promotion of inward investmentdigi.heteml.jp/tokyo2015/english/news-events/2014/... · china and...

Promotion of Inward Investment: Attractive Sectors and Investment Climate

July 10, 2014

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Japan External Trade Organization

8 locations in North America: New York (Regional Headquarter) San Francisco Chicago Los Angeles Atlanta Houston Toronto Vancouver

The Japan External Trade Organization (JETRO) is a Japanese governmental organization that promotes mutual trade and investment between Japan and the rest of the world.

JETRO helps foreign companies set up an office in Japan quickly and cost effectively by providing expertise, resources, and industry connections. Because JETRO is an independent agency of the Japanese government, our services are offered free of cost.

JETRO assists Japanese companies by providing consultations, information and business matching opportunities to help their overseas business succeed.

73 offices in 55 countries

43 offices in Japan

Copyright (C) 2014 JETRO. All rights reserved.

Introduction – What is JETRO?

2

Inward FDI in Japan by Country and Industry

Sources: Ministry of Finance, Bank of Japan

Inward FDI in Japan, stock : 2013

(Unit: billion JPY)


Unit: 100 Million JPY

JAPAN 179,481

North America

Central& South America

Europe

Asia

Oceania

56,780

83,192

25,822 1,691 11,996

Europe ⇒ Japan 83,192

（Country / Region）（Industry） Netherlands 29,150 Finance & Insurance 20,381 France 15,014 Electric Machinery 17,212 UK 13,819 Transportation Equip. 13,899 Switzerland 10,715 Chem. & Pharm. 11,179 Germany 6,783 Wholesale & Retail 7,085 Luxemburg 3,548 General Machinery 2,126 Sweden 1,356 Services 1,930 Italy 897 Petroleum 1,393

North America ⇒ Japan 56,780 （Country & Region） USA 55,216 Canada 1,564 （Industry） Finance & Insurance 33,425 Wholesale & Retail 5,862 Electric Machinery 4,197

Central &South America ⇒ Japan 11,996

（Country / Region） Cayman Is. 9,912 Brazil 54 （Industry） Finance & Insurance 4,706 Electric Machinery 1,936

Oceania ⇒ Japan 1,691

（Country / Region） Australia 1,301 New Zealand 373

Asia ⇒ Japan 25,822

（Country / Region）（Industry） Singapore 14,077 Finance & Insurance 9,329 Hong Kong 5,742 Wholesale & Retail 2,810 Taiwan 2,395 Services 2,088 R. Korea 2,190 Real Estate 1,435 P.R. China 607 General Machinery 1,159 Malaysia 507 Communications 1,086

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Japan is composed of large markets. The nominal GDP of the Kanto region is equivalent to that of the UK; that of the

Kinki region is equal to that of Korea.

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GDP Comparison Between Japan’s Regions and Select Foreign Countries

One of the largest economies in the world

Large numbers of leading global companies and small to medium sized companies with proprietary technologies

Highly skilled workforce

Exceptionally high Japanese consumer demands that foster the design of products and services that are competitive in world markets

Attractive and strategic government incentives

Advanced business infrastructure

Well-developed laws and regulations (intellectual property rights, etc.)

High quality of life (safe, convenient)

5

Japan’s Business Advantages

Source: Japan Patent Office

Number of Lawsuits Related to IP (patents, utility models, designs) in Japan,

China and the US

51.5 46.8 43.4 40 37.8 36.3

31.2

17.5

0102030405060

Source：MIC, Report on the Survey of Res. And Development

(2012)

Number of Researchers among 10,000 People Between G8

Countries


・The Japanese government set a goal to double the Foreign Direct Investment (FDI ) into Japan (17.5 trillion yen as of 2011) to 35 trillion yen by the year 2020. ・Prime minster Abe is taking a leading role to promote FDI into Japan.

Prime Minister Abe

emphasized that FDI

into Japan was a

critical pillar of his

growth strategy at the

JETRO London’s

seminar on May 1,

2014.

