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[2017 White Paper on Small and Medium Enterprises in Japan]
FY2016 Developments among SMEs
FY2017 SME Policy Measures
Outline April 2017
About White Paper on Small and Medium Enterprises Annual Report Based on Article 11 of the Small and Medium-sized Enterprise Basic Act (Statutory White Paper) It is obliged to compile a report on the developments related to SMEs based on opinions of the Council for Small and Medium Enterprise Policy and submit it to the Diet every year. This is the 54th annual report after the enactment of the Small and Medium-sized Enterprise Basic Act.
Small and Medium-sized Enterprise Basic Act (extract) (Annual Report, etc.)
Article 11 (1) The Government must submit a report on the developments related to small and medium-sized enterprises and measures it has taken therefor to the Diet every year.
(2) The Government must prepare a document clarifying measures it intends to take in consideration of the developments related to small and medium-sized enterprises compiled in the report referred to in the preceding paragraph, based on opinions of the Council for Small and Medium Enterprise Policy and submit it to the Diet every year.
Definitions under the Small and Medium-sized Enterprise Basic Act and the Number of Enterprises and Employees
[Remarks] “2014 Economic Census for Business Frame” (rearranged and processed) 1
SMEs Small enterprises
Business type Stated capital or number of employee Number of employees
Manufacturing industry and
others 300 million yen or less 300 or fewer 20 or fewer
Wholesale trade industry 100 million yen or less 100 or fewer 5 or fewer
Service industry 50 million yen or less 100 or fewer 5 or fewer
Retail trade industry 50 million yen or less 50 or fewer 5 or fewer
Number of enterprises
Number of employees
Large enterprises 0.011 million 14.33 million
SMEs 3.809 million 33.61 million
Small enterprises 3.252 million 11.27 million
Large enterprises:
Approx. 0.011 million 0.3%
Medium enterprises: Approx. 0.557 million
14.6%
Small enterprises: Approx. 3.252 million
85.1%
SMEs: Approx. 3.809 million
99.7%
Outline of FY2016 Developments among SMEs (i) • While SME business conditions are slowly improving, there are ongoing structural challenges
including stagnant business entries, slackening productivity, the aging of managers and growing labor shortages.
• Important under such situation is a lifecycle in which innovation takes place through business entries, existing enterprises pursue growth, and projects and business resources (including withdrawing enterprises) are smoothly taken over by the next generation. Labor shortages common to all life stages and other challenges are analyzed.
2
Business succession
Business entries New business development
Succession/M&A Business exit
Start-up stage Growth stage Maturity stage
Human resources (a challenge common to all life stages)
Human resources utilization unique to SMEs
Innovation sources
SME Lifecycle (image) Fig.
3
Part 1 [Analysis of the Current Status] FY2016 Developments among SMEs
Chapter 1 Current Status of SMEs Chapter 2 SME Lifecycle and Productivity Chapter 3 Current Status of the SME Employment
Environment and Labor Shortages
Part 2 [Analysis by Theme] SME Lifecycle Chapter 1 Business Entries Chapter 2 Business Succession Chapter 3 Promotion of New Business Development Chapter 4 Overcoming Labor Shortages
SME Policy Measures Taken in FY2016
Chapter 1 Fine-tuned Support for SMEs in Disaster-hit Areas
Chapter 2 Productivity Improvement Support for SMEs
Chapter 3 Overseas Business Expansion Support for SMEs
Chapter 4 Sustainable Development Support for Miro Enterprises
Chapter 5 Vitalization of Regional Economies and Promotion of Corporate Metabolism
Chapter 6 Development of the Business Environment
Chapter 7 Policy Measures by Business Type and Area
Chapter 8 Other SME Policy Measures
Outline of FY2016 Developments among SMEs (ii)
【Analysis of the Current Status 1-1】Current Status of SMEs and Micro Enterprises (i)
• Ordinary profits of SMEs have remained at record-high levels and their business confidence has been improving.
Fig. 1
Fig. 1: “Financial Statements Statistics of Corporations by Industry (quarterly report)” (Ministry of Finance) (Note) Large enterprises here are enterprises whose stated capital is 1 billion yen or more and SMEs are
those whose stated capital is 10 million yen or more but less than 100 million yen.
Fig, 2: “TANKAN (Short-Term Economic Survey of Enterprises in Japan)” (Bank of Japan) and “Survey of SME Business Conditions” (Small and Medium Enterprise Agency and Organization for Small & Medium Enterprises and Regional Innovation, JAPAN)
(Note) Large enterprises in TANKAN refer to those whose stated capital is 1 billion yen or more, and SMEs are those whose stated capital is 20 million yen or more but less than 100 million yen.
-60
-50
-40
-30
-20
-10
0
10
20
30
Ⅰ Ⅱ Ⅲ Ⅳ Ⅰ Ⅱ Ⅲ Ⅳ Ⅰ Ⅱ Ⅲ Ⅳ Ⅰ Ⅱ Ⅲ Ⅳ Ⅰ Ⅱ Ⅲ Ⅳ Ⅰ Ⅱ Ⅲ Ⅳ Ⅰ Ⅱ Ⅲ Ⅳ Ⅰ Ⅱ Ⅲ Ⅳ Ⅰ Ⅱ Ⅲ Ⅳ Ⅰ Ⅱ Ⅲ Ⅳ Ⅰ
07 08 09 10 11 12 13 14 15 16 17
大企業(短観) 中小企業(短観)
中小企業(景況調査) 小規模企業(景況調査) (DI, %p)
Changes in Business Conditions DI Fig. 2
4
5.3
10.0
0.0
2.0
4.0
6.0
8.0
10.0
12.0
Ⅰ Ⅲ Ⅰ Ⅲ Ⅰ Ⅲ Ⅰ Ⅲ Ⅰ Ⅲ Ⅰ Ⅲ Ⅰ Ⅲ Ⅰ Ⅲ Ⅰ Ⅲ Ⅰ Ⅲ
07 08 09 10 11 12 13 14 15 16
中小企業 大企業
Changes in Ordinary Profits
SMEs Large enterprises
Large enterprises (TANKAN)
(Trillions yen, fourth-quarter backward moving average)
(Years and quarters)
SMEs (TANKAN)
SMEs (Survey of SME Business Conditions)
Small enterprises (Survey of SME Business Conditions)
(Years and quarters)
0
2
4
6
8
10
12
14
16
00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15
大企業 中小企業 小規模企業 (million yen)
【Analysis of the Current Status 1-2】Current Status of SMEs and Micro Enterprises (ii)
• SME sales and productivity have been slackening
Labor Productivity Changes by Enterprise Size
Fig. 1: “Financial Statements Statistics of Corporations by Industry (annually)” (Ministry of Finance) (Note) Large enterprises here are enterprises whose stated capital is 1 billion yen or more, SMEs are
those whose stated capital is 10 million yen or more but less than 100 million yen and small enterprises are those whose stated capital is less than 10 million yen.
Fig. 2
5
Changes in Sales Fig. 1
Fig. 1: “Financial Statements Statistics of Corporations by Industry (quarterly report)” (Ministry of Finance) (Note) Large enterprises here are enterprises whose stated capital is 1 billion yen or more and SMEs are
those whose stated capital is 10 million yen or more but less than 100 million yen.
126.4
133.0
100
110
120
130
140
150
160
170
Ⅰ Ⅱ Ⅲ Ⅳ Ⅰ Ⅱ Ⅲ Ⅳ Ⅰ Ⅱ Ⅲ Ⅳ Ⅰ Ⅱ Ⅲ Ⅳ Ⅰ Ⅱ Ⅲ Ⅳ Ⅰ Ⅱ Ⅲ Ⅳ Ⅰ Ⅱ Ⅲ Ⅳ Ⅰ Ⅱ Ⅲ Ⅳ Ⅰ Ⅱ Ⅲ Ⅳ Ⅰ Ⅱ Ⅲ Ⅳ
07 08 09 10 11 12 13 14 15 16
中小企業 大企業 SMEs Large enterprises (Trillions of yen, fourth-quarter backward moving average)
(Years and quarters)
Large enterprises
Large enterprises SMEs Small
enterprises
SMEs and small enterprises
(Year)
【Analysis of the Current Status 1-3】 Current Status of SMEs and Micro Enterprises (iii) - Business Practice Improvement Initiative - • Ordinary profits of large enterprises have greatly improved, increasing their profitability margin over
SMEs. • To improve such situation, an initiative is being promoted to stabilize and spread appropriate
transactions between subcontractor SMEs and their larger contractors to pave the way for SMEs to raise wages.
6
Fig. 2 Business Practice Improvement Initiative (Seko Plan)
Fig. 1: “Financial Statements Statistics of Corporations by Industry (quarterly report)” (Ministry of Finance) (Note) Large enterprises here are enterprises whose stated capital is 1 billion yen or more and SMEs are those
whose stated capital is 10 million yen or more but less than 100 million yen.
5.2
9.4
0
2
4
6
8
10
12
Ⅰ Ⅱ Ⅲ Ⅳ Ⅰ Ⅱ Ⅲ Ⅳ Ⅰ Ⅱ Ⅲ Ⅳ Ⅰ Ⅱ Ⅲ Ⅳ Ⅰ Ⅱ Ⅲ Ⅳ Ⅰ Ⅱ Ⅲ Ⅳ Ⅰ Ⅱ Ⅲ Ⅳ Ⅰ Ⅱ Ⅲ Ⅳ Ⅰ Ⅱ Ⅲ Ⅳ Ⅰ Ⅱ Ⅲ
07 08 09 10 11 12 13 14 15 16
中小企業 大企業
Changes in Ordinary Profits Fig. 1
(i) Clarification and strict implementation of cross-sectoral rules • Increasing the number of violation cases from 66 to 141 by including
“inappropriate cost-cutting activities” and “passing die storage costs to subcontractors”
• Adding “cooperation in improving productivity” and other practices to desirable business practices for larger contractors and their subcontractors
• Larger contractors should make payments to their subcontractors in cash as much as possible and implement other measures to take leadership in improving business practices.
