<II. Medium-sized and SMEs>8)

1

Business outlook and demand forecast(1) Forecast of Japan’s economic growth rate
○The real economic growth rate forecast for Mediu m-sized and SMEs (all industries, actual
value average) for the “next fiscal year” (FY2017) was 1.0%. The forecasts for the “next 3
years” and the “next 5 years” were both 1.0%.
○The nominal economic growth rate forecasts for the “next fiscal year,” the “next 3 years,”
and the “next 5 years” were all higher than the real rate forecasts.

(2) Forecast of growth rate of industry demand○The forecast of the real growth rate of industry demand of Medium-sized and SMEs for the “nextfiscal year” (FY2017) was 0.8%. The figures for the manufacturing and non-manufacturingindustries were 0.7% and 0.9%, respectively.
○The medium-term forecasts for the “next 3 years” and the “next 5 years” were 0.9% and 0.8%,
respectively.
○In terms of the forecasts for the “next fiscal year” by sector, the growth rate forecast of the
manufacturing industries was high in “Pharmaceutical” (1.6%) and “Electric Appliances”(1.3%), and that of the non-manufacturing industries was high in “Insurance” and “Securities &Commodity Futures” (1.4% for both).

8) Medium-sized and SMEs with a capital of 0.1 to 1 billion yen (not incl.) among enterprises all over Japan (excl.

enterprises covered in I. Listed Companies) (hereinafter “Medium-sized and SMEs.”) T he survey of Medium-sized
and SMEs started in FY2016.

- 45 - (II. Medium-sized and SMEs)

[Fig. 2-1-1] Real growth rate forecasts of industry demand by sector(%)

Forecast for the next fiscal year

3.0

Forecast for the next 3 years

Forecast for the next 5 years

2.0

1.0

Note 1) The “ forecast for the next fiscal year” in the FY2016 survey refers to the forecast for FY2017; the“ forecast for the next 3 years” refers to the forecast for FY2017 to FY2019; and the “ forecast fo r the
next 5 years” refers to the forecast for FY2017 to FY2021 (fiscal year average).
Note 2) Only sectors with 5 or more responding enterprises are included for all of the “ forecast for the next
fiscal year,” “ forecast for the next 3 years” and “ forecast for the next 5 years.”- 46 - (II. Medium-sized and SMEs)

MiningOther Products

Pulp & Paper

Metal Products

Iron & SteelMarine Transportation

Retail Trade

Glass & Ceramics Products

Land Transportation

Oil & Coal Products

Foods

Fishery, Agriculture & Forestry

Rubber Products

Wholesale Trade

Textiles & Apparels

Precision Instruments

Warehousing & Harbor Transportation Services

Electric Power & Gas

Transportation Equipment

Services

Nonferrous Metals

Machinery

Construction

Other Financing Businesses

Chemicals

Real Estate

Air Transportation

Electric Appliances

Information & Communication

Insurance

Securities & Commodity Futures

All industries-1.0

Pharmaceutical

0.0

2

Exchange rates(1) Forecast yen-dollar rate after 1 year
○The forecast yen-dollar rate after 1 year (around January 2018) for Mediu m-sized and SM Es(all industries, class value average) was 113.1 yen/dollar.
○Compared with the yen-dollar rate for the month immediately before the survey (116.0
yen/dollar in December 2016), the forecast appreciated by 2.9 yen.

(2) Break-even yen-dollar rate
○The break-even yen-dollar rate of exporting Medium-sized and SMEs (all industries, actual
value average) was 105.6 yen/dollar.
○In terms of the break-even yen-dollar rate by industry, the rates of the manufacturing and thenon-manufacturing industries were 104.8 yen/dollar and 109.2 yen/dollar, respectively.
Co mpared with the yen-dollar rate for the month immediately before the survey, the rates ofthe manufacturing and non-manufacturing industries appreciated by 11.2 yen and 6.8 yen,respectively.
○In terms of the break-even yen-dollar rate by sector, compared with the all industries average,
sectors such as “Land Transportation” (115.6 yen/dollar) and “Pulp & Paper” (113.6
yen/dollar) set weaker break-even rates, while sectors such as “Pharmaceutical” (95.0
yen/dollar) and “Chemicals” (101.3 yen/dollar) set stronger rates.
[Fig. 2-2-1]Forecast yen-dollar rate after 1 year and the break-even yen-dollar rate by industry
Forecast yen-dollar rate after 1 year

(yen/dollar)

Break-even yen-dollar rate

130
120
110
100
90
80

Yen-dollar rate in the month immediately before
the survey (Dec.2016) : 116.0 yen/dollar

Non-manufacturing

Other

Processing-type

Material-type

Manufacturing

60

All industries

70

Note 1) “ Forecast yen-dollar rate” is the average o f the class values, while “break-ev en yen-dollar rate” is theaverage of the actual reported numbers.
Note 2) Calculation of “ break-even yen-dollar rate” includes only enterprises that conduct exports.

