ISMs in response to the COVID-19 outbreak.
Source : "Investment Policy Related to National Security: A Survey of Country Practices" (UNCTAD) and relevant
legislation in subject countries
Copyright (C) 2020 JETRO. All rights reserved.

59

Chapter 3 Section 1 Trade policies of major countries/regions

ISMs further reinforced amid the COVID-19 outbreak Amid the outbreak of COVID-19, many governments have strengthened implementation of ISMs since
March 2019. In so doing, they aim to tighten their supervision over inward FDI in medical-related
sectors and safeguard domestic companies whose value have fallen from opportunistic takeovers.
Reinforcement of ISMs in context of outbreak of COVID-19 (as of June 2020)

Copyright (C) 2020 JETRO. All rights reserved.

Chapter 3 Section 2 Current situation and challenges of the multilateral trading system

Although the WTO has achieved a certain level of success over the past 25
years, the need to restore the functions of the Appellate Body is urgent60

 While the decline in the function of the WTO as the foundation of the multilateral trading system has been
pointed out for some time, discussions are being held toward reform by, for example, addressing modern
problems such as the development of digital trade and reviewing existing systems. Enforcement of discipline issupported by Dispute Settlement Body, a judicial function. Efforts to improve judicial functions are an urgent
issue.
 19 WTO members, including the EU and China, officially informed the WTO in April 2020 of the establishment ofa “multi-party interim appeal arbitration arrangement." Although this is regarded as a temporary measure until
the WTO Appellate Body restores its normal functions, it is important that the reforms to the dispute resolution
system be implemented quickly and in a lasting manner.
Issues and future direction of WTO functions
Item
FunctionsPurpose

Major results, etc. in the past

Main issues

Future direction

・ Protocol Amending the Agreement on
Government Procurement (GPA):
Effective from 2014
・ Information Technology Agreement
Formulation of rules inMultilateral trade rule
Difficult to develop new rules by unanimous(ITA) Expansion negotiations:new fields by someformation and tradeconsensus of all members
Concluded in 2015
Legislation
members (e.g. eliberalization
・ Protocol Amending the Agreement on ※ Fishery subsidies will be negotiated on acommerce, investment
negotiations
multilateral basis by all members
Trade-Related Aspects of Intellectual
facilitation, etc.)
Property Rights (TRIPS): Effective from2017
・ Trade Facilitation Agreement (TFA):
Effective from 2017・ Obligation to notify under each
Deterrence ofagreement
Establishment of more
protectionist※ Reports related to COVID-19: 186
effective monitoringmeasures by(As of June 29, 2020) Existence of members who do not comply withfunction (promotion of
Monitoring investigating and・ Discussions at Council and Committee existing rules, such as non-notyfying of subsidies,concrete measures such
publishing the statusetc.
by sector
as reform of notificationof implementation of ・ Trade Policy Review Mechanism (TPRM)
and regular committees)
the current trade rules ・ Joint monitoring report by WTO,UNCTAD and OECD
Judicial review by the Appellate Body
・ Requests for consultations: 595
Judicial resolution of ・ Establishment of panels: 297
Maintenance and(hereinafter referred to as the AB). The US
trade disputes andoptimization of dispute・ Panel reports circulated: 211
regards the AB actions as a matter of concern
Judiciary
ensuring
・ Appellate Body reports circulated: 124 and prevents from appointing the AB members. settlement functions
・ Appellate Body reports adopted: 123
implementation
involving the US
The AB ceased to function in December 2019
(As of the end of June 2020) (panel procedures, etc. remain).
Source : Various materials such as the WTO website

Dispute case between membersof the interim appeal arbitration
arrangement among past disputes

Disputes among MPIA members,
18.2%

Other,
81.8%
Note: 1) 595 cases as of the end of June 2020 were covered.

2) MPIA is "a multi-party interim appeal arbitration
arrangement under Article 25 of the DSU". 22
participating members as of the end of June weretargeted.
3) If all complaints, non-filing countries and regions
are not affiliated to MPIA, they are considered to be"Other".
4) Projects in the EC and EU countries are handled by
the EU.
Source: WTO website and "Report on Compliance by Majaor
Trading partners with Trade Agreements" (METI)

Copyright (C) 2020 JETRO. All rights reserved.

61

Chapter 3 Section 2 Current situation and challenges of the multilateral trading system

WTO’s monitoring functions being reassessed during COVID-19 pandemic Countries and regions are implementing trade-related measures due to the global outbreak of COVID-19. The
WTO compiles these actions (186 as of June 29, 2020) and publishes them on its website. Leaders of eachcountry/region reaffirmed their support for the rules-based multilateral trading system and for the central roleof the WTO.
 COVID-19 has triggered actions in public health and intellectual property rights such as compulsory licensing(see Note). As of June 2020, there were no decisive drugs or vaccines for treatment, but balance between
patent rights and corporate profits is being sought.
Note: The government shall grant third parties the right to exploit the patented invention without the consent of the patent holder.

Notifications on COVID-19

Major intellectual property rights-related actions withthe spread of COVID-19
Country

Europe andRussia35 notifications

WTO

Americas

186 notifications

60 notifications

AfricaMiddle EastAsia

15 notifications

21 notifications

52 notifications

Note :

1)
2)
3)

Source :Regional classification was basically inaccordance with the WTO.
The EU is classified as "Europe/Russia".
Due to the lack of regional allocation of
notifications, the calculation does notmatch the total.
"WTO Members' Notifications on COVID-19,
as of June 29, 2020" (WTO).

Date

Summary

The Chamber of Deputies of Chile has approved a resolution on the
grant of compulsory licensing referred to in Article 51, No. 2 of theIndustrial Property Law in order to facilitate access to and use of
Chile
Mar. 17
medical products and technologies for prevention and treatment of
new coronavirus infection (hereinafter referred to as the "COVID19").
Permitted to import from India the generic drug of Kaletra from
IsraelMar. 18 AbbVie Inc. of the U.S. based on the Patent Law (use of inventions in
the interest of the state).
The act concerning measures against COVID-19 came into effect.
Canada Mar. 25 Allow to make, construct, use and sell a patented invention to theextent necessary to respond to public health emergency.
The Infectious Disease Protection Act was revised and enforced.
Allow the use of pharmaceutical and medical device inventions forGermany Mar. 27
public welfare and the safety of the Federal Republic of Germany
under Article 13(1) of the Patent Law.
The Government Decree on Compulsory Licensing was enforced
under Article 31 of the Agreement on Trade-Related Aspects of
Hungary May 17 Intellectual Property Rights (TRIPS Agreement). Allow the HungarianIntellectual Property Office to grant compulsory licensing related to
public health.
Source : Chamber of Deputies of Chile, the Canadian Department of Justice, the Federal
Ministry of Justice and Consumer Protection of Germany, and the WTO website
Copyright (C) 2020 JETRO. All rights reserved.

Chapter 3 Section 3 Current situation of FTAs in the world and Japan

62

Shifts in effective FTA coverage varies by country and region
 9 Free Trade Agreements (FTAs) newly came into effect in 2019. And the total number of FTAs in the world
reached 321 force as of June 2020 (including customs unions and preferential trade agreements, JETRO survey).
 Looking at the effective FTA coverage ratios of each country and region, those for Japan, China, Korea, and the
EU have continued to rise over the past decade. Meanwhile, ratios for ASEAN and the US remained almost flat
due to the limited number of new agreements. In ASEAN, member states have accelerated efforts to form FTAs
independently, and Singapore's effective FTA coverage ratio exceeded 90 percent.
Effective FTA coverage ratio of major countries/regions

Effective countries and regions (Two-way )FTA coverage
Two-way

3rd

2d

1st

Export Import

Japan

37.1

34.4

39.6

ASEAN

15.0 EU

US

39.6

46.6

35.0

NAFTA

Canada

84.2

89.6

79.2

NAFTA

Mexico

79.6

93.4

66.4

Chile

84.3

85.8

82.7

Brazil（%）

12.0 TPP11

11.9

29.6 Korea

3.2 CAFTA-DR

1.4

66.3 EU

10.7 TPP11

7.7

NAFTA

65.0 EU

8.3 TPP11

China

27.3 United States 16.7 EU

80.0

70.0

EU-Korea FTA(effective in Dec. 2015)

6.3
13.9

14.7

13.4

16.5

MERCOSUR

8.8 CAN

3.0 Chile

2.1

Total trade

76.3

77.2

75.3

EU

63.2 Switzerland

2.6 Turkey

1.4

Extra-regional

35.4

37.8

33.1

Switzerland

7.1 Turkey

3.7 Japan

3.4

Turkey

49.6

57.7

42.7

EU

41.3 Korea

1.7 Israel

1.6

China

31.9

25.1

40.2

ASEAN

14.1 Korea

6.2 Taiwan

5.0

Korea

69.6

73.9

65.0

China

23.3 ASEAN

14.5 US

12.9

ASEAN

EU

Effective FTA coverage ratios in majorcountry/region (June 2010 - June 2020)(Unit: %)

60.0

56.5

63.6

ASEAN

23.3 China

17.5 Japan

8.2

Singapore

91.1

84.8

94.3

ASEAN

24.1 China

13.7 EU

12.1

Malaysia

62.3

61.4

63.3

ASEAN

26.7 China

17.2 Japan

7.0

Vietnam

62.8

48.6

75.7

China

19.1 Korea

15.2 TPP11

13.4

Thailand

60.5

57.3

63.8

ASEAN

23.1 China

16.5 Japan

12.0

Indonesia

67.1

64.2

69.8

ASEAN

24.0 China

21.6 Japan

9.3

India

17.2

16.0

17.9

ASEAN

11.2 Korea

2.6 Japan

2.2

Australia

75.4

79.1

70.6

China

32.6 TPP11

19.9 ASEAN

12.9

New Zealand

63.3

67.2

59.6

TPP11

24.9 China

24.1 Australia

13.0

Note: 1) FTA coverage ratio is the ratio of trade with countries and regions where FTAs have already been in effect, as of the end ofJune of each year. The trade amount is based on the trade statistics for 2019. 2) Abbreviations ;Andean Community (CAN), Central
America-Dominican Republic Free Trade Agreement (CAFTA-DR), and European Economic Areas (EEAs). 3) Japan's coverage ratio
does not include the US. 4) China's coverage ratio does not include Hong Kong and Macao. 5) ASEAN coverage ratio does notinclude Hong Kong. 6) Figures for Canada and Singapore are based on export statistics excluding re-exports. 7) TPP11 include only
ratifiers in the coverage ratio.
Source: Documents and trade statistics of each government, and "DOTS (edition of June 26, 2020)" by the IMF.

69.6
60.0

50.0

60.0

China-Korea FTA(effective in Dec. 2015)

39.6
37.1

40.0

35.4
30.0
31.9

20.0

10.0

0.0

Japan-EU EPA(effective in Feb. 2019)Japan
EU (extra-regional trade)
Korea

US
China
ASEAN

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Note: 1) Effective FTA coverage ratio is the ratio of trade with countries and regions where
FTAs have already been in effect, as of the end of June of each year. 2) The trade amount isbased on the statistics of the previous year. 3) Japan's coverage ratio does not include US.
4) ASEAN's coverage ratio was calculated based on the ASEAN Trade In Goods Agreement(ATIGA) and ASEAN+1. However, Hong Kong is not included.
Source: Documents and trade statistics of each government, and "DOTS (edition of June
26, 2020)" by the IMF.

Copyright (C) 2020 JETRO. All rights reserved.

Chapter 3 Section 3 Current situation of FTAs in the world and Japan

63

Increasing presence of Japanese products in FTA partner imports
 Within the TPP-11, Canada and New Zealand, which are new FTA partners for Japan, have many products forwhich import duties of about 5-10% were immediately eliminated, and the import share of Japanese goods
expanded for several industrial products.
 One year after the Japan-EU EPA came into force, the ratio of the imports utilizing EPA to the EU’s imports of
EPA-eligible goods was 41.1%. Exports from Japan increased for several products, and progress was made in
improving operations through joint committees and field-specific, specialized committees.
Products which Japan's share expanded in Canada’s import after TPP11 Utilization of the Japan-EU EPA by product (February
took effect (2019)2019-January 2020)(Unit: %)Product

Share of Japanese
products in Canada's
importIncrease ofimport value

Tariff rate

(year-on-year)

MFN TPP11 2018

→ 2019Products(Unit: Million euros)
ImportAmount ofamount (A) Year-on- imports using B/A×100of eligible
Japan-EU（％）
year
products
EPA (B)(times)33,34410.9
13,64840.9
11,498
12.0
5,154
44.8
8,171
10.3
3,208
39.3
4,091
9.7
1,282
31.3
1,425
10.8
802
56.3
788
10.0
414
52.6
1,574
10.7
324
20.6

82 (times)
184.2
150.1
121.5
65.1

7.0
7.0
8.5
6.0
9.5

Eliminatedimmediately

Total of industrial products
Vehicles and parts
Nickel, hydrogen storage cells
General machinery
Car parts
Electrical machinery
Plastics and articles
Radiators and parts
Rubber and articles
Wheels and axles for railway
Organic chemicals
Note : 1) Among products of which imports from Japan have increased after the TPP11 Agricultural, forestry and
282
11.2
156
came into effect, those which have been imported for more than 10 million USD andfishery products and foodare subject to tariff reduction or elimination are listed in the descending order ofPrepared food
98
11.0
56
Fish and crustaceans
28
9.7
23
growth. 2) While the tariff schedule is based on the eight-digit HS code, the trade
Meat
19
32.0
18
amount was extracted on a six-digit basis due to statistical restrictions. The tariff rate
Beverages, spirits andis in the highest tax rate within the first six digits.
26
10.0
14
vinegar
Source : Trade statistics of Canada, World Tariff (FedEx)
Preparation of
18
11.2
12
vegetables and fruit
Animal or vegetable fats
19
11.8
11
and oils
Total
33,62610.9
13,804Note : Eligible products refer to those subject to MFN duties.
Source : Eurostat

Spanners, wrenches

0.3
86.4
2.1
1.8
3.2

→
→
→
→
→

20.3
94.1
5.2
4.4
5.1

55.1
57.4
81.2
92.2
51.7
65.7
57.3
41.1

Copyright (C) 2020 JETRO. All rights reserved.

