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Home > Statistics > Economic Census for Business Activity > Explanation of Terms for the 2016 Economic Census for Business Activity

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Explanation of Terms for the 2016 Economic Census for Business Activity

Added value

"Added value" refers to the value that is newly generated during the production activities of an enterprise. It is calculated by subtracting the intermediate input value, including costs of raw materials, from the value of production.
The following formulas are used in this survey:


Added value = sales - total cost + total wages and salaries + tax and public imposition

Total cost = cost of goods sold + selling cost and administrative expenses


Added value in this survey does not include the following elements of GDP that are contained in the concept of the national accounts system:
Added value from consumption of fixed capital, social insurance premium charged on an employer, imputed rent of an owned house, R&D expenses, operator of agriculture, forestry and fisheries, public enterprises, producers of government services, and so on.

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Amounts of sales (income)

"Amounts of sales (income)" refers to sales of commodities, or sales, operating revenues, and amounts of completed work resulting from providing services. Income from selling properties, including tangible fixed assets such as securities, land and buildings, and machines and instruments, is not included in the amounts. Ordinary revenues are regarded as amounts of sales (income) for companies in "finance and insurance," legal persons other than companies, and organizations other than legal persons.

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Business activities

In principle, industrial classifications of establishments or enterprises, etc. are based on their main business having accomplished the highest sales (income). However, some establishments or enterprises, etc. operate several businesses other than their main business, and the businesses indicated in terms of sales (income) are regarded as business activities.

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Classification by single-unit establishments, head offices, or branch offices, and by single-unit or multi-unit establishments

Single-unit establishments

"Single-unit establishments" refers to establishments with no head offices or branch offices at different locations run by the same management agency.

Head offices ( Headquarters, Main Offices )

"Head offices" refers to establishments which hold branch offices at different locations run by the same management agency and which control all of them. When each department belonging to a head office is located in a number of separate locations, an establishment where a representative like a president works is regarded as the head office and other establishments are regarded as branch offices.

Branch Offices ( Branch Shops, Branch Houses)

"Branch offices" refers to establishments controlled by a head office at another location. Intermediary establishments, which control subordinate establishments while being controlled by establishments in upper positions, are also considered branch offices.
Branch offices also include sales offices, satellite offices, factories, warehouses with persons engaged, and dormitories with supervisors. Legal organizations which exist as foreign companies are regarded as branch offices.

Multi-unit establishments

Multi-unit establishments include head offices and branch offices.

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Classification by single-unit or multi-unit enterprises

Enterprises are divided into the following two types, according to the establishments comprising enterprises, etc.

Single-unit enterprises

"Single-unit enterprises" refers to enterprises, etc. that exist as a single unit in a dependent establishment.

Multi-unit enterprises

"Multi-unit enterprises" refers to enterprises, etc. that consist of a head office in Japan and branch offices within or outside Japan (including those that consist of a head office in Japan and branch offices only outside Japan).

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Enterprises

"Enterprises" refers to legal organizations, which exist as stock companies, limited companies, mutual companies, general partnerships, limited partnerships, and limited liability companies. The whole consisting of a head office and branch offices is regarded as an enterprise. Single-unit establishments are considered as enterprises in their own right.

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Enterprises, etc.

"Enterprises, etc." refers to legal persons engaging in businesses/activities (excluding foreign companies) or establishments of individual proprietorships. When the same individual proprietor runs multiple establishments, all of those establishments are regarded as a single, combined enterprise.
Specifically, enterprises, etc. are legal organizations which exist as stock companies, limited companies, mutual companies, general partnerships, limited partnerships, limited liability companies, legal persons other than companies, and individual proprietorships. The whole consisting of a head office and branch offices is regarded as an enterprise. Single-unit establishments are considered as enterprises in their own right.

