[2017 white paper on small and medium enterprises in japan] · withdrawing enterprises) are...

[2017 White Paper on Small and Medium Enterprises in Japan]

FY2016 Developments among SMEs

FY2017 SME Policy Measures

Outline April 2017

About White Paper on Small and Medium Enterprises Annual Report Based on Article 11 of the Small and Medium-sized Enterprise Basic Act (Statutory White Paper) It is obliged to compile a report on the developments related to SMEs based on opinions of the Council for Small and Medium Enterprise Policy and submit it to the Diet every year. This is the 54th annual report after the enactment of the Small and Medium-sized Enterprise Basic Act.

Small and Medium-sized Enterprise Basic Act (extract) (Annual Report, etc.)

Article 11 (1) The Government must submit a report on the developments related to small and medium-sized enterprises and measures it has taken therefor to the Diet every year.

(2) The Government must prepare a document clarifying measures it intends to take in consideration of the developments related to small and medium-sized enterprises compiled in the report referred to in the preceding paragraph, based on opinions of the Council for Small and Medium Enterprise Policy and submit it to the Diet every year.

Definitions under the Small and Medium-sized Enterprise Basic Act and the Number of Enterprises and Employees

[Remarks] “2014 Economic Census for Business Frame” (rearranged and processed) 1

SMEs Small enterprises

Business type Stated capital or number of employee Number of employees

Manufacturing industry and

others 300 million yen or less 300 or fewer 20 or fewer

Wholesale trade industry 100 million yen or less 100 or fewer 5 or fewer

Service industry 50 million yen or less 100 or fewer 5 or fewer

Retail trade industry 50 million yen or less 50 or fewer 5 or fewer

Number of enterprises

Number of employees

Large enterprises 0.011 million 14.33 million

SMEs 3.809 million 33.61 million

Small enterprises 3.252 million 11.27 million

Large enterprises:

Approx. 0.011 million 0.3％

Medium enterprises: Approx. 0.557 million

14.6%

Small enterprises: Approx. 3.252 million

85.1%

SMEs: Approx. 3.809 million

99.7%

Outline of FY2016 Developments among SMEs (i) • While SME business conditions are slowly improving, there are ongoing structural challenges

including stagnant business entries, slackening productivity, the aging of managers and growing labor shortages.

• Important under such situation is a lifecycle in which innovation takes place through business entries, existing enterprises pursue growth, and projects and business resources (including withdrawing enterprises) are smoothly taken over by the next generation. Labor shortages common to all life stages and other challenges are analyzed.

2

Business succession

Business entries New business development

Succession/M&A Business exit

Start-up stage Growth stage Maturity stage

Human resources (a challenge common to all life stages)

Human resources utilization unique to SMEs

Innovation sources

SME Lifecycle (image) Fig.

3

Part 1 [Analysis of the Current Status] FY2016 Developments among SMEs

Chapter 1 Current Status of SMEs Chapter 2 SME Lifecycle and Productivity Chapter 3 Current Status of the SME Employment

Environment and Labor Shortages

Part 2 [Analysis by Theme] SME Lifecycle Chapter 1 Business Entries Chapter 2 Business Succession Chapter 3 Promotion of New Business Development Chapter 4 Overcoming Labor Shortages

SME Policy Measures Taken in FY2016

Chapter 1 Fine-tuned Support for SMEs in Disaster-hit Areas

Chapter 2 Productivity Improvement Support for SMEs

Chapter 3 Overseas Business Expansion Support for SMEs

Chapter 4 Sustainable Development Support for Miro Enterprises

Chapter 5 Vitalization of Regional Economies and Promotion of Corporate Metabolism

Chapter 6 Development of the Business Environment

Chapter 7 Policy Measures by Business Type and Area

Chapter 8 Other SME Policy Measures

Outline of FY2016 Developments among SMEs (ii)

【Analysis of the Current Status 1-1】Current Status of SMEs and Micro Enterprises (i)

• Ordinary profits of SMEs have remained at record-high levels and their business confidence has been improving.

Fig. 1

Fig. 1: “Financial Statements Statistics of Corporations by Industry (quarterly report)” (Ministry of Finance) (Note) Large enterprises here are enterprises whose stated capital is 1 billion yen or more and SMEs are

those whose stated capital is 10 million yen or more but less than 100 million yen.

Fig, 2: “TANKAN (Short-Term Economic Survey of Enterprises in Japan)” (Bank of Japan) and “Survey of SME Business Conditions” (Small and Medium Enterprise Agency and Organization for Small & Medium Enterprises and Regional Innovation, JAPAN)

(Note) Large enterprises in TANKAN refer to those whose stated capital is 1 billion yen or more, and SMEs are those whose stated capital is 20 million yen or more but less than 100 million yen.

-60

-50

-40

-30

-20

-10

0

10

20

30

Ⅰ Ⅱ Ⅲ Ⅳ Ⅰ Ⅱ Ⅲ Ⅳ Ⅰ Ⅱ Ⅲ Ⅳ Ⅰ Ⅱ Ⅲ Ⅳ Ⅰ Ⅱ Ⅲ Ⅳ Ⅰ Ⅱ Ⅲ Ⅳ Ⅰ Ⅱ Ⅲ Ⅳ Ⅰ Ⅱ Ⅲ Ⅳ Ⅰ Ⅱ Ⅲ Ⅳ Ⅰ Ⅱ Ⅲ Ⅳ Ⅰ

07 08 09 10 11 12 13 14 15 16 17

大企業(短観) 中小企業(短観)

中小企業(景況調査) 小規模企業(景況調査) (DI, %p)

Changes in Business Conditions DI Fig. 2

4

5.3

10.0

0.0

2.0

4.0

6.0

8.0

10.0

12.0

Ⅰ Ⅲ Ⅰ Ⅲ Ⅰ Ⅲ Ⅰ Ⅲ Ⅰ Ⅲ Ⅰ Ⅲ Ⅰ Ⅲ Ⅰ Ⅲ Ⅰ Ⅲ Ⅰ Ⅲ

07 08 09 10 11 12 13 14 15 16

中小企業大企業

Changes in Ordinary Profits

SMEs Large enterprises

Large enterprises (TANKAN)

(Trillions yen, fourth-quarter backward moving average)

(Years and quarters)

SMEs (TANKAN)

SMEs (Survey of SME Business Conditions)

Small enterprises (Survey of SME Business Conditions)


0

2

4

6

8

10

12

14

16

00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15

大企業中小企業小規模企業 (million yen)

【Analysis of the Current Status 1-2】Current Status of SMEs and Micro Enterprises (ii)

• SME sales and productivity have been slackening

Labor Productivity Changes by Enterprise Size

Fig. 1: “Financial Statements Statistics of Corporations by Industry (annually)” (Ministry of Finance) (Note) Large enterprises here are enterprises whose stated capital is 1 billion yen or more, SMEs are

those whose stated capital is 10 million yen or more but less than 100 million yen and small enterprises are those whose stated capital is less than 10 million yen.

Fig. 2

5

Changes in Sales Fig. 1

Fig. 1: “Financial Statements Statistics of Corporations by Industry (quarterly report)” (Ministry of Finance) (Note) Large enterprises here are enterprises whose stated capital is 1 billion yen or more and SMEs are

those whose stated capital is 10 million yen or more but less than 100 million yen.

126.4

133.0

100

110

120

130

140

150

160

170

Ⅰ Ⅱ Ⅲ Ⅳ Ⅰ Ⅱ Ⅲ Ⅳ Ⅰ Ⅱ Ⅲ Ⅳ Ⅰ Ⅱ Ⅲ Ⅳ Ⅰ Ⅱ Ⅲ Ⅳ Ⅰ Ⅱ Ⅲ Ⅳ Ⅰ Ⅱ Ⅲ Ⅳ Ⅰ Ⅱ Ⅲ Ⅳ Ⅰ Ⅱ Ⅲ Ⅳ Ⅰ Ⅱ Ⅲ Ⅳ

07 08 09 10 11 12 13 14 15 16

中小企業大企業 SMEs Large enterprises (Trillions of yen, fourth-quarter backward moving average)


Large enterprises

Large enterprises SMEs Small

enterprises

SMEs and small enterprises

(Year)

【Analysis of the Current Status 1-3】 Current Status of SMEs and Micro Enterprises (iii) - Business Practice Improvement Initiative - • Ordinary profits of large enterprises have greatly improved, increasing their profitability margin over

SMEs. • To improve such situation, an initiative is being promoted to stabilize and spread appropriate

transactions between subcontractor SMEs and their larger contractors to pave the way for SMEs to raise wages.

6

Fig. 2 Business Practice Improvement Initiative (Seko Plan)

Fig. 1: “Financial Statements Statistics of Corporations by Industry (quarterly report)” (Ministry of Finance) (Note) Large enterprises here are enterprises whose stated capital is 1 billion yen or more and SMEs are those

whose stated capital is 10 million yen or more but less than 100 million yen.

5.2

9.4

0

2

4

6

8

10

12

Ⅰ Ⅱ Ⅲ Ⅳ Ⅰ Ⅱ Ⅲ Ⅳ Ⅰ Ⅱ Ⅲ Ⅳ Ⅰ Ⅱ Ⅲ Ⅳ Ⅰ Ⅱ Ⅲ Ⅳ Ⅰ Ⅱ Ⅲ Ⅳ Ⅰ Ⅱ Ⅲ Ⅳ Ⅰ Ⅱ Ⅲ Ⅳ Ⅰ Ⅱ Ⅲ Ⅳ Ⅰ Ⅱ Ⅲ

07 08 09 10 11 12 13 14 15 16

中小企業大企業

Changes in Ordinary Profits Fig. 1

(i) Clarification and strict implementation of cross-sectoral rules • Increasing the number of violation cases from 66 to 141 by including

“inappropriate cost-cutting activities” and “passing die storage costs to subcontractors”

• Adding “cooperation in improving productivity” and other practices to desirable business practices for larger contractors and their subcontractors

• Larger contractors should make payments to their subcontractors in cash as much as possible and implement other measures to take leadership in improving business practices.

