JETRO Global Trade andInvestment Report 2019
The fluctuating international economic order andglobal business in the future
Key points
🔶 World trade in 2018 was at a record high,however, its growth is slowing down
- The slowdown continues in the first quarter of2019🔶

Global trade flows changing with the tariff fightbetween the US and China- Negative growth in trade between the US and
China

🔶

Startups emerging as new business partners- New momentum toward establishing startup
ecosystems around the world

Japan External Trade Organization(JETRO)
Overseas Research Department

JETRO Global Trade and Investment Report 2019
Contents

Chapter 1: World trade and Japan’s trade• Section 1: Current state of the world economy• Section 2: World trade• Section 3: Japan’s trade• Section 4: Impact of trade protectionism
Chapter 2: Global FDI and Japan’s FDI• Section 1: Global FDI• Section 2: Japan’s outward FDI• Section 3: Japan’s inward FDI• Section 4: Emerging companies as new business partners
Chapter 3: Trends in global trade rule formation• Section 1: Current situation of FTAs in the world and Japan• Section 2: Recent trends in FTA rule formation• Section 3: Trends of trade protectionism• Section 4: Current status and issues of multilateral trade system
What is JETRO Global Trade and Investment Report?

■ History
In 1956, JETRO launched “Current Situation of Overseas Markets.” Since then, it has been issued as“JETRO White paper on International Trade,” “JETRO White paper on Foreign Direct Investment”(2 volumes), “JETRO White paper on International Trade and Investment.” Since 2010, "JETRO
Global Trade and Investment Report,” has been available free on our website below.

■ Key features
This is an annual report analyzing the trends of the worldwide economy, trade, FDI and trade rules
utilizing various data as well as reports from our overseas offices. JETRO Global Trade andInvestment Report is a report in which annual trade, investment and trends in trade rules can beunderstood at a glance.
The full text of the report (in Japanese) can be downloaded from the URL below.
https://www.jetro.go.jp/world/gtir/■

2

Copyright (C) 2019 JETRO. All rights reserved.

World trade and investment, trade rules

World trade in 2018 was at a record high, however, its growth is slowing down
■ In 2018, world trade (trade in goods, nominal export value) increased by 9.7% to a record

high of $19.0 trillion (JETRO estimate). However, growth slowed compared to 2017. The
reason for this slowing growth is the deceleration of the global economy due to trade disputes
and rising tariffs, a decline in business confidence and heightened policy uncertainty.
■ In the same year, exports expanded in many countries and regions, but the growth rate
slowed compared to the previous year. Particularly in Europe, exports slowed in the second halfof the year. By product category, resource-related products supported global trade expansion on
the back of rising fuel prices, while exports of electrical equipment and general machinery(such as semiconductor-related products) declined.
■ Adding up the total trade values of 33 major economies where data was available up to thefirst quarter of 2019, the total export value showed a decrease of 2.6% compared to the same
period last year. Growth was negative for major items such as general machinery (2.3%
decrease YoY), electrical equipment (3.4% decrease YoY), transport equipment (4.3% decrease
YoY) and chemicals (0.9% decrease YoY). The decline was especially noticeable in machine
tools, semiconductor manufacturing equipment and cellular phones.
Trends in world trade (export basis)（Billion USD）

20,000

Export value
Nominal growth rate (right axis)
Real growth rate (right axis)（Year-on-year ％change）
20
Others19,024 25
20

17,34518,000Contribution of exports by economies, on aquarterly basis

（％）

15

16,00014,00012,000

4.5

10,000101010.7 9.7

5

5

2.8

8,000
6,000

0

0

-5

-5

-10

-10

-15

4,000

-15

-20

2,000

-25

0

-30

-20

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

Value
16,64064,543
15,607
7,238
5,819
4,974
7,378
2,570
48,047
24,9146,049
14,006
2,437
3,244
2,399
4,493
190,243
114,61575,62830,088（100 million USD, ％）ImportGrowth ContriShareratebution
13.0
8.6
1.1
32.9
10.4
3.4
6.6
10.5
0.7
3.3
12.3
0.4
3.4
8.7
0.3
3.3
5.0
0.2
3.8
11.5
0.4
1.2
2.6
0.0
21.9
15.1
3.2
10.8
17.8
1.8
2.7
11.9
0.3
7.0
13.5
0.9
1.2
11.2
0.1
2.6
14.3
0.4
0.9
20.2
0.2
1.2
4.7
0.1
100.0
10.3
10.3
61.9
9.3
5.8
38.1
11.9
4.5
12.1
5.2
0.7

Note: Figures of "World," "EU," "Advanced economies," "Emerging/developing economies" and "Commodity
exporters" were estimated by JETRO. 2) Figures of "EU" include those of intraregional trade. 3) Member countries of
ASEAN 6 are Singapore, Thailand, Malaysia, Vietnam, Indonesia and the Philippines. 4) East Asia includes China,
South Korea, Taiwan and ASEAN 6. 5) See footnote in the main text regarding the definition of "Commodity exporters"(40 emerging/developing economies and 7 advanced economies). Figures of small countries which were unavailable orunable to be estimated were excluded. 6) Advanced economies include 37 economies based on the definition of DOTS
(IMF). Figures for "emerging/developing economies" are calculated by subtracting "advanced economies" from the"world."7) Highlighted cells indicate countries/regions with a decreased growth rate compared to 2017.
Source: Trade statistics of respective economies and WTO data

II III IV I

II III IV I

II III IV I

II III IV I

II III IV I

2014

2015

2016

2017

2018

2019

World trade by product (export basis, 2018)

World trade by country and region (2018)
US
EU
Germany
Netherlands
FranceUK
Japan
Australia
East Asia
China
South Korea
ASEAN6
VietnamIndia
BrazilRussiaWorld
Advanced economies
Emerging/developing economies
Commodity exporters

I

Note: 1) World exports cover 210 economies. 2) See footnote in the main text regarding thedefinition of "commodity exporters."EU26 includes all EU member economies excluding two
commodity exporters (Greece and Cyprus).

（year）

ExportGrowth ContriShare
Value
rate
bution8.7
7.6
0.7 25,427
33.9
9.5
3.2 64,613
8.2
7.7
0.6 12,857
3.8
11.0
0.4
6,457
3.1
8.7
0.3
6,725
2.6
11.2
0.3
6,552
3.9
5.8
0.2
7,481
1.4
11.2
0.1
2,271
25.3
9.2
2.3 43,028
13.1
10.1
1.3 21,090
3.2
5.4
0.2
5,352
7.4
10.0
0.7 13,728
1.3
13.3
0.2
2,369
1.7
8.3
0.1
5,144
1.3
10.2
0.1
1,812
2.4
25.6
0.5
2,382
100.0
9.7
9.7 196,149
60.2
8.0
4.9 121,455
39.8
12.3
4.8 74,694
15.8
17.1
2.5 23,822

2018

Commodity exporters
ASEAN6
China
Japan
US
EU26
World exports (growth rate)

15

Value
Total exports
Machinery and equipment
General machinery
Turbines
Computer and peripheral equipment
Semiconductor manufacturing equipment
Industrial robots
Electrical equipment
Communication equipment
Integrated circuits
Lithium-ion storage batteries
Transport equipment
Automobiles
Automobile parts (excluding engines)
Precision equipment
Chemicals
Pharmaceuticals and medical supplies
Commodity-related products (total)
Fuel (mineral fuels etc.)
Non-fuel (metal, food and beverages)
Metal
Food and beverages

190,243
77,12922,744
1,369
6,084
837
60
27,560
6,120
7,146
298
20,190
9,313
4,213
6,634
26,307
6,052
55,09924,60430,495
15,18715,308（100 million USD, ％）GrowthContrirate
bution
100.0
9.7
9.7
40.5
7.6
3.1
12.0
9.9
1.2
0.7
14.3
0.1
3.2
11.0
0.3
0.4
9.4
0.0
0.0
-0.5
0.0
14.5
8.6
1.3
3.2
4.9
0.2
3.8
14.5
0.5
0.2
32.8
0.0
10.6
4.6
0.5
4.9
3.9
0.2
2.2
6.6
0.2
3.5
5.4
0.2
13.8
11.3
1.5
3.2
12.8
0.4
29.0
15.5
4.3
12.9
28.5
3.1
16.0
6.8
1.1
8.0
10.7
0.8
8.0
3.1
0.3

Share

Note: 1) JETRO estimates. See Appendix Annnotation II regarding the method of estimation.
2) See Appendix Annnotation I regarding the product classification. 3) Highlighted cells indicate itemswith a decreased growth rate compared to 2017.
Source: Trade statistics of respective economies

3

Copyright (C) 2019 JETRO. All rights reserved.

