REPORT FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT AND COUNCIL on the evaluation of the programme of specific measures and actions to improve access of European Union goods and cross-border services to Japan

TABLE OF CONTENTS

INTRODUCTION

1. OVERVIEW OF THE JAPAN PROGRAMMES

2. THE EXECUTIVE TRAINING PROGRAMME IN JAPAN

2.1. Results of the control and monitoring operations financed

2.2. Contractual obligations and principles of sound and efficient management

2.3. Cost effectiveness analysis

3. THE EU GATEWAY TO JAPAN EXPORT PROMOTION CAMPAIGN

3.1. Results of the control and monitoring operations financed

3.2. Contractual obligations and principles of sound and efficient management

3.3. Cost effectiveness analysis

4. THE 'AD HOC' PROJECTS SCHEME

5. CONCLUSIONS

INTRODUCTION

This report is submitted to the European Parliament and the Council pursuant to article 3(1) of Council Regulation (EC) No 1035/1999 'on the implementation by the Commission of a programme of specific measures and actions to improve access of European Union goods and cross-border services to Japan' [1] (hereinafter referred to as 'the Japan regulation'). Article 3(1) stipulates that: "The Commission shall present to the European Parliament and the Council by 1 September 2000 an evaluation report including the results of the control and monitoring operations financed; this report shall also take account of contractual obligations and principles of sound and efficient management. It shall include the results of a cost effectiveness analysis."

[1] Council Regulation (EC) No 1035/1999 of 11 May 1999, OJ L 127, 21.5.1999, p. 1.

Following the adoption of the Japan regulation in May 1999 and the allocation of commitment credits to the Japan budget line B7-851 in July of the same year, the Commission launched the appropriate procedures in order to select two independent external contractors to evaluate the two main programmes covered by the regulation: the 'Executive Training Programme in Japan' (ETP) and the 'EU Gateway to Japan' export promotion campaign (GTJ). Contracts for the evaluation of GTJ and ETP were signed in autumn 1999 and winter 2000 respectively; the Final Evaluation Reports were presented to the Commission in July and August 2000 respectively. The two Evaluation reports were subsequently transmitted to the members of the Advisory Committee assisting the Commission in carrying out the activities covered by the Japan regulation, which is composed of representatives of Member States.

The present report includes the main conclusions and results of the aforementioned Final Reports, in so far they were relevant to the requirements set for this evaluation report by article 3(1) of the Japan regulation. The 'Executive Summary' of both Evaluation Reports are annexed to this report (English only).

This report and the two full Evaluation Reports will be made available to the general public on DG RELEX's Website.

1. OVERVIEW OF THE JAPAN PROGRAMMES

The Japanese market is widely regarded as very specific and demanding, posing additional market access difficulties to those encountered by EU industry on other markets of industrialised countries. Language and cultural barriers, complex distribution structures and an intricate regulatory environment are some of the challenges EU enterprises wishing to penetrate this vast and important market are confronted with. With a view to assisting EU industry to overcome these difficulties in the early stages of their marketing and investment efforts, the Commission has designed and set up the Japan programmes which complement and bring added value to the efforts undertaken by Member States on the Japanese market. The Japan programmes consist of three pillars: 'The Executive Training Programme in Japan' (ETP), the 'EU Gateway to Japan' export promotion campaign and the 'Ad-hoc projects' scheme. In carrying out the Japan programmes, the Commission is assisted by an Advisory Committee composed of the representatives of the Member States.

The ETP Japan is an 18-month programme consisting of a 12-month full-time intensive Japanese language course in Tokyo followed by 6 months on-the-job training in Japanese firms. A parallel programme of lectures and seminars on various aspects of doing business in Japan, as well as a programme of visits to Japanese institutions and industrial plants, is organised during the 18-month period. The objective of this programme is to build up a pool of European executives with the necessary language, cultural and business skills to operate successfully in the Japanese business environment. Since its inception in 1979, more than 700 executives have acquired through this programme the competencies needed to give effective assistance to their organisations in accessing the Japanese market.