(ii) Development of voluntary action plans by sector, etc. • Of sectors that have developed subcontracting guidelines, the automobile

industry and some other large enterprises were requested to develop and steadily implement voluntary action plans to improve business practices and increase added value. A follow-up to the request has been conducted. At the end of March 2017, 21 groups in eight sectors had developed such plans.

(iii) On-site inspection by business practice investigators

(Subcontracting Supervising Inspectors) • Subcontracting Supervising Inspectors have been deployed to hold more

than 2,000 interviews with subcontractor SMEs annually and use the data from the interviews to improve business practices.

SMEs Large enterprises (Trillions of yen, fourth-quarter backward moving average)


Reducing sizes 0.093

Maintaining sizes 3.0

Expanding sized 0.072

0

0.5

1

1.5

2

2.5

3

3.5

Large-sized entries 0.001

Medium-sized entries 0.111

Small-sized entries 0.546

Large-sized exits

-0.001

Medium-sized exits

-0.099 Small-sized exits

-1.027

▲ 1.6

▲ 1.2

▲ 0.8

▲ 0.4

0.0

0.4

0.8

0.61 0.59 0.55 0.53 0.54 0.51

4.23 4.10 3.78 3.66 3.67 3.34 Small

enterprises 3.25

00.5

11.5

22.5

33.5

44.5

55.5

6

1999 2001 2004 2006 2009 2012 2014

7

【Analysis of the Current Status 2-1】SME Lifecycle and Productivity (i) (Changes in the number of enterprises from business entries and business exits)

Fig. 1 Changes in the Number of Enterprises Fig. 2 Breakdown of business entries and exits (2009-2014)

Fig. 3 Changes in Sizes of Existing Enterprises (2009-2014)

(Note) Enterprises that maintained their sizes unchanged include about 110,000 enterprises that failed to be identified in 2009 and were identified in 2014 due to enterprise split-ups and the improvement of statistical precision and exclude 40,000 enterprises that were identified in 2009 and could no longer be identified in 2014 due to mergers, etc.

From medium to small: 0.092 From large to medium: 0.001

Medium enterprises

0.56

Large enterprises

0.01

From small to medium: 0.071 From medium to large: 0.001

• The total number of enterprises has followed a downward trend, decreasing by 390,000 from 2009 to 2014. Small-sized business exits represent a large portion of this decline.

• This means a decreasing trend for small enterprises and an increasing trend for medium enterprises.

Figs. 1-3: “Economic Census,” “Economic Census for Business Activity” and “Establishment and Enterprise Census” (Ministry of Internal Affairs and Communications) (rearranged and processed)

Existing enterprises: 3.16 million firms

Exits

Entries

(million enterprises)

4.2 3.8

-0.39

(Year)

(million enterprises) +0.6

-1.1

(million enterprises)

5.9

0.6

5.9

3.1

1.3

1.8

-6.2

-0.8

-4.2

-2.8

-1.8

-3.0

-15

-10

-5

0

5

10

15

大企業中規模企業小規模企業

減少大企業減少中規模企業減少小規模企業

1,248

1,289

1,200

1,220

1,240

1,260

1,280

1,300

2009 2014

+41 (+3.3%)

8

【Analysis of the Current Status 2-2】 (Changes in the number of employees from business entry and exit)

• While the overall number of employees remained basically unchanged from 2009 to 2014, employees at medium enterprises increased. Particularly, medium-sized business entries represent a significant contribution to the increase.

• The number of employees per enterprise increased particularly for medium enterprises.

Fig. 1

Fig. 2

Changes in the number of employees

Breakdown of changes in the number of employees (2009-2014)

Fig. 3 Changes in the number of employees by enterprise size

37.9

40.1

36.537.037.538.038.539.039.540.040.5

2009 2014

+2.2 (+5.8%)

3.50 3.46

3.003.103.203.303.403.503.60

2009 2014

48.0 47.9 -0.1

Figs. 1-3: “Economic Census,” “Economic Census for Business Activity” and “Establishment and Enterprise Census” (Ministry of Internal Affairs and Communications) (rearranged and processed)

(i) Large enterprises

(ii) Medium enterprises

(iii) Small enterprises

-0.04 (-0.9%)

(million employees)

(Year)

Large enterprises Medium enterprises Small enterprises (million employees)

Existing enterprises +0.95

Start-up enterprises +5.5

Closed enterprises -6.5

Total -0.1

(Number of employees)

(Year)

(Year)

(Year)



Small Enterprises

12.8

Small Enterprises

11.3

Medium enterprises

20.3

Medium Enterprises

22.3

Large enterprises

14.9

Large Enterprises

14.3

0

10

20

30

40

50

2009 2014

-3.8%

+9.9%

-12.1%

9

【Analysis of the Current Status 2-3】 SME Lifecycle and Productivity (iii) (Business entry and exit rates by sector in FY2015)

Remarks: “Annual Report on Employment Insurance Services” (Ministry of Health, Labour and Welfare) (Notes) 1. The business entry rate in the Annual Report on Employment Insurance Services is computed by dividing the number of business establishments where employment relationships were established in a fiscal year by the number of business establishments adopting employment

insurance at the end of the previous year. 2. The business exit rate in the Annual Report on Employment Insurance Services is computed by dividing the number of business closings where employment relationships were closed in a fiscal year by the number of business closings adopting employment insurance at the end

of the previous year.

• The status of business entries and exists differs from sector to sector.

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

8.0%

0.0% 1.0% 2.0% 3.0% 4.0% 5.0% 6.0% 7.0% 8.0% 9.0% 10.0% 11.0%

(Business exit rate)

(Business entry rate)

Low entry rate High exit rate Average entry rate

for all sectors 5.2％

High entry rate High exit rate

Low entry rate Low exit rate

High entry rate Low exit rate

Average exit rate for all sectors

3.8％ Manufacturing industry

Lodging and food service industries

Life-related service and entertainment industries

Construction industry

Information and communications

industry

Real estate and rental industries

Retail industry

Academic research and special technical service

industry

Other services industries (mixed services, etc.)

Healthcare and welfare

Other industries (mining, electricity, finance, agriculture/forestry/fisheries,

public services, unclassifiable enterprises) Education and

learning support industry

Wholesale industry

Transportation and mail industries

0

0.05

0.1

0.15

0.2

0.25

30歳～ 45歳～ 60歳～ 75歳

【Analysis of the Current Status 2-4】 SME Lifecycle and Productivity (iv) (Current status of business exits)

10

• As SME managers are aging, the number of business exits has hit a record high, despite a decline in the number of bankruptcies.

• Enterprises with managers aged 60 or more and 80 or more hit their respective record-high shares of closed enterprises.

Fig. 3

Fig. 2

37.1

34.7

27.3

33.7

6.1 14.0

0.0

10.0

20.0

30.0

40.0

50.0

60.0

70.0

80.0

90.0

100.0

2007 2016

Business exits

49 years old or younger 50-59 years old 60-69 years old

70-79 years old 80 years old or older(%)

(Year)

Ages of managers of closed enterprises

Figs. 2-3: “2016 Business Exit Trend Survey” (Tokyo Shoko Research)

Changes in business exits and bankruptcies

29,583

8,446

0

5,000

10,000

15,000

20,000

25,000

30,000

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Number of business exits Number of bankruptcies

Fig. 1 Distribution of Ages of Managers of SMEs (by five-year interval)

Fig.1: “COSMOS2 (corporate information file)” (Teikoku Databank, Ltd.) (rearranged and processed)

(Note) The mode value is the value that occurs most frequently.

1995 Mode value

The largest age cohort of managers shifted from 47 years old to 66 years old in 20 years.

2000

2005 2010

2015

60 years old or older

70.5%


82.4%

(Number of SMEs)

(Year)

(million managers)

30 years old 45 years old 60 years old 75 years old

Exit of high-productivity enterprises

【Analysis of the Current Status 2-5】 SME Lifecycle and Productivity (v) (Relationship between Lifecycle and Productivity (i))

• Influences of each lifecycle element’s trend on SME productivity are analyzed. • While start-up enterprises have boosted productivity, the latest productivity-boosting effect has declined.

Existing enterprises with high productivity have been expanding their share and thus pushing up overall productivity. On the other hand, a decline in existing enterprises’ productivity, and bankruptcies and exits of enterprises with high productivity have pushed down overall productivity.

11

Breakdown of productivity changes by element Fig. 1

Fig. 1: “FY2016 Analysis of Corporate Metabolism for SMEs” under contract from the Small and Medium Enterprise Agency (Research Institute of Economy, Trade and Industry, December 2016) (Notes) 1. Productivity here refers to total factor productivity, which indicates how overall value added changes when labor and capital change.

2. The business change effect refers to the overall productivity boosting or reducing effect of enterprises’ business changes. 3. Used here are financial data of customer SMEs that the CRD (Credit Risk Database) Association received from its members (credit guarantee associations and financial institutions).

