WhitePaperonInternational EconomyandTrade2012Philippines) NewDelhi (India) Bangkok (Thailand) KualaLumpur (Malaysia) Notes ：The annual burden on Japanese affiliated companies (manufacturing

White Paper on InternationalEconomy and Trade 2012

Extending the Frontiers of Growth through Global Linkages

July 2012

Policy Planning and Research Office,

Trade Policy Bureau,

Ministry of Economy, Trade and Industry

- Extending the Frontiers of Growth through Global Linkages -

1-1 State of world economy – recent developments and prospects

- The pace of economic growth decelerated in the latter half of 2011, both in advancedand emerging economies.

- The euro area growth rate is anticipated to be negative; while high growth is expectedin emerging economies despite deceleration.

Real GDP growth outlook for 2012(vertical axis) and the share ofglobal GDP in 2011 (horizontal axis) by country/region

USA 0.5

UK -0.2Euro area 0.0

Japan 1.0

-1.0

0.0

1.0

2.0

3.0

4.0Ratio to the previous quarter, %

8.2%

10%

20% 40% 60% 80%

Vertical axis：Real GDP growth outlook for 2012（in black）

Horizontal axis：Share of global GDP in 2011 by country（in red）

（%）

GDP growth rate in the advanced economies

1

-5.0

-4.0

-3.0

-2.0

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1

2008 2009 2010 2011 2012

（Quater, year）

USA UK Japan Euro area

Sources: OECD stat

China 1.8Russia 1.9

India 1.3Brazil 0.2

-5.0

-4.0

-3.0

-2.0

-1.0

0.0

1.0

2.0

3.0

4.0

5.0

6.0


2008 2009 2010 2011 2012

（Qurter, year）

Russia China

India Brazil

Ratio to the previous quarter

Notes：China started to publicly announce the data of ratio to the previous period from 2011.

Therefore, it is not available before 2010.

Sources：OECD stat

8%

3%

22.7%

2.1%

8.4%

2%

1.6%

3.5%

5.2%0.6%

4%0.5%

3.5%

0.8%

3.2% 8.1%

-0.7%

1.4%

1.9%

3.4%

3%

2.6%

6.9%

10% 2.4%

4%

15.6%

5%5%

-5%

0% Oth

er advan

ced

econ

om

ies

USA

Japan

Ko

rea

Germ

any

France

UK

Italy

Oth

er ad

vance

d EU

eco

no

mie

s

Oth

er e

me

rging EU

eco

no

mie

s

Brazil

Ind

ia

Ch

ina

Ru

ssia

Oth

er emergin

g eco

no

mies

Horizontal axis：Share of global GDP in 2011 by country（in red）

3.5%World average

Source：Compiled using data from IMF, "World Economic Outlook" April, 2012

Advancedeconomies

Emergingeconomies

35.3%64.7%

5.7%Emerging economies

1.4%Advanced economies

EU 25.4%EU 0%

-1.9%

Notes：Data for "other advanced economies" and "otheremerging/developing economies" was estimated by METIbased on IMF data. Deflated by 2010 basis.

GDP growth rate in the emerging economies

April, 2008 159.9

Failure of LehmanBrothers

November, 2010160.3

6

8

10

160

165

170(%)

(2000=100,seasonally adjusted)

World trade volume （left axis）

Month on month changes

1-2 Signs of recovery in world trade and net capital flows to emerging economies

- Recovery of world trade stalled in the latter half of 2011.- Capital flows to emerging economies turned negative in the latter half of 2011.

15202530

（Unit：Billion $）

World trade volume Flow of funds into emerging economies

May, 2009 128.3

February, 2012 -0.3

-10

-8

-6

-4

-2

0

2

4

6

120

125

130

135

140

145

150

155

160

1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10 1

2005 2006 2007 2008 2009 2010 2011 2012

(Month,year)

Source：Compiled using data from Netherlands Bureau for Economic Policy Analysis（CPB）

2

-20-15-10

-505

1015

1 2 3 4 5 6 7 8 9 1011121 2 3 4 5 6 7 8 9 1011121 2 3

2010 2011 2012

（Month, year）

Source：IMF 「WEO」, April 2012

Outflow

1-3 Diverging economic trends in euro area economies

- Despite the euro area crisis, Germany maintains solid growth.- Unit labor costs were kept low in Germany, in contrast with other euro area economies.

Unit labor cost in the major Euro area economiesGDP in the majoreuro area economies and the UK

98

100

102

（Index、Q1, 2008＝100）

Recovery of Germanyand France is superiorto euro area.

【Growth rate in 2011】

Euro area：+1.5%France：+1.7%Germany：+3.0%G 6 9%

140

150（Index、2000=100）

3

88

90

92

94

96

98


2008 2009 2010 2011 2012

Euro area France Germany Greece Ireland

Italy Portugal Spain UK

Notes：The numbers for Ireland and Portugal are latest data.For Greece, the seasonally-adjusted data has not been announced officially after Q2, 2011.