The 'Gateway to Japan' campaign is an integrated export promotion campaign aimed at assisting European SMEs to successfully introduce their products on the Japanese market. The programme consists of the recruitment, preparation and participation of EU companies in sectoral exhibitions, trade missions and other promotional activities in Japan. It is implemented in close co-operation with Member States who provide commercial services to the participants (market research, programme of business meetings, interpretation, etc.) through their representations in Japan. Following a pilot campaign run between 1990 and 1993, the first Gateway campaign took place between 1994 and 1996. The current - second -Gateway campaign, running from 1997 to the end of 2000, covers 10 different industrial sectors and will bring to Japan more than 900 companies in the 34 events that will have been implemented in this period.

In addition to and complementing the two above mentioned programmes, the Commission provides financial support on an ad-hoc basis to European organisations implementing activities in the areas described in article 2(2) of the Japan Regulation. Activities to be co-financed are typically selected through a 'Call for Proposals' published in the Official Journal of the European Communities. One of the main criteria for selection of a project is that at least five Member States will participate in the proposed project. Before the adoption of the Japan regulation, the rate of co-financing offered varied from 10% to a maximum of 50% of the project's expenditure. In the current exercise (year 2000) the Commission co-finances up to a maximum of 35% of the project's expenditure. Additional funding typically comes from participating fees, the organiser(s) and/or national promotion bodies. Being a grant-based scheme, selected projects are managed by the beneficiary, who reports to the Commission on the results of the activities and the use made of the public funds awarded.

2. THE EXECUTIVE TRAINING PROGRAMME IN JAPAN

The purpose of the independent ETP evaluation that the Commission contracted out to the company "The Evaluation Partnership" was to determine the effectiveness, relevance and efficiency of the programme on the basis of the analysis of all ETP editions completed (ETP's 1 to 18). Drawing on the evaluation results, the evaluators were asked to make recommendations on how the format, duration, conditions and content of the programme could be improved. This report draws on the summary of evaluation findings which can be found in chapter 9 of the ETP evaluation report.

2.1. Results of the control and monitoring operations financed

The main conclusion reached by the evaluators is that "the ETP programme is a very effective instrument of policy, highly valued by its clientele and one which continues to be relevant to the problems facing businesses seeking to enter or develop business relations with Japan. It is also an efficient programme but there is potential for improvement".

The overall appreciation of the beneficiaries of the ETP programme is very high. Virtually all (99%) ETP participants are satisfied with the ETP programme, with 73% describing it as "very valuable" and 26% as "useful". Sponsor companies and current employers were also very positive in their assessment showing a 97% satisfaction rate with 62% finding ETP "very valuable" and 34% "useful".

On effectiveness, the evaluators concluded that ETP is a highly effective programme as its objectives of creating a pool of EU executives equipped with the specific linguistic, cultural and business skills necessary to operate in Japan and to give effective assistance to their organisations in penetrating the Japanese market, are fundamentally met. ETP is considered as a comprehensive Human Resources Development tool and its individual components are of high quality. The programme also carries a high added value being implemented at European level.

The ETP participants are very positive about the skills and knowledge they have acquired through the programme. 96% of participants believe that ETP has made them accustomed to Japanese business practices and market requirements. 88% of participants see themselves in a position to help develop their company's expertise in Japan and 98% feel that they can now help their companies understand Japan. 87% of participants feel confident working in the Japanese culture.

There is evidence that ETP has a strong impact on the professional career and personal life of the participants. This is shown by the fact that after completing ETP a large proportion of participants stay in Japan to work for their companies on a long-term basis. On average 41% of a participant's life is spent in Japan after ETP, while participants have been working with the Japanese market on average for 61% of their life after ETP. These are considerable results especially if one considers that ETP started 20 years ago.

Sponsor companies and subsequent employers consider that ETP has a positive impact on the company's performance. Companies feel that ETP participants brought to their organisation a high level of competence in the Japanese language (90%) and a high level of ease in handling Japanese courtesies, values and culture (94%). The evaluators reported that there is substantial evidence that companies which employ ETP alumni, particularly from the earlier editions, have significantly improved their market access. 95% of participants believe that, after having completed ETP, they can do business with Japan more effectively and about two thirds of sponsors and employers are positive about the role of ETP in developing their business presence in Japan and in improving the access of their goods and services to Japan.

