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Chapter 6 Business Activity
This chapter contains statistics on the basic structure of the business including the number of establishments by industry, the number of employees, business performance based on balance sheet and profit and loss statement, statistics on corporate bankruptcies and statistics on corporate activities including overseas business development and activities of foreign enterprises.
Establishment and Enterprise Census*
*It ended with the 2006 survey, and was abolished or merged into Economic Census (fundamental statistics)
(1) Brief history
The Prime Minister's Office (currently, the Ministry of Internal Affairs and Communications) carried out the first establishment census in 1947. Its purposes were to shed light on corporate activities of business establishments, to grasp industrial structure and to provide the sampling frame for various sample surveys. The second survey was carried out in the following year 1948. Since then, it was conducted every three years until the 13th survey in 1981.
Since the fourteenth survey in 1986, it has been carried out in a cycle of five years. However, in order to complement the list of establishments obtained by the survey, it was decided to implement a project that would survey changes in establishments such as opening and closing in an interim year to update the list of establishments.
The fifteenth survey of 1991 fell in the year when the census of commerce, which had been conducted every three years, would be conducted. As a result, they were carried out simultaneously on July 1.
In 1996 the survey was revised to grasp the basic structure of an enterprise as well as the basic structure of establishments. Consequently, the name was changed to the establishment and enterprise census. At the same time, the project to update the lists of establishments and enterprises, in an interim year was construed as a simplified survey of the establishment and enterprise census.
Two types of questionnaires are used for the Census. Questionnaire A is used for privately-managed establishments and enterprises nationwide (excluding unincorporated establishments in agriculture, forestry and fisheries, the domestic service industry and establishments that belong to foreign governments or international organizations). On the other hand, Questionnaire B is used for establishments and enterprises that belong to national and local public bodies.
(2) Establishment and employee
Establishment - A unit established for economic activities within a certain area. In principle, it needs to meet the following requirements:
a) It carries out its economic activities within a certain area (a section) under a single business entity.
b) It is equipped with employees and equipment to manufacture its products or provide its service on a constant basis.
Employee - All persons who belong to and work at an establishment that satisfies the above requirements as of the day of survey. This means that it includes persons who have been dispatched to other companies or to establishments under separate business entities such as subcontractors. Conversely, it excludes those persons who work in the establishment but are dispatched from other companies or establishments under separate business entities such as subcontractors and receive no wages/salaries from the said establishment.
A family member who works for an unincorporated enterprise is considered to be an employee even if he/she is paid no compensation.
Financial Statements Statistics of Corporations by Industry(Fundamental Statistics)
(1) Brief history
The survey goes back to 1883 when the Ministry of Agriculture and Commerce enacted "Regulations on Agricultural and Commercial Information" and ordered local agencies to conduct various industrial surveys. Survey was conducted in such fields as "agriculture," "manufacturing" and "commerce." The information on companies was under the "commercial communication category." In 1894 the Ministry laid down the "Form on Agricultural and Commercial Statistics," and began to use a "company questionnaire" for each company, as a report form. In 1925 the Ministry of Agriculture and Commerce was divided into the Ministry of Agriculture and Forestry and the Ministry of Commerce and Industry. Taking this opportunity, the "company questionnaire" was transformed into the "company questionnaire" as an independent survey under the control of the Ministry of Commerce and Industry.
This survey was interrupted in 1944 due to World War II , but was started again in 1945 subsequent to the end of the War. In December 1946 the survey was transferred to the jurisdiction of the Ministry of Finance. At the same time, the name was changed to "Financial Statements Statistics of Corporations by Industry." Its scope was expanded to a great extent. In 1948 an annual survey was started as statistics on financial statement analysis for all commercial corporations (all corporations with a capital of ten million yen or more and a sample survey for corporations with a capital of under 10 million yen, excluding financial and insurance companies). In 1950, a quarterly survey was started for corporations with a capital of 2 million yen or more, thereby establishing the current system consisting of annual survey and quarterly survey. In 1973, the target of the quarterly survey was restricted to companies with a capital of 10 million yen or more.
In 2009, financial and insurance companies was added to the target of the survey.
The annual survey covers all commercial corporations, whereas the quarterly survey covers commercial corporations with a capital of 10 million yen or more. The sample includes all corporations excluding financial and insurance companies with a capital of 50 million yen or more and corporations with a capital of under 50 million yen selected in the stratified random sampling method, whereas the sample includes all corporations of financial and insurance companies with a capital of 10 million yen or more and corporations with a capital of under 10 million yen selected in the stratified random sampling method.
(2) Definition of terminology
The definitions of terminology used in this survey generally follow those stipulated in the "Regulations Concerning the Vocabularies, Forms and How to Prepare Reports for Financial Statements etc". Nonetheless, some vocabularies are unique to this survey.