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Establishments

"Establishments" refers to a unit of the place where business activities are performed and fulfill the following conditions in principle:

  • An establishment is a unit of place which occupies a certain space (1 plot) and in which business activities are performed under a single management agency.
  • An establishment has persons engaged and equipment, manufactures and sells goods, and provides services on an ongoing basis.

Establishments consisting of only loaned or dispatched employees

"Establishments consisting of only loaned or dispatched employees" refers to establishments where there are no persons engaged who belong to the establishments and where business activities are performed only by employees loaned or dispatched from separately-operated establishments, such as other companies.

Establishments not having reported their industry, etc.

"Establishments not having reported their industry, etc." refers to establishments whose business type, etc. is unknown because of insufficient information by respondents, etc., even if they exist as establishments.

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Expenses

(a) Total expenses (cost of goods sold + selling cost and administrative expenses)

Expenses corresponding to the amounts of sales (income). Ordinary expenses for companies in "finance and insurance" and for legal persons other than companies.

(b) Cost of goods sold (excluding individual proprietorships, companies in "finance and insurance," and legal persons other than companies)

Numbers included in the total expenses. "Cost of goods sold" is the total amount of cost of goods purchased, manufacturing costs, costs of completed work, costs of revenue from operation of service businesses, and depreciation costs (those included in cost of goods sold), which correspond to sales values.

(c) Total wages and salaries (wages and salaries for individual proprietorships (excluding wages of family employees))

Total amount of wages and salaries (director's remuneration before income tax, insurance premium, wages and salaries, bonuses, allowances, wages, etc.) to directors (including part-time directors) and persons engaged (including temporary employees). Wages and salaries to employees contracted or dispatched to separately operated establishments are included.

(d) Costs for health and welfare (including retirement benefits) (excluding individual proprietorships)

Total amount of statutory welfare costs (pursuant to acts such as Employees" Pension Insurance Act, Health Insurance Act, Long-Term Care Insurance Act, and Industrial Accident Compensation Insurance Act), contribution to welfare facilities, welfare expenses, estimated wages and salaries in kind, retirement benefit expenses, retirement allowances, etc., which are borne by companies.

(e) Rents on movable or immovable property (Rents for individual proprietorships)

Total amount of rents on land, buildings, machines, etc. Amount of lease payments, which is treated as sales for accounting, is not included.

(f) Depreciation costs

Depreciation costs involved in fixed assets. Total amount of depreciation costs recorded as "cost of goods sold" and "selling cost and administrative expenses," respectively.

(g) Tax and public imposition (excluding corporate tax, inhabitant tax, and business tax)

Total amount of taxes which should be borne in business, such as fixed assets tax, automobile tax, and stamp tax. Business tax of taxable revenue (electricity, gas and insurance) and consumption tax, which should be paid in the case of adopting the tax-included accounting method, are included. Corporate tax, inhabitant tax, and business tax of taxable income are not included.

(h) Outsourcing expenses (excluding individual proprietorships)

Costs for consignment, subcontract, and other forms of orders of a part or all of businesses to other enterprises. Payments to temporary staffing companies are included.

(i) Interest expenses, etc. (excluding individual proprietorships, "62 banking," and "63 financial institutions for cooperative organizations")

Total amount of interest expenses, etc. on borrowing. Interest expenses, etc. recorded as non-operating expenses are corresponded. They are not numbers included in the total expenses.

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Industrial classification of enterprises

Industries have been classified at the level of single enterprises, based on the amount of sales (income) and the kinds of main business of the whole enterprises including their branch offices (in principle, the businesses having accomplished the highest gross income or gross sales of the whole enterprises in 2015). As for the preliminary tabulation, industries have been classified based on indusutrial divisions, in principle.

Industrial Classification used in the 2016 Economic Census for Business Activity »

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Industrial classification of establishments

Industries have been classified based on Japan Standard Industrial Classification (revised in October 2013) by the amount of sales (income) and the kinds of main business of establishments (in principle, business having accomplished the highest income or sales in 2015).
As for the preliminary tabulation, industries have been classified based on industrial divisions in principle.

