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Editorial: Support small and midsize companies’ digitization to strengthen their foundation

  • October 14, 2020
  • , The Japan News , 11:41 a.m.
  • English Press

Amid growing momentum for digitization in society due to the spread of the novel coronavirus, small and midsize companies have been noticeably slow to respond to the move toward digitization. The government needs to strongly support their efforts for that purpose.

 

Immediately after taking office, Prime Minister Yoshihide Suga instructed Economy, Trade and Industry Minister Hiroshi Kajiyama to study ways to boost productivity and strengthen the business foundation of small and midsize companies. The trend toward digitization must be expanded to small and midsize companies to vitalize the economy.

 

The business conditions of small and midsize companies have been hit harder by the coronavirus crisis than those of large companies. According to the Tankan quarterly economic survey for September released by the Bank of Japan, recurring profits for the current fiscal year are expected to decrease by about 21% for large enterprises compared with the previous year, while those for small and midsize companies are expected to decrease by about 46%.

 

This is likely because many small and midsize companies operate in the service industries, such as accommodation and restaurant businesses, and in many cases large companies’ cost-cutting measures have had a direct negative impact on small and midsize companies.

 

For the time being, it is important to take steps to secure the necessary funds for these companies, such as government-affiliated and private financial institutions providing virtually interest-free and no-collateral loans. However, it is also indispensable to support efforts by small and midsize companies to continue operations by taking measures against the coronavirus.

 

To that end, one effective option is to facilitate the use of information technology.

 

Gymnastics classes and yoga classes where students receive instruction remotely via the internet are said to be booming.

 

Some areas have created services that allow customers to order by smartphones and make cashless payments at small eating and drinking establishments using such services.

 

In one example, when a chamber of commerce and industry launched a website to introduce products from companies with stocks of food, there was a flood of inquiries. In the manufacturing industries as well, ordering products and holding business meetings online is spreading.

 

Amid the coronavirus disaster, many small and midsize firms have little room for investment. The government should help them by expanding subsidies for the introduction of information technology.

 

Another factor behind the delay in digitization is a shortage of human resources.

 

In September, the government launched a project called the “digitization support team” in which private-sector experts versed in information technology advise small and midsize companies struggling to cope with digitization. The government is urged to identify the problems facing each company and take detailed measures in line with their individual circumstances.

 

A long-established ryokan inn in Kanagawa Prefecture, which had been on the verge of bankruptcy, developed its own system for reservation management and salary payments, among other tasks. In addition to reducing the clerical burden on employees, the inn used IT to share information among staffers to improve the quality of its services, which led to a sharp recovery in its business performance.

 

Currently, the inn is selling the system to other companies. It is also important for small and midsize companies themselves to review their operations and improve efficiency, while sharing such successful cases.

 

— The original Japanese article appeared in The Yomiuri Shimbun on Oct. 14, 2020.

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