Japanese firms review overseas business plans amid COVID-19 and US-China trade war

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New Delhi, Mar 15 (UNI) Around 70 per cent of Japanese companies pursuing overseas operations are rethinking their business strategy amid global risks such as coronavirus pandemic and the US-China trade and technology tensions, a recently released survey showed.
The COVID-19 pandemic and resultant lockdowns since last year that have battered the world economy, and
companies in the world’s third largest economy have been thrust into restructuring their business plans and organization to weather the fallout from the virus.
With the spread of the virus, 64.8 per cent of firms with business dealings abroad said they have been negatively impacted in terms of overseas sales for fiscal 2020 ending this month, according to Japan External Trade Organization.
As per the JETRO survey, the US-China trade tensions as well as export restrictions by the two countries have also stirred worries among the companies.

The survey found that 36.4 per cent are concerned in the next two to three years over Beijing’s strengthened export regulations, while 32.6 per cent expressed the same for US export control restrictions.
There are 1,454 Japanese companies operating in India.

In multiple answers, 42.5 per cent of respondents, including those in the food and clothing, apparel and electrical machinery sectors, cited a review of their sales strategy, reports news service Kyodo.

As a specific measure on how to revise such strategy, 60.9 per cent cited a review of their overseas customers.

Others are taking the digital route due to increased demand on digital technology amid the pandemic, with 38.5 per cent looking to utilisation of virtual exhibits and business meetings and 30 per cent with eyes on cross-border e-commerce.

The survey also found that the margin of decline for overseas sales — especially in the apparel and retail sectors — in fiscal 2020 dropped by 38.4 per cent on average, more than 10 points higher from that of domestic sales.

Although the proportion of firms looking at expanding their existing overseas operations for the next three years has hit a record low, the JETRO survey said the proportion for those still wanting to start an overseas foray in the future has only marginally decreased, underscoring how “eagerness to advance overseas has not waned,” Kyodo said.

Around 13,500 Japanese firms ranging from manufacturers to trading houses and in the communications sector were surveyed between the end of October to early December, with a total of 2,722 giving valid responses.

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