Development Bank of Japan
Research Report
No. 50

Corporate Capital Spending Behavior andInnovation Efforts:
Findings of Survey on Capital Spending Behavior(Conducted in November 2004)

March 2005

Economic and Industrial Research Department
Development Bank of Japan

This report was originally published in Japanese as Chosa No. 76
in February 2005.

Contents
Summary ........................................................................................................................................

iii

Introduction ...................................................................................................................................

1

I

Outline ....................................................................................................................................

3

II

Survey Results........................................................................................................................
1. Outlook for Capital Spending in Fiscal Years 2004 and 2005 .........................................
2. Decision-Making on Capital Spending ............................................................................
3. Retirement and Vintage of Equipment.............................................................................
4. Relationship between Overseas and Domestic Capital Spending....................................
5. Conditions of Financial Activities ...................................................................................
6. Efforts for Innovation ......................................................................................................
6.1. Changes in Product Life Cycles and Underlying Factors.......................................
6.2. Management of R&D Expenditure.........................................................................
6.3. Utilization of External Resources for New Business Development .......................
6.4. Strategy on Intellectual Property ............................................................................

5
5
10
12
15
21
24
25
26
28
30

Appendix

Industrial Classification Table.....................................................................................

34

Development Bank of Japan Research Report/ No. 50

iCorporate Capital Spending Behavior and Innovation Efforts:
Findings of Survey on Capital Spending Behavior(Conducted in November 2004)
Summary
1.

Aims

Corporate capital spending is gaining momentum.
DBJ’s Survey on Planned Capital Spending for
Fiscal Years 2004 and 2005 indicates that initially planned domestic capital spending for thecurrent fiscal year will be revised upwards. It
also predicts brisk capital spending for the next
fiscal year, particularly in manufacturing. As
compared with similar cases in the past, the current increase in capital spending is marked byaccelerated retirement of equipment and continued reduction in interest-bearing liabilities. Arguments for bringing industrial activities back toJapan have stimulated interest in the relationshipbetween domestic and overseas capital spending.
Attention has also focused on R&D as a sourceof corporate competitiveness as well as on
strategies for using the resulting intellectual
property.
In this context, the DBJ conducted a survey
on corporate capital spending behavior and innovation efforts for the 3,638 firms covered by
the Survey on Planned Capital Spending for Fiscal Years 2004 and 2005 (conducted in November 2004), in order to understand corporations’attitude toward capital spending and to predict
the trend in the coming years.
2.

Outlook for Capital Spending in Fiscal
Years 2004 and 2005

For the current fiscal year, 20% of the firms envisage revising their initial domestic capitalspending plans upward, backed by buoyant demand; fewer firms expect to revise them downward. As regards the next fiscal year, capitalspending will remain similar to this year in bothmanufacturing and non-manufacturing. In the
manufacturing sector, the number of firms thatwill increase spending exceeds those planning

cutbacks. Many of the firms that expect to reduce
spending will do so mainly due to schedulingconsiderations. Thus, capital spending will remain positive in FY2005, led by the manufacturing sector.
3.

Decision-Making on Capital Spending

The majority of firms responded that investment
projects with higher quantitative values are given
priority in decision-making. Although they exceed the firms that also seriously consider quantitative factors, their share fell about 10% on two
years earlier. This implies that the recovery incorporate profits is spurring investments that are
not directly linked to short-term profit, such as
strategic long-term investments and investments
for environmental conservation. 70% of firms
said that they emphasize payback period whenquantitatively assessing individual investments.
Thus, corporate investment is still oriented toward certainty.
4.

Retirement and Vintage of Equipment

20% of the firms have accelerated equipment
retirement (including disposal) since two or three
years ago, exceeding by 10% the number offirms that prefer passive retirement, a trend thatis more pronounced in the manufacturing sector.
The accelerated retirement may be explained by
the increase in unnecessary equipment as a resultof the selection and concentration of businesses
and active replacement of existing equipment on
the back of buoyant profits. The majority offirms consider the current level of vintage as appropriate for major domestic plants. The numberof firms planning to rejuvenate their equipment
is almost the same as that which are allowing for
further aging. Thus, capital spending is unlikely
to experience short-term fluctuation from thevintage perspective.

Development Bank of Japan Research Report/ No. 50

iii

5.

Relationship between Overseas and Domestic Capital Spending

In the medium term, most of the firms plan tomaintain or increase the current level of capitalspending both in Japan and overseas. The relationship between overseas and domestic capitalspending can be identified by focusing on thefirms that responded to questions regarding bothcategories of capital spending. Over 80% of thefirms that plan to increase capital spending overseas are considering increasing or maintaining
domestic spending. Likewise, most of the firmsthat expect to increase domestic capital spending
will maintain or increase spending overseas.
Thus, there is almost no trade-off between domestic and overseas capital spending.
As regards the selection of locations fordomestic new plants, the survey found that
manufacturers emphasize resources (available
sites, labor force, etc.) while non-manufacturers
attach more importance to market (demand).
Easy access and proximity to existing facilities
are valued by manufacturers and non-manufacturers alike.
Asked about the purposes of overseas capital spending, most manufacturers cited production in consuming areas for all regions of theworld. Other major purposes include development of sales and R&D facilities in North America and Europe, as well as development of production facilities in Asia for export to third
countries and Japan. In China, investment will bemainly for re-export to Japan rather than to third
countries, pointing to the importance of China interms of developing local markets andre-exporting to Japan.
6.

Conditions of Financial Activities

About 60% of the respondent firms plan to reduce interest-bearing liabilities in the quarters
ahead. Indeed, almost 70% of the firms are narrowing their investment projects, giving priority
to reducing interest-bearing liabilities for improving their financial position. The trend indicates that firms are still selective, even though
they have reached the stage of investment expansion. Future trends in capital spending will depend on the progress in corporate efforts to re-iv

Development Bank of Japan Research Report/ No.50

duce interest-bearing liabilities, as 40% of thefirms responded that they will increase domestic
capital spending when interest-bearing liabilities
have declined to optimum levels. However, morethan a quarter of the firms are still cautious about
future risks, and intend to keep curtailing suchliabilities even after they have fallen to reasonable levels.
Some 60% of the firms set a specific equity
ratio as a benchmark of sound financial position.
In most of the cases, the ratio is around 50% formanufacturing and 30% for non-manufacturing.
7.

Importance of Innovation

The current growth of capital spending is supported by investment in new products and technologies. Any projection of future capital spending should consider corporate efforts for innovation, so the survey also covers innovation efforts
by manufacturers.
Almost half of the responding firms consider that product life cycles have become
shorter, citing diversified market needs and intensified competition as primary causes. Innovation has therefore become crucial for a firm toachieve sustained growth. Timely marketing of
new products that meet market needs is one major challenge, along with the development oforiginal products that allow differentiation.
8.

Management of R&D Expenditures

Asked about budgetary control on R&D expenditures, only 40% of the firms responded thatthey manage the total R&D expenditure. Moreover, the survey found that the majority of thefirms do not quantitatively evaluate R&D efficiency. Appropriate indicators should be developed to measure and improve the efficiency of
R&D. Almost 80% of the firms that have quantitative indicators to measure efficiency also use
indicators to evaluate the relationship between
profits and R&D expenditure. Other indicators
include the relationships between the number ofpatents, royalty income, the sales of new products and the number of commercialized developments on the one hand, and R&D expenditureson the other.

9.

Utilization of External Resources for New
Business Development

29% of the respondent firms actively utilize external resources in developing new businesses.
Active outsourcing for new business development is expected to increase in the years ahead,as 36% of the firms plan to actively use external
resources in the future. By category of partner,
most firms responded that they now work, andwill continue to do so, with Japanese universities,
thus indicating high expectations for those domestic institutions. Only a few percent of thefirms expect active partnerships with overseas
universities or venture companies both now andin the future. As product life cycles shorten andthe speed of R&D becomes more crucial, Japanese manufacturers are seeking to increase thespeed and quality of product development
through outsourcing.

tion of core technologies through patents, while
over 20% expect to increase licensing fee income.
This trend is commonly observed both in thematerials and processing & assembly sub-sectors.
Elsewhere, manufacturers in the materials
sub-sector give priority to the effective use of
external patents, while processing & assembly
firms give priority to putting their technologies
and know-how into a “black box.” Regarding
non-core technologies, about half of the firms
retain them for future purposes such as protecting property rights; not many firms intend to usethem actively for gaining profits.
Although almost 80% of the firms recognize
the value of their intellectual property, it is often
considered only in terms of the cost of administering and maintaining the patents. As intellectual property becomes increasingly important,the survey results indicate that Japanese firms
need to improve their management of intellectual
property.

10. Strategy on Intellectual Property
by Masao Masuda (email: mamasud@dbj.go.jp)
With regard to intellectual property management,
70% of the respondent firms seek active protec-

Development Bank of Japan Research Report/ No. 50v

Introduction
Corporate capital spending is gaining momentum.
DBJ’s Survey on Planned Capital Spending for
Fiscal Years 2004 and 2005 indicates that initially planned domestic capital spending for thecurrent fiscal year will be revised upwards. It
also predicts brisk capital spending for the next
fiscal year, particularly in manufacturing. As
compared with similar cases in the past, the current increase in capital spending is marked byaccelerated retirement of equipment and continued reduction in interest-bearing liabilities. Arguments for bringing industrial activities back toJapan have stimulated interest in the relationshipbetween domestic and overseas capital spending.
Attention has also focused on R&D as a sourceof corporate competitiveness as well as on
strategies for using the resulting intellectual
property.
In this context, the DBJ conducted a survey
on corporate capital spending behavior and innovation efforts for the 3,638 firms covered by
the Survey on Planned Capital Spending for Fiscal Years 2004 and 2005 (conducted in November 2004), in order to understand corporations’attitude toward capital spending and to predict
the trend in the coming years.

While mainly analyzing the results of the present survey, this report also includes
some supplementary interpretations, taking account of information obtained fromother sources.

Development Bank of Japan Research Report/ No. 50

1I

Outline4.

1.

Coverage

November 12, 2004. Most of the responses to thequestionnaire were obtained in November (thesame as the principal survey).

(1) Outlook for domestic capital spending (forthe current and next fiscal years)(2) Decision-making on capital spending(3) Retirement and vintage of equipment(4) Relationship between overseas and domestic
capital spending(5) Conditions of financial activities(6) Efforts for innovation (for manufacturers
only)• Changes in product life cycles and underlying factors• Management of R&D expenditure• Utilization of external resources for new
business development• Strategy on intellectual property

3.

5.

The 3,638 firms covered by the Survey on
Planned Capital Spending for Fiscal Years 2004
and 20051 (hereinafter referred to as the “principal survey,” which targets all private firms inJapan’s major industries capitalized at ¥1 billion
or more, excluding agriculture, forestry, finance,
insurance and medicine).
2.

Date of Survey

Survey Method

The survey was conducted by questionnaire (sentto individual firms, followed up by telephoneinterviews when necessary).

1

See DBJ Research Report No.49 (available
http://www.dbj.go.jp/english/public/research.html).

Survey Items

Responses

Responses were obtained as follows.
No. ofNo. of

Firms

Valid Re-of Valid

Targetedsponses

Responses

Total

3,638

1,866

51.3%

Manufacturing

1,706

774

45.4%

Non-manufacturing

1,932

1,092

56.5%

Proportionat

Development Bank of Japan Research Report/ No. 50

3<Reference> Data on Firms Responding to the Present Survey
A. Trends in Capital Spending of Respondent Firms
Capital Spending (¥ billion)

Change (%)

No. of Firms

Total
ManufacturingNon-manufacturing

1,763
725
1,038

FY2003
Actual13,219.4
4,211.6
9,007.8

FY2004
Planned
14,354.3
5,078.1
9,276.2

FY2004
Planned
8.6
20.6
3.0

Change in Nov.
2004 (principal)
Survey (%)
FY2004
Planned
8.4
21.7
2.2

Note: Of the 1,866 firms (774 manufacturers and 1,092 non-manufacturers) that gave valid responses to the present survey,
this table excludes the 10 firms (three manufacturers and seven non-manufacturers) that did not give valid responses tothe planned capital spending survey conducted in November 2004, as well as the 93 firms (46 manufacturers and 47
non-manufacturers) that did not give valid responses to the planned capital spending survey conducted in June 2004.

B. Coverage of the Present Survey as % of Firms Targeted by the Principal Survey

Total
ManufacturingNon-manufacturing

No. of
Firms
67.9
65.0
70.1

Amount of Capital
Spending
70.5
68.6
71.6

Notes: 1. Of the 1,866 firms (774 manufacturers and 1,092 non-manufacturers) that gave valid responses to the present survey, this table excludes the 10 firms (three manufacturers and seven non-manufacturers) that did not give valid
responses to the planned capital spending survey conducted in November 2004.
2. The amount of capital spending represents planned figures for FY2004 based on the principal business classification.

