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JETRO Releases the Results of its Survey of Japanese Manufacturers in Europe and Turkey.



Tokyo, Japan, May 26, 2006 - (JCN JCN Japan Corporate News
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 Newswire) - The Japan External Trade Organization Japan External Trade Organization (日本貿易振興会   (JETRO JETRO Japan External Trade Organization ) today released the results of its latest annual survey of Japanese manufacturers in Europe and Turkey.

According to according to
prep.
1. As stated or indicated by; on the authority of: according to historians.

2. In keeping with: according to instructions.

3.
 JETRO research, a total of 1,008 Japanese manufacturers were operating in Europe and Turkey as of the end of 2005: 818 in Western Europe Western Europe

The countries of western Europe, especially those that are allied with the United States and Canada in the North Atlantic Treaty Organization (established 1949 and usually known as NATO).
, 174 in Central and Eastern Europe The term "Central and Eastern Europe" came into wide spread use, replacing "Eastern bloc", to describe former Communist countries in Europe, after the collapse of the Iron Curtain in 1989/90.  and 16 in Turkey. By country, the UK hosted the largest number (241), followed by France (172), Germany (97) and the Czech Republic Czech Republic, Czech Česká Republika (2005 est. pop. 10,241,000), republic, 29,677 sq mi (78,864 sq km), central Europe. It is bordered by Slovakia on the east, Austria on the south, Germany on the west, and Poland on the north.  (65). The inclusion of the Czech Republic here underscores the increasing preference Japanese manufacturers have for situating operation bases in Central and Eastern European countries.

A total of 30 Japanese firms started new operations in the region during 2005 (17 in Western Europe and 13 in Central and Eastern Europe). By country, Poland was a top destination for these new investments, followed by the Czech Republic and France. By industry, transport equipment (auto) parts led the new investments, followed by electric/electronics equipment and parts, and pharmaceuticals/medical equipment. Overall, however, there were fewer new Japanese entrants to the region in 2005 (compared to previous years), JETRO research also revealed.

According to the survey, which received replies from 325 firms (or 32.2% of the 1,008 firms sent questionnaires), 16.9% of respondents (52 firms) indicated plans to set up new operation base(s). Asked where they plan to situate sit·u·ate  
tr.v. sit·u·at·ed, sit·u·at·ing, sit·u·ates
1. To place in a certain spot or position; locate.

2. To place under particular circumstances or in a given condition.

adj.
 these new bases (multiple replies were allowed), the majority (31) are eyeing locations in Central and Eastern Europe, while just 12 cited countries in Western Europe. By country, Poland ranked highest, followed by the Czech Republic and Hungary.

The majority of respondents (60.9%) in the region expect to post an operating profit Operating profit (or loss)

Revenue from a firm's regular activities less costs and expenses and before income deductions.


operating profit

See operating income.
 in 2005, while just 25.0% project negative earnings. In Central and Eastern Europe, a higher percentage of firms expect negative earnings (41.3%), compared to 39.7% foreseeing profits in 2005, reflecting the fact that many Japanese operations in this region are relatively new and so are not yet profitable.

Regarding the outlook for 2006, more than half of all respondents (52.5%) foresee improved profit/loss performance compared to 2005--an even higher percentage (64.6%) was recorded for firms in Central and Eastern Europe.

Asked to indicate difficulties in doing business in the region (multiple replies were allowed), a majority of respondents pointed to labor issues (90.9%) and problems procuring parts and materials (73.6%). Many respondents in Western Europe cited high labor and procurement The fancy word for "purchasing." The procurement department within an organization manages all the major purchases.  costs, while a majority of those in Central and Eastern Europe cited difficulties in recruiting and retaining personnel.

The percentage of respondents citing difficulties from environmental regulations increased by 9.2 points from last year's survey to 38.1%. Asked about the new EU environment directives (such as WEEE WEEE Waste from Electric and Electronic Equipment (directive)
WEEE Waste Electrical and Electronics Equipment
WEEE Waste Electrical and Electronic Equipment
*1, effective from 2005; RoHS*2, scheduled to take effect July 2006; and REACH*3, scheduled to take effect in early 2007), nearly half of respondents (49.5%) replied that their products are/would be subject to at least one of the three directives: RoHS (cited by 35.4% of firms), WEEE (cited by 20.3%) and REACH (cited by 17.5%) A majority of firms (70.8%) affected by these or

other directives replied that such regulations impact their production costs.

*1 WEEE=Waste Electrical and Electronic Equipment. The WEEE directive requires electrical/electronic manufacturers/sellers in the EU to be responsible for collecting and recycling their products.

*2 RoHS= Restriction of Hazardous Substances. The RoHS directive limits the use of six chemicals and heavy metals heavy metals,
n.pl metallic compounds, such as aluminum, arsenic, cadmium, lead, mercury, and nickel. Exposure to these metals has been linked to immune, kidney, and neurotic disorders.
 in electrical/electronic equipment manufactured in or imported to the EU.

*3 REACH= Registration, Evaluation, and Authorization of Chemicals. The REACH directive requires chemical importers and producers in the EU to conduct risk assessments of imported/produced chemicals and register information on these materials with the new European Chemicals Agency The European Chemicals Agency (ECHA) is an agency of the European Union which manages the technical, scientific and administrative aspects of the Registration, Evaluation, Authorisation and Restriction of Chemicals (REACH) system. It is sited in Helsinki. .

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:
Mr. Masakazu Tachikawa
Mr. Go Miyabe
Europe Division
Overseas Research Dept.
Phone: +81-3-3582-5569

Mr. Atsushi Ikeda
Middle East and Africa Division
Overseas Research Dept.
Phone: +81-3-3582-5180


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Publication:JCN Newswires
Date:May 27, 2006
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