Source：Eurostat

（年期）

Greece：-6.9%Ireland：+0.7%Italy：+0.4%portugal：-1.6%Spain：+0.7%UK：+0.7%

（Ratio to the previous year.The numbers for Greeceand Portugalare estimates.）

90

100

110

120

130

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

France

Germany

Italy

Spain

Greece

Ireland

Portugal

Notes：The data is re-calculated and converted from the index of 2005=100 into 2000=100.The values for 2011 are expected value.

Source：Eurostat

（Year）

1-4 Germany’s rising current account and trade surpluses

- Throughout the 2000s, current account imbalances between Germany and other euroarea economies widened.

- Germany’s trade surplus mainly comprises machinery and transport equipment andchemicals.

150

200（Billion euro）

Transition of current account in 4 majorEuro area countries

2,500

3,000

ドイツOthers

Othermanufacturing

d t

（Hundred million euro）Transition of trade balance in Germany

4

-250

-200

-150

-100

-50

0

50

100

Italy

France

Spain

Germany

Source：Eurostat（Year）

-1,500

-1,000

-500

0

500

1,000

1,500

2,000productsMachinery,transportationequipmentChemical

Mineral-related fuel

Non-food rawmaterials

Food

Total

Note：The classification of the items is based on Standard International Trade Classification (SITC).Source：Eurostat

（Year）

1-5 U.S. economy: continued growth but prospects uncertain

- The U.S. economy decelerated in early 2011 due to negative factors including higheroil prices; stronger signs emerged in the first several months of 2012.

- Exports have exceeded the pre-crisis peak; housing investment has declined from itspeak level and we have yet to see a clear recovery.

Real GDP growth and demand-side compositionin the U.S. Real GDP and each demand component (2007Q4=100)

140

150 Real GDPPersonal consumption

Equipment investment

（2007Q4=100）

6.0

8.0（前期比年率、％、％ポイント）(Ratio to the same period of previous year, %, % point)

5

60

70

80

90

100

110

120

130

0

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1

2005 2006 2007 2008 2009 2010 2011 2012

Equipment investmentResidential investment

ExportImportGovernment expenditure

Note：The figures for Q1, 2011 are preliminary.

Source：US department of commerce, CEIC Database （Year, quarter）

-1.8

1.3

-3.7

-8.9

-6.7

-0.7

1.7

3.8 3.9 3.82.5 2.3

0.41.3 1.8

3.02.2

-10.0

-8.0

-6.0

-4.0

-2.0

0.0

2.0

4.0


2008 2009 2010 2011 2012

個人消費設備投資住宅投資在庫投資

純輸出政府支出実質GDP

備考：季節調整値。2012年第1四半期は速報値。

資料：米国商務省、IMF「World Economic Outlook, April 2012」から作成。

（年、四半期）

Notes: Seasonally-adjusted data. The figures for Q1 2011 are preliminary.Source: US department of commerce, IMF「WEO, April 2012」.

(year, quarter)Personal consumption Equipment investment Residential investment

Inventory investment Net export Government expenditure

Real GDP

1-6 Chinese economy: high growth but with slower pace

- The Chinese economy maintained a solid 9.2% growth in 2011, but growth slowedcompared to 2010.

- Rising wages in large coastal cities have caught up with those of other major Asiancities such as Kuala Lumpur and Bangkok.

Real GDP growth rate (ratio to the same monthin the previous year) in China

Salary level comparison of Japanese-manufacturingindustry in China and major Asian countries (annual sum)

14

16

18（Annually basis）（Quarterly basis）

GDP growth rate Q1 Q2 Q3 Q4 Q19 7% 9 5% 9 1% 8 9% 8 1%Th f il f L h

(%)

6

7(Thousand $)

6

-6

-4

-2

0

2

4

6

8

10

12

14


200120022003200420052006200720082009201020112012 2008 2009 2010 2011 2012

Note：The figure displays only growth rate because the quarterly-based breakdown according to the demand for item has not been reported.Source：NationalBureau of Statistics of China, CEIC database

Net export(Purple)

Gross capital

formation(Green)

Final consumption(Red)

9.7%→9.5%→9.1%→8.9%→8.1%The failure of Lehman

Brothers(2008.9)

Economic stimulating

measure determination of

4 trillion yuan(2008.11)

Contribution2010 2011

GDP 10.4%→ 9.2%Consumption 3.8%→ 4.8%Investment 5.6%→ 5.0%Foreign demand 1.0%→▲0.5%

10.49.2

0

1

2

3

4

5

Beijing Shanghai Guangzhou Dhaka(Bangladesh)

Hanoi(Vietnam)

Jakarta(Indonesia)

Manila (thePhilippines)

New Delhi(India)

Bangkok(Thailand)

Kuala Lumpur(Malaysia)

Notes：The annual burden on Japanese affiliated companies (manufacturing industry workers including base salary,

medical treatment, social work insurance, overtime, bonus. 2010 survey

Source：JETRO Web site（Investment cost data）

2-1 Trade deficit in 2011

- In 2011, exports declined due to the yen appreciation and deceleration of the worldeconomy, Great East Japan Earthquake, the flood in Thailand, while imports keptincreasing.

