News & Press Releases

Foreign direct investment into Japan during 2007 grew at a much faster pace than since the current statistical system was adopted in 1985, according to a projection by Ministry of Finance Japan. Its preliminary report shows foreign direct investment reaching 15 trillion yen through the end of September and well on track to achieving the government's goal of 5 per cent of GDP by 2010. Investments from the United States accounted for 57.3 per cent of the total, followed by the Cayman Islands, Singapore, Switzerland, and Germany.

Meanwhile, according to a survey by the Japan External Trade Organization (JETRO) of 864 foreign companies in Japan during last September and October, a higher-than-ever 63.1 per cent said they plan to expand their business in Japan. Specifically, their growth strategies included strengthening their sales power, introducing new products and services, and expanding their existing production capacity and services. This shows that many foreign companies are taking a positive stance toward growing their scale in Japan.

On the other hand, in terms of barriers to investing in Japan, the companies mentioned acquisition of human resources, the cost of doing business, the demand for high product standards, and the closed and special nature of the Japanese market. Among these, the difficulty of obtaining personnel can probably be ascribed to the intensifying struggle to attract superior employees as the Japanese market and its companies internationalize.

Compared to a similar survey taken in 1995, however, the percentage of companies citing business costs as a barrier declined by 9.9 points and the percentage mentioning the closed and special nature of the Japanese market fell by 6.1 points. This proves that deployment in Japan is getting easier for foreign companies. The statistics also demonstrate that these companies see Japan as an important focal point for the Asia market and as a place to cooperate with local industry.

"Our decision to establish a company in Japan was flawless and in the near future we are confident of obtaining great success there," says Karl-Heinz Streibich, CEO of German's Software AG. "Our Japanese company will play a big role in making Software AG a 1 billion euro software enterprise."

The increase in foreign companies shows that Japanese firms are aggressively studying ways to tie up with and do more business with them in order to improve their own services and development. It also indicates that foreign firms cannot ignore how doing business with Japanese counterparts is a key to global competitiveness.

JETRO hopes these foreign entries will bolster the accretion of industry in Japan and spawn new technologies and innovative management. The organization will continue to aggressively support foreign direct investment into Japan.

About JETRO
JETRO, or the Japan External Trade Organization, is a government-related organization that works to promote mutual trade and investment between Japan and the rest of the world. Originally established in 1958 to promote Japanese exports abroad, JETRO's core focus in the 21st century has shifted toward promoting foreign direct investment into Japan and helping small to medium-size Japanese firms maximize their global export potential.