On average, payments in the ICT sector take between 30 and 90 days. Business culture promotes prompt payment, and therefore the number of delays is low.
- The Japanese ICT industry is well established and holds a global reputation for excellence and innovation. Japan is the second largest ICT market in the Asia-Pacific region after China, with well-known companies such as Hitachi, Sony, Panasonic and Toshiba having a large market share.
- The Japanese ICT sector recorded value added growth of 1.5% in 2016, and is expected to increase 1.3% in 2017. Last year the domestic consumer electronics market benefitted from the yen appreciation, high household income levels as well as strong demand for the latest devices. However, given the slower yen appreciation expected in 2017 spending growth is expected to slow down to 0.6%, with total spending amounting to USD 57.6 billion. Between 2016 and 2020 the consumer electronics market is expected to contract at a compound annual growth rate (CAGR) of 0.5% due to the high market saturation (high penetration of devices across all segments) and the unfavourable demographic development.
- Japanese ICT companies obtain finance easily as banks are very willing to lend and interest rates are low. The current government is very supportive of bank lending, putting pressure on banks to even lend to weaker companies. Therefore, high gearing ratios are common in Japan.
- On average, payments in the ICT industry take between 30 and 90 days. The business culture in Japan promotes prompt payment, and therefore the number of protracted payments is low. The insolvency level in the ICT sector is low and is expected to remain stable in 2017.
- Our underwriting stance for this industry is generally open due to stable growth and margin outlook, the low insolvency level and good payment experience and the fact that the market is dominated by large corporates and well-established domestic businesses.
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Market Monitor ICT June 2017
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