(photo by: CABINET PUBLIC RELATIONS OFFICE)

Government Initiatives in FDI Promotion

• High Corporate Tax Rate

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Japan’s Challenges and Efforts

⇒ In the New Growth Strategy the Government decided to cut the rate below 30%

• Administrative Procedures and Obtaining License and Permits

⇒ National Strategic Special Zones are allowed to loosen regulations of specific sector ⇒ One-stop desk for setting up business will be made in each zone

Top 20 Life Insurance Firms, Ranked by Policy Income

2 Firms 7 Firms

Source: Teikoku Databank, Toyo Keizai “Quarterly Corporate Report”


1995 Company Name Income*（Billion Yen）

1 Nihon 6,146

2 Daiichi 4,092 3 Sumitomo 3,555

4 Meiji 2,688

5 Asahi 1,859

6 Mitsui 1,687

7 Yasuda 1,588

8 Taiyo 1,326

9 Daido 1,153

10 Chiyoda 995

11 Fukoku 703

12 Kyoei 897

13 Nihon Dantai 717

14 Toho 747

15 AFLAC 501

16 Daihyaku 560

17 Alico Japan 234

18 Nissan 251

19 Sony 224

20 Tokyo 235

2012 Company Name Income*（Billion Yen）

1 Kampo 6,481 2 Nihon 5,342 3 Meiji Yasuda 3,659 4 Sumitomo 3,144 5 Daiichi 2,921 6 Aflac 1,995 7 MetLife Alico 1,497 8 Gibraltar 1,903

9 The Prudential Gibraltar Financial Life Insurance

1,052

10 Taiyo 1,018 11 Sony 925 12 Daido 724 13 AXA Group Life 670 14 Fukoku 647 15 Prudential 624 16 Mitsui 578 17 Tokio Marine & Nichido 566 18 The Dai-ichi Frontier 551 19 Manulife 532

20 Asahi 460

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Top 20 Pharmaceutical Firms, Ranked by Sales

3 Firms 10 Firms

Source: Teikoku Databank

1995

Company Name Sales

（Billion Yen）

1 Takeda 602.0

2 Sankyo 410.2

3 Otsuka 369.6

4 Yamanouchi 295.1

5 Eisai 253.6

6 Taisho 220.9

7 Shionogi 225.5

8 Daichi 217.3

9 Fujisawa 219.3

10 Tanabe 175.2

11 Chugai 169.0

12 Sumitomo 149.8

13 Banyu 130.8

14 Dainippon 130.3

15 Ciba-Geigy 136.3

16 Ono 131.9

17 Pfizer 101.2

18 Nihon Kayaku 108.3

19 Yoshitomi 101.6

20 Taiho 100.3

2012

Company Name Sales

（Billion Yen）

1 Takeda 789.8

2 Astellas 623.7

3 Otsuka 598.0

4 Daiichi Sankyo 549.9

5 Pfizer 524.2

6 Mitsubishi Tanabe 396.5

7 Chugai 382.0

8 MSD (Merck) 356.0

9 Eisai 348.0

10 Novartis 322.6

11 Sanofi 284.5

12 Glaxo SmithKline 272.8

13 Shionogi 255.9

14 AstraZeneca 219.7

15 Ciba-Geigy 205.7

16 Taisho 194.5

17 Dainippon Sumitomo 189.9

18 Eli Lilly Japan 175.7

19 Bayer 170.7

20 Ono 143.6

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JETRO’s primary focuses include the following industry sectors and functions

Energy/ Environment

•Renewable/Alternative Energy

•Clean Tech •Demand and Response

Health Care • Pharmaceutical • Medical Device • Bio Tech

ICT • Communication • Data Center • Cloud

Priority Industry Sectors and Functions


R&D and Regional Headquarters

Attractive Sectors

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Source: Bloomberg New Energy Finance / METI

13 13 13 13 13 13 13 13 13 13 13

3.2 3.2 3.3 3.4 3.5 3.6 4.2 4.8 5.4 6.0 6.63 3 3 3 3 3 4 4 5 5 63.9 5.1 7.3

12.719.5

27.7

38.040.5

42.2 43.0 43.4

2.1

5.8

9.3

13.013.0

13.013.0 13.0

24 2528

35

46

58

7377

8081 83

20

10

20

11

20

12

20

13

e

20

14

e

20

15

e

20

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e

20

17

e

20

18

e

20

19

e

20

20

e

PV Utility-scale(1MW+)