64

Chapter 4

Digital tradeChapter 4 Section 1 Global digital trade

65

Trade in digital-related goods in 2019 declined for the first time in 3 years
 In 2019, world trade in digital-related goods (JETRO
estimate, export basis) decreased by 1.5% from theprevious year to $3.2105 trillion. This downturn, thefirst in three years, was caused by some digitalrelated goods being subject to additional tariffs
between the US and China and slower trade insemiconductor products.
 Looking at changes in the ranking of the top
countries and regions in terms of exports over the
past decade, China has maintained its top position,and the US has maintained its second place. Vietnam
has greatly increased its ranking over the past
decade. Japan’s ranking has been declining for the
past ten years.
(Rank)

Top 10 exporters of digital-related goods(Year)

1

China

2

US

3

Germany

4

Korea

5

Netherlands

6

Taiwan

7

Japan

8

Vietnam9

Mexico10

Malaysia

Note:1) Ranking for Vietnam and Mexico in 2019 is calculated based on estimates. 2) Hong
Kong, where there are many re-exports, is not included. Singapore is not shown in this figure
because its value excluding re-exports has been assessed. 3) From 2010 to 2014, Vietnam
ranked 33 in 2010, 27 in 2011, 18 in 2012, and 14 in 2013 and 2014.
Source: Trade statistics of respective country/region

Global trade in digital-related goods (export basis)(100 million USD)(%)

40,00030.0
20.0

30,000

10.0
20,0000.0
10,000

-10.0

0
2010

11

12

13

14

15

16

17

-20.0
19
(Year)

18

Exports value of digital-related goods

Exports value of digital-related goods: growth rate (right axis)
Exports value of non-digital-related goods: growth rate (right axis)
Note: 1) JETRO estimates (see Appended Notes 1 and 2 for estimation methods
and product classifications) 2) The exports value of non-digital-related goods isthe total world export value minus the exports value of digital-related goods.
Source: Trade statistics of respective country/region

Top 10 digital-related goods trading countries (2019)
Export
2019
Rank
1
2
3
4
5

Country/
region
World
China
US
Germany
Korea
Netherlands

Value
32,105
8,007
2,540
1,779
1,658
1,564

2010
GrowthCountry/
Share
rate
region100.0-1.5
100.0 World
24.9
-1.2
21.7 China
7.9-3.1
9.2 US
5.5-4.3
6.3 Germany
5.2
-15.4
4.7 Netherlands
4.9-3.7
5.0 Japan

Share(Unit: 100 million USD, %)Import
2019
2010
Value
34,019
5,956
4,639
1,637
1,451
1,251

Growth
Share
rate
100.0
-3.4
100.0
17.5
-4.5
14.2
13.6
-4.6
14.1
4.8
-5.8
5.9
4.3
0.7
4.0
3.7
-2.5
4.2

Share

6 Taiwan
1,527
4.8
6.9
4.0 Singapore
1,209
3.6
-3.0
4.1
7 Japan
1,393
4.3
-5.4
6.7 Korea
1,113
3.3
-3.4
3.0
8 Vietnam
1,200
3.7
37.6
0.3 Taiwan
1,100
3.2
13.4
2.8
9 Mexico
1,032
3.2
10.2
3.1 Mexico
843
2.5
-13.8
2.9
10 Malaysia
953
3.0
-4.4
3.2 UK
794
2.3
-6.1
3.1
Note :1) Figures for the world, Vietnam, and Mexico are estimates. 2) Hong Kong, where there are many
re-exports, is not included. Singapore's exports are calculated after excluding re-exports.
Source: Trade statistics of respective country/region
Copyright (C) 2020 JETRO. All rights reserved.

Chapter 4 Section 1 Global digital trade

66

Trade share of communication equipment and electronic components
including semiconductors increased over the past decade

Looking at trade in digital-related goods by products, computers and peripheral equipment etc. as well as video
equipment, which were subject to the US-China additional tariffs, have recently contributed to the slowdown. China,
which has the largest share, has seen decreased exports of both products. The slowdown in Chinese exports ofcommunication equipment was also noticeable as it accounted for 40% of the global export share.

Conversely, looking at long-term trends, the share of communication equipment, semiconductors and electronic
components, and measuring and testing equipment in world trade has particularly increased over the past ten years.
Among the top exporting countries, China's share of all these products increased.

World trade in digital-related goods (export basis, 2019)(Unit: 100 million USD, %)

2019
Value

Share

Growth rate Contribution

2010

2010-2019

Share

CAGR

Computer and peripheral equipment, etc.

5,718

17.8

-5.8

-1.1

22.9

Computer and peripheral equipment

3,646

11.4

-3.7

-0.4

12.7

1.8

Computer parts

1,283

4.0

-10.5

-0.5

6.0

-1.6

115

0.4

8.9

0.0

0.4

0.8

5,891

18.3

-3.1

-0.6

14.3

5.9

Office equipment
Communication equipment
Cellular phones

0.2

2,602

8.1

-8.0

-0.7

5.6

7.3

Semiconductors and electronic components

8,353

26.0

1.2

0.3

22.3

4.8

Electron tubes and semiconductors

1,158

3.6

1.0

0.0

5.4

-1.6

Integrated circuits

7,195

22.4

1.2

0.3

16.9

6.4

Other electronic components

4,781

14.9

-1.3

-0.2

16.8

1.7

Video equipment

1,191

3.7

-7.4

-0.3

5.9

-2.1

Audio equipment

166

0.5

-1.1

0.0

0.8

-2.4

Measuring and testing equipment

2,749

8.6

1.1

0.1

7.6

4.5

Medical electronic equipment

1,282

4.0

8.1

0.3

3.7

4.0

Semiconductor manufacturing equipment

802

2.5

-6.7

-0.2

2.1

5.0

Industrial robots

55

0.2

-9.8

0.0

0.1

6.9

3D printers, etc.

66

0.2

-3.1

0.0

0.2

4.5

Drones

928

2.9

5.7

0.2

2.9

3.2

Radio remote control equipment 40

0.1

3.2

0.0

0.1

8.4

Aero-photography unmanned aerial
353vehicle

1.1

-2.8

0.0

1.7

-1.7

Small unmanned aerial vehicle

535

1.7

12.4

0.2

1.1

8.0

Digital-related goods: parts

17,101

53.3

-0.8

-0.4

53.9

2.9

Digital-related goods: final goods

14,997

46.7

-2.2

-1.0

46.0

3.2

Digital-related goods total

32,105

100.0

-1.5

-1.5

100.0

3.0

Note : 1) JETRO estimates (see Appended Note 2 for the estimation method). 2) See Appended Note
1 for product classification. 3) The drone is defined by JETRO because the HS code is not accurately
specified. It may include products other than drones. 4) Shaded items show an increase in theirshare compared to 2010.
Source : Trade statistics of respective country/region

Products and Top 5 exporting countries/regions withincreased share of world digital-related goods Trade(2019)(Unit: 100 million USD, %)Product

Communicati
on equipment

Semiconducto
rs andelectronic
components

Measuringand testing
equipment

Rank

1
2
3
4
5
1
2
3
4
5
1
2
3
4
5

2019
Country/region

China
Vietnam
Netherlands
US
Korea
China
Taiwan
Korea
Malaysia
US
Germany
US
China
Japan
UK

Value

2,264
574
367
338
183
1,369
970
843
535
471
433
389
334
236
120

Share

Growth rate

38.4
9.8
6.2
5.7
3.1
16.4
11.6
10.1
6.4
5.6
15.7
14.2
12.2
8.6
4.4

-6.8
6.6
-10.6
-3.8
24.0
20.3
3.9
-27.2
-1.9
3.4
-2.7
-1.5
8.8
-3.1
5.4

2010

2010-2019

Share

CAGR

30.9
0.6
6.5
7.1
7.4
11.4
10.2
7.9
5.6
8.7
16.1
17.4
8.1
10.8
5.1

8.5
44.7
5.4
3.4
-3.8
9.2
6.3
7.7
6.5
-0.1
4.2
2.1
9.3
1.8
2.6

Note : 1) The trade value for Vietnam in 2019 is JETRO estimates. 2) The share is the share of eachproduct in the world export value. 2) Listed only the top 5 countries/regions by value of exports in
2019. 3) Hong Kong, where there are many re-exports, is not included. Singapore is valued at theamount excluding re-exports. 4) Average growth rates (CAGR) are figures for 2010-2019. 5) The
shaded area indicates an increase in the share of world exports in 2019 compared to 2010.
Source : Trade statistics of respective country/region

Copyright (C) 2020 JETRO. All rights reserved.

Chapter 4 Section 1 Global digital trade67

China becomes a production base for digital-related goods in Asia
 In the digital-related goods trade, China has become theworld's largest production base importing the most partsand producing the most final goods.

Exports and imports of digital-related parts andfinal goods in each country and region(2019)(100 million USD)(Times)<Exports>
5,000
4,000

Asia

100.0
74.0
East Asia
73.7
Japan
5.1
China
19.6
Hong Kong
15.5
Korea
8.2
Taiwan
7.7
ASEAN
17.5
NAFTA
8.7
US
6.9
Europe15.7
EU
15.1
Germany
4.5
Other regions
1.5

World
Asia

East
Asia

66.4
59.4
59.3
3.8
14.1
14.0
7.0
6.6
13.7
3.3
2.8
2.8
2.7
1.0
0.9

64.2
57.4
57.3
3.8
13.2
13.5
6.8
6.6
13.4
3.2
2.8
2.6
2.5
1.0
0.9

NAFTA
Japan

China

2.8
2.4
2.4

24.6
22.3
22.2
1.2

0.7
0.2
0.1
0.5
0.8
0.2
0.2
0.1
0.1
0.1
0.0

11.7
3.0
2.5
3.7
1.0
0.8
1.2
1.2
0.5
0.1

Hong Kong

14.3
13.6
13.5
0.7
6.3
1.4
1.7
3.5
0.5
0.3
0.2
0.2
0.1
0.0

Korea

Taiwan

ASEAN

4.1
3.5
3.5
0.3
1.6
0.2

4.6
3.5
3.5
0.5
1.3
0.4
0.3

13.8
12.2
12.2
1.0
3.4
0.9
1.9
1.4
3.5
0.9
0.8
0.6
0.6
0.2
0.1

0.5
0.8
0.4
0.3
0.2
0.2
0.1
0.1

1.0
0.3
0.3
0.2
0.2
0.1
0.5

11.8
6.6
6.5
0.7
2.0
0.7
0.7
0.6
1.9
3.7
2.5
1.3
1.2
0.4
0.2

US

7.9
5.5
5.4
0.6
1.5
0.5
0.6
0.5
1.7
1.1
1.1
1.1
0.3
0.2

Europe

17.6
5.9
5.8
0.5
2.3
0.6
0.3
0.4
1.6
1.1
0.9
10.4
10.0
2.8
0.3

1.9

1,000

4.0

0.9

2.0

1.7

0.7

3.0

1.0

0

0.0
China

Japan

Digital-related parts

Korea

TaiwanDigital-related final goods

ASEAN

US

Parts/final goods (right axis)

Other
EU

16.3
5.4
5.4
0.5
2.1
0.6
0.3
0.4
1.5
1.0
0.9
9.6
9.2
2.6
0.2

Germany

4.0
1.5
1.5
0.2
0.4
0.2
0.1
0.1
0.5
0.3
0.2
2.2
2.1
0.0

regions

4.2
2.2
2.1
0.1
1.2
0.2
0.2
0.1
0.4
0.6
0.6
1.2
1.1
0.3
0.2

Note :1) Chart was created on an export basis. 2) East Asia is the sum of Japan, China, Korea, Taiwan, Hong Kong, Macau, and ASEAN, and
ASEAN is 10 countries. Figures for Hong Kong and Singapore include re-exports. The EU includes intra-regional trade. 3) Other regions
include Oceania, Central and South America, the Middle East, and Africa. 4) Shaded areas are countries and regions with a global share of
10% or more (excluding other regions). 5) The figures in bold indicate countries and regions where global share increased compared to2010 (excluding other regions). 6) Figures for the world, Asia, East Asia, ASEAN, NAFTA, Europe, EU, and other regions are estimates.
Source : Trade statistics of respective country/region<Imports>(100 million USD)(Times)

5,000
4,000

5.0
4.0

3.9

3,000

2.6

2,000

3.1

3.0
2.0

2.0
0.7

1,000

1.0

Parts ratio highWorld
Export5.0

2,000(Unit: %)

6.0

5.3

3,000

World trade matrix of digital-related parts (2019, share of world trade)
Import7.0

6.2

Parts ratio high

 Looking at the trade matrix of digital-related parts, China
procures most of them from East Asia including Korea,
Taiwan, Japan, and ASEAN. The share of intra-East Asian
trade in the world trade in digital-related parts increased
to 57.3% in 2019, and a production network centered in
China has been formed.

0.4

0

0.0

China

Japan

Digital-related parts

Korea

TaiwanDigital-related final goods

ASEAN

US

Parts/final goods (right axis)

Note: The trade value of ASEAN (the total of 10 member countries) is estimates.
Source: Trade statistics of respective country/region

Copyright (C) 2020 JETRO. All rights reserved.

Chapter 4 Section 1 Global digital trade

68

Trade in digital-related services in 2018 reached a record high In 2018, the trade in digital-related services (telecommunications, computer and information services, exportsbasis) recorded a 14.7% increase from the previous year to $606.1 billion and a growth rate surpassing nondigital services (increased by 6.9%). The value of trade in digital-related services has continued to increasesince 2010, and the value of trade in 2018 reached its highest level since 2005 when the first data became
available.
 In 2018, Ireland was the top exporter of digital-related services followed by India and China. In Ireland, major
global digital companies who have set up offices in the country based on its advantageous financial systemseem to have contributed to the increase in exports. India maintained its position as the second-largest
exporter after Ireland with exports driven by software development, etc.
Trends in the world's digital-related services trade (export basis)

World's top 10 digital-related services
trade share and regions (2018) (Unit: 100 million USD, %)Trade in digital-related services

7,000

20

6,000

15

5,000

Rank

(%)

(100 million USD)

4,000

5

3,000

Export

10

0

2,000

-5

1,000
0

-10
11

12

13

14

15

16

17

18

digital-related services export value
digital-related services: growth rate (right axis)
Non-digital-related services: growth rate (right axis)
Note: Digital services include communications, computer and information services.
Exports of non-digital-related services are the total value of exports of services
minus exports of digital-related services.
Source: WTO data

Import2010

Country/region

2018
Value

2018
Share

2018
Growth

World

6,061

100.0

rate
14.73

1
2

Ireland
India

1,011
582

16.7
9.6

3

China

471

4
5

US
Germany

440
408

6
7

UK
Netherlands

89FranceSweden2010
Share20102018

100.0

CAGR
7.9

28.31
7.11

11.3
12.3

13.2
4.6

7.8

69.47

3.2

20.7

7.3
6.7

4.12
9.52

7.6
6.3

7.3
8.8

281
272

4.6
4.5

8.16
8.46

5.7
n.a.