Developments in exports and imports

1.5

2.0

2.5

30

40

50（Trillion yen）（Ratio to the same month of the previous year：%）

7

▲ 2.5

▲ 2.0

▲ 1.5

▲ 1.0

▲ 0.5

0.0

0.5

1.0

▲ 50

▲ 40

▲ 30

▲ 20

▲ 10

0

10

20

2007 2008 2009 2010 2011 2012

Trade balance（Right axis）

Export（Ratio to the same month

of the previous year）（Left axis）

Import（Ratio to the same month

of the previous year）（Left axis）

（Month, year）Notes：All values are a decision level before 2011.

As for the numerical values of 2012, all the export is confirmed report levels. As for the import, confirmed reportlevel up to February. March are preliminary figures based on nine columns.

Source：Ministry of Finance "Trade statistics"

2-2 Higher import prices contributed to trade balance deterioration

- The major contributing factor to the deterioration in the trade balance in 2011 washigher import prices, especially in resources; additional factors being higher importvolume (such as LNG) and lower export volume.

Factor decomposition of changes in trade balance(after 1995)

Factor decomposition of the amount of import ofmineral-related fuel

20

30Unit factor (Import)

Quantum factor (Import)

Unit factor (Export)

（Difference from previous year：Trillionyen）

▲ 5000

0

5000

10000

f

（Difference from the same month of the previous year： Hundred million yen)

Crude oil and rough oil

▲ 3,000

▲ 2,000

▲ 1,000

0

1,000

2,000

3,000

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Quantumfactor

Unit factor

Approximate error

Liquid natural gas (LNG)

Notes：The classification of the items is a generalcondition product base of "trade statistics". All values are a decision level before 2011.As forthe numerical values of 2012 is confirmed report levelup tp February. March are preliminary figures based on ninecolumns. Calculated from each quantum and unit indices of export and import.


（Difference from the same month of theprevious year： Hundred million yen)

（Month,

year）

▲ 30

▲ 20

▲ 10

0

10

20

1995 2000 2005 2010

Quantum factor (Export)

Approximate error

Change（Difference from previous year）

Note：Calculated from each quantumand unit indices of export and import.Source：Ministry of Finance "Trade statistics"

（Year）

8

▲ 15000

▲ 10000

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Quantumfactor

Unit factor

Approximate error

Notes：The classification of the items is a generalcondition product base of "trade statistics". All values are a decision level before 2011.As for the numerical values of 2012 is confirmed report levelup tp February. March are preliminary figures based on ninecolumns. Calculated from each quantum and unit indices of export and import.


（Month,

year）

2-3 Japan’s export prices are declining despite acceleration in import prices

- Japan’s export prices have declined amid the appreciation of the yen; import priceshave risen rapidly along with rising resource prices.

-Germany’s export prices have risen along with higher import prices.

200

250Recent change of export and import prices and terms of trade (Japan)

High prices/Improvement of terms of trade

Sharp rise in import prices

（Index：April,1995=100）

200

250Recent change of export and import prices and terms of trade (Germany)

High prices/Improvement of terms of trade

（Index：April,1995=100）

Export price rise together with

the rise of import price

9

51.5

84.3

163.6

0

50

100

150

1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Terms of trade (Index: Export price/Import price)

Export price (Index)

Import price (Index)

Note：For comparison with past yen appreciation period, the value on April, 1995, is set to 100. The latest value is of March,2011.

Source：Bank of Japan "Corporate Goods Price Index (Badse year, 2005)"

Low prices/Deterioration of terms of trade

Chronic deterioration of terms of trade

Export price moderately rise and fall.

（Month,

year）

87.8

119.2

135.8

0

50

100

150

1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Terms of trade (Index: Export price/Import price)

Export price (Index)

Import price (Index)

Note：For comparison with past yen appreciation period, the value on April, 1995, is set to 100. The latest value is of March,2011.

Source：Bank of Japan "Corporate Goods Price Index (Badse year, 2005)"

Low prices/Deterioration of terms of tradethe rise of import price

Relatively stable trajectory of terms of trade

（Month,

year）

2-4 Germany’s stable export prices.

- Germany’s export price movements are very similar inside and outside of the EU,despite exchange rate changes.

