The Journal The Authority on Global Business in Japan

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Though the Japanese market continues to present challenges for overseas companies, the latest Foreign Chambers in Japan Business Confidence Survey finds that most remain optimistic about the future.

Conducted between April 12 and 22, the spring 2016 edition incorporates 303 valid responses from members of 17 foreign chambers of commerce and business organizations—an increase of 26% from the previous survey.

On an index using a scale from +2 (strong improvement) to -2 (strong decline), optimism for growth in the Japanese economy over the next six months dropped from a level of +0.31 in the October 2015 survey to just +0.02. Looking 12 months out revealed a similar decrease: +0.18 compared to +0.47 in the previous survey. Breaking this down by industry uncovered noticeable changes in finance (+0.16; previously +0.86), services (+0.39; previously +0.66), as well as sales and trading (+0.11; previously +0.39).

Respondents also reported a small drop in company performance compared with the previous survey. The index for reported sales performance over the past six months was +0.57 compared with +0.71 in October, while profitability growth held nearly steady at +0.61 (previously +0.60).

When asked about the sales performance outlook for the next six months, US and Canadian companies (+0.91; previously +1.06) were a bit more bullish than their European counterparts (+0.63; previously +0.91). Only 3% are planning to downsize and just one of the respondents is considering withdrawing from Japan.

From October to April, the majority of respondents foresee an increase in sales over the next six months despite a drop in the overall index (+0.73; previously +0.94). Some 14% expect strong improvement and 58% expect some improvement. Among the remaining respondents, just 11% anticipate a negative trend (10% saying some decline, 1% strong decline).

Identifying the reasons for a change in business performance, 58% cited their own efforts. The exchange rate was a key factor for 9%, while a change in resources affected 8%. A shift in competition played a role for 7%, and 5% specified Abenomics. An additional 13% cited other factors.

With regard to an area of growing importance for achieving gender balance in the workforce, companies were asked about childcare. Of 296 respondents, 10% said this is a constant topic in their company, 19% said it is frequently discussed, 38% said it is mentioned sometimes, and 24% said it is not discussed. The remaining 9% had no opinion.

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