(ii) Development of voluntary action plans by sector, etc. • Of sectors that have developed subcontracting guidelines, the automobile
industry and some other large enterprises were requested to develop and steadily implement voluntary action plans to improve business practices and increase added value. A follow-up to the request has been conducted. At the end of March 2017, 21 groups in eight sectors had developed such plans.
(iii) On-site inspection by business practice investigators
(Subcontracting Supervising Inspectors) • Subcontracting Supervising Inspectors have been deployed to hold more
than 2,000 interviews with subcontractor SMEs annually and use the data from the interviews to improve business practices.
SMEs Large enterprises (Trillions of yen, fourth-quarter backward moving average)
(Years and quarters)
Reducing sizes 0.093
Maintaining sizes 3.0
Expanding sized 0.072
0
0.5
1
1.5
2
2.5
3
3.5
Large-sized entries 0.001
Medium-sized entries 0.111
Small-sized entries 0.546
Large-sized exits
-0.001
Medium-sized exits
-0.099 Small-sized exits
-1.027
▲ 1.6
▲ 1.2
▲ 0.8
▲ 0.4
0.0
0.4
0.8
0.61 0.59 0.55 0.53 0.54 0.51
4.23 4.10 3.78 3.66 3.67 3.34 Small
enterprises 3.25
00.5
11.5
22.5
33.5
44.5
55.5
6
1999 2001 2004 2006 2009 2012 2014
7
【Analysis of the Current Status 2-1】SME Lifecycle and Productivity (i) (Changes in the number of enterprises from business entries and business exits)
Fig. 1 Changes in the Number of Enterprises Fig. 2 Breakdown of business entries and exits (2009-2014)
Fig. 3 Changes in Sizes of Existing Enterprises (2009-2014)
(Note) Enterprises that maintained their sizes unchanged include about 110,000 enterprises that failed to be identified in 2009 and were identified in 2014 due to enterprise split-ups and the improvement of statistical precision and exclude 40,000 enterprises that were identified in 2009 and could no longer be identified in 2014 due to mergers, etc.
From medium to small: 0.092 From large to medium: 0.001
Medium enterprises
0.56
Large enterprises
0.01
From small to medium: 0.071 From medium to large: 0.001
• The total number of enterprises has followed a downward trend, decreasing by 390,000 from 2009 to 2014. Small-sized business exits represent a large portion of this decline.
• This means a decreasing trend for small enterprises and an increasing trend for medium enterprises.
Figs. 1-3: “Economic Census,” “Economic Census for Business Activity” and “Establishment and Enterprise Census” (Ministry of Internal Affairs and Communications) (rearranged and processed)
Existing enterprises: 3.16 million firms
Exits
Entries
(million enterprises)
4.2 3.8
-0.39
(Year)
(million enterprises) +0.6
-1.1
(million enterprises)
5.9
0.6
5.9
3.1
1.3
1.8
-6.2
-0.8
-4.2
-2.8
-1.8
-3.0
-15
-10
-5
0
5
10
15
大企業 中規模企業 小規模企業
減少大企業 減少中規模企業 減少小規模企業
1,248
1,289
1,200
1,220
1,240
1,260
1,280
1,300
2009 2014
+41 (+3.3%)
8
【Analysis of the Current Status 2-2】 (Changes in the number of employees from business entry and exit)
• While the overall number of employees remained basically unchanged from 2009 to 2014, employees at medium enterprises increased. Particularly, medium-sized business entries represent a significant contribution to the increase.
• The number of employees per enterprise increased particularly for medium enterprises.
Fig. 1
Fig. 2
Changes in the number of employees
Breakdown of changes in the number of employees (2009-2014)
Fig. 3 Changes in the number of employees by enterprise size
37.9
40.1
36.537.037.538.038.539.039.540.040.5
2009 2014
+2.2 (+5.8%)
3.50 3.46
3.003.103.203.303.403.503.60
2009 2014
48.0 47.9 -0.1
Figs. 1-3: “Economic Census,” “Economic Census for Business Activity” and “Establishment and Enterprise Census” (Ministry of Internal Affairs and Communications) (rearranged and processed)
(i) Large enterprises
(ii) Medium enterprises
(iii) Small enterprises
-0.04 (-0.9%)
(million employees)
(Year)
Large enterprises Medium enterprises Small enterprises (million employees)
Existing enterprises +0.95
Start-up enterprises +5.5
Closed enterprises -6.5
Total -0.1
(Number of employees)
(Year)
(Year)
(Year)
(Number of employees)
(Number of employees)
Small Enterprises
12.8
Small Enterprises
11.3
Medium enterprises
20.3
Medium Enterprises
22.3
Large enterprises
14.9
Large Enterprises
14.3
0
10
20
30
40
50
2009 2014
-3.8%
+9.9%
-12.1%
9
【Analysis of the Current Status 2-3】 SME Lifecycle and Productivity (iii) (Business entry and exit rates by sector in FY2015)
Remarks: “Annual Report on Employment Insurance Services” (Ministry of Health, Labour and Welfare) (Notes) 1. The business entry rate in the Annual Report on Employment Insurance Services is computed by dividing the number of business establishments where employment relationships were established in a fiscal year by the number of business establishments adopting employment
insurance at the end of the previous year. 2. The business exit rate in the Annual Report on Employment Insurance Services is computed by dividing the number of business closings where employment relationships were closed in a fiscal year by the number of business closings adopting employment insurance at the end
of the previous year.
• The status of business entries and exists differs from sector to sector.
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
7.0%
8.0%
0.0% 1.0% 2.0% 3.0% 4.0% 5.0% 6.0% 7.0% 8.0% 9.0% 10.0% 11.0%
(Business exit rate)
(Business entry rate)
Low entry rate High exit rate Average entry rate
for all sectors 5.2%
High entry rate High exit rate
Low entry rate Low exit rate
High entry rate Low exit rate
Average exit rate for all sectors
3.8% Manufacturing industry
Lodging and food service industries
Life-related service and entertainment industries
Construction industry
Information and communications
industry
Real estate and rental industries
Retail industry
Academic research and special technical service
industry
Other services industries (mixed services, etc.)
Healthcare and welfare
Other industries (mining, electricity, finance, agriculture/forestry/fisheries,
public services, unclassifiable enterprises) Education and
learning support industry
Wholesale industry
Transportation and mail industries
0
0.05
0.1
0.15
0.2
0.25
30歳~ 45歳~ 60歳~ 75歳
【Analysis of the Current Status 2-4】 SME Lifecycle and Productivity (iv) (Current status of business exits)
10
• As SME managers are aging, the number of business exits has hit a record high, despite a decline in the number of bankruptcies.
• Enterprises with managers aged 60 or more and 80 or more hit their respective record-high shares of closed enterprises.
Fig. 3
Fig. 2
37.1
34.7
27.3
33.7
6.1 14.0
0.0
10.0
20.0
30.0
40.0
50.0
60.0
70.0
80.0
90.0
100.0
2007 2016
Business exits
49 years old or younger 50-59 years old 60-69 years old
70-79 years old 80 years old or older(%)
(Year)
Ages of managers of closed enterprises
Figs. 2-3: “2016 Business Exit Trend Survey” (Tokyo Shoko Research)
Changes in business exits and bankruptcies
29,583
8,446
0
5,000
10,000
15,000
20,000
25,000
30,000
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Number of business exits Number of bankruptcies
Fig. 1 Distribution of Ages of Managers of SMEs (by five-year interval)
Fig.1: “COSMOS2 (corporate information file)” (Teikoku Databank, Ltd.) (rearranged and processed)
(Note) The mode value is the value that occurs most frequently.
1995 Mode value
The largest age cohort of managers shifted from 47 years old to 66 years old in 20 years.
2000
2005 2010
2015
60 years old or older
70.5%
60 years old or older
82.4%
(Number of SMEs)
(Year)
(million managers)
30 years old 45 years old 60 years old 75 years old
Exit of high-productivity enterprises
【Analysis of the Current Status 2-5】 SME Lifecycle and Productivity (v) (Relationship between Lifecycle and Productivity (i))
• Influences of each lifecycle element’s trend on SME productivity are analyzed. • While start-up enterprises have boosted productivity, the latest productivity-boosting effect has declined.
Existing enterprises with high productivity have been expanding their share and thus pushing up overall productivity. On the other hand, a decline in existing enterprises’ productivity, and bankruptcies and exits of enterprises with high productivity have pushed down overall productivity.
11
Breakdown of productivity changes by element Fig. 1
Fig. 1: “FY2016 Analysis of Corporate Metabolism for SMEs” under contract from the Small and Medium Enterprise Agency (Research Institute of Economy, Trade and Industry, December 2016) (Notes) 1. Productivity here refers to total factor productivity, which indicates how overall value added changes when labor and capital change.
2. The business change effect refers to the overall productivity boosting or reducing effect of enterprises’ business changes. 3. Used here are financial data of customer SMEs that the CRD (Credit Risk Database) Association received from its members (credit guarantee associations and financial institutions).
Entry of high-productivity enterprises
Expansion of high-productivity enterprises’ market share
Bankruptcy of high-productivity enterprises
Decline in existing enterprises’ productivity
0.5
▲ 1.0
0.2
-2.0
-1.5
-1.0
-0.5
0.0
0.5
1.0
1.5
2003-2007 (第1期)
2007-2009 (第2期)
2009-2013 (第3期)
業種転換効果 廃業効果 倒産効果 参入効果
再配分効果 内部効果 合計 (%)
(Year)
Internal effect Redistribution effect
Bankruptcy effect
Business exit effect
New entry effect Business change effect
Total
11.2%
7.0% 8.3%
5.9%
0.0
2.0
4.0
6.0
8.0
10.0
12.0
2003-2007 2009-2013
Positive new entry effect Negative new entry effect(%)
0.3%
0.1%
-0.10
-0.05
0.00
0.05
0.10
0.15
0.20
0.25
0.30
0.35
0.40
2003-2007 2009-2013
Positive new entry effect Negative new entry effect
TFP growth
(%)
• Approx. 50% of start-up enterprises have raised SME productivity overall. • The trend of raising productivity has recently declined due to a drop in high-productivity start-up enterprises.