The relevance of the programme was also one of the key issues examined. In particular it was assessed to what extent the programme objectives were relevant to the needs of the Community enterprises wishing to overcome the difficulties encountered in establishing business relationships in Japan. The findings of the evaluation show that ETP continues to be an appropriate instrument of human resource development to help EU companies take advantage of new business opportunities in Japan. ETP contributes to overcoming the practical barriers to trade and investment by immersing its participants in the intricacies of Japanese language, business practice and culture. It continues to contribute positively to the improvement of EU-Japan trade relations. In addition, the evaluation findings confirm that ETP enjoys wide support from the Japanese and European business communities and that its unique position as a policy instrument makes it a valuable asset for its key constituencies.

The evaluators concluded that the rationale of ETP needs little adjustment to fit into the present and future situation, particularly as an HRD programme targeted at business executives. It is clear that both the programme and its participants over the years have been able to adapt successfully to the changing (economic) circumstances in Japan. ETP continues to produce alumni who have the capability to engage in the new EU/Japan business environment. The programme would therefore appear to have high relevance for the future.

2.2. Contractual obligations and principles of sound and efficient management

The evaluators reported that ETP is managed professionally and effectively both in Brussels and in the Commission's Delegation in Tokyo. In particular it was reported that there was evidence of a separation of duties between the operational and financial officers, that deliverables and penalty clauses are built into key contracts and that actions and expenditures are very visible and can be easily verified. With regard to the on-going assessment of the programme, ETP has been reviewed every four years, this being the 5th full-scale evaluation. In addition, the programme has a built-in system of monitoring and adjustment based on feedback from participants and others as a source for continuous improvement. The evaluators concluded that sufficient evidence was gathered to suggest that the programme is implemented in conformity with SEM principles and in a conscientious manner.

2.3. Cost effectiveness analysis

According to the evaluators, the evidence gathered on programme costs indicates that the activities have been implemented within the planned and agreed budget and that unit costs have been contained. While expressing a positive assessment of the cost-effectiveness of the programme, the evaluators also suggested there was scope to moderately improve the efficiency of the programme. In this respect it was suggested to enlarge the proportion of variable costs, to revisit the participants allowances and to seek economies of scale by managing several Asian training programme together (e.g. ETP Japan and ETP Korea). The total personnel and administration cost stood at 5.3% of programme cost. This was considered in line with other leading Commission framework programmes and the unit cost of programme delivery was considered to be reasonable.

3. THE EU GATEWAY TO JAPAN EXPORT PROMOTION CAMPAIGN

The Commission contracted Inparco Consult scrl to carry out a mid-term independent evaluation study of the EU 'Gateway to Japan' campaign. The objectives of this study were to evaluate the effectiveness and efficiency of the campaign and, where necessary, give suggestions for improvement.

3.1. Results of the control and monitoring operations financed

The main conclusion of the report is that "the EU Gateway to Japan programme has generally succeeded in meeting its objectives. It has provided support to companies in all Member States and the feed-back from the companies has been positive."

34% of the participating companies have received orders as a result of their participation. In total, 60% of the companies surveyed are actually doing business with Japan and more than half of them attribute this business to their participation in the campaign (in the long term these numbers are likely to grow as most of the companies not doing business with Japan at present are continuing to talk to potential customers with a view of exporting in the near future). Moreover, 26% of the companies state that they would not have gone to Japan without the 'Gateway to Japan' campaign.

15% of participating companies have generated additional employment as a result of their participation and each EURO spent in the programme has generated EUR 3.5 in additional investment by participating companies to absorb the increased business.

The research conducted demonstrates the widespread opinion "that the EU Gateway to Japan campaign and its services respond to the needs of the target audience". In the opinion of the evaluators, it has been "almost universally recognised that the European dimension and identity is very useful in Japan" and in cases where the campaign co-exists with similar national programmes the EU Gateway to Japan "appears to work reasonably well with these programmes, with the national co-ordinators having a good picture of which programmes are more suitable for which clients, enabling them to exploit both to the best advantage". In this respect, the participation in the programme of Member States' commercial offices in Tokyo has been widely appreciated with more than 90% of respondents being satisfied or very satisfied with the services provided by their national commercial office.

The evaluation report has also identified a number of beneficial spin-offs of the programme, such as the campaign's positive impact on EU-Japan trade relations in general and the on-going Deregulation process in particular, its contribution to the enhancement of the visibility of the EU in Japan and the improved networking achieved among European participants from different Member States.

