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Business trends

China's environmental campaign pushes companies to relocate

Japanese manufacturers moving within mainland or to other countries

China bolstered environmental protections in 2015 and introduced a tax last year based on the emission of pollutants.   © Reuters

OSAKA -- Tougher environmental protections in China have placed a heavier financial strain on Japanese companies operating there, prompting them to relocate production elsewhere in the country or even beyond its borders.

Though many of these businesses initially supported Beijing's environmental campaign, some have begun to worry about its impact on their operations.

Sanyo Chemical Industries produces paint additives at a plant in the Jiangsu Province city of Nantong. It relies on local waste collection companies to handle the large amount of byproducts, but stronger environmental safeguards led many of the companies to close and spurred others to raise prices. The Japanese manufacturer plans to move production to an existing facility in Thailand by the end of this year.

Chemicals maker Asahi Kasei gave up on plans to boost output of automotive plastics at its plant in the city of Suzhou, citing emissions regulations and other issues. The company instead will build a new facility in the nearby city of Changshu.

Nichirin, which makes hoses for cars, plans to shift production from Shanghai to a new site in Changshu around June.

"We won't be able to continue operations if Shanghai tightens environmental regulations any further, so we decided on a pre-emptive move," a company representative said.

A 2018 survey by the Japan External Trade Organization found that 10% of Japanese companies operating in China thought the environmental standards there were too strict and hampered businesses. Six percent were considering moving production.

China introduced tough penalties for polluters in 2015 when it overhauled environmental regulations for the first time in a quarter century. The country also introduced a tax in 2018 based on the amount of pollutants and noise that a company emits.

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