World trade and investment, trade rules

Global direct investment decreases over 10%, affected by US tax reform■ Global inward FDI in 2018 decreased by 13.4% from the previous year to $1,297.2 billion(on a balance of payment basis, net, flow). Inward FDI in developed countries fell 26.7% to$556.9 billion, remaining at its lowest level in 14 years, since 2004. Behind this is the largescale tax system revision (a one-time tax on overseas retained earnings of US companies, etc.)
in the United States which resulted in US companies going forward with the domestic
repatriation of profits held overseas, for example from European affiliates.

■ The number of global cross-border greenfield investments announced in 2018 increased by
7.2% from the previous year (13,855 cases) to 14,847 cases. Among major economies, thenumber of investments toward ASEAN showed a remarkable increase. In the case of crossborder greenfield investment in ASEAN by companies from outside of the region, the increase
in investment from the US and China is particularly noticeable.
Top 10 countries/regions in the world interms of FDI (2018)(Unit: Million USD)
Inward FDI
Outward FDI
1 United States
251,814 Japan
143,161
2 China
139,043 China
129,830
3 Hong Kong, China
115,662 France
102,4214 Singapore
77,646 Hong Kong, China
85,1625 Netherlands
69,659 Germany
77,076
6 United Kingdom
64,487 Netherlands
58,9837 Brazil
61,223 Canada
50,455
8 Australia
60,438 United Kingdom
49,8809 Spain
43,591 Korea, Republic of
38,917
10 India
42,286 Singapore
37,143
Note: Excluding financial centers in the Carribean region
Source: Data of UNCTAD

Trends in global inward FDI (net and flow)(Billion USD)
2,200
FDI in developed countries

2,000

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

1,800

Global cross-border greenfield investment

1,600
1,400
1,200
1,000
800
600
400
200
0

2003

04

05

06

07

08

09

10

11

12

13

14

15

16

17

Note: 1. The figures for developed countries were summed from those of 39 countries/regions based on the categories of UNCTAD.
2. The figures for emerging and developing countries are those of the world (excluding the financial center in the Caribbean region)
minus those of developed countries.
Source: Data from UNCTAD and Thomson Reuters

18(year)

千Change in US outward FDI (net and flow)(Billion USD)

(Cases)

200

2,000
1,800

150

Change in global cross-border greenfield
investment(Cases)
18,000World (right axis)

1,600

100

1,000

-50

800

-150
-200

8,000
6,000
4,000

400

Reinvestment of earnings

2,000

200

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 (Year)Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
2014

2015

2016

2017

16,00010,000600Outward FDI-100

toward ASEAN

12,0001,200

0toward China

14,0001,400

50

toward US

2018

Source: fDi Markets (Financial Times)

Source: BOP (IMF)

4

Copyright (C) 2019 JETRO. All rights reserved.

World trade and investment, trade rules

FTA network expands worldwide, with widespread use by Japanese companies■ The total number of free trade agreements (FTAs) in force in the world as of the end of June2019 was 314, up from 307 in the same period of last year (including customs unions andpreferential trade agreements, research by JETRO). The coverage ratio of Japan's enacted FTAs
has increased significantly from 23.4% in the previous year to 36.7% with the entry into forceof TPP-11 and the Japan-EU EPA. If RCEP, which is under negotiation, comes into force, thecoverage ratio will increase to 63.8%.
■ According to JETRO surveys, the utilization rate of FTAs in the export of Japanesecompanies to ASEAN countries has increased in recent years. The elimination of tariffs basedon FTAs can happen immediately or incrementally, and there are many items that are
eliminated after 10 years or more. About 10 years have passed since the entry into force ofmany FTAs with Asian countries, meaning they are finally reaching their “harvesting period”.
FTA (in force) coverage ratio of major countries/regions（Unit：%）FTA coverage ratioTwo-way Export
Import
Japan
36.7
34.8
38.7
US
39.1
47.0
33.9
Canada
83.3
89.2
78.0
Mexico
78.1
88.9
67.5
Chile
83.8
86.3
81.0
Brazil
16.3
15.7
17.1
Total trade
76.3
77.3
75.3
EU28
Extra-regional
34.4
36.9
31.9
Turkey
50.2
59.0
43.6
China
30.6
23.2
39.2
South Korea
67.8
72.5
62.5
ASE AN
59.6
57.2
62.0
Singapore
78.6
74.0
81.1
Malaysia
62.4
61.6
63.3
Vietnam
63.6
51.3
76.4
Thailand
60.8
59.2
62.3
Indonesia
66.6
64.0
69.0
India
16.9
16.8
16.9
Australia
72.8
75.9
69.3
New Zealand
63.0
65.3
60.7

FTA partner countries/regions
1st
2nd
3rd
ASEAN
15.2 TPP11
12.0 EU
NAFTA
29.2 South Korea 3.1 Singapore
NAFTA
66.1 EU
10.1 TPP11
NAFTA
63.9 EU
8.1 TPP11
China
27.7 US
16.4 EU
Mercosur10.1 CAN
3.0 ChileEU
63.8 Switzerland 2.5 Turkey
Switzerland 6.7 Turkey
3.9 EEA
EU
42.1 South Korea 1.9 EFTA
ASEAN
12.6 South Korea 6.8 Taiwan
China
23.6 ASEAN
14.0 US
ASEAN
22.7 China
17.3 Japan
ASEAN
23.8 China
13.1 TPP11
ASEAN
27.2 China
16.7 Japan
China
22.7 South Korea 14.0 TPP11
ASEAN
23.3 China
16.0 Japan
ASEAN
23.9 China
19.7 Japan
ASEAN
11.1 South Korea 2.5 Japan
China
29.6 TPP11
20.8 ASEAN
TPP11
26.1 China
21.9 ASEAN

11.5
1.4
7.7
6.1
13.6
2.3
1.4
3.4
1.5
4.9
11.5
8.4
10.3
7.1
13.1
12.0
10.1
2.1
13.8
12.2

Note: 1)The subject countries include countries and regions which have established an FTA as of the end of June 2019. The figures are based upon tradevalues in 2018.
2)Abbreviations: Andean Community (CAN), the European Economic Area (EEA).
3) Hong Kong and Macao are excluded from the figures of China.
4) Hong Kong is excluded from the figures of ASEAN.
5) Figures for Canada and Singapore were calculated by export statistics which exclude re-exported trade.
6) TPP11 includes only ratification countries in the coverage rate..
Source: Documents and trade statistics from each country's government, "DOTS, June 29th, 2019"(IMF)

Utilization of FTAs in exports of Japanese firms
Survey Year
Total

Thailand

VietnamIndonesia

Malaysia

Philippines

India

Import value shares and tariff rates
of certain cosmetics (HS330499) in Thailand(%)
FY2016→FY2018

