SMEs in Public Procurement

23. Japan

23.1. SMEs in the national economy

Only a very small fraction of Japanese enterprises are large. Within the SME sector micro-enterprises predominate, in both number of firms and number of employees.

Table ‎23.1. Number of business establishments and enterprises by industry and size in Japan, 2014

(Private, non-primary industry)

	SMEs				Large enterprises		Total
			Of which micro
Industry	No.	% of total	No.	% of total	No.	% of total	No.	% of total
Mining and quarrying of stone and gravel	1 454	99.7	1 284	88.1	4	0.3	1 458	100
Construction	455 269	99.9	435 110	95.5	284	0.1	455 553	100
Manufacturing	413 339	99.5	358 769	86.4	1 957	0.5	415 296	100
Electricity, gas, heat supply and water	1 000	97.2	708	68.8	29	2.8	1 029	100
Information and communications	45 254	98.8	29 993	65.5	533	1.2	45 787	100
Transportation and postal services	73 136	99.7	53 255	72.6	251	0.3	73 387	100
Wholesaling/ retailing	896 102	99.5	712 939	79.2	4 182	0.5	900 284	100
Finance and insurance	29 959	99.1	28 821	95.4	259	0.9	30 218	100
Real estate and goods rental and leasing	319 221	99.9	311 568	97.5	296	0.1	319 517	100
Scientific research and professional and technical services	188 455	99.7	160 861	85.1	622	0.3	189 077	100
Accommodations and food services	544 281	99.9	464 989	85.3	759	0.1	545 040	100
Life-related, entertainment and recreation services	382 304	99.9	353 250	92.3	542	0.1	382 846	100
Education and learning support	107 479	99.9	94 409	87.7	129	0.1	107 608	100
Medical, healthcare and welfare	210 326	99.9	146 427	69.5	258	0.1	210 584	100
Compound services	3 492	100	3 478	99.6	1	0	3 493	100
Services (not otherwise classified)	138 157	99.3	96 393	69.3	1 004	0.7	139 161	100
Non-primary industry, total	3 809 228	99.7	3 252 254	85.1	11 110	0.3	3 820 338	100

Note: Number of enterprises = Number of companies + Business establishments of sole proprietors (independent establishments and head offices).

Source: (OECD, 2017[1]).

23.2. National policy framework to support SMEs in public procurement

The objective of supporting SMEs in public procurement is elaborated in the Act on Ensuring the Receipt of Orders from the Government and Other Public Agencies by Small and Medium-sized Enterprises, and the Basic Policy on State Contracts with Small and Medium Enterprises. This Basic Policy sets the goal for each fiscal year, including the target amount and the ratio of contracts with SMEs and micro-enterprises to the total budget of state contracts. Cabinet approval was given on 28 August 2015 for setting 54.7% as the target contract ratio among SMEs and micro-enterprises in fiscal 2015, and for roughly doubling the ratio of state contracts with new SMEs over the three years from fiscal 2015 to 2017, compared to fiscal 2014 (estimated at around 1%).

23.3. Implementation mechanisms

As a follow-up to the Basic Policy, a white paper1 was produced that included the following:

• The Minister for Economy, Trade and Industry issued a request regarding the Cabinet approval of the Basic Policy on State Contracts with Small and Medium Enterprises to the heads of each agency and ministry, prefectural governors, all municipal mayors, and mayors of the Tokyo special wards (1 805 organisations), and also requested that they make efforts to increase opportunities for SMEs and micro-enterprises to receive orders.

• From August to September, 50 information sessions (Councils to Promote Local Access to Public Sector Demand) were held throughout Japan to actively raise awareness of the Basic Policy in regional areas.

• A conference was organised to discuss policies for information sharing and co‑operation regarding initiatives to promote procurement from new SMEs in regional areas.

• A “Guide to contracts in the public sector” was produced and distributed to central and local government agencies and other commerce and industry-related organisations.

23.4. Monitoring performance

The Small and Medium Enterprises Agency measures the share of contracts awarded to SMEs.

Reference

[1] OECD (2017), Financing SMEs and Entrepreneurs 2017: An OECD Scoreboard, OECD Publishing, Paris, http://dx.doi.org/10.1787/fin_sme_ent-2017-en.

Note

← 1.  www.chusho.meti.go.jp/sme_english/index.html