C. Trends in R&D Investment of Respondent Firms
R&D Investment (¥ billion)

Change (%)

No. of Firms

Total

580

FY2003
Actual
3,242.9

FY2004
Planned
3,420.9

FY2004
Planned
5.5

Change in Nov.
2004 (principal)
Survey (%)
FY2004
Planned5.1

Note: Of the 774 manufacturers that gave valid responses to the present survey, this table excludes the 102 firms that did notgive valid responses to the R&D expenditure survey conducted in November 2004, as well as the 92 firms that did notgive valid responses to the R&D expenditure survey conducted in June 2004.

D. Coverage of the Present Survey as % of Firms Targeted by the Principal Survey
No. of Firms
Total

79.6

Amount of R&D
Investment
69.4

Notes: 1. Of the 774 manufacturers that gave valid responses to the present survey, this table excludes the 102 firms that did
not give valid responses to the R&D expenditure survey conducted in November 2004.
2. The amount of R&D expenditures represents the planned figure for FY2004 based on the principal business classification.

4

Development Bank of Japan Research Report/ No. 50IISurvey Results

1. Outlook for Capital Spending in Fiscal Years 2004 and 2005
(Questions asked)
I. Outlook for capital spending
Q1 As compared with the initial plan, your (domestic) capital spending for the current fiscal
year will be:
1. revised upwards.
2. revised downwards.
3. almost unchanged.
Q2 As compared with the plan for the current year, your (domestic) capital spending for the next
fiscal year will:
1. increase.
2. decrease.
3. stay almost unchanged.
Q3 [For those who chose 1 or 2 in Q1or Q2] What is the reason(s) for such change (choose one
or two items for each question)?
1. Profit outlook (upward/downward revision)
2. Demand trend (increase/decrease more than expected, etc.)
3. Supply trend (perceived shortage/surplus in equipment)
4. Equipment price trend (decline/rise in unit prices for capital spending)
5. Efforts for cutbacks on capital spending cost (change in construction method and otherself-help efforts excluding the unit price factor)
6. Financial impact (increase in investment fund through improved rating/avoidance of adverse
effect on rating, etc.)
7. Change in management method to ensure profitability (raising hurdle rate, changing valuation method, etc.)
8. Others (please specify) _______________________________________________________(1) Outlook for capital spending in FY2004
Asked about any revision to the initial plan of(domestic) capital spending for the current fiscal
year (Figure 1-1), more firms responded that they
had revised the plan upwards (21%) rather than
downwards (17%). 60% of the firms indicatedlittle change from the initial plan. By industrial
Total
1,843 firms = 100%
Manufacturing
768 firms = 100%
Non-manufacturing
1,075 firms = 100%
0%

21%

10%

61%

58%

16%

18%

18%
20%

30%

(1) Revised upwards

Reason(s) for Q2

sector, a higher percentage of firms have madean upward revision in the manufacturing sector,
thus confirming that the current recovery incapital spending is led by manufacturers. By industry, the share of firms reporting an upwardrevision is largest in non-ferrous metals (43%),
followed by transport equipment (41%) and ce-

17%

26%

Reason(s) for Q1

64%
40%

50%

60%

(2) Revised downwards

70%

80%

90%

100%

(3) Almost unchanged

Figure 1-1. As Compared with the Initial Plan, (domestic) Capital Spending for
the Current Fiscal Year will be:

Development Bank of Japan Research Report/ No. 50

5ment, ceramics & glass (36%). In contrast, thelargest share of firms reporting a downward revision belongs to pulp & paper (32%), followed bypetroleum (26%) and telecommunications & information (24%).
As factors behind upward revision (Figure1-2), the majority of firms (54%) reported “demand trend (demand increasing more than expected),” followed by “supply trend (perceived
shortage in equipment)” with 23%, “others(scheduling factors, etc.)”2 with 23% and “profit
outlook (upward revision to expected profit)”with 19%. On the other hand, “efforts for cutbacks on capital spending cost” (37%) is theprimary factor behind downward revision (Figure 1-3), followed by “profit outlook (downward
revision to expected profit)” with 27%, “demand
trend (demand decreasing more than expected)”
with 25% and “others (scheduling factors, etc.)”with 21%. The finding reveals that profit anddemand trends are the key in projecting future
developments of capital spending, as they represent major factors in both upward and downward

revisions. “Efforts for cutbacks on capital spending cost,” one of the factors behind downward
revision, may be considered positively, for it will
result in the same performance (as in previous
projects) with smaller investments. Schedulingconsiderations are not negative factors, either.
Thus, there is no need to be pessimistic about
any downward revisions as long as they result
from such factors.
By sector, “demand trend” is the most significant factor behind upward revision in bothmanufacturing and non-manufacturing. However,this is followed by “supply trend” in the manufacturing sector and by “others (scheduling factors, etc.)” in the non-manufacturing sector. As
regards downward revision, “efforts for cutbacks
on capital spending cost” represents the primaryfactor in both sectors, followed by “demand
trend” in manufacturing and by “profit outlook(downward revision to expected profit)” in
non-manufacturing.
Looking at significant factors behind upward revision in major industries, “demand

19%
4%

Total

54%

23%

23%
19%
3%

Manufacturing

67%

28%

15%
20%
4%

Non-manufacturing

42%

17%

31%
0%

10%

20%

30%

(1) Profit outlook (upward revision)(3) Supply trend (perceived shortage in equipment)(5) Efforts for cutbacks on capital spending cost(7) Change in management method to ensure profitability

40%

50%

60%

70%

80%

(2) Demand trend (demand increasing more than expected)(4) Equipment price trend(6) Financial impact(8) Others

Figure 1-2. Factors Behind Upward Revision
Note:

Since multiple choices are allowed, figures for individual items do not add up to the total.

2

The questionnaire requests the firms choosing “others” tospecify the reason. Most of the replies refer to schedulingfactors such as the timing of major projects and periodic
repairs (inspections).

6

Development Bank of Japan Research Report/ No. 50

27%
25%
9%
6%

Total

37%
7%
21%
26%
31%
11%
4%

Manufacturing

37%
8%
21%
28%
21%
8%
8%

Non-manufacturing

37%
6%
21%

0%

5%

10%

15%

20%

25%

30%

35%

40%

(1) Profit outlook (downward revision)(2) Demand trend (demand decreasing more than expected)(3) Supply trend (perceived surplus in equipment)(4) Equipment price trend(5) Efforts for cutbacks on capital spending cost(6) Financial impact(7) Change in management method to ensure profitability(8) Others

Figure 1-3. Factors Behind Downward Revision
Note:

Total
1,775 firms = 100%
Manufacturing
734 firms = 100%
Non-manufacturing
1,041 firms = 100%0%Since multiple choices are allowed, figures for individual items do not add up to the total.

23%

26%

20%
10%

28%

49%

24%

50%

32%
20%

(1) Increase

30%

48%

40%

50%

(2) Decrease

60%

70%

80%

90%

100%

(3) Stay almost unchanged

Figure 1-4. As Compared with the Plan for the Current Year, Your (Domestic)
Capital Spending for the Next Fiscal Year will:trend” has a substantial share in electric machinery (89%), transport equipment (84%), iron &steel (82%), cement, ceramics & glass (75%) andgeneral machinery (75%). A high percentage offirms cites “supply trend” in iron & steel (64%)
and cement, ceramics & glass (42%), while“profit outlook” has a large share in construction(35%).
(2) Outlook for capital spending in FY2005
Half of the firms in both the manufacturing andnon-manufacturing sectors responded that their(domestic) capital spending will “stay almost
unchanged” in the next fiscal year (Figure 1-4).
In manufacturing, more firms expect an increase” (26%) rather than a decrease (24%),

while “decrease” (32%) exceeds “increase”(20%) in non-manufacturing. Although it is difficult to interpret the “almost unchanged” response, this might be considered rather positively
at least for the manufacturing sector, as it will
follow two consecutive years of double-digit increase3. Thus, capital spending will remain positive in the manufacturing sector, but no significant spillover effect is expected in the
non-manufacturing sector. The percentage of the3

According to the Survey on Planned Capital Spending for
Fiscal Years 2004 and 2005 (conducted in November 2004),
capital spending (planned) for FY2004 in the manufacturingsector will increase 22.3% over the actual figure for
FY2003, the second consecutive year of double-digit
growth (following a 11.3% increase in FY2003 on a year
earlier).

Development Bank of Japan Research Report/ No. 50

7

as they do not directly indicate a deterioration of
investor sentiment in the next fiscal year. Hereagain, capital spending will largely depend on
demand trend and profit outlook, as they arecited as key factors behind both expected increase and decrease.
Looking at factors behind expected increasein major industries, “demand trend” has a substantial share in electric machinery (74%),transport equipment (74%), general machinery(62%) and cement, ceramics & glass (60%). A
high percentage of firms cite “others (schedulingfactors, etc.)” in electric power & gas (75%) andtelecommunications & information (55%), while“supply trend” has a large share in transport
equipment (47%) and cement, ceramics & glass(40%). As regards factors behind expected decrease, “others (scheduling factors, etc.),” “demand trend” and “efforts for cutbacks on capitalspending cost” have a significant share in food &beverages (64%), general machinery (40%) and“other” manufacturing industries (38%), respectively.

firms expecting an increase after subtracting thepercentage of those expecting a decrease ishighest in industries such as leasing (+25 percentage points), general machinery (+14), petroleum (+10), iron & steel (+8), cement, ceramics& glass (+6), precision machinery (+4), chemicals (+4) and transport equipment (+3).
The firms that chose “increase” or “decrease” were also asked about relevant factors.
As factors behind expected increase (Figure 1-5),
the largest number of manufacturers cited “demand trend,” while “others (scheduling factors,etc.)” has the biggest share in the non-manufacturing sector. In both sectors, however, othermajor factors include “supply trend” and “profit
outlook.” As for factors behind expected decrease (Figure 1-6), “others (scheduling factors,etc.)” has the largest share in both the manufacturing and non-manufacturing sectors, followedby “demand trend” and “efforts for cutbacks oncapital spending cost.” Among the top four factors behind expected decrease, there is still noneed for pessimism about scheduling factors andefforts for cutbacks on capital spending cost,

21%
43%

21%
Total

4%
35%
25%
54%

26%
Manufacturing

4%
26%
16%
32%

18%
Non-manufacturing

3%
45%
0%

10%

20%

30%

40%

50%

(1) Profit outlook (upward revision)(2) Demand trend (demand increasing more than expected)(3) Supply trend (perceived shortage in equipment)(4) Equipment price trend(5) Efforts for cutbacks on capital spending cost(6) Financial impact(7) Change in management method to ensure profitability(8) Others

60%

Figure 1-5. Factors Behind Expected Increase
Note:

8

Since multiple choices are allowed, figures for individual items do not add up to the total.

Development Bank of Japan Research Report/ No. 50

15%
22%

12%
Total

19%

8%

45%
13%

23%

14%
Manufacturing

18%

4%

46%
16%
21%

11%
Non-manufacturing

20%

9%

44%
0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

(1) Profit outlook (downward revision)(2) Demand trend (demand decreasing more than expected)(3) Supply trend (perceived surplus in equipment)(4) Equipment price trend(5) Efforts for cutbacks on capital spending cost(6) Financial impact(7) Change in management method to ensure profitability(8) Others

50%

Figure 1-6. Factors Behind Expected Decrease
Note:

Since multiple choices are allowed, figures for individual items do not add up to the total.

Development Bank of Japan Research Report/ No. 50

92. Decision-Making on Capital Spending(Questions asked)
II. Decision-making on capital spending
Q4 In making decisions on individual investment projects, you
1. give priority to those with higher quantitative values (rate of return, payback period, etc.) inprinciple.
2. also seriously consider unquantifiable factors (qualitative values).
Q5 As quantitative indicators, you give the highest priority to (choose one or two items):
1. payback period
2. internal rate of return (IRR)
3. net present value (NPV)
4. return on investment (ROI)
5. Others (please specify) _______________________________________________________(1) Rationale for decision-making on individual
investment projects
Asked about the extent to which quantitativeevaluation forms the basis of decision-making on
investment projects (Figure 2-1), the majority offirms (56%) responded that investment projects
with higher quantitative values are given priority.
Although they exceed the firms that also seriously consider quantitative factors, their sharefell about 10% in both sectors on two years earlier, when a similar survey was conducted. Thisimplies that the recovery in corporate profits isspurring investments that are not directly linked
to short-term profit, such as strategic long-term
investments (in new businesses, new products
and R&D) and investments for environmental
conservation.

