In February 2025, JETRO released its annual survey on Japanese-affiliated companies based in Europe. 

The purpose of the survey is to identify actual conditions at Japanese-affiliated business activities operating overseas and to provide the results to a wide range of Japanese companies and policymakers. Topics covered in this report: 1. Operating profit forecast; 2. Future business direction for the next one to two years; 3. European policies and regulations; 4. Operational challenges; 5. Changing competitive environment; 6. Procurement and sales; 7. Japan-EU EPA (Economic Partnership Agreement) and Japan-UK EPA; 8. ESG Initiatives.
Key Findings: 

• 61.0% of the surveyed manufacturing companies expected “profit,” a decline of 7.7 percentage points from the previous year’s survey. 
• In the future business direction for the next one to two years, companies foreseeing the business “remaining the same” surpassed those expecting “expansion.” 
• CBAM was the topic of most concern in terms of the EU policies and regulations; for promotion of digitalization, a little less than 30% of respondents started to use AI. 
• The biggest operational challenge is how to secure human resources; and cost-related challenges are rated high.
• Japanese-affiliated companies competing squarely with powerful European brands. 
• Supply chains tend to be more diversified and shortened.
• 58.5% of the companies utilize Japan-EU EPA for imports from Japan, an increase of 13 percentage points from the previous year.
• Another challenge lies in balancing corporate sustainability initiatives with increasing costs and other burdens.

Source: JETRO

Published: March 2025