5.1
n.a.

207
150

3.4
2.5

12.99
5.39

4.3
2.6

4.9
7.0

10 Israel

144

2.4

17.61

1.3

15.9

26 (Reference) Japan
1 US

46
404

0.8

-9.64
0.91

0.5

12.5
4.2

2
3

Germany
China

366
238

8.90
23.96

7.9
24.6

4
5

FranceNetherlands

203
181

9.52
12.14

5.5
n.a.

6
7

UK
Switzerland

164
159

10.69
-5.87

2.5
5.7

8

Japan

155

9.30

16.4

9 Singapore
10 Belgium

150
106

3.50
11.27

21.1
8.1

Note :1) Since the world total for imports has not been announced, thecomposition ratio is not calculated. 2) For Netherlands, as data for 2010
are not available, composition ratio and CAGR for 2010 are not calculated.
3) Ranking is evaluated only for countries and regions for which data canbe obtained. 4) Shaded figures indicate that the growth rate of exports
and imports in 2018 exceeded the average growth rate (CAGR) from2010 to 2019 (excluding the Netherlands).
Source : WTO data

Copyright (C) 2020 JETRO. All rights reserved.

Chapter 4 Section 1 Global digital trade69

Cross-border data flow more than tripled in 4 years
 According to the International Telecommunications Union (ITU), individuals using internet worldwide increased
from 8 per 100 inhabitants in 2001 to 53.6 in 2019 (ITU estimate). In recent years, the number of smartphoneusers has been increasing, and a variety of devices are also connected to the Internet (IoT: Internet of Things)
resulting in an increase in the amount of data generated.

 The amount of data that moves across borders is also increasing. International bandwidth, which approximates
the volume of cross-border data distribution, rapidly increased from 153 terabits per second (Tb/s, 1 terabit =1 trillion bits) in 2015 to 486 Tb/s (estimated) in 2019. Cross-border data flow in developing countries
exceeded that in developed countries in 2016.
Internet and smartphone users around the world
and trends in cross-border data flow
(Per 100 inhabitants, %)Individuals using the Internet60
per 100 inhabitants(Terabit/second)
600

40(Terabits/second)
600
500

Percentage ofsmartphone users(%)
Cross-border data flow
(international bandwidth)(Terabit/second, right axis)

50

Cross-border data flow (International Bandwidth) by
Region500

400

Developed countries(43.1%):CAGR27 5%
Developing countries (56.9%): 39.0%

300
400

30

300

20

200

10

100

200
100
0
2015

16

17

18

Note:1) Geographic breakdown by ITU.

19
(Year)

2) Figures in parentheses are composition ratios in 2019.

Note: Figures for internet users and cross-border data flow in 2019 are estimates.
Percentages of smartphone users are estimates by eMarketer.
Source: ITU (International Telecommunications Union) and eMarketer

24

23

21

20

19

18

17

16

15

14

13

12

11

10

09

08

07

06

05

04

03

02

2001

0

22

(Year)

03) CAGR is the annual average growth rate between 2015 and 2019.

4) Figures for 2019 are estimates.
Source: ITU (International Telecommunications Union) data

Copyright (C) 2020 JETRO. All rights reserved.

Chapter 4 Section 1 Global digital trade70

Semiconductor manufacturing equipment and industrial robots underpin
Japanese exports of digital-related goods

 Japan’s exports of digital-related goods in 2019 fell by 5.4% from the previous year to $139.3 billion andimports decreased by 2.5% to $125.1 billion. Since 2010, China has been the largest export partner countries.
While value of exports to many countries did not reach 2010 levels, exports to Vietnam have approximately
tripled from 2010.

 Looking at the share of world trade by product category, Japan’s exports of semiconductor manufacturing
equipment and industrial robots account for about 30%, and Japan has become the world’s largest exporter ofthese products. While the average growth rate for many products in the 2010s was negative, semiconductor
manufacturing equipment and industrial robots recorded positive growth, supporting Japan's exports ofdigital-related goods.
Japanese trade of digital-related goods
180（Billion USD）

Japanese exports of digital-related goods by product category (2019)(Million USD, %)Export value of digital-related goods

160

ExportImport value of digital-related goods

Value

140

Share of
world

Share

Growthrate

-6.2

-0.5

-5.2

trade
2.1

Contribution 2010-2019

120

Computer and peripheral equipment, etc.

11,981

8.6

100Computer and peripheral equipment

1,695

1.2

-7.1

-0.1

-4.8

0.5

80

Computer parts

1,511

1.1

-14.1

-0.2

-6.1

1.2

145

0.1

-13.2

0.0

-13.5

1.3

3,920

2.8

-22.2

-0.8

-5.8

0.7

214

0.2

1.7

0.0

29.4

0.1

Semiconductors and electronic components

36,667

26.3

-2.0

-0.5

-2.8

4.4

Electronic tubes and semiconductors

8,855

6.4

-5.8

-0.4

-4.0

7.6

Integrated circuits

27,812

20.0

-0.7

-0.1

-2.4

3.9

Other electronic components

26,118

18.8

-4.9

-0.9

-2.3

5.5

Video equipment

3,588

2.6

-5.5

-0.1

5.5

3.0

Audio equipment

154

0.1

-23.7

0.0

-7.4

0.9

Measuring and testing equipment

23,573

16.9

-3.1

-0.5

1.8

8.6

Medical electronic equipment

5,317

3.8

0.7

0.0

1.5

4.1

Semiconductor manufacturing equipment

22,621

16.2

-8.6

-1.4

1.9

28.2

Industrial robots

1,590

1.1

-20.4

-0.3

4.3

28.7

3D printers, etc.

401

0.3

9.7

0.0

3.5

6.1

Drone

3,104

2.2

-14.1

-0.3

-11.7

3.3

Digital-related goods: parts

87,869

63.1

-4.7

-2.9

-2.3

5.1

Digital-related goods: final goods

51,309

36.8

-6.7

-2.5

-0.7

3.4

Digital-related goods total

139,257

100.0

-5.4

-5.4

-1.8

4.3

60

Office equipment

40

Communication equipment

20

Cellular phones02010 2011 2012 2013 2014
Source: "Trade Statistics" (MOF)

40

CAGR

(Billion USD)

2015

2016

2017

2018

2019

Japanese Exports of Digital-related Goodsby Major Country and Region

34.7

Parts

Final goods

30
22.3
20

15.2

12.8

10

10.2
6.5

5.4

4.4

0
2010 2019 2010 2019 2010 2019 2010 2019 2010 2019 2010 2019 2010 2019 2010 2019
China

US

TaiwanHong Kong

Korea

Germany

ThailandNote: The top export and import partner countries and regions of Japan in digitalrelated goods in 2019.
Source: "Trade Statistics" (Ministry of Finance).

Vietnam

Note :1) See Appendix Annotation 1 for product classification. 2) The drone is defined by JETRO
because the HS code is not accurately specified. It may include products other than drones. 3) The
share of world trade is the share of each product in world trade (JETRO estimates).
Source : "Trade Statistics" (Ministry of Finance)

Copyright (C) 2020 JETRO. All rights reserved.

Chapter 4 Section 2 Trends in global digital business

71

Technological developments behind digitization
 The rapid development of technology is the reason behind the advancement of digitization in recent years.
First, research on artificial intelligence (AI) has evolved dramatically. AI research, which has been conducted forhalf a century, has experienced a third wave since 2000 enabling machine learning and deep learning.
 Moreover, the fifth generation (5G) standard for mobile communications networks was introduced in 2019, andit was the so-called first year of 5G. 5G realizes ultra-high speed, ultra-low delay, and multiple simultaneousconnections for mobile communications enabling remarkably fast data processing. Furthermore, computers
have made great leaps forward. Further research, including the publication of Google’s report that has realized
quantum supremacy advancing beyond supercomputers, is expected moving forward.
Major advances in digital technology

1960

1970

First wave
AI

Communi-cation

1990

2000

2010

Second wave

The term "artificial intelligence"
emerges at the Dartmouth
Conference in 1956.

Speechrecognition
becomespossible.

1G
Analog system with voice

Spread of minicomputers

Computer

1980

System/360 announced by IBM
Intel announces a
microprocessor
Source : Various materials

Third wave

Start of data mining

2G

Machine learning and deeplearning become possible.
AlphaGo wins professional Go
player3G

1999 NTT DoCoMo began i-mode
Tansition to a global standard system

Advent of microprocessors

2020

Supercomputer
Supercomputer

4G

5G

Ultra-high speed,
ultra-low delay, andAdvent of LTE multiple simultaneousconnections are
realized.

Development of
quantum computers
Google in US

Macintosh and Windows1.0 are Advent of Summit (US), K (Japan), demonstrates
released.
Sunway TaihuLight (China)"quantumtranscendancy"
Copyright (C) 2020 JETRO. All rights reserved.

Chapter 4 Section 2 Trends in global digital business

72

Entry of online platforms into "Reality" One of the recent trends in digital business is the advancement of online platforms from the virtual space to“real” space. These companies have strengthened their influence by forming information from search data, ecommerce (EC) purchase history, social media, etc. into data. These platforms are entering a variety ofindustries in the real world.
 In many cases, platforms enter other industries more quickly through alliances and acquisitions of othercompanies.
Examples of major online platforms expanding into the“real" world
VirtualReal

Alphabet(Google)・Search engine
・Video streaming service(Youtube)

・Selling "Chrome Book" PCs・Started a self-driving taxi service jointly with Waymo
・Developed a health management application
・Constructed a renewable energy power generation system
・Developed VR for manufacturers

Amazon・EC・Video streaming service(Amazon Prime)・Developed a brick-and-mortar store "Amazon Go"
・Selling AI speakers "Amazon Echo" and "Alexa"
・Entered into a broadband communication service with artificial satellites
・Providing a service to help develop autonomous driving cars

Baidu

・Search engine

・Implementing the "Apollo Project," opening an autonomous vehicle platform to the public
・Mass producing and testing driverless minibuses together with bus manufacutures

Alibaba・EC (Tmall Global)
・Mobile payment (Alipay)

・Combining the Internet and the real worlds through the supermarket "Hema Fresh Store"
・Proposing optimal coordination at the "Fashion AI Concept Store"
・Mitigating the city traffic congestion utilizing AI and big data analysis

Rakuten・EC

・Providing services including Rakuten Medical, insurance and financial businessYahoo・Search engine
・Mobile payment (PayPay)

・Proposing the concept of ”Data Forest" to provide data to companies and local governments
・Operating its mobile phone business "Y mobile"

Source : websites of each company

Copyright (C) 2020 JETRO. All rights reserved.

Chapter 4 Section 2 Trends in global digital business73

Expansion of existing business fields through digitalization
 The second trend in digital business is the expansion of existing business fields through digitization. In the
traditional manufacturing and interpersonal services industries, new value is added, and the business model ischanged by the digitization and networking of customer information and processes.
 In each industry, companies are expanding into new business fields through the digitization of everything with
IoT and sensors and the development of services such as sharing and subscriptions.
Expansion of business areas through digitalization

Examples of companies expanding business fields through digitization
Existing business

Digitalizing
Area ofnewbusiness
Adding newvalue by analyzing
processes &customer information

Drug discovery
and marketing

Development of digital drugs incollaboration with Proteus Digital
Health, Inc. of the U.S.

Shiseido

Development andsale of skincare
products

Using IoT to create databaseon skin quality

TORAY

Development of Development of smart textiles that can
detect heart rate and cardiographic
and sale of textiles
waves in collaboration with NTT

Michelin

Manufacture andsale of tires

Monitoring of air pressure andtemperature of tires using IoTSportsCreation and disclosure of data on
athlete movements

NFL(National Football
League)Servitization

Area ofexisting
business

Manufacture& sales ofthings, face-toface services

Changes ofbusiness models

Networking
Source: Created by JETRO

Expanding business
DegitalizingSensors are embedded in tablets torecord drug taking and provide
information to caregivers
Production of beauty essence andmilky lotion optimal for each individualStarted a trial of heat stroke control
system and detection of sleepiness fordrivers
When abnormal values are identified,drivers are warned, reducing risk ofdelay
By developing applications using open
data,
the number of visitors has increased

Komatsu

construction machinery
Sale

Data collection and cloud processing of
construction site conditions using GPS
and drone surveying

Provision of a comprehensive
construction consulting service

Bridgestone

Manufacture andsale of tires

Tires are equipped with a sensor todetect road surface conditions

Determine road conditions (dry, wet,snow, etc.) and support safe driving

Ability to lock and unlock the door
with digital remote operations

Realized a repair parts delivery service
to cars for craftsmen

With car subscriptions,shift from ownership to sharing

Conversion to a mobility company inresponse to diversifying vehicle usage
patterns

Manufacture and sale ofof things

Digitization

OtsukaPharmaceuti
calDaimler
Chrysler
ToyotaDHL

Manufacture andsale ofautomobiles
Manufacture andsale ofautomobiles
Transportation

Development of digital keys incooperation with Audi and Amazon

Networking

Launch of an in-car delivery service,turning cars into delivery boxes

Source : Websites of each company

Copyright (C) 2020 JETRO. All rights reserved.