[Current survey]
Total

Manufacturin

Non-manufacturing

1,747 firms = 100%

723 firms = 100%

1,024 firms = 100%

39%

44%
56%

48%

[August 2002 survey]
1,928 firms = 100%

34%

52%

61%

814 firms = 100%

1,114 firms = 100%

30%

38%

66%

62%
70%

(1) Give priority to those with higher quantitative values (rate of return, payback period, etc.) in principle(2) Also seriously consider unquantifiable factors (qualitative values)

Figure 2-1. In Making Decisions on Individual Investment Projects (On-Going Survey)

10

Development Bank of Japan Research Report/ No. 50

By sector, both the current and previous
surveys indicate that the percentage of firms
giving priority to quantitative evaluation is almost 10% higher in manufacturing than in
non-manufacturing, mainly because qualitativeevaluation is seriously considered by many
non-manufacturers in transportation, electric
power & gas and telecommunications & information industries. This may be because firms inthose industries often invest, out of public interest, in projects that are not necessarily profitable.
By industry, firms that give priority toquantitative evaluation represent the largest majority in petroleum (86%), followed by iron &steel (84%), leasing (78%), “other” manufacturing (78%), pulp & paper (68%), textiles (68%),transport equipment (67%) and electric machinery (66%).
(2) Preferred quantitative indicators
Asked about the most important indicator in
making quantitative assessment of investments(Figure 2-2), 71% of firms cited “payback period,” which is almost the same percentage as
recorded in the previous survey two years ago(70%). Thus, corporate investment is still oriented toward certainty. The share of firms citing“return on investment (ROI)” declined from theprevious survey to about one third (33%). Although “internal rate of return (IRR)” and “net[August 2002 survey][Present survey]

24%
T otal
1,647 firms =100%

T otal
1,880 firms=100 ％

33%
5%

25%

70%

23%

71%

12%

10%
41%
3%

23%

75%
Manufacturing
814 firms=100 ％

13%

Manufacturing
689 firms =100%present value (NPV)” increased their shares fromthe previous survey, they only stand at 24% and
12% respectively. This finding is opposite to that
expected from finance theory, according towhich the share of NPV should be largest. Several factors may explain this:• As the business environment becomes increasingly uncertain, firms are first and foremost required to make sure that invested capital will be recovered in the short term.
• It is impractical to assess investment profitability with NPV due to technical difficulties
involved in making estimates, etc.
• Payback period, a commonly used indicator, ismuch easier to understand than NPV.
The result shows no significant difference
betweenthe
manufacturing
andnon-manufacturing sectors. By industry, theleasing industry has the lowest percentage offirms citing payback period (55%), followed byconstruction (62%) and non-ferrous metals(64%). The share of ROI is largest in pulp & paper (57%), followed by wholesale & retail (47%),
non-ferrous metals (43%), electric machinery(43%) and transport equipment (41%). The
shares of IRR and NPV are small in every industry, with 30+% shares only observed in petroleum (IRR: 41%, NPV: 36%), non-ferrous metals(IRR: 36%), leasing (IRR: 36%), services (IRR:34%) and precision machinery (IRR: 30%).

37%
2%

73%

11%
42%
2%
68%

68%
23%

Nonmanufacturing
958 firms =100%

Nonmanufacturing
1,066 firms=100 ％

12%
30%
6%
0%

20%

40%

60%

80%

0%

(1) Payback period(2) Internal rate of return (IRR)(4) Return on investment (ROI)(5) Others

24%
10%
40%
3%
20%

40%

60%

80%

(3) Net present value (NPV)

Figure 2-2. Preferred Quantitative Indicators
Note:

Since multiple choices are allowed, figures for individual items do not add up to the total.

Development Bank of Japan Research Report/ No. 50

113. Retirement and Vintage of Equipment(Questions asked)
III. Retirement and vintage of equipment
Q6 In the last two or three years, your attitude toward retirement (including disposal) of equipment has:
1. become more active.
2. changed little.
3. become less active.
Q7 [For those who chose 1 in Q6] What is (are) the reason(s) for active retirement (including
disposal) of equipment (choose one or two items)?
1. Active renewal of existing equipment has necessitated the disposal of older (aging) assets.
2. Improved profit has allowed extraordinary loss to be accounted for.
3. Surplus in equipment has been perceived in the business due to reduced demand.
4. In the process of business selection and concentration, withdrawal from a business has madesome equipment unnecessary.
5. Perceived redundancy emerged in equipment as a result of merger, etc.
6. Equipment has been retired as part of asset liquidation (sale to a SPC, leaseback, etc.).
7. Trading market has developed for secondhand assets.
8. Others (please specify)__________________________________________________
Q8 In the last 12 months, the vintage of equipment in your major domestic plants has:
1. aged.
2. changed little.
3. rejuvenated.
Q9 In light of investment-related costs, demerits of narrowing the focus of investment, etc., thevintage of equipment in major domestic plants:
1. needs to be rejuvenated.
2. should stay at the current level.
3. may be allowed to age a little further.

(1) Attitude towards equipment retirement
Statistical data in the Gross Capital Stock of Private Enterprises indicates an acceleration ofequipment retirement (including disposal) in recent years. The retirement rate was particularlyhigh in FY2003, with the value of retirement exceeding the amount of new investment in the
manufacturing sector. In this context, the present
survey asked some questions about the change incorporate attitude towards equipment retirementin the last two or three years (Figure 3-1). Almost 20% of the firms (19% to be exact) havebecome more active in equipment retirement,
exceeding by almost 10% the number of firmsthat have become less active. This trend is more
pronounced in the manufacturing sector. By industry, the share of “more active” firms is significant in iron & steel (41%), non-ferrous metals(30%), cement, ceramics & glass (27%) and textiles (25%).

12

Development Bank of Japan Research Report/ No. 50

The “more active” firms were also asked
about the factors behind such accelerated equipment retirement (Figure 3-2). The principal factor turned out to be “active renewal of existing
equipment,” which is cited by almost half of thefirms, followed by “business selection and concentration” (32%) and “improved profit” (19%),
which has allowed recognition of losses resulting
from retirement (disposal). “Perceived redundancy in equipment resulting from merger, etc.”
is also a significant factor in manufacturing,whereasaconsiderable
numberofnon-manufacturers have accelerated equipment
retirement “as part of asset liquidation.” Thesefindings imply that firms are disposing of unnecessary assets in the process of reconstructing
their business portfolio, while consolidating thebasis of their competitiveness by accelerating
equipment renewal in core businesses. By industry, a substantial number of firms cited “active

19%

Total
1,758 firms =100％

71%

22%

Manufacturing
732 firms =100％

0%

10%

5%

73%

17%

Non-manufacturing
1,026 firms =100％

10%

69%

20%

30%

40%

(1) Become more active

14%

50%

60%

(2) Changed little

70%

80%

90%

100%

(3) Become less active

Figure 3-1. In the Last Two or Three Years, Attitude Towards Equipment Retirement(including disposal) has:

60%
56%

(1) Active renewal of existing equipment has
necessitated the disposal of older (aging) assets.

53%
51%
50%

(2) Improved profit has allowed recognition of
extraordinary losses.

40%(3) Surplus in equipment has been perceived in thebusiness due to reduced demand.

36%
32%
29%

30%

20%

(4) In the process of business selection andconcentration, withdrawal from a business has madesome equipment unnecessary.
(5) Redundancy in equipment has been perceived asa result of merger, etc.

19%
15%
11%

10%

(6) Equipment has been retired as part of asset
liquidation (sale to a SPC, leaseback, etc.).

11%

7%

7%
4%

(7) Others

0%
Total
331 firms =100％

Manufacturing
160 firms =100％

Non-manufacturing
171 firms =100％

Figure 3-2. Reasons for Accelerated Retirement of Equipment
Notes: 1. Since multiple choices are allowed, figures for individual items do not add up to the total.
2. “(7) Others” represents the total of the responses “trading market has developed for secondhand assets” and“others.”

renewal of existing equipment” in food and beverages (79%), transport equipment (75%) andgeneral machinery (75%). “Improved profit” hasa large share in iron & steel (50%), while “selection and concentration” was most often cited iniron & steel (57%), chemicals (56%), wholesale& retail (44%), construction (43%) and electricmachinery (38%). “Asset liquidation” is a popular choice in real estate (28%), construction(22%) and telecommunications & information(19%).
(2) Vintage of equipment
The vintage (average age) of manufacturing
equipment based on the FIFO method increased

constantly from 1991, but turned downwards in
2003.4 In this context, the survey asked about
the change in the vintage of equipment in majordomestic plants in the last 12 months (Figure
4

In most cases, equipment age as of 1970 in the National
Wealth Survey of the former Economic Planning Agency is
combined with relevant data in the Gross Capital Stock of
Private Enterprises published by the Cabinet Office to calculate the vintage of equipment (i.e. the number of years
elapsed since 1970). However, the result of the estimation
depends on the method employed, as the benchmark method
assumes average retirement for both old and new equipment,
while the FIFO method assumes that the oldest equipment isretired first (see DBJ, “Monthly Topics,” No. 078 (Japaneseonly) for the vintage of manufacturing equipment based on
the benchmark method).

Development Bank of Japan Research Report/ No. 50

13

firms planning to rejuvenate their equipment(21%) is almost the same as that which are allowing for further aging (21%). Thus, capitalspending is unlikely to experience short-term
fluctuation from the vintage perspective. By industry, firms planning to rejuvenate equipment
have a considerable share in iron & steel (34%),“other” manufacturing (29%), textiles (29%),
general machinery (28%), real estate (28%), food& beverages (27%) and transport equipment(26%), while those allowing for further aging
account for a substantial percentage in petroleum(52%), construction (35%), electric power & gas(34%) and cement, ceramics & glass (31%).

3-3). More firms reported “aging” (28%) rather
than “rejuvenation” (11%). No marked difference is observed between the manufacturing andnon-manufacturing sectors. By industry, theshare of “aging” is largest in petroleum (57%),
cement, ceramics & glass (45%), textiles (39%)
and iron & steel (36%). A considerable percentage of firms reported “rejuvenation” in transport
equipment (21%), leasing (20%) and electricmachinery (16%).
As regards the optimal level of vintage(Figure 3-4), the majority of firms (58%) consider the current level of vintage as appropriate
for major domestic plants. The percentage of

Total
1,776 firms =100％

28%

61%

11%

Manufacturing
736 firms =100％

29%

60%

11%

Non-manufacturing
1,040 firms =100％

28%

62%

10%

0%

10%

20%

30%

(1) Aged

40%

50%

60%

(2) Changed little

70%

80%

90%

100%

(3) RejuvenatedFigure 3-3. Equipment Vintage in Major Domestic Plants in the Last 12 Months:

Total
1,754 firms =100％

21%

Manufacturing
728 firms =100％24%

Non-manufacturing
1,026 firms =100％
0%

58%

57%

19%

10%

21%

19%

22%

58%

20%

(1) Needs to be rejuvenated

30%

40%

50%

(2) Should stay at the current level

60%

70%

80%

90%

100%

(3) May be allowed to age a little further

Figure 3-4. In light of Investment-Related Costs, Demerits of Narrowing the Focus of Investment, etc., the Vintage of Equipment in Major Domestic Plants:

14

Development Bank of Japan Research Report/ No. 50

4. Relationship between Overseas and Domestic Capital Spending(Questions asked)
IV. Relationship between overseas and domestic capital spending
Overseas
Q10 As compared with the current level, overseas and domestic spending
Domestic
in the medium term (in three years or so) will:
1. increase.
2. stay on a par.
3. decrease.
Q11 What are the purposes of overseas capital spending? (With regard to major products, pleasechoose one or two items for each region.)
North America
1. To develop facilities for production in consuming areas
Europe2. To develop facilities for export to third countries (outside the region)
China
3. To develop facilities for re-export to Japan
Asia excluding China
4. To develop R&D facilities
Other regions
5. To develop sales facilities
6. Others (please specify)__________________________________________________
Q12 As regards domestic capital spending (on new plants), which factors receive priority inselecting locations? (Please choose up to three items.)
1. Easy access to transportation network
2. Local resources (e.g. available sites, labor force)
3. Proximity to existing facilities
4. Demand for goods and services in the area
5. Official support from central and local governments
6. Partnership with a local academic institution
7. Availability of support services
8. Quality residential environment
9. Others (please specify)__________________________________________________(1) Medium-term domestic and overseas capitalspending: possible “re-industrialization”
Although some argue for “re-industrialization”(bringing industrial activities back to Japan) in
the manufacturing sector, the long-term trend indomestic and overseas capital spending of
manufacturers has rarely shown a substitutive
movement, i.e. one increasing to the detriment of
the other. Thus, the manufacturing sector as a
whole
has
not
reallyexperienced“de-industrialization” or “re-industrialization,”even though there may have been some specificcases. Indeed, an increase in overseas production
has never resulted in a matching decrease in domestic production. Rather, a complementary relationship has been observed between domestic
and overseas production, with the increase in thelatter stimulating exports of capital goods, partsand other manufactured products.5
In order to examine the sustainability of thispattern in the years ahead, the survey asked
whether capital spending will increase or decrease in the medium term (in three years or so)(Figure 4-1). 85% of the firms intend to maintainor increase domestic capital spending, with more
firms envisaging an increase (22%) rather than adecrease (15%). As regards overseas capitalspending, 94% of the firms will increase investment. Particularly in the manufacturing sector,
more firms envisage an increase rather than adecrease in both Japan and overseas, as half ofthe manufacturers (50%) responded that they will
increase overseas capital spending. By manufacturing industry, the number of firms expecting an
increase exceeds that envisaging a decrease by
more than 10 percentage points in iron & steel
5

See DBJ, “Monthly Topics,” No. 079 (Japanese only).