PV Roof-top (<1MW)

Wind

Geothermal

Biomass/Waste

Small Hydro(<=50MW)

0

50

100

150

200

250

300

20

01

20

02

20

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eSolar PV

Wind

Geothermal

Biomass/Waste

Hydro

Nuclear

Oil

Gas

Coal

Japan’s New Energy Basic Plan Renewable Energy Outlook

Solar outpaces all renewable sources Utility scale solar will stabilize in growth following the end of the Feed-in Tariff

program Roof top solar will continue to grow


Energy/Environment - Overview

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59%

3%

38%

Japan's Electric Demand Breakdown

Unregulated byutilities

Unregulated byPPS

Regulated byutilities


Opens up access to 84 million customers accounting for JPY 7.5 trillion ($75 billion)

Electricity System Reform Stages

Stage 1: Establishment of National Grid Operator by 2015

Stage 2: Full Liberalization of the retail market by 2016

Stage 3: Unbundling of vertically integrated utilities by 2018

PASSED – Nov 2013

PASSED – Jun 2014

METI will introduce legislation in 2015

First fundamental reform in 60 years. The reform will involve three steps and is expected to be completed by 2020 at the

latest.

Energy/Environment – Electricity System Reform

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Software as a Service company that partners with utility providers around the world. Established Opower Japan in 2013 and provides TEPCO with customer engagement services.

Photovoltaic (PV) solar system provider, opened its Japan sales office in 2013 due to the introduction of the Feed in Tariff program in 2012. Planning a $100 M investment in Japan.

Global energy intelligence software provider, entered into a Joint Venture with Marubeni Corp. in 2013 to deploy demand response in Japan and awarded a pilot project with TEPCO.

A demand response service provider, expanded its international presence in 2013 by establishing a regional R&D operation in Japan to localize their packaged service.

US Companies that established an entity in Japan

Energy/Environment

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7250.1 7314.8 7563.5 7780.5 8016.5 8316.9

8783.2 8951.1 9380.2

0

1000

2000

3000

4000

5000

6000

7000

8000

9000

10000

2003 2004 2005 2006 2007 2008 2009 2010 2011

(million yen) Japan’s Drug Market

Source: MHLW

1962.6 2059.6 2110.5

2258.7 2131.4

2223.9 2176 2315.4 2386

0

500

1000

1500

2000

2500

3000

2003 2004 2005 2006 2007 2008 2009 2010 2011

(million yen) Japan’s Medical Device Market

Health Care - Overview

Both Japan’s drug market and medical device market are the 2nd largest in the world. Japan accounts for 12% of the global drug market and 10% of the global medical

device market.

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2012 2020 2030 2040 2050

Drug Discovery 1 10 60 150 250

Service 47 264.2 2536.1 5510.9 6198.1

Consumables 70.3 300.5 2235 4780.4 5367.5

Devices 53.8 370.7 683.1 957.9 1031.4

0

5000

10000

15000

Hu

nd

red

Mill

ion

Ye

n

Years

Estimated Growth of Regenerative Medicine Related Industries in Japan (Clinical, Research, Drug Discovery)

Drug Discovery

Service

Consumables

Devices

Source: Seed Planning’s Fiscal Year 2012 Report of Small Medium Enterprises Support Research (Regenerative Medicine Related Industries Report)

Health Care - Overview

The regenerative medicine market in Japan is expected to grow exponentially in the coming years.

Japan aims to expand markets for drugs, medical devices and regenerative medicine from a collective 12 trillion yen to 16 trillion yen by 2020.

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Review of the Ban on Online Sales of Non-prescription drugs Enables the online sale of all non-prescription drugs with a few exceptions. This will provide consumers with greater purchase options and enhanced convenience.

Establishing the internet as the new element of economic infrastructure will create new industries and spur innovation.

