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Trade war

Konica Minolta to boost Malaysian output as trade war rages

Japanese maker to produce 60% of printers in country as it shifts from China

Production of Konica Minolta multifunction printers is currently split evenly between Malaysia and China. (Photo by Toru Hatano)

MELAKA, Malaysia -- Konica Minolta will shift more multifunction printer production to Malaysia as the Japanese electronics maker looks to lessen dependence on its Chinese operations, which have been hit by the U.S.-China trade war.

Atsuo Takemoto, general manager of Konica Minolta's manufacturing unit, said the company wants to make 60% of its multifunction printers in Malaysia and 40% in China. Production of the printers is currently split evenly between the two countries.

"Two years ago, China was producing most of our printing products, and Malaysia only about 20%," Takemoto told the Nikkei Asian Review. "But now [Malaysia] is already making 50%, and our target is to increase this to 60%."

For fiscal 2018 ended March, Konica Minolta reported a net profit of $384.5 million on the back of about $9.7 billion in revenue. The company's business solutions segment reported sales of $6 billion.

While Takemoto declined to specify the reason for the shift, there are signs Konica Minolta has joined the exodus of companies from China to avoid American tariffs as a result of the raging trade war.

Since last year, more than 20 listed Chinese companies have relocated or expanded manufacturing abroad, or are planning to do so.

At a weekend meeting of G-20 finance ministers in the Japanese city of Fukuoka, U.S. Treasury Secretary Steven Mnuchin said that "as a result of tariffs on China, there are a lot of companies immediately moving production to other countries, particularly in Asia."

Konica Minolta's move follows a recent decision by Japanese competitor Ricoh to move production of its U.S.-bound multifunction printers to Thailand from China.

Nikkei reported last month that Sharp and Kyocera could also join Ricoh on its way out of China. Sharp produces most of its U.S.-bound multifunction printers in China's Jiangsu Province.

To support rising production in Malaysia, Takemoto said the company was investing a significant sum in upgrading its factory in the southern state of Melaka, around 100 miles from Kuala Lumpur.

"For now, we have no plans to build more factories in China or Malaysia," Takemoto explained. "But we are going to modernize the Malaysian plant with state-of-the-art machinery and other technology."

In addition to increasing production of multifunction printers in the country, Takemoto said Konica Minolta has been gradually introducing new production techniques there, such as digital manufacturing, which could help overcome the limitations of conventional manufacturing.

Takemoto spoke following Monday's launch of the Smart Industrial Center in Melaka, a government-backed industrial park. Konica Minolta is among the center's first tenants, alongside port operator Kamigumi and a handful of other Japanese companies.

Konica Minolta is one of the first tenants in Malaysia's Smart Industrial Center, which opened on June 10. (Photo by Takashi Nakano)

The center is designed for companies to share inventory and other data with local suppliers. Logistics operations are built into the site to further save on costs.

Five more companies will set up facilities in the center, which is slated to double in size to about 270,000 sq. meters by late 2020. Total investment in the center is planned at 600 million ringgit ($144 million).

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