FY2018 JETRO Survey on Business Conditions for JapaneseCompanies in the U.S.
(37th Annual Survey)(Summary)

Japan External Trade Organization (JETRO)
March 7, 2019

2

Japan’s outward FDI marks record highJapanese FDI

unit: Million USD

180,000

160,000

140,000

120,000

100,000

80,00060,00040,00020,00002000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
US(source; Ministry of Finance, compiled by JETRO).
Copyright(C)(C)
2019
JETRO.
All rights
Copyright
2018
JETRO.
Allreserved.
rights reserved.

World

Locations of Japanese Manufacturers In North America

3

Food/Processed food, agricultural or fishery products
Textiles (Spinning/Woven fabrics/Chemical fibers)
Printing/Publishing
Paper/Pulp
Textile apparel/Textile products
Lumber/Wood products

Furniture/Fixtures
Chemical and allied products/Petroleum products
Plastic products
Rubber products
Ceramic/Stone and clay products
Medicines
Fabricated metal products(Including plated products)
Iron and steel(Including cast and wrought products)
Non-ferrous metals
Electrical machinery/Electronic devices(Including parts)
General-purpose/Production machinery (Including molds and machine tools)
Business oriented machinery (office machines, medical equipment, etc)
Information and communication electronics equipment
Transportation equipment parts (Motor vehicles/Motorcycles)
Transportation equipment (Motor vehicles/Motorcycles)
Transportation equipment parts (Railroad vehicles/Ship/Aircraft/Industrial trucks)
Transportation equipment (Railroad vehicles/Ship/Aircraft/Industrial trucks)
Miscellaneous manufacturing industries

3
Copyright (C) 2019 JETRO. All rights reserved.

Business Survey on Japanese Companies
in the U.S. - Overview

Overview:
 Survey period: Valid responses:
 Survey coverage:

November 9 – December 7, 201856.6% (730 of 1,289 companies)
Japanese manufacturers operating in the U.S. In this research“manufacturers” include those with sales functions, whereas “sellers” arelimited to those without manufacturing functions. At least 10 of their capitalmust be owned by a Japanese company, directly or indirectly.
This is the 37th annual survey, initiated since 1981 (not conducted in 2004).

 Note:The Key of Business
0.5%

Respondents by Regions and Industries

Manufacturing
20.5%

Manufacturing

Sales,
retail/wholesale

Both
Manufacturing
and sales

Unknown

TotalNortheast

7 (1.0)29 (4.0)50 (6.8)

0 (0.0)86 (11.8)

Midwest51 (7.0)45 (6.2)

98 (13.4)

0 (0.0)194 (26.6)

South

73 (10.0)

46 (6.3)

154 (21.1)

4 (0.5)277 (37.9)

West

19 (2.6)

70 (9.6)

84 (11.5)

0 (0.0)173 (23.7)

Total

150 (20.5)

190 (26.0)

386 (52.9)

4 (0.5)730 (100.0)

Sales,
retail/wholesale
52.9%

26.0%

Manufacturing
and sales,
retail/wholesale
Unknown# of respondents :730

(1) The totals in the surveys in this report may not be 100 because the numbers are rounded off to the first decimal point.
(2) The firms participated in this survey may not have answered all questions. The rates are calculated based on the numbers of answers collected.

44

Profit Forecast and Future Business Direction
580.9

Profit Forecast
74.5% Said Profitable –Figure Surpasses 70%
for Seven Consecutive
Years

8070
60

3.5
2.8
53.2 51.2

4.8
75.7
4.4 4.5
4.1
69.7
4.0 67.9
66.6
66.2 2.9
3.8 67.166.6
63.7
65.5
3.5
59.7
66.0
56.8

2.7

50

△ 0.1

23.2

28.8
24.9 24.3 23.624.7 24.4

2010

7.9 7.8 8.6

10.2

7.310.2 9.2 8.8

79.7

78.3
74.2

61.7
2.9

1.6
42.4

21.3 19.0
11.2 12.4

35.5
22.2
17.3
14.5 15.1

14.6
10.5

13.6

16.6

15.0
9.6 8.6

8.0

0

△ 2.5

2.9

2.9
2.5

2.2

△ 0.1
21.6

81.4
74.4 74.5 4
82.3
77.5
3

2.6

1.0
29.1

5.8 7.6

73.3
67.5

1.9

1.7
41.0
34.7
38.9

4030

(%)