Health Care – Growth Strategy

Widening of “Mixed Medical Care” System Mixed Medical Care: A combination of accepted and unaccepted medical practices

covered by public insurance. Patient can suggest to the doctor the kind of treatment they want. 16

Source: http://japan.kantei.go.jp/letters/message/abenomics/1.html

ICT – New Growth Strategy and Opportunities

Government seeks to make Japan the top IT society in the world

Will make a rule on how to protect individual privacy while utilizing Big Data

Introduction of the national identification number system “My Number”(starts from 2016)

Data Center Efficiency and Solutions

Cloud Computing: New Generation of Third Platforms

Big Data is Transforming the Way We Manage Our Business

New Growth Strategy and IT

There are many Subsectors with Opportunities for Foreign Companies

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Incentives by the Japanese Government Source: JETRO website (http://www.jetro.go.jp/en/invest/incentive_programs/)

Program name Outline Implementtion

status Authority in charge

The Act for

Promotion of Japan

as an Asian

Business Center

The Japanese Government will take support measures for

certified global companies, including tax breaks and patent

fee exemption, in order to motivate global companies to

locate their R&D facilities or regional headquarters in

Japan.

In effect

Trade and Investment

Facilitation Division, Trade

and Economic Cooperation

Bureau, METI

Subsidy Program

for Projects

Promoting FDI, Site

Location and

Regional

Development in

Japan

Subsidy program for establishment by global companies

of R&D facilities or regional headquarters in Japan.

Covers survey design costs, facility costs, equipment

costs, and facility rental fee.

Application Period

for 2014:

March 24 – June 2

Trade and Investment

Facilitation Division, Trade

and Economic Cooperation

Bureau, METI

Comprehensive

Special Zones

Incentives, including special regulatory measures and tax

reduction, are available for companies with business plans

in 7 designated zones: Hokkaido, Ibaraki, Tokyo,

Kanagawa, Aichi/Gifu, Kyoto/Osaka/Hyogo, Fukuoka.

Special regulatory

measures differ

from one

designated region

to the other.

Regional Revitalization

Bureau, Cabinet

Secretariat

Special Zones for

Reconstruction

Incentives, including special regulatory measures and tax

reduction, are available for companies with business plans

in the recovering areas stipulated in the Act on Special

Provisions of Article 3 of the Public Finance Act.

In effect Reconstruction Agency

Points-based

Preferential

Immigration

Treatment for

Highly Skilled

Foreign

Professionals

Under the points-based system, foreign professionals who

earn 70 points or more will be recognized as "highly skilled

foreign professionals" and will be given preferential

immigration treatment.

(* Personnel of selected companies for the Subsidy

Program for Projects Promoting Asian Site Location in

Japan are given 10 points.)

In effect

Foreign Residents

Information Center,

Immigration Bureau,

Ministry of Justice

Copyright (C) 2014 JETRO. All rights reserved. 18

The Act for Promotion of Japan as an Asian Business Center

To attract R&D centers and Asian regional headquarters of global companies to Japan, the legislation gives

incentives (e.g., reduced corporate tax burdens, lower patent fees) to certified companies.

Outline

1. Eligible operations

New R&D and headquarter operations conducted by global companies in Japan

certified as conforming to the basic policy defined by the minister in charge.

2. Incentives

Preferential corporate tax: 20% income deduction up to 5 years

(Around 7% reduction in the effective tax rate)

Preferential income tax: Same tax treatment for stock options from the foreign

parent company as given to those from Japanese companies

Reduced patent fees for SMEs: Reduced patent fees on the results of R&D

operations

Faster investment procedures: Shortening the required inactive period from the

current 30 days to 2 weeks after application under the Foreign Exchange Act

Financing support by SBICs

3. Certification requirements

• A company with one or more foreign affiliated companies

• Significant global operations

• Advanced knowledge and technology

• No affiliated companies can be currently engaged in R&D or RHQ activities in

Japan

• A new company shall be established in Japan

• Employment of a certain number of employees or more

• The newly established company shall be solely engaged in R&D or RHQ

activities (required only for the application of preferential tax treatment)

Overview

Target

Incentives

R&D center

Asian regional HQ

*Headquarter

operations include

activities such as

making decisions

concerning the

business strategy of

subsidiaries

Basic policy

Business plan

certification

• Tax reductions (preferential

corporate tax, etc.)

