China increasingly worried about ‘losing face’ as Japan bankrolls exodus of firms

Name: Japanese electronics retailer to let employees keep working until age 80 as labour force shrinks
Uploaded: 2020-08-04T22:30:07.000Z
Duration: 2 min 11 s
Description: Japanese electronics retailer to let employees keep working until age 80 as labour force shrinks

Japan has offered a group of 87 companies subsidies totalling US$653 million to expand production at home and in Southeast Asia

The coronavirus pandemic has wreaked havoc on global supply chains, and Japan is officially trying to diversify its supply chains and make them more resilient

Reading Time:4 minutes

Why you can trust SCMP

Japanese printer giants including Brother, Kyocera and Fuji Xerox are already relocating from China to Vietnam. Photo: Shutterstock Images

Cissy Zhou

Published: 6:30am, 5 Aug 2020Updated: 8:44am, 6 Aug 2020

Japan’s decision to offer an initial group of 87 companies subsidies totalling US$653 million to expand production at home and in Southeast Asia has sparked debate whether the world’s third largest economy is trying to gradually decouple from China.

The coronavirus pandemic has wreaked havoc on global supply chains, with the crisis underlining what many companies and countries have known for some time: they are too reliant on China.

China is Japan’s largest trading partner, and Japan is China’s second largest trading partner, and while not all of the enterprises involved in the initial wave have operations in China, the move by the Japanese government has sparked concerns in China.

Although the companies involved are estimated to be less than 1 per cent of total Japanese investment in China, and there will not be an immediate economic impact, if the trend continues, it might shake the foundation of China’s long-term growth model and potentially lead to some hollowing out of the country’s industrial base.

02:11

Japanese electronics retailer to let employees keep working until age 80 as labour force shrinks

Using the subsidy, 57 of the companies will open more factories in Japan, while the remaining 30 plan to expand production in Southeast Asian countries, including Vietnam, Myanmar and Thailand.