Usage

FY2016（n=1,234）

45.1

FY2017（n=1,347）

44.9

FY2018（n=1,472）

48.2

FY2016(n=824)

47.2

FY2017(n=875)

46.7

FY2018(n=957)

49.0

FY2016(n=575)

33.7

FY2017(n=646)

32.8

FY2018(n=727)

40.2

FY2016(n=554)

39.2

FY2017(n=579)

41.3

FY2018(n=597)

44.6

FY2016(n=532)

31.6

FY2017(n=547)

29.3

FY2018(n=580)

33.3

FY2016(n=383)

26.1

FY2017(n=412)

26.2

FY2018(n=466)

30.0

FY2016(n=354)

29.1

FY2017(n=376)

28.2

FY2018(n=382)

37.4

(%)
50

+3.1

+1.8

40

+6.4

30

Import: Japan
Tariff: JTEPA

Import: South Korea
Tariff: AKFTA

20

+5.4

10

+1.7

0

+3.9

+8.3

Note: 1) The parameter for the total is the number of firms that are performing exports to one or morecountries/regions for which FTAs have been implemented at the time of the survey. It does notinclude firms who did not answer whether they were using an FTA or whose answers were unclear.
2) List includes six countries with which FTAs have been implemented as of the time of the survey andto which many companies are exporting.
Source: FY2018 Survey on the International Operations of Japanese Firms (JETRO)

52007 08 09 10 11 12 13 14 15 16 17 18 (Year)
Note: 1) JTEPA stands for "Agreement between Japan and the
kingdom of Thailand for an Economic Partnership", and AKFTA"ASEAN Korea Free Trade Agreement." 2) Tariff reductions are
based on agreements.
Source: Global Trade Atlas (IHS Markit), JTEPA documents(Ministry of Foreign Affairs), AKFTA documents (ASEAN
Secretariat) and Thai Customs

Copyright (C) 2019 JETRO. All rights reserved.

Trends and impact of trade protectionism

Growing uncertainty resulting from the expansion
in trade-restrictive measures worldwide■ According to WTO, G20 economies introduced 71 trade-restrictive measures in 2018,
representing an increase for two consecutive years. In addition, the trade coverage of thesemeasures from October 2018 to May 2019 is estimated at US$335.9 billion, the second
largest volume following the previous aggregation period (US$480.9 billion).
■ In terms of the growing protectionist trend, certain countries and regions have introduced
various trade-restrictive measures, such as increased tariffs and the encouragement of the useof domestic products. Within the string of retaliations that have followed the unilateralmeasures by the United States since 2018 include measures that are not consistent withinternational trade rules, leading to diminished predictability for firms.
Numbers of trade-restrictive measures by G20 economies and their trade coverage
100(Numbers)

90
80

91

Total
78

83
68

70

58

60

(Numbers)(100 million, US$)
10 5,000
OthersExport restriction
9
Import restriction
Average per month (right axis)
8 4,00071
762
6 3,000

50

30

4 2,000
320

20

2 1,000

10
012012 2013 2014 2015 2016 2017 2018
Note: Tade remedies are not included. The dates inparentheses indicate the aggregation period.
Source: WTO

3,359

5

40

40

4,809

18/5- 18/1018/10 19/5
(Year/Month)

0

470

741
322

0

17th
18th
19th
20th
21st
Report Report Report Report Report(Oct 2016- (May-Oct (Oct 2017- (May-Oct (Oct 2018May 2019)
May 2017) 2017)
May 2018) 2018)

Global Economic Policy Uncertainty Index

400

2018
US-China Trade Friction(1997-2015 Average=100)

350

2016
Brexit Referendum

300
250

200

2000
Dot-com Bubble Burst

1997
Asian Financial Crisis

2010
2013
Eurozone CrisesUS Government Shutdown

2001
9/11
2003
Iraq War2008
Global Financial Crisis

150
100

50
1997
1999
2001
2003
2005
2007
2009
2011
2013
2015
2017
Note: Index developed by Stanford University based on data collected through articles of leading newspapers from 20
countries on a monthy basis. The larger the figure, the higher the uncertainty.
Source: "Economic Policy Uncertainty Project" (Policy Uncertainty.com)

6

2019(Year)

Copyright (C) 2019 JETRO. All rights reserved.

Trends and impact of trade protectionism

Tariff rate rises as US administration uses all tools available■ Immediately after the start of the Trump administration, US actively used trade remedy
measures, including safeguards implemented for the first time in 16 years. Since 2018, US has
also used unilateral trade measure. This includes measures that have not been used for many
years. Trading partners have been quick to respond with counter measures against US’s actions
such as measures under Article 232 of the Trade Expansion Act of 1962 and the repeated tariffincreases for Chinese products.
■ For the current US administration, which aims to reduce the trade deficit, there is a highpriority for measures against China, with which the US has the largest trade deficit. The US has
added tariffs on Chinese products three times since July 2018 under Article 301 of the 1974
Trade Act. The average effectively applied tariff rate of the US rose from around 1.4% in the
2000s to 1.9% in 2018, mainly due to the expansion of additional tariffs against Chinese goods.
This is about the same rate as 1998 (2%) shortly after the WTO was established.
Major trade-related decisions taken by the Trump administration

2019

2018

Date
Outline of measures
23-Jan President approves safeguard measures on large residential washers and crystalline silicon photovoltaic products
8-Mar Determination of additional import tariffs on steel and alminum based on the investigation conducted under Section 232 of the Trade Expansion Act of 1962
Determination of additional import tariffs on imports from China and strengthened investment restriction on Chinese investment in the US, based on the investigation
22-Marconducted under Section 301 of the Trade Act of 1974
27-Mar Agreement in principle of an amended US-Korea FTA (KORUS FTA)
23-May Initiation of investigation under Section 232 of the Trade Expansion Act of 1962 regarding the effects of imported automobiles and parts on national security
6-Jul First round of additional tariffs on imports from China based on Section 301 of the US Trade Act of 1974
Enactment of the National Defense Authorization Act (NDAA) for FY2019, including FIRRMA to strengthen CFIUS, ECRA to enhance export control regulations,
13-Augand stipulations to prohibit government procurement of Chinese telecommunication equipment
23-Aug Second round of additional tariffs on imports from China
24-Sep Third round of additional tariffs on imports from China
30-Nov Signature of the US-Mexico-Canada Agreement (USMCA)
17-Feb Submission of Section 232 Investigation Report on automobiles and parts from the DOC to the President
1-Mar Submission of the 2019 Trade Policy Agenda and 2018 Annual Report to Congress
15-Apr Trade Agreement on Goods (TAG) negotiation starts with Japan
10-May Raising of tax rate on the third round of additional tariffs on imports from China
13-May Announcement of the list of products subject to the fourth round of additional tariffs on imports from China
16-May Addition of Huawei and its 68 affiliates to the Entity List of the DOC
17-May Proclamation postponing for 180 days a final decision on whether to impose Section 232 tariffs on automobiles and parts
20-May Areement to remove Section 232 steel and aluminum tariffs on Canada and Mexico23-May DOC proposes rulemaking to impose countervailing duties on countries that act to undervalue their currency
Announcement of additional tariffs on products imported from Mexico based on the 1977 International Emergency Economic Powers Act → Indefinitely suspended
30-Mayon June 7
Sources: White House, JETRO website

US average effective tariff rate

35.0 (%)

The Revenue Act of 1913

(Also known as the Underwood Tariff,which stipulates comprehensive andsignificant elimination of tariffs.)

30.0
25.0

Average effective tariff rate

The Tariff Act of 1930

(Also known as the Smoot-Hawley Tariff Act, ahigh tariff policy law established for the Great
Depression.)

