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2018 White Paper on Small Enterprises in Japan

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White Paper on Small Enterprises in Japan Minor Changes, Major Results! Creative Ideas Can Increase Productivity! National Association of Small and Medium Enterprise Promotion Organizations Outline of the 2018 White Paper on Small Enterprises in Japan This fourth White Paper on Small Enterprises in Japan(*) consists of three parts. Part I analyzes recent trends and the labor productivity of micro businesses. Part II examines the initiatives of micro businesses to improve productivity, with a focus on their review of operations, utilization of IT, capital investment, and inter-company cooperation. Part III introduces case studies of micro businesses as representing new working styles, with reference to micro businesses and freelance businesses that achieve growth by addressing local issues. *The “small enterprises” that are the concern of the White Paper on Small Enterprises are businesses with a regular workforce of 20 or fewer employees (or five or fewer employees in the case of businesses in the commerce and service industries), as defined by the Basic Act for Promoting Small Enterprises (Article 2, Paragraph 1). In the text, however, the term “micro businesses” is used to make it clear that small enterprises include “sole proprietorships” as well as “companies.” Part I Developments among small enterprises in fiscal 2017 l Current state of small enterprises This chapter examines the gradually improving business conditions of micro businesses, such as their recovery of ordinary profits accompanying the gradual recovery of Japan’s economy. l Structural analysis of micro businesses Upon presenting a general overview of micro businesses, this chapter describes their strengths and issues and presents a picture of their diversity. l Labor productivity analysis of micro businesses This chapter shows that some micro businesses have succeeded in achieving a level of labor productivity surpassing that of large enterprises and SMEs even amid a widening disparity in labor productivity between them and large enterprises/ SMEs. Part II Measures to increase labor productivity in micro businesses l Labor shortages and operational review at micro businesses This chapter discusses the importance of enhancing the operational efficiency of micro business managers by broadly examining the heightened sense of labor shortage among micro businesses and shedding light on the reality where many micro businesses are addressing the issue by increasing the working hours of their managers. l Improving labor productivity at micro businesses through the use of IT This chapter describes the current state and issues of IT utilization by micro businesses and discusses the importance of reducing the operational load of managers and increasing productivity by introducing IT mainly to back-office sections. l Improvements in labor productivity due to capital investment by micro businesses This chapter describes the current status of capital investment by micro businesses and shows that the lack of successor is one of the reasons behind their weak capital investment and that making active investments would lead to greater labor productivity. l Better labor productivity through inter-company collaboration for micro businesses and business successions This chapter describes the current status of inter-company cooperation among micro businesses and discusses how inter- company cooperation particularly among different industries can lead to greater labor productivity. It also discusses how business succession can lead to labor productivity improvement by showing that micro businesses that have inherited a previous business are strongly growth-oriented and have high earning power. Part III Active roles of micro businesses l Micro businesses that achieve growth by addressing local issues This chapter introduces case examples of initiatives by businesses that bring a ripple effect to the local economy, such as through the development of local products and businesses that support the local community by providing assistance to disadvantaged shoppers. Case examples in which local support organizations cooperate in supporting micro businesses are also introduced to show the importance of providing fine-tuned, community-based support. l Micro businesses that represent new styles of working This chapter introduces case examples of micro businesses that function as second or side businesses and micro businesses that cater to diverse working styles in response to life events such as having and raising a child, to show that micro businesses are becoming a source of employment to people seeking diverse working styles. Contents Part I Developments among micro businesses in fiscal 2017 . 1 Chapter 1 Current state of micro businesses . 