12
Fig. 1 Breakdown of new entry effect
Fig. 3 Business entry rate changes (2009-2013)
The gap between business entry rates for high and low productivity enterprises has narrowed.
58%
42%
Fig. 1-2: “FY2016 Analysis of Corporate Metabolism for SMEs” under contract from the Small and Medium Enterprise Agency (Research Institute of Economy, Trade and Industry, December 2016) (Notes) 1. Productivity here refers to total factor productivity, which indicates how overall value added changes when labor and capital change. 2. The business entry rate here refers to start-up enterprises’ share of the total number of enterprises.
54%
46%
Fig. 2 Distribution of new entry enterprises (2009-2013)
【Analysis of the Current Status 2-6】 SME Lifecycle and Productivity (vi) (Relationship between Lifecycle and Productivity (ii))
Shares of the total number of start-up enterprises
Shares of the total number of start-up
enterprises
-0.10
-0.05
0.00
0.05
0.10
0.15
0.200 25 50 75 100
(%, Accumulated enterprise shares)
Positive Negative
50% of positive effect
50% of positive effect
4% 50%
54%
(%, accumulated new entry effect)
(Year)
• Some 50% of closed enterprises have pushed down productivity. Half of closed enterprises, excluding those attributable to mergers and acquisitions and moving overseas, have substantially pushed down productivity.
• Such enterprises feature fewer employees and sales and higher profits than existing enterprises. The share of enterprises that have determined successors to owners is relatively small for closed enterprises, indicating it is important to reduce business exits resulting from successor shortages.
13
Fig. 2 Distribution of closed enterprises (2009-2013)
Closed enterprises (Negative (i))
50.3%
Closed enterprises (Negative (ii))
0.8%
(Reference) Existing
enterprises
Closed enterprises (pushing up)
48.9%
Number of employees 6.4 94.5 11.2 8.7
Sales 0.19 billion yen 6.59 billion yen 0.34 billion yen 0.09 billion yen
Sales growth 0.55% 3.54% 1.4% -3.8%
Ordinary profit margin 3.93% 4.95% 1.9% -1.1%
Fixed asset growth 1.0% 8.0% 3.9% -0.5%
Share for enterprises that determined
successors to owners 42% 41.7% 45% 40.8%
Breakdown of business exit effect Fig. 1
Average characteristics of closed enterprises (business performance indicators) Fig. 3
Fig. 1-3: “FY2016 Analysis of Corporate Metabolism for SMEs” under contract from the Small and Medium Enterprise Agency (Research Institute of Economy, Trade and Industry, December 2016)
(Note) Productivity here refers to total factor productivity, which indicates how overall value added changes when labor and capital change.
54.8%
Share of the total number of closed
enterprises
44.6%
0.6%
48.9%
50.3%
0.8%
【Analysis of the Current Status 2-7】 SME Lifecycle and Productivity (vii) (Relationship between Lifecycle and Productivity (iii))
Share of the total number of closed
enterprises
-0.5%
-0.6%
-0.80%
-0.70%
-0.60%
-0.50%
-0.40%
-0.30%
-0.20%
-0.10%
0.00%
0.10%
0.20%
2003-2007 2009-2013
Positive business exit effect Negative business exit effect (i)Negative business exit effect (ii) TFP growth
-0.75
-0.50
-0.25
0.00
0.25
0.500 25 50 75 100
Positive Negative
50% of negative effect →Closed enterprises(Negative (i))
50% of negative effect →Closed enterprises(Negative (ii))
(%, Accumulated shares) 0.8%
50.3% 51.1%
(%, Accumulated business exit effect)
0.38
0.30
0.240.260.280.300.320.340.360.38
94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15
Large enterprises (Regular employees)SMEs (Regular employees)
(Year)
(million yen)
0.002
-0.133
0.473
-0.016 -0.188
-0.043
0.065
-0.030 -0.053
0.181
-0.085 -0.002
-0.215
0.323
-0.121
-0.378 -0.053
-0.045 -0.056 -0.066
0.091
-0.169
-0.6-0.4-0.2
00.20.40.6
Managerialjobs
Special/technical
jobs
Clericaljobs
Salesjobs
Servicesjobs
Securityjobs
Productionprocess
jobs
Transportand
machineryoperation
jobs
Constructionand
miningjobs
Transport,cleaning
andpackaging
jobs
Nursingcarejobs*
2013 average 2016 average
▲ 30
▲ 20
▲ 10
0
10
20
30
I II IIIIV I II IIIIV I II IIIIV I II IIIIV I II IIIIV I II IIIIV I II IIIIV I II IIIIV I II IIIIV I II IIIIV I
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Manufacturing industry Construction industryWholesale industry Retail industryService industry
(DI,%p)
(Years and quarters)
【Analysis of the Current Status 3-1】 Current Status of the SME Employment Environment and Labor Shortages (i)
14
• SMEs have increasingly perceived labor shortages, especially concerning the high ratio of job offers to applicants. Particularly, the number of employees has been decreasing at smaller-sized SMEs. The background factors of such situation are job and wage gaps.
Fig. 2
Fig. 3 Fig. 1
Fig. 4 Changes in the number of employees by employment size
Gap between job offers and applicants by job type Changes in Employee Overcapacity and Insufficiency DI
Fig. 2: “Labor Force Survey” (Ministry of Internal Affairs and Communications)
Surp
lus
Shor
tage
Changes in wages by enterprise size
Surplus Shortage
Fig. 4: “Basic Statistical Survey of Wage Structure” (Ministry of Health, Labour and Welfare) rearranged and processed (Notes) 1. “Regular employees” covered general workers with no specified employment periods until 2004. Since 2005, they have covered
general workers described as “regular employees” by business establishments. 2. Wages represent “regularly paid cash wages” for June every year, covering basic pay, predetermined allowances and overtime money. 3. Enterprises with 299 or fewer permanent employees (99 or fewer permanent employees for wholesale, services, retail and restaurant
industries) are classified as SMEs. The others are large enterprises.
Fig. 1 “Survey of SME Business Conditions” (SME Support, Japan, Small and Medium Enterprise Agency)
Fig. 3: “General Public Employment Placement Conditions” (Ministry of Health, Labour and Welfare) (Notes) 1. Excluding “agriculture/forestry/fisheries jobs” and “unclassifiable jobs”
2. “Nursing care jobs” cover “welfare facility instruction specialists,” “other social welfare specialists,” “domestic helpers” and “nursing care service jobs” extracted from “special/technical jobs” and “services jobs”, based on “Classification of Jobs (2013 Revised Edition)” by the Ministry of Health, Labour and Welfare.
(million persons)
17.4
15.1
12.5
16.3
6
8
10
12
14
16
18
20
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
1~29 30~99 100~499 500 or more(10,000 employees)
53.2
48.7
26.9
17.6
19.9
33.7
0% 100%
Women(n=2,791)
Seniors(n=2,684)
Utilizing Considering utilizing Not utilizing or considering utilizing
15.6 27.2 28.5 29.9 33.4
40.4 43.0 44.1 45.9 49.3
24.8 19.0 19.1 18.3 14.9 19.2 10.9 8.3 5.9 2.4
0
20
40
60
80
100
1-4 5-19 20-49 50-299 300 or more
15-34 years old 35-54 years old 55-64 years old 65 years old or older(%)
【Analysis of the Current Status 3-2】 Current Status of the SME Employment Environment and Labor Shortages (ii) (Utilization of various human resources)
• Smaller enterprises utilize more various human resources, including women and seniors. • Many SMEs utilize or consider utilizing various human resources as core employees.
Fig. 1
Figs. 1-2: “2007 Basic Survey of Employment Structure” and “2012 Basic Survey of Employment Structure” (Ministry of Internal Affairs and Communications) Fig. 3 “Survey on Recruitment and Job Retention at SMEs and Micro Enterprises” under contract from the Small and Medium Enterprise Agency (Mizuho Information & Research Institute, November 2016)
Male and female shares of employees by company size (employees)
(2007) (2012)
Fig. 2 Age distribution of employees by company size (employees)
(2012)
Fig. 3 Utilization of various human resources as core workers (SMEs)
15
(2007)
52.5 57.0 60.7 61.4 63.2
47.5 43.0 39.3 38.6 36.8
0
20
40
60
80
100
1-4 5-19 20-49 50-299 300 or more
Males Females(%)
52.8 55.3 59.6 61.2 62.5
47.2 44.7 40.4 38.8 37.5
0
20
40
60
80
100
1-4 5-19 20-49 50-299 300 or more
Males Females(%)
20.2 30.8 32.9 34.9 38.0
38.9 39.8 40.3 41.6 45.3
25.1 20.1 20.2 19.1 14.7 15.8 9.3 6.7 4.5 2.0
0
20
40
60
80
100
1-4 5-19 20-49 50-299 300 or more
15-34 years old 35-54 years old 55-64 years old 65 years old or older(%)
【Analysis by Theme 1-1】Business Entries (i)
Percentages of people indifferent to starting up enterprises (international comparison)
Fig. 1 Percentages of people who are interested in starting up enterprises that actually succeed in starting up those enterprises (international comparison)
Fig. 3
Fig. 3: Prepared by the Small and Medium Enterprise Agency from “International Comparison of Factors Influencing Business Start-up Activities” (Research Institute of Economy, Trade and Industry, March 2016)
• In comparison with other countries, Japan features a lower business entry rate and a larger share of people who are indifferent to starting up enterprises. However, people attempting to start up enterprises in Japan are likelier to actually succeed in starting up those enterprises.
• Increasing public interest in starting up enterprises is important. A key motivator for people to start up enterprises seems to be recommendations from close friends.
16 Figs. 1-2: Prepared by the Small and Medium Enterprise Agency from a report on a FY2013 “Survey on Entrepreneurship” (Venture Enterprise Center, March 2014)
Most frequently cited Second most frequently cited Third most frequently cited
49 years old or
younger
Male (n=961)
Influence of surrounding entrepreneurs and managers
(40.7%)
Failing to do what I want to do at my place of employment
(29.2%)
Future uncertainties and worsened treatment at my
place of employment (27.5%)
Female (n=75)
Recommendations by close friends (33.3%)
Home environment changes (marriage, child delivery, etc.)