Entry of high-productivity enterprises

Expansion of high-productivity enterprises’ market share

Bankruptcy of high-productivity enterprises

Decline in existing enterprises’ productivity

0.5

▲ 1.0

0.2

-2.0

-1.5

-1.0

-0.5

0.0

0.5

1.0

1.5

2003-2007 （第１期）

2007-2009 （第２期）

2009-2013 （第３期）

業種転換効果廃業効果倒産効果参入効果

再配分効果内部効果合計 (%)

(Year)

Internal effect Redistribution effect

Bankruptcy effect

Business exit effect

New entry effect Business change effect

Total

11.2%

7.0% 8.3%

5.9%

0.0

2.0

4.0

6.0

8.0

10.0

12.0

2003-2007 2009-2013

Positive new entry effect Negative new entry effect(%)

0.3%

0.1%

-0.10

-0.05

0.00

0.05

0.10

0.15

0.20

0.25

0.30

0.35

0.40

2003-2007 2009-2013

Positive new entry effect Negative new entry effect

TFP growth

(%)

• Approx. 50% of start-up enterprises have raised SME productivity overall. • The trend of raising productivity has recently declined due to a drop in high-productivity start-up enterprises.

12

Fig. 1 Breakdown of new entry effect

Fig. 3 Business entry rate changes (2009-2013)

The gap between business entry rates for high and low productivity enterprises has narrowed.

58％

42％

Fig. 1-2: “FY2016 Analysis of Corporate Metabolism for SMEs” under contract from the Small and Medium Enterprise Agency (Research Institute of Economy, Trade and Industry, December 2016) (Notes) 1. Productivity here refers to total factor productivity, which indicates how overall value added changes when labor and capital change. 2. The business entry rate here refers to start-up enterprises’ share of the total number of enterprises.

54％

46％

Fig. 2 Distribution of new entry enterprises (2009-2013)

【Analysis of the Current Status 2-6】 SME Lifecycle and Productivity (vi) (Relationship between Lifecycle and Productivity (ii))

Shares of the total number of start-up enterprises

Shares of the total number of start-up

enterprises

-0.10

-0.05

0.00

0.05

0.10

0.15

0.200 25 50 75 100

(%, Accumulated enterprise shares)

Positive Negative

50% of positive effect

50% of positive effect

4％ 50％

54%

(%, accumulated new entry effect)

(Year)

• Some 50% of closed enterprises have pushed down productivity. Half of closed enterprises, excluding those attributable to mergers and acquisitions and moving overseas, have substantially pushed down productivity.

• Such enterprises feature fewer employees and sales and higher profits than existing enterprises. The share of enterprises that have determined successors to owners is relatively small for closed enterprises, indicating it is important to reduce business exits resulting from successor shortages.

13

Fig. 2 Distribution of closed enterprises (2009-2013)

Closed enterprises (Negative (i))

50.3％

Closed enterprises (Negative (ii))

0.8％

(Reference) Existing

enterprises

Closed enterprises (pushing up)

48.9％

Number of employees 6.4 94.5 11.2 8.7

Sales 0.19 billion yen 6.59 billion yen 0.34 billion yen 0.09 billion yen

Sales growth 0.55％ 3.54％ 1.4％ -3.8％

Ordinary profit margin 3.93％ 4.95％ 1.9％ -1.1％

Fixed asset growth 1.0％ 8.0％ 3.9％ -0.5％

Share for enterprises that determined

successors to owners 42％ 41.7％ 45％ 40.8％

Breakdown of business exit effect Fig. 1

Average characteristics of closed enterprises (business performance indicators) Fig. 3

Fig. 1-3: “FY2016 Analysis of Corporate Metabolism for SMEs” under contract from the Small and Medium Enterprise Agency (Research Institute of Economy, Trade and Industry, December 2016)

(Note) Productivity here refers to total factor productivity, which indicates how overall value added changes when labor and capital change.

54.8％

Share of the total number of closed

enterprises

44.6％

0.6％

48.9％

50.3％

0.8％

【Analysis of the Current Status 2-7】 SME Lifecycle and Productivity (vii) (Relationship between Lifecycle and Productivity (iii))

Share of the total number of closed

enterprises

-0.5%

-0.6%

-0.80%

-0.70%

-0.60%

-0.50%

-0.40%

-0.30%

-0.20%

-0.10%

0.00%

0.10%

0.20%

2003-2007 2009-2013

Positive business exit effect Negative business exit effect (i)Negative business exit effect (ii) TFP growth

-0.75

-0.50

-0.25

0.00

0.25

0.500 25 50 75 100

Positive Negative

50% of negative effect →Closed enterprises（Negative (i)）

50% of negative effect →Closed enterprises（Negative (ii)）

(％, Accumulated shares) 0.8％

50.3％ 51.1%

(％, Accumulated business exit effect)

0.38

0.30

0.240.260.280.300.320.340.360.38

94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15

Large enterprises (Regular employees)SMEs (Regular employees)

(Year)

(million yen)

0.002

-0.133

0.473

-0.016 -0.188

-0.043

0.065

-0.030 -0.053

0.181

-0.085 -0.002

-0.215

0.323

-0.121

-0.378 -0.053

-0.045 -0.056 -0.066

0.091

-0.169

-0.6-0.4-0.2

00.20.40.6

Managerialjobs

Special/technical

jobs

Clericaljobs

Salesjobs

Servicesjobs

Securityjobs

Productionprocess

jobs

Transportand

machineryoperation

jobs

Constructionand

miningjobs

Transport,cleaning

andpackaging

jobs

Nursingcarejobs*

2013 average 2016 average

▲ 30

▲ 20

▲ 10

0

10

20

30

I II IIIIV I II IIIIV I II IIIIV I II IIIIV I II IIIIV I II IIIIV I II IIIIV I II IIIIV I II IIIIV I II IIIIV I

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Manufacturing industry Construction industryWholesale industry Retail industryService industry

(DI,%p)


【Analysis of the Current Status 3-1】 Current Status of the SME Employment Environment and Labor Shortages (i)

14

• SMEs have increasingly perceived labor shortages, especially concerning the high ratio of job offers to applicants. Particularly, the number of employees has been decreasing at smaller-sized SMEs. The background factors of such situation are job and wage gaps.

Fig. 2

Fig. 3 Fig. 1

Fig. 4 Changes in the number of employees by employment size

Gap between job offers and applicants by job type Changes in Employee Overcapacity and Insufficiency DI

Fig. 2: “Labor Force Survey” (Ministry of Internal Affairs and Communications)

Surp

lus

Shor

tage

Changes in wages by enterprise size

Surplus Shortage

Fig. 4: “Basic Statistical Survey of Wage Structure” (Ministry of Health, Labour and Welfare) rearranged and processed (Notes) 1. “Regular employees” covered general workers with no specified employment periods until 2004. Since 2005, they have covered

general workers described as “regular employees” by business establishments. 2. Wages represent “regularly paid cash wages” for June every year, covering basic pay, predetermined allowances and overtime money. 3. Enterprises with 299 or fewer permanent employees (99 or fewer permanent employees for wholesale, services, retail and restaurant

industries) are classified as SMEs. The others are large enterprises.

Fig. 1 “Survey of SME Business Conditions” (SME Support, Japan, Small and Medium Enterprise Agency)

Fig. 3: “General Public Employment Placement Conditions” (Ministry of Health, Labour and Welfare) (Notes) 1. Excluding “agriculture/forestry/fisheries jobs” and “unclassifiable jobs”

2. “Nursing care jobs” cover “welfare facility instruction specialists,” “other social welfare specialists,” “domestic helpers” and “nursing care service jobs” extracted from “special/technical jobs” and “services jobs”, based on “Classification of Jobs (2013 Revised Edition)” by the Ministry of Health, Labour and Welfare.

(million persons)

17.4

15.1

12.5

16.3

6

8

10

12

14

16

18

20

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

1～29 30～99 100～499 500 or more(10,000 employees)

53.2

48.7

26.9

17.6

19.9

33.7

0% 100%

Women(n=2,791)

Seniors(n=2,684)

Utilizing Considering utilizing Not utilizing or considering utilizing

15.6 27.2 28.5 29.9 33.4

40.4 43.0 44.1 45.9 49.3

24.8 19.0 19.1 18.3 14.9 19.2 10.9 8.3 5.9 2.4

0

20

40

60

80

100

1-4 5-19 20-49 50-299 300 or more

15-34 years old 35-54 years old 55-64 years old 65 years old or older(%)

【Analysis of the Current Status 3-2】 Current Status of the SME Employment Environment and Labor Shortages (ii) (Utilization of various human resources)

• Smaller enterprises utilize more various human resources, including women and seniors. • Many SMEs utilize or consider utilizing various human resources as core employees.

Fig. 1

Figs. 1-2: “2007 Basic Survey of Employment Structure” and “2012 Basic Survey of Employment Structure” (Ministry of Internal Affairs and Communications) Fig. 3 “Survey on Recruitment and Job Retention at SMEs and Micro Enterprises” under contract from the Small and Medium Enterprise Agency (Mizuho Information & Research Institute, November 2016)

Male and female shares of employees by company size (employees)

(2007) (2012)

Fig. 2 Age distribution of employees by company size (employees)

(2012)

Fig. 3 Utilization of various human resources as core workers (SMEs)

15

(2007)

52.5 57.0 60.7 61.4 63.2

47.5 43.0 39.3 38.6 36.8

0

20

40

60

80

100

1-4 5-19 20-49 50-299 300 or more

Males Females(%)

52.8 55.3 59.6 61.2 62.5

47.2 44.7 40.4 38.8 37.5

0

20

40

60

80

100

1-4 5-19 20-49 50-299 300 or more

Males Females(%)

20.2 30.8 32.9 34.9 38.0

38.9 39.8 40.3 41.6 45.3

25.1 20.1 20.2 19.1 14.7 15.8 9.3 6.7 4.5 2.0

0

20

40

60

80

100

1-4 5-19 20-49 50-299 300 or more

15-34 years old 35-54 years old 55-64 years old 65 years old or older(%)

【Analysis by Theme 1-1】Business Entries (i)

Percentages of people indifferent to starting up enterprises (international comparison)

Fig. 1 Percentages of people who are interested in starting up enterprises that actually succeed in starting up those enterprises (international comparison)

Fig. 3

Fig. 3: Prepared by the Small and Medium Enterprise Agency from “International Comparison of Factors Influencing Business Start-up Activities” (Research Institute of Economy, Trade and Industry, March 2016)

• In comparison with other countries, Japan features a lower business entry rate and a larger share of people who are indifferent to starting up enterprises. However, people attempting to start up enterprises in Japan are likelier to actually succeed in starting up those enterprises.