Development Bank of Japan Research Report/ No. 50

15[Domestic]

Total
1,542 firms =100％

22%

62%

15%

Manufacturing680firms =100％

22%

65%

13%

Non-manufacturing
862 firms =100％

22%

0%

10%

60%

20%

30%

40%

(1) Increase

17%

50%

60%

70%

(2) Stay on a par

80%

90%

100%

(3) Decrease[Overseas]

41%

Total

6%

52%

635 firms =100％

50%

Manufacturing
414 firms =100％25%

Non-manufacturing

4%

46%

64%

11%

221 firms =100％
0%

10%

20%

30%

40%

(1) Increase50%(2) Stay on a par

60%

70%

80%

90%

100%

(3) Decrease

Figure 4-1. As Compared with the Current Level, Medium-term Capital Spending will:(35% envisaging an increase and 3% envisaging
a decrease), food & beverages (26% and 6% respectively), pulp & paper (21% and 5%), electricmachinery (22% and 8%), transport equipment(28% and 16%) and general machinery (21% and
10%).
The relationship between overseas and domestic capital spending can be identified by focusing on the 405 manufacturers that responded
to questions regarding both categories of capitalspending (Figure 4-2). Over 80% of the firmsthat plan to increase capital spending overseas
are considering increasing or maintaining domestic spending. Likewise, most of the firms that
expect to increase domestic capital spending will
maintain or increase spending overseas. Thus,
there is almost no trade-off between domestic
16

Development Bank of Japan Research Report/ No. 50

and overseas capital spending. The result shows
little difference between the materials and processing & assembly sub-sectors6. These findings
imply that the traditional complementary relationship between domestic and overseas capitalspending is likely to hold steady in the mediumterm.
It is nonetheless true that an increasing
number of domestic plants have been constructed
or expanded recently. The DBJ survey conducted
6

The two sub-sectors are defined as follows.
Materials: textiles, pulp & paper, chemicals, cement,
ceramics & glass, iron & steel, non-ferrous metals.
•
Processing & assembly: food & beverages, generalmachinery, electric machinery, precision machinery,transport equipment, other manufacturing (printing& publishing, rubber, metal products, others).
•

Manufacturing

Domestic(1) Increase(2) Par(3) Decrease(1) Increase57 （14％）116 （29％）

29 （7％）(2) Par29 （7％）

139 （34％）

19 （5％）(3) Decrease

2 （0％）

12 （3％）

2 （0％）

Overseas405 common firms

Domestic spending of“overseas-increase”
firms (50%)

29 (7%)

173 (43%)

Increase or parOverseas spending of“domestic-increase”
firms (21%)

2 (0%)

86 (21%)

0

50

100

Decrease

150

200

250

Figure 4-2. Relationship between Domestic and Overseas Capital Spending(Manufacturing)
70%
59%

60%
50%

48%
40%

40%

53%

48%

47%
45%

41%
37%

31%

27%

30%

24%
20%

15%

17%
14%
9%

6% 8%

10%

5%

2% 3% 2%

2% 4%

9%

7%

1%

0%
Total

ManufacturingNon-manufacturing

1,271 firms =100％

568 firms =100％

703 firms =100％(1) Easy access to transportation network(2) Local resources (e.g. available sites, labor force)(3) Proximity to existing facilities(4) Demand for goods and services in the area(5) Official support from central and local governments(6) Partnership with a local academic institution(7) Availability of support services(8) Quality residential environment(9) Others

Figure 4-3. As Regards Domestic Capital Spending (on New Plants), which Factors Receive
Priority in Selecting Locations?
Note:

Since multiple choices are allowed, figures for individual items do not add up to 100%.

in June 2004 found that planned domestic capitalspending for FY2004 (initial plan) grew faster(up 16.8%) than overseas spending (up 7.8%),
pointing to the relative briskness of domestic
investment. This result indicates the redefinition(renewed recognition) of domestic production in
the process of building an optimal complementary relationship, rather than active movement
toward re- industrialization.7

7Bearing in mind that a simplified argument might be misleading, active domestic investment as part of “redefinition”
is observed in three types of business, which are oriented
towards (1) the integration of development and production,(2) the pursuit of scale and concentration merits, and (3)location in consuming areas. In practice, the optimal complementary relationship varies according to the industry or
firm. Furthermore, the optimal solution changes with business environment. No simple dichotomy is assumed, such as
high-end products for domestic facilities and lower-end
products for overseas facilities.

(2) Factors in selecting locations for domestic
new plants
Asked about major factors considered in selecting locations for domestic new plants (Figure4-3), most of the manufacturers (59%) cited “local resources (available sites, labor force, etc.),
but the majority of non-manufacturers (53%)
cited “demand for goods and services in thearea.” Thus, the survey found that manufacturers
emphasize resources (available sites, labor force,etc.) while non-manufacturers attach more importance to market (demand). “Easy access” and“proximity to existing facilities” are valued bymanufacturers and non-manufacturers alike. A
considerable number of firms also consider theavailability of official support from “central andlocal governments.”

Development Bank of Japan Research Report/ No. 50

17(3) Purposes of overseas capital spending
Asked about the purposes of overseas capitalspending (Figure 4-4), most manufacturers cited“production in consuming areas” for all regionsof the world excluding “other” regions. The result indicates that many firms adopt the policy of“producing where demand exists.” Other purposes vary among regions. Indeed, more firms
cited “development of sales and R&D facilities”
for North America and Europe than for Asia,
while “development of production facilities forexport to third countries and Japan” is more important in Asia than in North America andEurope. Particularly in China, more investment isaimed at re-export to Japan rather than export tothird countries, pointing to the importance ofChina in terms of developing local markets andre-exporting to Japan. In contrast, investment
purposes do not vary significantly among regionsin the non-manufacturing sector. Due to theirbusiness characteristics, most non-manufacturers
cited “development of sales facilities” for all regions of the world.
A comparison between the two manufacturing sub-sectors (Figure 4-5) indicates that ahigher percentage of materials firms cited “development of facilities for production in consuming areas” for every region, while export toJapan and third countries is a more importantinvestment purpose in Asia for processing & assembly firms. This result shows that overseas
capital spending in the materials sub-sector is
focused on constructing local production facilities to meet the needs of Japanese affiliates already operating in the region. Although production in consuming areas is also the primary purpose of overseas investment in the processing &assembly sub-sector, many firms envisage export
to third countries and Japan, as required by theirproduct characteristics.

18

Development Bank of Japan Research Report/ No. 50

Focusing on investment of Japanese manufacturers in Asia, more firms cite “export to third
countries” than “re-export” to Japan for Asia excluding China. However, the order is reversed
for China (although the shares are identical in thematerials sub-sector). This may be explained by
the timing of initial investment. Many of the
production facilities in ASEAN countries havereached a sufficient technological level to be able
to supply (final) products to the world market.
By comparison, it seems that most plants in
China have not reached that level (for example,
producing finished goods for local markets while
only implementing part of the production process(using cheap labor) for goods sold in Japan).
By industry, the following results were obtained for the manufacturing sector.
• “R&D” was cited most often in chemicals(19%) and precision machinery (18%) forNorth America, and in transport equipment(20%) for Europe.
• For China, a substantial share of “re-export toJapan” is observed in textiles (62%), food &beverages (53%), electric machinery (45%)
and other manufacturing (42%), while theshare of “export to third countries” is important in electric machinery (40%), cement, ceramics & glass (40%), textiles (38%) and precision machinery (33%).
• For Asia excluding China, “export to third
countries” has a substantial share in cement,
ceramics & glass (55%), electric machinery(50%), precision machinery (50%) and othermanufacturing (50%). “Re-export to Japan” isan important investment purpose in “other”
manufacturing (40%) and electric machinery(34%).

Non-manufacturing

Manufacturing
57%
7%
5%
9%

[NorthAmerica]

27%
3%
8%
3%

[NorthAmerica]

47%

29%
10%
0%

26%

20%

40%

60%

80%

0%

1%

[Europe]

8%

40%

60%

41%

52%

9%
0%

27%
20%

40%

60%

80%

0%

20%

70%
24%
31%

[China]

80%

23%
4%
4%
4%

50%
8%
[Europe]

20%

40%

60%

80%

60%

80%

60%

80%

28%
8%
25%

[China]

2%

5%

46%

17%
3%
0%

18%
20%

40%

60%

80%

0%

20%

54%

20%
9%

39%

[Asia
excluding
China][Asia
excluding
China]

22%
0%
19%

20%
3%
40%

6%
0%

25%

20%

40%

60%

80%

0%

38%
17%
5%
2%

[Otherregions]40%[Otherregions]

20%

40%

20%
6%
8%
0%

37%

28%

15%
0%

20%

50%
40%

60%

80%

0%

20%

40%

60%

80%

(1) Development of facilities for production in consuming areas (within the region)(2) Development of facilities for export to third countries (outside the region)(3) Development of facilities for re-export to Japan(4) Development of R&D facilities(5) Development of sales facilities(6) Others

Figure 4-4. Purposes of Overseas Capital Spending in Manufacturing Sector
Note: Since multiple choices are allowed, figures for individual items do not add up to 100%.

Development Bank of Japan Research Report/ No. 50

19Processing & assembly

Materials
65%

53%

9%
5%
9%

[NorthAmerica]6%6%9%[NorthAmerica]

16%
11%
0%

35%
10%

20%

40%

60%

80%

0%

20%

0%
3%

[Europe]

40%

60%

0%

80%

20%

78%
23%
23%

[China]

0%

60%

80%

60%

80%

3%
18%

3%

3%
20%

40%

60%

80%

71%
34%

0%

20%

40%

48%
[Asia
excluding
China]

15%
0%
17%

41%
25%
1%
19%

7%
0%

40%

67%
25%
34%

15%

[Asia
excluding
China]

80%

9%

20%

0%

60%

46%

26%

[China]

80%

7%
2%
9%

6%
0%

60%

43%

74%
12%
[Europe]

40%

6%
20%

40%

60%

80%

0%

20%

40%

(1) Development of facilities for production in consuming areas (within the region)(2) Development of facilities for export to third countries (outside the region)(3) Development of facilities for re-export to Japan(4) Development of R&D facilities(5) Development of sales facilities(6) Others

Figure 4-5. Purposes of Overseas Capital Spending(Comparison between Materials and Processing & Assembly Sub-Sectors)
Notes: 1. Since multiple choices are allowed, figures for individual items do not add up to 100%.
2. Materials: textiles, pulp & paper, chemicals, cement, ceramics & glass, iron & steel, non-ferrous metals
Processing & assembly: food & beverages, general machinery, electric machinery, precision machinery, transport
equipment, other manufacturing (printing & publishing, rubber, metal products, others)

20

Development Bank of Japan Research Report/ No. 50

5. Conditions of Financial Activities(Questions asked)
V. Conditions of financial activities
Q13 In your company, interest-bearing liabilities:
1. are reduced in the current fiscal year and will continue to be reduced in the years ahead.
2. are expected to decline to optimum levels and reduction will not be necessary in the years
ahead.
3. have already reached optimal levels and do not need to be reduced.
4. Others (please specify)__________________________________________________
Q14 [For those choosing 1 in Q13] What is the reason for the reduction in interest-bearing liabilities?
1. Investment projects are narrowed, with priority given to reducing interest-bearing liabilities
for improving financial position.
2. Although desired investments have been made, high profitability overall has resulted in surplus funds, which are used for repayment of interest-bearing debts.
Q15 When interest-bearing liabilities have declined to optimum levels, how do you plan tospend the money that has been used for reducing liabilities? (Please indicate the current
situation if you have already achieved the objective.)
1. Increase of domestic capital spending
2. Increase of overseas investment (including investments and loans for affiliates and M&A)
3. Domestic M&A
4. Distribution to shareholders including through increased dividends and increased treasurystock
5. Increase of financial assets
6. Further reduction of interest-bearing liabilities
7. Others (please specify)__________________________________________________
Q16 What do you think is the appropriate level of equity ratio to ensure a sound financial position?
1. Under 20%
2. 20-30%
3. 30-40%
4. 40-50%
5. 50-60%
6. Over 60%
7. No particular benchmark defined(1) Reduction in interest-bearing liabilities
Figure 5-1 shows the attitude of firms regarding
the reduction of interest-bearing liabilities. At
present, 64% of the respondent firms are reducing interest-bearing liabilities, many of which(58% of the total) will continue to reduce them inthe years ahead. The percentage of firms planning to continue reduction in the years ahead ishigher in manufacturing than in non-manufac-

turing. By industry, a substantial percentage ofmanufacturers will continue reduction in material
industries such as pulp & paper (86%), iron &steel (82%), cement, ceramics & glass (78%) andnon-ferrous metals (74%). In the non-manufacturing sector, firms envisaging continued reduction have a large share in construction (66%) andelectric power & gas (62%).

