Seventy-six percent of major companies in Japan feel that business conditions are improving, nearly double the ratio from half a year ago, an Asahi Shimbun survey showed on June 17.
The companies cited increases in consumer spending and solid corporate earnings. But they also expressed anxieties about the European economy and the strong yen.
One other large cause for concern was a possible electricity shortage and the nation’s future energy policy. Although many companies expressed hopes that Japan can eventually end its dependence on nuclear energy, more than half of the companies surveyed support the restart of nuclear reactors to ensure a stable electricity supply.
The Asahi Shimbun’s latest biannual survey was conducted on 100 major companies from May 28 to June 8, and mainly involved interviews with top executives.
According to the survey, 42 companies feel that domestic business conditions are gradually expanding, while 34 companies believe the situation is at a temporary standstill but positive signs are being seen in some sectors.
In comparison, 41 companies expressed such optimism in the previous survey in November 2011.
Fifty-eight companies in the latest survey said Japanese consumers are opening their wallets again.
“I think that, at present, demand for electronics parts is increasing, production of digital-related goods is growing, and consumer spending is recovering,” said Tetsuo Kuba, president of Kyocera Corp., an electronics equipment maker.
Business sentiment hit a low in The Asahi Shimbun survey in June 2011, the first following the Great East Japan Earthquake and tsunami. But it has been steadily rising in a number of sectors, including the auto industry, where sales have received a lift from the resumption of government subsidies in 2011 for environmentally friendly vehicles.
“Many companies in the industries of cars, electronics parts, tires and other products have resumed their investments,” said Junji Tsuda, president of Yaskawa Electric Corp.
Osamu Shinobe, senior executive vice president of All Nippon Airways Co., said domestic travel declined after the earthquake but made a rebound late last year.
“The reactions (from customers) to sales promotion plans, such as bigger discounts for airfares, are good. I feel that we will achieve a good business performance this year,” Shinobe said.
Confidence was also growing about the situation overseas. The number of companies that feel overseas business conditions are declining or gradually receding plummeted to nine from 49 in the previous survey. In addition, 47 companies said business conditions abroad are gradually expanding or in temporary standstill with positive signs in some sectors.
However, many of the companies surveyed were cautiously optimistic about what was happening in other countries.
“There are many unstable factors (such as the European debt crisis and the U.S. presidential election),” said Mizuno Corp. President Akito Mizuno.
The Japanese companies also expressed caution concerning the nation’s future electricity policy, following the accident at the Fukushima No. 1 nuclear power plant. The government is expected to soon start full-scale debate on its mid-term and long-term energy policies.
Forty of the 100 companies said the use of nuclear energy should be reduced as long as the reduction will not hurt the economy.
“Japan should reduce the number of nuclear reactors while making sure that there will be no large, adverse effects on the Japanese economy,” said Seiji Higaki, president of financial group Resona Holdings.
Shunichi Samura, president of department store chain operator J.Front Retailing Co., said the government should work out a plan that combines a reduction in nuclear reactors with programs to save energy.
Two companies said the government should try to achieve a nuclear-free country as early as possible.
But 60 of the 100 companies sought restarts of nuclear reactors because of anxieties over the electric power supply, and 22 companies said nuclear power should continue to account for a certain percentage of Japan’s energy sources.
“To provide energy security for our country, which has few natural resources and aims to prevent global warming, nuclear power cannot help but cover a certain ratio of electricity generation,” said Mitsunori Takahagi, president of JX Holdings Inc., an oil company.
The companies were surveyed before the government announced it would restart two reactors at the Oi nuclear plant in Fukui Prefecture. Without the restarts, Japan would have faced a summer without nuclear power.
Thirty-nine of the companies said reactors should be restarted after their safeties are confirmed, while 21 said reactor operations should be resumed if necessary based on the supply-and-demand situation.
In total, 60 companies showed a positive stance toward the restart of nuclear reactors, particularly those in the manufacturing industry.
“A stable electricity supply at low cost is a major prerequisite for the people to maintain the foundation of their lives,” said Shinichi Taniguchi, vice president of Nippon Steel Corp. “Besides, it is one of the most important foundations for Japanese manufacturing industries to fight in international competitions.”
Masashi Kuroda, vice president of Osaka Gas Co., warned that leaving the Oi reactors offline would have serious consequences for the Japanese economy.
“Concerns over a possible electricity supply shortage are big, especially in Kansai region. If the current situation continues (with no reactors online), companies may move their factories to foreign countries one after another,” he said.
Twenty-three of the 100 companies cited “electricity shortages or rises in electricity charges” as a concern for future business conditions in Japan.
Tokyo Electric Power Co., the embattled operator of the Fukushima No. 1 nuclear plant, has raised or plans to raise electricity charges for companies by 17 percent on average.
Toshikazu Nishimoto, president of Tokyo Steel Co., said: “For our company that uses cheap electricity at midnight, TEPCO’s rate hike is effectively nearly 40 percent. With such a high electricity charge, we cannot compete with our overseas rivals.”
Kunio Harimoto, president of toilet manufacturer Toto Ltd., said that if companies are asked to save electricity, they will have to curb operations of their factories, leading to a big impact on production.
But 45 of the 100 companies replied that they cannot reject requests from electric power companies to raise the rates because there are few alternatives to gaining a steady power supply.
“Given the increase in costs for thermal power generation, an electricity charge hike is unavoidable,” said Jo Kato, a senior executive officer of Mitsubishi Estate Co.
However, 15 of the 100 companies said they cannot accept the higher rates.
“Electric power companies should cut personnel and other expenses to reduce their entire costs,” said Ikuji Ikeda, president of Sumitomo Rubber Industries Ltd.
Meanwhile, 73 of the 100 companies said they support Prime Minister Yoshihiko Noda’s plan to raise the consumption tax rate, while seven expressed their opposition. The remaining 20 companies did not give an answer on the issue.