(25.3%)
Influence of surrounding entrepreneurs and managers
(22.7%)
50-59 years old
Male (n=809)
Future uncertainties and worsened treatment at my
place of employment (35.7%)
Failing to do what I want to do at my place of employment
(28.4%)
Influences of surrounding entrepreneurs and managers
(27.3%)
Female (n=107)
Recommendations by close friends (37.4%)
Home environment changes (marriage, child delivery, etc.)
(29.0%)
Failing to do what I want to do at my place of employment
(23.4%)
60 years old or older
Male (n=949)
Influence of surrounding entrepreneurs and managers
(25.2%)
Recommendations by close friends (21.9%)
Future uncertainties and worsened treatment at my
place of employment (21.7%)
Female (n=99)
Failing to do what I want to do at my place of employment
(30.3%)
Recommendations by close friends (26.3%)
Acquisition of licenses or qualifications useful for
business operations (24.2%) Fig. 4: “Survey on Business Entry Realities” under contract from the Small and Medium Enterprise Agency (Mitsubishi UFJ Research and
Consulting, November 2016) (Notes) 1. Motivations for entrepreneurs to have interests in starting up enterprises before actually doing so are compiled. 2. Because respondents were allowed to cite multiple motivations, percentage shares may not necessarily add up to 100%.
Recommendations by close friends and the presence of entrepreneurs can become key motivations.
Fig. 2 Fig. 4 Motivations for entrepreneurs to start new enterprises
International comparison of business entry rates
5.2
9.3
14.3
7.3
12.4
0.02.04.06.08.0
10.012.014.016.018.020.0
01 02 03 04 05 06 07 08 09 10 11 12 13 14 15
Japan U.S. U.K. Germany France(%)
19 20
13 15 9
05
10152025
Japan U.S. U.K. Germany France
(%)
75.8 78.2 72.3
63.9 60.7 64.7 63.5 60.7 62.3
72.3 73.1 77.3
22.9
36.0 30.6
39.2
0
10
20
30
40
50
60
70
80
90
01 02 03 04 05 06 07 08 09 10 11 12
Japan U.S. U.K. Germany France
(Year)
(%)
(Years, fiscal years)
【Analysis by Theme 1-2】Business Entries (ii)
17
• 5- to 10-year-old enterprises are classified into three types -- high growth, stable growth and sustainable growth. • Services and manufacturing enterprises are dominant among high-growth enterprises. Their managers are young
and indicate effects of entrepreneurial education.
Fig. 1
Fig. 2
Fig. 4
Fig. 3 Growth trends after business entry
Fig. 1-4: “Survey on Business Entry Realities” contracted by the Small and Medium Enterprise Agency (Mitsubishi UFJ Research and Consulting, November 2016) (Note) Growth types are based on quantitative data for this document. As some enterprises cannot be classified into the categories depending on their response to the questionnaire, numbers in these types may not necessarily add up to the total number.
Entrepreneurs’ age distribution by growth type
Details of entrepreneurial education at school by growth type
Industry shares by growth type
(Note) The data cover respondents who cited specific courses at elementary schools, junior high schools, senior high schools, technical colleges, vocational schools, junior colleges, universities or graduate schools.
25.4
22.1
35.6
25.2
13.8
10.0
24.5
16.5
10.8
12.4
6.1
8.7
10.0
12.1
3.6
9.4
8.1
7.9
8.1
10.2
8.0
7.6
8.1
11.8
7.5
8.3
6.6
3.1
16.2
19.8
7.4
15.0
0% 100%
All SMEs(n=3,184)
High growth type(n=127)
Stable growth type(n=740)
Sustainable growth type(n=2,216)
Services industry (excluding healthcare and welfare service industries)Healthcare and welfareManufacturing industryConstruction industryWholesale industryRetail industryInformation and communications industryOther industries
7.5
15.5
9.7
6.1
26.4
31.8
31.7
24.1
30.4
26.4
29.2
31.4
27.1
20.2
21.9
29.3
8.6
6.2
7.4
9.1
0% 100%
Overall(n=3,191)
High growth type(n=129)
Stable growth type(n=729)
Sustainable growth type(n=2,174)
39 years old or younger 40-49 years old 50-59 years old60-69 years old 70 years old or older
13.6 14.4 12.8
8.8
4.8 7.2
14.7
11.3
7.7
3.9 3.0 2.4
14.3
9.7 8.3
3.3 2.7 2.7
0
3
6
9
12
15
Learningaccounting and
financialknowledge
Reading bookson entrepreneurs
Workplaceexperiences atenterprises or
shops
Leadershipeducation
Participation in entrepreneurs’
lecture and exchange meetings
Participation inenterpriseinternship
High growth type (n=124~126) Stable growth type (n=691~713) Sustainable growth type (n=2,038~2,092)
(%)
60.0
40.8 35.6 28.3 26.4
0
20
40
60
資金調達 家族の理解・ 協力
事業や経営に 必要な知識・ ノウハウの習得
質の高い 人材の確保
販路開拓・ マーケティング
(%)
57.6
36.4 32.1 31.6 30.8
0
20
40
60
質の高い 人材の確保
企業の成長に応じた組織体制の見直し
量的な労働力の 確保
資金調達 新たな製品・商品・サービスの開発
(%)
47.8 47.5
34.4 31.2 27.8
0
20
40
60
資金調達 質の高い 人材の確保
量的な労働力の 確保
販路開拓・ マーケティング
自社の宣伝・PR
(%)
【Analysis by Theme 1-3】Business Entries (iii)
18
• Within each growth type, challenges shift from fundraising to recruitment as enterprises go to higher stages. • Whether enterprises have realized target growth types depended on successful fundraising.
Use of loans without security or guarantee Fig. 2 Loans without security or guarantee in the stabilization or expansion stage lead to stable or high growth
(Notes) 1. Here, in the “start-up stage” , there are no mainstream products or service sales, while in the “the
initial growth stage,” sales have been reported, but operating income has not turned positive, and in the “stabilization or expansion stage,” sales have been reported, and operating income has turned positive for at least one fiscal period.
2. Here, Loans without security or guarantee are loans provided without security or guarantee due to high ratings for business operations and growth potential.
Challenges at each growth stage Fig. 1
Figs 1-2: “Survey on Business Entry Realities” under contract from the Small and Medium Enterprise Agency (Mitsubishi UFJ Research and Consulting, November 2016)
(3) Stabilization or expansion stage
(2) Initial growth stage
(1) Start-up stage Challenges involving
fundraising
Challenges involving recruitment
Challenges involving sales channel exploration
(1) Use of loans without security or guarantee at stable growth enterprises
(2) Use of loans without security or guarantee at high growth enterprises
3.9
10.1
3.4
16.7
0
5
10
15
20
Start-up stage Stabilization or expansion stage
Enterprises that failed to achieve the goal of stable growth (n=605~639) Enterprises that achieved stable growth (n=475~521)
(%)
3.3
12.4
4.7
21.1
05
10152025
Start-up stage Stabilization or expansion stage
Enterprises that failed to achieve the goal of high growth (n=209~210) Enterprises that achieved high growth (n=85~95)
(%)
Fundraising Family members’ understanding and
cooperation
Learning knowledge and knowhow required for
business operations and management
Securing high-quality human
resources
Sales channel exploration and
marketing
Fundraising Securing high-quality human
resources
Securing labor in significant
quantities
Sales channel exploration and
marketing
Enterprise advertisement and
public relations
Fundraising Securing high-quality human
resources
Reorganization responding to
enterprise growth
Securing labor in significant
quantities
Developing new products
or services
Start-up stage (n=2,781) Initial growth stage (n=2,762) Stabilization or expansion stage (n=2,690)
Most frequently cited
Second most frequently cited
Third most frequently cited
Fourth most frequently cited
Fifth most frequently cited
Fundraising methods used in the
stabilization or expansion stage
(n=104)
Loans from private financial
institutions (73.1%)
Loans from government
financial institutions (45.2%)
Enterprise managers’ own funds (36.5%)
Using public subsidies (19.2%)
Loans from family members, relatives, acquaintances, etc.
(13.5%)
Fundraising methods that enterprises
wanted to use in the stabilization or expansion stage
(n=14)
Investment from venture capitals,
investment partnerships, funds,
etc. (78.6%)
Investment from individual
investors (71.4%)
Loans from private enterprises or other
organizations (71.4%)
Investment from private enterprises, funds, foundations
or other organizations
(71.4%)
Using crowdfunding
(64.3%)
An enterprise that took advantage of speedy planning and development processes to enhance technology and gain success
Robit Inc. in Tokyo, founded in June 2014, develops IoT (Internet of
things) systems, robots, etc. Robit's President Takahashi decided to start up an enterprise after winning first prizes at multiple business contests thanks to high ratings for his planning ability and sample products during his university days.
After starting up the enterprise with marginal money including business contest prize money and business start-up and second start-up promotion subsidies from the Small and Medium Enterprise Agency, President Takahashi planned products and developed samples repeatedly within a short period of time. The speedy product planning and development attracted individual investors, allowing him to successfully receive investment from them.
Later, he took advantage of the investment to recruit some friends from his university days and enhance research and development. In the summer of 2016, which was two years after the start-up, Robit successfully launched the “Mezamashi Curtain mornin’” system to open and close curtains with smartphones.
【Analysis by Theme 1-4】Business Entries (iv)
19
• In the stabilization or expansion stage at high growth enterprises, there are strong needs for investment and for business advisers, internal managers, business planners and other human resources required for business expansion.