115

120

1.15

1.20

（倍率）（指数、2000年1月=100）ドイツの輸出先別の輸出物価（工業製品全体）の比較

ユーロ高

Comparison of export prices (whole industrial products) in Germany(Ratio) (Index, January 2000=100)

Appreciationof the euro

10

90

95

100

105

110

0.90

0.95

1.00

1.05

1.10

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

輸出物価（全世界向け）／輸出物価（非EU向け）

参考：名目実効為替レート（右軸）

備考：輸出物価は、自国通貨ベース。名目実効為替レートは、2000年1月を100としている。資料：ドイツ統計局「輸出物価指数（2005年基準）」、BIS「実効為替レート（名目）」、Eurostatから作成。

（年月）

ユーロ安

(Year,month)Notes: Export prices are measured by local currency. Nominal effective exchange rate is indexed January 2000=100.

Source: Statistisches Bundesamt “Export price index (2005 standard)”, BIS “Effective exchange rate (nominal)”, Eurostat

Depreciationof the euro

Export price(to whole world)/ Export price(to non-EU)

Reference: Nominal effective exchange rate(right axis)

2-5 Export strategies of German firms (exports in high-end products and globalmarketing and specialized product segments)

- The strong brand value of large German firms is often seen to be maintained throughexports of high-end products from Germany.

- Global marketing in specialized product and technology segments is conducted by mid-sized enterprises to ensure adequate global market share.

Strategy of large German firms～ Exports of high-end products by branding～

Unit price of automotive (more than 3 000cc)

The two-pillar strategy of German excellent medium andsmall-sized firms(“TheHiddenChampions”)

11

Origin ofimport Unit price

The shareamong the

value ofimport

Germany 83,500 37%Japan 39,000 22%U.S. 47,800 17%

Source: Global Trade Atlas

①Specialization in application,product, expertise

②Global marketing strategy（Expanding sale subsidiaries into each overseas country and region）

Source: Hermann Simon “Hidden Championsof the 21st Century” (2009)

Unit price of automotive (more than 3,000cc)which China imports (2011)

- "Index of export revenue" in Japan has been sharply declining since 2007, with yenappreciation.

- Even before 2007, "index of export revenue" had been gradually falling with falling"index of overseas pricing".

Export profitability of manufacturing products in Japan

2-6 Export prices of manufacturing products (total average) in Japan

（Calculating formula）Ratio:（April, 1995＝1）

�“Index of exchange rate”＝ “Export price (yen-based) / Export price (contract currency-

based)”

�“Index of overseas pricing”＝ “Export price (contract currency-based) / Corporate goods

price”

�“index of export revenue”＝“Export price (yen-based) / Corporate goods price”

�“Index of export profitability” is the product of “Index of exchangerate” and “Index of pricing power overseas”

�In other words, “export profitability” can be decomposed into the“exchange rate” and “price overseas” components.

12

0.7

0.8

0.9

1.0

1.1

1.2

1.3

1.4

1.5

1.6

1.7

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Export price (yen-based)/ Export price (contract currency-based)

Export price (contract currency-based)/ Corporate goods price

Export price (yen-based)/ Corporate goods price

Manufacturing products

p

Note: For each ratios of indices, the value on April, 1995, past yen appreciation period, is set to 1.Source：Bank of Japan "Corporate Goods Price Index (2005 base)"

（Year/

Month）

60

80（%：Ratio to the same month of the previous year）

3-1 Impact on production by Thai floods

- Japan’s domestic automotive production was significantly affected by the Great EastJapan Earthquake. The flood in Thailand also suppressed the recovery of domesticproduction.

- Domestic production in Thailand and other ASEAN countries was also negativelyaffected; recovery ensued thereafter.

Change of automotive production before and afterthe flood in Thailand, China and Japan

Change of the automotive production before andafter the flood in Thailand and major ASEAN countries

150

Japan Guangdong（China） Thailand

（%：Ratio to the same month of the previous year）

▲ 100

▲ 80

▲ 60

▲ 40

▲ 20

0

20

40

60

1 2 3 4 5 6 7 8 9 10 11 12 1 2 3

2011 2012

Thailand

Indonesia

The Philippines

Vietnam

Malaysia

Note：The data is calculated from output data for Thailand, Indonesia and Malaysia, and from production index (volume of productionindex) for Vietnam (for the Philippines). The value of March, 2011 in the Philippines has not been announced.

