6,814 Japanese companies operating in the USA
– Many of them operating in “California” and “New York” -
Over a month has passed since the victory of the Presidential candidate, Donald Trump, in the United States’ (hereinafter called “US”) Presidential election on November 9. In his protectionist trade policies, including spelling out the US’s exit from the Trans-Pacific Partnership (TPP) trade deal based on his “America First,” there is a concern about friction in trade and diplomacy with neighboring countries. Among Japanese companies, including manufacturers of finished cars and electric devices, many place importance on the North American market, and there is a good chance that many of those operating in the US will be affected by the trade policies of the incoming Trump administration.
Teikoku Databank extracted Japanese companies whose operation in the US has been determined through investment in a local company, founding of and financial contribution to a local subsidiary, an affiliated or associated company, establishment of a substation and/or office, etc., based on the company profile database “COSMOS2″ (approx. 1,460,000 companies) as of November 2016, Comprehensive Company Research (CCR) File Report (approx. 1,700,000 companies), and public information, and compiled and analyzed data by industry sector, by prefecture, by annual turnover, and by host state.
Survey results (Summary)
1. 6,814 Japanese companies were determined to be operating in the US at the end of November 2016. By industry sector, the largest number was in “Manufacturing,” with 2,649 companies (composition rate, 38.9%). By industry subsector, many automobile-related and pharmaceutical industry companies have been operating, in addition to those in the IT-related industry, such as software.
2. By prefecture, “Tokyo” was ranked top with 3,179 companies (composition rate, 46.7%), followed by “Osaka” (659 companies, 9.7%), and “Aichi” (500 companies, 7.3%).
3. By host state, “California” has the largest number, with 1,517 companies (composition rate, 40.1%), followed by “New York” with 626 companies (16.6%). The top 2 states account for the majority in terms of composition rate.
4. In the top 5 states in which many Japanese companies operate, many companies in the manufacturing industry operate in Illinois, etc., while many in the financial industry, such as investment, and services industries, operate in California, etc. The industrial sector in which companies operate varies from place to place.
1. By industry sector
By industry subsector – “Manufacturing” industry has largest number; IT-related industry ranked top by industry subsector
6,814 Japanese companies were determined to be operating in the US at the end of November 2016.
By industry sector, the largest number of companies operating was in the “Manufacturing” industry, with 2,649 (composition rate, 38.9%), followed by “Wholesale trade” with 1,618 companies (23.7%), and “Services” with 1,317 companies (19.3%). The top 3 industry sectors comprise 5,584 companies, which account for 81.9% of the total. By industry subsector, “Customized development software” was ranked top, with 229 companies (3.4%). Moreover, the 20 top-ranked subsectors were occupied by the IT-related industry, such as “Packaged software” (122 companies, 1.8%) and “Information services” (44 companies, 0.6%). The reason for this is considered to be that the IT-related industry, including Apple, Google, Amazon, and other major IT companies at the head of the list, has been active in the US.
It was also clear that many automobile-related industry companies have been operating, such as for “Manufacture of automobile parts and accessories” (122 companies, 1.8%), “Manufacture of automobile driving, steering, and braking control devices” (63 companies, 0.9%), and “Manufacture of internal combustion engines for automobiles” (42 companies, 0.6%). The reason behind this is considered to be that many automobile parts suppliers have entered to accompany manufacturers of finished cars, which have a local production base. Also, on the basis that the US is a country with major pharmaceutical companies, such as Pfizer, and Eli Lilly and Company, many companies engaging in the “Manufacture of medical supplies and drugs” (54 companies, 0.8 %) were seen.
By sales volume – “Services” industry ranked top only in “less than one billion yen”
According to sales volume by industry sector, the “Services” industry (composition rate, 33.3%) was ranked top in “less than one billion yen.” Small-sized software and consulting industries comprised the majority. However, the “Manufacturing” industry was at the top for all of “one billion to less than 10 billion yen,” “10 billion to less than 100 billion yen,” and “100 billion yen or more.”
By sales volume
2. By prefecture – “Tokyo” alone accounts for half
By prefecture in which headquarters of companies operating in the US are located, “Tokyo” was ranked top with 3,179 companies (composition rate, 46.7%), followed by “Osaka” ranked second (659 companies, 9.7%) and “Aichi” ranked third (500 companies, 7.3%). These top 3 prefectures account for 63.7% of the total, and companies operating in the US are concentrated in prefectures with large companies and a metropolitan area. Among them, “Aichi” can be counted as one of the prefectures with active entries into the US market at the national level, with Toyota Motor, manufacturer of finished cars, and manufacturers of automobile parts.
3. By host region
By host state
By host state based on the 3,779 companies whose region of business operation was identified, “California,” including San Francisco and Los Angeles, has the largest number, with 1,517 companies (composition rate, 40.1%), followed by “New York” with 626 companies (16.6 %). The top 2 states constitute the majority in terms of composition rate. Also ranked highly were “Illinois,” including Chicago (345 companies, 9.1%), “Hawaii,” famous as a tourism destination, and “Michigan,” where major US manufacturers of finished cars such as Ford and Chrysler have their headquarters.
By industry subsector
The top 5 states in which Japanese companies operate were analyzed by industry subsector.
①California (West Coast)
Software-related businesses such as “Customized development software,” and “Packaged software,” ranked highly partly because of IT industrial clusters centered on Silicon Valley.
② New York (East Coast)
Many operating holding companies engaging in “Investment,” and financial institutions such as “Ordinary banks,” have entered, given that New York is a top, world-class financial center.
③ Illinois (Midwest)
The top industry in Illinois is “Manufacture of metal cutting machine tools,” with 18 companies (composition rate, 5.2%). In addition, many operating holding companies engaging in “Investment,” and trading companies engaging in “Wholesale trade of general merchandise,” operate in the said state, the largest in the US Midwest, and that with the third largest US city, Chicago.
In Hawaii where many Japanese tourists visit, “Rental office,” “Building trade,” etc. ranked highly, as did “General travel,” such as major travel agencies, on the basis of there being plenty of resorts and commercial properties that can be an investment destination for Japanese companies.
The top industry in Michigan was “Manufacture of automobile parts and accessories,” with 22 companies (composition rate, 9.7%). Many companies from the automobile-related industry operate in the said state with US automobile industrial clusters, including Detroit.
By industry subsector (by state)
As a result of the survey, 6,814 Japanese companies were determined to be operating in the US. Many of them are in the manufacturing industry, such as automobile-related and pharmaceutical companies. By host state, many Japanese companies in the manufacturing industry operate in Illinois, etc., while many in the financial industry, such as investment, and services industries, operate in California, etc. It is also evident that even among the top 5 states, the industry sector in which companies operate varies from place to place. However, operating companies are concentrating on the US West and East Coasts, and there are states with hardly any operating Japanese companies.
Since the November 9 victory of presidential candidate Trump, the foreign exchange and stock prices that initially nosedived have performed steadily, with a weaker yen and higher stock prices, respectively. “Trump Shock” has lessened recently. However, depending on the policies of the incoming Trump administration, chaos in stock prices and on the foreign exchange is quite likely to happen again. Under the same administration that has promised anti-free trade, a return to the Japan-US trade friction of the past, and a growing rise of pressure against Japan in the US market are assumed. Interference in the progress of globalization of these operating companies could ensue. Specifically, there is concern that trade policies such as US exits from TPP and the North American Free Trade Agreement (NAFTA) will broadly affect Japanese companies that develop strategies for the US market, including trade and market entry.
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