Chapter 4 Section 2 Trends in global digital business74

R&D accounts for more than half of digital investment
in major developed countries

 Looking at the ratio of digital investment to GDP, Japan (6.4%) is ranked high alongside Korea (6.8%) and theUnited States (6.7%). In Ireland, Korea, Germany, and other major developed countries, R&D accounts for morethan half of total digital investment confirming the importance of R&D in promoting digitization.
 Total R&D investment (2018) increased by 30% from five years ago in major industries where digitization isprogressing (9 industry fields below). By industry (2018), ICT equipment and services as well as transport
equipment accounted for 78% of the total.
Digital investment in major countries (R&D, ICT equipment, software, R&D Investment by Country and Region in Industries
with Strong Digital Presence (Billion USD)etc.) as percentage of GDP (2017)
(%)
0.0

2.0

4.0

6.0

8.0

10.0

Ireland
8.4

Sweden

7.3

Korea

6.8

United States

6.7

Japan

6.0

Czech Republic

5.8

Israel4.7

Germany

4.7

Finland

4.5

Canada3.8

United Kingdom

3.7

Australia

3.2
1.3

113
71

Computer software, databases

Note: 1) Investment for each item is calculated from gross fixed capital formation. 2)
Mexico lacks data on software and databases. 3) Figures for ICT equipment in Korea,
Germany, and Spain are OECD estimates. 4) Only some countries are listed.
Source: OECD data

Other services
(56)

22
21

Air and Defense
(34)

22
24
16
12

Financial and insurance services
(31)

13
11

Retail and wholesale
(13)

EU

Japan

141

118

54
51

Healthcare(57)

OECD averages (4.6)

ICT equipment

80 100 120 140 160 180 200 220

153 205

Other machinery
(222)

US
R&D and Other Intellectual Property

60

ICT services
(167)

6.2

France40

Transportation equipment
(115)

6.4

Denmark

20

ICT equipment
(352)

10.9

Switzerland

Mexico012.0Upper:2018
Lower:2013

4
3
China

Korea

TaiwanOther

Note: 1) Of the top 2500 companies in the world in terms of R&D investment(2018), companies that were comparable with 2013 are selected. Then, based on
OECD data, 1047 companies in the top half of the 41 industries with the highest
digital strengths are counted. Corporate countries and regions are based on
headquarters. 2) Figures under the industry name are the number of companies.
Source: "EU R&D Scoreboard“(EU)Copyright (C) 2020 JETRO. All rights reserved.

Chapter 4 Section 2 Trends in global digital business75

Increased R&D investment in digitalized ICT equipment and services aswell as transport equipment

 Looking at the increase in R&D investment in key industries that are becoming increasingly digital, from 2013
to 2018, the United States, China, and Korea for ICT equipment in addition to the United States and China for
ICT services, and the EU and Japan for transport equipment respectively, have experienced significant
increases. China's growth rate is remarkable.

 Among the companies investing most in R&D (2018), it is notable that many are American and German
companies. The Toyota Motor Corporation and Honda Motor Co., Ltd. from Japan are also included in theserankings.
Increase of R&D investment (amount and rate) in industries
with strong digital presence (Increase from 2013 to 2018, bycountry and region) (Upper: Increase amount (million USD), Lower: Increase rate (%))
Industry type
ICT equipment

Transport equipment

ICT services
Other machinery

Other services
Air and Defense

Healthcare
Financial andinsuranceservices
Retail and wholesale

Total

In 2018

Taiwan

Korea

China

Japan

US

EU

51,151

24,398

1,724

1,574

14,180

5,047

4,733

33.4

39.3

6.2

7.0

144.8

31.1

42.9

World

R&D investment by the top 20 companies in industries
with strong digital presence (2018 and 2013) (Unit: Million USD, %)28,7694,481

10,947

5,663

4,878

1,644

81

25.6

27.0

19.5

17.9

167.0

54.8

50.5

47037

39329

1749

-1633

6455

-3

83

In 2013

Investment Investmen

Company
1 Alphabet

Country Industry typeUSamountt amount2013 →, 2018
Increase

Increaseamountrate

ICT services

21,011

7,915

13,096165.5

2 Samsung Electronics US

ICT equipment

17,056

14,014

3,042

21.7

3 Microsoft

US

ICT services

16,95011,388

5,561

48.8

4 Volkswagen

Germany Transportation equipment

15,686

16,205-519.3-3.2

5 ・ Holding

China

ICT equipment

14,651

4,953

9,697

195.8

6 AppleUS

ICT equipment

14,298

4,478

9,820

219.3

7 IntelUS

ICT equipment

13,602

10,618

2,984

28.1

8 Daimler

Germany Transportation equipment

10,397

7,423

2,974

40.1

9 Facebook

US

ICT services

10,318

1,416

8,902

628.7

10 Toyota

Japan

Transportation equipment

9,504

8,653

852

9.8

11 Ford

US

Transportation equipment

8,236

6,404

1,832

28.6
19.8

Huawei

66.0

83.5

13.5

-27.5

273.7

-0.4

15.9

2,586

68

-1665

125

2940

1199

7

5.1

0.4

-9.8

1.2

81.4

276.2

25.1

1,442

544

52

65

367

4

83

6.9

25.9

2.4

0.5

143.6

0.1

60.8

-2,459

617

-2182

0

24

0

0

-10.1

7.2

-17.4

―

78.0

―

―

4,271

2,098

1,580

445

85

0

0

12 BMW

Germany Transportation equipment

7,924

6,613

1,311

36.1

32.8

41.1

33.7

118.7

―

―

13 General Motors

USTransportation equipment

7,834

7,205

629

8.7

1,993

278

1,759

49

0

0

0

14 Honda

Japan

Transportation equipment

7,567

6,026

1,541

25.6

18.5

70.2

19.3

176.0

―

―

―

15 Robert Bosch

Germany Transportation equipment

7,117

6,421

696

10.8

16 Siemens

Germany ICT equipment

6,795

6,287

508

8.1

17 Cisco Systems

US

ICT equipment

6,360

6,298

62

1.0

18 Oracle

US

ICT services

6,052

5,154

898

17.4

19 Qualcomm

US

ICT equipment

5,613

4,970

643

12.9

20 Dell Technologies

US

ICT equipment

4,965

3,250

1,714

52.8

302

214

-47

0

35

0

0

8.7

8.8

-5.1

―

93.4

―

―

135,092

72,027

13,917

6,288

28,965

7,890

4,987

41.9
33.5
151.8
7.5
9.7
44.6
29.4
Note: 1) Highlighted yellow cells (upper row) show increases of more than $5 billion (excluding
world and industry totals). Bolds and italics (lower row) show an increase rate of more than 100%. 2)
From the top 2500 companies in the world in terms of R&D investment (2018), companies that werecomparable with 2013 were selected. Then, based on OECD data, 1047 companies in the top half of
the 41 industries with the highest digital strengths are counted. Corporate countries and regions are
based on headquarters.
Source: "EU R&D Scoreboard“(EU)・ Investment

Note: Figures for Dell Technologies in 2013 are EMC investment before
acquisition. Alibaba Group Holding (ICT Services) was excluded from this chartand Chart IV-24, IV-25 because the amount of investment in 2013 is uncertain(the company's 2018 investment was $5.49 billion).
Copyright (C) 2020 JETRO. All rights reserved.
Source: "EU R&D Scoreboard“(EU)Chapter 4 Section 2 Trends in global digital business76

US-China cross-border e-commerce (BtoC) sales
account for half of the global market

 Total EC sales worldwide (2018) was $26 trillion. BtoB EC sales accounted for more than 80%.

 Worldwide cross-border EC sales (BtoC, 2018) was $404 billion. By country and region, China (excluding Hong
Kong, $100 billion) and the United States ($85 billion) account for about half of the global total. In terms of theratio of cross-border EC (BtoC) sales to total exports, Japan (2.9%) is lower than the United Kingdom (8.2%),
the United States (5.1%) and China (4.0%).
EC sales in the top 10 countries in the world (2018)(Billion USD)

(%)
8,640

84.0

70.0
60.0

50.0

42.0

3,280

90.0
80.0

66.0

32.0

2,304

23.0

18.0 19.0

918 807

40.0

24.0

29.0

17.0

1,364

722

30.0
20.0

394 348 333
Spain

10.0
0.0

(%)

(Billion USD)
100

100

90

9.0

85

8.2

8.0

80

7.0

70

6.2

60

6.0

5.1

50

5.0
40

4.0

40

35

4.0

2.9
21

20

15
1.0

10

2.0

0.8

0.5

0.2

3

4

1

1.0
0.0

Netherlands

Korea

Italy

FranceGermanyJapan

Hong Kong

UK

Cross-border e-commerce (BtoC) sales

China

Percentage of EC sales to GDP (right axis)

Note: Figures for the United States, Korea (BtoB only),
Germany (BtoB only), and Italy are UNCTAD estimates.
Source: UNCTAD data

120Total e-commerce sales (BtoC)

Total e-commerce sales (BtoB)

3.0

2.0

30

US

Australia

Italy

Germany

France

UK

Korea

China

Japan

US

10,000
9,000
8,000
7,000
6,000
5,000
4,000
3,000
2,000
1,000
0

Cross-border EC (BtoC) sales in the top 10 countries and regions (2018)

Percentage of cross-border e-commerce (BtoC) sales to exports (right axis)

Source: UNCTAD data

Copyright (C) 2020 JETRO. All rights reserved.

Chapter 4 Section 2 Trends in global digital business

77

Progress of corporate activities brought by digitization 1) Increased productivity: Japan's hourly labor productivity is $46.1, below the OECD average. With theintroduction of digital technologies to corporate activities, process visualization and manpower reduction canbe realized, and improvements to productivity are expected.

 2) Solving social issues: Startups, which have experienced remarkable growth in recent years, are good atpresenting solutions to various social issues with quick and flexible responses. Even in fields that used to bedifficult to commercialize, by visualizing issues using data and making it easier for investors to understandthem, startups have become even more capable of addressing social issues.
Relationship between the Progress ofDigitization and Labor Productivity

Japanese startups addressing social issues through digitization

1.00
0.90

Germany
France

0.50

Korea

0.40

Japan

Agriculture, forestry andfisheries

0.60

US

OECD
Average

0.30
0.20

0.10

Russia

0.00
0.0

20.0

40.0

60.0

80.0

Labor productivity per hour(USD)

Note: Digitization rate is the median ICT usage intensity for all workers (0-1).
Source: OECD Skills Outlook 2019, Compendium of Productivity Indicators 2019

Environment anddisaster prevention

0.70

Netherlands
Finland

EducationUK
Australia
CanadaMedical and welfare

Digitization rate

0.80

Description of Businesses

Fields Company Name

Major Digital
Technologies

External partners

Iris Corp.

Develop Medical Devices to Support
Influenza Diagnostics based on AI

Shionogi
Pharmaceutical

Triple Double
Japan

Developing an excretion forecasting device
to support the independence of the elderly
and nursing care

ITOCHU TechnoSolutions, Korian(France)

Develop Robot Suit HAL in which cybernics
technology that connects humans androbots has been used

SOCSO Rehabilitation

Cyberdyne

Inaho
Routrek
Networks

Develop Automated Vegetable
Harvesting Robots with AI Technology
Contribute to labor saving and quality improvement byautomating water and fertilizer in greenhouse cultivation
based on the information obtained via sensors

Centre (Malaysia),
Ministry of Health (Saudi
Arabia)Kashima City,
Saga Prefecture,
Saga City
Meiji University
Kurokawa Farm,
My Farm

FarmshipDevelop an one-stop supply-demandmatching system for foodstuffs such as
production, logistics, and sales

WOTA

Use the AI Water Circulation System to offer
WOTA BOX outdoor shower to the victims ofnatural disasters

Kanagawa
Prefecture, JAXA

Challenergy

Develop wind power generators capable ofgenerating stable electricity even under
severe wind environments such as typhoons

Life Is Tech

Provide entertainment-oriented IT
programming education for middle and highschool students, and reduce educational
disparities between regions

Nippon Unisys,
Ishigaki City andNapocor(Philippines)

Note : IoT:
AI:
Source : Websites of each company

Robot:

Cloud:

House Foods,
Toshiba Plant
SystemIbaraki Prefecture, HighSchool, Walt DisneyCompany (US)Digital equipment:

Copyright (C) 2020 JETRO. All rights reserved.

Chapter 4 Section 2 Trends in global digital business78

New digital-related business responding to COVID-19
 COVID-19 provided an opportunity to rapidly digitalize the living infrastructure and corporate activities aroundthe world. Including medical services such as online medical care, digitalization has progressed in fields such as
education and food service industry.
 In Japan, various new services have begun in response to COVID-19, such as online classes and developmentof systems to reduce food loss caused by cancellation of events and self-restraint of restaurants.
New digital-related business responding to COVID-19
Scotish Farmers: since
they cannot secureseasonal workers fromoverseas, they arerecruiting local
students andemployees of closed
restaurants instead on
the Internet. (UK)Doctolib: developed
a video consultation
platform that doctors
across France can put
in use. (France)

COVID19CZ:
introduced “smart
quarantine” which
utilizes an IT
network to quickly
identify people atrisk of infection.
(Czech Republic)
Dishcovery:
providing digital
services to translate
and digitalize
restaurant menus.
(Italy)Paga: to reduce the handling of
cash in their digital payment service,it has changed its system to allow
users to pay without fees. (Nigeria)
Yoco: accelerating thedevelopment of remote
payment products whichallow money transfers via
web links on client
networks. (South Africa)

Alibaba: figuring out the risk ofinfection by comprehensively
analyzing big data of QR code
payment service “Alipay” and thatof the movement status and healthmanagement of citizens possessedby the government. (China)
Hema Fresh Store: begun an"employee sharing" system totemporarily accept employees
in the food service industry
and make up for the shortageof their own delivery staff.
(China)Toppr: offers online
practice exams,
practice exercises,
and video lessons forstudents to prepare
for exams. (India)

Dalian Horen Education
Technology: developed
an educational
application forelementary, junior highand high school students
based on AI technology
and big data. (China)

Tina3d: developed
an app whichmakes alarm bells
when an infected
person is
confirmed. (Korea)

Gojek: developed a service to bring
the necessary medicines to homes ofpatients if they were diagnosed witha suspected infection by an online
consultation with a doctor.
(Indonesia)
Jabil: uses digital tools tomanage supply chains suchas material procurement andvisualize risks. (Singapore)

Zoom: provided avideo conferencing
platform toelementary, juniorhigh and highschools in Japan,
Italy and the US. (US)Astool:released a pricecomparison
website such as
for masks andalcohol gels.
(Japan)Atama Plus:strengthened its
product services tosupport teachers
who provide
remote classes.
(Japan)One Carrier: started broadcasting
company briefing sessions forjob-seeking students on Youtube.
(Japan)Glaucks: expanded productsof their food sharing platform
in order to eliminate foodlosses for food business
operators. (Japan)

Google: improved Google
Map to display takeout
and delivery information,and is offering training
programs for restaurants
which have started takeout
and delivery services. (US)

IBM: developed a system to respondinquiries about Covid-19 based on data
released by the US Centers for Disease
Control and Prevention. (US)Compre dos Pequenos:
Focusing on issues of business
continuity and employment
retention, it is selling gift
certificates of SMEs' products
and services available after theend of Covid-19. (Brazil)：Medical：Education：Restaurant：Employment

Source: Biznews by JETRO, media coverage：OtherCopyright (C) 2020 JETRO. All rights reserved.