Average effective tariff rate on Chinese goods

The Reciprocal Trade Agreement Act of
1934

12.4%

(Stipulating the promotion of trade agreements with othercountries for expanding exports.)

20.0
15.0

1948 GATT goes into effect

1995 WTO established
2001
China's accession to WTO

10.0

1.9%

2018

2010

2000

1990

1980

1970

1960

1950

1940

1930

1920

1910

1900

0.0

1890

5.0

(Year)

Note: Average effective tariff rates on Chinese products are the actual rates imposed from 1989 to 2017. Only the figure for 2018 is estimated by the Peterson
Institute for International Economics, taking into account the effects of additional tariffs imposition.
Sources: Unites States International Trade Commission, World Integrated Trade Solution(World Bank), The Peterson Institute for International Economics
7
Copyright (C) 2019 JETRO. All rights reserved.

Trends and impact of trade protectionism

Import value between the US and China declines after mutual imposition of
additional tariff measures■ 2018 saw a succession of large-scale trade restrictive measures enforced. Particularly sinceJuly, the exchange of additional tariff measures between the US and China has been ongoing,
continuing in 2019. The scale of trade value subject to major trade restrictive measures since
2018 corresponds to around 4% of the world trade value in 2017.
■ The growth of US imports from China in 2018 slowed down after the imposition of the thirdround of additional tariffs against China, and since January 2019 it has continued to decline
significantly compared to the same month of the previous year. At the same time, China's
imports from the US have slowed in growth after the imposition of its first round of additionaltariffs, and since October 2018 they have begun declining year-on-year.
Major trade restrictive measures since 2018
Tariff-effective
dateCountries/regions
imposing themeasures3/23/2018

US

3/23/2018

US

4/2/2018

China

6/22/2018
7/6/2018(Unit: Million USD, %)Trade scale(2017)

Percentage of total
imports from thetarget country

Additional 25% tariffs on 252 steel products

29,033

1.2

Additional 10% tariffs on 9 aluminum products

17,4030.7

USAdditional tariffs of up to 25% on 128 products including fruits, pork, steel and aluminum

2,969

2.0

EU

US

Additional tariffs of up to 25% on 182 products including steel, aluminum, engines, ships and card
games

3,206

1.1

US

China

[First round] Additional 25% tariffs on 818 products including cars, pumps and electronic parts

32,262

6.4

TargetOutlineAll trading
partners*
All trading
partners*[First round] Additional 25% tariffs on 545 products including agricultural products such as soy
7/6/2018
China
US33,83422.6
beans, livestock such as beef and pork, cars and seafood[Second round] Additional 25% tariffs on 279 products including plastics, semiconductors, railway
8/23/2018
US
China
13,685
2.7
cargo and tractors[Second round] Additional 25% tariffs on 333 products including cars, chemical products and energy
8/23/2018
China
US
14,1089.4
products[Third round] Additional 10% tariffs on 5,745 products including furniture, clothes and miscellaneous
9/24/2018
US
China
189,91037.6
goods. On May 10, 2019, the rate was raised to 25%.
[Third round] Additional tariffs of up to 10% on 5,207 products including LNG, electronic products
9/24/2018
China
US53,39335.7
and food. On June 1, 2019, the rate was raised up to 25% among the 4,545 products.
[Fourth round] Additional tariffs of up to 25% on 3,805 products including cellular phones,
Undecided
US
China
255,208
50.5
notebook computer and toys.
Note: 1) The figures for trade scale were created from the 2017 trade statistics of countries/regions imposing the measures. Target products were counted based on those which were listed at thetime restrictive measures were implemented. '2) * Some countries and regions were excluded.
Source: "Biznews" by JETRO, "World Economic Trends II (The 2018 Autumn/Winter Report)" by the Cabinet Office, and trade statistics from each country.

Trends in import of China from the US

Trends in import of the US from China
20.0(Year-on-year change)

(%)

30.0

(Year-on-year change)(%)

Year-on-year change
15.0

20.0

Year-on-year change

10.0

10.0

5.0

0.0

0.0

-10.0

-5.0
-10.0

-15.0
-20.0

First
SecondThirdFirst roundon July 6-20.0

Second roundon August 23

-30.0

-40.0

Third roundon September 24

OthersFirst
SecondSecond roundon August 23
Third roundon September 24

Third
Others-50.0

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May
2018

First rounf
on July 6

2019

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May
2018

2019

Source: "Trade statistics" by China Customs, "Biznews" by JETRO

Source: "Trade statistics" by the DOC, "Biznews" by JETRO

8

Copyright (C) 2019 JETRO. All rights reserved.

Trends and impact of trade protectionism

Shift in US procurement of computer parts and accessories■ When comparing China's share of import subject to additional tariff measures in the US
before and after imposition of the additional tariffs, China's share declined in many items suchas computer parts and digital processing units after imposition.

■ Considering the import of computer parts and accessories, such as printed circuit boards, theimports from China decreased by nearly 60% compared to before additional tariff measures.
Meanwhile, the import from Korea increased 2.3 times, and that from Taiwan 2.7 times.
Regarding digital processing units (excluding notebook computer), the import from China
dropped to about half, while imports from Mexico and Taiwan expanded by 16.4% and 5.8
times respectively.
Changes of China's share of the US imports before and after additional tariff measures by the US
Imports
from China(2017)

Taeget Products
Total import of target products (3,434 products, counted based on the 6-digit HS code)

235,857(Unit: Million USD, %)China's share of US's imports of target products
BeforeAfter
Change of(Oct. 2017 (Oct. 2018 share
Mar. 2018)
Mar. 2019)
16.0

14.0

1

851762*

Third

Voice, image data transmission / reception devices (switching, routers, etc.)

22,935

51.2

50.2

- 2.0
- 0.9

2

847330

Third

Parts and accessories for computer, such as printed circuit boards

15,00970.9

32.6- 38.23850440

Third

Static converters (rectifiers, etc.)

4,612

50.2

46.2

- 4.0

4

847150

Third

Digital processing units (excluding notebook computer)

4,412

19.4

9.2

- 10.25940161*

Third

Seats with wooden frames, upholstered

3,773

67.7

63.9

- 3.8

6

940320

Third

Metal furniture (excluding for offices)

3,532

70.3

69.0

- 1.3

7

940540Third

Electric lamps and lighting fittings

3,115

67.9

68.5

+ 0.6

8

420292Third

Bags (plastic, fiber, excluding suitcases and handbags)

3,002

70.4

65.8

- 4.5

9

940360Third

Wooden furniture (excluding for offices, kitchens and bedrooms)

2,736

45.8

42.7

- 3.1

10

854442

Third

Cables for communication and power (with connectors)

2,688

54.1

53.5

- 0.6

11

870870

Third

Road wheels and parts and accessories for motor vehicles

2,358

58.7

56.0

- 2.7

12

848180Third

Cocks (made of steel, copper)

2,235

28.5

30.7

+ 2.2

13

854370

SecondElectrical devices with individual functions (such as LED bulbs)

2,213

34.1

27.7

- 6.4

14

847170First

Automatic data processing storage units

2,137

18.6

4.9

- 13.715940510Third

Chandeliers and other electric ceiling or wall lighting fittings

2,136

53.0

54.7

+ 1.7

16

940179*

Third

Seats with metal frames, not upholstered

2,035

87.6

86.2

- 1.4

17

870899

Third

Parts and accessories for motor vehicles

1,903

14.3

14.6

+ 0.3

18

391810

Third

Vinyl floor covering

1,805

84.3

87.3

+ 3.0

19

850811

Third

Vacuum cleaners (less than 1500-watt output)

