A strengthening yen and a shrinking population is driving Japanese companies to accelerate their expansion into the China market.
'The appreciation of the yen is pushing Japanese companies to reduce production costs in order to stay competitive in the export trade,' said Mika Hanada, director of the agriculture, forestry, fisheries, and food department of the Japan External Trade Organisation (Jetro).
'One of the best ways will be revising the supply chain of Japanese goods and moving production bases further into China, which is one of the most important export markets for Japan,' said Hanada, who was in Hong Kong to attend an international Food Expo.
Hanada also said the number of Japanese companies seeking advice from Jetro on overseas investment had risen significantly from April onwards. These include companies in the electronics, vehicle and food industries.
The Japanese yen strengthened to 76.785 yen per US dollar as at August 13, compared with its pre-quake level of 83.0 yen per US dollar. Economists have warned that the strengthening of the currency could wipe out the country's fledgling post-quake economic recovery.
As of June this year, China accounted for 20 per cent of Japan's total exports, and 21.1 per cent of its total imports. Imports from China - up 21.4 per cent year-on-year - are growing at a faster rate than exports to the country, which were up 14.3 per cent year on year in the first half.