【Specific case】Robit Inc. (Tokyo)
Robit’s “Mezamashi Curtain mornin’”
Fig. 1
Fig. 2
Fundraising methods at high-growth enterprises in the growth or expansion stage
Human resources required at high growth enterprises in each growth stage
Fig. 1-2: “Survey on Business Entry Realities” under contract from the Small and Medium Enterprise Agency (Mitsubishi UFJ Research and Consulting, November 2016)
47.4 42.1
21.1 15.8 14.7
11.6
58.4 57.5
32.7 31.0
22.1 17.7
66.1 59.6
40.4 41.3 47.7 49.5
0
10
20
30
40
50
60
70
経営者の右腕人材
営業・販売人材 財務・会計人材 内部管理人材 経営企画人材 後継者候補人材
創業期(n=95) 成長初期(n=113) 安定・拡大期(n=109) (%)
(Note) The five most frequently cited items are listed for fundraising methods that enterprises used and those that enterprises wanted to use.
The product’s shipments surpassed 20,000 units in the six months after its launch and its sales have smoothly grown. Robit is tackling the commercialization of new products and services.
Start-up stage (n=95) Initial growth stage (n=113)
Stabilization or expansion stage (n=109)
Close aides to managers
Marketing and sales personnel
Finance and accounting personnel
Internal managers
Business planners
Successor candidates
46.4
38.4
27.1
22.1 19.5
9.7
59.6
49.5
32.3 32.3 31.5
16.9
59.8
51.8
37.7 36.1
43.6
55.9
0
10
20
30
40
50
60
70
経営者の右腕人材
営業・販売人材 財務・会計人材 内部管理人材 経営企画人材 後継者候補人材
創業期(n=524) 成長初期(n=626) 安定・拡大期(n=637)
(%)
Most frequently cited
Second most frequently cited
Third most frequently cited
Fourth most frequently cited
Fifth most frequently cited
Fundraising methods used in the stabilization
or expansion stage (n=546)
Loans from private financial
institutions (78.4%)
Loans from government
financial institutions
(42.6%)
Enterprise managers’ own funds (40.2%)
Using public subsidies (22.9%)
Loans from family members,
relatives, acquaintances, etc.
(13.8%)
Fundraising methods that enterprises wanted
to use in the stabilization or expansion stage
(n=110)
Investment from venture capitals,
investment partnerships, funds, etc. (44.5%)
Using crowdfunding
(44.5%)
Using public subsidies (42.7%)
Investment from private
enterprises, funds, foundations or
other organizations
(40.0%)
Investment from individual
investors (37.3%)
Most frequently cited
Second most frequently cited
Third most frequently cited
Fourth most frequently cited
Fifth most frequently cited
Fundraising methods used in the initial
growth stage (n=646)
Loans from private financial
institutions (72.9%)
Enterprise managers’ own funds (46.4%)
Loans from government
financial institutions
(40.9%)
Loans from family members,
relatives, acquaintances, etc.
(22.0%)
Using public subsidies (19.8%)
Fundraising methods that enterprises wanted
to use in the initial growth stage (n=126)
Using public subsidies (44.4%)
Investment from private
enterprises, funds, foundations or
other organizations
(43.7%)
Investment from venture capitals,
investment partnerships, funds, etc. (42.9%)
Investment from individual
investors (39.7%)
Using crowdfunding
(38.1%)
【Analysis by Theme 1-5】Business Entries (v)
20
• Fundraising needs at stable growth enterprises shift from loans to public subsidies and investment as they go to higher stages. From the initial growth stage, needs increase for advisers to managers and various other human resources.
Fig. 1
Fig. 2
Fundraising methods at stable growth enterprises in each growth stage
Human resources required at stable growth enterprises in each growth stage
Fig. 1-2: “Survey on Business Entry Realities” under contract from the Small and Medium Enterprise Agency (Mitsubishi UFJ Research and Consulting, November 2016)
Most frequently cited
Second most frequently cited
Third most frequently cited
Fourth most frequently cited
Fifth most frequently cited
Fundraising methods used in the start-up
stage (n=677)
Enterprise managers’ own funds (82.3%)
Loans from family members,
relatives, acquaintances, etc.
(39.3%)
Loans from private financial
institutions (39.3%)
Loans from government
financial institutions
(28.2%)
Using public subsidies (12.6%)
Fundraising methods that enterprises
wanted to use in the start-up stage (n=179)
Loans from private financial
institutions (45.3%)
Loans from government
financial institutions
(41.3%)
Using public subsidies (36.9%)
Investment from venture capital
firms, investment partnerships, funds, etc. (34.6%)
Investment from private enterprises, funds, foundations
or other organizations
(31.8%)
(Start-up stage)
(Initial growth stage)
(Stabilization or expansion stage)
(Note) The five most frequently cited items are listed for fundraising methods that enterprises used and those that enterprises wanted to use.
Start-up stage (n=524)
Initial growth stage (n=626)
Stabilization or expansion stage (n=637)
Close aides to managers
Marketing and sales personnel
Finance and accounting personnel
Internal managers
Business planners
Successor candidates
36.3
44.1
75.0
65.9
74.9
57.1
63.9
69.8
80.8
71.2
020406080100
Business succession is felt as a challenge (n=1,336~1,440) Measures or preparations are being implemented (n=1,453~1,576)
(%)
3.9 10.5
22.7
42.4
20.5 10 years or longer5-10 years3-5 years1-3 years1 year or shorter
(%)
(n=1,075)
Share of enterprises having taken more than 3 years
37.1%
Non-family business
succession 33.4
Family business
succession 66.6
(n=2,357)
Non-family directors
[値]
Non-family employees
[値]
Outside people [値]
(n=787)
Successors have been
determined
41.6
There are successor candidate
s 27.5
There are no
successor candidate
s, or successors have not
be determine
d …
(n=4,036)
63.6
54.5
51.0
31.2
29.4
36.4
45.5
49.0
68.8
70.6
0% 100%
The successor has been determined(n=1,369)
There is a successor candidate whose consent has not been gained
(n=950)
We are looking for a successor candidatebut have yet to find any candidate
(n=453)
The time is not mature to look for any successor candidate
(n=401)
We have never consideredany successor candidate
(n=248)
Recommended Not recommended
【Analysis by Theme 2-1】Business Succession (i)
21
Business succession challenges, measures and preparations (the successor has been or has not been determined)
11.5
15.2
26.9
30.5
31.0
52.7
62.2
66.7
79.6
80.2
0 20 40 60 80 100
Business succession is felt as a challenge (n=2,180~2,216) Measures or preparations are being implemented (n=2,016~2,088)
(%)
Securing advisers for the successor
Transferring power to the successor gradually
Developing a post-succession business operation plan
Negotiating with financial institutions on managers’ personal guarantees
The successor has been determined The successor has not been determined
• Non-family business succession accounts for one-third of the total business succession cases. In many of non-family business succession cases, successors come from within the organization.
• In many cases where acquaintances recommended that managers prepare for business succession, successors were chosen. While the selection of successors takes time, enterprises that have not determined successors have generally failed to progress in enacting business succession measures.
Fig. 1
Fig. 4
Fig. 2 Successor selection
conditions
Successor criteria and present status of non-family succession (medium-sized corporations)
Breakdown of non-family business succession cases
Shares of enterprises recommended to prepare for business or asset succession by successor selection stage
Figs. 1-4: “Questionnaire Survey on Business Succession” contracted by the Small and Medium Enterprise Agency (Tokyo Shoko Research, November 2016)
Fig. 3 Time to receive consent from a candidate after beginning the selection process
(%)
Share of family business succession
In-house organizational improvement
Choosing the successor and
gaining consent from the successor and
other stakeholders
【Analysis by Theme 2-2】Business Succession (ii)
22
• Enterprises fail to make smooth progress in resolving challenges regarding non-family asset succession. Relevant challenges include time-consuming measures and preparations for asset succession methods.
• Top managers must select their successors and systematically make preparations for succession, while supporters and financial institutions must cooperate in providing fine-tuned support for resolving various challenges.
Fig. 1
Fig. 2 Fig. 3
Asset succession challenges, measures and preparations (family and non-family succession) Family business succession Non-family business succession
25.7
30.2
40.9
42.6
62.7
62.9
56.0
54.4
11.6
6.9
3.0
2.9
0% 100%
Negative profitmargin (n=319)
0-3% or less(n=1,364)
3-10 % or less(n=823)
10% or more(n=204)
Higher than expected As high as expected Lower than expected
Impressions of treasury share appraisal value viewed by the ordinary profit margin
47.1
26.6
12.0 11.4 6.1
27.1 20.7
7.1 8.3 4.6
05
101520253035404550
Certified publicaccountants ortax accountants
serving as advisers
Correspondentfinancial institutions
Business consultant Relatives,friends/acquaintances
Non-family directorsor employees
Implementing measures and preparations(n=700)Not implementing measures and preparations(n=2,192)
(%)
Advisers recommending preparations for business or asset succession by stage of measures and preparations regarding successors’ financial resources What is important for enterprises managers is advice from those who frequently meet them
There are many loss-ridden enterprises whose stocks have unexpectedly high appraisal value
Figs. 1-3: “Questionnaire Survey on Business Succession” under contract from the Small and Medium Enterprise Agency (Tokyo Shoko Research, November 2016) (Note) “Successors’ financial resources” refer to financial resources for successors to purchase treasure shares and business assets.
30.3
44.7
53.5
35.7
50.1
49.3
34.5
64.5
69.0
69.7
020406080
Business succession is felt as a challenge (n=1,522~1,522)
Measures or preparations are being implemented (n=1,341~1,481)
(%) 21.8
21.4
35.1
18.8
28.3
48.4
55.2
55.6
60.8
62.6
0 20 40 60 80
Business succession is felt as a challenge (n=832~847)
Measures or preparations are being implemented (n=725~780)
(%)
Considering optimum methods for transferring treasury shares and business assets
Successors’ financial resources for paying taxes and
purchasing treasure shares and business assets
The appraisal value of treasury shares and business assets is high, placing great gift or inheritance tax
burdens on successors
Fundraising for enterprises’ purchase of treasury shares and business assets
Appropriate appraisal of treasury shares and business assets
85.7 77.9 73.5
67.0 65.2
11.3 23.7
15.8 15.2 7.8
0102030405060708090
100
Continuedemployment and
treatment ofemployees
Lack of informationor knowledge about
mergers andacquisitions
Lack of legal, tax,financial and otherspecial knowledge
Information leakagerisk regarding
consideration ofmergers andacquisitions
Corporate culturedifferences
Feeling challenges (n=839~856) Taking measures and making preparations (n=744~768) (%)
59.1
43.4 42.3
9.1 4.5 2.6
010203040506070
Certified publicaccountants or tax
accountants servingas advisers (n=716)
Relatives,friends/acquaintances
(n=691)
Correspondentfinancial institutions
(n=698)
Commerce andindustry associationsor chambers (n=638)
Business successsupport centers
(n=627)
ComprehensiveSupport Centers
(n=626)
(%)
【Analysis by Theme 2-3】Business Succession (iii)
23
• For enterprises that lack successors but want to continue business operations, business transfers, sales or integration (mergers and acquisitions) are important options. In general, most managers insist on not only maintaining positions for their employees but also the future development of their business.