1,714

77.4

76.1

- 1.4

20
853710Third
Equipment for electrical control and distribution (less than 1,000 volts)
1,681
16.1
18.2
+ 2.0
Note: 1) Target products released based on the 8-digit HTS code were re-counted in the level of the 6-digit HS code (a total of 3,434 products). 2) Codes with *; partially
include non-target products. 3) In the case that a product is targeted in multiple phase, it was listed with the largest import amount. 4) Colored cells are products of which theshare has shrunk by 10%points or more after imposition. Source: "Trade statistics" by the DOC, "Biznews" by JETRO

Changes of import of target products after additional tariff measures by the US
Parts and accessories for computer,such as printed circuit boards

Total import of target products(%)(Billion USD）
900

800

20.0
Share of China (right axis)

16.0

14.0

15.0

70.9

14,000(%)
Share of China(right axis)

10.0

700

5.0
600

500

(Million USD)
16,000

0.0

492

499

32.6

12,000803
10,000

200
100

0

26

129

South
Korea
Mexico

139

China
123

109

before

after

31

4,000

40.0

18,000

(%)

19.4

9.2

16,00014,000Share of China(right axis)

Taiwan183

1,057

12,000
Taiwan
2,192

China
8,957

0.0

20.0
15.0

10.0
5.0

0.0

10,000

South
Korea

8,000

3,322

6,000

Mexico10,352

12,048

4,000

2,000
0

60.0

1,453

400
300

（Million USD)
80.0 20,000

20.0

8,000

6,000

Digital processing units(excluding notebook computer)

3,715

2,000
0

before

after

China
2,677

1,393

beforeafter

Note: 1) The period of "Before": Oct. 2017 - Mar. 2018. The period of "After": Oct. 2018 - Mar. 2019. 2) Only the two countries/regions with the largest increase in share of US's
total import of all target products as well as each individual product are displayed. 3) Share of China is that of total imports of taeget product by the US.
Source: "Trade statistics" by the DOC, "Biznews" by JETRO
Copyright (C) 2019 JETRO. All rights reserved.

9

Trends and impact of trade protectionism

China’s procurement of soybeans and cotton shifts to Brazil and other countries■ When comparing the US share of the import subject to additional tariff measures in China
before and after imposition of the additional tariffs, the US share shrank in items such as
soybeans and cotton by more than 30% after imposition.
■ In regard to China’s soybean imports, the import from the US, which was its largest trading
partner in the category, decreased 90% from before imposition. Meanwhile, the import from
Brazil increased 1.9 times, and that from Canada increased 2.5 times. The import of cotton
from the US decreased 45.7%, while imports from Brazil and Australia both increased
approximately five times.
Changes of US's share of China's imports before and after additional tariff measures by China(Unit: Million USD, %)US share of China's imports of target products

Imports fromthe US(2017)

Taeget Products
Total import of target products (4,078 products, counted based on the six digit HS code)

Before(Oct. 2017 Mar. 2018)

After(Oct. 2018 Mar. 2019)

Change ofshare

101,334

9.5

5.9

-3.6

Soybeans, other than seeds

13,959

56.2

7.2

-49.0

First

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

10,318

25.1

17.8

-7.3

SecondLiquefied propane gas

1,761

26.4

0.0

-26.4

SecondWaste paper (such as unbleached kraft paper)

1,694

51.8

37.0

-14.8

First

Electric-powered vehicles

1,403

94.2

93.4

-0.8

740400

SecondCopper waste and scrap

1,390

18.6

4.7

-13.9

7

470321

Third

Chemical woodpulp (of softwood)

1,069

22.2

15.9

-6.3

8

520100First

Cotton, not carded or combed

980

49.6

13.7

-35.9
-98.2

1

1201902870323*327111244707105870380*

6

First

9

100790First

Grain sorghum, other than seeds

956

98.2

0.0

10

410150

Third

Whole hides of cows and horses (exceeding 16 kg)

892

55.4

52.5

-2.9

11

020649First

Offal of swine except livers, edible, frozen

874

46.7

9.7

-37.0

12

760200

SecondAluminum waste and scrap

832

30.2

29.0

-1.2

13

440791Third

Oak wood

829

84.7

73.1

-11.6

14

902780

Third

Instuments and apparatus for analysis

820

26.1

23.4

-2.6

15

870324*First

Passenger cars with engine over 3,000 cc

784

10.2

8.2

-2.1

16

847989Third

Machines and mechanical appliances with individual functions

764

8.9

6.0

-2.9

17

260300Third

Copper ores and concentrates

671

2.6

0.0

-2.6

18

870840First

Gear boxes for motor vehicles

660

11.9

8.2

-3.7

19

852349Third

Optical media for recording sound or other phenomena

647

29.4

25.4

-4.0

20
271111
Third
Liquid natural gas
644
7.9
0.9
-7.0
Note: 1) Target products released based on the eight digit HS code were re-counted in the level of the six digit HS code (a total of 4,078 products). 2) Codes with *; partially
include non-target products since January 2019. 3) In the case that a product is targeted in multiple measures, it was listed under the measure with the largest import amount.
4) Colored cells are products of which the share has shrunk by 30%points or more after imposition. Source: "Trade statistics" by China Customs, "Biznews" by JETRO

Changes of import of target products after additional tariff measures by China(Million USD)
10.0 22,500

9.5

56.2

Share of US(right axis)

5.9

500

17,500

539

0.0

400

494

490

12,5005,000

Australia

0

US

12

22

55

35

Before

19

After

0.0

Brazil

20.0
0.0

2,000

1,333

1,500

Australia

BrazilUS

11,307

10,245

1,095
Before

After

590

1,000
118
500

2,500

0

40.0

13.7

20.0

10,000

200

20

2,500

Canada

5,986

7,500

100

Share of US(right axis)

40.0

7.2

15,00060.0

49.6

Share of US(right axis)

20,0005.0(%)(Million USD)(%)
60.0 3,000

(%)

600

300

Cotton, not carded or combed

Soybeans

Total import of target products(Billion USD）
700

0

148
US

Brazil
723

567

308

BeforeAfter

Note: 1) The period of "Before": Oct. 2017 - Mar. 2018. The period of "After": Oct. 2018 - Mar. 2019. 2) Only the two countries/regions with the largest increase in share of China's total import of all target
products as well as each individual product are displayed. 3) Share of US is that of total imports of taeget products by China. 4) As data on “gold (HS7108)” (included in target products) was not disclosed
through China's trade statistics before March 2018, gold is excluded from total import of target products.
Source: "Trade Statistics" by China Customs, "Biznews" by JETRO

10

Copyright (C) 2019 JETRO. All rights reserved.

Trends and impact of trade protectionism

Southeast Asia as a candidate for transferring production bases■ Although a number of foreign-affiliated companies in China did not have plans to transfer

their production bases when asked in surveys, some companies had begun to review theirproduction system. Should the decision be made to transfer production and bases to othercountries in response to protectionism, foreign-affiliated companies in China listed Southeast
Asia as a candidate location.
Candidate regions where German and US companies in China are considering transferring production sites(1) German-affiliated companies in China
The ratio of companies which have decided
to transfer production sites from China in
response to protectionism (%)(1) German-affiliated companies in China
Countries and regions where companies havedecided to transfer production sites in response toprotectionism within the past two years(Multiple answers allowed, ％)

13.2

5.7

1.9

3.8
Other

WesternEurope（n=379）India

Southeast
Asia

Have not decided
to transfer
80.9%

20.8

Africa

0

20.8

20

Central/SouthAmerica

Unsure
5.3%

32.1

34.0

United States

40

Central andEasternEuropeHave decided
to transfer
13.8%(2) US-affiliated companies in China
Destination countries and regions where companies have already transferred or are
considering transferring production sites in response to protectionism(Multiple answers allowed、％)

