News
The Japan External Trade Organization (JETRO) has unveiled s report on the business operations of Japanese-affiliated firms in Africa. The research had been conducted between August and October 2012. JETRO received 168 valid replies (a 50.5% response rate) from the 333 companies to whom it sent questionnaires. The question items covered areas such as future business outlook, challenges in business, requests for Japanese government support and more. Below is a summary of the results.
1. Due to Africa's stable macro economy, many Japanese firms see improved operating profits.
Of respondents, 51.6% stated that their business performance in Africa had improved over the past five years. Also, 67.3% of firms replied that their host country will grow more important for their business in the future.
2. Many firms intend to expand business. Consumer market, agricultural development, telecommunication, medical care and environmental technology fields show promise.
* As for business plans, 58.7% of firms intend to expand business in the country they are located, while 31.6% are planning or considering expanding to other African countries.
* Consumer market, agricultural development, telecommunication, medical care and environmental technology were listed as promising fields for exploration. Japanese firms are expected to diversify their business.
* In terms of consumer market development, 83.3% of respondents consider the middle class as promising, with the upper class (36.4%) and women (24.2%) also ranking high.
3. Japanese firms not alone in exploring African market, competition growing from China and Korea
In Africa's promising market, the strongest competition was cited as coming from European (23.9%) and Japanese companies (17.2%). However, these figures have fallen since the previous survey, with a growing number of respondents citing Chinese (16.6%) and Korean firms (12.9%) as the most competitive.
4. More companies are concerned about political and social instability compared to the previous survey conducted in 2007
Political and social instability, legislation and implementation of regulations or laws and problems with employment and labor remain as challenges in management and conditions remain harsh in Africa's business environment.
5. Many firms point out insufficient understanding from or communication with corporate headquarters as a management problem
Other problems many cited were inconsistencies between company compliance rules and local business customs (36.5%), a lack of products developed or released which are suitable for the African market (33.8%) and insufficient understanding from or communication with corporate headquarters (32.4%).
6. More than 70% of firms request greater Japanese government support for business in Africa
* According to the survey, 74.3% of firms think that the Japanese government should reinforce their support for Japanese companies. Specific types of support they consider necessary are conveying various requests to the government of their host country (e.g. for construction of various systems or guidelines for improvement) (57.8%), provision of information (46.9%), signing bilateral treaties (e.g. FTAs/EPAs, tax treaties, investment protection agreements) (43.8%) and promotion of Japanese goods and brands by ranking government officials (33.6%).
* Also, 38.2% of firms replied that they are adversely affected by the support provided by other governments for their own companies. Specific comments included ''Other governments actively assist the companies of their own country in obtaining government procurement contracts,'' and ''Companies of other countries enjoy greater tariff benefits than Japanese firms thanks to economic agreements.''