• Enterprises fail to make progress in making preparations or taking measures despite abundant succession challenges. The share is low for enterprises that consult with specialists on succession. Support arrangements are necessary to find relevant needs and respond to various challenges.
Fig. 1 Fig. 3
Fig. 2
Fig. 4
2.3
3.4
20.2
33.3
77.5
63.3
0% 100%
Having a successor orsuccessor candidate
(n=2,141)
Having no successor(n=1,094)
Considering or having made decisions on business transfers, sales or integration (mergers and acquisitions)Accepting business transfers, sales or integration (mergers and acquisitions) to continue business operationsNot considering business transfers, sales or integration (mergers and acquisitions)
Consideration of sale, integration or transfer of business ownership (mergers and acquisitions) both for enterprises with or without successors or successor candidates
88.8
38.3 38.0 29.3
23.7
88.7
35.5
56.7
22.0 25.5
86.0
33.1
59.0
24.7 29.8
0
20
40
60
80
100
Maintaining orsecuring continued
employment ofemployees
Monetary incomefrom sales
Further corporateand businessdevelopment
Liquidatingcorporate debt
Utilizing ordeveloping in-
house technologyand knowhow
20 or fewer(n=410)
20-50(n=282)
50 or more(n=178)
(%)
Priorities for sale, integration, or transfer of business ownership (mergers and acquisitions) by company size (employees)
Challenges, measures and preparations regarding business transfers, sales or integration (mergers and acquisitions)
Consultants on business succession for enterprises interested in sale, integration, or transfer of ownership (mergers and acquisitions) (three most frequently cited and 3 least frequently cited consultants)
Consultants for enterprises are those that frequently contact the enterprises
Even enterprises interested in mergers and acquisitions have failed to make progress in taking relevant measures or making preparations.
Figs. 1-4: “Questionnaire Survey on Business Succession” contracted by the Small and Medium Enterprise Agency (Tokyo Shoko Research, November 2016)
【Analysis by Theme 2-4】Business Succession (iv)
24
【Specific case】Autec Mechanical Co. (Minami-Alps City, Yamanashi Prefecture)
From the left, the sales head (candidate for the next president), the chairman and the present president
Three generations tackling smooth business and asset succession
Autec Mechanical is a manufacturer founded by its present chairman to design and produce automatic assemblers and automatic inspection devices, etc. Since the early stage, the chairman has not stuck to family management but has been conscious of developing a system for excellent employees to succeed to the top manager position and enable business operations to be maintained over the long term.
The present chairman developed a corporate business philosophy and has held business plan presentation contests to spread the enterprise’s business direction. The chairman picked an employee as a director in his 40s and appointed him as the present president who has now taken over the management of the business management.
The enterprise picked a sales head as a director and a candidate for the next top manager in his 40s and dispatched him to an outside successor training course that the present president underwent in his 40s. The enterprise is proceeding with training of a business successor candidate.
The chairman says: “Large organizations can select business successors. However, SMEs must take much time to train successor candidates. Successor candidates are required to accumulate experiences as managers from an early stage.”
While implementing solid business management with the share price rising,
the enterprise has transferred shares held by the chairman and his family to the present management and an employee shareholding association gradually to facilitate non-family succession.
32.6
26.7 24.7
18.1
10.8 12.5
35.7 35.4
25.9 25.9
20.1 16.9
0
5
10
15
20
25
30
35
40
Lacking personnelwho has necessary
technology orknowhow
Difficult saleschannel exploration
Massive costsrequired for new
businessdevelopment
Insufficientknowledge onmarket needs
Insufficientcommunication of
products or servicesto markets
Difficulties inidentifying a project
in which theenterprise can take
advantage of itsstrength
Successful (n=288) Unsuccessful (n=703)(%)
【Analysis by Theme 3-1】Promotion of New Business Development (i) • New business development contributes to SME growth. • The success of new business development depends on target strategies and marketing initiatives.
25
Fig. 1
Fig. 3
Fig. 2 Relationship between new business development (new product development) and the ordinary profit margin
Implementation of new business development
Figs. 1-3: “Survey on SMEs’ Business Strategies for Growth” under contract from the Small and Medium Enterprise Agency (Nomura Research Institute, November 2016)
Challenges for enterprises that are successful and unsuccessful in new business development
Marketing-related challenges Marketing-related challenges
36.0
28.0
37.8
41.8
26.3
30.2
0% 20% 40% 60% 80% 100%
Implementing(n=670)
Notimplementing
(n=2,142)
Increasing Remaining unchanged Decreasing
22.3
23.7
16.0
4.9
77.7
76.2
84.0
95.0
0% 20% 40% 60% 80% 100%
New market exploration strategy(n=2,959)
New product development strategy(n=2,928)
Diversification strategy(n=2,959)
Business switch strategy(n=2,875)
Implementing Not implementing
(1) New market exploration strategy
(2) New product development strategy
31.7
19.6
14.9 14.9
8.5 11.0
36.1
21.2 21.8 21.6 18.1
14.9
0
5
10
15
20
25
30
35
40
Lacking personnelwho has necessary
technology orknowhow
Massive costsrequired for new
businessdevelopment
Insufficientknowledge onmarket needs
Difficult saleschannel
exploration
Insufficientcommunication of
products orservices to markets
Difficulties inidentifying a
project in whichthe enterprise cantake advantage of
its strength
Successful (n=281) Unsuccessful (n=679)(%) (2) New product development strategy
62.8
51.7
13.2 14.0 10.3
5.4
76.2
39.2
14.4 13.7 10.5 5.3
0
10
20
30
40
50
60
70
80
90
In-house salesdivision members or
representatives
In-house businessplanning division
members orrepresentatives
In-house marketingplanning division
members orrepresentatives
In-house researchand development
division members orrepresentatives
Oher divisionmembers and
representatives
None or no divisionexists to find market
needs
Successful (n=242) Unsuccessful (n=564)
(%)
59.5
38.6 34.5
30.7 30.3
65.4
28.9 36.5
25.2 30.2
0
10
20
30
40
50
60
70
Flexible productionand provision of
products or servicesaccording to requests
Developmentcapabilities for
products or servicesreflecting market
needs
Production andprovision of high
value added productsor services
Brand power ofenterprises and
products or services
Technological, andresearch anddevelopmentcapabilities
Successful (n=264) Unsuccessful (n=616)
(%)
29.3
30.7
40.0
(%) (n=75)
44.5
36.0
19.5
IncreasingRemaining unchangedDecreasing
(%) (n=328)
60.4
49.1 48.8
33.3
60.4
42.6 38.6
28.4
55.1
39.2 38.6 31.6
54.1
31.1 33.8
17.6
54.5
24.7 29.9
19.5
0
10
20
30
40
50
60
70
Obtaining new customers Improving enterpriseawareness
Improving employees’ motivations
Human resourcesdevelopment
All of the four (n=336)Finding market needs and enterprise strengths and PR operations (n=197)Finding market needs and enterprise strengths (n=158)Finding strengths alone (n=74)Implementing no market operations (n=77)
(%)
Fig. 3
【Analysis by Theme 3-2】Promotion of New Business Development (ii) • Enterprises that are strong in finding market needs among marketing operations are successful in new business
development. At such enterprises, business planning divisions as well as sales divisions are opt to find market needs.
• Enterprises that evaluate and verify marketing operations benefit from employees’ improved motivations and personnel training effects.
26
Fig. 1
Fig. 2 Fig. 4
Ordinary profit margin trends by presence and absence of marketing operations
Enterprise strengths for successful and unsuccessful enterprises in new business development
Relationship between marketing operations and new business development effects
Figs. 1-4: “Survey on SMEs’ Business Strategies for Growth” under contract from the Small and Medium Enterprise Agency (Nomura Research Institute, November 2016)
(Note) Marketing operations include “finding enterprise strengths,” “finding market needs,” “information strategies” and “verification of marketing operation effects.”
Divisions to find market needs for successful and unsuccessful enterprises in new business development
(Notes) 1. Among new business development effects, qualitative ones alone are tabulated. 2. PR operations include not only advertisement but also strategic information collection and communication activities such as finding
enterprise ratings and effective utilization of various media.
(1) Implementing all marketing operations
(2) Not implementing all market operations
26.5 26.5
18.4
8.2 8.2 6.1
40.8 39.7 36.9
29.4
18.2
33.5
12.0 6.2
0
10
20
30
40
50
Utilization ofoutside resources
may cost more thansecuring in-house
personnel orarrangements
Appropriatecontract prices are
unknown
Outsourcing effectsfail to meet costs
Concern regardingthe leakage of
technology andknowhow tocompetitors
Outside resourcesare less flexiblethan in-house
resources
Outsourcingcontract procedures
are cumbersome
No particularproblems arose
Utilizing outside resources (n=49)Considering utilizing outside resources while failing to utilize them (n=582)
(%)
50.4 32.2
17.4
Increasing
RemainingunchangedDecreasing
62.5 20.0
17.5
Increasing
RemainingunchangedDecreasing
【Analysis by Theme 3-3】Promotion of New Business Development (iii) • It is effective for enterprises to utilize outside business resources for responding to labor shortages, a common
challenge for new business development. Utilizing outside resources has a positive effect on the profits. Enterprises that have utilized outside resources have not perceived many problems.
