Hi-tech ventures survive tensions

PUBLISHED : Tuesday, 26 April, 2005, 12:00am
UPDATED : Tuesday, 26 April, 2005, 12:00am

Japanese firms with operations in the mainland are concerned about recent protests but are standing by their commitments

Relations between Japan and the mainland are on the mend after two weeks of tension, and Japanese electronics firms with ventures in China aim to continue with their plans but are watching out for future flashpoints.

Some of the world's most sought after liquid-crystal display television sets and office printers are made in China, so it is in the best interest of both nations to smooth out any differences.

Senior executives from Sharp and Ricoh said they were focused on growing their businesses in China despite the heightened anti-Japan sentiment and destructive street protests.

'As businessmen, we do not feel qualified to comment on complex political issues,' said Koichi Endo, executive managing director at global office systems supplier Ricoh Group.

'Recent events will not in any way affect our solid commitment to China.'

Nobuyuki Sugano, group deputy general manager for Asia and China operations at Sharp's International Business Group, shared the same view, but indicated there was a threshold that Japanese firms were keeping tabs on.

'We see the recent events as temporary and hope this kind of thing will not happen again because this is not very good situation for investors,' said Mr Sugano, in reaction to the wave of anti-Japan demonstrations that hit Beijing two weeks ago.

'If these continue, Japanese firms may reconsider their investments in China,' in light of official figures that would be a major concern for both sides.

Covering more than two decades of strategic trade, Japan has rivalled the United States and outpaced Europe on the amount of foreign direct investment (FDI) made in the mainland.

According to mainland statistics, the cumulative value of investments received between 1979 and 2003 by China from Japan totalled US$40.7 billion. The US invested US$43.6 billion, while Europe - comprising the combined FDI of Britain, France, Germany and Italy - invested US$28.6 billion in the same period.

With manufacturing operations spread across southern China - the largest being in Shanghai and Shenzhen - Ricoh has seen its mainland investments steadily grow to support its international markets.

Ricoh has 395 consolidated subsidiaries worldwide, employs 75,000 people and has total annual sales of US$17 billion.

It has the No1 market share for plain paper copiers in Europe and Japan and the second largest market share in the United States.

Sharp has about five major electronics factories in the mainland, including its Nanjing facility, which turns out a considerable volume of its best-selling Aquos LCD colour televisions.

Sharp said total worldwide demand for flat-panel TVs from 2001 to last year was estimated at about 14 million units, which meant that Aquos models accounted for a third of all flat-panel TV sales worldwide.

According to the Japan External Trade Organisation (Jetro), a government-backed trade promotions body, the country's total trade with China, including Hong Kong, reached US$205.1 billion last year.

That exceeded Japan's trade with the US, which stood at US$189.2 billion.

Meanwhile, a Jetro survey of Japanese companies and their affiliates in 14 East Asian markets earlier this month found that business confidence in China and the rest of North Asia was mixed.

Declines were also reported in eastern and southern China, Hong Kong and Taiwan.