• Increasing public interest in starting up enterprises is important. A key motivator for people to start up enterprises seems to be recommendations from close friends.

16 Figs. 1-2: Prepared by the Small and Medium Enterprise Agency from a report on a FY2013 “Survey on Entrepreneurship” (Venture Enterprise Center, March 2014)

Most frequently cited Second most frequently cited Third most frequently cited

49 years old or

younger

Male (n=961)

Influence of surrounding entrepreneurs and managers

(40.7％)

Failing to do what I want to do at my place of employment

(29.2％)

Future uncertainties and worsened treatment at my

place of employment (27.5％)

Female (n=75)

Recommendations by close friends (33.3％)

Home environment changes (marriage, child delivery, etc.)

(25.3％)


(22.7％)

50-59 years old

Male (n=809)




(28.4％)

Influences of surrounding entrepreneurs and managers

(27.3％)

Female (n=107)


Home environment changes (marriage, child delivery, etc.)

(29.0％)


(23.4％)


Male (n=949)


(25.2％)




Female (n=99)


(30.3％)


Acquisition of licenses or qualifications useful for

business operations (24.2％) Fig. 4: “Survey on Business Entry Realities” under contract from the Small and Medium Enterprise Agency (Mitsubishi UFJ Research and

Consulting, November 2016) (Notes) 1. Motivations for entrepreneurs to have interests in starting up enterprises before actually doing so are compiled. 2. Because respondents were allowed to cite multiple motivations, percentage shares may not necessarily add up to 100%.

Recommendations by close friends and the presence of entrepreneurs can become key motivations.

Fig. 2 Fig. 4 Motivations for entrepreneurs to start new enterprises

International comparison of business entry rates

5.2

9.3

14.3

7.3

12.4

0.02.04.06.08.0

10.012.014.016.018.020.0

01 02 03 04 05 06 07 08 09 10 11 12 13 14 15

Japan U.S. U.K. Germany France(%)

19 20

13 15 9

05

10152025

Japan U.S. U.K. Germany France

(%)

75.8 78.2 72.3

63.9 60.7 64.7 63.5 60.7 62.3

72.3 73.1 77.3

22.9

36.0 30.6

39.2

0

10

20

30

40

50

60

70

80

90

01 02 03 04 05 06 07 08 09 10 11 12

Japan U.S. U.K. Germany France

(Year)

(%)

(Years, fiscal years)

【Analysis by Theme 1-2】Business Entries (ii)

17

• 5- to 10-year-old enterprises are classified into three types -- high growth, stable growth and sustainable growth. • Services and manufacturing enterprises are dominant among high-growth enterprises. Their managers are young

and indicate effects of entrepreneurial education.

Fig. 1

Fig. 2

Fig. 4

Fig. 3 Growth trends after business entry

Fig. 1-4: “Survey on Business Entry Realities” contracted by the Small and Medium Enterprise Agency (Mitsubishi UFJ Research and Consulting, November 2016) (Note) Growth types are based on quantitative data for this document. As some enterprises cannot be classified into the categories depending on their response to the questionnaire, numbers in these types may not necessarily add up to the total number.

Entrepreneurs’ age distribution by growth type

Details of entrepreneurial education at school by growth type

Industry shares by growth type

(Note) The data cover respondents who cited specific courses at elementary schools, junior high schools, senior high schools, technical colleges, vocational schools, junior colleges, universities or graduate schools.

25.4

22.1

35.6

25.2

13.8

10.0

24.5

16.5

10.8

12.4

6.1

8.7

10.0

12.1

3.6

9.4

8.1

7.9

8.1

10.2

8.0

7.6

8.1

11.8

7.5

8.3

6.6

3.1

16.2

19.8

7.4

15.0

0% 100%

All SMEs(n=3,184)

High growth type(n=127)

Stable growth type(n=740)

Sustainable growth type(n=2,216)

Services industry (excluding healthcare and welfare service industries)Healthcare and welfareManufacturing industryConstruction industryWholesale industryRetail industryInformation and communications industryOther industries

7.5

15.5

9.7

6.1

26.4

31.8

31.7

24.1

30.4

26.4

29.2

31.4

27.1

20.2

21.9

29.3

8.6

6.2

7.4

9.1

0% 100%

Overall(n=3,191)

High growth type(n=129)

Stable growth type(n=729)

Sustainable growth type(n=2,174)

39 years old or younger 40-49 years old 50-59 years old60-69 years old 70 years old or older

13.6 14.4 12.8

8.8

4.8 7.2

14.7

11.3

7.7

3.9 3.0 2.4

14.3

9.7 8.3

3.3 2.7 2.7

0

3

6

9

12

15

Learningaccounting and

financialknowledge

Reading bookson entrepreneurs

Workplaceexperiences atenterprises or

shops

Leadershipeducation

Participation in entrepreneurs’

lecture and exchange meetings

Participation inenterpriseinternship

High growth type (n=124～126) Stable growth type (n=691～713) Sustainable growth type (n=2,038～2,092)

(%)

60.0

40.8 35.6 28.3 26.4

0

20

40

60

資金調達家族の理解･協力

事業や経営に必要な知識・ノウハウの習得

質の高い人材の確保

販路開拓･マーケティング

(%)

57.6

36.4 32.1 31.6 30.8

0

20

40

60

質の高い人材の確保

企業の成長に応じた組織体制の見直し

量的な労働力の確保

資金調達新たな製品･商品･サービスの開発

(%)

47.8 47.5

34.4 31.2 27.8

0

20

40

60

資金調達質の高い人材の確保

量的な労働力の確保

販路開拓･マーケティング

自社の宣伝･PR

(%)

【Analysis by Theme 1-3】Business Entries (iii)

18

• Within each growth type, challenges shift from fundraising to recruitment as enterprises go to higher stages. • Whether enterprises have realized target growth types depended on successful fundraising.

Use of loans without security or guarantee Fig. 2 Loans without security or guarantee in the stabilization or expansion stage lead to stable or high growth

(Notes) 1. Here, in the “start-up stage” , there are no mainstream products or service sales, while in the “the

initial growth stage,” sales have been reported, but operating income has not turned positive, and in the “stabilization or expansion stage,” sales have been reported, and operating income has turned positive for at least one fiscal period.

2. Here, Loans without security or guarantee are loans provided without security or guarantee due to high ratings for business operations and growth potential.

Challenges at each growth stage Fig. 1

Figs 1-2: “Survey on Business Entry Realities” under contract from the Small and Medium Enterprise Agency (Mitsubishi UFJ Research and Consulting, November 2016)

(3) Stabilization or expansion stage

(2) Initial growth stage

(1) Start-up stage Challenges involving

fundraising

Challenges involving recruitment

Challenges involving sales channel exploration

(1) Use of loans without security or guarantee at stable growth enterprises

(2) Use of loans without security or guarantee at high growth enterprises

3.9

10.1

3.4

16.7

0

5

10

15

20

Start-up stage Stabilization or expansion stage

Enterprises that failed to achieve the goal of stable growth (n=605～639) Enterprises that achieved stable growth (n=475～521)

(%)

3.3

12.4

4.7

21.1

05

10152025

Start-up stage Stabilization or expansion stage

Enterprises that failed to achieve the goal of high growth (n=209～210) Enterprises that achieved high growth (n=85～95)

(%)

Fundraising Family members’ understanding and

cooperation

Learning knowledge and knowhow required for

business operations and management

Securing high-quality human

resources

Sales channel exploration and

marketing

Fundraising Securing high-quality human

resources

Securing labor in significant

quantities

Sales channel exploration and

marketing

Enterprise advertisement and

public relations

Fundraising Securing high-quality human

resources

Reorganization responding to

enterprise growth

Securing labor in significant

quantities

Developing new products

or services

Start-up stage (n=2,781) Initial growth stage (n=2,762) Stabilization or expansion stage (n=2,690)

Most frequently cited

Second most frequently cited

Third most frequently cited

Fourth most frequently cited

Fifth most frequently cited

Fundraising methods used in the

stabilization or expansion stage

(n=104)

Loans from private financial

institutions (73.1%)

Loans from government

financial institutions (45.2%)

Enterprise managers’ own funds (36.5%)

Using public subsidies (19.2％)

Loans from family members, relatives, acquaintances, etc.

(13.5%)

Fundraising methods that enterprises

wanted to use in the stabilization or expansion stage

(n=14)

Investment from venture capitals,

investment partnerships, funds,

etc. (78.6%)

Investment from individual

investors (71.4%)

Loans from private enterprises or other

organizations (71.4%)

Investment from private enterprises, funds, foundations

or other organizations

(71.4%)

Using crowdfunding

(64.3%)

An enterprise that took advantage of speedy planning and development processes to enhance technology and gain success

Robit Inc. in Tokyo, founded in June 2014, develops IoT (Internet of

things) systems, robots, etc. Robit's President Takahashi decided to start up an enterprise after winning first prizes at multiple business contests thanks to high ratings for his planning ability and sample products during his university days.

