Survey Result of Japanese Companies in Southern California 2016

Transcription

1 Survey Result of Japanese Companies in Southern California Summary of findings There are reportedly 700 Japanese companies on record with JBA and JETRO in Southern California, contributing to the local economy through job creation, paying salaries, providing medical insurance, etc. Continuously, steady business growth has seen in sales and operation profit. The more than half of the companies expected their operations profit will likely increased over the next year or two. The top three advantages of doing business in California are Market Size, Size of Japanese Community and Logistics/Transportation Hub. However, Labor Cost, Environment Regulation will remain as a disadvantage of having a business in California. Overview of Japanese Companies in Southern California Geographic Distribution Statistics Southern California is one of the leading global hubs for Japanese companies where 700 Japanese companies operate based on JBA and JETRO s record. Industrial Distribution Statistics Based on an industry breakdown, "Manufacturing" is the leading segment and combined with "Service" (*) will make up more than 50% of the total. (*)"Service" includes information systems, film/publishing, leisure/tourism and professional services (law, accounting and consulting firms). <Table 1> Geographic Distribution Statistics Ratio of Japanese Company Number of Companies Established 2001< Los Angeles 71.2% 64 Orange 20.4% 20 San Diego 5.6% 9 OTHER 2.8% 7 Total 100% 100 Construction Real Estate 2.9% Other 0.9% Finance 4.7% Shipping 10.5% <Graph 1> Industrial Distribution Statistics Wholesale/ Retail 12.8% Trading 14.3% Manufactur ing 29.4% Service 24.5% n=343

2 Contributions to the Regional Community Job Creation The total number of employees in Southern California reached 82,557 with 334 companies responding. Of these, locally hired employees comprised 97.2% of the total. <Graph 2> Percentage of Locally Hired Employees 2.8% Employees from Japan Locally hired employees The result shows Japanese companies are contributing to the local economy through job creation. 97.2% Locally hired employees n=82,557 Locally Hired Employees Salaries and Wages A total of $1, million in salaries and wages (including benefits) were paid per year by the 222 responding Japanese companies in Southern California. Healthcare Insurance Coverage More than 90% of Japanese companies provide healthcare insurance for their employees, where sufficient medical benefits are extended to the employees of these Japanese companies. <Graph 3> Healthcare Insurance Provision Other 2% Employee s only 21% Employee s and their families 77% n=309

3 Investment and Business Environments Evaluation of Business Performance When asked to evaluate their current business performance against the purpose of expanding into California, etc., at nearly 70% of all responses were positive, such as "Very Satisfactory" and "Somewhat Satisfactory." This was the same trend as the previous survey. <Graph 4> Business Performance in Southern California 0% 20% 40% 60% 80% 100% 3.4% 66.0% 25.9% 4.6% 4.9% 62.6% 28.1% 4.4% 4.8% 60.6% 25.6% 9% 5.0% 49.4% 33.2% 12.5% Very Satisfactory Somewhat Satisfactory Somewhat Unsatisfactory Very Unsatisfactory n=324 <Graph 5> Year-Over-Year Change in Sales 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 51.8% 32.2% 15.9% 50.1% 31.4% 18.4% 46.5% 30.9% 22.7% 25.4% 22.9% 51.8% Increased Did not change Decreased n=301

4 Year-over-year changes in profit responses in 2015 showed companies profits that "Increased over the previous year rising from 42.7% in the previous survey to 46.1%. Companies that expected to see profits "Decreased from the previous year was decreased (from 21.1% to 17.1%). <Graph 6> Year-Over-Year Change in Profit 0% 20% 40% 60% 80% 100% 46.1% 17.1% 42.7% 36.1% 21.1% 38.0% 25.2% 25.8% 29.4% 44.8% Increased Did not change Decreased n=321

5 Future Outlook As for the outlook on operating profit over the next year or two, "Will likely increase" responses increased to 52.4%, roughly equivalent to the result in the previous year's survey. On the other hand, 4.3% of companies said operating profit "Will likely decrease," decreasing from 7.4% in the previous survey. <Graph 7> Profit Outlook for the Next 1-2 Years 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 52.4% 39.3% 4.3% 4.0% 54.2% 35.6% 7.4% 2.7% 44.2% 39.1% 11.2% 5.5% 16.9% 9.5% Will likely increase Will likely not change Will likely decrease Unknown n=328

6 Advantages of California The " Market size" is a major advantage of California. This is followed by being a "Size of Japanese Community," "Logistics/Transportation (Sea Ports/Airports) ", and "Geographical proximity to Japan," <Graph 8> B usiness Advantages of California (Multiple responses) 0% 10% 20% 30% 40% 50% 60% 70% Market size 58.3% 59.3% 65.8% Size of Japanese community Logistics/Transportation Geographical proximity to Japan 20.1% 19.8% 25.1% 20.0% 33.8% 35.9% 36.0% 38.1% 36.3% Climate 12.8% 35.2% 29.5% n=343 Concern over Business Operations in The Future "Economic slowdown" presents the greatest concern. This is followed by "Influence of exchange rate" and Labor cost increase". <Graph 9> Concerns over Operating Business in California (Multiple responses) 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% Economic slowdown Influence of exchange rate Labor cost increase Tougher regulations (including environmental and security regulations) Effects of terrorism and war 26.2% 18.4% 20.4% 17.8% 17.5% 13.0% 13.6% 50.7% 45.0% 60.4% 49.3% 47.4% 72.3% 75.9% 83.8% n=343

7 Disadvantages associated with Business Operation "Labor costs" is the greatest barrier/source of dissatisfaction. This is followed by "Taxes." Heavy burdens in terms of personnel expenses, health insurance, etc., and higher tax rates than in other states are being cited. <Graph 10> Disadvantage Associated with Business Operations (Multiple responses) 0% 20% 40% 60% 80% 100% Labor costs (including benefits) 50.5% 76.4% 67.8% Taxes 42.8% 55.0% 58.6% Environment regulation 18.2% 14.0% 12.1% Permit approval procedures Export/Import procedures (including security regulations) 15.7% 21.6% 21.3% 15.7% 19.5% 33.9% Surveying Bodies This survey is conducted every other year jointly by JBA* (Japan Business Association of Southern California) and JETRO** s Los Angeles Office. This is the 12 th survey. * JBA is a nonprofit organization comprising around 450 Japanese companies operating in Southern California. ** JETRO (Japanese External Trade Organization) is a Japanese government body tasked with the promotion of trade and investment between Japan and the U.S. Scope/Method of Survey The survey covers Japanese companies having a base in Southern California and meeting one of the following conditions: [1] A company with 10 % or more of its capital owned (directly or indirectly) by a company headquartered in Japan; [2] a branch or representative office of a company whose headquarter is located in Japan; or [3] a company established and operated by individuals of Japanese origin. Southern California is defined as a region that comprises 10 counties including Los Angeles, Orange, Ventura, Santa Barbara, Kern, San Luis Obispo, San Bernardino, Riverside, San Diego and Imperial. In general, more than 700 Japanese companies are recognized as having an operational base in Southern California. 585 of these Japanese companies were requested by JBA and JETRO to reply (Survey period: February ). **** Visit the following websites for the survey reports *** JBA: JETRO Los Angeles: