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Economy

Japan reveals 87 projects eligible for 'China exit' subsidies

Hoya heads to Vietnam and Laos, while Sumitomo Rubber moves to Malaysia

Japan's Prime Minister Shinzo Abe speaks to the media at his official residence in Tokyo. The leader seeks to build a more resilient supply chain.   © Reuters

TOKYO -- Japan's Ministry of Economy, Trade and Industry on Friday unveiled the first group of Japanese companies to subsidize for shifting manufacturing out of China to Southeast Asia or Japan.

Eighty-seven companies or groups will receive a total of 70 billion yen ($653 million) to move production lines, in a bid to reduce Japan's reliance on its large neighbor and build resilient supply chains.

Thirty of these will shift production to Southeast Asia, including Hoya, which produces hard-drive parts and will move to Vietnam and Laos.

Sumitomo Rubber Industries will make nitrile rubber gloves in Malaysia, while Shin-Etsu Chemical will shift production of rare-earth magnets to Vietnam.

The other 57 projects will head to Japan.

Household goods maker Iris Ohyama currently produces face masks at Chinese plants in the port city of Dalian, Liaoning Province, and Suzhou, west of Shanghai, with nonwoven fabric and other main materials procured from Chinese companies.

With the help of subsidies, the company will begin producing face masks at its Kakuda factory in its home base in Miyagi Prefecture in northern Japan. All material will be prepared locally, independent of overseas suppliers.

Hygiene products maker Saraya, whose offerings include alcohol-based sanitizer, also qualifies for the subsidy.

Eligible companies include producers of aviation parts, auto parts, fertilizer, medicine and paper products, with the roster incorporating such big names as Sharp, Shionogi, Terumo and Kaneka.

The government earmarked 220 billion yen in the fiscal 2020 supplementary budget to create a subsidy program to encourage companies to move plants to Japan. Of that amount, 23.5 billion yen was set aside to promote the diversification of production sites from China to Southeast Asia.

Early in the coronavirus outbreak, Japan experienced a severe challenge in sourcing such items as masks, many of which come from China.

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