After starting up the enterprise with marginal money including business contest prize money and business start-up and second start-up promotion subsidies from the Small and Medium Enterprise Agency, President Takahashi planned products and developed samples repeatedly within a short period of time. The speedy product planning and development attracted individual investors, allowing him to successfully receive investment from them.

Later, he took advantage of the investment to recruit some friends from his university days and enhance research and development. In the summer of 2016, which was two years after the start-up, Robit successfully launched the “Mezamashi Curtain mornin’” system to open and close curtains with smartphones.

【Analysis by Theme 1-4】Business Entries (iv)

19

• In the stabilization or expansion stage at high growth enterprises, there are strong needs for investment and for business advisers, internal managers, business planners and other human resources required for business expansion.

【Specific case】Robit Inc. (Tokyo)

Robit’s “Mezamashi Curtain mornin’”

Fig. 1

Fig. 2

Fundraising methods at high-growth enterprises in the growth or expansion stage

Human resources required at high growth enterprises in each growth stage

Fig. 1-2: “Survey on Business Entry Realities” under contract from the Small and Medium Enterprise Agency (Mitsubishi UFJ Research and Consulting, November 2016)

47.4 42.1

21.1 15.8 14.7

11.6

58.4 57.5

32.7 31.0

22.1 17.7

66.1 59.6

40.4 41.3 47.7 49.5

0

10

20

30

40

50

60

70

経営者の右腕人材

営業･販売人材財務･会計人材内部管理人材経営企画人材後継者候補人材

創業期(n=95) 成長初期(n=113) 安定・拡大期(n=109) (%)

(Note) The five most frequently cited items are listed for fundraising methods that enterprises used and those that enterprises wanted to use.

The product’s shipments surpassed 20,000 units in the six months after its launch and its sales have smoothly grown. Robit is tackling the commercialization of new products and services.

Start-up stage (n=95) Initial growth stage (n=113)

Stabilization or expansion stage (n=109)

Close aides to managers

Marketing and sales personnel

Finance and accounting personnel

Internal managers

Business planners

Successor candidates

46.4

38.4

27.1

22.1 19.5

9.7

59.6

49.5

32.3 32.3 31.5

16.9

59.8

51.8

37.7 36.1

43.6

55.9

0

10

20

30

40

50

60

70

経営者の右腕人材

営業･販売人材財務･会計人材内部管理人材経営企画人材後継者候補人材

創業期(n=524) 成長初期(n=626) 安定・拡大期(n=637)

(%)






Fundraising methods used in the stabilization

or expansion stage (n=546)




financial institutions

(42.6%)


Using public subsidies (22.9%)

Loans from family members,

relatives, acquaintances, etc.

(13.8%)

Fundraising methods that enterprises wanted

to use in the stabilization or expansion stage

(n=110)


investment partnerships, funds, etc. (44.5%)

Using crowdfunding

(44.5%)


Investment from private

enterprises, funds, foundations or

other organizations

(40.0%)


investors (37.3%)






Fundraising methods used in the initial

growth stage (n=646)






(40.9%)



(22.0%)


Fundraising methods that enterprises wanted

to use in the initial growth stage (n=126)


Investment from private

enterprises, funds, foundations or

other organizations

(43.7%)


investment partnerships, funds, etc. (42.9%)


investors (39.7%)

Using crowdfunding

(38.1%)

【Analysis by Theme 1-5】Business Entries (v)

20

• Fundraising needs at stable growth enterprises shift from loans to public subsidies and investment as they go to higher stages. From the initial growth stage, needs increase for advisers to managers and various other human resources.

Fig. 1

Fig. 2

Fundraising methods at stable growth enterprises in each growth stage

Human resources required at stable growth enterprises in each growth stage

Fig. 1-2: “Survey on Business Entry Realities” under contract from the Small and Medium Enterprise Agency (Mitsubishi UFJ Research and Consulting, November 2016)






Fundraising methods used in the start-up

stage (n=677)




(39.3%)





(28.2%)


Fundraising methods that enterprises

wanted to use in the start-up stage (n=179)





(41.3%)


Investment from venture capital

firms, investment partnerships, funds, etc. (34.6%)

Investment from private enterprises, funds, foundations

or other organizations

(31.8%)

(Start-up stage)

(Initial growth stage)

(Stabilization or expansion stage)

(Note) The five most frequently cited items are listed for fundraising methods that enterprises used and those that enterprises wanted to use.

Start-up stage (n=524)

Initial growth stage (n=626)

Stabilization or expansion stage (n=637)

Close aides to managers

Marketing and sales personnel

Finance and accounting personnel

Internal managers

Business planners

Successor candidates

36.3

44.1

75.0

65.9

74.9

57.1

63.9

69.8

80.8

71.2

020406080100

Business succession is felt as a challenge (n=1,336～1,440) Measures or preparations are being implemented (n=1,453～1,576)

(%)

3.9 10.5

22.7

42.4

20.5 10 years or longer5-10 years3-5 years1-3 years1 year or shorter

(%)

(n=1,075)

Share of enterprises having taken more than 3 years

37.1％

Non-family business

succession 33.4

Family business

succession 66.6

(n=2,357)

Non-family directors

[値]

Non-family employees

[値]

Outside people [値]

(n=787)

Successors have been

determined

41.6

There are successor candidate

s 27.5

There are no

successor candidate

s, or successors have not

be determine

d …

(n=4,036)

63.6

54.5

51.0

31.2

29.4

36.4

45.5

49.0

68.8

70.6

0% 100%

The successor has been determined(n=1,369)

There is a successor candidate whose consent has not been gained

（n=950）

We are looking for a successor candidatebut have yet to find any candidate

(n=453)

The time is not mature to look for any successor candidate

(n=401）

We have never consideredany successor candidate

(n=248)

Recommended Not recommended

【Analysis by Theme 2-1】Business Succession (i)

21

Business succession challenges, measures and preparations (the successor has been or has not been determined)

11.5

15.2

26.9

30.5

31.0

52.7

62.2

66.7

79.6

80.2

0 20 40 60 80 100

Business succession is felt as a challenge (n=2,180～2,216) Measures or preparations are being implemented (n=2,016～2,088)

(%)

Securing advisers for the successor

Transferring power to the successor gradually

Developing a post-succession business operation plan

Negotiating with financial institutions on managers’ personal guarantees

The successor has been determined The successor has not been determined

• Non-family business succession accounts for one-third of the total business succession cases. In many of non-family business succession cases, successors come from within the organization.

• In many cases where acquaintances recommended that managers prepare for business succession, successors were chosen. While the selection of successors takes time, enterprises that have not determined successors have generally failed to progress in enacting business succession measures.

Fig. 1

Fig. 4

Fig. 2 Successor selection

conditions

Successor criteria and present status of non-family succession (medium-sized corporations)

Breakdown of non-family business succession cases

Shares of enterprises recommended to prepare for business or asset succession by successor selection stage

Figs. 1-4: “Questionnaire Survey on Business Succession” contracted by the Small and Medium Enterprise Agency (Tokyo Shoko Research, November 2016)

Fig. 3 Time to receive consent from a candidate after beginning the selection process

(%)

Share of family business succession

In-house organizational improvement

Choosing the successor and

gaining consent from the successor and

other stakeholders

【Analysis by Theme 2-2】Business Succession (ii)

22

• Enterprises fail to make smooth progress in resolving challenges regarding non-family asset succession. Relevant challenges include time-consuming measures and preparations for asset succession methods.

• Top managers must select their successors and systematically make preparations for succession, while supporters and financial institutions must cooperate in providing fine-tuned support for resolving various challenges.

Fig. 1

Fig. 2 Fig. 3

Asset succession challenges, measures and preparations (family and non-family succession) Family business succession Non-family business succession

25.7

30.2

40.9

42.6

62.7

62.9

56.0

54.4

11.6

6.9

3.0

2.9

0% 100%

Negative profitmargin (n=319)

0-3% or less(n=1,364)

3-10 % or less(n=823)

10% or more(n=204)

Higher than expected As high as expected Lower than expected

Impressions of treasury share appraisal value viewed by the ordinary profit margin

47.1

26.6

12.0 11.4 6.1

27.1 20.7

7.1 8.3 4.6

05

101520253035404550

Certified publicaccountants ortax accountants

serving as advisers

Correspondentfinancial institutions

Business consultant Relatives,friends/acquaintances

Non-family directorsor employees

Implementing measures and preparations(n=700)Not implementing measures and preparations(n=2,192)

(%)

Advisers recommending preparations for business or asset succession by stage of measures and preparations regarding successors’ financial resources What is important for enterprises managers is advice from those who frequently meet them

There are many loss-ridden enterprises whose stocks have unexpectedly high appraisal value

Figs. 1-3: “Questionnaire Survey on Business Succession” under contract from the Small and Medium Enterprise Agency (Tokyo Shoko Research, November 2016) (Note) “Successors’ financial resources” refer to financial resources for successors to purchase treasure shares and business assets.

