The Foreign Chambers in Japan (FCIJ) is an informal organization comprised of foreign chambers of commerce and business groups in Japan mainly for the purpose of information exchange and enhancement of the activities of the component organizations.

The FCIJ conducted the first Business Confidence survey in April 2002, based on a format developed by the Finnish Chamber of Commerce in Japan (FCCJ). This survey, conducted twice a year, is rapidly becoming a barometer of foreign business in Japan.

This, the 32nd, survey was conducted between October 18 and 27, 2017, and received 243 valid responses from members of 17 foreign chambers of commerce in Japan.

Participating organizations included the ACCJ (American Chamber), ANZCCJ (Australian and New Zealand), BCCJ (British), BLCCJ (Belgian-Luxembourg), CCBJ (Brazilian), CCCJ (Canadian), Czech (CCCIJ), FCCJ (Finnish), CCIFJ (French), DIHKJ (German), GrCCJ (Greece). IJCC (Irish), ICCJ (Italian), SACCJ (South African), SpCCJ (Spanish) SCCJ (Swedish) and SCCIJ (Swiss Chamber).

The healthy growth that started in the Fall 2016 survey continued in this survey and shows further improved sentiments compared to the previous survey conducted in April 2017. The respondents remain positive about the Japanese economy, for the next 6 months it is expected to continue to grow – the index, on a scale from +2 (strong improvement) to -2 (strong decline) – was now +0.67, compared to +0.40 in April. Looking 12 months ahead, the respondents see an even increased improvement in the economy than forecasted in the previous survey. The index was now +0.73, compared to +0.55 in the previous survey.

The stronger growth in the economy was also reflected in the performance of the companies. The index for reported sales performance in the past six months was now +0.77 compared to +0.70 the previous survey, although the profitability growth decreased slightly, now +0.61 now compared to +0.66 in October.

In the sales forecast for the coming six months the respondents were also more optimistic than in April, the index was now +0.93, the highest index since April 2007 (previous survey +0.87). The forecast for profitability also grew marginally more than in the April survey, from +0.77 to +0.78.

The optimism reflected in the company performance data also clearly show that the strategies of the foreign-affiliated companies in Japan continue to be bullish. 81% (77% in the April survey) are looking for further growth and 16% are expecting to sustain their current level. Only 2% is planning to downsize and only one of the respondents are considering withdrawing from Japan.

This time the survey included two alternating questions. The first was on how the business climate would be affected by the planned changes in inheritance and gift tax laws. 75% reported that it would have no impact while 19% thought it would have some negative and 7% strong negative impact. Many respondents commented that they were not familiar with the implications of the new law.

The second alternating question was regarding BREXIT for Europeans and TPP11 and NAFTA for the others. As for BREXIT, a large majority (60%) thinks it is bad both for Britain and the EU. In addition, 34% think it is bad for Britain but good for EU. Regarding TPP11, 41% thought it would have a positive impact, 48% none. NAFTA changes would not have much impact in Japan, 19% expected negative, 75% thought that the changes/negotiations would not impact their business.

This time we also had an open question regarding the biggest challenges in the Japanese market. The by far the most cited challenge was labor issues, mainly hiring, and retaining good staff.

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