The Impact of the Financial Crisis on Developing Countries

■ Although downside pressure was increasing, positive attitude for overseas operations remained unchanged; a majority of companies intended to maintain their present levels of domestic operations. Of all the companies responded to the survey, 79% indicated their intention to strengthen or expand overseas operations. This is a 3 percentage point decline from last year, which seems to reflect that they were beginning to feel the impact of the global economic slowdown. However, roughly 80% of the companies remained positive. This finding, when combined with lackluster domestic demand growth, indicates that Japanese manufacturers still placed focus on overseas business operations as their source of business growth. At the same time, only 41% indicated their intention to strengthen or expand domestic operations, down 10 percentage points from last year, with 53% planning to maintain domestic operations at the present level. ■ Specific investments being planned focused on greenfield investments in India and Viet Nam; expansion of existing bases in China and Thailand; and expansion of sales in Russia and the Middle East. While high levels of specific investments being planned in China and Thailand aimed to expand both manufacturing and sales bases, they pertained primarily to expansion of existing bases. By contrast, significant greenfield investments were being planned in India and Viet Nam. Many prospective investments in Russia and the Middle East were related to sales, which revealed a strategy of making initial investments in the area of sales rather than manufacturing. By industry, there was a decrease in investments in automobiles and related industries, which had been increasing in recent years. *1 Overseas business operations are defined as production, sales and research and development (R&D) activities in overseas bases, as well as outsourcing of production to and procurement from overseas sources.