Govt must help more companies tap promising overseas markets

Editorial

12:29 JST, September 6, 2022

To revive the Japanese economy, it is essential to increase the profitability of small and midsize companies, for which many people work. The government should support the development of overseas markets that will lead to the growth of such companies.

There are 3.6 million small and midsize companies in Japan, accounting for more than 99% of all companies. They employ 70% of the total workforce.

However, Japanese small and midsize companies are said to have lower productivity than their overseas counterparts, and improving their productivity has been highlighted as a major issue. In order to spread wage increases widely, it is necessary for small and midsize companies to strengthen their financial base.

Improving management efficiency through digitization and expanding their scale through mergers and acquisitions are effective ways to do this, but expanding their overseas business is also a promising option in the face of a shrinking domestic market.

The weakening of the yen has provided a tailwind for exports, and profits earned overseas will be magnified in yen terms. The number of younger-generation small and midsize business owners who are strongly inclined to look overseas is also said to be increasing. More than ever, there is a growing need for the government to provide a support policy.

The government has established a section in the Cabinet Secretariat to serve as a control tower for promoting the overseas expansion of leading second-tier companies and small and midsize companies.

The office will coordinate assistance efforts by government ministries and agencies as well as such entities as the Japan Bank for International Cooperation and overseas diplomatic establishments to introduce companies to new markets and help them develop sales channels. It will also provide financing and capital investment. It is important to take measures that accurately meet the needs of small and midsize companies.

Past examples are instructive. For example, against the backdrop of the global boom in washoku Japanese cuisine, growing numbers of local sake breweries are exporting sake overseas.

In Hokkaido, a supermarket concerned about the declining local population has established an overseas subsidiary in Vietnam to sell foods produced in Hokkaido, a business that has been well received. Even locally based distributors can expand overseas with a little ingenuity.

In the manufacturing industry, a welding equipment manufacturer in Shizuoka Prefecture has expanded its sales channels to Europe thanks to its unique technology for extending the service life of molds and machine parts.

There are many small and midsize companies in local regions with advanced technologies that support Japanese manufacturing. The government should discover many such companies and encourage them to sell their technologies overseas.

It is also desirable to expand business overseas in connection with cutting-edge technologies in growth fields.

A start-up that commercialized the results of research at the University of Tokyo has developed a unique battery system that can provide higher output in a shorter time than ordinary batteries, and has successfully delivered the system to Ireland, a country eager to introduce renewable energy.

A virtuous cycle must be created so that overseas profits are channeled into domestic research and development, leading to further technological innovation.

(From The Yomiuri Shimbun, Sept. 6, 2022)