3.2. Contractual obligations and principles of sound and efficient management

The campaign will exceed its initial objective of bringing 900 companies to Japan and the level of expenditure will be well under the budget agreed. It is the evaluator's view that "monitoring appears to be satisfactory. The Commission receives regular operational reports, financial statements and reports containing feedback from the participants." The information contained in these reports is useful and is used to fine-tune the programme on a continuous basis where scope for this exists.

Separation of duties exists between financial and operational officers and contracts include measurable targets with penalty clauses in case of under-performance. The report states that "financial reporting is clear and distinguishes clearly between expenditure on the different elements of the programme" and that "efforts are made to cost activities on a continuous basis."

The evaluators state in their conclusions that the EU Gateway to Japan programme is very well organised in Japan where participants have rated the organisation of events as the most valuable service provided by the campaign. The central organisation in Europe is also "well regarded at an administrative level, providing an efficient service to national contact points and Commission."

3.3. Cost effectiveness analysis

Although the evaluators have been unable to compare EU Gateway to Japan to similar national and/or regional programmes, figures presented for the campaign are encouraging. According to the evaluators, every EURO spent in the campaign has generated so far EUR 37 of additional sales for participating companies.

In terms of expected sales, companies have reported an average of EUR 820.000 per company as expected increase in sales resulting from their participation. This figure is approximately 57 times the average cost per participant for the campaign which is estimated at EUR 14,327. It is therefore the evaluator's view that "the campaign has generated significant returns on investment for the participating companies and for the campaign as a whole."

Suggestions have been made for improvements, notably with regard to the inclusion of sectoral expertise in the campaign and to the company selection procedure. The Commission looks forward to discussing these suggestions with Member States should this campaign be continued.

4. THE 'AD HOC' PROJECTS SCHEME

With the exception of a one-day conference on Deregulation in Tokyo in December 1999, no project has yet been co-financed under the 'Ad-hoc projects' scheme since the adoption of the Japan regulation in May 1999.

A 'Call for Proposals' was published on 20 April 2000 in the Official Journal [2] and it is expected that projects resulting therefrom will start running in the autumn of 2000. No evaluation of the scheme can therefore be given in this report.

[2] OJ C 106, 20.4.2000, p. 6.

5. CONCLUSIONS

This report concludes that the Commission's programme of specific measures and actions to improve market access for EU business in Japan has met its objectives and has been implemented in a cost effective manner and according to principles of sound and efficient management.

The 'Executive Training Programme' in Japan, which was first conceived in 1979 and is widely considered a 'flagship' Commission programme, continues to enjoy an impressive satisfaction rate from its beneficiaries: the young European executives participating in the programme and their sponsor companies. The evaluation has shown that the programme is as relevant for EU industry as it was 20 years ago - a finding of the evaluation which is supported by the persisting demand for the programme from EU industry. Indeed, the success and continuing relevance of the programme were acknowledged by the leaders of the EU and Japan at their last Summit meeting in July 2000 when they concluded:

"Japan and the EU welcome the forthcoming 20th anniversary of the EU's Executive Training Programme in Japan and recognise its important role in strengthening the cultural and business relations between Japan and the EU. They express their strong support for the continuation of the programme in the future." [3]

[3] Japan-EU Summit Joint Conclusions, Tokyo 19 July 2000.

The 'Gateway to Japan' campaign can also boast a high satisfaction rate from its beneficiaries. It has assisted more than 900 European companies, mostly SMEs, in successfully introducing their businesses and products on the Japanese market. In addition, the campaign has made a positive contribution to the improvement of EU-Japan trade relations and it has been very effective in fostering a positive image in Japan of EU industry and its products. With regard to the latter, it should be recalled that participating companies consider the European 'umbrella' under which they are introduced by 'Gateway' to the Japanese market as an important factor contributing to their success.

In conclusion, the Commission considers that the positive results of the evaluation of the Japan programmes give every reason to continue them. Even though the market access situation in Japan has improved in recent years, the Commission believes that this programme should be continued at least for some time beyond the expiry in December 2001 of the Japan regulation. A Commission proposal for, inter alia, the renewal of the legal base for the Japan programmes is currently under discussion in the European Parliament and the Council [4]. The Commission is confident that the present report will contribute favourably to the outcome of these discussions.