Sources：Automotive Industry Club, The Federation of Thai Industries （Thailand）、Association of Indonesian Automotive Industries（Indonesia）、Malaysian Automotive Association（Malaysia）, National Statistical Office（the Philippines）, General StatisticalOffice（Vietnam）, CEIC Database

（Month,year）

13

▲ 57.3 ▲ 60.1

4.5

▲ 39.0

9.9

▲ 25.2

▲ 67.6

▲ 85.0▲ 100

▲ 50

0

50

100

1 2 3 4 5 6 7 8 9 10 11 12 1 2 3

2011 2012

Japan g g（） Thailand

Effects of the Earthquake disaster Effects of the flood in Thailands

Note：It is considered that the trend of Guangdong on January-February in 2012 is largely influenced by a seasonal factor(The Vernal Equinox Day was on Februaryin 2011, but it was on January in 2012) .

Sources：Japan Automobile Manufacturers Association, Inc., Statistics Bureau of Guangdong province, Automotive Industry Club, The Federation of Thai Industries（FTI）, CEIC Database

（Month, year）

3-2 Business response to Thai floods

- Survey results suggest signs of re-organization of global supply chains with a view torisk diversification.

- Thailand maintains its appeal as an investment destination for Japanese firms,especially as an export base to third markets, due to industrial agglomeration and FTAnetworks; but the need for improvement in business environment, including floodcontrol measures, remains compelling.

33 3

3580Left scale: Promising country/region for mid-term (approx. next 3

（%）（%）Countries/Region that Japanese manufacturing businesses choose as promising & their

attractiveness as third-country export platforms

Return tooriginal

Question：Will the supply be resourced to the original supply source from the alternative source after

the original source has been restored? (responses from manufacturing businesses）

14

33.3

0

5

10

15

20

25

30

0

10

20

30

40

50

60

70

China India Thailand Vietnam Brazil Indonesia Russia USA Malaysia Taiwan

years) business expansion (proportion of votes (%), multiple-

choice)

Right scale: Attractiveness as third countryexport platform as

reason to consider promising (proportion of votes (%) from

businesses that choose the country/region as promising and gave

reasons for considering the country/region promising; multiple-

choice

Source：Compiled from Japan Bank for International Cooperation "Survey Report concerning the Overseas Expansion of JapaneseManufacturing Businesses"（Decmber, 2011）

8%

8%

24%

35%

27%

18%

19%

23%

6%

8%

8%

12%

31%

31%

41%

4%

0% 20% 40% 60% 80% 100%

Third countries（26 bases）

Japan（26 bases）

Thailand（17 bases）

originalsuppliersMore than half

Partial return

No return

Undecided

Others

Note：Total do not add up to 100 each because of rounding off to the nearest whole number.Source：Ministry of Economy, Trade and Industry "Emergency Survey concerning the State of Supply Chain Recovery from the Thai

Flooding Damage"（survey conducted late November-early December .

4-1 Overseas business activities picking up among mid-sized enterprises

- An increasing number of Japanese firms owned overseas subsidiaries in the 2000s,especially among mid-sized enterprises.

- Survey results show that 48.7% of SMEs intend to expand exports, while another11.0% intend to explore export opportunities.

The number of overseas subsidiary possession companies(Manufacturing, classified by worker size)

80%

90%

1 200

1,400企業数 2001

企業数 2006

The number of overseas subsidiarypossession companies

The share which accounts for the numberclassified by scale of companies

Increase ofnumber

Export business plan(for the coming three years or so) (all industries)

Number ofcompanies, 2001 48.7%

57.9%50.3%

Expansion of exports

15Source：Ministry of Internal Affairs and Communications “Establishment and Enterprise Census” (2001,

2006）、Ministry of Internal Affairs and Communications/Ministry of Economy, Trade andIndustry “The Economic Census” (2009）.

0%

10%

20%

30%

40%

50%

60%

70%

0

200

400

600

800

1,000

1,200 企業数 2006

企業数 2009

％ 2001

％ 2006

％ 2009

Number ofcompanies, 2006

Number ofcompanies, 2009

Expandof share

Source：JETRO “FY 2011 Survey on the International Operations ofJapanese Firms”

1.5%

13.4%

15.9%

11.0%

1.9%

18.2%

11.1%

3.8%

1.6%

14.2%

15.1%

9.7%

0% 10% 20% 30% 40% 50% 60% 70%

Considering downscaling or closure of exportbusiness

No future plan to start export business

Maintain the current scale

Considering starting export business

Total(n=2769)

Large-scale firms(n=478)

Small- and medium-sizedenterprises(n=2291)

Delivery servicesThe number of parcels handled by Yamato Group in Asia has grown by 4.4 times inFY2010-2011. Differentiation of services is being undertaken by deploying

bi it J i i l di hill d/ l d l d d i ti f

4-2 Overseas business activities picking up among non-manufacturing sectors (suchas wholesale, services)

- The number of overseas subsidiaries in non-manufacturing sectors has overtaken thatof manufacturing sectors.

- Service firms expanding overseas are differentiating their businesses by uniqueJapanese models; their domestic businesses and overseas business operations byother Japanese firms could also benefit.

