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Guiding Japanese Companies to Success in International Business

Shiro Uchida
Global Japanese Business Network Leader

What can we do for our clients in Japan to enhance their international competitiveness in the global economy?

Shiro Uchida

While the business environment for Japanese companies is changing dramatically, the global economy has increasingly become flat and synchronized. Japanese companies are accelerating their speed in expanding business overseas against a background of the shrinking market within Japan, cost increases and many other factors.

Once a company advances into the international market, it will face some difficulties and cultural gaps. There are few companies that can proceed with globalization only with their own human resources. We believe that our professional skills, experience and network will benefit you and bring you success in your overseas business.

One of PwC’s advantages is its strong global network with 195,000 professionals in over 157 countries. Within the PwC global network, we have formed a “JBN” (Japanese Business Network), a network team covering 80 countries, comprised of very competent professionals providing support to Japanese companies that plan to expand into the international market. We operate with strong and cross-border global collaboration.

Forms of international business vary widely depending on the purpose, region, strategy and specific approach chosen by the client. To ensure that the best option is chosen, you need a solid entry strategy and human resources who know the country or region very well. Moreover, to be successful in the target country, you need not only good knowledge of local laws, regulations and business practices but also personal connections with political, financial and other business persons.

Our globalization support services are not just services provided to Japanese companies in the Japanese language. We are a service organization that provides complete solutions for various problems that may arise from differences in culture and business practice. We form a mixed team of Japanese and local professionals and work with local chambers of commerce and economic organizations to gather, in a timely manner, the latest information on legislation, regulations and industrial trends. During this whole process, we are working together with'our clients.

Our greatest strength is that we have professionals throughout the world who are able to assist in your success by solving problems associated with doing business in your target country. We continue to contribute to the enhancement of international competitiveness of our clients in Japan, with knowledge and experience gathered through the PwC global network.

I hope that you enjoy the benefits of using the PwC global network to lead your international business successfully.

Assurance—Audit and Assurance Mission

Tsuyoshi Saito
PricewaterhouseCoopers Aarata
Globalization leader for Audit and Assurance

Tsuyoshi Saito

In international operations, companies experience unexpected problems associated with business management or financial reporting that they did not forsee when they first entered the target country. Especially in Southeast Asia, Turkey, the Middle East, South Africa, the BRICs (Brazil, Russia, India and China) and other emerging countries problems may arise in the development of local accounting/finance or IT personnel, compliance with local accounting standards, tax system and other legal systems. It is often difficult to identify and solve these problems in a timely manner. PricewaterhouseCoopers Aarata provides fine-tuned support to overseas subsidiaries of its clients and their head offices in Japan, in collaboration with other member firms in the PwC network. We support you in solving problems related to your operations with our global-based auditing, assistance with internal control, diagnosis of financial reporting, the system structure and operating processes of your international operation, and advisory services.

We place emphasis on the abilities of individual members to propose and act to solve problems that our clients face in the course of international expansion. We are experts in auditing internal controls, including internal control of systems. In addition to our specialties in various fields, we have a keen and wide insight into the business of our clients. We always try to serve as a Trusted Business Advisor to our clients in Japan. PricewaterhouseCoopers Aarata continues to send more than 40 accountants to overseas sites each year. 「The organization functions entirely as an international services division.」

Once a Japanese company enters the international market, it must establish a solid management foundation, including a financial reporting system, to ensure stable business operations. It is necessary to identify problems in the early stages of the international business and take proper action to eliminate them. You may achieve this efficiently by using PricewaterhouseCoopers Aarata and other professionals in the PwC network.

Advisory – Consulting Mission

Kenji Katsura
Globalization leader for Consulting, International Business Support/Emerging Country Entry Strategy Support Office leader

Kenji Katsura

Japanese companies have seen emerging countries mainly as production bases in the global market. Now, many companies see these countries as consumer markets. Recently, Japanese companies planning to expand into the BRICS, Indonesia, ASEAN—in particular, Vietnam and Myanmar—and Africa has increased at an accelerated pace.

Doing business in emerging countries has its particular difficulties. There are a number of work phases to be completed before a company starts up a local business. This includes market research before entry, legal procedures to establish a corporation, financial and tax procedures, development of basic operating processes and establishment of a supply chain and sales channels. In the global market, the business practices used in Japan may not work. Doing business overseas involves far greater and more complex risks than starting up a business in Japan.