Chapter 4 Section 2 Trends in global digital business79

Challenges to rapid digitization
 With the rapid progress of digitization, the problems and challenges in technology, management, policy andsociety have been pointed out. With the increase in data distribution from the Internet of Things (IoT) andvirtual currency trading, security concerns are increasing.

 In a survey by the Ministry of Internal Affairs and Communications, companies in Japan, the United States, theUnited Kingdom, and Germany were asked about the challenges involved in introducing IoT. “Risk that a third
party will take over something connected to the network,” was cited as the biggest challenge in all countries. In
Japan, compared to the other three countries, many companies regard "Lack of personnel" as a problem.
Problems and challenges to rapid digitization

Issues in introducing IoT (Japan, US, U.K., Germany)
Risk that a third party willtake over something
connected to the network

Challenges
・ Sharing among industries does notprogress due to reluctance to disclose data
Technology ・ Lack of human resources and know-how
・ Lack of data volume
・ Remain of aging systems
・ Difficulty in harmonizing with existing
legacyManagement ・ Escalating security protection costs
・ Undeveloped internal systems that will be
the driving force of digitalization

Policy andSociety・ Lack of international rules and standards
・ Lack of incentives such as subsidies
・ Surfacing of intergenerational disparities
・ Lack of social acceptability

Source : Various materials

Lack oforganization/personnel tolead the introduction of
IoT

(%)

50.0
40.0
30.0

Storage of real data andprivacy information

20.0

Costs related toinfrastructuredevelopment andmaintenance

10.0
0.0

Uncertainty that valid data
will be available until data
is obtained

Ensurance of the accuracy
and precision of data

Safety risk associated with
controlling things
Ensuring connectivity andintegrating with existing
information systems

Japan (n=198)
US (n=355)
UK (n=430)
Germany (n=428)

Note: Multiple answers. "Other" and "No particular issues" are excluded.
Source: "Investigative research on innovation and new economy formation through ICT"
(Ministry of Internal Affairs and Communications)
Copyright (C) 2020 JETRO. All rights reserved.

80

Chapter 4 Section3 Trends in digital-related rule formation

Creating international rules governing the digital space becomes urgent
 With the development of digital businesses, countries are developing laws and regulations for consumer
protection, national security, and the protection and development of their own industriesE-transaction laws havebeen enacted in 80% of the world’s countries and regions, data protection and privacy laws in 70%, andconsumer protection laws in 60%.
 Particularly, as digitalization is forced to rapidly progress due to the spread of COVID-19, concerns over the lackof international rules governing cybersecurity and data cross-border transfer is growing. Worldwide standards
are being formulated by international organizations and forums, such as e-commerce rules by the WTO, freeflow of data by the G20, and digital taxation by the OECD.
Policy objectives behind digital restriction and frameworks forinternational rule-making
Protection anddevelopment of local
Othersindustry
Examples of ・Protection of privacy
・Local content
・Censorshipmeasures・Protection of copyright requirements
・Filtering
adopted for and public morals
・IPR restrictions
・Prohibition of antieach
・Right to be forgotten
・Digital taxationcompetitive behavior
objective
・Cyber security
・Requirements fordisclosure of technicalinformation
・Restrictions on foreign
investment
・Data localization：Prohibition of cross border data transaction, Server
location requirements
Objectives

Frameworkforinternational
rule-making

Consumer protection,national security

WTO：E-commerce facilitation
G20：Ensuring free flow of data
OECD：Digital taxation
APEC：Harmonizing privacy proteciton

Development status of digital legislation by region(Unit: %)World

Americas Asia Pacific

EuropeLaw

StatusLegislation

81.4

91.4

81.7

97.8

61.1

E-transaction
laws

Draft legislation

5.7

8.6

3.3

0.0

11.1

No legislation

4.1

0.0

3.3

0.0

11.1

Legislation

66.0

68.6

56.7

95.6

50.0

10.3

11.4

10.0

2.2

16.7

18.6

20.0

26.7

0.0

24.1

Legislation

56.2

71.4

43.3

73.3

46.3

Consumer
Draft legislation
protection laws

5.7

5.7

6.7

2.2

7.4

Data protection
and privacy
Draft legislation
legislation
No legislation

Cybercrime
laws

(194)

(35)

(60)

(45)

Africa (54)No legislation

8.8

8.6

10.0

0.0

14.8

Legislation

79.4

82.9

76.7

88.9

72.2

Draft legislation

5.2

2.9

11.7

0.0

3.7

No legislation

13.4

11.4

11.7

6.7

22.2

Note : 1) Figures in parentheses are the number of countries. The Middle East is included in the Asia-Pacific region bydefinition in source materials. 2) The total does not amount to 100 due to a certain number of countries and regions forwhich data have not been collected.
Source : UNCTADFTA：E-commerce, free flow of data, privacy protection, etc.
Note : Description after "："are the representative initiative of each international forum.
Source : Centre for International Governance Innovation（CIGI）, and various materials
Copyright (C) 2020 JETRO. All rights reserved.

81

Chapter 4 Section3 Trends in digital-related rule formation

E-commerce plurilateral negotiations expand while huge gaps remain between countries As of the end of June 2020, the number of WTO members participating in e-commerce negotiations launchedby the WTO increased from 70 at its inception to 84. The combined GDP of the members accounts for morethan 90% of the global GDP, and the rule-making framework expands worldwide.
 Meanwhile, the negotiating attitudes of the United States, the EU, and China, all of which have influence overmaking rules, differ greatly. While the United States intends to achieve a high degree of liberalization, the EU,
while supporting liberalization, emphasizes building the credibility of the digital market through the protectionof personal information. China has emphasized that the facilitation of trade in goods and development
support for developing countries and has shown a negative attitude toward liberalization.
Number of members participating in
WTO e-commerce negotiations(Countries)

(%)

90

100.0

80

At the informal
Ministerial Meetingin January 2019,
China and othercountries joined the
Joint Statement asvoluntary members.

Policies on e-commerce rules of major countries and regions
Basic Policy

Level of liberalization

84
90.0

Liberalization

70

70

Countries thathave announced
participation in
negotiations since
July 2019・ Kenya

70.0

・ Cote d'Ivoire

Reliability

・ Cameroon

60

・ Indonesia
・ Philippines
・ Burkina Faso

50.0
2017.122019.6
Number of voluntary members

2020.6

Proportion of GDP of voluntary members to global GDP (2019)(right axis)
Source: WTO, "WEO, October 2019" (IMF)

Development
supportChina
Facilitation
Development
supportoriented
Low

Freedom of cross-border data circulation〇〇〇

Non-tariff charges on electronic transmission〇〇

Prohibition of Disclosure Requests for Source Code

〇
〇

〇
〇

Free Internet access〇〇

Expand market access〇Protection of online consumers〇〇〇

Protection of personal information〇△ (Note 3)

〇

〇
〇

〇

〇

Preventing Spam Mail〇

Paperless trade△ (Note 2)〇

Electronic payments
Response to the digital divide〇〇〇

Promotion of joint research〇

Development support for developing countries〇

Electronic contract

50

High

〇

e-signature certification
Facilitation

Reliabilityoriented〇

Cyber Security Cooperation

60.0

Liberalization
oriented

Non-discriminatory treatment

Disallowing data localization requests

80.0

EU

Use of open data owned by the government
Prohibition of mandatory standard requirements such as security

78

US

〇

Note : 1) The issues and contents are extracts and are not exhaustive. 2) China only supports the extension of the moratorium
agreement on the non-imposition of tariffs on electronic transmissions and does not mention the perpetuation of rules. 3) China
considers the protection of personal information to the extent that each country consideres appropriate and necessary, and does notinsist on effective rule formation.
Source : WTO documents (INF/ECOM/4, 5, 7, 19, 22)

Copyright (C) 2020 JETRO. All rights reserved.

82

Chapter 4 Section3 Trends in digital-related rule formation

Area and scope of FTA digital rules deepening The objectives of establishing digital rules in FTAs include 1) promotion of EC, 2) international adoption ofrelated rules, and 3) promotion of inward direct investment. As of the end of 2019, there were approximately 70
trade agreements, including FTAs, which govern the digital sector.
 Countries in the Pacific Rim, such as the US, have actively incorporated digital rules into FTAs. In the latter half ofthe 2010's, there was a growing trend to define the digital sector in countries that did not have an agreementwith the US. Both the content and the quantity of the regulations have been expanded. Especially in TPP11 andUSMCA, the provisions have been significantly modernized in response to technological developments.
FTAs defining the digital sector(cases)(cases)Other

9

FTAs concluded by US FTA partners

JapanSwitzerland

8<2001-2003>

FTAs concluded by US

870

Cumulative number of deals (right axis)

Thailand New
Zealand7

Changes in digital regulations in FTAs: Number of clauses bycontent
80

7

7Japan-EU,
TaiwanGeorgia

Hong KongNew Zealand

6

60

5

5

5

4

4

5

4

40

4

Relatively new articles

the first EC chapter)・ Paperless trade (37)

・ Scope (12)・ No customs duties (57)

・ Non-Discrimination (27)・ Reduction of trade barriers (3)・ Relationship to other chapters (39)・ Access and use of the Internet (4)・ Cooperation (54)・ Definitions (49)・ Technology Neutrality (1)・ Private sector Involvement (3)・ Maintenance of EC-related domestic

・ Cross-Border Data Transfers (7)・Promotion of EC(32)laws (17)・ Internet interconnection charge sharing

・ Policy Harmonization (4)・ Electronic Authentication (27)(2)

・ Consumer protection (36)・ Use and location of computing facilities

・ Protection of Personal Information (21) (4)

2

2
1

1

China Georgia

2003

04

05

06

07

20

EU-Ukraine

09

10

11

12

13

14

15

16

17

18
19
(Effective Year)
Note: 1) Digital provisions specified in the same chapter with other areas, or specified as annexes are also included.
2) The balloon shows the FTAs (“Other” part of the graph) where the US and its partner country are not concluded
parties.
Source: "List of FTAs in the World and Japan" (JETRO) and respective agreements.

・ Liability of intermediary service
providers (2)・ Limitations on dispute settlement (1)・ Interactive computer services (1)・ Open government data (1)008・ Unsolicited commercial message (8)・ WTO Rule consistency (26)

10

0

0

・ Cybersecurity (3)・ Source code (4)JapanMongolia,
EEUVietnam

1

30

3

Taiwan New
Zealand

Taiwan Nicaragua

3

1

5

<From 2009>

Post Singapore-Australia FTA (with・ Ensuring transparency (21)50
5Conventional provisions<2003-2009>

Note : Figures in parentheses are the number of provisions that provide the same content, not the
number of agreements.
Source : "Digital Trade and Dispute Settelement in RTAs: An Evolving Standard?"(Journal of World Trade)

Copyright (C) 2020 JETRO. All rights reserved.

83

Chapter 4 Section3 Trends in digital-related rule formation

Multilateral agreements specializing in the digital sector
 The United States, which has promoted the liberalization of digital trade, has defined its own rules in many FTAs.
The EC chapter of the USMCA is among them and has the highest regulation levels. A regulation level exceeding
TPP has been realized through multiple items governing cross-border data transfer, cybersecurity, and more.
 Some agreements specialize in the digital sector, such as the US-Japan Digital Trade Agreement and the Digital
Economic Partnership Agreement between Singapore, Chile, and New Zealand (DEPA, reached a substantial
conclusion of negotiation in January 2020). DEPA includes rules that go beyond USMCA including rules on AI
operations, and there is a noticeable lead in forming rules through individual agreements.
US trade agreements and other digital provisions
TPP11
USKorea Colombia Panama (Referen Japance)
Digital

USMCA

Mar.
2012

May.
2012

Oct.
2012

Withdra
wal

Jan.
2020

Jul. 2020

Definitions

○

○

○

○

○

○

Scope of Application and General Provisions (Confirmation of Importance)

○
○

○
○

○
○

○
○

○
○

Gener
al

Types

Item

Non-Discriminatory Treatment of Digital Products

Liberalization

Outline of the Digital Economic Partnership Agreement (DEPA)

Non-tariff charges on electronic transmission○

Cross-border transfer of information by electronic means

○

○

○

Prohibition of Requests for the Installation of Computer-Related Equipment

Reliability

Protection of online consumers○○○

E-invoicing
Fintech and E-

○

○
●

●

promote andCross-border data

Facilitating smooth cross-border data transfer○"As the regional adoption of e-

○

○

●

●
○

facilitate
opportunities

flows
Open government

under certain conditions
Expand access and use of government data to

invoicing heightens, we canproject further reduction in●

Measures against commercial messages that are not required

○

○

○

Cooperation on matters related to cybersecurity

○

●

●
●
○

○

●
○

Electronic authentication and electronic signature

○

○

○

○

○

Computerization of trade-related documents

○

○

○
●

○
●

○

○

○
○

Dispute Resolution
Transparency (disclosure of laws, etc.)○○

step to facilitate enhanced
interoperability, secured data
between trade platforms."(Standard Chartered Bank [UK]).