80
60
40
20
0

64.6 60.3

24.7
18.5

10.4

6.3

6.3

8.4

6.0

5.9

4.2

4.2

4.2

3.8

3.9

10.5

Latin
America*

EuropeEast Asia

United States

IndianSubcontinent*

Elsewhere

Southeast
Asia

No plans to relocate
manufacturing
facilities

Results of research from Aug. to Sep., 2018 (n=432)
Results of research in May, 2019 (n=239)

Note: 1. Duration: (1) From August 27 to October 22, 2018; (2)The periods of research are from August 29 to September 5, 2018 , and from May 16 to 20, 2019.
2. Target companies are (1) members of the German Chamber of Commerce and Industry in China with production sites in China, and (2) members of the US
Chamber of Commerce and Industry in China and Shanghai with production sites in China.
3. In graph (2), "Indian Subcontinent" includes India, Bangladesh, Pakistan and Sri Lanka, and "Latin America" includes "Mexico". (Research in May 2019 wasdone only in "Mexico".)
4. For other details, refer to the documents below.
Source: (1)"German Business in China Business Confidence Survey"（The Delegations of German Industry and Commerce in China), (2)"Impact of US andChinese Tariffs on American Companies in China"（AmCham China and AmCham Shanghai）

Trends of global companies which were affected by additional tariff measures by the US and China (major cases)

For US market

For Chinese market

Time ofannoucement

Company

Head officelocation

Field

OutlineJul. 2018

Tesla

US

Electric vehicles

Constructed an EV production plant in the suburbs of Shanghai

Apr. 2019

Harley-Davidson

US

Motorcycles

Moved its motorcycle production from the US to Thailand

May. 2019

BMW Group

Germany

Automobiles

Moved its SUV production from the US to China (Shenyang)

May. 2019

Ford Motor Company

US

Automobiles

Planning to start production of a new model car (Lincoln) in China

Jul. 2018

Volvo Cars
Sweden（Zheijiang Geely Group Holding） (China)

Automobiles

Moved its SUV production from China to Europe

Oct. 2018

Nidec Corporation

Japan

MotorsFeb. 2019

TCL Corporation

China

May. 2019

Ricoh Company

Japan

May. 2019

Brooks Running Company

US

Shoes

Moved most production of running shoes from China to Vietnam

Jun. 2019

Sharp Corporation（Foxconn Technology Group）

Japan(Taiwan)

PCs

Moved a part of production of notebook PCs from China to Vietnam

Moved its production of cars and home electronic parts for the US from China to
MexicoStarted construction of TV production plants in Vietnam for domestic sales and theTV
US market
Moved main production of main multifunction printers for the US market to Thailand
Multifunction printersfrom China

Note: Some cases may include production other than for the Chinese or US market.
Source: Media coverage and press releases

11

Copyright (C) 2019 JETRO. All rights reserved.

Trends and impact of trade protectionism

Downturn in global economy resulting from trade issues, WTO reform becomes
critical agenda■ The global economic outlook is dominated by risks of downturn. According to estimates byinternational organizations, when looking at the economic impact of trade tensions, the harm tocorporate sentiment and investment is more serious than the additional tariff measures.
Therefore, even from the viewpoint that trade tensions adversely affect the global economy,
maintaining and strengthening the multilateral trade system is considered important.
■ Amidst the negative impact of trade tensions, there spreads a sense of crisis that therulemaking, monitoring and dispute settlement mechanism of the WTO in its current state areinsufficient. In particular, recovery of the dispute settlement function is not expected in the
short-term due to the issue regarding appointing Appellate Body members. With the
improvement in terms of fairness and reliability of the judicial function by Appellate Body,
which has been in place since the inception of the WTO framework, it should be resolved assoon as possible.
Outline of IMF's analysis of the impact of global trade tensions on the economy (GDP)Scenario(1)
Measures already implemented(2)
Additional tariffs on all mutual imports
between US and China(3)
Additional tariffs on cars and parts(4)
Impact on sentiment of firms(5)
Impact on financial market
Note:

Source:

2019
2020
2023
2019
2020
2023
2019
2020
2023
2019
2020
2023
2019
2020
2023

World
-0.11
-0.12
-0.08
-0.20
-0.23
-0.14
-0.25
-0.35
-0.25
-0.50
-0.51
-0.29
-0.78
-0.82
-0.32

Impact on economy（GDP）（%）
US
China
-0.15
-0.56
-0.16
-0.46
-0.16
-0.23
-0.20
-1.16
-0.27
-0.95
-0.31
-0.37
-0.61
-1.00
-0.69
-0.88
-0.55
-0.41
-0.74
-1.27
-0.76
-1.04
-0.55
-0.47
-0.91
-1.63
-0.95
-1.41
-0.56
-0.51

Each scenario is as follows:
1) The US imposes additional tariffs of 10% on aluminum imports, 25% on steel imports, 25% on $50 billion of imports from China and 10% on an
additional $200 billion of imports from China (rising to 25% in 2019). US trading partners impose retaliatory tariffs of an equivalent amount, except
in the case of the 10% tariff on $200 billion in Chinese imports. In this case, China responds with additional tariffs of 7% on $60 billion of US
imports (rising to 17% in 2019).
2) In addition to the above, from 2019 the US imposes additional tariffs of 25% on a further $267 billion of imports from China, and China respondswith additional tariffs of 25% on all imports from the US.
3) In addition to the above, from 2019 the US imposes additional tariffs of 25% on all imported cars and car parts, with trading partners imposing
retaliatory tariffs of an equivalent amount.
4) In addition to the above, the sentiment of companies worsens, and investment declines.
5) In addition to the above, the financial market is negatively affected.
"WEO, October 2018" (IMF)

Major developments surrounding the WTO
and number of documents published（No. of documents）
7,000

6,000

5,000

November 2001
4th Ministerial Conference- Start of new roundDecember 2011
8th Ministerial Conference- Agreement to explore"new approach"2017
February: Enforcement of Trade Facilitation
Agreement
December: 11th Ministerial Conference- Joint statment among voluntary members regarding
areas like electronic commerce
December 2013
9th Ministerial Conference- Trade Facilitation Agreement

4,000

3,000

Increased perception ofneed for WTO reform etc

2,000

1,000

0

Japan
0.03
-0.00
-0.03
0.08
0.01
-0.05
-0.04
-0.15
-0.24
-0.23
-0.34
-0.27
-0.47
-0.66
-0.34

Function of WTO and evaluations

Function

Multilateral trade rule
Legislative formation and tradeliberalization negotiations

×→△

△

△

Difficulties in decision making among all
members. Lack of US involvement in the
WTO. (Same as 2018)

Deterrence of protectionism
by investigating andMonitoring publishing theimplementation status of
current trade rules

○

○→△

△

Elimination of market-distorting measures suchas subsidies. Improvement of monitoring
function to ensure that all members comply
with their notification requirements.

▲

The suspension of the Appelate Body is not thesuspension of the dispute settlement function(panel procedures remain), but two of the threemembers of the current Appellate Body will
have their terms end on December 19.

December 2015
10th Ministerial Conference- Agreement on product expansion
negotiations for Information
technology Agreement (ITA)

2001 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18
15 16 17 18 19(January-June)(Year)
Note: The number of documents in which the word "WTO" has been published in 39 major overseas newspapers/magazines which could be
identified since 2001.
Source: "Factiva (July 2, 2019)" (Dow Jones), website of Ministry of Foreign Affairs, various materials

2014
2018
2019
Publication year of JETRO Global Trade and Investment Report
Evaluation
Challenges

Judicial

Judicial settlement of tradedisputes and its
implementation by Dispute
Settlement Body

○

◎→△

Note:

Each symbol is only to illustrate the current situation of the WTO, and not intended to undervalue thesignificance and function of the organization.
Source: "Global Trade and Investment" (JETRO, respective years), and various materials

12

Copyright (C) 2019 JETRO. All rights reserved.

