Japan is an important component in the diversification strategy of multinational German companies
Business with and from Japan is becoming increasingly important for German companies, not least against the backdrop of the Russia-Ukraine war. This is evident from the fifth Business Climate Survey conducted by the German Chamber of Industry and Commerce in Japan and KPMG in Germany, for which 115 subsidiaries of German companies in Japan were surveyed in May 2022.
For instance, the proportion of German companies surveyed that have their Asian headquarters in Japan has increased by 6 percentage points compared with the previous year. At the same time, the proportion of German companies surveyed with their Asian headquarters in Singapore and China decreased by 7 and 2 percentage points, respectively. In addition, 58 percent of the German companies surveyed (compared with 48 percent in the previous year) now cooperate with Japanese companies on joint projects in third markets, taking advantage of their cooperation partners' traditionally good access, particularly in Asia.
This underscores Japan's increasing relevance at a time when multinational companies are reassessing their risk positions to reduce their dependence on individual countries and their vulnerability to crises. Japan is thus an important component in the diversification strategy of multinational German companies.
Managing Partner International Business
KPMG AG Wirtschaftsprüfungsgesellschaft
Japan scores highly on economic and social stability
In times of geopolitical change and the increasing decoupling of China and the USA, German companies value Japan for its economic stability. Among the country's particular strengths, surveyed German companies cited its economic stability (97 percent compared with 90 percent in the previous year), the trustworthiness of business relations (96 percent compared with 95 percent in the previous year), and security and social stability (92 percent compared with 90 percent in the previous year).
However, the situation on the labour market has deteriorated significantly, with 81 percent (61 percent last year) of respondents reporting a clear shortage in the availability of qualified staff.
Positive outlook for the future, but the war in Ukraine is a burden
A large majority of the companies surveyed for our study are positive about 2022. Three quarters of them (75 percent) expect rising sales and more than half (55 percent) expect rising profits. The forecasts for 2023 are even more optimistic: 78 percent expect increased sales and 68 percent higher profits.
Despite the positive expectations, the situation of German companies in Japan is not entirely favourable. Of the companies taking part in our May 2022 survey, 17 percent describe themselves as being directly affected by the war as well as by sanctions and counter-sanctions, 7 percent of them very strongly. In addition, due to the limited availability of raw materials and the increased prices for them, as well as problems in supply chains, 74 percent of companies are indirectly affected by the war (of which 35 percent are very strongly affected).
Cooperation on global challenges
Germany and Japan have many things in common - such as their strong positions as the third- and fourth-largest global economies, their aging populations and the lack of available labour. At the same time, they share the same values. It is therefore only logical that the two countries should cooperate even more closely on key global challenges, namely climate protection, securing supply chains and maintaining free trade routes. Thus Chancellor Scholz's first visit to Asia took him to Japan at the end of April 2022. In addition, bilateral relations are being intensified through regular government consultations.
Our business climate survey contains more fascinating facts and figures on the assessment of business opportunities for German companies in Japan. Download the survey results here and find out more on which topics German and Japanese executives have different perspectives and what Japan can learn from Germany - and vice versa.