○○

standards
Promoting the opening of APIs linking financial○○

Cooperation○

flows, and seamless e-invoicing○○

payments○

Developing Mechanisms to Enhance theCompatibility of Related Laws and Regulations○

Authorization for sharing negotiation of Internet interconnection fees

digital trade

institutions and external systems○

Expansion of access and use of government published data

Digital identities

B. Build trust in Personal information
digital systems, protection

Protection of personal information

Domestic electronic trading framework
Facilitation

establishment of a common set of

documentation and customs procedures
digital standards and guidelines is
Promote the adoption of the same international vital. DEPA is a meaningful first●

Responsibilities of computer-based interactive service providers and users

Other

Reduce the cost and time required for

●

○
○

○

Paperless trade○

Prohibition of Algorithmic Disclose Requests○

Major Comments from companies○ "For trade to flourish in an
increasingly borderless world, the○○Principles of Internet access and Internet use

Major items
Reducing hurdles for registrations and opening
corporate accounts○

Prohibition of Requests for Installing Computer-Related Equipment in
Financial Services
Prohibition of source code disclosure requirements

USMCA+○Item
A. Facilitating
end-to-end

for participation datain the digital
economyData innovation andregulatory sandbox(Exclusion)

C. Improving

create new opportunities for business, including operating costs." (Dairy Farm
small and medium-sized enterprises[Hong Kong])

Artificial intelligence

Reliability of
Digital Systems Online consumer○○

Promote innovation by exempting some○ "By addressing emerging andregulations for a limited time

important issues that impact thedigital economy such as Artificial

Request companies to use AI in a transparent and Intelligence and data
fair manner
innovation, DEPA is a milestone
Maintain relevant laws and regulations to protect in international tradeand Expanding protection
Opportunities SMEs cooperation

consumers from damages in online commerce
Promotion of information sharing among SMEs

to Participate inthrough digital dialogue, etc.

the Digital
EconomyDigital inclusivity○

agreements." (Google [US]).

Confirmed the importance of everyone's
participation in, contribution to, and benefit fromthe digital economy

Note : 1) Items not specified in USMCA (so-called USMCA Plus) are denoted by ○. 2) Bold text for comments by companies refers to certain DEPA
module.
Source : Joint press releases from Singapore, Chile and New Zealand.

Note : 1) Years and months refer to the effective year and months. 2) If there are relevant provisions, it was set to ○. ● specifies rules with a level exceeding TPP11. 3) For more
information on FTA regulations that are older than the US-Korea FTA, see also World Trade and Investment Report, 2018 edition, page 113.
Source : US FTAs, US-Japan Digital Trade Agreement, and US Business Software Alliance materials

Copyright (C) 2020 JETRO. All rights reserved.

84

Chapter 4 Section3 Trends in digital-related rule formation

Acceleration of digital rule formation in each country and region
 While international discussions on digital rules have not reached a conclusion, each country and region is
promoting the introduction of digital laws and regulations due to 1) the increasing momentum for protecting
personal information and 2) concerns about security, etc.
 Regulations on cross-border data transfers, which affect international businesses greatly, tend to be tightened.
In order to avoid excessive data transfer restrictions while protecting a minimum of personal information,
approaches to allowing data transfer based on certain criteria are spreading.

Country/region
USSummary

Recent Development Status of Related Rules

Transition to protection ・ Each state will enact privacy laws due to concerns over the management system of personal information byof personal information large tech companies. The California Consumer Privacy Act (CCPA) clarifies consumer rights and corporate
obligations with respect to personal information and is a model for other states.
・ Increased oversight of anti-competitive behavior by platformers.

Central
Acceleration ofand South legislation for digital・ In Brazil, a bill on digital taxation was submitted to Congress in May 2020. Taxation rates are determinedbased on domestic sales.

Americataxation・ In other major Central and South American countries, while complying with OECD rules, legislation is being

EuropeStart of work program

developed to make digital service providers to pay value-added taxes (VAT).
・ Under the "Europe in Response to the Digital Era" policy, the working program on the formulation ofrelated to rule
formation under thedigital rules was announced at the beginning of 2020. Toward the Modernization and Enhancement of theSingle Market.

new system

・ Progress is being made in reviewing competition policies in the data economy, such as the digital services
bill. Whether to adopt or reject the proposed e-privacy rule for tracking browsing history is also a focus ofattention.

China

Responding to Cyber・ Unification of digital taxation rules is important from the standpoint of achieving a single market.
・ The Cyber Security Law (effective in 2017) and related detailed regulations and standards stipulate the

Security Law is a
Challenging Issue

handling of "personal information" and "important data" on the network.
・ Some companies struggle to deal with many uncertainties regarding their security assessment obligations
when providing information abroad.
・ A position to respect Internet sovereignty and regulatory rights in international negotiations.

ASEAN

Deepening data-related ・ Progress of strengthening regulations related to data, such as the enactment and revision of the Personal
regulations

India

Aiming to utilize

Information Protection Law and the Cyber Security Law, in major countries. With COVID-19, interest in theformation of rules is increasing in terms of both protection and utilization of personal information.

Types of rules for cross-border data transfers
Type of regulation
1) No
regulation
2) Unregulated
in principle3) Only partial
transferallowed4) Generally
prohibited

Regulatory strengths

Overview of the development of related rules
in response to digitization by country and region

Summary

Examples ofcountries and regions

Due to lack of data protection legislation,
Least developed
there is no discipline for cross-border data
countries, etc.
movement.
Cross-border data transfer is not prohibited US, Canada,
and requirements are not established.
Mexico, Philippines,
However, if data is misused at the destination, etc.
the transferee is responsible for this.
Data transfer is permitted only in cases where EU, Thailand,
certain requirements are met (e.g. when the Singapore, Brazil,
personal information protection is properly
South Africa, etc.
implemented at the destination of the data).
Determine the appropriateness of crossChina, Indonesia,
border data transfer individually according to Vietnam, Kenya,
the importance of the project and data.
etc.

Note : Countries and regions are exemplified based on the main nature of the rules. Depending on the elements that make up
the rule, it may not be possible to strictly classify into 4 types.
Source : OECD and documents of each government

・ Countries that introduce digital taxation from 2020 are the mainstream.
・ Establishment of the National Identification Number System and the Comprehensive Digital Publicpersonal data properly Infrastructure based on this system. Adopt an approach that encourages the use of information while ensuring
the trust of individuals.
・ The Personal Information Protection Bill under Diet deliberation will avoid excessive data localization.
AfricanDeveloping Rules under ・ The African Union (AU) adopted the Africa Digital Transition Strategy 2020-2030.
Countries the Digital Transition
・ Promote the development of legal systems to handle personal information appropriately. South Africa andStrategy

Kenya are introducing GDPR compliant data-protection legislation.
・ There is also a trend toward taxation of social media.

Note : Bold letters indicate specific laws, regulations, and systems.
Source : Various materials

Copyright (C) 2020 JETRO. All rights reserved.

85

Digital Business and Rule Formation Trends
by Country and Region
 United States

 Central and South America
 Europe China ASEAN India Africa

86

Chapter 4 Digital Business and Rule Formation Trends by Country and Region

US: Online platforms continuing to expand business domains
 Competition for consumers among online platforms intensifies as they expand their business domains. In thesteadily expanding US e-commerce (EC) market, Amazon stands out, accounting for approximately a 40%
share in EC retail sales. In May 2020, Facebook launched a new EC service utilizing social media.
 Each tech giant is looking for more points of contact with consumers and seeking new investment
opportunities in the healthcare and digital health sectors. Google and Apple aim to acquire consumer data
through wearable devices.
Recent business trends for US largest technology
companies in the healthcare sector

EC's share to total US retail sales(%)(Billion USD)

7,000

25.0

Retail Sales (EC)CompanyTime

GoogleNov. 2019

Retail sales (excluding EC)

with smart watches, etc., specializing in healthmanagement, for about $2.1 billion.
Acquired US Food and Drug Administration (FDA)

EC's share of total retail sales (right axis)

6,000

Business trends
Acquired Fitbit, a US wearable device startup that deals

Sep. 2018

20.0(Forecast)

Apple

5,000

Allied with Allscripts, an Electronic Health Records (EHR)
Aug. 2019

15.0

4,000

certification and incorporated ECGs into the smartwatch"AppleWatch".
control company in the US, the EHR controlled by thecompany can be checked in iPhone health managementapp.
In collaboration with medical organizations, Facebook

Facebook

3,000

Oct. 2019

Sep. 2018

2,000
5.0

2016

2017

2018

2019

2020

2021

2022

2023

million. Since November 2019, the service has been
expanded with the brand name changed to "Amazon
Pharmacy".
The AI Assistant "Alexa" was approved for compliance with

1,000

0.0

medical checkups and the acquisition of medical institution
information on a Facebook application.
Acquired PillPack, a US online pharmacy, for about $750

10.0

0

launched a service that enables schedule management of

AmazonApr. 2019

the "Health Insurance Portability and Accountability Act"
(HIPAA), which stipulates the handling of personal healthinformation, enabling the company to provide anenvironment for developing personal healthcare services
using Alexa's voice recognition technology.

2024

Note: Retail sales (EC) are the value of goods and services ordered over the Internet (excluding travel-related and food services).
The payment method is not limited.
Source: eMarketer (May 2020)

Started online healthcare service "Amazon Care" on a trial
Sep. 2019basis for some employees. In October 2019, the company
acquired Health Navigator, a US startup that develops
telemedicine technology, and incorporated it into its
service's system.

Source : Press releases, financial statements and various media reports of each company

Copyright (C) 2020 JETRO. All rights reserved.

Chapter 4 Digital Business and Rule Formation Trends by Country and Region

US: Reaching a turning point for personal information protection87 In recent years, there have been growing concerns regarding enormous stores of personal information by large
tech companies and their mismanagement in protecting the information, and each state has taken the lead inenacting privacy laws. The California Consumer Privacy Act (CCPA), the first comprehensive privacy law enacted
in the United States, became a model for other states as a law clarifying consumer rights and businessobligations related to personal information.
 The Federal Government, Congress, and the states have begun a series of investigations regarding the
anticompetitive practices of online platforms. Sources of surveillance of large technology companies range fromanticompetitive acquisitions of startups to data monopolies.
Summary of major privacy legislation submitted by statelegislatures since 2018

Major investigations of anticompetitive practices by online
platforms

Principal Rules Included
Consumer rights
Operator obligations
State

California
Maine
NevadaStatus ofthe bill

Establish

Restricti Restricti
Restricti
Prohibiti ons on
ons onOpt-out
Access to Rectificat
ons inNotificati Informati on ofcollectio informati
Deleting
Data
from
informati ion of
informati
on toon leak consume
n ofon
informati
portabilit selling tooninformationConsum notificatirinformati processionya thirdon
processi
ers
on
discrimin on for
ng for
party
ng
ation
specific specificpurpose purpose

○

○

○

○

ed

○

○

○

○
○

○
○

○

○

○

○

○

○

○

○

○

Illinois
Maryland

○
○

○

○
○

○

○
○

○
○

○
○

○
○

○

○

○

○

○

○

○

○

○

○

Minnesota
Nebraska
New
Hampshire
New Jersey
New YorkSouth Carolina

Under
Congressdeliberat
ion

○

○

○

○

○
○
○

○
○

○
○

○

○

○

○

○

○

○

○
○

○
○

Jun. 2019

Congress
House Judiciary
Committee

Department of
OnlineJustice
platforms
Attorney general of
Sep. 2019 47 states, district Facebook
and territories

○

○

○

○
○

Attorney general for
Sep. 2019 50 states, district Google
and territories

○
○
○

○

Onlineplatforms

Jul. 2019○

ArizonaAnnouncem
Main body of the Investigatioent orinvestigationn targetStart date

Note : 1) Excluding states that have already been voted down or eliminated in Congress. When multiple
bills were submitted in the same state, the bill with more rights and obligations was prioritized. 2) The
bill's status is as of April 16, 2020. 3) The right to data portability refers to the right not only to disclosethe consumer's personal information owned by the business, but also to request it to be sent by mail orelectronically. 4) Maine and New Jersey require consumer consent (opt-in) to sell data to third parties.
Source : International Association of Privacy Professionals (IAPP)

Feb. 2020

Federal Trade
Commission(FTC)

Alphabet(Google),Amazon,Apple,
Facebook,
Microsoft

Main investigation items
・ Competitive problems in the digital market
・ Anti-competitive practices by market-dominant companies
・ Adequacy of existing antitrust laws, competition policies and current enforcement
statusWhether they increase their market power too much, thereby restraining competition
and innovation, or compromising the interests of consumers
Anti-competitive practices resulting from dominant status such as improper handlingof consumer data, reduction of quality of consumer choices, and lifting of advertising
fees
・ General control over the online advertising market and the distribution anddiffusion of online information that lead to anti-competitive practices
・ Business practices that hinder consumer choices, stifle innovation, and infringe
consumer privacy
Anti-competitive acquisition of early founders or potential competitors. The FTCordered the companies investigated to provide information about company
acquisitions completed between 2010 and 2019 that were not filed with the FTC or
the Federal Justice Department.

Note : Limited to investigations announced or initiated after 2019.
Source : Announcements from each Federal agency/State Attorney General's Office, "Biznews" (JETRO), and various media reports.

Copyright (C) 2020 JETRO. All rights reserved.

Chapter 4 Digital Business and Rule Formation Trends by Country and Region

Central and South America: Rising fintech start-ups and progressing legislation
 According to the Latin American Private Equity and
Venture Capital Association (LAVCA), the amount ofventure capital investment in Central and South America
was the highest ever in 2019. Investment in Brazil is thelargest, accounting for 54.1% of the total. By field,
investment in FinTech is the largest in terms of both value
and number of cases.
 In Brazil, legislation is being developed with the rise of
FinTech companies providing new services. The Angel
Investors Act and the Uber Act, which came into force as aresult of the advancement of Uber from the US market, areexamples. Legislation is progressing with the entry ofcompanies, and the FinTech field is expected to continue
to grow in the future.
VC investment in Central and South American countries

88

VC investment by sector in Central and SouthAmerican countries (by value)
Food tech
1%

CRM
2%

Game
1%

HR Tech
1%

ERP
1%

Other
5%

Space stick
1%

Marketing
2%
SaaS
2%

E-commerce
5%
Transportation
5%

FinTech31%

Marketplace
8%

Protec Corp.
9%

Logistics andDistribution
26%

VC investment by sector in Central and SouthAmerican countries (by number of cases)

Marketing
2%

Other
22%

FinTech22%

Agritech2%
Digital security
2%

Biotech health sticks
9%

ProtecTransport
7%
CRM
ation
3%
E-commerce
HR Tech
SaaS
3%
6%
4%
7%
Logistics andMarketplace
EdtechDistribution
4%
4%
3%
Note: Protec: Integration of urban residents' lives and FinTech. CRM: Customer
management system.
Source: LAVCA

Copyright (C) 2020 JETRO. All rights reserved.

