80% of J-GoodTech listed companies want to expand overseas

The U.S. is the most popular destination for strengthened initiatives

When conducting an opinion poll of the 2,500 SMEs registered with the J-GoodTech business matching site, SME Support, Japan found that 79.2% of 125 companies who filled in the voluntary comments section were interested in expanding overseas. Additionally, the United States was the highest priority destination for strengthened initiatives, occupying 18.7% overall. The intention to secure sales outlets was particularly noteworthy, and the survey showed that companies wished to expand sales of solid products and technologies to improve brand recognition in anticipation of expansion overseas, leading to expansion of business operations.

Developing the international market is the most important issue

The opinions and requests section of J-GoodTech listed companies showed that the majority were interested in expanding overseas, totaling 53.6%. At 25.6%, one quarter of all businesses noted support from SME Support, Japan as a condition to overseas expansion initiatives. When added to together, nearly 80% of companies who responded were positive about overseas expansion. From this survey it is clear that many J-GoodTech listed companies are interested in overseas expansion.

Companies interested in expansion noted in the following points in their opinions and requests: “We’re studying the most important challenges now”, “We’d like to hear directly from relevant parties (companies) in the destination country”, “We’re currently looking to open sales channels overseas for both opening a production facility and for exporting from Japan”, etc. Respondents noted that “Imports and exports will be liberalized under the Trans-Pacific Partnership (TPP) (gradual tariff reduction), and we want to secure procurement and production of inexpensive overseas products.

Companies considering conditional expansion overseas note the following points: “I’d like support to break through the language barrier and join the local market”, “It would be good to create a common industry group of SMEs so that we can outsource production at each location”, and “I’m very interested in expanding overseas, but don’t know if our processing technology and prices will mesh with the rest of the world.” We can see that despite challenges in these initiatives, companies are interested in accelerating their efforts if the challenges can be overcome.

In any case, this is seen as a breakthrough to deal with the shrinking market in Japan due to a declining birth rate and aging population. On the other hand, there are only a very few companies who are not considering overseas expansion at the current time. Some companies showed a cautious attitude, saying “Our company is small, so I think it would be difficult for us overseas”, “Our company policy is to keep production in Japan”, and “Even in training technicians, problems arise in moving them to companies that will treat them well.”

Searching for sales channels with cutting-edge technology and products

Fifty-three companies responded that the United States is their highest priority for overseas expansion efforts in the future. This accounted for about 20% of the 284 companies that responded. The most popular reason was “Developing sales channels (securing sales contacts)”, with 69.8% of companies choosing the U.S. Following that was “Securing distributors (including sales and service)” (22.6%) and “Technical collaboration” (7.5%). Because the government has generally agreed on the TPP, it seems that future reduced tariffs have also affected decisions.

SME Support, Japan has noticed that the high technical standards of J-GoodTech listed companies are one reason for so many businesses making the U.S. their top priority for expansion. Sales Channel Support Division New Market Development Coordinator, Mr. Yasuo Koike says, “For some time, SMEs have wanted to expand sales of their cutting-edge technologies or products that incorporate those technologies in the United States. The fact that the U.S. is the top priority for expansion for so many companies proves that companies with the right technologies and products for expansion to the U.S. are gathered at J-GoodTech.”

Popularity in Asian countries other than China

After the United States, the most popular countries are Vietnam (11.6%), Indonesia (9.5%), Thailand (9.2%), and China (8%). The presence of the massive Chinese market remains the same. However, concerns over increases in personnel costs have resulted in companies selecting other Asian countries as a way to add other candidates for expansion in addition to China. Companies who give top priority to expansion in Vietnam give reasons such as “Developing sales channels (secure sales contacts)” and “Production outsourcing”. There are hopes not only for production sites, but also for the market itself.

When researching enhanced initiatives in Indonesia and Thailand, the stand-out reasons there were also “Develop sales channels (secure sales contacts)” and “Securing distributors (including sales and service)”, and “Companies listed in J-GoodTech tend to want cutting-edge technologies in the States, while general-purpose items are focused in Asia” (Koike). On the other hand, there is still a firmly rooted desire in China for “Developing sales channels (secure sales contacts” and “Production outsourcing”. There are also SMEs who have their own original business strategies and deal with requests from clients.

Traditionally, China has dominated forays into foreign markets, making up 31.1% of the overall share. Following that was Thailand at 15.3%, Taiwan at 10.0%, the U.S. and South Korea at 7.6%, and Vietnam at 7.1%. This survey was conducted using approximately 2,500 J-GoodTech listed companies. It took place over the course of one month from December 21, 2015 to January 15, 2016, with responses from 389 companies. SME Support, Japan is considering using questionnaires to develop future measures. The tailwind of J-GoodTech registered companies resulting in increasing numbers of overseas business and push to match with Japanese J-GoodTech companies will result in ever more success stories.