30.3

44.7

53.5

35.7

50.1

49.3

34.5

64.5

69.0

69.7

020406080

Business succession is felt as a challenge (n=1,522～1,522)

Measures or preparations are being implemented (n=1,341～1,481)

(%) 21.8

21.4

35.1

18.8

28.3

48.4

55.2

55.6

60.8

62.6

0 20 40 60 80

Business succession is felt as a challenge (n=832～847）

Measures or preparations are being implemented (n=725～780)

(%)

Considering optimum methods for transferring treasury shares and business assets

Successors’ financial resources for paying taxes and

purchasing treasure shares and business assets

The appraisal value of treasury shares and business assets is high, placing great gift or inheritance tax

burdens on successors

Fundraising for enterprises’ purchase of treasury shares and business assets

Appropriate appraisal of treasury shares and business assets

85.7 77.9 73.5

67.0 65.2

11.3 23.7

15.8 15.2 7.8

0102030405060708090

100

Continuedemployment and

treatment ofemployees

Lack of informationor knowledge about

mergers andacquisitions

Lack of legal, tax,financial and otherspecial knowledge

Information leakagerisk regarding

consideration ofmergers andacquisitions

Corporate culturedifferences

Feeling challenges (n=839～856) Taking measures and making preparations (n=744～768) (%)

59.1

43.4 42.3

9.1 4.5 2.6

010203040506070

Certified publicaccountants or tax

accountants servingas advisers (n=716)

Relatives,friends/acquaintances

(n=691)

Correspondentfinancial institutions

(n=698)

Commerce andindustry associationsor chambers (n=638)

Business successsupport centers

(n=627)

ComprehensiveSupport Centers

(n=626)

(%)

【Analysis by Theme 2-3】Business Succession (iii)

23

• For enterprises that lack successors but want to continue business operations, business transfers, sales or integration (mergers and acquisitions) are important options. In general, most managers insist on not only maintaining positions for their employees but also the future development of their business.

• Enterprises fail to make progress in making preparations or taking measures despite abundant succession challenges. The share is low for enterprises that consult with specialists on succession. Support arrangements are necessary to find relevant needs and respond to various challenges.

Fig. 1 Fig. 3

Fig. 2

Fig. 4

2.3

3.4

20.2

33.3

77.5

63.3

0% 100%

Having a successor orsuccessor candidate

(n=2,141)

Having no successor(n=1,094)

Considering or having made decisions on business transfers, sales or integration (mergers and acquisitions)Accepting business transfers, sales or integration (mergers and acquisitions) to continue business operationsNot considering business transfers, sales or integration (mergers and acquisitions)

Consideration of sale, integration or transfer of business ownership (mergers and acquisitions) both for enterprises with or without successors or successor candidates

88.8

38.3 38.0 29.3

23.7

88.7

35.5

56.7

22.0 25.5

86.0

33.1

59.0

24.7 29.8

0

20

40

60

80

100

Maintaining orsecuring continued

employment ofemployees

Monetary incomefrom sales

Further corporateand businessdevelopment

Liquidatingcorporate debt

Utilizing ordeveloping in-

house technologyand knowhow

20 or fewer(n=410)

20-50(n=282)

50 or more(n=178)

(%)

Priorities for sale, integration, or transfer of business ownership (mergers and acquisitions) by company size (employees)

Challenges, measures and preparations regarding business transfers, sales or integration (mergers and acquisitions)

Consultants on business succession for enterprises interested in sale, integration, or transfer of ownership (mergers and acquisitions) (three most frequently cited and 3 least frequently cited consultants)

Consultants for enterprises are those that frequently contact the enterprises

Even enterprises interested in mergers and acquisitions have failed to make progress in taking relevant measures or making preparations.

Figs. 1-4: “Questionnaire Survey on Business Succession” contracted by the Small and Medium Enterprise Agency (Tokyo Shoko Research, November 2016)

【Analysis by Theme 2-4】Business Succession (iv)

24

【Specific case】Autec Mechanical Co. (Minami-Alps City, Yamanashi Prefecture)

From the left, the sales head (candidate for the next president), the chairman and the present president

Three generations tackling smooth business and asset succession

Autec Mechanical is a manufacturer founded by its present chairman to design and produce automatic assemblers and automatic inspection devices, etc. Since the early stage, the chairman has not stuck to family management but has been conscious of developing a system for excellent employees to succeed to the top manager position and enable business operations to be maintained over the long term.

The present chairman developed a corporate business philosophy and has held business plan presentation contests to spread the enterprise’s business direction. The chairman picked an employee as a director in his 40s and appointed him as the present president who has now taken over the management of the business management.

The enterprise picked a sales head as a director and a candidate for the next top manager in his 40s and dispatched him to an outside successor training course that the present president underwent in his 40s. The enterprise is proceeding with training of a business successor candidate.

The chairman says: “Large organizations can select business successors. However, SMEs must take much time to train successor candidates. Successor candidates are required to accumulate experiences as managers from an early stage.”

While implementing solid business management with the share price rising,

the enterprise has transferred shares held by the chairman and his family to the present management and an employee shareholding association gradually to facilitate non-family succession.

32.6

26.7 24.7

18.1

10.8 12.5

35.7 35.4

25.9 25.9

20.1 16.9

0

5

10

15

20

25

30

35

40

Lacking personnelwho has necessary

technology orknowhow

Difficult saleschannel exploration

Massive costsrequired for new

businessdevelopment

Insufficientknowledge onmarket needs

Insufficientcommunication of

products or servicesto markets

Difficulties inidentifying a project

in which theenterprise can take

advantage of itsstrength

Successful (n=288) Unsuccessful (n=703)(%)

【Analysis by Theme 3-1】Promotion of New Business Development (i) • New business development contributes to SME growth. • The success of new business development depends on target strategies and marketing initiatives.

25

Fig. 1

Fig. 3

Fig. 2 Relationship between new business development (new product development) and the ordinary profit margin

Implementation of new business development

Figs. 1-3: “Survey on SMEs’ Business Strategies for Growth” under contract from the Small and Medium Enterprise Agency (Nomura Research Institute, November 2016)

Challenges for enterprises that are successful and unsuccessful in new business development

Marketing-related challenges Marketing-related challenges

36.0

28.0

37.8

41.8

26.3

30.2

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

Implementing(n=670)

Notimplementing

(n=2,142)

Increasing Remaining unchanged Decreasing

22.3

23.7

16.0

4.9

77.7

76.2

84.0

95.0

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

New market exploration strategy(n=2,959)

New product development strategy(n=2,928)

Diversification strategy(n=2,959)

Business switch strategy(n=2,875)

Implementing Not implementing

(1) New market exploration strategy

(2) New product development strategy

31.7

19.6

14.9 14.9

8.5 11.0

36.1

21.2 21.8 21.6 18.1

14.9

0

5

10

15

20

25

30

35

40

Lacking personnelwho has necessary

technology orknowhow

Massive costsrequired for new

businessdevelopment

Insufficientknowledge onmarket needs

Difficult saleschannel

exploration

Insufficientcommunication of

products orservices to markets

Difficulties inidentifying a

project in whichthe enterprise cantake advantage of

its strength

Successful (n=281) Unsuccessful (n=679)(%) (2) New product development strategy

62.8

51.7

13.2 14.0 10.3

5.4

76.2

39.2

14.4 13.7 10.5 5.3

0

10

20

30

40

50

60

70

80

90

In-house salesdivision members or

representatives

In-house businessplanning division

members orrepresentatives

In-house marketingplanning division

members orrepresentatives

In-house researchand development

division members orrepresentatives

Oher divisionmembers and

representatives

None or no divisionexists to find market

needs

Successful (n=242) Unsuccessful (n=564)

(％)

59.5

38.6 34.5

30.7 30.3

65.4

28.9 36.5

25.2 30.2

0

10

20

30

40

50

60

70

Flexible productionand provision of

products or servicesaccording to requests

Developmentcapabilities for

products or servicesreflecting market

needs

Production andprovision of high

value added productsor services

Brand power ofenterprises and

products or services

Technological, andresearch anddevelopmentcapabilities

Successful (n=264) Unsuccessful (n=616)

(％)

29.3

30.7

40.0

(%) (n=75)

44.5

36.0

19.5

IncreasingRemaining unchangedDecreasing

(%) (n=328)

60.4

49.1 48.8

33.3

60.4

42.6 38.6

28.4

55.1

39.2 38.6 31.6

54.1

31.1 33.8

17.6

54.5

24.7 29.9

19.5

0

10

20

30

40

50

60

70

Obtaining new customers Improving enterpriseawareness

Improving employees’ motivations

Human resourcesdevelopment

All of the four (n=336)Finding market needs and enterprise strengths and PR operations (n=197)Finding market needs and enterprise strengths (n=158)Finding strengths alone (n=74)Implementing no market operations (n=77)

(%)

Fig. 3

【Analysis by Theme 3-2】Promotion of New Business Development (ii) • Enterprises that are strong in finding market needs among marketing operations are successful in new business

development. At such enterprises, business planning divisions as well as sales divisions are opt to find market needs.

• Enterprises that evaluate and verify marketing operations benefit from employees’ improved motivations and personnel training effects.

26

Fig. 1

Fig. 2 Fig. 4

Ordinary profit margin trends by presence and absence of marketing operations

Enterprise strengths for successful and unsuccessful enterprises in new business development

Relationship between marketing operations and new business development effects


(Note) Marketing operations include “finding enterprise strengths,” “finding market needs,” “information strategies” and “verification of marketing operation effects.”

Divisions to find market needs for successful and unsuccessful enterprises in new business development

(Notes) 1. Among new business development effects, qualitative ones alone are tabulated. 2. PR operations include not only advertisement but also strategic information collection and communication activities such as finding

enterprise ratings and effective utilization of various media.

(1) Implementing all marketing operations

(2) Not implementing all market operations

26.5 26.5

18.4

8.2 8.2 6.1

40.8 39.7 36.9

29.4

18.2

33.5

12.0 6.2

0

10

20

30

40

50

Utilization ofoutside resources

may cost more thansecuring in-house

personnel orarrangements

Appropriatecontract prices are

unknown

Outsourcing effectsfail to meet costs

Concern regardingthe leakage of

technology andknowhow tocompetitors

Outside resourcesare less flexiblethan in-house

resources

Outsourcingcontract procedures

are cumbersome

No particularproblems arose

Utilizing outside resources (n=49)Considering utilizing outside resources while failing to utilize them (n=582)

(%)

50.4 32.2

17.4

Increasing

RemainingunchangedDecreasing

62.5 20.0

17.5

Increasing

RemainingunchangedDecreasing

【Analysis by Theme 3-3】Promotion of New Business Development (iii) • It is effective for enterprises to utilize outside business resources for responding to labor shortages, a common

challenge for new business development. Utilizing outside resources has a positive effect on the profits. Enterprises that have utilized outside resources have not perceived many problems.

