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News Release

Issue of Revitalizing Small and Medium-sized Enterprises
- Urgent Restructuring of “Overseas”, “Pricing” and “Human Resources” Strategies -

June 6, 2008

Points

1) Despite appreciable advances in the financial soundness of small and medium-sized enterprises (SMEs) thanks to recent recovery trends, there has been a marked worsening of business conditions and a widening of the gap with large corporations amid growing uncertainty about the future of the Japanese economy.

2) An important factor in the widening of the gap in business conditions with large corporations has been the slow response of SMEs to overseas markets. SMEs with a low percentage of exports and products manufactured overseas may be missing profit-earning opportunities on promising overseas markets. In addition, SMEs with weak bargaining power are unable to transfer the soaring costs of raw materials to prices, further driving down profits.

3) In this environment, SMEs must address the issue of shifting the emphasis of business strategies from cost reduction to market expansion and boosting their capacity to create added value. This will require: (1) expansion of sales markets from a global perspective, (2) clearly defined differentiation policies aimed at maintaining or raising sales prices, and (3) focus on human resource development.

For more information on the content of this report, please contact Koji Konishi, the Japan Research Institute, Limited.

Tel: 03-3288- 4523
E-mail:konishi.C5A702@jri.co.jp

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