- 47 - (II. Medium-sized and SMEs)

[Fig. 2-2-2] Break-even yen-dollar rate by sector(yen/dollar)120

All industries average : 105.6yen/dollar

110
100
90
80
70

Stronger yen than average

Land Transportation

Pulp & Paper

Warehousing & Harbor Transportation Services

Wholesale Trade

Glass & Ceramics Products

Foods

Other Products

Iron & SteelInformation & Communication

Marine Transportation

Machinery

Nonferrous Metals

Textiles & Apparels

Electric AppliancesServices

Rubber Products

Precision Instruments

Transportation Equipment

Metal Products

Construction

Chemicals

Pharmaceutical

60

Weaker yen than average

Note 1) Calculation of “ break-even yen-dollar rat e” includes only enterprises that conduct exports(average of reported numbers).
Note 2) Only sectors with 5 or more responding enterprises are included.

- 48 - (II. Medium-sized and SMEs)

3

Prices○Average purchase prices after 1 year for Medium-sized and SM Es (all industries, class value
average) increased by 3.0%.
○Average sales prices after 1 year (all industries, class value average) increased by 1.4%.
○Purchase price increases surpassed sales price increases, and terms of trade (all industries)
were forecast to worsen by 1.6 percentage points.

[Fig. 2-3-1] Forecast rates of changes in average purchase and sales prices and thechange in the terms of trade after 1 year by industry
FY2016
Average purchase priceAll industries

terms of trade

3.0

1.4

-1.6

3.1

1.1

-2.1

M aterial-type

3.9

1.8

-2.0

Processing-type

2.4

0.4

-2.0

Other

3.1

1.0

-2.2

2.9

1.7

-1.2

M anufacturing

Industry

Average sales priceNon-manufacturing industries

Note 1) Terms of Trade = Rate of change in average sales price – rate of change in average purchase priceNote 2) Terms of trade are deriv ed from the rate of change o f the averag e sales price and the rate of change o f the averag epurchas e price (Refer to FY2016 Statistical Tables <II. Medium-sized and SMEs> 3-1 and 3-2) that include two
decimal points. Therefore, they may not always coincide with figures calculat ed from the rate o f change in av erag esales prices and the rate of change in average purchase price in the table above due to rounding.

- 49 - (II. Medium-sized and SMEs)

4

Change in capital investment○The percentage of Medium-sized and SMEs that increased capital investment (all industries)
for the “past 3 years” (average of FY2014–FY2016) was 62.8%.
○The percentage of enterprises expecting to increase capital investment (all industries) overthe “next 3 years” (average of FY2017–FY2019) was 62.2%.
○ The rate of change in capital investment over the “next 3 years” (average of
FY2017–FY2019) increased by 4.6%. In terms of the rate of change in capital investment bysector, the increase rate was high in sectors such as “Pulp & Paper” and “Oil & Coal
Products” (6.6% for both) in the manufacturing industries, and in sectors such as “Mining”(10.0%) and “Air Transportation” (8.1%) in the non-manufacturing industries.

[Fig. 2-4-1]Change in the percentage of enterprises that increased/decreased capital investment
or are expecting an increase/decrease in capital investment for the past 3 years or overthe next 3 years (all industries)
(%)
100%
90%

9.1

10.1

9.5

9.0

18.8

18.8

80%
70%
60%
50%
40%
30%
20%
10%

62.2

62.8

No capital investment was made./No capital investment is planned.
Decrease
No change
Increase

0%
Past 3 years

Next 3 years
Survey yea r (FY) 2016

Note 1) Increase: Percentage of enterprises responding over 0%, No change: Percentage of enterprises responding 0%,
Decrease: Percentage of enterprises responding less than 0%.
Note 2) The “ past 3 years” means the period from FY2014 to FY2016.
Note 3) The “ next 3 years” means the period from FY2017 to FY2019.