【Specific case】 Tanaka Metal Factory (Yamagata City, Gifu Prefecture)

Taking advantage of outside resources for a brand strategy to create a niche market

Tanaka Metal Factory develops, produces and sells copper and stainless steel parts and shower heads. It had been producing water faucet valves as a subcontractor. In response to stagnant demand and fiercer price competition under slack housing starts, however, the enterprise has sought to develop proprietary products and explore sales channels for them without depending on subcontracting deals.

When considering a new core business, the enterprise paid attention to water-saving shower heads that were selling at high prices. It proceeded with new product development and successfully developed shower heads featuring water-saving and beauty care effects.

When launching a new product for consumers, the enterprise outsourced branding strategy development and successfully increased customers’ awareness of the product by clarifying the concept and advertisement points for the product.

27

Fig. 1

Ordinary profit trends Ordinary profit trends

Relationship between utilization of outside resources for evaluating and verifying marketing operations and the ordinary profit margin (successful enterprises in new business development)

Fig. 2 Challenges for enterprises that have utilized and have not utilized outside resources


(％) (n=40)

(％) (n=230)

Tanaka Metal Factory took nearly

three years to establish its proprietary brand products targeting women in their 30s who are sensitive to beauty care and health. As a result, its sales have doubled.

14.6 85.4

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

Evaluatingand

verifyingmarketingoperations(n=341)

Utilizing outside resources Not utilizing outside resources

1.0

1.9

0.9

0.6

2.1

5.3

5.7

4.9

4.0

6.1

0% 5% 10%

Utilizing

Consideringutilizing

0.9

1.3

1.6

1.7

1.8

8.6

5.7

8.8

6.2

5.2

0%5%10%

Visualizing traffic lines of employees toimprove business processes

(n=989)(n=1,886)

Finding product and service operations andcustomer needs to develop new products

(n=994)(n=1,906)

Grasping and controlling orders, productionand inventories integrally

(n=988)(n=1,887)

Automating and streamlining backyard andassistant operations(n=985)(n=1,885)

Finding customers’ and trading partners’ needs

(n=995)(n=1,912)

【Analysis by Theme 3-4】Promotion of New Business Development (iv) • SMEs do not utilize IoT and other new technologies to a large extent but have some interest in them. Non-

manufacturing SMEs could take advantage of new technologies for visualizing things to raise productivity. • SMEs have relatively high interest in the sharing economy that can become their new business chance.

28

【Specific case】Tokachi Bus Co. (Obihiro City, Hokkaido Prefecture)

Tokachi Bus is a regional enterprise that positively utilizes IoT to improve customer satisfaction.

It is a bus operator founded in 1926, providing bus operations in one

city and 13 towns/villages in Tokachi, Hokkaido. The enterprise seeks to increase bus users instead of viewing their decline as natural in a state of despair.

In 2008, the enterprise launched marketing house-to-house visits along bus routes to find reasons for falling demand. In a bid to resolve bus users’ concerns about uncertain bus stops and routes, it joined hands with an information technology vendor to develop a bus transfer guidance service. The enterprise provides an application for searching a bus route by destination even if bus stop locations are unknown.

The enterprise has also introduced a system for bus location users utilizing IoT technology, providing a service to visualize bus operations on an application and notify customers of arrival times. The service has resolved bus users’ concerns about volatile arrival times in winter, increasing customer satisfaction. The enterprise is considering installing sensors in buses to count incoming and outgoing passengers and using sensor data for revising bus schedules.

Fig. 1

Fig. 2

Utilization of IoT, big data, artificial intelligence and other new technologies by business category

Interest in the sharing economy


[Manufacturing] [Non-manufacturing]

Various initiatives successfully led the enterprise to achieve sales growth in 2011. Furthermore, it is trying to increase tourists to revitalize the Tokachi region by providing regional tourism spot information and bus routes to such spots.

9.5

11.2

13.6

36.7

38.2

46.4

53.8

50.6

40.1

0% 100%

As platform providers (n=692)

As goods and services providers (n=694)

As space, goods and services users (n=699)

Having interest in and considering participating in the sharing economyHaving interest in but not considering participation in the sharing economyHaving no interest

60.4

36.3

35.6

26.5

34.0 27.0

52.8

25.6

63.6

24.4

28.7 21.6

31.0

25.7

60.1

31.9

Total

Businessplanning

Internalmanagement

Finance andaccounting

Informationsystems

Research anddevelopment,

andengineering

Marketing,sales andservices

Productionand

transportation

Core personnel (n=681～709) Labor personnel (n=649～696)

(%)

【Analysis by Theme 4-1】Overcoming Labor Shortages (i)

29

• Enterprises seeking growth and expansion strongly feel shortages of both core and labor personnel. • Particularly, core personnel shortages prevent enterprises from responding to weak new business development

and demand growth, affecting new business development at enterprises focused on growth and expansion.

Fig. 1

Fig. 2 (Reference) Personnel classification in 2017 White Paper

Manufacturing Non-manufacturing

Labor shortages by industry and business category

Core personnel shortage’s influences on business by type of business development policy

Fig. 1-2: “Survey on Recruitment and Job Retention at SMEs and Micro Enterprises” under contract from the Small and Medium Enterprise Agency (Mizuho Information & Research Institute, November 2016)

(Note) The length of a spoke of the radar chart is proportional to the seriousness of labor shortage rates.

【Growth and expansion】【Stabilization and maintenance】【Growth and expansion】【Stabilization and maintenance】

Pers

onne

l cla

ssifi

catio

n

Core personnel

・Core personnel in each division that undertake advanced and difficult business operations ・Personnel responsible for management and operations of the organization ・Personnel directing and managing multiple people ・Personnel with high specialization, skill and educational levels

Labor personnel

・Personnel in each division that undertake relatively routine work ・Personnel not responsible for organizational management or operations ・Personnel working under core personnel’s direction and management ・Personnel doing auxiliary work for core personnel ・Personnel providing indispensable labor for business operation while lacking special skills

42.5

25.4

24.6 18.4

23.5

20.0

41.4 25.7

50.4

18.3 19.4 15.4

21.3

18.1 43.4

32.6

Total

Businessplanning

Internalmanagement


Informationsystems


andengineering


Productionand

transportation

Core personnel (n=1,272～1,401) Labor personnel (n=1,240～1,362)

(%) 57.8

31.7

35.8

24.3

30.0 44.8

54.0

51.5

60.1

19.5

27.9 18.3

26.7 40.1 51.1

58.3

Total

Businessplanning

Internalmanagement


Informationsystems


andengineering


Production andtransportation


(%)

47.4

27.6

29.6

18.2

27.6 34.5

41.7

39.7 42.6

17.8 22.3

14.6 18.3 29.4

33.5

45.8

Total

Businessplanning

Internalmanagement


Informationsystems


andengineering


Productionand

transportation


(%)

58.4 57.6

47.8 43.1

36.0 40.7

45.0 53.0 54.6

28.3

0

10

20

30

40

50

60

70

Stagnant new businessand area development

Losing opportunities byfailing to respond to

demand growth

Difficult technology andknowhow succession

Difficult business sizemaintenance

Growing recruitmentcosts

Growth and expansion (n=531) Stabilization and maintenance (n=777)(%)

Human resources remain for

three year or more after recruitment

90.6

Human resources failing to

remain for three years or

more after recruitment

9.4

(%) (n=849)

33.0 29.0 29.0 28.7

25.6 23.4 21.8

17.2

37.2

28.0 26.6

21.5 24.6 22.4

18.9 16.2

0

10

20

30

40

Wage hikes andpromotion

according toskills andaptitudes

Human resourcesrating

responding toachievements

and work details

Promotion ofovertime workreduction andleave systems

Considerationgiven to theworkplace

environment andhuman relations

Training andcapacity building

support

Securing higherwage levels than

at otherenterprises

Promotingreduction of

work burdensand guaranteeing

of work safety

Flexible workinghours

Enterprises successful in securing human resources （n=582) Enterprises unsuccessful in securing human resources (n=1,405)(％)

【Analysis by Theme 4-2】Overcoming Labor Shortages (ii)

30

• Enterprises that successfully stabilize business operations focus on workplace environment improvements and work burden reductions and are successful in recruitment.

• Enterprises that can utilize various human resources take advantage of SME flexibility, including overtime work cuts and giving consideration to human relations, to improve the workplace improvement.

30

Fig. 1 Fig. 3

Fig. 2

Success or failure of recruitment and stabilization of recruited human resources

Initiatives viewed by SMEs as effective for stabilizing and nurturing human resources

Workplace environment improvement initiatives by presence or absence of various human resources (core personnel)


(Note) Enterprises utilizing various human resources are those utilizing any of the classes of “women,” “seniors,” “foreigners” and “handicapped” as core personnel. Enterprises considering doing so are others considering utilizing any of the above as core personnel. Other enterprises are those not considering doing so.

