TOKYO -- Japan has been lagging South Korea and Taiwan in nurturing competitive midsize businesses due to its rigid classification of companies into large and smaller based on the amount of capital and the number of employees.
The country offers subsidies and tax breaks to those classified as smaller, or SMEs (small and medium-sized enterprises), but for many of them this has removed incentives to expand. Japan's Asian rivals, meanwhile, have succeeded in fostering competitive middle-scale enterprises -- those falling between big and smaller -- in such strategic industries as semiconductors, making them key drivers of growth and investment.
