Around 70 per cent of Japanese firms keen on pursuing overseas operations are rethinking or have reviewed their business strategies amid global risks like the COVID-19 pandemic, according to a recent survey by the Japan External Trade Organisation (JETRO). COVID-19 has compelled Japanese firms to restructure business plans and organisation to weather the fallout.

Since the beginning of the pandemic last year, 64.8 per cent of the firms with business dealings abroad said they have been negatively affected in terms of overseas sales for fiscal 2020 ending in March,the survey found.

Among other global risks, US-China trade tensions as well as export restrictions by the United States and China 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.

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.

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 2019-20 dropped by 38.4 per cent on an 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 JETTRO 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’.

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 2,722 offering valid responses.

Fibre2Fashion News Desk (DS)

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