Example of the overseas business development of the service industry

18,000

20,000 Other non-manufacturing

Information and

Expansion of overseas subsidiary in non-manufacturing

ubiquitous Japanese services, including chilled/cooled parcels and designation ofdelivery timesRestaurantYoshino-ya (over 500 restaurants overseas) is seeking differentiation by promotingsafe and secure images of Japanese food and its unique sauce and recipesMoss Burger (about 300 restaurants overseas) incorporates Japanese tastes in itsproducts, while pursuing localization of flavors, some of which are beingintroduced to Japanese menusTourismWakura Kagaya Ryokan in Ishikawa Prefecture established its subsidiary in Taiwanin December 2010. It pursues to provide its characteristic Japanese “omotenashi”services.A quarter of local customers stayed in Japanese Wakura Kagaya, providingbenefits to its domestic businessesConvenience store chainsConvenience store chains are accelerating their overseas business development;the number of overseas stores of the industry as a whole is projected to overtakethat of domestic stores in 2012.The sector has established a unique Japanese business model with “convenience”as an essential ingredient 16

Note： "Other manufacturing industry" includes precision machinery up to 2006.Source：Ministry of Economy, Trade and Industry “Basic Survey on Overseas

Business Activities”

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

2004 2005 2006 2007 2008 2009 2010

communication

Retail

Services

Transport

Wholesale

Agriculture and forestryfishery, mining,constructionOther manufacturing

Transportation machine

No

n-m

an

ufa

cturin

gM

an

ufa

cturin

g

- Human resources are typically seen as a major barrier for overseas businesses

グローバルでの制度や仕組みの共通化

進出先国での法制度、マーケット等につい

ての情報

グローバル化を推進する国内人材の確

保・育成

Commonization of the global system and

Reasons for giving up going overseas（medium- and small-sized enterprises）

Problems with setting up and administration ofoverseas base

4-3 Barriers for overseas businesses

Securing and training of talented domesticpersonnel promoting globalization

Information about market and legal systemin target country

Due to domestic issues, could not deal with

Decision couldn't be made due to lack ofprediction

Unable to secure sufficient domestic humanresources

Note： The effective answers, 82 companies (manufacturers), 14 companies (Wholesales)Source： Organization for Small & Medium Enterprises and Regional Innovation, JAPAN

“Survey of medium- and small-sized enterprises overseas business activities” (2010)

Note： The effective answers, 263 companies (all types of industry)Source：Ministry of Economy, Trade and Industry (2010) “Questionnaire about

the global talent training “

0% 10% 20% 30% 40% 50% 60% 70% 80%

無回答

その他

特に課題はない

グローバル化に必要な資金の確保

グローバルでの経営理念・ビジョンの徹底

グローバルに通用する製品・サービスの

開発

グローバルでの制度や仕組みの共通化g ystructure

Development of products and services towork globally

Thorough global management philosophy andvision

Securing necessary funds for globalization

No particular problem

Others

No answer

17

0% 10% 20% 30% 40% 50%

Exchange rates/economic situation unstable

Change in overseas business partner's policies

Others

Couldn't secure local managerial resources

Results of market research or F/S were notfavorable

Necessary funds could not be raised

Lack of necessary information or knowledge

Lack of appropriate location on partner

overseas business

系列2

系列1Wholesales

Manufacturers

4-4 International comparisons of FDI stocks and FDI incomes

- Japan’s FDI stock and FDI income as shares of GDP remain low compared with othermajor countries, both outward and inward.

Outward and inward foreign direct investment returns(Ratio to GDP)Outward and inward foreign direct investment stocks (Ratio to GDP)

3%

4%

（％：ＧＤＰ比）

（Balance line of outward and inward FDI returns）

(%: Ratio to GDP)

40%

50%China（Out: 298 billion $, In: 579 billion $）

Korea（Out: 139 billion $, In: 127 billion $）

Japan（Out: 831 billion $, In: 215 billion $）

（%：Ration to GDP）

UK

France

Germany

（Balance line of outward and inward FDI stocks）

18

Notes： This figure plots the absolute value for each country in 1990, 1995, 2000, 2005,2010 calendar years (for Germany, 2009 calendar year). Hong Kong is not included infigures for China. OECD Stat is used for Germany.

Source：Institute for International Trade and Investment “International ComparativeStatistics”, OECD Stat

Notes： This figure plots the absolute value for each country in 1990, 1995, 2000, 2005,2010 calendar years (for Germany, 2009 calendar year). Hong Kong does not beincluded in China.

