Transcript Three turning points of SME Policy

The 37th Meeting of the APEC SMEWG
SME Policy and Internationalization
in Japan
The 4th Sep. 2013
Director, International Affairs Office
SME Agency, METI in Japan
Mr. Hiroyuki Kondo
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I. History of SME policy in Japan
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Three turning points of SME Policy
(1) SME Agency
was established
(1948)
(2) SME Basic Act
was enacted
(1963)
(3) SME Basic Act
was fully revised
(1999)
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(1) SME Agency was established (1948)
Background
 Resources were delivered to steel and coal under the idea of “Priority Production
System” (1946, just after World War II)
 Few materials and budget reached textile and miscellaneous industries, which were
mostly composed of SMEs. Then SME issues coming up to the surface
 Cabinet decided “Outline of SME measures” in 1947, which described consultation for
management and technology matters of SMEs and proposed “General Bureau of SME.”
SME Agency was established in 1948
Main policies & measures
 SME Management Consultant system for management efficiency and technology
improvement (1948)
 SME credit line at Restoring Financial Bank (1948), thereafter establishment of
government finance institutions (1949-)
 “SME Cooperatives Act” (1949) in line with economic democracy and anti trust.
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(2) SME Basic Act was enacted (1963)
Background
 The Dual Structure Issue (Gap between LSE and SME) ：SMEs had not enjoyed the era of
high economic growth since 1955.
SMEs are too small and too many therefore law productivity
repeating excessive competitions. (Structural factors)
 Shift to open economy (Member of article 8 of IMF in 1964)： LSEs demanded more
rationalization to SMEs.
SME Basic Act was enacted in 1963.
(1) Image of SMEs: Socially weak
(2) Basic philosophy : Correction of the dual structure.
Main polices and measures
 “SME Modernization Act” (1963), designating specific industries, formulating their
modernization plans and promoting their machine modernizations.
[“63 regime” by both the Basic Act & the Modernization Act]
 “SME Guidance Act” (1963), systemizing SME consultant at legal project
 Correcting subcontract terms and securing public demand orders to break away from
situations of over competition among SMEs and disadvantageous in dealing with LSEs
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(3) SME Basic Act was fully revised (1999)
Background
 Reversing the mortality rate and the start-up rate: With maturing of Japan’s economy
and overseas shift of production bases in the 1990s the overall number of SMEs started
to decline in 1989 (The premise that there were too many SMEs was not applied).
 Fluctuation in the concept of industrial area: Joint operations in the same industry
decreased. SMEs which distinguished from others increased since the latter of the
1980s.
Freedom of movement, one of the SME’s advantages, enables quick
responses to market and product innovations.
SME Basic Act was fully revised (1999)
(1) Image of SMEs : Foundation of Japanese economy / Source of dynamism
(2) Basic philosophy : Diverse and vigorous growth and development of
independent in addition to scaling up to LSEs.
Main measures
 “Act on temporary Measures for the Promotion of Creative Business Activities of SMEs”
(1995) targeting start ups as well as existing SMEs.
 Instead of “SME modernization Act” which had been the symbol of “63 regime,” “SME
Management Reform Act”(1999) which supports new product, new production system
as a way of living of SMEs.
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(4) SME Basic Act was partially amended (2013)
Background
 90% of SMEs are SEs, and because they have weak foundations, the number of the
companies and employees are decreasing recently.
 On the other hand, SEs are important to provide stability of local economies and to
development of economy and society.
SME Basic Act was partially amended (2013)
(1) Basic idea of SEs : Stable local economy and economic and social development
(2) Adding policies : business overseas, utilizing IT, facilitating business succession etc.
Main measures
 To make the financial arrangement smoothly, adding electric recorded claims to the
scope of credit guarantees
 To approve the introduction of business experts and business partners to SEs by using IT,
and the SMRJ supports
SEs to contribute to
stable local economies
Hokkyoku Shirokuma-Do
（7employees）
SEs to promote
globally-Futaba
（12 employees）
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II. Internationalization of SMEs
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(1) Promoting Export (the 1970s)
 The 1970s was the period of stable growth. Exports of manufactured goods had
increased by 3.2 times.
 Imports of light products such as textile increased from Asian economies to Japan and
her exporting markets. SME’s ratio of export from Japan decreased during the 1970s.
Changes of SME’s ratio of export (manufactured goods)
50
40
30
20
10
0
70 72 74 76 78 80 82 84 86 88 90 92 94 96 98 100
Ratio of export
Ratio of import
Most of export promoting measures had continued from the 1960s
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(2) Overseas Investment (the 1990s)
 LSEs shifted their production bases to South East Asia and China because of
foundering domestic market and yen appreciation.
 SMEs increased overseas investment by following parent companies. This has
contributed to generate local employment and economic growth.
Members of Japanese Chamber of Commerce in Bangkok
Information provision and financial supports about investment were enhanced.
The first law which supports SMEs overseas investment appeared in 1993.
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(3) Implementation to support international business
 SMEs are supported oversea by government affiliated organizations. SMRJ and JETRO do
specific supports. Supports at local area also have been enhanced.
Specific support (JETRO/SMRJ)
Provision of information
on international markets
Support for developing
overseas strategy
Support for arranging
business meetings
Support for displays at
exhibitions
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