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2019/SOM2/HRDWG/SYM/007

Policies for Increasing the Beneficiaries of Globalization - Recent Initiatives in Japan

Submitted by: Asia University

Symposium on Trade and Human Resources Development: Capacity Building for Inclusive

TradeViña del Mar, Chile

3 May 2019

Policies for Increasing the Beneficiaries of Globalization Recent Initiatives in Japan

APEC Symposium on Trade and Human Resources Development

In Valparaíso-Viña del Mar, Chile, May 3rd, 2019

Arata KUNO, Ph.D.Asia University

Tokyo, Japan

1

Outline

• SMEs in Japan

• Recent Policies for Increasing the Beneficiaries of Globalization in Japan

1. Consortium for “New Export Nation” Initiative (2016-)

2. Japan Mall Project (2018-)

3. J-Startup and Global Acceleration Hub (2018-)

• Conclusion

2Source: SME Agency

SMEs in Japan

• Industry structure

– Of total businesses, 99.7% (3.81 mill.) are SMEs

– Around 70% of employees are in SMEs

• Overseas business development by SMEs

– The no. of SMEs conducting outward FDI

• 6,074 in 2001 => 6,346 in 2014

– The no. of manufacturing SMEs conducting direct export

• 4,342 in 2001 => 6,553 in 2014

– There is still a room for increasing the no. of beneficiaries of globalization

3Source: SME Agency

Challenges that SMEs are facing

• Major challenges related to outward FDI

– Lack of knowledge about intl. business (50.5%)

– Unable to hire staffs capable of handling intl. business functions (45.2%)

– Unable to find local partners (32.3%)

• Major challenges related to Exports

– Unable to find local partners (42.5%)

– Foreign exchange risks (38.7%)

– Complying with local regulations and business practices (33.4%) 4Source: SME Agency “2016 White Paper on Small and Medium Enterprises”

YES37.7%

NO62.3%

SMEs in Japan

• 37.7% of non-exporting SMEs are interested in overseas business

Source: SME Agency “2014 White Paper on Small and Medium Enterprises”

N=1,824

Japan’s Mega FTAs

• TPP11 (Dec. 2018)

– 13% of world GDP, 15% of world trade

– Tax saving effects for JPN: 282-500 bill. JPY/Year

• Japan-EU EPA (Jan. 2019)

– 30% of world GDP, 40% of world trade

– Tax saving effects for JPN: 187-315 bill. JPY/ Year

• Ongoing negotiations: JPN-US, RCEP, CJK…

=> Greater business opportunities for SMEs6Source: Cabinet Office, MOFA, and METI

Consortium for New Export Nation

• Overview

– Aims at strengthening and consolidatingexisting support systems for SMEs that intend to develop overseas business

• Stipulated in the “Comprehensive TPP-Related Policy Framework” in 2015, officially launched in Mar. 2016

– Consists of 1,195 supporting organizations

• From public + private sectors

– Provides single-window service to SMEs

• To reduce red tape and transaction costs for SMEs

• Secretariat: JETRO (46 regional + 74 overseas offices) 7Source: Cabinet Office and METI

Consortium for New Export Nation

METI/MOFA/MAFF

JETRO (Secretariat)

Local Governments

SME Support

Japan Patent Office

NEXI (Export Insurance)

JICA, AOTS, NEDO

JSA (Standards)

JQA (Quality Assurance)

Private Financial Institutions

Bar Associations

Chamber of Commerce

(1,195 in total)

8Source: JETRO and SME Agency

Domestic Support Organizations

Embassies

JETRO, JICA, AOTS

Private Financial Institutions

Law Firms, Accounting Firms

Consulting Firms

Supporting Organizations Overseas

Assigned Expert

Client (SME)

3. Support

5. Support

5. Support

4. Coordinate4. Coordinate

2. Assign

1. Ask for Support

Consortium for New Export Nation

• Progress so far

– No. of SMEs asked for support: 8,395 (Feb.2019)

• Of which 638 were encouraged by private financial institutions to ask for support

• Of which 1,749 have been subject to hands-on support (as of Jun. 2018)

• Successful: 528, Not Successful: 467, Ongoing: 754

– Area of support includes

• Preparation of overseas business plans, market research, negotiations overseas, buyer selection, launching a shop overseas, compliance with standards and certification, etc.

9Source: JETRO and SME Agency

Japan Mall Project

• Background

– Size of global cross-border EC market

• 233 bill. USD (2014) => 530 bill. USD (2017)

• 994 bill. USD? (2020)

– A great chance for SMEs to sell their products globally through online marketplaces.

• Challenges

– Too much uncertainty for Japanese SMEs

• Lack of knowledge about intl. EC business and trade

• Lack of personnel, budget, and time

• Language, foreign exchange risks, and etc.. 10

Source: METI, JETRO

Japan Mall Project

• Overview

– Aims at promoting and supporting participation of SMEs in cross-border EC (or digital trade)through designated online marketplace websites

– Implemented by JETRO since 2018

– Free participation fee!

– More than 20 online marketplace partners

– Targeted products

• Processed food, beverage, alcoholic liquor

• Cosmetics, beauty products

• Daily commodity11

Japan Mall Project

• How it works

– JETRO

• receives from a partner a list of products which the partner might want to sell on its websites

• publicly advertises for candidate SMEs

• also utilizes its local offices and regional banks in delivering the information to prospective SMEs

– The partner

• comes to JPN for selecting products and negotiation

• purchases products from SMEs with “no-return condition” through designated trading companies

• sells them on the Japan Mall page of its own website12

Japan Mall Project

• SMEs can benefit from JMP because they don’t have to worry about

– Lack of information on and financial/human resources for doing cross-border EC business

– Complicated export procedures

– Sales channel development

– Inventory risk

– Claim-handling risk

– Foreign exchange risk (payment is made in JPY)

– Participation fee (free!) 13

https://www.j-startup.go.jp/en/

J-Startup Program

• Overview

– Aims at supporting startups with high potential

• Launched in 2018

• Recommenders (top venture capitalists, etc.) and external committee select top Japanese startups

• In the area of AI, IoT, Robot, Aerospace, Platform, etc.

– Successful candidates will obtain support from both public and private sectors

• Private: collaboration opportunity, mentoring by experts, acceleration programs

• Public: certification by logo, preferential treatment concerning subsidies, overseas expansion support

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J-Startup Program

• Overseas Expansion Support

– Startup tour

• Supports participation of startups to intl. tech-events– SLUSH, TECH IN ASIA, GITEX FUTURE STARS, SXSW,

CES, Web Summit, etc.

– JETRO Global Acceleration Hub

• Aims at supporting startups that intend to develop overseas business

• Global Partners in 12 major cities will provide mentoring service on business opportunities and funding, and introduce local partners and VCs

• Free of charge! 16https://www.j-startup.go.jp/en/

Conclusion

• Policies for increasing the beneficiaries of globalization in Japan

– Have been changing dramatically during the past few years

– Focusing on supporting

• Participation of SMEs in cross-border EC/digital trade

• Overseas business development by startups

– Emphasize importance of partnership

• With Private sector (financial institutions, foreign online marketplaces, Japanese VCs, supporting companies, and foreign accelerators)

• Among central/local governments

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