Development Bank of Japan Research Report/ No. 50

21

58%

T otal
1,720 firms=100 ％

6%

62%

Manufacturing721firms=100 ％

0%

10%

20%

30%

40%

50%

13%

21%

6%

55%

Manufacturing
999firms=100 ％

23%

6%

10%

24%

60%

70%

15%
80%

90%

100%

(1) Reduction in current and coming fiscal years(2) Optimum levels to be attained in the current fiscal years, no need for reduction in coming fiscal years(3) Optimum levels already attained, no need for reduction(4) Others

Figure 5-1. Attitude Toward Reducing Interest-Bearing Liabilities
T otal982 firms =100 ％67%

Manufacturing

33%

62%

38%

441 firms =100 ％71%

Manufacturing
541 firms =100 ％
0%

10%

20%

30%

29%
40%

50%

60%

70%

80%

90%

100%

(1) Investment projects are narrowed, with priority given to reducing interest-bearing liabilities for improving financial position.
(2) Although desired investments have been made, high profitability overall has resulted in surplus funds, which are used for repaying interest-bearing debts.

Figure 5-2. Reason for Reducing Interest-Bearing Liabilities
37%

T otal
1,572 firms =100 ％

8%

32%

Manufacturing
661 firms =100 ％

15%

41%

Manufacturing
911 firms =100 ％
0%

10%

3%

20%

3%

3%
30%

3%
40%

11%

8%

5%

13%

10%
50%

9%
60%

27%

6%

26%

5%

27%
70%

80%

6%
90%

100%

(1) Increase of domestic capital spending(2) Increase of overseas investment(3) Domestic M&A(4) Distribution to shareholders including through increased dividends and increased treasury stock(5) Increase of financial assets(6) Further reduction of interest-bearing liabilities(7) Others

Figure 5-3. Use of Funds After Interest-Bearing Liabilities Have Declined to Optimum Levels
Asked about the reason for the reduction ininterest-bearing liabilities (Figure 5-2), 67% of
the firms planning to continue reduction responded that they are narrowing their investment
projects, giving priority to reducing interest-bearing liabilities for improving their financial position. The trend indicates that firms arestill selective, even though they have reached thestage of investment expansion. By industry, investment-selective firms that give priority to reducing interest-bearing liabilities account for a
substantial share in manufacturing industries
such as petroleum (82%), general machinery(78%), pulp & paper (74%) and non-ferrous
metals (70%), as well as in non-manufacturing

22

Development Bank of Japan Research Report/ No. 50

industries including construction (89%), electric
power & gas (78%) and transportation (77%). On
the other hand, firms that are reducing interest-bearing liabilities due to financial surplus arelargely concentrated in the manufacturing sector
including precision machinery (54%), food &beverages (50%), transport equipment (49%) andchemicals (45%).
(2) Use of financial resources after completing
reduction of interest-bearing liabilities
Firms were also asked how they will use the financial resources currently used for reducing
interest-bearing liabilities when such liabilities
have declined to optimum levels (Figure 5-3).

The result indicates that future trends in capitalspending will depend on the progress in corporate efforts to reduce interest-bearing liabilities,
as 37% of the firms responded that they will increase domestic capital spending when interest-bearing liabilities have declined to optimum
levels. However, more than a quarter of the firms
are still cautious about future risks, and intend tokeep curtailing such liabilities even after they
have fallen to reasonable levels.
Firms planning to redirect funds to domestic
capital spending have a substantial share in textiles (40%), petroleum (38%), iron & steel (38%)
and non-ferrous metals (38%) for manufacturingindustries, as well as leasing (63%), services(53%), wholesale & retail (45%) and real estate(42%) for non-manufacturing industries. In contrast, many firms will continue to curtail interest-bearing debts in materials industries such as
pulp & paper (52%), cement, ceramics & glass(41%) and iron & steel (34%) for manufacturingindustries, as well as in electric power & gas(36%), transportation (36%), real estate (32%)
and construction (32%) for non-manufacturingindustries. A relatively high percentage of firms
chose distribution to shareholders in petroleum(24%), chemicals (20%), precision machinery(21%) and construction (18%).

T otal12%
T otal
1,009 firms=100 ％ 4%

59%

41%

1,723 firms =100 ％Manufacturing
716 firms =100 ％Nonmanufacturing
1,007 firms=100 ％ 0%

46%

20%

No benchmark defined

60%

80%

21%

Non5% 14%
manufacturing

54%

40%

22%

Manufacturing 10%
467 firms =100 ％
2%

65%

35%

(3) Desired level of equity ratio
In order to see how long the reduction of interest-bearing liabilities will continue (i.e. what the
optimum levels are for interest-bearing liabilities), the survey asked firms about the level of
equity ratio that serves as a benchmark of soundfinancial position (Figure 5-4). The result showsthat some 60% of the firms set a specific equity
capital adequacy ratio as their target. The mostpopular choice turned out to be 50-60% among
manufacturers
and30-40%
among
non-manufacturing firms. Based on this result,the simple average (calculated on the assumptionthat 25% represents the 20-30% range, 35%
represents the 30-40% range and so on) stands at
47% for manufacturing, 44% for non-manufacturing and 45% for all industries (“under 20%”
represented by 15% and “over 60%” represented
by 65%). According to the Financial Statements
Statistics of Corporations by Industry, the average equity ratio (weighted average) stood at 35%
in FY2003 for large firms capitalized at ¥1 billion or more. In general, the benchmark ratio ishigher in R&D-dependent industries (e.g. electricmachinery) and lower in equipment-dependent
industries such as leasing, electric power & gas,
construction and real estate.

100%

Benchmark defined

542 firms =100 ％
0%

23%

21%

27%

22%

24%

20%
Under 20%(4) 40-50%

20%

40%

18%

60%
(2) 20-30%(5) 50-60%

19%

20%

17%

80%

100%

(3) 30-40%(6) Over 60%

Figure 5-4. Equity Ratio Serving as a Benchmark of Sound Financial Position

Development Bank of Japan Research Report/ No. 50

236. Efforts for Innovation
In recent years, innovation has become increasingly important for firms to ensure sustained
growth. Corporate innovation efforts should also
be considered when predicting capital spending
in the years ahead, as the current growth of
spending is supported by investments in new
products and technologies. In this context, thepresent survey also examined innovation efforts
in the manufacturing sector8 . Manufacturers

Stage of intellectual property creation andmanagement

were asked questions about changes in productlife cycles and underlying factors, as well as
challenges facing firms at each stage of intellectual property creation and management, namely
the method of budgetary control on R&D expenditure, indicators used for the measurement of
R&D efficiency, attitude toward utilizing external resources and strategy on intellectual property (policy for utilization of intellectual property,
management method, etc.) (Figure 6-1).

Survey item

Changes in product life cycles and underlying
factors

Input of R&D resources

Method of budgetary control on R&D
expenditure

Indicators of R&D efficiency
Creation of R&D output(intellectual property)

Utilization of external resources and future
policyPolicy on utilization of intellectual property

Utilization/management of R&D output(intellectual property)

Licensing fee income and payment
Recognition of intellectual property value

Figure 6-1. Survey Items by Stage of Intellectual Property Creation and Management

8

For the purpose of the present analysis, the manufacturingsector is further classified into the materials and processing& assembly sub-sectors, which are defined as follows.
• Materials: textiles, pulp & paper, chemicals, cement,
ceramics & glass, iron & steel, non-ferrous metals.
• Processing & assembly: food & beverages, generalmachinery, electric machinery, precision machinery,transport equipment, other manufacturing (printing &publishing, rubber, metal products, others).

24

Development Bank of Japan Research Report/ No. 50

6.1 Changes in Product Life Cycles and Underlying Factors(Questions asked)
VII. Innovation
Q19 In the last few years, life cycles (profit earning periods after marketing) of your products
have:
1. become shorter.
2. become longer.
3. stayed almost unchanged.
Q20 [For those choosing 1 in Q19] What is the reason for the shortening of product life cycles?
1. Diversification of market needs
2. Intensified competition (e.g. increase of competitors due to globalization)
3. Catch-up facilitated by the use of IT
4. Unsatisfactory protection of intellectual property (impact of illegal copies overseas andcounterfeits)
5. Intellectual property protected but based on easily circumvented patents
6. Others (please specify)__________________________________________________

Asked about changes in product life cycles (inthe last few years) (Figure 6-2), almost half ofthe firms consider that product life cycles havebecome shorter, with only 4% responding thatthey have become longer. Most of the firms reporting shortened life cycles cited diversified
market needs and intensified competition as primary causes. The result indicates that timely
marketing of new products that meet diversified
market needs has become a major challenge,
along with the development of original productsthat allow differentiation.

45%

Manufacturing
691 firms =
100%

4%

Materials
262 firms =100%
Processing &assembly
417 firms =
100%

52%

36%

62%
2%

51%

44%
5%

0%

20%
(1) Shorter

40%(2) Longer

60%

80%

(3) Unchanged

100%

By industry, the share of firms reporting
shortened product cycles is highest in food &beverages (67%), followed by electric machinery(65%) and textiles (54%) and lowest in petroleum (8%), followed by iron & steel (19%) andpulp & paper (29%). Thus, the shortening ofproduct life cycles is more significant in industries producing end-use items.

Manufacturing
307 firms =
100%

61%

38%

Materials
94 firms =
100%

63%

37%

60%

38%

Processing &assembly
212 firms =
100%

0%

20%

40%

(1) Diversified market needs

60%

80%

100%

(2) Intensified competition

Figure 6-2. Changes in Product Life Cycles and Underlying Factors

Development Bank of Japan Research Report/ No. 50

25

6.2 Management of R&D Expenditure(Questions asked)
VI. Management of R&D expenditure
Q17 Budgetary control on R&D expenditure is based on:
1. a certain percentage of sales.
2. a certain portion of profits (linked to profit level).
3. no particular indicator (scrutiny of individual projects only).
4. Other indicators (please specify).__________________________________________
Q18 What kind of indicator is used company-wide to measure R&D efficiency?
1. Relationship between profits and R&D expenditure (e.g. operating profit in the recent five
years/R&D expenditure in the preceding five years)
2. Relationship between the number of patents and R&D expenditure (or R&D staff) (e.g. patent applications per person)
3. Relationship between royalty income and R&D expenditure
4. Other quantitative indicators (please specify) ________________________________
5. No quantitative indicator used

(1) Budgetary control on R&D expenditure
Asked about budgetary control on R&D expenditure (Figure 6-3), only 40% of the firms responded that they manage the total R&D expenditure, which indicates that the majority of firms
have not introduced total amount control. Manyof the firms that manage the total R&D expenditure do so in terms of a certain percentage ofsales, with less than 10% of the total using a certain portion of profit. The result shows nomarked difference between the materials andprocessing & assembly sub-sectors. However, acertain portion of profit is used more often as an

Manufacturing
684 firms =100 ％31%

Materials
261 firms =100 ％31%

Processing & assembly

33%

indicator to manage the total R&D expenditure
in processing & assembly industries such as
electric machinery (14%) and precision machinery (12%). The finding that the majority of firms
do not manage the total R&D expenditure may
be because spending on R&D (particularly thedevelopment segment) in individual divisions
tends to fluctuate at their discretion, as an increasing number of firms adopt the divisional
form of organizational structure.

8%

5%

56%

5%

5%

58%

11%

53%

4%

408 firms =100 ％
0%

10%

20%

30%

40%

50%

60%

70%

(1) Based on a certain percentage of sales(2) Based on a certain portion of profits(3) No particular indicator used for total R&D expenditure(4) Others

Figure 6-3. Budgetary Control on R&D Expenditure

26

80%

Development Bank of Japan Research Report/ No. 50

90%

100%

efficiency. As mentioned earlier, however, thecurrent business conditions including diversified
market needs and intensified competition on a
global scale will compel firms to pay far more
attention to R&D efficiency, as they face mounting pressure to show improved performance, including through the disclosure of quarterly financial statements. Firms need to start by developing an appropriate indicator to measure efficiency, if they are to conduct more efficient
R&D activities. Even firms using some kind of
efficiency indicator should examine its relevance,
to say nothing of those firms which do not makequantitative measurements at all. For example,
the relationship between profits and R&D expenditure is influenced by changes in businessenvironment (changing competitive advantage asagainst other companies, superiority or inferiority of the firm’s own business model, etc.) as
well as by R&D efficiency. Failure to distinguishbetween those two factors might lead to an erroneous judgment that R&D efficiency is declining,when actually it is not.