Emerging companies as new business partners

Emerging companies show presence in major developed countries■ According to the National Venture Capital Association (NVCA), global venture capital (VC)

investment reached 254.3 billion dollars in 2018. Breaking down the amount of VC investmentby economy, the highest is the US, followed by China and then Europe. When comparing VC
investment as a percentage of GDP, that for the US (0.4%), and Israel (0.378%) is more than 10times higher than other major developed countries like Japan (0.036%). In recent years, while
the ratio for major developed countries overall has been climbing, it has only seen minute
growth in Japan.
■ Ecosystems which produce emerging companies such as startups are created by multiple
factors such as people aiming to start their own business, capital, a structural foundation forcompanies and legal regulations. They continuously produce startups that specialize in businessprogressiveness and pursuit of innovation and work to promote corporate renewal.
VC investments as a percentage of GDP ofmajor developed countries (2014 - 2017)

VC investments as a percentage of GDP (2017)
0.400

0.1

0.2

0.3

0.4

0.5

0.374
US

0.378

0.400

Seed, start-up/other early stage

0.104

CanadaLater stage venture

0.177

Total(breakdown unknown)

UK

0.036

FranceLuxembourg

Denmark

BelgiumJapan

Germany

Switzerland

IrelandSpain

South Africa

Netherlands

FinlandSwedenFranceNew Zealand

UK

South Korea

CanadaUS

Israel

（％）
0.4
0.35
0.3
0.25
0.2
0.15
0.1
0.05
0

（％）

0.0

Japan

Germany

0.177
0.036
0.076
0.027
0.055
0.023
0.036
0.023
0.035

0.378
Note: 1. The percentage for Israel is from 2014, and that for South Africa from 2016.
IsraelOnly that for Japan was calculated by JETRO from the total GDP and the VC(year)
investment amount, on a fiscal year basis (from April to March of the next year).
2014 2015 2016 2017
2. The growth stage of companies are decided based on OECD categories.
Note: Israel is with the data in 2014 only. The 2017 data of Japan was calculated by JETRO from the total
Source: OECD, Venture Enterprise Center, Japan (VEC)

GDP and the VC investment amount. The data of Japan is on a fiscal year basis (from April to March of thenext year). The figures without a box are from the data of 2014. Those with a box are from the data of 2017.
Source: OECD, Venture Enterprise Center, Japan (VEC)

Concept of ecosystem- Students- Foreign entrepreneurs- Retired employees- Serial entrepreneurs

Socia lissues(Aging, increase in unemployment
rate, hollowing out of industry,me d ic a l d is p a r it ie s , e t c . )Business
environmentOppor-tunity

Entreprenuer

StartupFunding- Pitch contests- Accelerator programs- Incubation facilities, etc.

Source: Created by JETRO based on various information

13

- VC
- Government
subsidies- Angel investors,
etc.

Recovering initial investment(exit), upscaling- Initiative of government- Existing firms- Univ. and research institutes- IT infrasructure- Laws & regulations

Copyright (C) 2019 JETRO. All rights reserved.

Emerging companies as new business partners

Ecosystems being developed in various countries toward fostering startups■ Looking at the characteristics of ecosystems in the world’s leading cities from the four
perspectives of 1) entrepreneur, 2) funding, 3) opportunity and 4) business environment, thestrengths of each ecosystem become clear. In Japan, with the spread of open innovation bylarge companies, a fourth venture boom is coming, and corporate venture capital (CVC) andaccelerators are increasing especially in Tokyo.
■ The policies of various governments aimed at developing ecosystems can be grouped into
three categories: 1) supply of tax benefits and subsidies, 2) establishment and deregulation ofvisas for foreign entrepreneurs and 3) creation of regulatory sandboxes. The Japanese
government has lowered the corporate tax and begun creating a startup visa system with theintention of creating 20 unicorns (unlisted venture enterprises with a value of one billion dollars
or more) or equivalent listed venture enterprises by 2023.
Advantages of major ecosystems
City
SiliconValleyBostonLondonParis

BerlinAdvantages
Business
environ-ment

Entreprenuer

Oppor-tunity

Funding

Business
environ-ment

Entreprenuer

Opportunity

Funding

Business
environ-ment

Entreprenuer

Opportunity

Funding

Business
environ-ment

Entreprenuer

Opportunity

Funding

Business
environ-ment

Entreprenuer

Opportunity

Funding

City

Advantages- Referred to as the birthplace of the ecosystem, that of Silicon Valley has
formed spontaneously. With serial entrepreneurs playing a mentoring role,
there is a mechanism in place to create startups on an ongoing basis.
- Numerous foreign entrepreneures help maintain diversity in the region.

Tel Aviv- There is an accumulation of life-science companies and research institutes
such as MIT and Harvard University.
- As entrepreneurs and spin-off startups rise, they draw large companies andinvestors.

Dubai- As a renowned financial city, it has drawn an accumulation of startups
endeavoring in the fields of fintech, block chains and crypto currency.
- In terms of activities such as experimental studies, the city offers a flexible
and innovative legal system such as through the establishment of a regulatory
sandbox to create new industries.

Singapore- The government is leading the initiative "La French Tech " to support
startups. Overseas startups also receive generous support.
- Startups in fields related to fashion and life-style have accumulated in thecity.

Shenzen- With cost of living cheaper than in former West Germany due to industry being hollowedout during the era of the East-West Division, an ecosystem has been growing amongsubcultures such as artists and hackers.
- The city has a well-prepared support framework for students aspiring to be entrepreneurs,
and numerous excellent engineers from Eastern Europe have gathered.

Tokyo

Business
environ-ment

Entreprenuer

Opportunity

Funding

Business
environ-ment

Entreprenuer

Opportunity

Funding

Business
environ-ment

Entreprenuer

Opportunity

Funding

Business
environ-ment

Entreprenuer

Opportunity

Funding

Business
environ-ment

Entreprenuer

Opportunity

Funding- Numerous startups are being created in the fields of life-science andcyber security, with many researchers who have won the Nobel Prize andentrepreneurs who have just completed military service.
- The Jewish Community has greatly contributed to forming ecosystems.
- The government, which aims at developing an economy not dependant on
natural resources, is proactive in drawing overseas startups.
- Under the initiative of the city leadership, it is establishing a support
organization for funds and ventures.
- Through the strong leadership of the government, it has successfully
established an innovation hub in a short period of time.
- As a financial city, it has an accumulation of overseas-affiliatedcompanies, and has established its position as a hub of financial
procurement.
- With the creation of supply chains for electronic parts in the background,an ecosystem with strength in manufacturing has been forming.
- Due to proximity to the market and customers, it is distinguished byproduct development focusing on quick commercialization.
- Startups with strength in productization by combining devices with
software are showing growth, particularly related to core technologies.
- CVC and accelerator programs have recently been increasing in line withthe promotion of open innovation by major companies aiming at branchingout from in-house innovation models.

Note: 1) List includes cities where "JETRO Global Acceleration Hub" which assist Japanese startups in expanding business through overseas ecosystems, are located plus Tokyo.
2) Blue colored quadrants indicate advantages.
Source: Various materials

Measures of major countries for fostering ecosystems
Policies for developing ecosystems

Country

UAE
Singapore

FranceUK

1. Tax 2. Establishment 3. Regulatoryof startup visa
incentives,
sandboxand relaxation of(Note)
subsidies visa regulations

Government objectives and measures

Priority areas were announced for promoting innovation in "UAE Vision 2021" advocated by theFederal Government, and a government-controlled fund to assist entrepreneurs was established.
Various entrepreneur support programs conducted by different ministries and agencies have been
integrated into a single brand under the title "Startup SG," through which necessary assistance isprovided based on the growth stage of individual startups.
In 2013, the government established the initiative "La French Tech" which aims at supporting
ecosystems and cultivating them to an international level. The initiative will facilitate the formation ofcommunities, growth of ecosystems and internationalization.
Within its industrial strategy, the government has set five foundations (ideas, human resources,
infrastructure, business environment and places) and four grand challenges (AI, clean growth, futureoriented mobility and an aging society).