Source：Institute for International Trade and Investment “International ComparativeStatistics”

0%

1%

2%

3%

0% 1% 2% 3% 4% 5% 6% 7%

Japan Germany Korea UK France Germany(Non-Euro area) USA China

UK

Germany

Germany（Non-Euro area）

Japan

China

KoreaUSA

France

0%

10%

20%

30%

0% 10% 20% 30% 40% 50% 60% 70% 80%

Japan Germany Korea UK France Germany(Non-Euro area) USA China

UK（Out: 1,689 billion $, In: 1,086 billion $）

France（Out: 1,523 billion $, In: 1,008 billion $）

Germany（Out: 1,285 billion $, In: 938 billion $）

Germany（Non-Euro area）（Out: 668 billion $, In: 334 billion $）

USA（Out: 4,843 billion $, In: 3,027 billion $）

（Inward）

（Outward）

Korea

Japan

China

Germany

Germany(Non-Euro area)

USA(inw

ard)

10%

12%

Japan

（%：Ratio to GDP）

Korea40%

45%

50%

ustry

Outward FDI stock (Ratio to GDP) in manufacturingandservice industries in major countries

Japan

（%：Ratio to GDP）

4-5 Further room for overseas development in services

- Japanese overseas FDI stock per GDP remains low especially in services comparedwith other major countries

- Overseas business activities in services, including trade in services, still have room forenhancement

Transition of Service trade/GDP

（Balance line）

0%

2%

4%

6%

8%

0% 2% 4% 6% 8% 10% 12%

Pay

men

ts

Receives

Japan

Germany

Korea

UK

USA

France

China

Germany

UK

USAJapan

FranceChina

0%

5%

10%

15%

20%

25%

30%

35%

40%

0% 5% 10% 15% 20%

Ou

tw

ard

FD

I sto

ck

in

se

rv

ice

in

du

stry

Outward FDI stock in manufacturing industry

Korea

UK

France

Germany

USA

UKGermany

JapanKorea

USA

France

19

Note： This figure plots the absolute value for each country in 2000, 2005, 2006, 2007, 2009 (or 2008)calendar years. Here, the service industry implies the industry except for manufacturing,agriculture and mining.

Source： Institute for International Trade and Investment “International Comparative Statistics”,”International Direct Investment Matrix” (2011)

Note： This figure plots the absolute value for each country in 2000, 2005, 2006, 2007, 2009 (or 2008)calendar years.

Source： Institute for International Trade and Investment “International Comparative Statistics”,”International Direct Investment Matrix” (2011)

Manufacturing industry-serviceindustry direct foreign

investment balance balance line

4-6 Integration into global production networks has deepened to a certain extent

- Japan’s production structure deepened its reliance on imported goods and services in1995-2005 period, signifying integration into global production networks.

- Such integration has been strong in Germany and has even strengthened during theperiod.

Change of the "domestic survival rate" in our country

The warm color system shows that a spillover tends to stay within the country,while the cold color system shows that a spillover tends to leave abroad.

Change of the "domestic survival rate" in Germany

20

0%

10%

30%

50%

70%

90%

100%

0%

10%

30%

50%

70%

90%

100%

Source: OECD “Input-Output Table”

1995

Agric

ultu

re,fo

restry

and

fisher

Min

ing

Beve

rages

and

foods

Textile

produ

cts

Pulp,pape

ran

dw

oode

npro

duc

Chem

icalpro

ducts

Petro

leum

and

coalpro

ducts

Ceram

ic,sto

ne

and

clay

produ

Iron

and

steel

Metalpro

ducts

Genaralm

achin

ery

Ele

ctric

almac

hin

ery

Info

rmatio

nan

dcom

munic

atio

Tran

sportatio

nequ

ipment

Pre

cisio

nin

strum

ents

Misc

ellan

eous

man

ufac

turin

gp

Constru

ctio

n

Ele

ctric

ity,gas,heat

supply,w

a

Servic

es

and

oth

ers

1 2 3 4 5 6 7 8 9 10

11

12

13

14

15

16

17

18

19

Agriculture, forestry and fisher 1Mining 2

Beverages and foods 3

Textile products 4Pulp, paper and wooden produc 5Chemical products 6

Petroleum and coal products 7

Ceramic, stone and clay produ 8Iron and steel 9

Metal products 10

Genaral machinery 11Electrical machinery 12Information and communicatio 13

Transportation equipment 14

Precision instruments 15Miscellaneous manufacturing p 16

Construction 17

Electricity, gas, heat supply, wa 18Services and others 19

Final Goods that induce production（column）

Consumption of final goods

Indu

ced

produ

ction

secto

r(r

ow

)

