Why 110 Japanese firms went bankrupt in China last year
Fast fashion, rising labour costs, political tensions and an inability to adapt have many investors picking up the pieces and moving to Vietnam or Myanmar
Yao Jun is a worried man. As a senior official of the Changshu High Tech Industrial Park near Shanghai, he has swung deals worth tens of millions of dollars from Japanese manufacturers in past years. But things don’t look so good anymore.
“Investment from Japan has dropped in recent years,” he said. “Even two years ago we were hosting many Japanese business delegations. But now, fewer and fewer are coming. I’m worried that Japanese companies may no longer want to invest here.”
Yao’s fears are not misplaced. A new report by Tokyo Shoko Research reveals that 110 Japanese companies went bankrupt last year citing the challenges of doing business in China, or “China risk”, a combination of increasing production costs and heightened political tensions. That figure was an increase from 101 firms the previous year and the highest number since Tokyo Shoko Research began the annual survey in 2014.
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The companies that went under left debts amounting to 71.84 billion yen (HK$4.96 billion), although that was a decline of nearly 67 per cent on the previous year’s losses because only one company failed with debts totalling more than 10 billion yen (HK$691.08 million). The losses in 2015 were skewed by the collapse of shipping line Daiichi Chuo Kisen Kaisha with 120 billion yen (HK$8.30 billion) in debts.