Japans Policy on Small and Medium
Enterprises (SMEs) and Micro Enterprises
Small and Medium Enterprise Agency,
Ministry of Economy, Trade and Industry
September 2013
Contents
1
1. Overview
(1) What are SMEs? (2) SME Support Systems (3) SME-related Budget
2. Major SME Policies
(1) Supporting SMEs (2) Creating Jobs
3. Recent Revisions to Laws
4. Headquarters for the
Growth of Small and Micro
Enterprises
1. Overview
(1) What are SMEs?
(2) SME Support Systems
(3) SME-related Budget
2
3
1. (1) What are SMEs?
Accounting for 99.7% of all companies, 70% of all employees, and more than 50% of all added value (manufacturing industry) in Japan, SMEs form the very basis of the
Japanese economy.
Even such large corporations as Toyota, Honda, and Sony started out as small backstreet factories, and the revitalization of SMEs can promote competition in the
marketplace, creating new industries and becoming the motive force behind economic
restructuring.
The majority of the products of large corporations consist of components from SME subcontractors; thus, it is the hidden strength of SMEs that underpins trust in
Japanese products.
The economies of Japans provincial areas are supported by the activities of SMEs mainly in the service industry, retail trade, and the construction industry and SMEs
play a part in revitalizing local economies and boosting employment opportunities.
1. (1) What are SMEs? - Definition -
Definition in the SME Basic Act
Definition in the Corporation Tax Act
SME operators of which, micro enterprises
Industry Type Stated capital Employees Employees Stated capital
Manufacturing 300 million or less 300 or fewer 20 or fewer
100 million or less
Wholesale 100 million or less 100 or fewer 5 or fewer
Service industry 50 million or less 100 or fewer 5 or fewer
Retail 50 million or less 50 or fewer 5 or fewer
SME Basic Act (enacted 1963) SME Basic Act (revised 1999)
Basic Principle
Rectifying disparities between companies
in terms of productivity, etc.
Image of SMEs
Socially vulnerable (stereotypical perception)
Diverse, dynamic growth and development
by independent SMEs
Basic Principle
Basis of the Japanese economy, source of dynamism
Image of SMEs
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5
Small and Medium Enterprise Agency established (1948) SME Basic Act enacted (1963)
SME Basic Act revised (1999) SME Basic Act revised (2013)
Preventing the concentration of
economic power, developing
sound SMEs
Two-tier structure: rectifying disparities
between SMEs and large corporations
Supporting motivated, capable
SMEs
Shoko Chukin Bank established (1936)
SME Credit Insurance Act (1950)
Chambers of Commerce and Industry Act (1953)
SME Manufacturing Enhancement Act (2006)
Japan Finance Corporation Act (2007)
Credit insurance system expanded (2007)
Antimonopoly Act (1947)
Credit Guarantee Association Act (1953)
National Life Finance Corporation (1949)
SME Modernization Promotion Act (1963)
Promotion of specific industries (Act on Temporary Measures for the Promotion of the Machinery Industry (1956))
Commerce and Industry Association Act (1960)
MARUKEI (managerial improvement) loans for small businesses introduced (1973)
SME Cooperatives Act (1949)
SME Business Conversion Act (1976)
SME Association Organization Act (1957)
SME New Business Activity Promotion Act (2005)
Small Business Promotion Corporation established (1967)
Shoko Chukin Bank Limited Act (2007)
New Partnerships support (2005)
Organization for Small and Medium Enterprises and Regional Innovation, Japan established (2004)
Blue return system (1949) SME Universities (1980)
Small Business Investment Company (1963)
SME Consultation Centers established (1948)
SME Consultant Registration System (1953) Loans for modernizing SMEs (1966)
Basic
Principles
Monetary
Policies
Organization
Policies
Promotion
Policies
Small Enterprise Mutual Relief Projects Act (1965) Subcontract Act (1956)
Act on Ensuring the Receipt of Orders from the Government and Other Public Agencies by Small and Medium-sized Enterprises (1966)
1. (1) What are SMEs? Changes in Policy
The basic principles of policy on SMEs have been revised according to the needs of the times and support measures have
been implemented and enhanced, e.g. policies on finance, promotion, guidance, and unionization.