2005

Agric

ultu

re,fo

restry

and

fisher

Min

ing

Beve

rages

and

foods

Textile

produ

cts

Pulp,pape

ran

dw

oode

npro

duc

Chem

icalpro

ducts

Petro

leum

and

coalpro

ducts

Ceram

ic,sto

ne

and

clay

produ

Iron

and

steel

Metalpro

ducts

Genaralm

achin

ery

Ele

ctric

almac

hin

ery

Info

rmatio

nan

dcom

munic

atio

Tran

sportatio

nequ

ipment

Pre

cisio

nin

strum

ents

Misc

ellan

eous

man

ufac

turin

gp

Constru

ctio

n

Ele

ctric

ity,gas,heat

supply,w

a

Servic

es

and

oth

ers

1 2 3 4 5 6 7 8 9 10

11

12

13

14

15

16

17

18

19






Metal products 10




Construction 17




Indu

ced

produ

ction

secto

r(r

ow

)

Japan1995

Japan2005

ドイツ1995年

Agric

ultu

re,fo

restry

and

fisher

Min

ing

Beve

rages

and

foods

Textile

produ

cts

Pulp,pape

ran

dw

oode

npro

duc

Chem

icalpro

ducts

Petro

leum

and

coalpro

ducts

Ceram

ic,sto

ne

and

clay

produ

Iron

and

steel

Metalpro

ducts

Genaralm

achin

ery

Ele

ctric

almac

hin

ery

Info

rmatio

nan

dcom

munic

atio

Tran

sportatio

nequ

ipment

Pre

cisio

nin

strum

ents

Misc

ellan

eous

man

ufac

turin

gp

Constru

ctio

n

Ele

ctric

ity,gas,heat

supply,w

a

Servic

es

and

oth

ers

1 2 3 4 5 6 7 8 9 10

11

12

13

14

15

16

17

18

19






Metal products 10




Construction 17




Indu

ced

produ

ction

secto

r(r

ow

)

Germany1995

ドイツ2005年

Agric

ultu

re,fo

restry

and

fisher

Min

ing

Beve

rages

and

foods

Textile

produ

cts

Pulp,pape

ran

dw

oode

npro

duc

Chem

icalpro

ducts

Petro

leum

and

coalpro

ducts

Ceram

ic,sto

ne

and

clay

produ

Iron

and

steel

Metalpro

ducts

Genaralm

achin

ery

Ele

ctric

almac

hin

ery

Info

rmatio

nan

dcom

munic

atio

Tran

sportatio

nequ

ipment

Pre

cisio

nin

strum

ents

Misc

ellan

eous

man

ufac

turin

gp

Constru

ctio

n

Ele

ctric

ity,gas,heat

supply,w

a

Servic

es

and

oth

ers

1 2 3 4 5 6 7 8 9 10

11

12

13

14

15

16

17

18

19






Metal products 10




Construction 17




Indu

ced

produ

ction

secto

r(r

ow

)

Germany2005

16.2% 63.0% 20.8%製造業

（n=303)

海外国

内

Productivity over next three years(Classified by the form of advance into overseas)

- Firms with overseas businesses in multiple modes are more likely to improveproductivity than firms confined with domestic operations.

- Firms with overseas businesses are more likely to increase domestic employment thanfirms confined with domestic operations, both in manufacturing and in non-manufacturing sectors.

4-7 Impact of overseas businesses

Domestic employment over next three years（The number of workers）

61.9% 38.1% 0.0%Direct investment and export and

business tie-up（

Form

Manufacturing(n=303)bu

siness

esoy

men

t

eas

28.7%

6.1%

32.6%

55.3%

57.6%

61.0%

16.0%

36.4%

6.4%

0% 20% 40% 60% 80% 100%

非製造業

（n=94）

製造業

（n=33）

非製造業

（n=141）

（n=303)

増加傾向横ばい減少傾向

展開企業

非展開企業

内雇用

国内雇用

21

Note：Domestic employment implies the tendency over next three years.Source：Mitsubishi UFJ Research and Consulting Co., Ltd. “Questionnaire on

overseas business strategy of firms”

Note: This figure shows the productivity tendency for next three years (classifiedby the form of advance into overseas of firms).

Source：Mitsubishi UFJ Research and Consulting Co., Ltd. “Questionnaire onoverseas business strategy of firms”

35.2%

44.9%

48.7%

60.7%

47.5%

46.2%

4.1%

7.6%

5.0%

0% 50% 100%

Only domestic operation（n=122）

Only direct investment（n=158）

Direct investment and export（n=119）

（n=105)

Increasing trend Sideways movement Decreasing trend

ormof advance into overseas

Increasing trend Sideways movement Decreasing trend

Non-manufacturing(n=94)

Manufacturing(n=33)

Non-manufacturing(n=141)

Firms

with

overs

eas bu

siness

esD

omes

tic e

mpl

oym

ent

Dom

estic

em

ploy

men

t

Firms

with

only

dome

stic b

usine

sses

Form

of a

dvan

ce in

to o

vers

eas

Documents

WhitePaperonInternational EconomyandTrade2012Philippines) NewDelhi (India) Bangkok (Thailand) KualaLumpur (Malaysia) Notes ：The annual burden on Japanese affiliated companies (manufacturing