Real GDP Growth Rate (Over Previous Year) <Right Side>

(%)
902

2.2

1.8

1.6

10-1

11.8 9.9

13.7 15.2
11.6 8.5

7.8

12.2 12.9 13.2
9.49.1-2

12.8 12.3
10.3-3

91 92 93 94 95 96 97 98 99 00 01 02 03 05 06 07 08 09 10 11 12 13 14 15 16 17 18
ProfitBreak-even

Loss

Real GDP growth rate (right axis)# of respondents：721(Year)

Note: The GDP growth rate for 2018 is the IMF estimate (announced Oct. 2018). No survey conducted in 2004.

Future Business Direction

0.4%

Expansion

4.2%

54.2% of the respondents
have plans to expand in thenext year or two*63.9% said they are looking to expand theirsales function and 45.1% said production
facilities are likely

Remaining the sameReduction

Transferring to a third
country/region orwithdrawal from current
local market

41.3%# of respondents
:722

54.2%

55

Workforce and Procurement
Workforce

Procurement (Manufacture)

Respondents in the survey said 40.9% has
increased local employees and 44.0% would
likely increase employees in the future.

Approximately 60% of procurement rates
within the U.S., of which 38.9% came from US
companies.

Number of local employees and Japanese expatriates
Increase
Local Employees:
year-on-yearcomparison(n=718)40.9

Local Employees:
future plan
(n=705)44.0

No change
45.5

13.5

48.7

7.4

U.S.(Japanese companies in theU.S.)
U.S.(U.S. company)

14.4

Japanese Expats:future plan
(n=705)

10.2

72.6

13.0

2.1%

0.6%

5.1%

17.9%

MexicoCentral and South America

Japanese Expats:
year-on-yearcomparison(n=708)58.1%

2.9% 1.9%

U.S.(other foreign affiliatedcompanies in the U.S.)
Canada25.6%# of respondents:473

Japan
China

76.7

13.0

Korea, Hong Kong, Taiwan

2.2%
0.7%

1.3%

38.9%

0.9%

ASEAN

0%

20%

40%

60%

80%

100%

EU

NAFTA:3.1％

Other66

Factors for Increased Cost
Results showed Recruiting Workers (69.0%), Labor Costs (65.6%), Retention of Workers (46.3%), andIncrease of Tariff Rate (44.7%) were the top factors by respondents.
Management issues - Factors for increased cost
Recruiting workers (regular workers and engineers)

69.0

Labor costs (including salaries and bonuses)

65.6

Retention of workers

46.3

Increase of tariff rate (Trade-restrictive measures)

44.7

Raw material, natural resource and/or commodity prices

42.5

Healthcare costs

36.2

Transportation costs (including gasoline price)

24.7

Cost of dispatching Japanese expats (such as setting up livingconditions)

17.6

Foreign exchange risks (yen/U.S. dollar)

17.6

Related regulations

16.1

Financing costs

11.5

Travel expenses (including airfare)

10.2# of respondents：704

Other

1.6
0%

25%

50%

75%

77

Growing Market Sectors
for the Next 2 to 3 Years
Information and communication technology (ICT) was the most popular answer, followed byhealthcare and the environment. While ICT jumped 20 percentage points from the last survey in 2016,
the top 10 ranking did not change.
Fig. Industrial fields where market growth isexpected going forward(Unit: %)2016 (# of respondents 651)
ICT
51.5
Medical46.9
Environment
43.2
Health
26.1
Robotics/Mechatronics
17.1
Information Security
14.3
Oil/Natural Gas
11.7
Biotechnology
11.2
Transportation
7.8
Nanotechnology
5.5
Rail/Roads/Bridges
4.6
Agriculture and food processing
3.4
Real estate
3.2
Social infrastructure
2.9
Pro and business services
2.8
Other
2.2
Educational services
2.0
Accomm., food and ENTMT services
0.82018 (# of respondents 665)
ICT
71.6
Medical
44.7
Environment
30.4
Health
25.7
Robotics/Mechatronics
20.3
Information Security
14.7
Oil/Natural Gas
13.4
Biotechnology
9.5
Transportation
9.2
Nanotechnology
5.3
Agriculture and food processing
2.6
Rail/Roads/Bridges
2.0
Pro and business services
1.5
Real estate
1.4
Social infrastructure
1.2
Accomm., food and ENTMT services
0.9
Educational services
0.2
Other
0.0