【Specific case】 Tanaka Metal Factory (Yamagata City, Gifu Prefecture)
Taking advantage of outside resources for a brand strategy to create a niche market
Tanaka Metal Factory develops, produces and sells copper and stainless steel parts and shower heads. It had been producing water faucet valves as a subcontractor. In response to stagnant demand and fiercer price competition under slack housing starts, however, the enterprise has sought to develop proprietary products and explore sales channels for them without depending on subcontracting deals.
When considering a new core business, the enterprise paid attention to water-saving shower heads that were selling at high prices. It proceeded with new product development and successfully developed shower heads featuring water-saving and beauty care effects.
When launching a new product for consumers, the enterprise outsourced branding strategy development and successfully increased customers’ awareness of the product by clarifying the concept and advertisement points for the product.
27
Fig. 1
Ordinary profit trends Ordinary profit trends
Relationship between utilization of outside resources for evaluating and verifying marketing operations and the ordinary profit margin (successful enterprises in new business development)
Fig. 2 Challenges for enterprises that have utilized and have not utilized outside resources
Figs. 1-2: “Survey on SMEs’ Business Strategies for Growth” under contract from the Small and Medium Enterprise Agency (Nomura Research Institute, November 2016)
(%) (n=40)
(%) (n=230)
Tanaka Metal Factory took nearly
three years to establish its proprietary brand products targeting women in their 30s who are sensitive to beauty care and health. As a result, its sales have doubled.
14.6 85.4
0% 20% 40% 60% 80% 100%
Evaluatingand
verifyingmarketingoperations(n=341)
Utilizing outside resources Not utilizing outside resources
1.0
1.9
0.9
0.6
2.1
5.3
5.7
4.9
4.0
6.1
0% 5% 10%
Utilizing
Consideringutilizing
0.9
1.3
1.6
1.7
1.8
8.6
5.7
8.8
6.2
5.2
0%5%10%
Visualizing traffic lines of employees toimprove business processes
(n=989)(n=1,886)
Finding product and service operations andcustomer needs to develop new products
(n=994)(n=1,906)
Grasping and controlling orders, productionand inventories integrally
(n=988)(n=1,887)
Automating and streamlining backyard andassistant operations(n=985)(n=1,885)
Finding customers’ and trading partners’ needs
(n=995)(n=1,912)
【Analysis by Theme 3-4】Promotion of New Business Development (iv) • SMEs do not utilize IoT and other new technologies to a large extent but have some interest in them. Non-
manufacturing SMEs could take advantage of new technologies for visualizing things to raise productivity. • SMEs have relatively high interest in the sharing economy that can become their new business chance.
28
【Specific case】Tokachi Bus Co. (Obihiro City, Hokkaido Prefecture)
Tokachi Bus is a regional enterprise that positively utilizes IoT to improve customer satisfaction.
It is a bus operator founded in 1926, providing bus operations in one
city and 13 towns/villages in Tokachi, Hokkaido. The enterprise seeks to increase bus users instead of viewing their decline as natural in a state of despair.
In 2008, the enterprise launched marketing house-to-house visits along bus routes to find reasons for falling demand. In a bid to resolve bus users’ concerns about uncertain bus stops and routes, it joined hands with an information technology vendor to develop a bus transfer guidance service. The enterprise provides an application for searching a bus route by destination even if bus stop locations are unknown.
The enterprise has also introduced a system for bus location users utilizing IoT technology, providing a service to visualize bus operations on an application and notify customers of arrival times. The service has resolved bus users’ concerns about volatile arrival times in winter, increasing customer satisfaction. The enterprise is considering installing sensors in buses to count incoming and outgoing passengers and using sensor data for revising bus schedules.
Fig. 1
Fig. 2
Utilization of IoT, big data, artificial intelligence and other new technologies by business category
Interest in the sharing economy
Figs. 1-2: “Survey on SMEs’ Business Strategies for Growth” under contract from the Small and Medium Enterprise Agency (Nomura Research Institute, November 2016)
[Manufacturing] [Non-manufacturing]
Various initiatives successfully led the enterprise to achieve sales growth in 2011. Furthermore, it is trying to increase tourists to revitalize the Tokachi region by providing regional tourism spot information and bus routes to such spots.
9.5
11.2
13.6
36.7
38.2
46.4
53.8
50.6
40.1
0% 100%
As platform providers (n=692)
As goods and services providers (n=694)
As space, goods and services users (n=699)
Having interest in and considering participating in the sharing economyHaving interest in but not considering participation in the sharing economyHaving no interest
60.4
36.3
35.6
26.5
34.0 27.0
52.8
25.6
63.6
24.4
28.7 21.6
31.0
25.7
60.1
31.9
Total
Businessplanning
Internalmanagement
Finance andaccounting
Informationsystems
Research anddevelopment,
andengineering
Marketing,sales andservices
Productionand
transportation
Core personnel (n=681~709) Labor personnel (n=649~696)
(%)
【Analysis by Theme 4-1】Overcoming Labor Shortages (i)
29
• Enterprises seeking growth and expansion strongly feel shortages of both core and labor personnel. • Particularly, core personnel shortages prevent enterprises from responding to weak new business development
and demand growth, affecting new business development at enterprises focused on growth and expansion.
Fig. 1
Fig. 2 (Reference) Personnel classification in 2017 White Paper
Manufacturing Non-manufacturing
Labor shortages by industry and business category
Core personnel shortage’s influences on business by type of business development policy
Fig. 1-2: “Survey on Recruitment and Job Retention at SMEs and Micro Enterprises” under contract from the Small and Medium Enterprise Agency (Mizuho Information & Research Institute, November 2016)
(Note) The length of a spoke of the radar chart is proportional to the seriousness of labor shortage rates.
【Growth and expansion】 【Stabilization and maintenance】 【Growth and expansion】 【Stabilization and maintenance】
Pers
onne
l cla
ssifi
catio
n
Core personnel
・Core personnel in each division that undertake advanced and difficult business operations ・Personnel responsible for management and operations of the organization ・Personnel directing and managing multiple people ・Personnel with high specialization, skill and educational levels
Labor personnel
・Personnel in each division that undertake relatively routine work ・Personnel not responsible for organizational management or operations ・Personnel working under core personnel’s direction and management ・Personnel doing auxiliary work for core personnel ・Personnel providing indispensable labor for business operation while lacking special skills
42.5
25.4
24.6 18.4
23.5
20.0
41.4 25.7
50.4
18.3 19.4 15.4
21.3
18.1 43.4
32.6
Total
Businessplanning
Internalmanagement
Finance andaccounting
Informationsystems
Research anddevelopment,
andengineering
Marketing,sales andservices
Productionand
transportation
Core personnel (n=1,272~1,401) Labor personnel (n=1,240~1,362)
(%) 57.8
31.7
35.8
24.3
30.0 44.8
54.0
51.5
60.1
19.5
27.9 18.3
26.7 40.1 51.1
58.3
Total
Businessplanning
Internalmanagement
Finance andaccounting
Informationsystems
Research anddevelopment,
andengineering
Marketing,sales andservices
Production andtransportation
Core personnel (n=218~229) Labor personnel (n=208~228)
(%)
47.4
27.6
29.6
18.2
27.6 34.5
41.7
39.7 42.6
17.8 22.3
14.6 18.3 29.4
33.5
45.8
Total
Businessplanning
Internalmanagement
Finance andaccounting
Informationsystems
Research anddevelopment,
andengineering
Marketing,sales andservices
Productionand
transportation
Core personnel (n=399~416) Labor personnel (n=387~421)
(%)
58.4 57.6
47.8 43.1
36.0 40.7
45.0 53.0 54.6
28.3
0
10
20
30
40
50
60
70
Stagnant new businessand area development
Losing opportunities byfailing to respond to
demand growth
Difficult technology andknowhow succession
Difficult business sizemaintenance
Growing recruitmentcosts
Growth and expansion (n=531) Stabilization and maintenance (n=777)(%)
Human resources remain for
three year or more after recruitment
90.6
Human resources failing to
remain for three years or
more after recruitment
9.4
(%) (n=849)
33.0 29.0 29.0 28.7
25.6 23.4 21.8
17.2
37.2
28.0 26.6
21.5 24.6 22.4
18.9 16.2
0
10
20
30
40
Wage hikes andpromotion
according toskills andaptitudes
Human resourcesrating
responding toachievements
and work details
Promotion ofovertime workreduction andleave systems
Considerationgiven to theworkplace
environment andhuman relations
Training andcapacity building
support
Securing higherwage levels than
at otherenterprises
Promotingreduction of
work burdensand guaranteeing
of work safety
Flexible workinghours
Enterprises successful in securing human resources (n=582) Enterprises unsuccessful in securing human resources (n=1,405)(%)
【Analysis by Theme 4-2】Overcoming Labor Shortages (ii)
30
• Enterprises that successfully stabilize business operations focus on workplace environment improvements and work burden reductions and are successful in recruitment.
• Enterprises that can utilize various human resources take advantage of SME flexibility, including overtime work cuts and giving consideration to human relations, to improve the workplace improvement.
30
Fig. 1 Fig. 3
Fig. 2
Success or failure of recruitment and stabilization of recruited human resources
Initiatives viewed by SMEs as effective for stabilizing and nurturing human resources
Workplace environment improvement initiatives by presence or absence of various human resources (core personnel)
Fig. 1-3: “Survey on Recruitment and Job Retention at SMEs and Micro Enterprises” under contract from the Small and Medium Enterprise Agency (Mizuho Information & Research Institute, November 2016)
(Note) Enterprises utilizing various human resources are those utilizing any of the classes of “women,” “seniors,” “foreigners” and “handicapped” as core personnel. Enterprises considering doing so are others considering utilizing any of the above as core personnel. Other enterprises are those not considering doing so.
