ArrowArtboardCreated with Sketch.Title ChevronTitle ChevronEye IconIcon FacebookIcon LinkedinIcon Mail ContactPath LayerIcon MailPositive ArrowIcon PrintTitle ChevronIcon Twitter
Business trends

Japanese companies shift focus to ASEAN due to US-China rows

Industries consider expanding operations in Vietnam and Thailand: JETRO survey

Visitors try out a Toyota Camry car at Bangkok Auto Salon 2019. A rising number of Japanese companies are considering business expansion in ASEAN.   © Reuters

TOKYO (Kyodo) -- A rising number of Japanese companies are expanding business in Southeast Asia and scaling down operations in China due to escalating tensions between Beijing and Washington, according to the Japan External Trade Organization.

Citing a JETRO survey conducted late last year, the government-backed body said in an annual trade and investment report that 41% of Japanese companies are considering expanding operations in Vietnam in the next three years or so, up 5.5 percentage points from a year earlier.

The report, released July 30, quoted the survey as saying that 36.3% of respondents had given a similar answer for Thailand, up 1.5 points, while 48.1% said they would boost business in China, down 7.3 points.

"Since 2018, an intensified confrontation between the United States and China has pushed up Japanese companies' investment in the Association of Southeast Asian Nations," the report said.

"The gap between the amount of [Japanese] investment to ASEAN and China expanded to 20.4 billion yen ($191 million) in 2019 from 10.2 billion yen in 2017," it said.

ASEAN groups Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam.

Signaling moves toward the reorganization of global supply chains, a maker of steel, nonferrous metal and metal parts in the Tokyo area said it had shifted part of its production in China to Thailand and switched U.S.-bound exports from China to Thailand.

A maker of steel and nonferrous metal in the Shikoku region, western Japan, said it is planning to shift Mexico-bound exports from China to Vietnam, according to the survey.

The survey, conducted in November and December, covered 9,975 Japanese companies with strong interest in overseas business, of which 3,562, or 35.7%, responded.

Meanwhile, about 80% of Japanese companies operating overseas forecast that sales will drop in 2020 from the previous year due to shrinking demand in the wake of the novel coronavirus pandemic, according to the annual report.

In Asia, 91.4% of Japanese companies operating in India, 89.4% in Malaysia, 88.4% in Thailand, 85.3% in the Philippines and 84.4% in Indonesia made such forecasts.

The pandemic has significantly reduced Japanese investment in the Asian market, as well.

In the first five months of 2020, Japanese investment in Indonesia tumbled 75% from the same period in the previous year, while declining 35.5% for ASEAN as a whole.

Sponsored Content

About Sponsored Content This content was commissioned by Nikkei's Global Business Bureau.

You have {{numberArticlesLeft}} free article{{numberArticlesLeft-plural}} left this monthThis is your last free article this month

Stay ahead with our exclusives on Asia;
the most dynamic market in the world.

Stay ahead with our exclusives on Asia

Get trusted insights from experts within Asia itself.

Get trusted insights from experts
within Asia itself.

Try 1 month for $0.99

You have {{numberArticlesLeft}} free article{{numberArticlesLeft-plural}} left this month

This is your last free article this month

Stay ahead with our exclusives on Asia; the most
dynamic market in the world
.

Get trusted insights from experts
within Asia itself.

Try 3 months for $9

Offer ends October 31st

Your trial period has expired

You need a subscription to...

  • Read all stories with unlimited access
  • Use our mobile and tablet apps
See all offers and subscribe

Your full access to Nikkei Asia has expired

You need a subscription to:

  • Read all stories with unlimited access
  • Use our mobile and tablet apps
See all offers
NAR on print phone, device, and tablet media

Nikkei Asian Review, now known as Nikkei Asia, will be the voice of the Asian Century.

Celebrate our next chapter
Free access for everyone - Sep. 30

Find out more