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  6. Why Do Foreign Firms Leave Japan? ?A Survey of Investment Experiences and Exit Considerations ?

Why Do Foreign Firms Leave Japan? -A Survey of Investment Experiences and Exit Considerations -

No.262
May 2006
Senior Economist Martin Schulz

 

ABSTRACT

  1. To identify some of the most important market obstacles, this research focuses on a survey of foreign companies in Japan that found it necessary to significantly change their business strategy in Japan, or even decided to leave the market entirely. Surprisingly, most companies were rather positive in their valuation of Japan’s market environment. Instead of fully retreating from the market, they had divested from (one of) their affiliates, remained in a smaller market niche, or focused on importing and selling their overseas products.
  2. Their main complaint is about the costs and time requirements to enter the market, the difficulties to restructure a business, and low prospects for growth. Basically, foreign companies are facing the problems as competitive domestic companies as well. Their policy recommendations are therefore not different from their Japanese peers: improve conditions for domestic growth through deregulation and fostering competition. FDI promotion on the other hand, might be helpful to improve the internationalization of the Japanese business environment in general. The promotion of a more positive image of foreign companies, for example, might help to reduce “attitudes” towards foreign investors and would help to reduce many implicit market barriers.

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