Brand owners positive on Japan

02 August 2011

TOKYO: Most foreign companies trading in Japan are confident about its prospects for recovery after the natural disasters which struck the country.

PricewaterhouseCoopers, the business services firm, polled 201 CEOs from the US and Western Europe about the implications of the earthquake, tsunami, Fukushima nuclear incident and the government's response and communications.

Overall, 63% of participants active in the country agreed at least one of these factors had disrupted their local operations or those of their suppliers.

An additional 38% revealed revenue growth rates had been adversely influenced by these matters, while 29% stated the same for their units outside Japan.

For 25% of contributors, shifts in longer-term market opportunities were one discernable outcome of the recent events witnessed in the world's third-largest economy.

Indeed, this latter viewpoint was also expressed by 12% of companies that do not do business in the Asian nation at present.

The primary tactics employed based on the learnings gleaned from responding to the crisis included pursuing more in-depth scenario planning, implemented by 48% of firms which are active locally, and 35% not currently in this position.

Such figures stood at 31% and 21% respectively for reassessing short-term demand forecasts.

A 10% share of each group intended to change one or more aspects of their market positioning, like pricing, due to the insights yielded from Japan.

Entering or exiting new countries or businesses were approaches which proved popular with a roughly similar number of enterprises, PWC's study said.

More broadly, 67% of interviewees established in Japan concurred their confidence in doing business there had not altered, standing at 58% for their peers not currently involved domestically.

Another 31% of organisations with interests in Japan recorded a decrease in sentiment, a total declining to 18% for operators not relying on the country for sales.

Meanwhile, only 2% of participants in the first of these groups displayed greater confidence than previously, measured against 11% of firms in the second cohort.

Among the strategies which could help increase sentiment levels regarding doing business in Japan was more timely and accurate communication from the government, mentioned by 35% of those questioned.

Other widely-mentioned issues included managing the fiscal deficit, cited by 34% of the panel, rising to 40% for corporations trading in Japan.

A further 24% of interviewees wanted the authorities to pursue policies enhancing Japan's sustainability credentials.

Elsewhere, 21% of the sample recommended the implementation of policies and practices dealing with the impact of an ageing, shrinking population.

Looking ahead, 38% of firms with operations in Japan believed it should quickly overcome the crisis and re-emerge as a strong economic and political power, rising to 45% for companies which did not run a division in Japan.

An extra 52% of corporations present in Japan thought it would recover from the crisis but gradually lose global competitiveness, falling to 39% for their counterparts yet to try and crack this market.

Yumiko Noda, leader of PwC's Japan Recovery Taskforce, said: "Despite the inevitable and serious impact on Japanese business, a majority of respondents said that Japan would overcome the crisis and get back on the track of economic growth.

"But a combined effort would be needed to achieve this."

Data sourced from PricewaterhouseCoopers; additional content by Warc staff