- 50 - (II. Medium-sized and SMEs)

-2.0- 51 - (II. Medium-sized and SMEs)
Wholesale Trade

Rubber Products

Insurance

Other Financing Businesses

Past 3 years

Securities & Commodity Futures

Other Products

Textiles & Apparels

Precision Instruments

Services

Electric Appliances(%)

Construction

Land Transportation

Glass & Ceramics Products

Pharmaceutical

Transportation Equipment

Metal Products

Information & Communication

Retail Trade

Iron & SteelMarine Transportation

Real Estate

Warehousing & Harbor Transportation Services

Foods

Machinery

Nonferrous Metals

Electric Power & Gas

Chemicals

Fishery, Agriculture & Forestry

Oil & Coal Products

Pulp & Paper

Air Transportation

Mining

All industries[Fig. 2-4-2] Growth rate of capital investment by sector

12.0
Next 3 years

10.0

8.0

6.0

4.0

2.0

0.0

Note 1) The “Past 3 years” repres ents the growth rate from FY2014 to FY2016 (fiscal year averag e), and the “next 3
years” represents growth rate forecasts from FY2017 to FY2019 (fiscal year average).
Note 2) Sectors include only those with 5 or more responding enterprises for both “ past 3 years” and “ next 3 years.”

5

Change in the number of employees(1) Number of employees○The percentage of Medium-sized and SMEs that increased employees (all industries) for the“past 3 years” (average of FY2014–FY2016) was 52.5%.
○The percentage of enterprises expecting to increase employees (all industries) over the “next3 years” (average of FY2017–FY2019) was 58.3%.

[Figure 2-5-1]Change in the percentage of enterprises that increased/decreased employees orare expecting an increase/decrease in employees for the past 3 years or over(%)

the next 3 years (all industries)

100%
90%

11.5
22.1

80%
30.3

70%
25.5
60%
50%
40%
30%

58.3

52.5

20%
Decrease10%

No change

Increase

0%
Past 3 years

Next 3 years
Survey year FY2016

Note 1) Increase: Percentage of enterprises responding over 0%, No change: Percentage of enterprises responding 0%,
Decrease: Percentage of enterprises responding less than 0%.
Note 2) The “ past 3 years” means the period from FY2014 to FY2016.
Note 3) The “ next 3 years” means the period from FY2017 to FY2019.

- 52 - (II. Medium-sized and SMEs)

(2) Number of full-time employees○ The percentage of Medium-sized and SMEs that increased full-time employees (allindustries) among their emp loyees for the “past 3 years” (average of FY2014–FY2016) was
52.4%.
○The percentage of Medium-sized and SMEs expecting to increase full-time emp loyees (allindustries) among their emp loyees over the “next 3 years” (average of FY2017–FY2019)was 58.4%.
[Figure 2-5-2] Change in the percentage of enterprises that increased/decreased full-t ime
employees or are expecting an increase/decrease in full-time employees
among their employees for the past 3 years or over the next 3 years (allindustries)
(%)
100%
90%

11.8
21.7

80%
29.9

70%
25.8
60%
50%
40%
30%

58.4

52.4

20%
Decrease10%

No change

Increase

0%
Past 3 years

Next 3 years
Survey year FY2016

Note 1) Increase: Percentage of enterprises responding over 0%, No change: Percentage of enterprises responding 0%,
Decrease: Percentage of enterprises responding less than 0%.
Note 2) The “ past 3 years” means the period from FY2014 to FY2016.
Note 3) The “ next 3 years” means the period from FY2017 to FY2019.

- 53 - (II. Medium-sized and SMEs)

6

Overseas production ratio and reverse imports ratio(1) The ratio of enterprises conducting overseas production (manufacturing industries only)○The “FY2015 actual result” for the percentage of Medium-sized and SM Es conducting
overseas production was 13.4%. The “FY2016 estimate” was 13.6% and the “FY2021
forecast” was 14.5%.

[Fig. 2-6-1] Ratio of companies that conduct overseas production (manufacturing industries)
(%)

25.0
20.0
15.0

13.4

14.5

13.6

10.0
5.0
Manufacturing
Processing-type

Material-type
Other

0.0
2015

2016

2017

2018

2019

2020

2021

Note ) FY2015, FY2016, and FY2021 indicate actual result, estimate, and forecast, respectively.

- 54 - (II. Medium-sized and SMEs)

(2) Overseas production ratio (manufacturing industries only)○The “FY2015 actual result” for the overseas production ratio of Mediu m-sized and SMEs was
4.0%. The “FY2016 estimate” was 4.0% and the “FY2021 forecast” was 4.4%.
○9.3% of Mediu m-sized and SMEs expected an increase in overseas production ratio in the“FY2021 forecast” compared to the “FY2016 estimate,” 88.2% expected no change, and 2.5%
expected a decrease.
○In terms of the “FY2021 forecast” by sector, the level was high in sectors such as “Textiles &Apparels” (11.7%) and “Precision Instruments” (10.0%), while it was low in sectors such as“Oil & Coal Products” (0.0%) and “Glass & Ceramics Products” (0.5%).

