Front Page	E-mail PagePrint Version

November trip comes as California continues to be seen as a difficult place to do business

SACRAMENTO - 09/23/04 - California Gov. Arnold Schwarzenegger will visit Japan in November - his first official trip to Japan since assuming the governorship last November.

The governor will meet Japanese political and business leaders to strengthen the business ties between Japan and California, but "a concrete schedule for the trip has yet to be fixed," according to an official at the Japanese Consulate in San Francisco.
 
It's expected that the governor - popularly known in Japan as "Schwa-chan" - will actively promote California-made products, investment, and industry during the trip as he did earlier this year during business-promotion trips to the Middle East, Israel, and his native Austria.

But the Governor will have some heavy lifting to do during his upcoming trip as a growing number of Japanese companies have expressed their negative assessment of California's overall business climate - particularly in greater Los Angeles region.
    
Despite the fact that some Japanese companies continue to find Southern California attractive in terms of the region's market scale, its transportation infrastructure, and the size of the Japanese community, a recent survey by the Japan Business Association of Southern California (JBA) and the Japan External Trade Organization (JETRO) outlines the primary reasons for the drop in popularity of the Los Angeles area as a place to do business.
 
According to the survey, the primary reason behind the negative sentiment is the overall deteriorating business environment in the state caused by the rising costs of employee insurance and medical coverage; worker's compensation issues; the increased housing allowances for employees due to escalating land prices; and the low quality of labor force for the wages/salaries paid.
 
The growing cost burdens, the survey concluded, "are hurting Japanese companies in non-manufacturing sectors, which are more susceptible to labor cost increases, especially those in transportation and other service industries that are reliant on the Japanese community in Southern California."

In addition, it said, "the increase of imports of competing Chinese products into the US is another factor creating anxiety among the Japanese manufacturers in Southern California, which is a gateway to the US for Asian importers."

The five-county Southern California region acts as the national or Western US regional headquarters for the US operations of a number of Japanese companies including Toyota, Nissan North America Inc, Ricoh Electronics Inc, Isuzu Motors America Inc., Epson America Inc., Toshiba, Sumitomo, Fuji Electronics America Inc., and Honda.
 
California's stringent environmental regulations "present another factor that is weighing on the minds of Japanese transporters," the survey said, while "the growing dissatisfaction with the local tax system among the companies surveyed may have had negative psychological effects on their assessments."

Approximately one-half of the companies surveyed have revenues of less than $10 million, while companies generating $100 million or more accounted for nearly 20% and supported more than 111,000 jobs and more than $6 billion in salaries and wages in the greater Los Angeles area last year.

Among the areas in the US seen by Japanese companies as attractive sources of new investment and business opportunities, only Southern California dropped its score compared with the last survey, which was conducted in 2002.

The results of the survey were based on a questionnaire sent last May to a sample of 1,079 Japanese-owned companies with operations in the Los Angeles area with some 404 firms responding.
 
The full survey is downloadable in both English and Japanese is available at either http://www.jba.org or http://www.jetrolosangeles.org/

Go back, or read the latest Front Page stories:

Fox Calls for Closer NAFTA Integration

10/29/04 – Vicente Fox tells the Toronto Globe & Mail that the North America Free Trade Agreement partner countries were ''losing jobs to China…and working as NAFTA corporations, we've regained competitiveness and regained market share throughout the world'' to meet the challenge; the US presidential election should have no impact on relations between Mexico and the US, Fox said, adding that the cross-border relationship is ''very, very institutional…and not related to names or persons.''