Postwar reconstruction period
(1945-)
Rapid economic
growth period
(1955-)
Stable growth period
(1970-)
Transition period
(1989-) Present
Local Shopping Area Activation Act (2009)
Shopping District Promotion Association Act (1962)
Certified management improvement support providers (2012)
Act on Mutual Relief System for the Prevention of Bankruptcies of SMEs revised (2010)
Small Enterprise Mutual Relief Projects Act revised (2009)
Promotion of Business Activities by Small and Medium Sized Enterprises Utilizing Regional Resources Act (2007)
Financing support for overseas expansion (2012)
Act on Special Measures for Industrial Revitalization (2009)
Industrial Revitalization Act revised (2011)
Collaboration Between SMEs and Agriculture/Forestry/Fishery Business Act (2008)
Japan Finance Corporation for Small and Medium Enterprise
(1953) established
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Number of companies (4.2 million)
No. of employees
(42.73 million)
METI, Census of Manufactures (2009)
Ministry of Internal Affairs and Communications, Establishment and Enterprise
Census (2009) (edited version)
SMEs
Approx. 4.19 million
99.7%
Large enterprises
Approx. 12,000
0.3%
SMEs
Approx. 40.6
trillion
50.6%
Large
corporations
Approx. 39.7
trillion
49.5%
SMEs
Approx. 28.27 million
66%
Large enterprises
Approx. 14.46
million
34%
1. (1) What are SMEs? Number of Companies and Employees, etc.
SMEs account for 99.7% of Japans 4.2 million companies. They account for 60% and more than 50% of
total employees and total value added (manufacturing industry), respectively.
Value added
(manufacturing industry)
80.3 trillion
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SMEs (4.2 million)
1. (2) SME Support Systems
SME policies are mainly coordinated by the Small and Medium Enterprise Agency and implemented by a number of
related organizations working in partnership.
- Management advice
- Holding courses
- Providing information
- Dispatching experts, etc.
Hum
an r
esourc
e
dev
elopm
ent
and
trai
nin
g p
rogra
ms
Credit Guarantee
Corporations (52)
Loans Credit
guarantees
Small and Medium Enterprise Agency
Planning and formulation of policy on SMEs Regional Bureaus of Economy,
Trade and Industry (8)
SME
Universities (9) Prefectures (47)
Planning and formulation
of local policy on SMEs
SME Support Centers Prefectures, etc. (47)
Each region (13) *Management improvement support
providers 51
Budget
Budget
Support
for
inte
rnat
ional
izat
ion Insurance
Budget Budget
Budget
As of end July 2013
Certification
Cooperative efforts,
e.g. dispatching
experts
Management improvement support providers
(certified support service providers)
(13,459)
Professions
Existing SME
supporters
Financial
institutions
Application
- Management advice
- Holding courses
- Providing information
- Dispatching experts, etc.
Budget
Organization for Small
and Medium
Enterprises and
Regional Innovation,
Japan (SMRJ)
Headquarters (1),
regional head offices (9)
Japan External Trade
Organization (JETRO)
Headquarters (1), JETRO
Osaka (1), domestic offices
(37), Overseas offices (73),
Institute of Developing
Economies (1)
Chambers of Commerce and Industry (514)
*Management improvement support providers 210
Commercial and industrial associations (1,719)
*All certified as management improvement support
providers
Shoko Chukin Bank Head Office (1), branch offices (100)
*Certified as management
improvement support providers
- Analysis of management situation
- Support in formulating business plans
- Implementation of business plans, etc.
Japan Finance
Corporation Head Office (1),
branch offices (152)
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1. (2) SME Support Systems
Minister of Economy,
Trade a