[Manufacturing]

[Non-manufacturing]

Successful in recruiting expected human resources in

terms of number and skills

32.1 Unsuccessful in recruiting expected human resources in

terms of number and skills

67.9

(%) (n=2,673)

40.1 39.0 34.0

24.0

16.5

35.8 30.5

34.5

17.5 15.1 15.7 16.1 14.3 10.8

6.3

0

10

20

30

40

50

Promotion of overtimework reduction and

leave systems

Considerations givento the workplaceenvironment andhuman relations

Collection of employees’ opinions

through in-house study meetings, proposal

Reduction of workvolume and burdens onhuman resources under

working hoursconstraints

Development ofresting rooms and

other hardware

Utilizing various human resources (n=1,543)Considering doing so (n=377)Not considering doing so (n=286)

(%)

41.0 40.7 37.1

23.9 20.5

33.6

25.8 25.8

18.8 13.3

23.7

14.0 15.1 12.9

6.5

0

10

20

30

40

50

Promotion of overtimework reduction and

leave systems

Considerations givento the workplaceenvironment andhuman relations

Collection of employees’ opinions

through in-house study meetings, proposal

presentation contests, etc.

Development ofresting rooms and

other hardware

Reduction of workvolume and burdens onhuman resources under

working hoursconstraints

Utilizing various human resources (n=410)Considering doing so (n=128)Not considering doing so (n=93)

(%)

33.7

14.6

34.7

24.9

42.2

39.6

38.5

40.9

24.1

45.8

26.8

34.2

0% 100%

合理化・標準化実施企業 (n=187)

未実施企業(n=48)

合理化・標準化実施企業 (n=470)

未実施企業(n=225)

製造業

非製造業

増益横ばい減益

• Enterprises that can utilize various human resources despite labor shortages accomplish rationalization and standardization useful for improving productivity, leading to greater earning power.

【Analysis by Theme 4-3】Overcoming Labor Shortages (iii)

31

【Specific case】Sanshu Seika Co. (Kasukabe City, Saitama Prefecture)

Sanshu Seika has realized a flexible work style featuring each worker playing three roles, with women playing active roles Sanshu Seika is a rice and western confectionery manufacturing and marketing

company founded in 1950. Women account for nearly 40% of regular employees, more than 90% of non-regular employees and more than 20% of managerial officials, playing great roles as a substantial part of the workforce. The president has taken leadership in promoting the active role of women, allowing the enterprise to be chosen as one of the “Top 100 Diversity Employers” and receive other relevant certifications and commendations.

At Sanshu Seika, few employees take maternity leave, childcare leave or nursing care leave. The company features a childcare and nursing care system and allows employees to take paid holidays without any hesitation, regardless of their positions. The biggest secret behind the paid holiday system is a mechanism that allows each worker to play three or more roles through a system of cross-training for factory workers.

In order to allow the three-roles-per-worker mechanism to smoothly work, the enterprise has established rules to standardize the work, visualize role sharing and regularly reflect these factors in personnel evaluations, reportedly leading to follow-up arrangements for employees on vacation, higher motivation and productivity improvements.

Recent hit product “Fried Pasta”

Fig. 2

Fig. 1

[Manufacturing]

[Non-manufacturing]

Relationship between work visualization initiatives and earning power (enterprises utilizing various human resources as core personnel)

Fig. 1-2: “Survey on Recruitment and Job Retention at SMEs and Micro Enterprises” contracted by the Small and Medium Enterprise Agency (Mizuho Information & Research Institute, November 2016)

Work rationalization and standardization initiatives categorized by presence or absence of various human resources (core personnel)

(Note) “Enterprises implementing visualization” are those that implement the “visualization of work processes” and any of the “thorough promotion of 5S,” the “clarification of each worker’s work details and role sharing,” the “reform and reduction of work details” the “introduction of in-house common work tools” and the “integration of work that overlaps among divisions or areas.” Enterprises not doing so are those that implement no visualization initiatives.

This allows women employees who play core roles to demonstrate their potential while maintaining work-life balance through a flexible work style. The largest recent hit product is “Fried Pasta”, which was conceived by a short-time regular employee engaging in childcare. The president describes the hit product as an achievement emerging from arrangements based on the three-roles-per-worker mechanism.

Increasing profits

Leveling-off of profits

Decreasing profits

Man

ufac

turi

ng

Non

-m

anuf

actu

ring

Enterprises implementing visualization (n=187)

Enterprises not doing so (n=48)

Enterprises implementing visualization (n=470)

Enterprises not doing so (n=225)

66.0

48.2 38.5

32.6

17.7

58.3

32.6 43.9

26.5

9.8

37.2

17.0 17.0 10.6 8.5

010203040506070

Thorough promotion of 5S(organization, order,

cleaning, cleanliness anddiscipline)

Visualization of workprocesses

Clarification of each worker’s job description

and role sharing

Reform and reduction ofjob responsibilities

Introduction of in-housecommon work tools

Utilizing various human resources (n=423) Considering doing so (n=132) Not utilizing them (n=94)(%)

44.2 38.3 35.4

29.4 24.4

42.0 40.6 31.9 27.7

20.8 27.6 23.4

14.3 11.2 13.6

010203040506070

Clarification of each worker’s job description

and role sharing

Thorough promotion of 5S(organization, order,

cleaning, cleanliness anddiscipline)

Visualization of workprocesses

Reform and reduction ofjob responsibilities

Introduction of in-housecommon work tools

Utilizing various human resources (n=1,563) Considering doing so (n=379) Not utilizing them (n=286)(%)

29.6 29.6 27.3

25.9 25.0

16.2

22.2 23.0

31.3

18.5

23.0

8.2

0

5

10

15

20

25

30

35

Informationprocessing

General paperwork Tax, accounting andother special areas

Design and productplanning

Transportation,delivery, storage and

other logisticoperations

Research andmarketing

Growth/expansion-oriented policy (n=216) Stability/maintenance-oriented policy (n=243)(%)

32

【Analysis by Theme 4-4】Overcoming Labor Shortages (iv) • Enterprises that boost earnings even amid labor shortages are tackling labor-saving, information technology

introduction, outsourcing and other initiatives. • A rising number of enterprises are pursuing growth by outsourcing design marketing and other operations for

which advanced skill level human resources are required.

Fig. 1 Initiatives by enterprises facing labor shortages by ordinary profit (non-manufacturers)


Fig. 2 Business operations which have growing needs for outsourcing by business policy

An enterprise matching SMEs and venture firms

with skilled women freelancers. Waris is a human resource matching service enterprise founded in 2013. It

matches enterprises willing to outsource PR, marketing and other operations with freelance-oriented women, particularly professionals with an arts background and extensive management experience, under outsourcing contracts.

Some 70% of about 1,100 corporate customers are SMEs and venture firms. These customers can save costs by outsourcing new projects and other business operations requiring advanced strategists to well-experienced people, instead of recruiting advanced skill level human resources. Such outsourcing, unlike subcontracting, allows their employees to improve their capabilities by accumulating new knowledge and networks while working with freelance professionals.

As SMEs are not well experienced with project-outsourcing contracts, Waris reorganizes or breaks down project operations, clarifies required skills, examines outsourcing contracts and conducts follow-up services during contract periods. It thus provides integrated services to allow customers to smoothly complete projects.

【Specific case】Waris, Inc. (Minato-Ward, Tokyo)

Representative Director Miwa Tanaka

Representative Director Tanaka says: “Due partly to Japan’s declining labor force, it is difficult for SMEs and venture firms to recruit advanced skill level human resources. If they base their recruitment on employment, they have a risk of failing to secure necessary human resources when they are required. I would like these enterprises to become more flexible and consider the option of outsourcing.”

42.4

25.9

36.7

51.0

31.1

21.8

12.4 12.3

27.8 31.9

17.9

28.1

37.9

21.9

14.7

7.3 6.6

21.1

0

10

20

30

40

50

60

Mechanizationto save laborand reduce

work burdens

Mechanizationto improvevalue added

Informationtechnologyintroduction

for front-office

operations

Informationtechnologyintroduction

for back-officeoperations

Outsourcesduring busy

periods

Outsourcingadvancedspecial

operations

Outsourcingnon-core and

non-differentiated

operations

Switching tohigh-value-

addedoperations

Capacitydevelopment

to improve percapita

productivity

Mechanization/information technology introduction Outsourcing Others

Increasing profit despite core and labor personnel shortages (n=226～244) Decreasing profit due to core and labor personnel shortages (n=193～204)

(%)

33

Outline of FY2017 SME Policy Measures [Acknowledgement] Ordinary profits of SMEs have remained at record-high levels and their business confidence has been improving moderately. However, there are ongoing structural challenges including stagnant business entries, slackening productivity, the aging of managers and growing labor shortages. In the future, it will be important for the Japanese economy to enhance SMEs’ business capabilities, improve their productivity and increase the number of SME managers working with vitality in response to economic and social changes including a further decline in Japan’s labor force and fiercer international competition. [Key Points] From the four viewpoints -- “initiatives to enhance business capabilities and improve productivity,” “increasing SME managers working with vitality,” “developing a stable business environment” and “reconstruction and restoration from disasters,” the government will effectively implement policy measures to vitalize SMEs that are important for supporting regional economies. Specifically, in order to improve SMEs’ productivity, the government will tackle the enhancement of technical capabilities, the promotion of information technology, support for overseas expansion and the strengthening of business support arrangements. The government will also back up business entries and succession, and regional and interregional human resources exploration and will continue to tackle the improvement of business practices and financial support. Furthermore, the government will take measures required for SMEs affected by the Great East Japan Earthquake, the Kumamoto Earthquake and other disasters.

[Contents]

Chapter 1 Initiatives to Enhance Business Capabilities and Improve Productivity Chapter 2 Increasing the Number of SME Managers Working with Vitality Chapter 3 Development a Stable Business Environment Chapter 4 Reconstruction and Restoration from Disasters Chapter 5 Policy Measures by Business Type and Area Chapter 6 Other SME Policy Measures

[2017 white paper on small and medium enterprises in japan] · withdrawing enterprises) are...

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