The Emerging Country Entry Strategy Support Office provides client companies with wide-ranging and practical assistance that directly supports their business start-ups in foreign countries. Assistance is available in all aspects from decision-making on entry and starting up the local operation to optimization of the operation.

PwC has not only abundant personnel connections and consulting abilities necessary for assisting you enter an emerging country, but also staff members and a network that are able to support your operation from the long-term perspective and optimize the marketing strategy after you enter the market. That is why we can provide services for operational designing and structuring, abilities that our clients worry that they cannot obtain from within their organization.

Advisory – Deals Mission

Taizo Iwashima
Globalization leader for Deals

Taizo Iwashima

When a company considers a strategy to expand into the global market, there are two main options. One is a “greenfield” approach, in which it begins the formation of a business from scratch and another is a “brownfield” approach, in which it takes over and expands an existing business or facility in the market. One of the typical formats of this brownfield approach is M&A.

Investments by Japanese companies in overseas M&As have been increasing. In the first half of 2012, the greatest number of M&A deals by Japanese companies ever was concluded.

There are three main reasons why Japanese companies choose international business expansion through M&As.

The first reason is international expansion with the aim of acquiring production capacity. Many Japanese manufacturers have used an M&A strategy to acquire manufacturers in other countries so that they can add production capacity that they need in those areas or take advantage of lower labor costs. In addition, once a primary manufacturer starts operating in a foreign country, suppliers in the supply chain for that manufacturer often follow them into that country.

The second reason for international expansion is the acquisition of new technology or new brands. In industries where superior and advanced technologies are possessed by foreign companies, such as medical equipment, cloud computing and smart grid industries, or in industries where foreign competitors have strong brand power, companies in Japan often choose an M&A strategy to acquire those technologies and brands to increase their competitiveness in the international market.

The third reason is access to new and growing markets outside Japan. In addition to the BRICS (Brazil, Russia, India and China), this strategy includes Myanmar, Turkey, the Middle East, South Africa and other emerging countries.

For Japanese clients who plan to use an M&A strategy to enter the international market, PwC has a complete set of M&A services, including development of M&A strategies, lead advisors (FA), due diligence, tax advice, value appraisal, and PMI. By providing these services all internally, we can provide powerful assistance to the M&A projects of our clients. The goal of PwC’s M&A services is not just to close a deal; our mission is to support the global growth of our client through the deal. Wherever a deal is proposed in the world, or however difficult the proposed deal is, PwC works diligently with its clients to make a successful M&A deal with professional staff members well-versed in global M&A and the global network.

Tax – Tax Services Mission

Kazuya Miyakawa
Globalization leader for Tax Services

Kazuya Miyakawa

Many forward-thinking companies in Europe and the United States have a number of human resources posted to the tax service department for efficient tax management. When they invest in other countries, they conduct prior research of the taxation system in the target country and perform a detailed analysis to choose the optimum mode of operation. In a US-owned investment bank where I used to work, about 50 employees out of close to 5,000 employees in total were engaged in tax operations on a full-time basis. For a global organization, optimum tax management is so important that they need many staff members for tax management.

On the other hand in Japanese companies, only a few staff handle tax affairs on a full-time basis. If they decide to expand into the international market, they need to develop an optimum tax management strategy reflecting local taxation rules. In fact, many Japanese companies don’t have a sufficient number of employees who can fulfill this task.

As the extent of international expansion increases, Japanese companies will unavoidably face more severe competition with Western companies in the global market. An advanced tax strategy incorporating knowledge of local tax planning is necessary to maximize the cash flow, including future investment. One of the key points for successful international business is recognition of the importance of strategic and optimum tax management. It is as vital to the success of a business as the improvement in revenues.

International Finance

Keigo Omi
Integrated Financial Services Promotion Division

Keigo Omi

In the past, financial institutions in Japan established overseas offices in order to support the need for financial transactions by Japanese manufacturers, including automobiles and electronics, that established and operated production sites overseas. This trend towards the globalization of Japanese financial institutions is now shifting to the BRICS and emerging countries such as Thailand, Vietnam and Myanmar and other developing countries from the U.S, Europe and industrialized countries. To respond to this change, the PwC established the General Financial Services Group two years ago. Under this Group, the International Finance Business Office was formed in order to provide services related to international businesses to banks, non-banks, insurance companies, asset managers and other financial institutions in Japan. Our comprehensive services include not only provision of information on local financial markets or financial regulations but also assistance in developing business strategies, advice on the mode of entry into the target country, and reference to prospective local partners and investees.

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