Industrial Classification used in the 2016 Economic Census for Business Activity »

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Legal organization

Individual proprietorships

"Individual proprietorships" refers to businesses run by individuals.
Partnerships are also included in this category, unless they are legal entities.

Corporations

"Corporations" refers to businesses run under what has been granted legal personality pursuant to legal stipulations. The following companies and Corporations other than companies fall under this category:

  • Companies

    "Companies" refers to stock companies, limited companies, mutual companies, general partnerships, limited partnerships, limited liability companies, and foreign companies.
    Here, "foreign companies" means branch or sales offices of corporations founded overseas, which are registered in Japan pursuant to the stipulations of the Companies Act (Act No. 86 of 2005).
    Conversely, foreign-capitalized companies, which are run by companies owned by foreigners or founded by foreign capital, are not considered as foreign companies.

  • Corporations other than companies

    "Corporations other than companies" refers to corporations which are not included in the category of "Companies" among organizations with legal personality.
    For example, the following are regarded as corporations other than companies: incorporated administrative agencies, general incorporated associations, general incorporated foundations, public interest incorporated associations, public interest incorporated foundations, social welfare corporations, incorporated educational institutions, healthcare corporations, religious corporations, agricultural cooperatives (fishery and fishery processing cooperatives), business cooperatives, labor unions (with legal personality), mutual aid associations, national health insurance societies, credit unions, legal professional corporation, and so on.

Organizations other than corporations

"Organizations other than corporations" refers to organizations without legal personality.
For example, this category includes support groups, alumni associations, crime prevention associations, academic societies, and labor unions (without legal personality), and so on.

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Loaned or dispatched employees from other establishments

"Loaned or dispatched employees from other establishments" refers to those who work at the said establishments even if they are registered as employees of the original establishments, along with secondments or dispatched workers defined pursuant to the Worker Dispatch Act.

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Persons engaged

"Persons engaged" refers to all those who belong to the establishments and work. Therefore, persons engaged include employees loaned or dispatched to the separately operated establishments such as other companies. Conversely, loaned or dispatched employees from the separately operated establishments such as other companies, who do not receive their wage/salary (including wages in kind) from the establishments concerned, are not included in persons engaged, even if they work at the establishments.
However, family workers working at establishments of individual proprietors are regarded as persons engaged, even if they do not receive any wage/salary.

Individual proprietor

"Individual proprietor" refers to business owners under, private management and those who actually run the establishment.
An establishment under, private management must have only an individual proprietor.

Unpaid family workers

"Unpaid family workers" refers to family members of individual proprietor who work for the establishments without receiving a wage/salary.
Family members are included in "regular employees" or "temporary employees," provided they work and actually receive a wage/salary just like employees.

Paid directors

"Paid directors" refers to those who receive director's remuneration as an executive at a corporation or an organization (regardless of whether full-time or part-time).
Executives or commissioners are included in "regular employees," provided they engage in a certain assignment, while playing a role as a worker at the office or site, and receive a salary paid in accordance with the salary regulations that are applied to other general employees.

Regular employees

"Regular employees" refers to those who are employed on a regular basis.
Also, this category includes those who are employees for an unspecified period, those who are employed for over one month of a specified period.

  • Full-time employees, full-time staff

    This category includes those who are generally full-time employees or staff among regular employees.

  • Other than full-time employees, full-time staff

    This category includes those who are called "contract employees," "non-regular members of staff," "part-timers," and similar, excluding workers generally referred to as "full-time employees" or "full-tme staff" among regular employees.

Temporary employees

"Temporary employees" refers to those who are employed for less than a month of a specified period, or on a daily basis.

Loaned or dispatched employees to other establishments

"Loaned or dispatched employees to other establishments" refers to those who work at the separately operated establishments such as other companies even if they are registered as employees of said original establishments, along with secondments or dispatched workers defined pursuant to the Worker Dispatch Act, among persons engaged.

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