✓

✓

✓

✓

✓

✓

✓

✓

✓

✓

✓

✓

✓

Japan

The government has set a target to create 20 or more unlisted venture enterprises with an enterprisevalue or market cap of one billion dollars (unicorns) or equivalent listed venture enterprises by 2023.

✓

IsraelThe government has engaged in investment and created multiple VC firms through "Project Yozma"
started in 1993. "The Magnet Program" is supporting collaboration between industry and academia.

✓

China

The country is pushing a mass entrepreneurship and innovation campaign, with the State Council andlocal governments implementing over 400 measures combined.

✓

GermanyUS

The Federal Ministry of Economics and Energy (BMWi) and the Credit Institute for Reconstruction(Kfw) are playing a leading role in investing into startups through the government-affiliated venture
investment fund "Hightech Startup Fund," and holding business competitions. The frameworks varydepending on each state.
The prior administration under President Obama started the Startup America Initiative under a strategy
for American Innovation. It has focused on improving access to funds, cultivating entrepreneurial
human resources, deregulation and accelerating technological transfer.

*Some local gov.

4. Other

Government
initiative

StrongApproval of transfer of militarytechnology to the private sector✓* Some ministries

Addressing the promotion of digital
education and collaboration between
startups and SMEs
Established a framework for early stage
investment, expanded entrepreneur
education, expedited the patent process

Weak

Note: A regulatory sandbox is a framework in which the government reviews regulations using information and data obtained through demonstrations with the goal of introducing new technologies and business models to society.
Source: Various materials
Copyright (C) 2019 JETRO. All rights reserved.

14

Emerging companies as new business partners

Expansion into new markets and business fields through collaboration■ According to a JETRO survey, under 30% of Japanese companies have engaged incollaboration with foreign companies and/or organizations for innovation. In international
patent applications, the proportion of those with foreign co-inventor(s) for Japan was 2.1% andsmaller than the global average (6.1%). These statistics indicate Japan is lagging behind inestablishing networks with foreign companies, organizations, and/or researchers.
■ Some Japanese companies have expanded into new markets and business fields throughcollaboration with emerging foreign companies such as startups. Issues in collaboration havebeen raised, such as costs of collaboration, risks of information leakage, and differences inbusiness practices. The key to overcome these issues lies in how determined the company canbe as a whole, executives included, in engaging in the collaborations.
Efforts for innovation(Multiple answers、％)

0.0

20.0

40.0

60.0

Utilize resources in own
company (tecnologies, humanresources, etc.)

80.0

100.0

79.4
88.3
77.4

Number of patent applications in major countries/regions
and proportion of applications with foreign co-inventor(s)250（No. (thousand)）

（％）
35.0

Total Patent Applications（2016）

59.5
69.1
57.4

Collaborate with others

Patents with Foreign Co-inventor(s)（right）

30.0

200

25.0
12.4
18.9
11.0

Collaborate with domestic
startups
Colalborate with domestic firms(excluding startups)

25.1

Collaborate with domestic
universities/research institutes

Collaborate with foreign straups

22.3
6.8
9.9
6.1

20.0
15.0

100

37.6

South Korea

China

EU

US

Australia

Germany

FranceIsraelSource: FY2018 Survey on the International Operations of Japanese Firms (JETRO)

UK

2.3
1.1
2.6

CanadaLarge-scalefirms（n=615）SMEs（n=2,770）

2.1
India

6.3
12.4
5.0

0

10.0
5.0

OECD

Foreign Collaboration
Total：27.3％
Large-scale firms：38.7％
21.2
31.2 SMEs：24.8％
19.0
Total
（n=3,385）

47

50

World

Other

150

Japan

Collaborate with foreign firms(excluding startups)

Collaborate with foreign
universities/research institutes

Domestic Collaboration
Total：49.6％
Large-scale firms：60.5％
30.7 SMEs：47.2％
39.2
28.8

0.0

Note: The number of application indicates the number of international patentapplication applied under the Patent Cooperation Treaty.
Source: OECD.Stat

Collaboration between emerging foreign companies and Japanese companies
Company

IDOM

PartnerUber Technologies:
Founded in 2009,(US),
Ride-hailing service
Shipper (Logistics):
Founded in 2016,

OPENLOGI

Shoppee/
Tokopedia: Founded in
2009/2015(Indonesia),
Local e-commerce SMEs

SBI Remit

BitPesaFounded in 2013
(Kenya)Affordable and speedy
overseas money transfer
service throughblockchains

Motivation

Business

Seeking a business model to be a foothold
toward expanding business in Africa as a newsales market

The company leases second-hand Japanese cars for local
drivers registered with Uber in Tanzania. If the amount paid
passes a certain threshold, the driver can take possession of
the car. This has created a new sales channel for secondhand cars and, at the same time, a means for a more stable
income for local drivers.

Advantages and effects

The company recognized the potential of the new business model in
expanding into a new market, obtaning knowhow and a new customer
base. Through scaling up the new model, the company is aiming to
expand its business in other areas.

The first step towards expanding its logistic
With the aim of enabling more efficient and reliable
The one-year pilot project went without any trouble such as aoutsoucing service abroad. The company saw aninventory management and shipping, the company conducted misdelivery or returned package, proving the feasibility of the business
opportunity in the logistics service industry ina pilot project for logistics outsourcing operations inin Indonesia. In addition, the project also showed there is no significant
Indonesia, where the e-commerce market iscollaboration with the logistics platform service company
difference between domestic and overseas warehouse operations. As
rapidly growing. Cases have been reported
and the system of leading Indonesian e-commerce platforms the company confirmed the viability of its business model for thewhere local SMEs have difficulties in inventory
as well as local e-commerce SMEs.
overseas market, it is looking to enter Indonesia.
management.
This is the company's first business collaboration in Africa.
Money tranfer from Africa to Japan requires first
Seeking innovative solutions to improveexchanging the local money to another major foreign
customer service within Africa, where thecurrency before exchanging it to Japanese yen. The
company had a strategic interests for its growthcollaboration with BitPesa, however, enables the company
prospects.
to provide a faster and more affordable money transfer
service between African countries and Japan.

Collaboration with BitPesa, which already has business operations ineight African countries and covers 85 countries for money transfer, hasallowed the company to provide a direct money transfer service
between African countries and Japan.

Source: Interviews by JETRO, press releases and media reports

15

Copyright (C) 2019 JETRO. All rights reserved.

JETRO Global Trade and Investment Report 2019: The fluctuating international economic order andglobal business in the future
Key Points
Address any inquiries concerning this report to:International Economy Division, Overseas Research Department
Japan External Trade Organization (JETRO)
1-12-32 Akasaka, Minato-ku, Tokyo 107-6006 Japan
TEL: +81-(0)3-3582-5177
E-mail: ORI@jetro.go.jp
Note: Figures may not sum up to the total because some are less than one unit.

Disclaimer of liability: Responsibility for any decisions made based on or in relation to the information provided in this material
shall rest solely on the reader. Although JETRO strives to provide accurate information, JETRO will not be responsible for an yloss or damages incurred by readers through the use of such information in any manner.
[Reproduction without permission is prohibited.]
Copyright (C) 2019 JETRO. All rights reserved.