Japan Is Giving Companies Money to Move Out of China
$2.3 billion in 2020
Japan’s Ministry of Economy, Trade and Industry on Friday unveiled the first group of Japanese companies to subsidize for shifting manufacturing out of China to Southeast Asia or Japan.
Eighty-seven companies or groups will receive a total of 70 billion yen ($653 million) to move production lines, in a bid to reduce Japan’s reliance on its large neighbor and build resilient supply chains.
Thirty of these will shift production to Southeast Asia, including Hoya, which produces hard-drive parts and will move to Vietnam and Laos.
The other 57 projects will head to Japan.
Household goods maker Iris Ohyama currently produces face masks at Chinese plants in the port city of Dalian, Liaoning Province, and Suzhou, west of Shanghai, with nonwoven fabric and other main materials procured from Chinese companies.
With the help of subsidies, the company will begin producing face masks at its Kakuda factory in its home base in Miyagi Prefecture in northern Japan. All material will be prepared locally, independent of overseas suppliers.
Hygiene products maker Saraya, whose offerings include alcohol-based sanitizer, also qualifies for the subsidy.
The government earmarked 220 billion yen in the fiscal 2020 supplementary budget to create a subsidy program to encourage companies to move plants to Japan. Of that amount, 23.5 billion yen was set aside to promote the diversification of production sites from China to Southeast Asia.
Early in the coronavirus outbreak, Japan experienced a severe challenge in sourcing such items as masks, many of which come from China.
Source: Nikkei Asia Review