• Reduced patent fees for R&D

centers


Japanese Government (METI)

Internationally operating companies

planning to establish:

1. Regional HQs to gather human

resources excelling in management,

engineering, etc.

2. R&D facilities with the potential to

leverage Japan’s manufacturing

capacity for practical business

Subsidy for initial

investment of global

companies locating in Japan

Decision

Costs covered by the subsidy

1. Survey design costs

2. Facility costs

3. Equipment costs

4. Facility lease fees *For SMEs, the subsidy covers up to 1/2 of

the costs

For companies in specially designated areas:

up to 2/3

For other companies: up to 1/3

Target

Selection criteria:

- Uniqueness

- Added value

- Ripple effects (expected

accumulation effect of the

project, etc.)

- Affluent experience in

global business, etc.

Subsidy Program for Projects Promoting Foreign Direct Investment, Site Location and Regional Development in Japan


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Inward FDI into Japan


Source: Press release by METI Projects selected for the subsidy program for FY 2010－2013

FY Company Name Nationality Type

FY

22

Salesforce.com Co., Ltd. USA R&D Site

Zydus Pharma Japan Co., Ltd. India R&D Site

Dyesol Japan Co., Ltd. Australia R&D Site

Eurocopter Japan T&E Co., Ltd. France R&D Site

Dou Yee International Private Limited Singapore R&D Site

FY

23

Sanofi-Aventis K.K. France Regional Headquarters

3M Health Care Ltd. USA R&D Site

DSM Japan Engineering Plastics K.K. Netherlands R&D Site

Nihon Cabot Microelectronics K.K. USA R&D Site

NeoPhotonics Japan, Godo Kaisha USA R&D Site

Mikado Kyowa Seed Co., Ltd. (Subsidiary of Vilmorin & Cie S.A.) France R&D Site

Medasys Japan K.K. France R&D Site

Intelligent Energy Holdings Plc U.K. R&D Site

Umicore N.V. Belgium R&D Site

Volvo Technology AB Sweden R&D Site

FY

24

GE Japan Limited USA R&D Site

Johnson & Johnson K.K. USA R&D Site

Tenneco Japan Ltd. USA R&D Site

Faurecia Japan K.K. France R&D Site

FY

25

BASF Japan, Ltd. Germany R&D Site

Comverge Japan K.K. USA R&D site

Nippon Busch K.K. Germany Head site / R&D Site

Siemens Japan K.K. Germany R&D Site 21

Subsidy Program for Projects Promoting Foreign Direct Investment, Site Location and Regional Development in Japan


Consulting

Facilities

Information

Temporary office space offered free of charge

Gather a wide range of information needed

for your business

JETRO Invest Japan Business Support Center(IBSC) serves as one-stop

center for helping foreign companies set up operations in Japan.

Free individual consultation for your company

Talk to JETRO First about business in Japan

・Human resource

・Location

・Subsidy application

・Legal system

・Cost estimation

・Taxation

・Market regulation

・Business practice

・50 working days free

・Located in 6 major cities

・Fully equipped

・Shared reception

・PC room with printer/scanner etc.

・Conference rooms available

・Event hall available

・Market reports

・Business advisor

・Online database

・Platform of professional

service provider

・Connection to ministries and

regulatory authority

・Deregulation Request

Mio Kawada

JETRO New York

[email protected]

This document is owned by JETRO. All of the content in this document, including, but not limited to, still images, text, pictorial works, designs

and logos, is owned or licensed by JETRO.

This document shall not be reproduced or reprinted on any medium or registered on any search system in whole or part by any means, without

prior permission of JETRO. Although JETRO makes its best efforts to ensure the accuracy of the information contained in this document,

JETRO does not take any responsibility regarding losses derived from the information contained in this document.


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