Almost half of Japan technology firms diversifying supply chains away from China, survey shows

Kyodo News survey shows 42 per cent said they have diversified or are considering diversifying their supply chains by moving to India and Southeast Asian countries

The move comes in response to rising US-China competition over technological supremacy and concerns about potential concentration of medical production

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Kyodo recently surveyed some 150 major listed companies, of which 96 responded. The respondents include Canon, Toyota, KDDI, NEC, Kobe Steel and Mitsubishi Heavy Industries. Photo: EPA-EFE

Published: 10:41am, 30 Dec 2020Updated: 10:41am, 30 Dec 2020

Over 40 per cent of Japanese companies the government recognises as possessing sensitive technology linked to security are shifting their manufacturing bases and sources of parts supplies from China in a bid to diversify their supply chains, according to a Kyodo News survey.

The move to reduce their reliance on China and mitigate security risks comes in response to rising US-China competition over technological supremacy and concerns about potential concentration of medical production in China amid a shortage of medical supplies propelled by the coronavirus pandemic.

A total of 42 per cent, or 42 companies, of 96 respondents said they have diversified or are considering diversifying their supply chains by moving to India and Southeast Asian countries, according to the survey.

Kyodo recently surveyed some 150 major listed companies, of which 96 responded. The respondents include Canon, Toyota, KDDI, NEC, Kobe Steel and Mitsubishi Heavy Industries.

Only three respondents said they have or will downsize operations or withdraw from China, signalling the importance of the world’s second-largest economy to many Japanese companies.

While the Japanese government has been urging firms to shift their production bases back home to avoid risks associated with China, only eight respondents said they have or are thinking about doing so.

Around 60 per cent said they have been conducting in-house training or identified their “important technologies” as Japanese businesses that deal with both the United States and China have put emphasis on implementing measures against information leaks.