2 Chapter 2 Structural analysis of micro businesses . 26 Section 1 The overall picture of micro businesses . 27 Section 2 The actual state of micro businesses viewed by key industries . 33 Section 3 Summary . 38 Chapter 3 Labor productivity analysis of micro businesses . 39 Section 1 Labor productivity at micro businesses . 39 Section 2 Summary . 44 Part II Measures to increase labor productivity in micro businesses . 45 Chapter 1 Labor shortages and operational review at micro businesses . 46 Section 1 The labor shortage situation at micro businesses . 46 Section 2 Micro business owners’ work burden . 55 Section 3 Operational review of indirect work . 61 Section 4 Summary . 64 Chapter 2 Improving labor productivity at micro businesses through the use of IT . 65 Section 1 Current IT usage at micro businesses . 65 Section 2 Deployment of IT in back office operations . 68 Section 3 IT usage in finance and accounting operations . 79 Section 4 IT usage to increase revenues . 83 Section 5 Summary . 88 Chapter 3 Improvements in labor productivity due to capital investment by micro businesses . 89 Section 1 Current capital investment by micro businesses . 89 2018 White Paper on Small Enterprises in Japan i Section 2 Factors behind the weakness in capital investment . 96 Section 3 Improvements in labor productivity due to capital investment . 101 Section 4 Summary . 108 Chapter 4 Better labor productivity through inter-company collaboration for micro businesses and business successions . 109 Section 1 The current status of inter-company collaboration among micro businesses . 109 Section 2 Labor productivity improvements through inter-company collaboration . 112 Section 3 Labor productivity improvements triggered by business succession . 116 Section 4 Labor productivity improvements triggered by taking over management resources . 122 Section 5 Summary . 127 Part III Active roles of micro businesses . 129 Chapter 1 Micro businesses that achieve growth by addressing local issues . 131 Section 1 Businesses that have a ripple effect on local economies . 132 Section 2 Businesses that support local communities . 137 Section 3 Support frameworks that involve entire communities . 140 Chapter 2 Micro businesses that represent new styles of working . 151 Section 1 Dual occupations and side businesses . 152 Section 2 Working styles for achieving self-realization . 156 Section 3 Working styles that agree with life events . 158 Small enterprise policies implemented in fiscal 2017 Chapter 1 Promoting business management that should be implemented for future demand . 164 Section 1 Enhancement of productivity improvement and technological capacity . 164 ii 2018 White Paper on Small Enterprises in Japan Section 2 Promotion of IT . 165 Section 3 Support for market and demand cultivation . 166 Section 4 Support for overseas expansion . 167 Chapter 2 Promoting business renovation . 170 Section 1 Support for new business startups . 170 Section 2 Support for business succession . 172 Section 3 Cash-flow assistance and business generation support . 172 Section 4 Human resource and employment measures . 175 Chapter 3 Facilitating business activities contributing to regional economies . 179 Section 1 Utilization of local resources . 179 Section 2 Revitalization of shopping districts and city centers . 180 Section 3 Other regional revitalization measures . 181 Chapter 4 Developing a system for supporting micro businesses through community-wide collective efforts . .. 183 Section 1 Strengthening management support frameworks . 183 Chapter 5 Other policies for promotion of micro businesses . 184 Section 1 Support for SMEs and micro businesses in disaster-affected regions . 184 Section 2 Strengthening financial underpinnings . 188 Section 3 Measures for proper transaction prices and pass-throughs of consumption tax . 189 Section 4 Measures for reduced consumption tax rate system . 190 Section 5 Measures for business stabilization . 190 Section 6 Measures concerning public demand . 191 Section 7 Promotion of human rights awareness . 191 Section 8 Promotion of surveys and public information activities . 192 Chapter 6 Initiatives by industries and area . 193 Section 1 Measures for SMEs in agriculture, forestry and fisheries . 193 2018 White Paper on Small Enterprises in Japan iii Section 2 Measures for SMEs in the transport industry . 194 Section 3 Measures for small and medium building contractors and realtors . 195 Section 4 Measures for the environmental sanitation business . 196 Section 5 Environmental and energy measures . 197 Section 6 Measures on intellectual property . 198 Section 7 Promotion of standardization . 201 Small enterprise policies planned for fiscal 2018 Chapter 1 Promoting business management that should be implemented for future demand . .. 207 Section 1 Enhancement
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