Unincorporated Enterprise Survey (Fundamental Statistics)
(1) Brief history
The survey was instituted by the Economic Stabilization Headquarters (currently reorganized as the Economic and Social Research Institute under the Cabinet Office) in 1947 to obtain basic data for compiling the national income. In 1952, its industrial and commercial portions were transferred to the jurisdiction of the Prime Minister's Office (currently the Ministry of Internal Affairs and Communications), and the survey was revised into a new form titled the "Unincorporated Commercial and Manufacturing Enterprise Survey" (designated statistics No. 57). In 1961, the service industry was included in the survey in addition to the manufacturing and the wholesale-retail, and the name was changed to "Unincorporated Enterprise Survey."
The survey was further expanded in 1964 so as to grasp operating assets and liabilities. In 1966, the sample size was enlarged and the geographical coverage of the survey was extended to include towns and villages that had not been included earlier. In 2002, the survey was reformed in sample size and questionnaires.
(2) Survey structure and method
The survey is composed of two parts, namely "Trend Survey"(quarterly) and "Structural Survey"(yearly). It covers unincorporated enterprises in "Manufacturing", "Wholesale and retail trade", part of "Real estate and goods rental and leasing", part of "Scientific research, professional and technical services", "Accommodations, eating and drinking services", part of "Living-related and personal services and amusement services" and part of "Services, N.E.C.". It is conducted on a sample of approximately 4,000 enterprises selected in the three-stage sampling method.
Enterprise Bankruptcy Records
The Tokyo Commercial and Industrial Research and the Teikoku Databank have been summarizing data concerning corporate bankruptcies since January 1952 and April 1964 respectively. Every month the former publishes its data as a report titled the "Bankruptcies seen in graphs" and the latter, as the "Enterprise Bankruptcy Records."
The target of the survey is limited to bankruptcies with liabilities amounting to 10 million yen and over.
Basic Survey of Japanese Business Structure and Activities (Fundamental Statistics)
(1) Brief history
The prototype of this survey is Survey C of the "census of manufacturers" implemented in 1987 and 1989. Survey C of the census of manufacturers had been conducted each year for the period from 1956 to 1984 to grasp the shipment by each enterprise accumulating the record of establishments. Subsequently, it was conducted twice, in 1987 and 1989, to illuminate the diversification, progressive service orientation and overseas expansion of manufacturing enterprises.
In addition to the manufacturing industry, the mining industry and the wholesale and retail industry were included in 1992, whereby the survey was reorganized as the "Basic Survey of Japanese Business Structure and Activities." Initially, it was carried out in a cycle of three years. After the second survey held in 1996, it was decided to conduct a large-scale survey every three years and simple surveys, in the remaining years.
From the 1998 survey, "general restaurants" was added, in the 2001 survey, "electricity and gas industry," "credit card and installment financial industry" and "some industries in the service industry ", in the 2004 survey, "some industries in the service industry " (5 industries), and in the 2007 survey, part of the service industry. The survey covers enterprises with a staff of 50 or more and a capital or equity fund of 30 million yen or more among enterprises that have their own business establishments that fall under industrial categories applicable to this survey.
(2) Industrial classification of enterprises
The industrial classification adopted in this survey follows the system of Japan Standard Industrial Classification applicable to establishments. However, the number of enterprises classified under the wholesale industry of general commodities, the retail industry of general commodities and the rental service industry of general goods will drastically increase if the standard system is mechanically applied to this survey. The analysis based on such biased data will not result in correct understanding of trends in diversification. Hence, each enterprise in these three industries is classified according to its main economic activities instead of applying the standard classification system.
Basic Survey of Overseas Business Activities
(1) Brief history
The Ministry of International Trade and Industries (currently reorganized as the Ministry of Economy, Trade and Industry) began the survey in 1971 as the "Trend Survey of Overseas Business Activities." Its purpose was to shed light on the overseas business activities of Japanese enterprises and their impacts on local and Japanese economy. Subsequently, the Ministry conducted a more detailed survey called "Basic Survey of Overseas Business Activities" in 1981, since then a detailed survey and a relatively simple survey have been carried out every three years and in the remaining years respectively.
The survey covers Japanese enterprises that have overseas affiliates (excluding the financial and insurance industry and the real estate industry; hereinafter referred to as head-office enterprise). In the survey, two types of questionnaires are used: a questionnaire for head-office enterprise and a questionnaire for overseas affiliate.
(2) Overseas affiliate
An overseas subsidiary and an overseas second-tier subsidiary are generically called "overseas affiliates." The overseas subsidiary company is a foreign corporation with 10% or more Japanese equity. The overseas second-tier subsidiary is a foreign corporation with over 50% equity by an overseas affiliate that has over 50% Japanese equity.
Survey of Trends in Business Activities of Foreign Affiliates
The Ministry of International Trade and Industry (currently reorganized as the Ministry of Economy, Trade and Industry) began the survey in 1967 to probe management trends in enterprises with foreign capital.
The survey covers enterprises in which foreign investors hold over one-third of stocks or equity and which have notified the Ministry of Economy, Trade and Industry about incoming direct investment or submitted an ex-post report to that effect, based on the "Foreign Exchange and Foreign Trade Control Law."
It is designed to grasp the enterprise's outline, capital subscriptions, operation, assets, profit and loss, exports/imports and regional breakdown, research and development expenses, financing, capital investment, appropriation of profit, payment to foreign investors and employment.