JETRO Releases the Results of Its Latest Survey of Japanese Firms in Latin America.

Tokyo, Japan, Apr 25, 2006 - (JCN Newswire) - The Japan External Trade Organization  (JETRO) today released the results of its latest annual survey of Japanese companies and affiliates operating in Latin American countries, including Argentina, Brazil, Chile, Colombia, Costa Rica, Mexico, Panama, Peru and Venezuela.

According to the survey, 72.2% of respondents (close to last year's record figure of 76.5%) posted operating profits in 2005, with just 16.6% reporting negative earnings. This continued strong performance reflects Latin America's robust economic growth (4.5% in 2005), led by expanded exports of raw materials and foodstuffs to China and growing regional demand for industrial goods. By country, however, a smaller percentage of firms (in this latest survey) posted operating profits in Brazil (down 15.2 points) and Chile (down 14.1 points). Among firms reporting worsened performance in 2005, most cited increased competition and higher costs, which represent two possible downsides to the region's fast-growing markets.

Regarding business outlooks for 2006, 40.8% of respondents expect improved profit/loss performance, down 15.1 points over last year's survey; firms projecting worsened performance increased 4.4 points to 14.3%. These figures suggest that respondent firms anticipate increased competition in domestic markets as the Latin American economy grows a further 4.6% (projected) in 2006.

Regarding China's enlarged presence in the global market, 52.1% of respondents viewed the country as a "strong competitor/threat", up 2.7 points over last year's survey, while 27.9% viewed China as an "opportunity" (up 5.1%). China was cited as a "threat"-especially among firms involved in manufacturing, plant design/construction and import sales-due to "increasing competition in domestic [Latin American] markets" (60.2%) and "increasing competition in export markets" (20.4%). Among firms viewing China as an opportunity, 45.8% have plans to increase exports to the country's vast (and rapidly growing) domestic markets; trading houses and transportation industry firms are finding increased business opportunities in line with Latin America's surging exports of raw material and foodstuffs to China. More than a third of firms (35.6%) look to import more parts and materials, and also finished products, from China.

Firms were polled about the possible impact (if any) they expect from free trade agreements (FTAs) between China and Latin American countries (such as the China-Chile FTA, slated to take effect in 2006, and a possible China-Mercosur FTA, which is currently under study). More than half of respondents (52.0%) expect increased domestic competition (from an increase of Chinese products in the market) to result from such agreements.

Firms were also polled about the impact (if any) of trade agreements between Japan and their host country (such as the Japan-Mexico Economic Partnership Agreement (EPA), which came into effect last April, and a Japan-Chile EPA, for which talks started in February 2006). A majority of respondents (63.6%) are benefiting (or expect to benefit from) such agreements, mostly through "abolishment of tariffs" (60.8%) and "simplified customs clearance procedures" (16.1%). In Chile, a full 66.7% of firms expect to benefit from the possible Japan-Chile EPA, while 63.3% of firms in Mexico have a favorable view of the recent Japan-Mexico EPA.

A total of 223 companies (or 36.5% of firms sent questionnaires) replied to the survey, which JETRO conducted in January-February 2006.

About JETRO

The Japan External Trade Organization, or JETRO, is a government-related organization that works to promote mutual trade and investment between Japan and the rest of the world. Originally established in 1958 to promote Japanese exports abroad, JETRO's core focus in the 21st century has shifted toward promoting foreign direct investment into Japan and helping small to medium size Japanese firms maximize their global export potential.

Source: JETRO

Contact:

Japan External Trade Organization (JETRO)
Public Relations Division
E-mail: [e-mail]

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