Japanese industrial firms 'taking cautious business stance'

Industrial businesses in Japan are maintaining a cautious stance over their business strategies in the face of continuing difficulties in the global economy.

The latest Tankan survey from the Bank of Japan has revealed that large manufacturers' sentiment in the three months to December 2011 has dropped to minus four, compared to the plus two figure recorded in the previous quarter.

Causes of this pessimism include the continuing uncertainty over the financial stability of the European market, as well as the impact on export performance caused by the strength of the yen, reports BBC News.

Japan's currency has been seen as a safe haven by global investors in recent times, a trend that is devaluing overseas profits and leading many manufacturers to shift production overseas.

Yoshikiyo Shimamine from the Dai-Ichi Life Research Institute in Tokyo said: "Companies are taking more cautious views of the economy due to the one-two punch of the slowdown in overseas economies and the firmer yen."

Currently, the Japanese government is considering bolstering the business sector with new corporate governance laws, in response to recent cases of corrupt practices.