Japan Press Weekly

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2012 June 20 - 26 [ECONOMY]

Shrinking domestic market motivates companies to go abroad

Shrinking domestic markets have motivated companies to go overseas, recent surveys showed.

A credit reference agency, Teikoku Databank Ltd., last month conducted the survey asking what the motives are for overseas expansion, responded to by 10,467 companies around the country.

In multiple answers, “shrinking of the domestic market” (45,1%) comes on top, followed by “to launch a new business,” (40.4 %) and “to follow clients’ expansion abroad” (22.5%).

A similar result was obtained in the economy ministry’s survey of corporations which invested in their overseas affiliated companies in FY 2010. The most common reason for their decision to invest abroad is “the local market is expanding or expected to expand” (73.2 %).

Some claim that Japanese firms are “fleeing abroad” to avoid the strong yen and high corporate tax rates. These survey results rather suggest the need for domestic demand to be boosted to keep domestic businesses here.