[Fig. 2-6-2] Transition of overseas production ratios (manufacturing industries)
(%)

8.0

6.0

4.0

4.4

4.0

4.0

2.0
Manufacturing

Material-type

Processing-type

Other

0.0
2015

2016

2017

2018

2019

2020

2021

Note 1) FY2015, FY2016, and FY2021 indicate actual result, estimate, and forecast, respectively.
Note 2) Simple average o f responding enterprises including those that reported 0.0% for the overseas
production ratio.

- 55 - (II. Medium-sized and SMEs)

[Fig. 2-6-3] Overseas production ratio by sector (manufacturing industries)(%)

FY2015 actual result

FY2016 estimate

FY2021 forecast

14.0
12.0
10.0
8.0
6.0
4.0

Oil & Coal Products

Foods

Pharmaceutical

Other Products

Iron & SteelGlass & Ceramics Products

Chemicals

Pulp & Paper

Machinery

Metal Products

Nonferrous Metals

Transportation Equipment

Rubber ProductsElectric Appliances

Precision Instruments

Textiles & Apparels

0.0

Manufacturing

2.0

Note 1) Simple average o f responding enterp rises including those that reported 0.0% fo r the overseas
production ratio.
Note 2) Sectors include only those with 5 or more responding enterprises in all of “ FY2015 actual result,”“ FY2016 estimate” and “ FY2021 forecast.”- 56 - (II. Medium-sized and SMEs)

(3) Reverse imports ratio (manufacturing industries only)○The “FY2015 actual result” for the reverse imports ratio of Medium-sized and SMEs was 27.2%.
○The “FY2016 estimate” was 25.9%, and the “FY2021 forecast” was 24.3%.

[Fig. 2-6-4] Transition of the ratio of reverse imports (manufacturing industries)
(%)

40.0
35.0
30.0

27.2

25.9

24.3

25.0
20.0
15.0
10.0
5.0

Manufacturing
Processing-type

Material-type
Other

0.0
2015

2016

2017

2018

2019

2020

2021

(FY)

Note 1) FY2015, FY2016, and FY2021 indicate actual result, estimate, and forecast, respectively.
Note 2) This is a simple average whi ch excludes enterpris es reporting 0.0% overseas production ratio,
while it includes enterprises answering 0.0% reverse imports ratio.

- 57 - (II. Medium-sized and SMEs)

(4) “Main reason” and “Other relevant reasons” for having an overseas production base(manufacturing industries only)○After combining the “main reason” for having an overseas production base with “otherrelevant reasons” for Medium-sized and SMEs, the top reason was “Labor costs are low”
(61.0%), and the second top reason was “Strong demand exists, or demand is forecast to
expand, for our products in the local market(s) and markets in neighboring countries”(49.1%).
[Table 1-6-5] Reason for having an overseas production base (Main reason + Other relevant reasons)
Top 5 reasons (Manufacturing industries)
FY2016 survey（%）
Manufacturing

Material-type

Processing-type

Other④ Strong demand exists, ordemand is forecast to expand,① Labor costs are low

61.0

for our products in the local

54.5① Labor costs are low

70.4① Labor costs are low

57.4

market(s) and markets inneighboring countries④ Strong demand exists, or④ Strong demand exists, ordemand is forecast to expand,demand is forecast to expand,for our products in the local

49.1① Labor costs are low

50.0

for our products in the local

market(s) and markets inmarket(s) and markets inneighboring countries

neighboring countries④ Strong demand exists, ordemand is forecast to expand,

43.9

for our products in the local

51.9

market(s) and markets inneighboring countries⑦ We have entered the⑤ We can cater effectively tooverseas users’ needs

35.8⑤ We can cater effectively tooverseas users’ needs

37.9⑤ We can cater effectively tooverseas users’ needs

overseas market(s) following

37.8

entry by our parent

37.0

enterprise or customer(s) andso on⑦ We have entered the⑦ We have entered the⑦ We have entered theoverseas market(s) following

overseas market(s) following

overseas market(s) following

entry by our parent

34.4

entry by our parent

31.8

entry by our parent

enterprise or customer(s) andenterprise or customer(s) andenterprise or customer(s) and

so on

so on

so on

③ We can enjoy low costs of③ We can enjoy low costs of③ We can enjoy low costs ofmaterials, overall production

materials, overall production

processes, distributions, andland/buildings

27.1

processes, distributions, andland/buildings

25.8

materials, overall production
processes, distributions, and③ We can enjoy low costs of

34.7

materials, overall production
processes, distributions, and31.5

land/buildings

25.5⑤ We can cater effectively tooverseas users’ needs

29.6

land/buildings

Note 1) The composition ratio of the “Main reason” and “ Other relevant reasons” is based on the number of enterprises that
responded.
Note 2) Responding enterprises can choose one “ Main reason,” and up to two “ Other relevant reasons.”- 58 - (II. Medium-sized and SMEs)