(2) Efficiency of R&D
As regards indicators used for the measurementof R&D efficiency (Figure 6-4), the survey foundthat the majority of firms do not quantitatively
evaluate efficiency, as only 42% of the firms said
that they use some kind of indicator. Almost
80% of the firms that quantitatively evaluate efficiency (30% of the total) use the relationshipbetween profits and R&D expenditure as an indicator. Other indicators include the relationships
between R&D expenditure on the one hand, andthe number of patents, royalty income (bothlisted in the questionnaire), the sales of new
products (as an absolute amount or percentage of
total sales) and the number of commercialized
developments (as a percentage of the number of
newly developed products or research themes) on
the other. By industry, a significant percentage offirms (47%) cited the relationship between profits and R&D expenditure in electric machinery.
Japanese firms may have been able to conduct R&D activities from a sufficiently longterm perspective without worrying about their

Manufacturing
671 firms =100%

30%

Materials
256 firms =100%

29%

6%

5%

58%

5%

58%

1%
7%
1%
32%

Processing & assembly
400 firms =100%

6%

57%

5%
1%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

(1) Relationship between profits and R&D expenditure(2) Relationship between the number of patents and R&D expenditure(3) Relationship between royalty income and R&D expenditure(4) Other quantitative indicators(5) No quantitative indicator used

Figure 6-4. Measure of R&D Efficiency

Development Bank of Japan Research Report/ No. 50

27

6.3 Utilization of External Resources for New Business Development(Question asked)
Q21 In developing new businesses, external resources are/will be (write a number in each box):
1. utilized actively.
2. utilized somewhat.
Japanese universities
Overseas universities
3. utilized little.

Present

FuturePublic research institutions other than universities
Private corporations
Venture companies

Cooperation with external entities is becoming
increasingly important in the process of innovation. As life cycles shorten and the speed of innovation becomes more crucial, external cooperation may represent an effective time-saving
measure. Also, the sources of innovation havebeen shifting from traditional industries and research areas to inter-industrial and interdisciplinary areas, making external cooperation an advantageous policy in terms of complementarityand business interface. In this context, the survey
asked about the utilization of external resources
for new business development (Figure 6-5). At
present, 29% of the respondent firms actively
utilize external resources in developing new
businesses. Active partnership for new businessdevelopment is expected to increase in the years
ahead, as 36% of the firms plan to actively use
external resources in the future. By industry, active partnership is observed in precision machinery (from 52% at present and 60% in the future),chemicals (38% and 49% respectively), electricmachinery (35% and 38%), cement, ceramics &glass (34% and 45%) and iron & steel (30% and40%). (Those industries represent the top fourboth at present and in the future).
By category of partner (Figure 6-6), mostfirms report active cooperation with Japanese
universities both at present (19%) and in the future (28%), followed by cooperation with private
corporations and public research institutions.
Only a few percent of the firms expect active
partnerships with overseas universities or venturecompanies both now (about 3%) and in the future(6-7%). Since each firm cast only one “vote”
regardless of its size, the result does not preciselyreflect the flow of funds from large firms to external entities. Nonetheless, the finding indicateshigh expectations of Japanese firms for partnerships with domestic universities. Although theshare of cooperation with overseas universities isgenerally low, it is still considerable in some industries including precision machinery (16%)
and chemicals (7%). (40% of firms in those two
industries have some kind of partnership with anoverseas university including through “limited”
cooperation.) It seems that cooperation withoverseas universities is an attractive choice inthose areas. The same is true for partnerships
with venture companies, with relatively active
29%

Manufacturing

36%622 firms =100%
32%

Materials

42%

237 firms =100%27%

Processing & assembly
375 firms =100%

33%
0%

5%

10%

15%
Present

20%

25%

30%

35%

40%

45%

FutureFigure 6-5. Share of Firms Reporting Active Utilization of Any External Resources for
New Business Development

28

Development Bank of Japan Research Report/ No. 50

cooperation being envisaged in food & beverages(7% at present and 9% in the future), cement,
ceramics & glass (4% and 9% respectively) and
precision machinery (8% and 16%).
Figure 6-7 shows the change in the share of“active utilization” between the present and thefuture. Although the share increases for every

category of partner, the fastest growth of cooperation is expected with Japanese universities.
Thus, Japanese manufacturers are seeking toincrease the speed and quality of product development through increasingly active partnershipwith other entities, as product life cycles shorten
and the speed of R&D becomes more crucial.

19%

Japanese universities Present
Future49%

Overseas universities Present 3%
7%
Future

16%

81%
22%

Public research institutions Present
Future12%
19%

Private corporations Present
Future15%
21%

Venture companies Present 3%
6%
Future

32%
27%

45%

28%

71%
48%

40%
42%

38%
36%
29%

49%
50%
75%

22%

63%

30%

0%

20%

40%

(1) Utilized actively(2) Utilized somewhat

60%

80%

100%

(3) Utilized little

Figure 6-6. Utilization of External Resources for New Business Development (Planned)

Japanese universities

10% pts

Overseas universities

3% ptsPublic research institutions

8% pts
6% ptsPrivate corporations
Venture companies
0% ptsManufacturing
Materials
Processing & assembly

5% pts
2% pts

4% pts

6% pts

8% pts10% pts

12% pts

Figure 6-7. Change in the Share of Firms Reporting Active Utilization(Between Present and Future)

Development Bank of Japan Research Report/ No. 50

29

6.4 Strategy on Intellectual Property(Questions asked)
VIII. Intellectual property
Q22 Your intellectual property management will be centered on:(core technologies: please choose one or two items)
1. increasing licensing fee income.
2. active protection through patents.
3. putting their technologies and know-how into a “black box.”
4. expansion of cross-licensing.
5. effective use of external patents.
(non-core technologies: please choose one or two items)
6. gaining profits through disposal or licensing.
7. using as assets for cross-licensing.
8. commercialization in alliance with another firm.
9. retaining for future purposes such as protecting property rights.

Core technologies
1-5

Non-core technologies
6-9

Q23 What is the position of your licensing fee account (fee income – payment)?
1. In the black
2. In the red
3. Mostly balanced
4. No data available or no licensing contracts entered into
Q24 To what extent do you recognize the value of your intellectual property (please choose oneof the first four items and up to two of the last four items)?
1. Individual management
2. Business-unit-based management
3. Company-wide management
4. Not identified
5. Identification of patent administration and maintenance cost
1-4
6. Management of aggregate total cost (including R&D expenditure and5-8patent administration and maintenance cost)
7. Management of license fee income
8. Identification of the present value of future cash flow generated by new businesses using thepatents(1) Intellectual property management policy
If the creation of intellectual property throughquality R&D activities is one major pillar of
corporate innovation, another pillar is the maximization of profits through effective use andmanagement of intellectual property thus created.
Asked about the main policies of intellectual
property management (Figure 6-8), the highest
percentage (69%) of the respondent firms cited
active protection of core technologies throughpatents, while over 23% seek to increase licensing fee income. This trend is commonly observed

30

Development Bank of Japan Research Report/ No. 50

both in the materials and processing & assembly
sub-sectors. Elsewhere, manufacturers in thematerials sub-sector give priority to the effective
use of external patents, while processing & assembly firms attach more importance to putting
their technologies and know-how into a “blackbox.”
Regarding non-core technologies (Figure6-9), about half of the firms in both sub-sectors
retain them for future purposes such as protecting property rights. Apparently, not many firms
intend to use them actively for gaining profits.

[Core technologies]
80%
69%

71%

68%

60%
40%
23%
13% 13%

20%

20%

27%

22%
9%

24%

15%

14%

15%
12%

0%
Manufacturing

Materials

Processing & assembly

572 firms =100 ％224 firms =100 ％337 firms =100 ％(1) Increasing licensing fee income(2) Active protection through patents(3) Putting their technologies and know-how into a “ black box”
(4) Expansion of cross-licensing(5) Effective use of external patents

Figure 6-8. Intellectual Property Management will be Centered on:
Note:

Since multiple choices are allowed, figures for individual items do not add up to 100%.

[Non-core technologies]
60%
51%
40%
28%

30%

52%

49%

32%

30%

30%

21%

25%

22%

19%
20%

0%
Manufacturing
528 firms =100%

Materials
205 firms =100%

Processing & assembly
315 firms =100%(6) Gaining profits through disposal or licensing(7) Using as assets for cross-licensing(8) Commercialization in alliance with another firm
(9) Retaining for future purposes such as protecting property rights

Figure 6-9. Intellectual Property Management will be Centered on:
Note:

Since multiple choices are allowed, figures for individual items do not add up to 100%.

Also, “gaining profits through disposal or licensing,” “using as assets for cross-licensing”
and “commercialization in alliance with anotherfirm” were each cited by 20-30% of the firms inboth the materials and processing & assembly
sub-sectors.
By industry, “active protection through licensing” was cited for core technologies by a
substantial number of firms in general machinery(80%), “other” manufacturing (78%), iron &steel (77%) and non-ferrous metals (77%),
whereas “increasing licensing fee income” accounts for a considerable percentage in transport
equipment (39%), electric machinery (28%) andtextiles (27%). “Effective use of external patents” is a popular choice among firms in pulp &paper (43%), precision machinery (39%) andchemicals (29%). Many firms chose “putting
their technologies and know-how into a ‘blackbox’” in electric machinery (27%), non-ferrous

Development Bank of Japan Research Report/ No. 50

31

portance in maintaining and strengthening competitiveness as well as in properly evaluating thevalue of the firm. As proper recognition of the
intrinsic value of intellectual property is essential
for strategic purposes, the result implies thatJapanese firms need to improve their management of intellectual property.
By industry, a substantial percentage offirms cited “individual management” as a meansof recognizing the value of intellectual property
in precision machinery (52%), “other” manufacturing (42%), transport equipment (39%) andchemicals (34%). Many firms cited “business-unit-based management” in petroleum(33%), iron & steel (24%) and cement ceramics& glass (23%), while “company-wide management” is a popular choice among firms in industries such as petroleum (50%), textiles (50%) andelectric machinery (44%). As regards the content
of such recognition, “management of aggregate
total cost” has a large share in precision machinery (60%), general machinery (32%) and electricmachinery (32%), whereas a considerable percentage of firms cited “management of licensingfee” in transport equipment (47%), general machinery (44%), pulp & paper (42%) and chemical(41%). In contrast, “identification of the present
value of future cash flow generated by new
businesses using the patents” was only cited by
5% of the firms at most (electric machinery).

metals (23%) and food & beverages (18%). As
for non-core technologies, the percentage ofcompanies choosing to retain them “for future
purposes such as protecting property rights” ishigher in textiles (67%), “other” manufacturing(59%), food & beverages (59%) and iron & steel(56%), while it is lower in chemicals (41%),transport equipment (47%) and electric machinery (47%). The difference between industries
may be explained by the extent of obsolescenceof intellectual property (patents, etc.) and theweight of patents in developing new products.
(2) Position of licensing fee accountAs regards licensing fee income and payment(Figures 6-10 and 6-11), the majority of firms areaware of their balance, which tends to be in theblack for materials manufacturers and in the redfor processing & assembly manufacturers.
(3) Recognition of intellectual property value
Although almost 80% of the firms recognize thevalue of their intellectual property, it is often
considered only in terms of the cost of administering and maintaining the patents, based upon
“individual management” or “company-wide
management.” On the other hand, few firms rec
ognize the intrinsic value of intellectual property
in terms of costs and benefits for each business.
This finding indicates that intellectual property is
not sufficiently managed in Japan, given its im

Manufacturing

16%

19%

19%

46%

20%

15%

17%

47%

20%

45%

630 firms =100 ％Materials
249 firms =100 ％Processing &assembly

14%

21%

371 firms =100 ％

0%

20%

40%

(1) In the black(3) Mostly balanced

60%

80%

100%

(2) In the red(4) No available data, etc.

Figure 6-10. Position of Licensing Fee Account32

Development Bank of Japan Research Report/ No. 50

T ransport equipment
11%

Electric machinery
General machinery

-23%

-7%

12%

Iron & steel
3%

Chemicals
0%

Cement, ceramics & glass-25% -20% -15% -10% -5%0%5%

10% 15%Figure 6-11. Trends in Major Industries(share of firms in the black – share of firms in the red)31%

M anufacturing
628 firms =100％

13%

26%

M aterials
247 firms =100％

34%

Processing & assembly
369 firms =100％
0%

10%

36%

11%

20%

36%

9%

30%

22%

25%

36%

40%

50%

(1) Individual management(3) Company-wide management

60%

21%

70%

80%

90%

100%

(2) Business-unit-based management(4) No data available (no licensing contract entered)Figure 6-12. Recognition of Intellectual Property Value
100%
80%

79%

77%

76%

60%
40%
20%

34%

36%

34%
27%

28%

26%
2%

3%

2%

0%
M anufacturing
516 firms =100％

M aterials
200firms =100％

Processing & assembly
309 firms =100％(5) Identification of property administration and maintenance cost(6) M anagement of aggregate total cost(7) M anagement of licensing fee income(8) Identification of the present value of future cash flow generated by new businesses using the patents

Figure 6-13. Content of Intellectual Property Management
Note: Since multiple choices are allowed, figures for individual items do not add up to 100%.