8

9Trends in Employment in the Manufacturing Sector:
400,000 American Employees, the Highest Among Investor Countries.
◼
◼
◼

The total number people employed by Japanese-owned manufacturing companies in the US was 397,000 in 2016 – thehighest among all investor countries.
It has increased by 107,600 (37.2%) since 2010, the largest increase in the number of employees during that period among
investor countries.
In contrast, the total number of employees in the US manufacturing sector only showed a slight increase of 819,000 (7.1%)
during the same period.
Total Employees (Right Axis)
United Kingdom
China

Employees

Japan
CanadaSouth Korea

450,000

Total Employees ofForeign Owned
Companies

Germany
France107,000 people added
37.2％ increase

16,000,000

389.9 K

400,000

390.1 K

397.0 K
14,000,000

357.4 K
350,000

316.3 K

325.9 K
291.3 K300,000
250,000

312.3 K288.7 K

287.0 K

330.9 K

12,000,000

289.4 K
10,000,000

291.9 K

8,000,000

200,000
6,000,000

150,000
4,000,000

100,000

2,000,000

50,000
00
2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

Note: Companies with 50% or more of investment from the ultimate beneficial owner (UBO).
Source: US Department of Commerce “Activities of U.S. Affiliates of Foreign Multinational companies”
Copyright (C) 2019 JETRO. All rights reserved.

9

Trends in US R&D Expenditures by Japanese Companies◼
◼

The R&D expenditure of Japanese-owned companies in the United States was $8.05 billion in 2016, an increase of 82.3%
compared to 2007.
The $3.6 billion increase in R&D expenditure during this period is ranked second only to the United Kingdom among G7countries.
United Kingdom

Germany

FranceCanadaItaly

JapanR&D Expenditure
$10 B

$10 B
$3.6 billion
82.3％ increase

$9 B

$9 B

7,856 7,968

$8 B

6,852

$7 B

8,049

5,124

$5 B

4,056
$4 B

3,159

4,416

4,781

3,470 3,414 3,576

2,719
2,584 2,535 2,644

$3 B

$8 B

7,110

5,924

$6 B

$2 B

7,776$7 B
$6 B
$5 B
$4 B
$3 B

2,036
$2 B

$1 B

$1 B001997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

(Year)

Note: Companies with 50% or more of investment from the ultimate beneficial owner (UBO).
Source: US Department of Commerce “Activities of U.S. Affiliates of Foreign Multinational companies”
Copyright (C) 2019 JETRO. All rights reserved.

10Trends in Exports by Japanese-owned companies in the US◼

◼
◼

Exports from Japanese-owned companies in the US totaled $86.6 billion in 2016, an increase of 66% compared to before theUS financial crisis totals of 2007.
Japan tops all other investor countries in exports from the US, comprising 6.0% of total US exports and 5% of US GDP.
Japanese companies generated 23.4% of all foreign company exports in the US in 2016.
Foreign Investment Total (Right Axis)
Japan
Germany

Foreign Owned
Company Exports$100 B

US Total Export (Right Axis)
United Kingdom
France$1,800 B
87

$90 B

66％
Increase$80 B

87

81
69$70 B70

65
58$60 B
49

$50 B

Total US Exports

49
43

38

$40 B

41

41

39

41

43

52

$1,600 B$1,400 B$1,200 B

54
53$1,000 B

44$800 B$600 B$30 B$400 B$20 B$200 B$10 B
001997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Note: Companies with 50% or more of investment from the ultimate beneficial owner (UBO).
Source: US Department of Commerce “Activities of U.S. Affiliates of Foreign Multinational companies”
Copyright (C) 2019 JETRO. All rights reserved.

11