89

Chapter 4 Digital Business and Rule Formation Trends by Country and Region

Central and South America: Development of legislation for digital taxation
 In 2019, Brazil was the largest EC market in the retail sector in Central and South America and the Caribbean. In
Brazil, a bill to levy taxes on digital service providers doing business globally was submitted to the Chamber of
Deputies on May 4, 2020. The tax rate depends on sales in Brazil.
 Other major economies comply with the new rules being established centered around the OECD. Reflecting thecontents of the base erosion and profit shifting (BEPS) action plan announced by the OECD and the G20,
legislation that will make digital service providers pay value‐added taxes (VAT) is proceeding.
Profile of digital corporate taxation in Brazil

Sales in Brazil subject to tax

Actions to make value-added tax payable for digital service providers

Tax rate

150 million real (about 2.7 billion yen)or lessMore than 150 million real, less than
300 million real (about 5.4 billion yen)Over 300 million real (about 5.4 billion
yen)

Source: Bill 2358/2020 and media reports

1%
3%
5%

Country
MexicoChile

Major Developments and Taxable Items
・ A new tax reform law came into force on June 1, 2020.
Mandatory VAT payment by non-resident businesses.
・ Taxable objects are digital services that include contents
・ The Ministry of Finance Ordinance No. 825 (VAT Act) was
revised in February 2020. Mandatory VAT payment by nonresident businesses.
・ Taxable objects include video through download andstreaming, online platforms, etc.
・ The National Tax Agency adopted Resolution No. 51 in July
Colombia
2018. Mandatory VAT payment by non-resident businesses.
・ Taxable objects include all services including contents
・ A bill to impose a general sales tax (IGV) was submitted at theend of 2019. Requiring payment of IGV taxes by financial
intermediaries, such as credit card companies, rather than service
Peru
providers・ Video distribution services, services provided through digitalapplications, etc.
Source : Government releases and media reports

Tax rate
16%

19%

19%

18%

Copyright (C) 2020 JETRO. All rights reserved.

90

Chapter 4 Digital Business and Rule Formation Trends by Country and Region

Europe: Expanding digital and environmental action
 The European Commission has listed the "European Green Deal" and "Shaping Europe’s Digital Future" as toppriorities and is prioritizing these efforts even in post-COVID-19 recovery measures.
 Digital and environmental actions are spreading to businesses as well. The use of digital technologies is
expected to bring advantages including 1) improved knowledge, communication, and information sharing, 2)
more circular business models, products, processes, and 3) greater engagement of citizens and consumers. In
cross-border M&A, there are cases of investing not only in EU companies but also in digital companies outside
the EU.
Overview of the "European Green Deal" and"shaping Europe’s digital future"
Cross-border M&A of European digital environment-related companies

European Green Deal

Acquired company
Company Name

・ Targeting the world's first "climate-neutral
continent" with net zero greenhouse gas emissions.
・ As progress in climate change measures, a "Just
Transition" will be realized to support territories
dependent on carbon-intensive activities.
・ Develop an "Sustainable Europe Investment Plan" toachieve an ambitious target of reducing greenhousegas emissions by 55% by 2030.

Shaping Europe’s Digital Future
・ Define standards for this new generation oftechnologies that will become the global
norm.
・ Developed joint standards for 5G networks.
・ Promote a coordinated European approach on thehuman and ethical implications of Artificial Intelligence.
・ Provide opportunities for citizens to receive
education and acquire skills that are adapted to thedigital age.
Source : European Commission and Delegation of theEuropean Union to Japan.

Country

Acquiring company
Company NameCountryTime

TargetSummary

Areas

ABB, which promotes industrial DX, announced that it has

Cylon

Ireland

ABB

SwitzerlandMar. 2020

Smartagreed to acquire Cylon that improves efficiency and

Building

optimizes energy through building automation, heating,ventilation and air conditioning control solutions.

1st VisionCorp.

MachineUS

Ambienta

Italy

Feb. 2020

Vision[Note]

Ambienta, a sustainability-focused investor, has completed
the acquisition of 1st Vision, a machine vision distributor thatis a key component of Industry 4.0 and is expected tobenefit the environment from efficiency.
AMCS, which provides waste and recycling-management

TRUX

CanadaAMCS

IrelandJan. 2020

Softwaresoftware and vehicle technology, announced the acquisitionof TRUX in Canada, which provides waste management
software.

thinkstep Germany

Leanheat

Recy
Systems

SpheraUnitedStatesSep. 2019

Finland

Danfoss

Denmark May 2019

Germany

AMCS

IrelandJan. 2019

Cloud,
SoftwareAI

SoftwareSphera, which provides risk management software and information
services that specialize in environment, health and safety, completed
the acquisition of thinkstep, which provides software solutions for
products and corporate sustainability.
Danfoss, which provides fuel efficiency technology, announced that it
will acquire shares of Leanheat in Finland, which has been affiliatedsince 2016 and hold a 100% share of the company. Leanheat
provides a service that uses AI and sensors to manage building
heating.

AMCS announces acquisition of Recy Systems, a provider ofrecycling and waste management-related software.

Note : Conducts image processing and controls industrial machinery, etc.
Source : Refinitiv and Company press releases

Copyright (C) 2020 JETRO. All rights reserved.

Chapter 4 Digital Business and Rule Formation Trends by Country and Region

Europe: Trends in digital strategy and key Issues under the new structure91

 The New European Commission has set its digital policy, Europe Fit for the Digital Age, as one of its priorities. In
January 2020, a work program related to the formation of digital rules was announced. In the next five years,
modernization and strengthening of the single market will be targeted for change towards climate neutrality(zero real greenhouse gas emissions) and digital leadership.
 Key issues related to the digital sector are as follows. 1) Review of competition policy: ensuring a fair competitiveenvironment in the digital market including a review of the Digital Services Act; 2) adoption or non‐adoption of
the e-Privacy Rule: treatment of tracking standards for user viewing history on the Internet; and 3)
standardization of digital taxation rules: important from the perspective of realizing the digital single market.
EU Priority Agenda "Europe Fit for the Digital Age" Work Program
Policy Objectives
Europe fit for the digital age

Initiatives

Target period

European Strategy in Response to the Digital Era

Announced on Feb. 19, 2020

AI White Paper
European Data Strategy

Announced on Feb. 19, 2020
Announced on Feb. 19, 2020

Follow-up of AI White Paper, including Safety, Reliability, Basic Rights and Data

Q4 2020(Legislative Measures Including Impact

European approach to AI

Assessment)
Q4 2020
Digital Services

Digital Services Act(Legislative Measures Including Impact
Assessment)
Q4 2020

Strengthening Cyber Security Review of directives (NIS directives) relating to networks and information systems (Legislative Measures Including Impact
Assessment)
Standardization of chargers for mobile phones and similar devices

Q3 2020(Legislative Measures Including Impact
Assessment)
Q4 2020

Digital for Consumers
Review of Roaming Rules(Legislative Measures Including Impact
Assessment)

Industrial strategy

Announced on Mar. 10, 2020

New Industrial Strategy forSingle Market Barriers Report
Single Market Action Plan

Announced on Mar. 10, 2020
Announced on Mar. 10, 2020

EuropeSME strategy

Announced on Mar. 10, 2020
Q2 2020White Paper on Foreign Subsidy
FinTech Action Plan, which includes a strategy for the EU's integrated decision-

Digital Finance(Non-Legislative Measures)Q3 2020

making market(Non-Legislative Measures)Q3 2020

Proposal for cryptographic assets(Legislative Measures Including Impact
Assessment)
Q3 2020

Cross-Sectoral Financial Services Act on Operations and Cyber Resilience(Legislative Measures Including Impact
Assessment)

Note : The shaded items are those proposed as of May 20, 2020.
Source : Materials of the European Commission

Copyright (C) 2020 JETRO. All rights reserved.

Chapter 4 Digital Business and Rule Formation Trends by Country and Region

China: Rapid growth of digital businesses and further acceleration with
COVID-19

92

 In China, various types of internet services are becoming established ahead of other countries, including
mobile payments, which have been popular since around 2015.
 In response to COVID-19, cooperation between IT companies and governm en t agencies wasstrengthened. Governance and medical care utilizing the latest digital technology proved effective. In addition,
distance learning and mobile payments users also surged during the lockdown. It is expected that theconstruction of various "new infrastructures"*, which is promoted at a rapid pace through public-private
partnerships, will accelerate the growth of China's digital businesses.
*The term refers to the digital infrastructure that supports 5G, data centers, artificial intelligence and other technologies, and next-generation transportation
infrastructure such as charging stations.

Trends in the number of various internet service users in China

9.0
8.0
7.0

(100 ｍillion people)

Examples of COVID-19 responses using digital technology
Start dateCompany Name

Jan. 2020

Alibaba,which provides telephone health counseling
Baidu

AI Chat Bot (Automated Response System),Distance Learning
Live broadcast

Mobile payments
Video (including short video)

Jan. 2020

6.0
5.0
4.0

2.0

Dec. 2017

Dec. 2018

Jun. 2019

Mar. 2020

Note: 1) Due to the impact of COVID-19, no statistics were released in December 2019 and published in March 2020. 2) The number of users for live broadcast has beenannounced since December 2016, and for video (including short videos) since December 2018.
Source: The 45th Statistical Report on Internet Development (China Internet Network Information Center)for virus gene analysis and vaccine
development

Feb. 2020

Alibaba, Health Code: A Digital Indicator for Health
Tencent Status

Mar. 2020
Dec. 2016

Baidu

Feb. 2020

1.0
Dec. 2015

Alibaba,

services
AI algorithms and data analysis tools used

Baidu,
SenseTimeGroup andMegviiTechnology

3.0

0.0

Target technology

AI temperature measurement system

Alibaba, Program of apps that issue electronic gift
Tencent coupons

Note : There are also cases in which the starting date varies slightly depending on thecompany.
Source : Websites of each company and local news reports
Copyright (C) 2020 JETRO. All rights reserved.

Chapter 4 Digital Business and Rule Formation Trends by Country and Region

China: Japanese companies are required to respond to the enforced
Cybersecurity Law

93 When it comes to the handling of personal information and important data on networks that are indispensablefor the development of the digital economy, the Cybersecurity Law (effective June 2017) and related detailed
rules and standards were stipulated from the viewpoint of national security and the protection of personal
information.
 It has been pointed out that the safety assessment obligations for providing personal information andimportant data abroad are unclear whether they are limited to operators of critical information infrastructure,and it is difficult to deal with them. Conversely, there are cases in which action is being taken to respond to
personal information protection and grade notification required by the law.
Examples of responses by Japanese companies operating in
China to the Cybersecurity Law

Strength of government oversight and regulation

Entities subject to the Cybersecurity Law
TargetOperators of critical industries andsectors such as water supply, finance,
public services and electronic
Operators ofcriticalinformation
infrastructure

Network operators

administrative services, as well as other Information" andcritical information infrastructures that,"Important Data" in theonce functional destroy, loss or data
country and andleakage are encountered, could seriously providing them abroad.
jeopardize national safety, the national
economy and the livelihoods and public
interests
Network owners, administrators, andproviders of network services(At present, most companies andorganizations are likely to be network
operators.)

Source : Cybersecurity Law, etc.

Legal obligations
Requires safetyassessments whenstoring "Personal

It is unclear whether theabove is necessary or
not at present.

Time
Jan. 2019

Company
Response
RetailThe privacy policy on the website was updated based on the provisions ofCompany A
the Cybersecurity Law and Code of Personal Information Security (Note).
Jul. 2019
Precision
Collaborated with external experts to report cyber security grades toEquipment
relevant supervisory departments.
Company B
Nov. 2019 Electrical
Amendment was made to the "Agreement on Collection and Use of
equipment
Personal Information" for employees.
company C
Dec. 2019
Trading
Strengthened compliance with the Cybersecurity Law and created internal
company D
regulations.
Dec. 2019Pharmaceutical A questionnaire was conducted regarding the handling of personal
Company E
information of employees and users, and the standards for the
management of personal information were created after understanding thestatus of the storage and management of personal information within thecompany.
Jan. 2020
Electrical
Referring to the provisions of the Cybersecurity Law and the Code ofequipment
Personal Information Security, the "Written Consent to the Collection andcompany F
Use of Personal Information" was posted on the website regarding thecollection and use of personal information.
Note : Refers to the "Private Information Safety Standards for Information Safety Technology."
Source : Interviews with Japanese companies operating in China and law firms in China

Copyright (C) 2020 JETRO. All rights reserved.

94

Chapter 4 Digital Business and Rule Formation Trends by Country and Region

ASEAN: Digital investment slows down, while the scope of investment expands
 ASEAN has been successfully attracting digital investments, while the amount of investment in 2019 fell below
the previous year’s level. There seems to be the slump in the global economy and the reaction to the excessive
growth expectations for startups so far is the cause. Conversely, the number of investments is increasing, andinvestors are expanding the scope of investment targets with holding back on the amount invested.
 Each country in ASEAN faces various economic and social issues. For example, permanent economic losses
caused by traffic congestion is one of them. In addition to local companies that aim to solve these problems
through innovation using digital technology, Japanese startups have also found business opportunities in thisfield in recent years.
Trends in tech-affiliated startup investment for ASEAN（Number of cases）（Million USD）

14,000
投資額
Amount of Investment

12,000No.of Investment (Right Axis)
投資件数（右軸）

10,000

417
360

8,000
6,000

395

366

7,781

Digital Technologies to solve
issuesGlobalMobility
Service（GMS）

Philippines,
Cambodia,
Indonesia

Difficulty to escape frompoverty; the low-income groupcannot buy or own a vehicle
because they cannot get a loan
from a financial institution.

Providing a Fintech service thatallows customers to purchase avehicle by making a loan for lowincome people by utilizing an invehicle IoT device.

400

UMITRON

Thailand、
Singapore

Delay in productivity
improvement, severe working
environment and environmental
problems in the fishery industry.

Improved efficiency and reduced
environmental impact by realizing
efficient feeding using IoT andsatellite technology.

SuRaLa Net

Indonesia,
Philippines

An unstructured educational
system centered on arithmetic
widens educational inequality
and hinders income growth.