Table 6-1. Recognition of Intellectual Property Value(matrix based on Figures 6-12 and 6-13)
Manufacturing
(1)
(2)
(3)
(4)

(5)
135
41
164
55

(6)
50
19
55
15

(7)
64
23
64
25

[Number of firms]
(8)
6
3
3
1

Note: For the description of (1)-(4) and (5)-(9), see the legends in Figures 6-12 and 6-13 respectively.

Development Bank of Japan Research Report/ No. 50

33Industrial Classification Table (November 2004 Survey)
Sector/industry
Manufacturing[1] Food & beverages[2] Textiles[3] Paper & pulp
[4] Printing & publishing[5] Chemicals

Minor classification

Notes (former Japan Standard Industrial Classification, etc.)
Japan Standard Industrial Classification (hereinafter referred to as “Standard”)
Division F
Standard Major groups 12 and 13(1) Livestock productMeat products, dairy products(2) Flour milling, sugar proc- Grain cleaning & polishing, flour milling, fodders, sugar processing, vegetaessing & edible oils
ble oils, animal oils, edible oil & fat processing (margarine, etc.)(3) Beer & liquors
Alcoholic beverages(4) Other food & beverages
Seafood products, canned fruits & vegetables, seasonings, bakery & confectionery products, soft drinks, manufactured ice, tobacco
Standard Major groups 14 and 15, and Item 204(1) Chemical fibers
Rayon, acetate, synthetic fibers(2) Spinning mills
Man-made staple fiber, cotton, wool, silk, hemp. others(3) Other textiles
Woven fabrics, scouring, bleaching, dyeing, finishing, raw silk, twistingyarns, bulky yarns, knit fabrics, netting, rope, lace, carpets, finished textiles
Pulp, paper, paper products, paper containers (corrugated paper boxes, etc.),synthetic paper, cellophane
Newspaper, publishing, printing, bookbinding(1) Inorganic chemicals(2) Organic chemicals

Standard Major group 20 (except Item 204)
Soda, compressed & liquefied gas, sulfuric acid, carbide, inorganic pigments,
salt
Naphtha-cracking center, synthetic resins, synthetic rubber, olefin derivatives,
methane derivatives, fermentation industry, coal tar, synthetic dyes

(3) Pharmaceuticals(4) Miscellaneous chemicals[6] Petroleum[7] Rubber[8] Cement, ceramics& glass[9] Iron & steel[10] Non-ferrous metals[11] Metal products[12] General machinery

34

Ammonium sulfate & urea, chemical fertilizers, fatty acids, glycerin, soaps,
surface-active agents, paints, printing ink, explosives, agricultural chemicals,
perfumes & flagrances, cosmetics, toothpaste, adhesives, photosensitive materials
Crude petroleum & distillate processing, oil depots, petroleum terminals
Natural & synthetic rubber products (tires, tubes, belts, rubber-coated fabric, etc.)
Standard Major group 25(1) Cement
Cement, blocks, fresh concrete, foam concrete(2) GlassFlat glass, glass containers, scientific glass instruments, glass fiber, glassprocessing materials(3) Miscellaneous cement,
Ceramics, refractories, carbon, graphite, structural clay, abrasives, aggregate,
ceramics & glass
enamelStandard Major group 26(1) Ordinary steel
Iron & steel manufacture and secondary products(2) Special steel
Tool steel, structural steel, etc.
(3) Miscellaneous iron & steel Cast & forged steel, pig iron & castings, ferro-alloys, shirring
Standard Major group 27(1) Refining of non-ferrous Refining of copper, lead, zinc & aluminum, refining of nuclear fuel, refining
metalsof precious metals, nickel & titanium(2) Rolling of non-ferrous Rolling of copper, lead and aluminum
metals(3) Electric wire & cables
Naked electric wire, electric insulated wire, cables(4) Miscellaneous non-ferrous Non-ferrous metal castings, die castings, nuclear fuel processing
metalsSteel tower, steel bridge, tin cans, plated sheet, edge tools, hand tools, hardware, heating apparatus & plumbing supplies, fabricated construction-use
metal products (sash, etc.), bolts & nuts, powder metallurgy productsStandard Major group 29(1) Boilers, engines & turbines Boilers, steam engines, turbines, general-use internal combustion engines(except those for automobiles, ships and aircraft)(2) Metal working machinery
Cutting machines (turning, drilling & pressing machines), metal working
machines (power tools, drills, etc.)(3) Office, service industry &Office machines (computer, numerical accounting machines, copying mahousehold machineschines, typewriters, etc.), sawing machines, hand-operated knitting machines,
industrial & commercial refrigerating machines(4) Industry machinery
Spinning machinery, weaving machinery, knitting machinery, dyeing & finishingmachinery and parts thereof, cultivators, grain threshing machines, hoeing machines, bulldozers, tractors road rollers, electrolytic cells, distilling apparatus, heatexchangers, drying machines, food processing machinery, woodworking machinery, printing & bookbinding machinery, plastic working machinery, pulp & paperindustry machinery, pumps, compressors, elevators, conveyors, gears, chains, oil
hydraulic equipment(5) General machine parts
Fire extinguishing equipment & apparatus thereof, valves, bearings, pistonrings, molds & dies

Development Bank of Japan Research Report/ No. 50

[13] Electric machinery(1) Electronic equipment(2) Electrical equipment(3) Electronic parts & devices[14] Precision machinery[15] Transport equipment(1) Automobiles(i) Four-wheeled vehicles(ii) Motorcycles(iii) Bodies & parts(2) Shipbuilding(3) Aircraft manufacture(4) Miscellaneous transport
equipment[16] Other manufacturing

Standard Major group 30
Electronic computers, telephone equipment, telephone switchboard, broadcasters, traffic signals, fire warning systems, washing machines, radio & television set receivers, audio equipment, X-ray equipment
Generators, transformers, switching devices, ammeters, electrical welding
equipment
Semiconductor devices, integrated circuits, vacuum tubes, batteries
Quantity gauges, measuring instruments, analytical instruments, medical
instruments, optical instruments, lenses, cameras, watches & clocks, eyeglasses
Standard Major group 31

Automobile engines & parts thereof, clutch axles, radiators, brakes, oil filters,
transmissions, etc.
Shipbuilding, marine engines
Aircraft & engines thereof
Locomotives, electric trains & parts thereof, bicycles, lifts, carts
Sawing & planing, plywood, wooden furniture, plastic products (except synthetic paper), leather products, furniture & fixtures (wooden & metal), lubricating oils, asphalt, coke, briquettes, precious metals, musical instruments,
toys, lead pencils, lacquer ware, umbrellas

Non-manufacturing[1] Fisheries[2] Mining(1) Coal, crude petroleum &natural gas(2) Metal & non-metal mining[3] Construction[4] Wholesale & retail(1) Wholesale(2) Retail[5] Real estateStandard Division C: catching or collecting of marine animals and plants,
aquacultureStandard Division D
Mining, coal cleaning, natural gasoline production, etc.
Mining, quarrying, extraction, beneficiation, processing for quality improvement
Standard Division E: construction work by contractor, equipment installation
work, paving work, dredging work, etc.
Standard Division I
General merchandise wholesale, specialized wholesale
Department stores, supermarkets, eating & drinking places, miscellaneous
retail trade
Land development (except that for subdivision), real estate lessors, house &room lessors (except land and buildings for subdivision)[6] Transportation(1) Railways(2) Road passenger transport(3) Road freight transport(4) Water transport(5) Airways(6) Warehousing & incidental
services[7] Electric power &gas

Ordinary railways, monorails, trolley bus, cable railways, rope-ways
Bus, taxi, contracted motor passenger transport
Motor trucking, etc.
Oceangoing & inland water transport, vessel & ship rental & leasing, coastwise transport
Air transport, aircraft service
Ordinary warehousing (including silos & tanks), refrigerated warehousing,surface timber yard, port transport, road transport facilities, terminal facilities
for motor vehicles (bus & truck terminals), container yards, airport terminals,
piers & docks, freight forwarding, packing & crating(1) Electric power
Standard Division G(i) Nine utility companies(ii) Miscellaneous electric Private power generation, co-generation
power(2) Gas (including heat supply) City gas, propane gas distribution, heat supply[8] Telecommunications & information (1) Communications(2) Information services(3) Broadcasting[9] Leasing (including
rental)[10] Services(1) Hotels(2) Cinemas & amusement(3) Miscellaneous services

Telephones, telegraphs
Advertising, research & data processing services
General goods leasing & rental, office machinery rental (including electronic
computers)
Cinemas, amusement, miscellaneous hobby & recreation services
Automobile parking, automobile maintenance services, automobile rental,
guard services, other services[11] Other
non-manufacturing

Development Bank of Japan Research Report/ No. 50

35

List of Back Numbers (Including JDB Research Report)
No. 50 Corporate Capital Spending Behavior and Innovation Efforts: Findings of Survey on Capital Spending
Behavior (Conducted in November 2004) (this issue)
No. 49 Survey on Planned Capital Spending for Fiscal Years 2004 and 2005 (Conducted in November 2004),
January 2005
No. 48 Recent Trends in the Japanese Economy: Medium-term Outlook of Japanese Industrial Structure, January 2005
No. 47 Survey on Planned Capital Spending for Fiscal Years 2003, 2004 and 2005 (Conducted in June 2004),
September 2004
No. 46 Recent Trends in the Japanese Economy: Impact of Rising International Commodity Prices on Corporate Input/Output Behavior, September 2004
No. 45 How Life Cycle Assessment (LCA) Can Enhance the Fight against Global Warming, August 2004
No. 44 Recent Trends in the Japanese Economy: A Medium-term Scenario for the Japanese Economy with
Special Focus on the Flow of Funds and Finance, March 2004
No. 43 Survey on Planned Capital Spending for Fiscal Years 2002, 2003 and 2004 (Conducted in August 2003),
November 2003
No. 42 Promoting Corporate Measures to Combat Global Warming: An Analysis of Innovative Activities in the
Field, September 2003
No. 41 Prospects and Challenges for End-of-Life Vehicle Recycling, May 2003
No. 40 Survey on Planned Capital Spending for Fiscal Years 2002 and 2003 (Conducted in February 2003),
May 2003
No. 39 China’s Economic Development and the Role of Foreign-Funded Enterprises, May 2003
No. 38 Decline in Productivity in Japan and Disparities Between Firms in the 1990s: An Empirical Approach
Based on Data Envelopment Analysis, April 2003
No. 37 Trends in Socially Responsible Investment: Corporate Social Responsibility in a New Phase, March
2003
No. 36 Recent Trends in the Japanese Economy: A Medium-term Scenario for the Sustainability of the Japanese Economy, February 2003
No. 35 Concerns for the Future and Generational Consumption Behavior, February 2003
No. 34 Prospects and Challenges Surrounding Japan’s Electrical Equipment Industry: General Electrical
Equipment Manufacturers’ Restructuring of Operations and Future Prospects, November 2002
No. 33 Survey on Planned Capital Spending for Fiscal Years 2001, 2002 and 2003 (Conducted in August 2002),
November 2002
No. 32 Behavior Trends of Japanese Banks toward the Corporate Sector and Their Impact on the Economy,
October 2002
No. 31 Microstructure of Investment and Employment Dynamics: Stylized Facts of Factor Adjustment Basedon Listed Company Data, October 2002
No. 30 Recent Trends in the Japanese Economy: Globalization and the Japanese Economy, August 2002
No. 29 Corporate Financing Trends in Recent Years: Fund Shortages and Repayment Burden, August 2002
No. 28 Urban Renewal and Resource Recycling: For the Creation of a Resource Recycling Society, July 2002
No. 27 Labor’s Share and the Adjustment of Wages and Employment, June 2002
No. 26 Survey on Planned Capital Spending for Fiscal Years 2001 and 2002 (Conducted in February 2002),