[Manufacturing]
[Non-manufacturing]
Successful in recruiting expected human resources in
terms of number and skills
32.1 Unsuccessful in recruiting expected human resources in
terms of number and skills
67.9
(%) (n=2,673)
40.1 39.0 34.0
24.0
16.5
35.8 30.5
34.5
17.5 15.1 15.7 16.1 14.3 10.8
6.3
0
10
20
30
40
50
Promotion of overtimework reduction and
leave systems
Considerations givento the workplaceenvironment andhuman relations
Collection of employees’ opinions
through in-house study meetings, proposal
Reduction of workvolume and burdens onhuman resources under
working hoursconstraints
Development ofresting rooms and
other hardware
Utilizing various human resources (n=1,543)Considering doing so (n=377)Not considering doing so (n=286)
(%)
41.0 40.7 37.1
23.9 20.5
33.6
25.8 25.8
18.8 13.3
23.7
14.0 15.1 12.9
6.5
0
10
20
30
40
50
Promotion of overtimework reduction and
leave systems
Considerations givento the workplaceenvironment andhuman relations
Collection of employees’ opinions
through in-house study meetings, proposal
presentation contests, etc.
Development ofresting rooms and
other hardware
Reduction of workvolume and burdens onhuman resources under
working hoursconstraints
Utilizing various human resources (n=410)Considering doing so (n=128)Not considering doing so (n=93)
(%)
33.7
14.6
34.7
24.9
42.2
39.6
38.5
40.9
24.1
45.8
26.8
34.2
0% 100%
合理化・標準化実施企業 (n=187)
未実施企業(n=48)
合理化・標準化実施企業 (n=470)
未実施企業(n=225)
製造業
非製造業
増益 横ばい 減益
• Enterprises that can utilize various human resources despite labor shortages accomplish rationalization and standardization useful for improving productivity, leading to greater earning power.
【Analysis by Theme 4-3】Overcoming Labor Shortages (iii)
31
【Specific case】Sanshu Seika Co. (Kasukabe City, Saitama Prefecture)
Sanshu Seika has realized a flexible work style featuring each worker playing three roles, with women playing active roles Sanshu Seika is a rice and western confectionery manufacturing and marketing
company founded in 1950. Women account for nearly 40% of regular employees, more than 90% of non-regular employees and more than 20% of managerial officials, playing great roles as a substantial part of the workforce. The president has taken leadership in promoting the active role of women, allowing the enterprise to be chosen as one of the “Top 100 Diversity Employers” and receive other relevant certifications and commendations.
At Sanshu Seika, few employees take maternity leave, childcare leave or nursing care leave. The company features a childcare and nursing care system and allows employees to take paid holidays without any hesitation, regardless of their positions. The biggest secret behind the paid holiday system is a mechanism that allows each worker to play three or more roles through a system of cross-training for factory workers.
In order to allow the three-roles-per-worker mechanism to smoothly work, the enterprise has established rules to standardize the work, visualize role sharing and regularly reflect these factors in personnel evaluations, reportedly leading to follow-up arrangements for employees on vacation, higher motivation and productivity improvements.
Recent hit product “Fried Pasta”
Fig. 2
Fig. 1
[Manufacturing]
[Non-manufacturing]
Relationship between work visualization initiatives and earning power (enterprises utilizing various human resources as core personnel)
Fig. 1-2: “Survey on Recruitment and Job Retention at SMEs and Micro Enterprises” contracted by the Small and Medium Enterprise Agency (Mizuho Information & Research Institute, November 2016)
Work rationalization and standardization initiatives categorized by presence or absence of various human resources (core personnel)
(Note) “Enterprises implementing visualization” are those that implement the “visualization of work processes” and any of the “thorough promotion of 5S,” the “clarification of each worker’s work details and role sharing,” the “reform and reduction of work details” the “introduction of in-house common work tools” and the “integration of work that overlaps among divisions or areas.” Enterprises not doing so are those that implement no visualization initiatives.
This allows women employees who play core roles to demonstrate their potential while maintaining work-life balance through a flexible work style. The largest recent hit product is “Fried Pasta”, which was conceived by a short-time regular employee engaging in childcare. The president describes the hit product as an achievement emerging from arrangements based on the three-roles-per-worker mechanism.
Increasing profits
Leveling-off of profits
Decreasing profits
Man
ufac
turi
ng
Non
-m
anuf
actu
ring
Enterprises implementing visualization (n=187)
Enterprises not doing so (n=48)
Enterprises implementing visualization (n=470)
Enterprises not doing so (n=225)
66.0
48.2 38.5
32.6
17.7
58.3
32.6 43.9
26.5
9.8
37.2
17.0 17.0 10.6 8.5
010203040506070
Thorough promotion of 5S(organization, order,
cleaning, cleanliness anddiscipline)
Visualization of workprocesses
Clarification of each worker’s job description
and role sharing
Reform and reduction ofjob responsibilities
Introduction of in-housecommon work tools
Utilizing various human resources (n=423) Considering doing so (n=132) Not utilizing them (n=94)(%)
44.2 38.3 35.4
29.4 24.4
42.0 40.6 31.9 27.7
20.8 27.6 23.4
14.3 11.2 13.6
010203040506070
Clarification of each worker’s job description
and role sharing
Thorough promotion of 5S(organization, order,
cleaning, cleanliness anddiscipline)
Visualization of workprocesses
Reform and reduction ofjob responsibilities
Introduction of in-housecommon work tools
Utilizing various human resources (n=1,563) Considering doing so (n=379) Not utilizing them (n=286)(%)
29.6 29.6 27.3
25.9 25.0
16.2
22.2 23.0
31.3
18.5
23.0
8.2
0
5
10
15
20
25
30
35
Informationprocessing
General paperwork Tax, accounting andother special areas
Design and productplanning
Transportation,delivery, storage and
other logisticoperations
Research andmarketing
Growth/expansion-oriented policy (n=216) Stability/maintenance-oriented policy (n=243)(%)
32
【Analysis by Theme 4-4】Overcoming Labor Shortages (iv) • Enterprises that boost earnings even amid labor shortages are tackling labor-saving, information technology
introduction, outsourcing and other initiatives. • A rising number of enterprises are pursuing growth by outsourcing design marketing and other operations for
which advanced skill level human resources are required.
Fig. 1 Initiatives by enterprises facing labor shortages by ordinary profit (non-manufacturers)
Fig. 1-2: “Survey on Recruitment and Job Retention at SMEs and Micro Enterprises” under contract from the Small and Medium Enterprise Agency (Mizuho Information & Research Institute, November 2016)
Fig. 2 Business operations which have growing needs for outsourcing by business policy
An enterprise matching SMEs and venture firms
with skilled women freelancers. Waris is a human resource matching service enterprise founded in 2013. It
matches enterprises willing to outsource PR, marketing and other operations with freelance-oriented women, particularly professionals with an arts background and extensive management experience, under outsourcing contracts.
Some 70% of about 1,100 corporate customers are SMEs and venture firms. These customers can save costs by outsourcing new projects and other business operations requiring advanced strategists to well-experienced people, instead of recruiting advanced skill level human resources. Such outsourcing, unlike subcontracting, allows their employees to improve their capabilities by accumulating new knowledge and networks while working with freelance professionals.
As SMEs are not well experienced with project-outsourcing contracts, Waris reorganizes or breaks down project operations, clarifies required skills, examines outsourcing contracts and conducts follow-up services during contract periods. It thus provides integrated services to allow customers to smoothly complete projects.
【Specific case】Waris, Inc. (Minato-Ward, Tokyo)
Representative Director Miwa Tanaka
Representative Director Tanaka says: “Due partly to Japan’s declining labor force, it is difficult for SMEs and venture firms to recruit advanced skill level human resources. If they base their recruitment on employment, they have a risk of failing to secure necessary human resources when they are required. I would like these enterprises to become more flexible and consider the option of outsourcing.”
42.4
25.9
36.7
51.0
31.1
21.8
12.4 12.3
27.8 31.9
17.9
28.1
37.9
21.9
14.7
7.3 6.6
21.1
0
10
20
30
40
50
60
Mechanizationto save laborand reduce
work burdens
Mechanizationto improvevalue added
Informationtechnologyintroduction
for front-office
operations
Informationtechnologyintroduction
for back-officeoperations
Outsourcesduring busy
periods
Outsourcingadvancedspecial
operations
Outsourcingnon-core and
non-differentiated
operations
Switching tohigh-value-
addedoperations
Capacitydevelopment
to improve percapita
productivity
Mechanization/information technology introduction Outsourcing Others
Increasing profit despite core and labor personnel shortages (n=226~244) Decreasing profit due to core and labor personnel shortages (n=193~204)
(%)
33
Outline of FY2017 SME Policy Measures [Acknowledgement] Ordinary profits of SMEs have remained at record-high levels and their business confidence has been improving moderately. However, there are ongoing structural challenges including stagnant business entries, slackening productivity, the aging of managers and growing labor shortages. In the future, it will be important for the Japanese economy to enhance SMEs’ business capabilities, improve their productivity and increase the number of SME managers working with vitality in response to economic and social changes including a further decline in Japan’s labor force and fiercer international competition. [Key Points] From the four viewpoints -- “initiatives to enhance business capabilities and improve productivity,” “increasing SME managers working with vitality,” “developing a stable business environment” and “reconstruction and restoration from disasters,” the government will effectively implement policy measures to vitalize SMEs that are important for supporting regional economies. Specifically, in order to improve SMEs’ productivity, the government will tackle the enhancement of technical capabilities, the promotion of information technology, support for overseas expansion and the strengthening of business support arrangements. The government will also back up business entries and succession, and regional and interregional human resources exploration and will continue to tackle the improvement of business practices and financial support. Furthermore, the government will take measures required for SMEs affected by the Great East Japan Earthquake, the Kumamoto Earthquake and other disasters.
[Contents]
Chapter 1 Initiatives to Enhance Business Capabilities and Improve Productivity Chapter 2 Increasing the Number of SME Managers Working with Vitality Chapter 3 Development a Stable Business Environment Chapter 4 Reconstruction and Restoration from Disasters Chapter 5 Policy Measures by Business Type and Area Chapter 6 Other SME Policy Measures