Introduced "Surala Ninja!", an elearning system throughinteractive animation.

CambodiaFinancial services are lessbeneficial due to low bankaccount opening rates.

Jointly developed with the Central
Bank of Cambodia, Japan's firsttoken-type digital currency"Bakong" utilizing blockchain
technology.

200

1,882

100
0

2015

Social issues

Name

300

0

2014

Country ofparticipation/
involvement

Company

500

3,511
1,236

700
600

5,458

213

4,000
2,000

11,959616

Examples of Japanese startups using digital technology to solve
ASEAN’s economic and social Issues

2016

2017

2018

2019

Source: "Southeast Asia Tech Investment in 2019"（Cento Ventures）

Soramitsu

Source : Websites of each company and interviews with these companies

Copyright (C) 2020 JETRO. All rights reserved.

Chapter 4 Digital Business and Rule Formation Trends by Country and Region

ASEAN: Tightened data-related regulations and expansionof introduction of digital taxation

 In ASEAN countries, there are signs oftightening regulations on data, such as theenactment and revision of the Personal Data
Protection Act and the Cyber Security Act. The
spread of COVID-19 has raised more interest in
both the protection and use of personal
information of infected people.
 Japanese companies in ASEAN often exchangeclient data etc. with their headquarters inJapan. The governments of each country are
expected to establish appropriate data
management systems to protect personal
information and eliminate excessive regulation.

Major digital laws and regulations in ASEANCountry/region

ASEAN
Singapore

Enforced in Jan. 2020
Thailand

Enforced in May. 2017
Enforced in May. 2019

Indonesia

49.72

Malaysia

44.25

Shared among relatedcompanies in Asia

Enforced in Jan. 2013

Launched in Jan. 2020(%)

Shared with
headquarters in Japan

Time
Signed in Nov.2018

Enforced in Mar. 2018

Status of intra-group sharing of personal information by
Japanese companies operating in ASEAN
Not shared/particularly
shared(in-house only)95

Vietnam

Personal Data Protection Act 2012
Cybersecurity Act 2018
Taxation of goods and services tax (GST) on imported services (foreign
digital services)
Protection from Harassment (Amendment) Act 2019
Revised The Computer Crime Act (2017)
The Cybersecurity Act (2019)

Enforced in May. 2019

The Personal Data Protection Act (2019)

Enforced in Oct. 2012

(Enforcement of the Main Articles is postponed till 2021)
Government Regulations on Electronic Systems and Transactions (2012,

Enforced in Dec. 2016

No. 82)The Minister of Communication and Informatics No. 20 of 2016 on

Personal Data Protection in Electronic Systems (Data Protection
Regulation)
Government Regulations on the Operation of Electronic Systems andEnforced in Oct. 2019
Transactions (No. 71, 2019)
Enforced in Mar. 2020
Government Regulation in Lieu of Law (Peraturan Pemerintah Pengganti
Undang-Undang) No.1/2020 (Perppu-1)
From Jan. 2020 onward Personal Data Protection Bill is under deliberation in the People's
Consultative Assembly
Enforced in Nov. 2013
Personal Data Protection Act 2010
Launched in Jan. 2020

5.44

Legal and regulatory names
ASEAN Agreement on Electronic Commerce (Released in March 2019)

Enforced in Jul. 2016
Enforced in Apr. 2018

Service Tax on Digital Services
Law on network information security (86/2015/QH13)
Decree on the control, provision and use of Internet services and online
information (27/2018/ND-CP, amendment of decree 72/2013/ND-CP)

Enforced in Jan. 2019

Shared among relatedcompanies in thedomestic market

3.38

Philippines

Shared among relatedcompanies around theworld

The Data Privacy Act of 2012

Enforced in Sep. 2016
Implementing Rules and Regulations of the Data Privacy Act of 2012
From May. 2020 onward Digital taxation bill is under deliberation in the Congress of the Philippines

2.15

0

Enforced in Sep. 2012

Law on Cyber Security (24/2018/QH14)

Source : Various materials
10

20

30

40

50

60

Note: Valid responses were received from 3017 companies. Personal information refers to customer information,
employee salary information, etc.
Source: "2019 Survey on Business Conditions of Japanese Companies in Asia and Oceania" (JETRO)

Copyright (C) 2020 JETRO. All rights reserved.

96

Chapter 4 Digital Business and Rule Formation Trends by Country and Region

India: Japanese companies interested in the expanding startup ecosystem
 In 2019, more than 1,200 startups were founded in India producing 25 unicorns. More than 75 Japanesecompanies have started investing more than $17 billion into over 170 Indian startups during the past six years.
 Japanese companies operating in India are also accelerating their efforts to promote digitization incollaboration with startups in India. There is strong interest in the future utilization of AI and IoT, in particular.
Unicorns produced in India in 2019
Industry
type

Company
Name
Bigbasket

EC/RetailUtilization of digital technology by Japanesecompanies operating in India
Corporate outline

Operates home delivery service websites focused on(%)

fresh foods and other foods in 22 major cities in India.

33.6

commerce websites have the virtual feature for wearing

DELHIVERY

more than 8,000 customers, including major ecommerce companies.

Logistics
RIVIGO

A logistics company serving the entire domestic market.
Leveraging its IT capabilities, it has functions such as speedy
delivery, by converting traffic congestion information into data,delivery tracking, and remote operation of temperature
management.

13.1
12.2
11.3

IoT
Artificial intelligence(AI)IcertisDeploy cloud-based company management
platform utilizing AI.

RPA

Deploy gaming platforms (Dream11) that create virtual

Big Data

sports teams such as for crickets and football to

16.3
15.5

Electronic Commerce(EC)

Deploy cloud-based data protection platform.

compete against.
As a subsidiary of OLA, a major domestic automobile

EV

11.5

Digital Marketing

Druva

DREAM11

19.4

Robot

ability to wear eyeglasses, and they also have actual
stores and an omni-channel sales format.
Develop logistics services throughout India. It hasContent

19.3

Operates eyeglasses retailing. The company's e-

Lenskart.com

Software

Cloud

25.0
8.5
26.0

8.5
15.2

7.1
17.9

At present

Medium-to
long-term

Note:The 8 most frequently used technology items are listed.
Source: "2019 Survey on Business Conditions of Japanese Companies in Asia and Oceania" (JETRO)OLA ELECTRIC dispatch service company, the company is promoting
the spread of electric vehicles and scooters.

Source : Ziinov and published materials

Copyright (C) 2020 JETRO. All rights reserved.

97

Chapter 4 Digital Business and Rule Formation Trends by Country and Region

India: Expectations for the creation of advanced privacy standard platforms
 India, which is promoting digitization, has developed Aadhaar, a national identification number system, andIndia Stack, an integrated digital public infrastructure with personal identification, identity verification, andremittance functions based on the Aadhaar system. Democratic approaches to the use of data can be seen,
encouraging the use of information while maintaining public trust.
 As of June 2020, the Personal Data Protection Bill is under deliberation in Parliament . The domestic storage(data localization) of personal information is being discussed for regulatory relaxation though there is a concernthat this will hinder the economic growth brought about by free business. India aims to build an advanced
privacy distribution and management platform that builds trust with individuals by utilizing India Stack.
Status of personal information sharing by Japanesecompanies operating in India

India Stack's technology layers enabling four functions(%)

Shared with the headquarters in
Japan

48.58

In-house only
(Not shared particularly)

48.11

Consent Layer
Cashless layer

Shared among related companies
within the region (Asia region)

6.84

Shared among related companies inthe domestic market

4.95

Shared among related companies
throughout the world

4.01

Other

Name

Paperless layer
Presenceless layer

FunctionsFree and safe data distribution for democratic
use of data
A single interface for financial institutions using
cashless
Eliminating collection and management of large
volumes of documents
Digital biometric certification enables identity
verification regardless of location

Source : India Stack website

1.18

Note: Valid responses were received from 424 companies. Personal information refers to customer information,
employee salary information, etc.
Source: "2019 Survey on Business Conditions of Japanese Companies in Asia and Oceania" (JETRO)

Copyright (C) 2020 JETRO. All rights reserved.

98

Chapter 4 Digital Business and Rule Formation Trends by Country and Region

Africa: Digital technology contributes to building social infrastructure The leapfrog phenomenon is observed in which
digital technologies are introduced in areas where
the social infrastructure is not developed, andservices spread beyond gradual development. In
the financial sector, the use of FinTech is increasing
as mobile payments using mobile phones are
spreading, especially among low-income people
who have not been able to access bank accounts.

Changes in access to financial services in Kenya
100.0%
80.0%
60.0%
40.0%
20.0%

 Investment in startups by Japanese companies isalso increasing. Cooperation between Japanesecompanies and startups tends to be concentrated
in Kenya, where digitization has progressed fromthe early stages.
Examples of business utilizing digital technology
FieldsFinanceElectric
power

Company Name

Summary

Tala
BranchApollo Agriculture

MicrofinanceMicrofinance
Financing for small farmers

AZA Group

Payment services

M-KOPA SOLAR
BBOXX
Azuri
PowerGen
D.light
Powerhive

Solar Home Systems, etc.
Solar Home Systems, etc.
Solar Home Systems, etc.
Mini-grid, etc.
Solar Home Systems, etc.
Electric power development, etc.

ChefaaMyDAWA
CarePay

Pharmaceutical e-commerce
Pharmaceutical e-commerce
Healthcare Platform

mPharma

Online and mobile services

KOBO360
Lori Systems

Truck hiring
Truck hiring
Delivery service by motorcycles,
truck hiring

Healthcare

Distribution

Sendy
Source : Company websites

11.0
6.1

17.4
25.4

0.0%

41.3

40.4

7.2

7.8

79.4
71.4

61.6
26.8

32.1
14.0
26.7
0
2006

40.4

20.5

2009

40.8

38.4

27.9

29.2
66.7

75.3

82.9

2013

2016

2019

Excluded from any financial services

Accessible to informal financial services

Accessible to formal financial services

Mobile money penetration rate

Bank account penetration rate(including mobile banks)
Source: Kenya National Bureau of Statistics

Examples of collaborations between startups and Japanese companies
using digital technology
Name of Japanesecompany

Company Name

Bases

FieldsDate of announcementof partnership
Nov-2017
Feb- 2020

Sendy Limited

Kenya, etc.

Logistics

Toyota Tsusho
Corporation

Zipline International Inc.

United States,
Rwanda, Ghana, etc.

Drone

Powerhive Inc.

Kenya

Electric power

Jul-2019

Mitsui & Co.

M-KOPA Solar

Kenya, etc.

Electric powerMay-2018

M-KOPA Solar

Kenya, etc.

Electric powerDec-2018

Power Gen(WindGen Power USA, Inc.)

Kenya

Electric powerApr-2020

NEoT Offgrid Africa

Cote d'Ivoire, etc.

Electric power

Sep-2018

BBOXX Limited

UK, Rwanda, Kenya,etc.

Electric power

Aug-2019
Sep-2018

Sumitomo
Corporation
Mitsubishi
Corporation

May-2019

Marubeni
Corporation

WASSHA Co., Ltd.

Tanzania, Japan

Electric Power, etc.

Azuri Technologies Ltd

UK, Kenya, etc.

Electric Power, etc.

Jun-2019

SOMPO Holdings

BitPESA(BTC Africa A.C.)

Kenya, etc.

FinanceNov-2018

Yamaha Motor
Source : Company websites

Max.ngNigeria

Logistics

Jul-2019

WASSHA Co., Ltd.

Tanzania, Japan

Electric Power, etc.

Dec-2019

Copyright (C) 2020 JETRO. All rights reserved.

Chapter 4 Digital Business and Rule Formation Trends by Country and Region

Africa: Advancement in digital economy and progress in legislation99

 In February 2020, the African Union (AU) Summit adopted the Digital Transformation Strategy for Africa (DTS)
2020-2030, and it was agreed that digital technology and innovation would be used to bring about integrationof regional societies and economies, economic growth, and job creation.
 With the development of the ICT industry and the progress of digitization, the development of a legal systemfor properly handling personal information is required. In recent years, new legislative systems have beendeveloped, such as Egypt and Kenya's introduction of data protection legislation in compliance with the EU's
GDPR. Conversely, in some countries, such as Uganda and Tanzania, there are also movements of taxation onsocial media.
Recent trends in promoting digitization and rule formation in Africa

Trends indigitaleconomy

Whole

2018
2019
・ The African Union (AU) holds E・ At the Transform Africa Summit
Commerce Conference.
organized by Smart Africa (regional・ United Nations Economic Commission organization), the heads of major

regionfor Africa (UNECA) encourages Africancountries to disseminate digital IDs.

Privateinitiative

2020
・ The AU adopted the Digital
Transformation Strategy for Africa (DTS)
2020-2030.

・ Rwanda participates in eWTP (Note).

countries declare that they will
strengthen cooperation with the aim ofcreating a unified digital market.
・ Ethiopia participates in eWTP-

・ Uganda begins taxation on social

・ Egypt approves the Data Protection

・ South Africa: Protection of Personal

media.
Law (Egyptian GDPR).
Information Act (POPIA), approved in
Relevant rules in each ・ Tanzania introduced the so-called
・ Kenya started operation of the2013, is scheduled to go into effect incountry
Blogger Tax.
National Integrated Identity
FY2020/2021.
・ Zambia decides to impose taxes on
Management System (NIIMS) andcalls via the Internet.
enforced the Data Protection Act.
Note : eWTP refers to the concept "Electronic World Trade Platform" advocated by China's Alibaba Group in 2016.
Source : Various published materials

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100

JETRO Global Trade and Investment Report 2020: A global economy with increasing
uncertainty and the future of digitalization –OverviewAddress any inquiries concerning this report to:International Economy Division, Overseas Research Department
Japan External Trade Organization (JETRO)
1-12-32 Akasaka, Minato-ku, Tokyo 107-6006 Japan
TEL: +81-(0)3-3582-5177
E-mail: ORI@jetro.go.jp

Note: 1) The original Report is available only in Japanese. 2) Figures may not sum up to the total because some are less than one
unit.
Disclaimer of liability: Responsibility for any decisions made based on or in relation to the information provided in this material
shall rest solely on the reader. Although JETRO strives to provide accurate information, JETRO will not be responsible for any loss
or damages incurred by readers through the use of such information in any manner.
[Reproduction without permission is prohibited.]
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