May 2002
No. 25 Environmental Information Policy and Utilization of Information Technology: Toward a Shift in Environmental Policy Paradigm, March 2002
No. 24 The Changing Structure of Trade in Japan and Its Impact: With the Focus on Trade in Information
Technology (IT) Goods, March 2002
No. 23 Microstructure of persistent ROA decline in the Japanese corporate sector: Inter-company disparities
and investment strategies, March 2002
No. 22 Recent Trends in the Japanese Economy: The Japanese Economy under Deflation and Prospects ofEvolution, February 2002
No. 21 Survey on Planned Capital Spending for Fiscal Years 2000, 2001 and 2002, December 2001
No. 20 Current Situation and Challenges for Cable Television in the Broadband Era, October 2001
No. 19 Recent Trends in the Japanese Economy: The Japanese Economy under Deflation, August 2001
No. 18 Introduction of a Home Appliance Recycling System: Effects & Prospects: Progress towards Utilisationof Recycling Infrastructure, June 2001
No. 17 Survey on Planned Capital Spending for Fiscal Years 2000 and 2001, June 2001
No. 16 Revitalization of Middle-aged and Elderly Workers in Japan’s Labor Markets: Requiring the Expansionof the Vocational Training Functions, March 2001
No. 15 Risk-Averting Portfolio Trends of Japanese Households, March 2001
No. 14 Consumption Demand Trends and the Structure of Supply: Focus on Retail Industry Supply Behavior,
March 2001
No. 13 Recent Trends in the Japanese Economy: Weakness of Current Economic Recovery and Its Background,
March 2001
No. 12 Empirical Reassessment of Japanese Corporate Investment Behavior: Features and Changes since the1980s, based on Micro-level Panel Data, March 2001
No. 11 Survey on Planned Capital Spending for Fiscal Years 1999, 2000 and 2001, October 2000
No. 10 Job Creation and Job Destruction in Japan, 1978-1998: An Empirical Analysis Based on EnterpriseData, September 2000
No. 9

Recent Trends in the Japanese Economy: Information Technology and the Economy, September 2000

No. 8

Trend of International Reorganization Affecting the Japanese Automobile and Auto Parts Industries,
June 2000

No. 7

Survey on Planned Capital Spending for Fiscal Years 1999 and 2000, June 2000

No. 6

Current Status and Future Perspective of the Japanese Remediation Industry: Technology and Market
for Underground Remediation, May 2000

No. 5

Recent Trends in the Japanese Economy: The 1990s in Retrospect, March 2000

No. 4

Destabilized Consumption and the Post-bubble Consumer Environment, February 2000

No. 3

The Slump in Plant and Equipment Investment in the 1990s: Focusing on Lowered Expectations, theDebt Burden and Other Structural Factors, January 2000

No. 2

Survey on Planned Capital Spending for Fiscal Years 1998, 1999 and 2000, November 1999

No. 1

Corporate Strategies in Japan’s Semiconductor Industry: Implications of Development in Other AsianCountries, November 1999

JDB Research Report
No. 96 Recent Trends in the Japanese Economy: Focused on Fixed Investment and Capital Stock, August 1999
No. 95 Efforts to Protect the Natural Environment in the United States and Germany: Environmental Mitigation and Biotope Conservation, July 1999
No. 94 Survey on Planned Capital Spending for Fiscal Years 1998 and 1999, June 1999
No. 93 Towards the realization of ‘environmental partnership’: A survey of Japan’s environmental NPO sector
through comparison with Germany, June 1999
No. 92 The Impact of Demographic Changes on Consumption and Savings, March 1999
No. 91 Recent Research and Development Trends in Japanese Enterprises: Technology Fusion, March 1999
No. 90 Recent Trends in the Japanese Economy: Prolonged Balance Sheet Adjustment, January 1999
No. 89 Impact of Asset Price Fluctuations on Household and Corporate Behavior: A Comparison between Japan and the U.S., December 1998
No. 88 Survey on Planned Capital Spending for Fiscal Years 1997, 1998, and 1999, December 1998
No. 87 Foreign Exchange Rate Fluctuations and Changes in the Input-Output Structure, November 1998
No. 86 Structural Changes in Unemployment of Japan: An Approach from Labor Flow, November 1998
No. 85 Recent Trends in the Japanese Economy: Characteristics of the Current Recession, August 1998
No. 84 R&D Stock and Trade Structure in Japan, August 1998
No. 83 Survey on Planned Capital Spending for Fiscal Years 1997 and 1998, August 1998
No. 82 The Significance, Potential, and Problems of DNA Analysis Research: Establishing Public Acceptanceis Essential, May 1998
No. 81 The Japan Development Bank Reports on Capital Spending: Survey for Fiscal Years 1996, 1997 and1998 Conducted in August 1997, March 1998
No. 80 Recent Trends in the Japanese Economy: Growth Base of the Japanese Economy, January 1998
No. 79 Information Appliances: The Strength of Japanese Companies and Tasks for the Future, January 1998
No. 78 Challenges and Outlook for the Japanese Machinery Industries: Impact of ISO14000 Series and Environmental Cost, January 1998
No. 77 Current Conditions and Issues of Computerization in the Health Care Industry: For the Construction of
a Health Care Information Network, January 1998
No. 76 Household Consumption and Saving in Japan, December 1997
No. 75 The Direction of Japanese Distribution System Reforms: Strengthening the Infrastructure to Support
Diverse Consumer Choices, November 1997
No. 74 Foreign Direct Investments by Japanese Manufacturing Industries and Their Effects on International
Trade, October 1997
No. 73 The Impact of the Changing Trade Structure on the Japanese Economy: With Special Focus on the Effects on Productivity and Employment, October 1997
No. 72 An Analysis of Foreign Direct Investment and Foreign Affiliates in Japan, August 1997
No. 71 Recent Trends in the Japanese Economy: Stock Replacement and New Demand as Aspects of Economic Recovery, August 1997
No. 70 Corporate Fundraising: An International Comparison, June 1997
No. 69 The Japan Development Bank Reports on Capital Spending: Survey for Fiscal Years 1996 and 1997
Conducted in February 1997, May 1997

No. 68 The Japan Development Bank Reports on Capital Spending: Survey for Fiscal Years 1996 and 1997
Conducted in August 1996, August 1997
No. 67 An International Comparison of Corporate Investment Behavior: Empirical Analysis Using Firm Data
from Japan, France and the US, April 1997
No. 66 Housing in the National Capital: Analysis of the Market for Housing using Micro Data, March 1997
No. 65 The Environment for Locating Business Operations in Major East Asian Cities, January 1997
No. 64 Direction of Reconstruction of Business Strategy in the Chemical Industry, January 1997
No. 63 Reflection on Discussions Concerning Regulation of the Electric Power Industry: Deregulation of theElectric Power Industry in Japan and Implication of Experiences in the United States, December 1996
No. 62 Current Status and Future Perspective of the Japanese Semiconductor Industry, November 1996
No. 61 A Breakthrough for the Japanese Software Industry?: Responsiveness to Users’ Needs is the key, October 1996
No. 60 Recent Trends in the Japanese Economy Focusing on the Characteristics and Sustainability of the Current Economic Recovery, September 1996
No. 59 Analysis of the Primary Causes and Economic Effects of Information: Related investment in the UnitedStates and Trends in Japan, August 1996
No. 58 Selected Summaries of Research Reports: Published in FY1995, June 1996
No. 57 The Japan Development Bank Reports on Capital Spending: Survey for Fiscal Years 1995 and 1996
Conducted in February 1996, May 1996
No. 56 Recent Trends in the Japanese Economy, May 1996
No. 55 Issues Concerning the Competitiveness of the Japanese Steel Industry, February 1996
No. 54 Changes in the Financial Environment and the Real Economy, January 1996
No. 53 The Japan Development Bank Reports on Capital Spending: Survey for Fiscal Years 1994, 1995 and1996 Conducted in August 1995, October 1995
No. 52 Current Economic Trends: Focusing on the Appreciation of the Yen and its Effects, October 1995
No. 51 Problems Concerning the International Competitiveness of the Petrochemical Industry, October 1995
No. 50 An Economic Approach to International Competitiveness, October 1995
No. 49 Selected Summaries of Research Reports Published in FY1994, July 1995
No. 48 Strategies for Improving the Efficiency of the Japanese Physical Distribution System: Part 2, July 1995
No. 47 Issues on International Competitive Strength of the Auto Industry, June 1995
No. 46 Problems Concerning the International Competitiveness of the Electronics and Electric Machinery Industry, June 1995
No. 45 The Japan Development Bank Reports on Capital Spending: Survey for Fiscal Years 1994 and 1995
Conducted in March 1995, June 1995
No. 44 Strategies for Improving the Efficiency of the Japanese Physical Distribution System, March 1995
No. 43 Capital Spending Recovery Scenario Cycle and Structure, August 1994
No. 42 Progress of International Joint Development between Industrialized Countries on the Private Level,
May 1994
No. 41 The Japan Development Bank Reports on Capital Spending: Survey for Fiscal Years 1993, 1994 and1995 Conducted in August 1994 , November 1994

No. 40 Selected Summaries of Research Reports Published in FY1993, June 1994
No. 39 Recent Trends in Japan’s Foreign Accounts, April 1994
No. 38 The Japan Development Bank Reports on Capital Spending: Survey for Fiscal Years 1993 and 1994
Conducted in March 1994, April 1994
No. 37 Economic Zones and East Asia Prospect for Economic Activity Oriented Market Integration, December
1993
No. 36 Japanese Corporate Responses to Global Environmental Issues, December 1993
No. 35 The Japan Development Bank Reports on Capital Spending: Survey for Fiscal Years 1992, 1993 and1994 Conducted in August 1993, September 1993
No. 34 Structure of Profit to Capital in the Manufacturing Industry, September 1993
No. 33 Comparison of the Japanese and The U.S. Labor Markets, October 1992
No. 32 The Relative Competitiveness of U.S., German, and Japanese Manufacturing, March 1993
No. 31 The Japan Development Bank Reports on Capital Spending: Survey for Fiscal Years 1992 and 1993
Conducted in March 1993, April 1993
No. 30 The Japan Development Bank Reports on Capital Spending: Survey for Fiscal Years 1991, 1992 and1993 Conducted in August 1992, December 1992
No. 29 Flow of Funds in the 80s and Future Corporate Finance in Japan, November 1992
No. 28 The Japan Development Bank Reports on Capital Spending: Survey for Fiscal Years 1991 and 1992
Conducted in February 1992, April 1992
No. 27 An Analysis of Foreign Direct Investment in Japan, March 1992
No. 26 Projection of Japan's Trade Surplus in 1995: Analysis of Japan's Trade Structure in the 80s, February
1992
No. 25 Intra-Industry Trade and Dynamic Development of The World Economy, November 1991
No. 24 The Japan Development Bank Reports on Capital Spending: Survey for Fiscal Years 1990, 1991 and1992 Conducted in August 1991, September 1991
No. 23 The Japan Development Bank Reports on Capital Spending: Survey for Fiscal Years 1990 and 1991
Conducted in February 1991, March 1991
No. 22 Trends of the Petrochemical Industry and its Marketplace in East Asia, March 1991
No. 21 The Japan Development Bank Reports on Capital Spending: Survey for Fiscal Years 1989, 1990 and1991 Conducted in August 1990, September 1990
No. 20 Deepening Economic Linkages in The Pacific Basin Region: Trade, Foreign Direct Investment andTechnology, September 1990
No. 19 The Japan Development Bank Reports on Capital Spending: Survey for Fiscal Years 1989 and 1990
Conducted in February 1990, March 1990
No. 18 Petrochemicals in Japan, The US, and Korea an Assessment of Economic Efficiency, February 1990
No. 17 The Japan Development Bank Reports on Capital Spending: Survey for Fiscal Years 1988, 1989 and1990 Conducted in August 1989, October 1989
No. 16 Impact of the EC Unification on Japan’s Automobile and Electronics Industries, August 1989
No. 15 Industrial and Trade Structures and the International Competitiveness of Asia’s Newly Industrializing
Economies, August 1989
No. 14 The Japan Development Bank Reports on Capital Investment Spending: Survey for Fiscal Years 1988

and 1989 Conducted in February 1989, March 1989
No. 13 The Japan Development Bank Reports on Capital Spending: Survey for Fiscal Years 1987, 1988 and1989 Conducted in August 1988, September 1988
No. 12 Growing Foreign Investors’ Activities and the Future of Internationalization, September 1988
No. 11 Futures Tasks and Prospects for the Japanese Machine-Tool Industry, July 1988
No. 10 International Division of Labor in the Machine Industries Among Japan, Asia’s NICs and ASEANCountries, June 1988
No. 9

Trends of the Petrochemical Industry and its Marketplace in East Asia around Japan, May 1988

No. 8

The International Competitiveness of Japan and U.S. in High Technology Industries, April 1988

No. 7

The Japan Development Bank Reports on Private Fixed Investment in Japan, March 1988

No. 6

Economic Projections of the Japan’s Economy to the Year 2000, February 1988

No. 5

The Japan Development Bank Reports on Private Fixed Investment in Japan, September 1987

No. 4

Current Trends in the Japanese Auto Parts Industry in Overseas Production, July 1987

No. 3

Current Moves for Foreign Direct Investment into Japan, May 1987

No. 2

Overseas Direct Investments by Japanese Corporations, May 1987

No. 1

Current U.S. Consumption Trends, May 1987